Tesla Slumps As Model 3 Disappoints Despite "All-Time Best Quarter" For Model S, X Deliveries

Three months after Tesla disappointed shareholders by missing "bigly" on Q2 deliveries, Elon Musk has learned from his mistake, and reported Tesla's "all time best quarter" for Model S and X deliveries in Q3, with a total of 26,150 vehicles, more than the 25,000 expected, of which 14,065 were Model S and 11,865 were Model X, reversing the Q2 drop in the car which has received increasingly mixed consumer reviews.

Combined, Model S and X deliveries represented a 4.5% increase over Q3 2016, Tesla's previous best quarter, and a 17.7% increase over Q2 2017.

Commenting on the result, Tesla said that "we had previously indicated that second half Model S and X deliveries would likely exceed first half deliveries of 47,077, but we now expect to exceed that by several thousand vehicles. In total, we expect to deliver about 100,000 Model S and X vehicles in 2017, which would be a 31% increase over 2016." It added that "in addition to Q3 deliveries, about 4,820 Model S and X vehicles were in transit to customers at the end of the quarter. These will be counted as deliveries in Q4 2017."

However, what once again stumped the company, and the reason why the stock is currently lower in the after hours, is because Tesla also announced just 220 Model 3 deliveries, well below the 300-400 expected by Baird's auto analyst, having produced 260 Model 3s in the quarter.

Worse, whereas in August - less than two months ago - Tesla predicted it would build more than 1,500 Model 3s in the third quarter; it actually made... just 260.

Commenting on this unexpected slowdown, Tesla said that "Model 3 production was less than anticipated due to production bottlenecks. Although the vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at high rate, a handful have taken longer to activate than expected."

Still, well aware how the market reacted last time Tesla disappointed, Musk was clear to hedge by saying that "it is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term."

As a result, despite the "all-time best quarter" in company delivery history, TSLA shares slumped on the news, down 16% from recent highs, on worries whether the disappointing Model 3 deliveries were indeed a function of "production bottlenecks", Musk's traditional go to excuse, or if the CEOs is lying and there just wasn't enough demand, now that Tesla is explicitly cannibalizing its own sales.