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Tesla Denies ‘Misleading’ Reports Model 3s Are Being Built By Hand

Tesla is denying reports from earlier this month suggesting the electric vehicle maker is building Model 3s by hand because of a failure to fully automate production.

Reports implying that Tesla is forced to build vehicles manually because of a failure to automate production are “wrong and misleading,” the company said Monday in a statement. Tesla claims every automaker uses manual and automated processes to build their cars.

The Silicon Valley company’s shares took a hit after an Oct. 6 Wall Street Journal report noted investors and analysts were unaware that Tesla was building major portions of the Model 3 by hand as recently as September. Tesla vigorously denied the accusation and claimed WSJ has “relentlessly attacked Tesla with misleading articles.”

“Contrary to the Journal’s reporting, this is not some revelation,” the statement said. “As we’ve always acknowledged, it will take time to fine-tune the line for higher volumes, but as we have also said, there are no fundamental issues with Model 3 production or its supply chain, and we are confident in addressing the manufacturing bottleneck issues in the near-term.”

Tesla built 260 Model 3s between July and September, despite predicting in August that it would produce more than 1,500 before the end of the fourth quarter. Production on the highly touted vehicle was expected to expand from 100 cars in August to 1,500 in September, and plateau to 20,000 per month in December.

CEO Elon Musk plans to eventually build 20,000 cars per month – Tesla will have to ramp up production dramatically if it hopes to hit the December mark. Tesla produced roughly 85,000 vehicles in 2016 and plans to make half a million in 2018.

Tesla shares dropped 2.2 percent after Monday’s market open. Goldman Sachs reaffirmed is sell rating and noted that Tesla’s future fortunes are directly related to the company’s ability to hit its production deadlines on the Model 3.

“We continue to maintain our more cautious Model 3 ramp, which is far below company targets,” Goldman analyst David Tamberrino wrote in a note to clients on Oct. 3. He criticized the company in February, writing in a memo at the time that “our concerns are more near-term oriented with respect to operational execution on the Model 3 launch, an unproven solar business, and cash needs.”

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