Tesla Motors Inc will need to do a better job of convincing the market that it is still on track to make its promised 50,000 to 55,000 deliveries by the end of 2015. Why does the market pay such close attention to Tesla’s delivery targets instead of its earnings and revenues? Tesla’s delivery target is a yardstick to measure how fast the firm is transitioning from a startup into a real firm. The delivery targets also provide an insight into how long it will take the firm to breakeven and breakout.
Elon Musk will need to perform a miracle in order to meet his full-year 2015 delivery target as the third quarter deliver number falls short of forecasts and production of the Model X hasn’t really begun.
On Friday, Tesla reported that it delivered 11,580 EVs in the third quarter (ending Sept.) of 2015. The firm boasts that “this delivery level represents a 49% increase over Q3 last year as well as the sixth consecutive quarter of growth” despite the fact that it had one week of a planned shutdown in its factory.
Tesla’s 49% increase in delivery is below forecast
A mere look at the delivery number of 11,580 and the stats about the 49% y-o-y and sixth consecutive quarter of growth will make you think that Tesla has a fine showing. You’ll also think that the firm had a splendid quarter when you consider its previous guidance that third quarter deliveries will be in line with “approximately the same number of vehicles as the second quarter”. In the second quarter, Tesla Motors delivered 11,532 cars; hence, the 11,580 number in the third quarter meets the forecast.
However, the big picture shows that Tesla is behind its forecasts and the firm would need to crank up production before buyers and investors to start losing interest. At the start of this year, Tesla Motors said it planned to deliver between 50,000 and 55,000 cars. You’ll remember that the low-end of the guidance was lowered to 50,000 a couple of months ago. Now, it doesn’t look as if Tesla would even meet up with that low-end 50,000 number.
To start with, Tesla Motors has delivered 33,157 cars in the first nine months of this year. In essence, the firm needs to deliver 16,843 cars in the current quarter (last quarter) before it can meet up with the low-end 50,000 cars delivery number. On paper, Tesla delivered 965 cars per week in the quarter ending Sept. In real life, the firm was delivering 890 cars per week if you account for that one week planned shutdown.
Model X won’t get Tesla to 50,000 cars
For Tesla Motors to meet its low 50,000 delivery target by the end of the year, the firm would need to start delivering at least 1,307 cars per week to mark a 35% increase over the 965 cars delivery rate that it reported in the third quarter. Now, Tesla has to produce and deliver two cars, the Model S and the Model X – but the Model X is not yet running off the ramps. The Tesla Motors factory in Fremont, CA has been gearing up for production of the Model X, adding “Line 2” to the factory but that line is not yet fully operational. More than 25,000 people are waiting for their Model X and Elon Musk has only succeeded in shipping out six Model X to himself and his close buddies.