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UPDATE 1-Tesla deliveries rise in 3rd qtr, but Model 3 faces 'bottlenecks'

(Adds details of production, deliveries, company comment, background)

Oct 2 (Reuters) - Luxury electric vehicle maker Tesla Inc said on Monday its deliveries rose 4.5 percent in the third quarter from the prior-year period, but said "production bottlenecks" had left the company behind its planned ramp-up for the new Model 3 mass-market sedan.

Tesla said it delivered 26,150 vehicles in the third quarter, including 14,065 Model S vehicles and 11,865 Model X cars, up 17.7 percent from the second quarter of this year.

The company, based in Palo Alto, California, delivered just 220 Model 3 sedans and produced 260 during the quarter. It began production in July of the Model 3, which starts at $35,000, half the starting price of the Model S.

Tesla launched production of the Model 3 in July and said in early August that it was "confident" it could hit production of just over 1,500 cars per week in the third quarter.

"It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain," Tesla said in a statement. "We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term."

Tesla said it was on track to deliver around 100,000 S and X models this year.

The production figures for the Model 3 are also well below the company's earlier projections in a regulatory filing, when it said: "We expect to achieve a rate of 5,000 Model 3 vehicles per week by the end of 2017."

The company rushed this year to launch the Model 3 sedan and quickly ramp up production to reach a target of 500,000 cars per year in 2018 Tesla said on Monday that a handful of systems at its Fremont, California, car plant and its battery factory in Reno, Nevada, "have taken longer to activate than expected."

The automaker said 4,820 Model S and X vehicles were in transit to customers at the end of the third quarter and would be counted with its fourth-quarter figures.

In after-market trading, Tesla shares fell more than 1 percent to $337.84, from the close on Nasdaq of $341.53.

(Reporting by Nick Carey in Detroit; Editing by Leslie Adler)