Tesla sales below expectations because of parts shortages image

The electric car maker did not meet its sales expectations for the first quarter, because parts shortages hampered the production, Tesla said.

Tesla delivered 12,420 Model S sedans and 2,400 Model X models in the first three months of the year, up nearly 50 percent compared to Q1 last year. The company initially said it targeted to sell around 16,000 vehicles for the period, reiterating now it remains on track to hit its goals of 80,000 to 90,000 new cars in 2016. Tesla said its quarterly results were impacted by “severe Model X supplier parts shortages in January and February that lasted much longer than initially expected.” But once these issues were resolved, production and delivery rates improved and by the last full week of March, the production rate rose to 750 Model X SUVs per week. However, many of these vehicles were built too late to be delivered to their owners before end of quarter.

Tesla blamed the parts shortages on its own “hubris in adding far too much new technology to the Model X, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house”. The automaker promised to address all the root causes to ensure that these mistakes were not repeated with the Model 3 launch,” which is set to enter production in late 2017. Around 280,000 orders were placed for the newly launched affordable electric sedan, from which Tesla hopes to boost its overall production to 500,000 units by 2020.