03.07.201723:50:00UTC+00Tesla Deliveries Hit Lower End of Forecasts, Begins Production of New Model

Tesla Inc reported that it delivered around 47,100 electric sedans and SUV's during the first half of this year, hitting the lower end of its projections, as CEO Elon Musk revealed that production of its Model 3 is set to begin this week.

Shares of Tesla dropped 2.5 percent on Monday to $352.62 following the Model 3 announcement. Tesla shares are higher by over 60 percent in 2017, partly due to expectations of a solid launch for the Model 3. The company has a market value of $58 billion.

According to the company, a “severe shortfall” of new battery packs has strained vehicle manufacturing through June, while it predicts second-half deliveries of the Model S sedan and Model X sports utility vehicle to likely surpass that of the first half. Tesla had forecast first-half deliveries of 47,000 to 50,000.

Most investors are eyeing the outlook for the Model 3, while some analysts are skeptical on its planned July launch following production delays and quality issues which hurt launches of its previous models.

The Model 3 is a critical point for Tesla as it transitions from a luxury car manufacturer to a mass producer. The 500,000 vehicles that Tesla is planning to make in 2018 is almost six times its 2016 production.