Tesla said Wednesday that it won't hit its goal of producing 5,000 of its all-new electric Model 3 sedans a week by the end of the year. Instead, the electric-car maker now expects to reach that figure in March.

The Model 3 is a key part of Tesla's plan to reach a broader market. It currently sells Model S sedans and Model X SUVs that can run more than $100,000.

Tesla was flooded with orders for the Model 3 when it began accepting them in the spring of 2016. But once production started over the summer, the automaker began experiencing issues.

“Our primary production constraint has been in the battery module assembly line at Gigafactory 1,” Tesla said in a shareholder letter Wednesday as it released its quarterly results.

Battery building wasn't the only issue. The automaker said that body-shop welding and final vehicle assembly lines are running at half the speed of the other production lines, including the drive unit and paint shop.

CEO Elon Musk wrote last week on Twitter that the automaker was in "production hell," but in a conference call Wednesday he said that the company has "a clear path" to meet the revised production plan.

The delay may not scare off potential Model 3 buyers for now, said Ed Kim, vice president of industry analysis at AutoPacific, an automotive research firm.

“A three-month delay isn’t the end of the world, but not much further down the road, customers will have a lot more choice in long-range EVs,” Kim said. “The Europeans will have comparably priced long-range EVs arriving over the next few years, and these will have the benefit of their respective makers’ engineering prowess and excellence in quality and fit and finish.” 

But once those competitors show up in the next few years, “I am concerned about later [Tesla] reservation holders who will have a lot of appealing EV choices that didn’t exist when they made their fully refundable reservations,” Kim said.

Musk said that the Model 3 sedan would be “far easier to build this car than the Model S, and vastly easier than the Model X.”

He wouldn't address the current Model 3 production levels. “There’s too much uncertainty,” Musk said. “We’ll be in the thousands [of units a week] by the end of the year.”

Kim said quality is also crucial for the Model 3.

"Unlike Model S and Model X owners, who tend to be forgiving of their vehicles’ flaws because they are such fans of the brand, Model 3 owners will be much more mainstream and will have expectations of durability, quality, and reliability comparable to existing top-tier automakers,” he said.

Tesla also Wednesday said it delivered a combined 25,915 units of the Model S and Model X, along with 220 Model 3 sedans, in the third quarter.  The automaker delivered 24,500 Model S and Model X units in the same quarter in 2016.

Tesla Model 3
The Tesla Model 3.

Read the complete Tesla Model S and Model X road tests.