Tesla shares rise as Musk says Model 3 set to hit target

(Reuters) – Tesla Inc (TSLA.O) shares headed for their best day in more than two years on Wednesday after Chief Executive Elon Musk said the car maker was now churning out 500 of its Model 3 sedans a day and should achieve its 5,000 per week target by the end of June.

The move overturned around a third of the impact of a rocky few months for Tesla, which has seen shares fall by a quarter from a peak last September as it battled with production delays and reports of a series of car crashes.

Speaking at the company’s annual shareholder meeting on Tuesday, Musk offered teasers for upcoming projects, welling up when he spoke of the company’s vehicles being made “with love” and said his production lines have demonstrated the ability to make 3,500 Model 3 vehicles per week.

Tesla’s future profitability hinges on ramping up output of the affordable sedan but the company has fallen short of a series of targets.

“The market is starting to give Elon the benefit of the doubt that he will finally meet his production goal even though it is now six months late,” Tigress Financial Partners analyst Ivan Feinseth said.

In April, Tesla said it was making 2,270 vehicles a week.

Musk himself has also stung Tesla shares by warring with critics and journalists on social media and recently declining to answer questions from Wall Street analysts about Tesla’s capital requirements, saying they were “boring”.

The front hood logo on a 2018 Tesla Model 3 electric vehicle is shown in this photo illustration taken in Cardiff, California, U.S., June 1, 2018. Picture taken June 1, 2018. REUTERS/Mike Blake

A shareholder proposal came up for vote on Tuesday that required Musk to give away his chairman role. More than 80 percent of shareholder votes were against the proposal.

“We have no corporate governance problem with Mr. Musk’s dual titles, as ultimately it is about delivering the vehicles profitably,” CFRA analyst Efraim Levy said.

“We do, however, wish to see more discipline with the CEO’s pronouncements, but don’t expect much improvement there.”

Tesla also showed a design sketch of the upcoming Model Y SUV although little could be seen in the shadowy image and Musk teased that the car might not even have a steering wheel, stoking some fans’ hopes that the car could be fully autonomous.

He said the vehicle would be unveiled in March and begin production in 2020 along with Tesla Semi and the new Roadster.

Throughout its history, Tesla has repeatedly missed aggressive start-of-production targets, and auto experts believe that launching production of three new vehicles within two years is extremely unlikely.

Reporting by Supantha Mukherjee and Sonam Rai in Benagluru; Alexandria Sage in San Francisco; editing by Patrick Graham

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