In the final quarter of 2018, Tesla delivered just over 90,000 cars. In the first quarter of this year, that number dropped to 63,000, a number that sent shockwaves through Planet Tesla and drove stock analysts into a tizzy. Many people don’t seem to know or care that Tesla only reports a car as sold when it has been paid for by the customer and officially delivered. 10,000 or more Model 3’s were in transit to Europe at the end of March or sitting on docks waiting to be delivered.
The numbers were not as good as Q4 2018, to be sure, but weren’t as bad as many made them out to be. In fact, the Model 3 still had far more sales than the 2nd best selling midsize luxury car, accounted for 15% of luxury car sales in the USA, was the 3rd best selling car in California, and was the 13th best selling car in the USA.
Business Insider reports that it has seen a copy of a company-wide email sent by Elon Musk on May 23, an email that first leaked out of China. In it, Musk exhorts his troops to give maximum effort in the remaining weeks before the second quarter ends. If they do, Musk says, the company has a “good chance” of breaking the quarterly delivery record set at the end of last year. “In order to achieve this [record], we need sustained output of 1,000 Model 3’s per day,” he wrote. Characteristically, Tesla has declined to respond to a request for clarification from BI.
Tesla shares have been hammered lately, largely as a result of the company reporting a substantial loss in Q1 after two quarters of profits. The latest round of tariffs in the on-again, off-again US–China trade war haven’t helped either. Model 3’s manufactured goods in Fremont are now subject to a 25% import duty in China as the two superpowers play tit for tat on the international stage.
That makes Tesla’s decision to build a new Chinese factory in Shanghai look all the more prescient. Everybody with an IQ greater than broccoli knows China is ground zero for the electric car revolution. Despite some shrinkage in 2018, it is still by far the largest new car market the world has ever known and the Chinese government is firmly committed to electrifying its transportation sector.
Tesla expects to begin producing Model 3s in China before the end of this year — a remarkable achievement in itself — and that should be the end of trying to attract Chinese customers while it faces challengingly high prices. There are rumors the cost of producing a Model 3 in China will be significantly lower than for US-made cars, perhaps as much as 50% lower.
Assuming Tesla does set a new delivery record, will that assuage the concerns of Wall Street analysts, people who make nothing and contribute nothing of material value to society? Probably not. The Verge reports that Morgan Stanley auto analyst Adam Jonas told clients during a conference call this week, “Supply exceeds demand. They’re burning cash. Nobody cares about the Model Y.” (More on that at noon California time.)
Nobody cares about the Model Y? Wow. That’s a shocker. Small SUVs are the hottest part of the new car market worldwide and nobody is interested in a long-range all-electric 7 passenger version of the Model 3 that is quicker than a Lamborghini? We want some of what Jonas is smoking!
Related: Tesla Interest Is Soaring Online
The stock market is driven by two contradictory forces — fear and greed. For the past 3 years, greed has ruled the roost as investors bought into the idea that Tesla was on a path toward being the most valuable corporation on Earth.
Now fear has taken over, with some analysts predicting Tesla stock won’t stop falling until it reaches $36 per share. Both scenarios seem plainly absurd. If Tesla can prove there is ongoing demand for its electric vehicles — a record quarter would help a lot — its share price should recover soon.
But investing in Tesla has always been a wild ride. If you are not prepared for wild oscillations in its stock price, you probably should be putting your money into safer investments — like Apple. Oh, wait…..
For more thoughts on the reportedly leaked email, we recommend this forum post.
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