Tesla Motors Inc (NASDAQ:TSLA) shares continued to get killed in trading on Thursday, falling another 8% as investors begin to understand reality. Undoubtedly this is what CEO Elon Musk was concerned about when he said recently that he felt like the automaker’s stock price was higher than they deserved.

Tesla Motors

Tesla does good, but not good enough

Even though Tesla Motors Inc (NASDAQ:TSLA) beat its own guidance for the number of vehicle delivers it would make during the third quarter, investors still weren’t happy because they expected even more. Stifel analysts James J. Albertine and Lucy Webster say sentiment appears to be returning to reality as investors begin thinking again about the automaker’s expected pace of growth, investments and expansion.

According to Albertine and Webster, Tesla’s results were “impressive” compared to the company’s guidance. It generated $26 million in cash flow—a new record for the company. Also it exceeded guidance for Model S deliveries and brought gross margin to 22% ex-credits, compared to 13% in the second quarter. All in all, it did exactly what investors wanted, but it still wasn’t good enough.

Tesla deals with battery problems

The biggest issue holding Tesla Motors Inc (NASDAQ:TSLA) back right now is battery supply. The automaker did expand its agreement with Panasonic last week, but the big question mark right now is whether that will be enough to keep up with soaring demand. Musk said he believes that battery demand will be met in 2014, although they plan to partner with additional battery cell suppliers after 2014 if they see year over year production increases.

He also said on this week’s investor call that they are thinking about building the world’s biggest battery factory, which would be a big plus because the company would have more control over supply for its batteries.

Tesla on vehicle demand, deliveries

Tesla Motors Inc said they’re still expecting the first Model X crossovers to be delivered late next year, although they don’t believe production will be similar to that of the Model S until the middle of the following year. Currently they are churning out about 550 Model S sedans weekly.

The automaker also started accepting reservations for the Model S in Beijing during the September quarter and plan to start delivering those vehicles in the first quarter of next year. Management said the wait time in China has been growing. They said they still expect to see 66% international deliveries by the end of next year.