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Tesla Inc (TSLA) Makes Big Bad Geography Error With Model 3

Tesla Inc is in for another drubbing on Wednesday, at least in America’s most energy-inefficient industry- hot take blogs. Philly.com reported early in the morning that the firm’s Model 3 mid-market electric car will be delivered in geographic order i.e. California first, then the west and Maine at some point in the distant future. Some people are going to be disappointed, but this story is deeply unlikely to harm Tesla.

Tesla Model 3

Jonathan Takiff, who authored the piece on the Tesla plans, names reservation holder Jamie Holt as his source. Mr. Holt was told by his local dealership that the Model 3 may be rolled out geographically. Any fan of Elon Musk’s firm will already have built up a healthy skepticism toward this sort of story.

When do Tesla Model 3 deliveries start?

Mr. Holt, quoted by Philly.com, says “I was told they are considering delivery in the following order, regardless of the queue — first to California buyers, then Midwestern buyers, then East Coast buyers — and that the reason was geographic proximity ‘makes it quicker for them to deliver to California buyers.’”

That quote is the entire basis of the rumor about geographic delivery.

The first problem, a common trend with Tesla Inc  rumors, is the source. Those working on selling Tesla cars and keeping buyers happy really have their hands full. About 400,000 people have handed cash over to the firm in order to secure their place in line. They’re wondering when the company will actually deliver on its promise, and they’re asking their dealer.

As with the Model X rumors, it turns out that those on the lowest rung of the ladder don’t really know what’s going on in Fremont. It’s possible that those in charge of logistics haven’t even made those decisions firmly. Tesla Model 3 deliveries will start at a trickle next month.

Here’s what we do know: the first people to get the car will be Tesla employees, while the second group are those that were early adopters of the firm’s Model S and Model X. That’s a very California-centric group, and there may be no focus on the Golden State after that. Wires get crossed, and rumors passed on, around the water-cooler.

How will Tesla Inc stock react?

Most of the rumors we heard, many from dealerships, in the run up to the release of the Model X turned out to be untrue. There was a lot of false information, and a good deal of disinformation, being spread.

Those who reserved a Tesla Inc Model 3, despite the “affordable” label, generally have money to spare. If they did any reading on the subject before purchase, they will have learned a lot about Elon Standard Time.

Tesla Inc is a young firm. It has a history of missing deadlines. It also has a history of attracting extremely loyal customers. That’s the basis of the firm’s entire business model and the reason Tesla stock is trading for close to $400 per share.

Some Tesla stock bears are likely to overplay every little error leading up to, and through, the release of the Model 3. That is to be expected, and it’s an important function. It is good to reexamine exuberance, especially on something as exciting as Tesla stock.

On Wednesday, however, this rumor probably isn’t worth thinking about for most traders. The big bad geography error that Tesla has made here is a red herring. There’s no good source, and even if it is true it will have little effect on the future of Elon Musk’s automaker.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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