Shares of electric car maker Tesla dropped as the company confirmed issues related to battery shortage.
The company's popular Model S, a fully electric luxury sedan, has garnered a lot of attention in the auto market and it seems that Tesla is also focusing on increasing the sales for the car.
Elon Musk, Chairman and CEO of Tesla recently announced that the company delivered just over 5,500 units of the Model S in Q3 2013, which included more than 1,000 deliveries to European customers. Tesla also announced that it plans deliveries of 6,000 units in the current quarter. However, the delivery of the Model S in Q3 2013 and the company's projected delivery of the vehicle in Q4 2013 fall short of analysts' estimates.
Musk blamed shortage of battery for the lack of production of the Model S. However, the company seems to be working on meeting the short supply of batteries used in the Model S.
"Under this new agreement, Panasonic will increase its production capacity of automotive-grade lithium-ion battery cells to supply Tesla with a minimum of 1.8 billion cells over four years, more than three times our previous agreement. This number should be viewed as more of a floor than a ceiling," said Elon Musk and Deepak Ahuja, Chief Financial Officer at Tesla in a letter to shareholders.
The company also announced that it plans to expand in the near term. Tesla is said to be working on building a new factory that will produce battery packs needed for its cars. However, the company did not reveal details of when and where the factory will be built. Model S shipments to China will begin in January 2014 with the expected sales starting in February 2014.
Usually, electric cars come at a hefty price tag. Tesla also announced its plans to produce a comparatively cheaper electric car by 2016.
Tesla may have strong expansion plans and the company will first have to sort out battery shortage issues in order to achieve its target.
Shares of the car maker plunged around 14.5 percent after the company made announcement of its future plans on Tuesday, November 5.
On Friday, the shares were trading at $135.99 (down 2.71 percent) around noon.
