Tesla blames 'bottleneck' as only 260 Model 3s produced in Q3

A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles California United States

For the third quarter of this year Tesla said it shipped 220 Model 3 cars and produced 260 of them.

Q3 production totaled 25,336 vehicles, with 260 of them being Model 3.

But in its note, Tesla emphasized that there are "no fundamental issues with the Model 3 production or supply chain". Missing guidance by about 85 percent sends most companies' shares into a tailspin, but Tesla stock rose as much as 2 percent Tuesday.

Tesla said most of the lines at the Gigafactory, its battery plant in Nevada, and its auto assembly plant in California were meeting their production targets, but that "a handful have taken longer to activate than expected". Although the overall number was above expectations, Goldman focused on the Model 3 miss due to its importance to the company's future. In its statement, Tesla said there were no fundamental issues with the auto or its supply chain and expressed confidence in fixing its issues. That means that Tesla's vehicles-per-worker-per-year ranged between 8 and 14, or about one-seventh the efficiency of NUMMI two decades ago.

Elon Musk promised a brisk ramp up as Tesla Inc. rolls out its most affordable electric vehicle yet, but the model's plodding start in its first quarter of production may actually be a blessing in disguise. The Model 3 manufacturing ramp up will be incredibly hard even if Tesla hits all of its production goals.

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Unlike Tesla's solid Model S and X deliveries during the quarter, Model 3 deliveries were worse than the electric-car maker was aiming for. However, Tesla's Model X launch flub didn't really make sense.

Model 3. Image source: Tesla.

The electric sedan already has over four lakh bookings from all over the world and delay in production will essentially see a new booking getting delivery of the Model 3 only by late 2019.

After the bell on Monday, shares of Tesla (TSLA) declined after the company's Q3 production and delivery announcement.

The company said it has received some 450,000 pre-orders for the Model 3. Musk plans to eventually build 20,000 cars per month - Tesla will have to ramp up production dramatically if it hopes to hit the December mark. Those vehicles will be counted in the 4th quarter. "We expect Model 3 to have a breakout year in 2019".

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