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UPDATE 2-Tesla deliveries rise in 3rd qtr, but Model 3 faces 'bottlenecks'

(Adds production forecast details, background; updates share price)

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

Tesla had said in its second-quarter financial report that it expects "to achieve a rate of 5,000 Model 3 vehicles per week by the end of 2017." The automaker also said it expects at some point in 2018 to further ramp to a rate of "10,000 Model 3 vehicles per week," and an annual production rate in excess of 500,000 vehicles.

"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.

But 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 closing price on Nasdaq of $341.53. (Reporting by Nick Carey in Detroit, additional reporting by Bangalore newsroom; editing by Leslie Adler and G Crosse)