Business / Motoring

Problems put brakes on Tesla's bid market

(Agencies) Updated: 2016-07-11 07:24

Tesla Motors' goal of shaking up the automobile industry has hit a fresh speed bump as disappointing car production suggests a longer wait before it reaches profitability.

Already facing questions over a fatal crash involving its self-driving system and a controversial proposed merger with ailing solar power firm SolarCity, Tesla has now slashed its 2016 delivery targets after second-quarter output lagged behind expectations.

Tesla delivered only 14,370 vehicles in the second quarter, below the 17,000 originally forecast, according to figures released over the weekend of July 2-3.

As a result, Tesla trimmed its full-year delivery forecasts to 79,000 from the range of 80,000 to 90,000.

The revised targets further cloud the record of Tesla and its founder Elon Musk, who has vowed to remake America's roads by mainstreaming electric cars.

Earlier this year, Musk announced an ambitious goal to produce 500,000 electric cars a year by 2018, which would take Tesla from being a niche producer of luxury sedans to a mainstream competitor in the auto industry.

Tesla shares dropped 1.2 percent Tuesday to $213.98.

"While we are modestly disappointed by the number, we are not shocked," said a note from Deutsche Bank. "This is not the first time Tesla has missed an aggressive target."

The weak figures come on the heels of news recently that US auto safety regulators opened a preliminary investigation into Tesla's "Autopilot" self-driving technology after a fatal crash in Florida involving a Model S.

Preliminary reports indicated that the crash happened when a tractor-trailer made a left turn in front of the Tesla at an intersection. Tesla said neither the driver nor the self-drive system noticed the truck and the vehicle ran under the truck, killing the Tesla driver.

Some auto experts said the accident showed Tesla was deploying self-driving mechanisms before they are ready.

"My concern is that this was an avoidable accident," said Mary Cummings, who heads the Humans and Autonomy Laboratory at Duke University. "My concern is that this will set the industry back."

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