Tesla shares down after Musk’s ‘manufacturing hell’ warning

Tesla shares

Tesla shares took a hit on Monday after CEO Elon Musk warned the upstart automaker was preparing for “manufacturing hell” as it gears up for production of the Model 3 sedan. Tesla Twitter photo.

Tesla shares down 3.5 per cent Monday

Tesla shares were down by 3.5 per cent on Monday after the company’s CEO Elon Musk warned that the EV maker is facing “manufacturing hell” as it begins to ramp up production of its $35,000 Model 3 sedan.

The California-based automaker is counting on the Model 3 to turn the money-losing company into a profitable entity and make the tech-darling into a major player in the automobile industry.

Pacific NorthWest LNGTesla says it hopes to build 20,000 Model 3’s each month by December.

On Friday, the first of the 30 Tesla Model 3’s rolled off the assembly line and were handed over to employee buyers.

Elon Musk’s warnings of production challenges were the focus of investors who are already skeptical of Tesla’s aggressive growth targets.

The company promised to increase total vehicle production to 500,000 next year, nearly six times its 2016 output.  Many believe the target is unrealistic.  76,230 Tesla cars were sold in last year.

On Wednesday, the company is expected to post its quarterly results.  So far this year, Tesla has spent over $2 billion in cash ahead of the launch. Company stocks have gained 53 per cent this year, but they are down from a record high in June.

Reuters reports Tesla autoworkers at the Fremont, California factory are trying to start a union and have requested access to company safety plans and information on compensation.

Tesla’s stock was at $323.21 by mid-afternoon, down $11.85.

 

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