(Reuters) - Tesla Inc’s (TSLA.O) burning the midnight oil to hit a long-elusive target of making 5,000 Model 3 vehicles per week failed to convince Wall Street that the electric carmaker could sustain that production pace, sending shares down 2.3 percent on Monday.
Tesla met the target by running 24 hours a day for seven days, setting up a new production line inside a tent on the campus of its Fremont factory and pulling workers from other projects, according to the company and employees at the factory.
Tesla’s heavily-shorted shares rose as much as 6.4 percent to $364.78 in early trading, but sank after several analysts questioned whether Tesla would be able to sustain the Model 3 production momentum, which is crucial for the long-term financial health of the company.
“In the interim, we do not see this production rate as operationally or financially sustainable,” said CFRA analyst Efraim Levy. “However, over time, we expect the manufacturing rate to become sustainable and even rise.”
Levy cut CFRA’s rating on Tesla stock to “sell” from “hold.”
Tesla, which Chief Executive Elon Musk hailed on Sunday as having become a “real car company,” said it now expects to boost production to 6,000 Model 3s per week by late August, signaling confidence about resolving technical and assembly issues that have plagued the company for months.
Tesla also reaffirmed a positive cash flow and profit forecast for the year and announced that Doug Field, senior vice president of engineering, was stepping down after five years with the company.
Tesla has been burning through cash to produce the Model 3. Problems with an over-reliance on automation, battery issues and other bottlenecks have potentially compromised Tesla’s position in the electric car market as a host of competitors
