Electric carmaker Tesla has notched up its biggest quarterly loss to date, sending its shares down more than 5% in after-hours trading.
The company will also be reducing production of its luxury vehicles, the Model S and Model X, to reallocate those resources to the Model 3.
Tesla's negative free cash flow swelled to $1.4 billion, more than analysts had expected.More news: Shilpa Shinde and Vikas Gupta get into an intense fight again
The factory will produce Model S and Model X, but is meant to build primarily Model 3 and the forthcoming Model Y affordable crossover SUV, Musk said, since "it's really the only way to make the vehicles affordable for China".
Tesla said the main constraint was its battery module assembly line at its Nevada Gigafactory, where the company had to redesign part of the production process.
FILE PHOTO: A Tesla charging station is seen in Salt Lake City, Utah, U.S. on September 28, 2017. Hopes for the Model 3 have helped propel Tesla's stock so far this year.
Shares of Tesla (NASDAQ TSLA) traded down 1.648% during trading on Friday, hitting $326.067. It also spent $325 million to repay a credit facility in the quarter. Reports that many of those auto were returned to fix battery problems were not disputed by Tesla.More news: New 'Spider-Man' PlayStation 4 Trailer Digs into the Game's Story
"Model 3 reservation holders may not be thrilled about the fact that they have to wait longer than they thought for their vehicle, but it likely won't cause them to cancel their orders en masse", Caldwell said. That compares to Wall Street's expectations of a loss of $2.29 and revenue of $2.95 billion.
The news wasn't entirely bad for Tesla, however, the carmaker reporting revenues for the third quarter of $2.98 billion, a record, and up from the consensus forecast of $2.95 billion. (NASDAQ:TSLA) by 2.4% in the 3rd quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission.
Tesla warned that its adjusted gross margin would decline to about 15 percent due to a higher mix of lower-margin Model 3 deliveries in the fourth quarter, but then recover in the first quarter of 2018.
Quarterly revenues were $2.98bn, 30% higher than the same period previous year.More news: Modi leads tributes to Sardar Patel on birth anniversary
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