Tesla stock rose more than 8 percent Wednesday, on track for its best day of trading in over two years, after the company revealed it is nearing its Model 3 weekly production rate and shareholders backed Elon Musk as chairman and CEO.
Musk told shareholdersit is “extremely likely” Tesla will hit a weekly Model 3 production rate of 5,000 cars by the end of the month. Tesla has been struggling with production issues and faces concerns about its finances.
Shares of Tesla were heading toward its best day since November 4, 2015, when the company’s stock closed up 11.17 percent.
The electric car maker has struggled to meet its own production goals for Model 3, pushing back its forecast steadily since Musk claimed in July that Tesla would likely be making 20,000 per month by December. Musk later lowered the forecast for the first quarter of this year — to 2,500 per week. Tesla fell short of the diminished goal, reporting a peak rate of 2,270 per week at the end of the first quarter in May.
Delays have been frequent throughout Model 3 production, with Musk saying in November a supplier “really dropped the ball” at the Nevada Gigafactory. A CNBC report about Tesla facing potential delays from faulty parts coming off the line also sent jitters through the market. Also, CNBC last week quoted workers as saying Tesla’s factory paint shop in Fremont, California, has had several fires in the last four years, and the fires causes more problems than Tesla let on.
When Tesla unveiled its Model 3 in 2016, the company touted its accessible price and spoke of the car as one that would drive future profits by making Tesla electric vehicles a mass-market staple. Despite extensive delays in Model 3 deliveries, the car is now the best-selling electric car in the U.S. More than 450,000 people have already reserved that vehicle, paying $1,000 refundable fees to do so.
Beyond the Model 3, the company has been grappling with over-automation, tensions with suppliers including Panasonic and turnover of executive talent. It has been spending money on improvements at its Fremont plant and at the Gigafactory, where the batteries are produced.
Tesla’s head of worldwide sales, Robin Ren, announced Tuesday night that the company plans to build its first factory outside of the U.S. — in Shanghai. The Chinese government recently announced that it will allow foreign electric vehicle makers to fully own auto factories there. Tesla’s move into China is hotly anticipated, as building some vehicles there would allow the company to avoid import tariffs.
His comments came after shareholders voted to strike down two proposals intended to split up the CEO and chairman roles held by Musk and shake up the company’s board. The latter proposal would have removed three Tesla board members. Instead, all three were re-elected: Venture capitalist Antonio Gracias, Elon Musk’s brother Kimbal Musk and 21st Century Fox CEO James Murdoch.
Musk also said the electric car maker will soon produce more batteries at its massive Gigafactory than all other electric vehicle companies combined, including those in China.
As of Tuesday’s close, shares of Tesla have risen 15 percent from this year’s low of $244.59 per share hit on April 2.