Tesla's shares are shaping up to possibly have their worst week of the year so far as lower-than-expected production, increased competition and a review from an industry group weigh on the electric carmaker.
On Monday Tesla CEO Elon Musk sent out tweet saying that the Palo Alto, California-based company anticipates reaching production of 20,000 Model 3 cars per month in December. That figure is less than previous estimates. Musk previously said that Tesla would make 10,000 Model 3s per week by December. Tesla also said Monday that it delivered about 22,000 vehicles in the second quarter, bringing first-half deliveries to about 47,100. That's at the low end of the company's prediction earlier this year of 47,000 to 50,000 Model S sedan and Model X SUV deliveries in the first half.
Brad Erickson of Keybanc Capital Markets said in an analyst note that he expected Tesla's stock to be weak on the second-quarter deliveries, but anticipates investors mostly care about seeing Model 3s come off the production line this year and "may not hold the company's feet to the proverbial fire before 2018 in terms of actual profitability."
Tesla has had only two profitable quarters in its seven years as a public company.
Adding to the strain, Volvo announced on Wednesday that it plans to build only electric and hybrid vehicles starting in 2019. Volvo, which is based in Sweden but owned by Chinese firm Geely, will launch five fully electric cars between 2019 and 2021. Three of them will be Volvo models and two will be electrified cars from Polestar, Volvo Cars' performance car arm. It also plans to offer a range of hybrids as options, expecting to sell 1 million electrified cars by 2025.
Volvo isn't Tesla's only competition: General Motors beat Tesla to the mass market with the Chevrolet Bolt, Audi plans to introduce an electric SUV next year, and Ford will have one by 2020.
In addition, the Insurance Institute for Highway Safety said Thursday that Tesla's Model S received an acceptable rating in its small overlap front test, but did not receive the Top Safety Pick+ rating that the Lincoln Continental, Mercedes-Benz E-Class and Toyota Avalon all got. The small overlap front test represents the type of crash that happens when the front driver-side corner of a vehicle hits a tree or utility pole or collides with another vehicle. IIHS said that the main issue with the Model S's performance was that the safety belt let the dummy's torso move too far forward, allowing the dummy's head to hit the steering wheel hard through the air bag. IIHS said Tesla modified the vehicle and they retested it, but the same problem occurred.
A Tesla spokesperson said in a statement that the carmaker's rating for the small overlap front crash test was the second-highest rating available and that the company received the highest rating in the rest of IIHS's crash testing categories. The Tesla spokesperson maintained that "the most objective and accurate independent testing of vehicle safety is currently done by the U.S. government, which found Model S and Model X to be the two cars with the lowest probability of injury of any cars that it has ever tested."
Shares of Tesla Inc. dropped $13.10, or 4 percent, to $313.99 in Thursday morning trading.
Explore further: Tesla: 1st Model 3 to be built Friday, sales start July 28 (Update)