No joke: Tesla shares plummet as Model 3 production fears grow

Tesla investors aren't laughing after Elon Musk's April Fools' Day joke that the electric-car maker went bankrupt, as months of problems making the mission-critical Model 3 sedan risk compromising the company's cash reserves.

After the steepest monthly drop in more than seven years, Tesla shares fell as much as 8.1 per cent on Monday, while unsecured bonds the company issued in August traded near record intraday lows. Early this week, analysts widely expect the company to report that Model 3 production trailed its projection of 2,500 units during the last week of March.

The Model 3 woes are a greater risk to Tesla than the fatal accident involving a Model X driver using Autopilot, a related US regulator's investigation and a separate Model S recall, all of which have weighed on investor sentiment since last week. Analysts at Jefferies Group LLC and Moody's Investor Service estimate that Tesla may need to raise $US2 billion to $US3 billion ($2.6 billion to $3.9 billion) in capital. That's in large part because the slow build of Model 3 has limited the company's return on investments made to build its first mass-market car.

"What seemed to be a short-term issue has now been going on for more than three quarters," Philippe Houchois, an analyst at Jefferies Group, said Monday on Bloomberg Television. "Management will need to address a proper funding plan" and "reassure investors that they've got the funds to even potentially announce some further delay in the ability to ramp the production."

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