Tesla's Stock Soars 7 Percent, Thousands of Model 3 Orders Cancelled

Tesla Inc (NASDAQ:TSLA) on Wednesday said it will start production of the Solar Roof products at its Gigafactory 2 in Buffalo, New York before the end of 2017.

Analysts had wondered whether a steady stream of news reports about Tesla's production challenges would put a dent in the company's earnings, but the company's numbers surprised observers Wednesday. Since then, Model S deliveries have trended lower.

"There are walls moving all around that can all impede the success of the Model 3", said Karl Brauer, the senior director of content and executive publisher for Cox Automotive. It's betting that the $35,000 Model 3, with a 220- to 310-mile range and price tag close to the U.S. median, will be the auto to do it.

Around 63,000 people have cancelled their Tesla Model 3 pre-orders, with the total number of existing customers hovering around the 455,000 mark. By comparison, the Chevy Bolt has been selling about 1,800 cars per month through April. The Model Y won't enter production until the end of 2019 or early 2020, Musk has previously said.

The entrepreneur revealed the shocking statistic during Tesla's latest quarterly earnings call.

More news: US Senate passes sanctions bill targeting Russia, Iran, North.Korea

The Silicon Valley carmaker said it lost $336.4 million, or $2.04 a share, in the quarter, compared with a loss of $293.2 million, or $2.09 a share, in the year-ago period. "We believe Tesla shares are an overvalued show me story". "We're also very confident about costs". Within days of the announcement, the automaker had secured almost 300,000 reservations for its mainstream electric vehicle. Some data indicate slackening demand for the S and X models ahead of the Model 3's release.

While Musk noted that total orders for the Model 3 - which is positioned as the company's most affordable auto yet with a starting price of $36,000 - dropped from 518,000 to 455,000, those cancellations were over the course of the year and so there's nothing to worry about.

On the call, Musk said debt would be more likely than an equity raise if more capital is needed.

"The journalists were doing test rides, and about 80 percent said they'd buy the vehicle themselves", he said, noting that he remaining 20 percent said they "probably" would.

Elon Musk has thanked his management team for pulling him "back from the cliff of insanity", and encouraging him to design the upcoming Tesla Model Y on the same platform as the newly-launched Model 3. "I've never seen anything like it".

(Copyright © 2015. All Rights Reserved.)
 
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