'Bankwuptcy' watch: Will Tesla make it through?

Not one to pass up a chance to troll his followers, Tesla CEO Elon Musk kicked off April joking on Twitter that the electric automaker had gone bankrupt.

"Elon was found passed out against a Tesla Model 3, surrounded by 'Teslaquilla' bottles, the tracks of dried tears still visible on his cheeks," the executive tweeted, along with a photo of himself sleeping against a Model 3, holding a sign that read, "Bankwupt!"

Though the tweets were just another April Fools' Day joke from the automaker — in 2015, the company said it was creating a Tesla watch — Tesla's humor may be a little too close for comfort.

The automaker reported its first-quarter sales Tuesday, which followed reports that production missed its self-imposed goal of 2,500 Model 3 sedans a week, hitting 2,020 vehicles for the last week of the period.

The miss comes as Tesla deals with a federal investigation into a fatal crash involving a Model X operating with its Autopilot system engaged, a mounting trade war with China that could severely cost the automaker, a labor complaint filed by the National Labor Relations Board and rants against reporters by its CEO on social media.

On Monday, April 2, Tesla shares hit a 52-week low of $244.59. By the end of the week, shares were back up to $305, but still a far cry from the 52-week high of $389.61.

"Tolerance for the brand's history of missed numbers is likely at an end," said Karl Brauer, executive publisher at Kelley Blue Book and Autotrader.

To maintain the waning confidence in its production ramp-up, experts say, Tesla will need to prove it can manufacture vehicles at a consistent pace and make good on its promise to not raise additional capital this year.

While first-quarter output was just 480 vehicles shy of Tesla's target, the company's inconsistent production numbers leave analysts skeptical that the carmaker can steadily increase its rate in the second quarter.

Tesla declined to comment on the record for this report, but pointed to statements about future production plans. "In the past seven days, Tesla produced 2,020 Model 3 vehicles," the company said in a statement Tuesday, April 3. "In the next seven days, we expect to produce 2,000 Model S and X vehicles and 2,000 Model 3 vehicles."

After the company reported that it had produced 793 Model 3 sedans in the last week of the fourth quarter of 2017, Bloomberg's Model 3 output model, which tracks registered vehicle identification numbers, shows the rate stayed well below 1,000 vehicles until the last week of March.

"More important than a quarter-end all-out production push is the sustainability of production over the quarter — and the first quarter result did not give us any sense of sustainability," wrote Brian Johnson, a Barclays analyst, in a note to investors. "We expect production to come down significantly as Tesla addresses its bottlenecks in preparation for ramping to higher levels."

Tesla is well behind the rest of the industry when it comes to ramping up production.

Ron Harbour, a manufacturing consultant with Oliver Wyman, said, "When you're getting a factory to 1,000 cars a day, if that takes a month or two, you're doing badly."

And, as Tesla enters the mass-market segment of the industry, expectations for vehicle quality and consistency will differ from the relative tolerance it has seen from its typical first-adopter customer in the luxury market.

Brauer said, "The jump to high volume, it's different on so many levels. It's about the number of cars you can consistently produce with high quality. You have everything lined up to build 2,020 vehicles in one week, that's excellent, but can you do that for 52 weeks or more?"

In its first quarter delivery report, Tesla said it would not need to raise more capital for the rest of 2018.

"Tesla continues to target a production rate of approximately 5,000 units per week in about three months, laying the groundwork for [the third quarter] to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow," the report read. "As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines."

The statement echoes one Musk made in February 2017, when he said in an earnings call that the company did not need to raise more funding for the Model 3. Tesla ended up raising about $3 billion from capital markets that year.

"It seems hard to believe," Brauer said of Tesla's most recent statement on capital raises. "They have payments on their debt and loans staring them in the face, as well as upward shifts in expenditures."

In addition to rising production costs, Tesla may face financial risk from tariffs proposed by China in response to actions from the Trump administration.

Specifically, a tax on imported electric vehicles could increase prices of Tesla vehicles in the country even more than the existing 25 percent import tariff.

"While these steep import tariffs are part of the upper-end luxury market (and in some respects add to the prestige factor for luxury cars), for lower-luxury vehicles than the Model 3 a 50 percent premium would be significant," Barclays' Johnson wrote.

Despite the factors working against Tesla, there's hope among observers the automaker can pull through, as it has in other low points in its 15-year history.

"Moving production numbers up isn't hard once everything is working properly," Brauer said. "The problem is everything has to be working properly."