Tesla Model 3 production delay raises cashflow risks; shares down 3.6%

Tesla Inc shares fell as much as 3.6 per cent on Thursday, setting the company up to lose nearly $1.9 billion in market value after it pushed back a production target for its much-anticipated Model 3 sedan yet again.

Analysts stayed upbeat, saying the electric car maker had finally set an achievable target for their mass-market sedan that is priced at $35,000. Investors, however, are likely to focus on how the delay will impact Tesla's cashflow, a big challenge for many quarters now.

Tesla said on Wednesday it would likely build about 2,500 Model 3s per week by the end of the first quarter, half the number it had earlier promised. The company now expects to reach its goal of 5,000 vehicles per week by the end of the second quarter.

"With absolute Model 3 sales tracking behind expectations and Model 3 gross margin improvement likely to be pushed out until production reaches greater scale, the expected cash tailwind from Model 3 will take longer to manifest itself than was anticipated," Evercore ISI analyst George Galliers said in a note.

Tesla, headed by Elon Musk, has been struggling to overcome production bottlenecks and reported its biggest-ever quarterly loss in the July-September quarter.
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Tesla to raise $1.5 bn in bond offering to fund Model 3 sedan

Tesla announced on Monday that it intends to raise about $1.5 billion in a bond offering, as the US luxury electric automaker seeks to fund the production of its new Model 3 sedan.

Shares of Tesla have risen 67 per cent this year and ticked down 0.49 per cent to close at $355.17 on Monday after the announcement, Xinhua reported.

The debt offering marks Tesla's debut in the junk bond market.

Moody's is rating the bond B3 with a stable outlook and Standard & Poor's assigned a "B-" rating for the bond issue.

Tesla said in a press release that it intends to use the net proceeds from this offering to further strengthen its balance sheet during this period of rapid scaling with the launch of Model 3, and for general corporate purposes.

While Tesla has received more than 1,800 reservations per day for the Model 3 since its launch in late July, Tesla CEO Elon Musk confirmed that he's working on "something special" for early reservation holders.
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