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Tesla's Model 3 deliveries don't measure up to expectations

Tesla's trip through "production hell" with its new Model 3 electric vehicle is taking longer than expected.

The electric vehicle maker said Wednesday it delivered 1,550 of its more affordable Model 3 sedans — about six times more than it did during the third quarter but far less than most analysts were expecting.

While the deliveries fell short of expectations, Tesla said it was making progress in speeding up production of its Model 3 sedan, which the company is counting on to become its first mass-market electric vehicle.

The company said it made 793 Model 3 vehicles during the final seven working days of last year and hit a production rate on each of its manufacturing lines that works out to a pace of more than 1,000 Model 3s a week.

Tesla said it made as many Model 3 vehicles since Dec. 9 than it had during the four previous months of production, calling the uptick in output "significant growth." While most of the first wave of deliveries went to Tesla employees in an effort to detect early flaws and defects, the company said it deliveries to non-employees are "accelerating rapidly."

But Tesla also scaled back the pace of the ramp up in Model 3 production for the second time since November.

The company originally had hoped to be making 5,000 Model 3s per week by the end of December. But in November, it pushed that 5,000-vehicle target back to March 2018 because of  production problems at its Nevada battery factory and its California assembly plant.

On Wednesday, Tesla further scaled back its production plans, saying it now expects to produce about 2,500 Model 3s a week by the end of March, or half as many as its already-reduced target from November. Tesla said it hopes to hit 5,000 vehicles a week by the end of June.

Tesla is counting on the Model 3, which sells for $35,000 and up, to move the company from a niche producer of luxury electric vehicles to a mass market automaker. The Model 3 is a key part of Tesla's efforts to shift from being a company that has lost billions of dollars to one that is profitable.

The Model 3 — and its impact on Tesla's overall financial health — also is an important factor in the company's ramp up of production at its massive solar panel factory in Buffalo, which is scheduled to reach full production by the end of 2019.

Panasonic, Tesla's partner at the Buffalo factory, has started making solar panels in its portion of the facility, building a workforce of more than 300 people.

But Tesla, which plans to make its innovative solar roofing product in Buffalo, has yet to start production here or make any high-profile efforts to build a manufacturing workforce. Instead, the company continues to test its solar roof, which is being made on a pilot basis at its California factory.

Tesla also said it delivered 28,320 of its flagship Model S sedan and Model X sport utility vehicle. The company's delivered 101,312 Model S and Model X vehicles last year, 33 percent more than in 2016.

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