- Tesla shares dropped Thursday after Consumer Reports said it could no longer recommend the Model 3 due to a variety of problems the publication's members have raised.
- A Tesla spokesperson told Consumer Reports the company had already made "'significant improvements' to correct the issues that Model 3 owners raised."
- Watch Tesla trade live.
Tesla shares dropped more than 3% Thursday, below $300, after Consumer Reports said it could no longer recommend the Model 3 due to a variety of problems the publication's members have raised.
"Consumer Reports can no longer recommend the newest Tesla — the Model 3 electric sedan — because members say they've identified a number of problems with their cars, including issues with its body hardware, as well as paint and trim. CR members reported these results in our annual reliability survey, which includes data on about 470,000 vehicles," Patrick Olsen of Consumer Reports said.
A Tesla spokesperson told Consumer Reports the company has already made "'significant improvements' to correct the issues that Model 3 owners raised" with the publication.
Olsen highlighted the Model 3's importance to the company.
"The Model 3 is a critical car for Tesla," he wrote.
"It's the automaker's first attempt at a true mass-market electric vehicle (EV), and its long, bumpy launch into the consumer market starting in late 2017 was greeted by EV enthusiasts with a mixture of anticipation and frustration. The Model 3 rollout was plagued by numerous production delays and extraordinarily long wait times for customers who put down orders more than a year before delivery."
The report comes one month after Tesla reported quarterly earnings that fell short of analysts' estimates, though the company's revenue topped expectations.
The Elon Musk-led company told shareholders it would "continue to produce Model 3 vehicles at maximum production rates throughout 2019."
Tesla said it delivered 63,359 Model 3 vehicles to North American customers during the fourth-quarter, and in January began producing Model 3 vehicles for Europe and China. The two markets are considered important growth opportunities for the company.
Prior to the report, RBC Capital Markets analyst Joseph Spak told clients he thinks Tesla has "underestimated the cost curves and manufacturing side of the equation" for the Model 3.
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