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Tesla Motors Inc (TSLA) Hits 2000 Cars/Week; Avoid Shorting TSLA

Tesla Motors Inc (NASDAQ:TSLA)

Tesla Motors Inc has started producing an unbelievable 2000 cars per week and it calls for celebration in the bull camp. In 2013, the firm started out with about 400 cars per week to deliver a full year production of 20,800 vehicles. The firm has a wildly ambitious target to build and deliver 500,000 cars annually by 2018 and the firm plans build and deliver 1 million cars annually by 2020. Many people believed that CEO Elon Musk was biting more than he could chew when he made those bold projections.

Tesla Motors Inc (NASDAQ:TSLA)
Tesla Motors Inc Model S factory line 1

However, latest news report indicates that Tesla is on the track to reach its ambitious targets. If Tesla maintains its 2,000 vehicles per week schedule, the firm should be able to deliver about 104,000 cars annually. Of course, it is reasonable to assume that the firm might even increase its output before the end of the year. Elon Musk has finally found a way to solve the production problems that has made his firm notorious for infamous delays.

Here’s why 2000 cars per week is a milestone for Tesla

The 2000 weekly production milestone is important to Tesla Motors Inc because its increases the chances that the firm could meet its annual targets. The firm has provided guidance to produce between 80,000 and 90,000 cars in 2016. In the first quarter, the firm had an average production of 955 Model S and 185 Model X to make 1,140 vehicles each week. The firm has recorded a massive 75.43% production increase from making 1,140 cars per week to producing 2000 cars per week.

When Elon Musk wrote the last shareholders letter, he revealed that he wanted Tesla to end Q2 with a production output of 2,000 EVs per week. The latest news report indicates that the firm had met the target two weeks ahead of schedule. In fact, a source has hinted that the firm had reached that 2,000 output a couple of weeks ago and that it now makes “well over” 2,000 EVs now.

The bullish case for Tesla just became stronger

In assuming that Tesla Motors Inc maintained 1,140 weekly production until last week, the firm would have produced 1,140 cars in the last 22 weeks. In essence, the firm would have made 25,080 cars up until last week. If we adopt a conservative assumption that the firm will maintain an output of 2000 cars week for the remainder of this year, the firm will produce 2000 cars for 30 weeks to make 60,000 cars.

Adding 25,080 cars in the first 22 weeks plus 60,000 cars in the last 30 weeks of the year means that the firm will deliver 85,080 cars by the end of 2016 – smack dab in the middle of its 80,000 to 90,000 range. If the firm has strong chances of meeting its annual delivery targets, potential buyers would be more inclined to place an order because there are lesser chances of delays in deliveries. If potential buyers are placing orders, Tesla’s revenue will be on an upward trajectory, and investors will be pleased with the firm.

More so, if investors are pleased with the firm, they will keep their holdings in its stocks intact and more investors will be persuaded to buy its stock. Of course, is more investors are buying a stock, its trading price will increase, and the firm would have better leverage in the financial markets. Tesla is not the stock you want to short now; you’ll only end up burning yourself.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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