- In an email to employees, Tesla CEO Elon Musk said the company is producing an average of 900 Model 3 cars per day.
- Tesla hopes to reach a production rate of 7,000 cars per week.
- Shares in Tesla rose for the first time in seven days on the news, after analysts had become increasingly bearish on the stock.
Tesla shares rose 1.4% Thursday after CEO Elon Musk sent an e-mail to all employees saying the electric vehicle maker is close to reaching its target production numbers for the Model 3 this quarter.
The e-mail's optimistic tone helped Tesla shares turn positive for the first time in seven days. The company added nearly $500 million to its market cap, reaching around $34.6 billion, in early trading on Thursday.
Here's what Musk wrote to employees:
Subj. Exciting Goal!
Date: May 22, 2019
As of yesterday we had over 50,000 net new orders for this quarter. Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!
In order to achieve this, we need sustained output of 1,000 Model 3's per day. Almost all parts of the Model 3 production system have exceeded 1,000 units on multiple days (congratulations!) and we've averaged about 900/day this week, so we're only about 10% away from 7,000/week.
If we rally hard, we can do it!
Thanks for your hard work
Analysts had been losing confidence in Tesla's stock during the past week as the company entered cost-cutting mode. In an email to employees obtained by CNBC last week, Musk stressed the need for "hardcore" measures to cut spending.
Citi analysts wrote Tuesday that Tesla's shares could fall more than 80% to $36, citing "lingering demand/FCF (free cash flow) concerns." In a private call with Morgan Stanley clients Wednesday, Morgan Stanley research analyst Adam Jonas said he was skeptical about the company's ability to grow, CNBC reported.
"Tesla is not really seen as a growth story," Jonas said on the call, which CNBC heard in a recording. Today, "It seems like a distressed credit and restructuring story."
Loup Ventures co-founder Gene Munster gave the stock its latest downward revision Thursday. Munster expected the company would miss its delivery expectations this year especially as trade tensions drag on between the U.S. and China. He lowered 2019 delivery estimates about 10% to just 310,000 vehicles compared to guidance between 360,000 and 400,000.
While Musk's email to Tesla employees shed a light on production progress, logistics remains another challenge for the company in meeting its second-quarter delivery goals.
In the first quarter of 2019, Musk said the increase in overseas business stressed the company's logistics operations. Half of Tesla's global deliveries happened in the final 10 days of the first quarter.
Correction: Because of a transcription error, the original version of this story had typos in the date line and subject line of Musk's email.