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Tesla production pause adds to Model 3 concerns

From Reuters - April 17, 2018

(Reuters) - Tesla Inc (TSLA.O) shares fell as much as 2 percent in premarket trading on Tuesday, a temporary halt in production of its Model 3 sedan adding to nerves about the electric car makers consistent failure to keep its promises on vehicle output.

Model 3, the most affordable sedan from Tesla, is seen as crucial to the companys future profitability, but has so far missed several production goals.

The car maker said the halt - the second since February - was to improve automation and systematically address bottlenecks to increase production, a regular move by car companies.

While temporary suspensions to production, in order to improve manufacturing engineering/line rates, are not uncommon in the auto industry, particularly during a ramp-up, we believe that the news will once more be taken negatively by the market; providing more honey to the bears, Evercore ISI analysts said.

Teslas use of robots to assemble Model 3s had led to more complexity and delays, which billionaire Chief Executive Elon Musk acknowledged on Friday in a tweet: Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.

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