When Elon Musk speaks, you never know what words are going to come out of his mouth. Sometimes I wonder if Elon himself knows. He has a way of blurting stuff out that is rather engaging but must give company lawyers fits. Words are especially important when it comes to the impact they may have on the price of a company’s stock. Language that may move valuations one way or the other are carefully monitored by the SEC.
Can words really affect stock prices that much? Oh, yeah. After Tesla started sending notices to Model 3 reservation holders saying the delivery date of their cars was being pushed back by 6 months or so late on February 7, Tesla’s stock price plunged 7% the next day. That’s about $3.5 billion in value wiped out by a few simple words, if we do presume that was the cause of the price drop (note: the NASDAQ and DOW were also falling hard in that time period).
During the Q4 earnings call last week, Elon had this to say to the assembled multitude: “[We] expect the new automated lines to arrive next month in March. And then it’s already working in Germany so that’s going to be disassembled, brought out to the Gigafactory and reassembled, and then go into operation at the Gigafactory. It’s not a question whether it works or not. It’s just a question of disassembly, transport, and reassembly. So we expect to alleviate that constraint. With alleviating that constraint, that’s what gets us to the roughly 2,000 to 2,500 unit per week production rate.”
On Friday, Tesla walked that back in a filing with the SEC, in which it offered the following clarification:
“The ‘2,000 to 2,500’ units per week cited in this comment refers solely to the capacity of the additional automated battery module manufacturing equipment that is currently located in Germany, and not to Tesla’s total Model 3 production run rate or to the capacity of the automated battery module equipment that is already present at Gigafactory 1.
“Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is not dependent on the additional equipment that is currently located in Germany, as that equipment is expected to start ramping production during Q2 2018.
“With respect to battery module production, Tesla’s ability to meet its target of 2,500 per week by end of Q1 2018 is dependent only on the equipment that is already present at Gigafactory 1, as well as the incremental capacity that is currently being added through the semi-automated lines that were also discussed during the conference call.”
The SEC notification reconfirmed the projections contained in the company’s February 7 letter to investors. Tesla says it still expects to manufacture 2,500 cars a week by the end of Q1 in March and be at the 5,000 cars per week level by the end of Q2 on June 30 — subject to unforeseen circumstances altering those projections. “We’ll see,” said the Zen master.
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