Chinese Tariff Cuts & Model 3 Production Ramp Could Lift Tesla To Monster Q4

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Stock markets around the world are heaving a sigh of relief today, as the US and China agreed to a 90 day cooling off period in their trade war, which has seen China slap a 40% tariff on cars imported from America. That action has put a dent in Tesla sales in China, as its cars now cost significantly more than similar vehicles produced domestically.

Tesla Model 3

By some accounts, Tesla sales plunged 70% recently, but that’s a claim that Tesla denies. Whatever the actual figures may be (Tesla plays its cards close to its vest when it comes to reporting sales numbers by country and by month), it would be fatuous to assume the tariffs have not had an effect on sales. In response, Tesla has cut prices on the Model X and Model S vehicles it sells in China by as much as 26% in order to offset somewhat the crimp those tariffs have put in sales.

Tweeting from the G20 conference in Buenos Aires this weekend, the US president had good news on tariffs.

What that means exactly is ambiguous at this moment. Is it “reduce” or “remove,” and if the former, how much of a reduction will there be? Details should be forthcoming soon.

Monster Q4 Predicted

Whatever the specifics may be regarding China and tariffs, none of that unpleasantness has kept Greentech Media from predicting a monster fourth quarter for Tesla. But who isn’t predicting that? Tesla’s sales are always bigger in the last quarter of the month generally and December is generally a monster quarter in China, with this year far above previous ones for both of those expectations. Predictions are worth exactly what we pay for them, of course, but GTM seems to have access to some insider information that we cannot independently verify, so we’ll just add it to the pile of bullish indicators. Here’s what the outlet has to say:

“Current estimates for Q4 2018 are production of 60,750 Models 3s and 25,116 Model S+X combined, for a total of 85,866. Total projected deliveries for the quarter are 61,976 Model 3s and 27,872 Model S+X combined, for a total of 89,848. … If accurate, it means that Tesla has been able to sustain a Model 3 run rate of roughly 5,000 units a week (versus 4,300 units per week last quarter), and perhaps that a profitable $35,000 Model 3 is within reach.”

CleanTechnica reached out to Tesla for a comment on the GTM story but got no reply, which in itself may have some significance. If the claims were wildly inaccurate, the company would likely issue a denial. Saying nothing often speaks volumes.

Bloomberg Model 3 Tracker

Bloomberg maintains its own Model 3 tracker, which has proven fairly accurate at predicting how many cars Tesla is manufacturing at any particular time, but it is still a guesstimate. Updated as of December 3, it claims Tesla has built a total of 132,306 Model 3s and is producing 4,152 of them each week. The fact that Bloomberg does this at all is an indication of how significant the Model 3 is. Bloomberg does not have similar trackers for the Chevy Bolt, Nissan LEAF, BMW i3, Jaguar I-PACE, or Auto e-tron, for instance.

Taking all of the predictions together and assuming they are more or less accurate, the likelihood is that Tesla will once again astound and confound its skeptics in the fourth quarter and post significant profits two quarters in a row. We won’t know for sure until the Q4 earnings call in early February, but it looks like those of you who made the leap of faith and bought shares in Tesla when the price dipped a few months ago will be feeling pretty satisfied when the final numbers are revealed.

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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