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It’s not clear what is the bigger piece of bad news in today’s third quarter earnings report from Tesla (TSLA).

You pick. Was it the amazing cash burn or the admission that the company still couldn’t produce its Model 3.

The second? Okay.

Tesla continues to have problems producing its key Model 3 car.

Tesla reported today that it had produced just 260 of the $35,000 Model 3 in the quarter. The company had earlier estimated that it would produce 1,500.

In addition the company pushed back its schedule for ramping production of the Model 3. What had been a goal of 5,000 Model 3s a week by the end of 2017 is now 5,000 by the end of the first quarter of 2018. Almost half a million people put down $1,000 each to reserve a Model 3, but so far only employees and close friends of the company have received their vehicles.

Now on to Item #1, the cash burn.

Those production delays contributed to a eye-popping $1.4 billion cash burn during the quarter. The company showed a $619 million loss in the period (although revenue climbed 30% to $2.98 billion) and saw its balance of $3.53 billion in cash and cash equivalents fall to $3.04 billion at the end of September from $3.53 billion at the end of the second quarter. Gross margin, which includes the sale of zero emission vehicle credits, fell to 18.7% from 25% in the third quarter of 2016.

How bad are the production problems?

Last month, CEO and Tesla founder Elon Must said the Model 3 was “deep in production hell.” And today the company said it would cut production of its up-market Model S and Model X cars in order to devote more resource to the mass-market Model 3. The company said it planned to produce “about 10% fewer” units of its Model S and Model X models in the fourth quarter. The problem this quarter, the company has indicated, has been a bottleneck at the Gigafactory 1 in Nevada that produces batteries for the electric vehicles. Some of its production lines, including those for drive units, seats, paint and stamping, have the ability to make more than 1,000 cars per week during “burst builds of short duration,” the company said today. But battery pack assembly, body shop welding and final assembly are able to make about half as much.

Remarkably given the magnitude of the bad news, Tesla shares fell only modestly with he stock down just 3.15% before the report and 3.76% in after-hours trading on the news.

Investors and traders are inclined, I’d say, to give the company the benefit of the doubt and more time to reach its goals.

What could change that? Another big round of fund raising that either piled debt on the company’s balance sheet or diluted existing shareholders (either now through an equity offering (unlikely) or through another convertible debt issue.) And, of course, another miss on production targets for the Model 3.

The harshest words I’ve seen from Wall Street today after the report come from Tony Hughes, Managing Director and Senior Auto Economist at Moody’s Analytics.  “Judged as a car company, Tesla is currently producing a tiny volume of cars in unpopular segments with an uncompetitive unit cost for the mass market,” he wrote. “Residual prices and sales data clearly show that American consumers want to drive trucks and large SUVs powered by cheap gasoline, not small electric sedans…Tesla needs to quickly learn how to produce cars cheaply or face massive sunk costs in its nascent energy storage business.”