Tesla to Reach for the Stars with 500,000 Production Goal

May 19, 2016

By HV

Tesla‘s shares took a dip after the company announced it would sell $1.7 billion to $2 billion of its stock to reach the production goal of 500,000 Model 3s by 2018.

But not many investors took it as a realistic goal considering Tesla only produced 15,000 cars in the first three months of this year, and a typical auto plant produces 200,000 to 250,000 cars a year. And that concern sent the shares down 2.2% in after-hours trading. Since then, the shares had made a recovery and increased 3.18%.

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Model 3 came into the light of the public in March. It’s expected to be priced at $35,000, and 375,000 prospective buyers have made their $1,000 deposits.

One of the reasons justifying for the doubts surrounding the goal is Tesla hasn’t had much luck with its production. The company recalled 2,700 Model X cars in April for seat problem, and two top manufacturing executives left the company in early May. Plus, the 500,000 goal is about 10 times the company’s production in 2015.

Aside from the company selling its stock, CEO Elon Musk must also sell 2.8 million of his own shares to cover tax obligations for an options exercise.

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Last year, a report revealed that Tesla took a loss of more than $4,000 on every Model S sold. In the first quarter of this year, Tesla registered a net loss of $282.3 million and $1.4 billion in cash after tapping a credit line.

In its 13-year history, the company only had one profitable quarter, which was the first quarter of 2013 thanks to the launch of Model S in June 22.

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