Investors have taken flight from Tesla after the company admitted production is lagging targets – a contentious issue that will be the subject of a court hearing later on Thursday.
Shares fell 10% in pre-market deals – a fall matched when the Nasdaq opened – after the electric carmaker said it only managed to produce 77,100 vehicles in the first quarter of the year.
That is well behind the pace it must keep if it is to fulfil chief executive Elon Musk’s pledge to manufacture 500,000 cars annually.
The company also reported a 31% dip in the number of vehicles it delivered between January and March compared to the previous three months.
It said the total of 63,000 was largely a consequence of more cars being shipped to Europe and China – the latter currently engaged in a trade war with the US.
Both metrics were said, by analysts, to have fuelled concerns over Tesla’s profitability.
The company had already admitted that it was likely to record a loss in the first quarter as cost-cutting and price reductions in the model 3 would take a toll on its bottom line. Financial results are due by early next month.
Tesla said that, despite the lower production volumes, it still expected to deliver between 360,000 and 400,000 vehicles this year as production of its new Model Y mid-size SUV prepares to get underway next year.
Production targets at Tesla are contentious to the extent a court is due to rule today on whether Mr Musk broke a legal agreement not to tweet potentially market-sensitive information when he predicted in February that Tesla would make about 500,000 cars this year.
The Securities and Exchange Commission (SEC) made the condition part of a $40m settlement last year after Musk tweeted that he had lined up the financing needed to lead a buyout.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said of Tesla’s update: “Lower deliveries were expected this quarter, since export of Model 3s to China and Europe meant more vehicles would inevitably finish the quarter in transit.
“However, the actual number is worse than the market had hoped for, particularly for the more premium Model S and Model X.
“Our concern is that demand for Tesla’s premium models has been permanently affected by the cut in subsidies in the US and that sales are being potentially cannibalised by the cheaper Model 3.
“With the $35,000 Model 3 variant only just hitting the market, the potential for Tesla to undercut its own products is only growing.
“In theory premium sales could be offset by high volume, low margin Model 3 sales, but Model 3 production has increased only slightly quarter-on-quarter – hardly the ramp up in production some had been expecting.”