Tesla hits a snag with Model 3 production

In a note sent to investors on Tuesday, Tesla (TSLA) said in a regulatory filing that it manufactured only 260 Model 3s in the third quarter, well short of the company's target.

Production of the eagerly awaited Model 3, which is half the cost of Tesla's previous models, began in July. Tesla CEO Elon Musk said at the time he hoped to make 1,500 Model 3 sedans between July and September.

The company delivered just 220 Model 3s in the quarter. Tesla's Model S and Model X deliveries beat expectations, rising 4.5 percent over the year-ago period as the automaker shipped nearly 26,000 of the two vehicles. 

The company on Tuesday attributed production issues with the Model 3 to "bottlenecks" and said some systems at its California plant and Nevada factory are not yet operating at a high enough rate.  

"It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain," Tesla said in the filing. "We understand what needs to be fixed, and we are confident of addressing the manufacturing bottleneck issues in the near-term."

Musk acknowledged this summer that ramping up production for the Model 3 would be tricky, warning at an employee event that Tesla was about to embark on "at least six months of manufacturing hell." He also said the company was pushing to make 5,000 Model 3 cars per week by December.