SAN FRANCISCO -- With pressure escalating after one of the worst weeks in its almost 15-year-history, Tesla raced to manufacture and deliver its mission-critical Model 3 sedan to burnish the numbers it's about to report to rattled investors.
Tesla Inc.'s Fremont, Calif., delivery hub was packed with people Saturday evening as the last hours of the quarter drew to a close. Red couches and tall white tables were set up outside, a DJ played music and a truck selling Vietnamese food was on hand. Behind the scenes, a company that's struggled to figure out how to mass manufacture cars had implored workers to get production on track and disprove their doubters.
Meanwhile, CEO Elon Musk told employees in an email early Monday morning that the electric-car maker may exceed a weekly production rate of 2,000 Model 3 sedans, according to the blog Jalopnik.
“If things go as planned today, we will comfortably exceed that number over a seven day period!” Musk wrote in the email obtained by the car-enthusiast blog. The email was sent at 3:01 a.m. Monday California time, Jalopnik said.
But Tesla's skeptics are getting louder after the last few days.
The electric-car maker has come under regulatory scrutiny for the second crash this year involving Tesla's driver-assistance system Autopilot, the latest of which resulted in a fatality. Moody's Investors Service downgraded the company's credit rating further into junk, citing the combination of production problems and mounting obligations that could necessitate a more than $2 billion capital raise soon to avoid running out of cash.
Tesla shares fell 5.1 percent to close at $252.48 during a down day on Wall Street.
“It’s about the magnitude of the miss,” Philippe Houchois, a Jefferies Group LLC who rates the shares a hold, wrote in a report to clients Monday. Tesla probably fell short of a company-supplied consensus estimate of 10,000 Model 3 deliveries in the first quarter and may have trailed its target to end March making the sedan at 2,500-unit weekly rate, he said.
"Tesla is testing our patience," Gene Munster, a managing partner at venture capital firm Loup Ventures who's been bullish on the carmaker, wrote in a report after the company last week announced it would have to repair a power-steering issue with the Model S. "When we heard the recall news tonight we asked ourselves, do we still believe in the story?"
Musk risked coming off as tone deaf to investor concerns, sending a series of April Fools' Day tweets to joke that Tesla had gone bankrupt. The CEO first unveiled the Model 3 on March 31, 2016, and Tesla's manufacturing woes have kept hundreds of thousands of consumers who placed $1,000 deposits for the sedan waiting.