Tesla deliveries up 70%; stock price soars too
Reporting from San Francisco — The year started off badly for Tesla, when production problems and parts shortages gummed up delivery of its high-end electric cars.
But the company’s Fremont assembly plant seems to be running smoother now, and if the company doesn’t meet its earlier forecasts of 80,000 to 90,000 Tesla deliveries in 2016, it could get close.
Third-quarter deliveries of Tesla cars hit 24,500 from July to September, up 70% from the second quarter, Tesla said Sunday. That’s 15,800 Model S sedans and 8,700 Model X SUVs.
For the second half of the year, Tesla said, it expects to deliver 50,000 cars. That would bring the year’s total to 79,212.
That’s good news for Los Angeles-based tycoon and Tesla Chief Executive Elon Musk.
“I’m impressed,” said Michael Harley, a Kelley Blue Book analyst. “Elon delivered. There’s been a lot of negativity recently about the Autopilot crash [a fatal crash in Florida in May]. People seemed to think it would hurt him, but it didn’t seem to hurt their sales.”
Wall Street is impressed too. In late Monday morning trading on Wall Street, Tesla stock was up about 5%, at $214.
It’s unclear how many sales might have been spurred by price cuts. Some Tesla retailers were reportedly offering discounts on new cars, which they’re not supposed to do. Musk recently sent a message to retailers telling them never to discount a new car, only demonstration models and other slightly used cars.
In January and February, the Model X was plagued by parts shortages, which Tesla blamed on the “hubris” of trying to install too much technology too soon. In the first quarter, the company delivered 2,400 Model Xs. In the latest quarter, it delivered nearly four times that number.
Tesla remains under heavy pressure to boost production in dramatic fashion, and not just to sell more high-end cars.
The company plans to start production of its mid-range, $35,000 Model 3 by the end of next year. Musk said the company will be pumping out half a million cars annually by the end of 2018. That’s five times today’s production level.
The company is also building a $5-billion battery factory in Nevada.
Cash-flow issues are forcing Musk to prepare for new financing, either debt or equity or both. Investors will want to feel confident about Tesla’s ability to manufacture cars on time, with consistency and high quality.
“The more money he can raise, the better,” Harley said. “Everyone is waiting for the Model 3, and the faster he can get that going, the better. He’s not going to be the only player in this segment.”
Other automakers reported September sales on Monday. Not all numbers are in yet, but analysts say U.S. sales appear to be headed for a 1.5% decline from September 2015, further indication that a six-year growth surge is cooling fast.
Hit hardest were four-door sedans, while sales of crossover vehicles — basically, small SUVs — remained strong.
Mark Wakefield, who head the automotive practice at consultant AlixPartners, said crossovers offer a higher driving stance and are easier to get in and out of than traditional sedans, with little or no trade-off in the drive itself.
The baby boom generation has been at the forefront of automotive trends for decades, he said. “As boomers age, getting in and out of a car is getting more important.”
Twitter: @russ1mitchell
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UPDATES:
Oct. 3, 12:15 p.m.: This article has been updated throughout with additional details and background.
This article was originally published on Oct. 2 at 2 p.m.
