Tesla Motors Inc is facing down fire from multiple angles this week as Wall Street appears to lose some of its faith in Elon Musk’s project to change the auto world. With Consumer Reports saying that it’s no longer the best idea to buy a Model S, it’s easy to lose sight of where Tesla Motors’ problems began, but that doesn’t mean they’re going away.
Tesla Motors stock began its downward trend just as the firm showed off the Model X to the world. Wall Street didn’t have a problem with the specs or features of the Model X, but they did have a problem with the price. Now, as we come up on four weeks since the event that launched the car, it’s becoming clearer and clearer that it’s just not ready to ship.
Tesla Motors Inc Model X has not arrived
There are three distinct groups of people who bought the Model X and three distinct versions of the car said to be heading to them. The Founders editions are special versions of the car that were handed out to people at the launch event on September 29. Of the six cars given out at that event five went to friends of Tesla Motors while the sixth went to Elon Musk himself.
The second group is made up of those who shelled out to get a Signature version of the Model X. ModelXTracker estimates that there are around 1,200 people waiting on shipment of their Model X, and Tesla Motors has already been in contact with all of them to configure their car.
The third group are those that booked a “normal” Model X. They’re by far the largest group, numbering over 25,000 at last count, and they won’t see their car until all, or most, of those with Signature Model X orders have taken their shipment.
Bonnie, a Tesla Motors Club member who holds the second reservation for a Signature Model X, should be one of the first people to take delivery of the car. According to a thread on the Tesla Motors Club forum, Tesla Motors has assigned a VIN to her Model X, but no shipment date has been confirmed just yet.
The Model X is late, and as we head into next week, it will soon have been a month since the firm launched the car. Meanwhile Elon Musk and his team haven’t exactly been very communicative about the delay.
Tesla Motors stays quiet on the Model X
This week has seen Tesla Motors boss Elon Musk make all sorts of claims about the short to medium term future of his business, but there was a surprising omission from the plans he outlined. In a slew of tweets Mr. Musk promised everything from Tesla sales in the Middle East to a new software update to a Europe Autopilot launch, but he didn’t say anything about the Model X.
The car, which is the third that Tesla Motors has ever worked on, appears to facing the sort of production trouble that Wall Street was worried about heading into the launch event. Despite Tesla Motors hitting its self imposed release date, the firm has not been able to ship anything outside of the six Founder’s editions to buyers.
What’s slowing the Model X?
It’s not clear why the Model X is so late, but it is clear that the launch event Tesla Motors held before the end of the third quarter was a little bit premature. Elon Musk claimed that the Model X is “the hardest car to build in the world.” That’s likely adding to the problems the firm is facing in Fremont right now.
The Model X has all sorts of tech that just hasn’t been put on the road before. Delay in shipment of a few of those parts, or problems in the process of putting it all together could set production back quite a while.
The bottom line is we don’t know the precise reason for the delay in Model X shipments. Unless Elon Musk or one of his team members opens up, it’s not likely we’re going to find out what’s plaguing the firm right now. The next major opportunity for the firm to do that is its third quarter earnings call on November 3.
If Tesla Motors hasn’t shipped a Model X to one of the Signature Reservation holders by then, Wall Street’s research houses are sure to ask questions about the firm’s plans.
Don’t worry if the Model X is late
For those who booked a Model X thinking they’d be able to get their hands on the car this year, now’s not likely a good time. Those who were planning on shelling out more than $100,000 for a car will, for the most part, not be left without transport until their EV SUV arrives, but the anxiety of lack may begin creeping in.
For Tesla Motors investors a delay in the release of the Model X hurts, but it’s much more important that the firm gets the car right an puts a great product on the road.
The delay makes it clear that Elon Musk hasn’t, up until this point at least, been confident that can happen. The delay in the release of the Model X will hamper full year sales for the firm, and it may even cause cash burn to go up, but neither of those things will really matter in the long term.
For those buying into Tesla Motors stock right now, the long term is the only thing that can make sense. Given the firm’s huge valuation the only thing it has going for it is belief in a future where it can sell 500,000 cars per year, and faith that it can get there soon.
The month-long delay in the shipment of the first non-Founders Model X is not proof that Tesla Motors can’t get there, though it does add to evidence that the firm just isn’t ready for the big time just yet.
This crisis will, like all of those that have hit Tesla Motors before, pass. The question is whether its cause was rooted in problems inherent to the nature of Tesla Motors and the way that the firm is managed.
If it’s clear that management is at fault for the Model X delay, and the problems inside Tesla could interfere with the release of the firm’s Model 3 and beyond, that’s a major worry for those with shares. For now, however, it’s likely time to sit back and wait for earnings to arrive in the first week of November.