By Alexandria SageSAN FRANCISCO, March 29 (Reuters) - Tesla Inc shares rose on Thursday ahead of the expected release next weekof the company's quarterly auto production data, while a seniorexecutive urged workers at the automaker to hit a weeklyproduction target of 2,500 Model 3 sedans by the end of March.Quickly ramping up Model 3 production is crucial for theSilicon Valley electric vehicle maker. The company'sprofitability depends on delivering the new sedans to customerson a waiting list that Tesla has said now numbers about 500,000advance reservation holders.
Tesla shares recovered to $266.13, up 3 percent, Thursdayafter a sell-off prompted by a Moody's debt downgrade and newsthat safety regulators are investigating a Model X-involvedfatality.In an email to employees viewed by Reuters, Tesla SeniorVice President of Engineering Doug Fields wrote that productionof Tesla vehicles is "well into the 200's on every single line."Field gave reasons why Tesla needs to get to 2,500 vehiclesa week, including: "There are an incredible number of people who'short' Tesla stock, which means they profit when we fail. Andlately the story is the same: 'Tesla can't do high-volumeproduction'. I find that personally insulting, and you shouldtoo. Let's make them regret ever betting against us."Tesla must "quickly break through the 300 cars/day barrier,and keep going," the email continued.Tesla did not immediately comment on the email, which waspreviously reported by Bloomberg News.Doubts that Tesla could meet its production targets andconcerns about cash reserves were behind Moody's downgrade ofTesla last week. The ratings agency cited the likelihood of anew capital raise, which it estimated at over $2 billion, inpart to cover approximately $1.2 billion in convertible bondscoming due by March 2019.
The downgrade, together with a fatality involving a Model Xthat is currently being investigated by safety regulators, sentshares down 12 percent for the week, even after Thursday'srebound. That made it Tesla's worst week in ninemonths. Tesla shares are still above the $255.73 level, the pricewhen Tesla last announced a capital raise in March last year toraise $1.15 billion.Moody's and other analysts have predicted Tesla will soonhave to sell more shares to replenish cash reserves and pay forexpansion of Model 3 production and new vehicles such as theTesla Semi electric commercial truck and a compact sport utilityvehicle.As of Dec. 31, Tesla had $3.4 billion in cash andsecurities. Moody's estimated approximately $500 million in cashwas needed for normal operations and forecast cash burn thisyear of about $2 billion.Beyond the $2 billion that Moody's predicted Tesla wouldseek in the near-term, it said the company would likely need toraise additional capital during the second half of 2019.Chief Executive Elon Musk has promised to build 10,000 Model3s per week by some point in 2018 after meeting a 5,000-per weektarget by the end of the second quarter. Tesla built only 2,425Model 3s in its fourth quarter. Barclays analyst Brian Johnson warned in a note to investorson Thursday that Tesla could engage in a Model 3 "burst rate" ofproduction that could send shares up, but would not besustainable. (Writing by Alexandria Sage and Joe WhiteEdting by Tom Brown)
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