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Tesla Motors (TSLA)’s Unreliable Near-Term Forecasts Cast Doubts on Future

In an unexpected bit of transparency, Tesla Motors Inc recently announced its failure to meet its Q2 delivery goals. The luxury EV maker said it hoped 17,000 new Teslas would meet their owners back in May. This weekend though — mere days after the end of the second quarter — Tesla reported that only 14,370 were delivered.

The news is not entirely fazing to those who are familiar with Tesla’s trends. Some would say the firm is just staying true to form. Tesla CEO, Elon Musk, has a reputation for over-promising and under-delivering. However, what if we took this recent delivery failure as the sum of the EV firm’s predictive capacity? Forgetting the many times that Tesla failed to improve its finances, meet production goals, stay on top of its deliveries as well as its launches; if the company can’t accurately project its figures two months away then how can we trust its two-year goals?

Tesla Motors Inc (TSLA) Elon Musk speaking at the Model 3 unveiling in March
Elon Musk speaking at the Model 3 unveiling in March

The Q2 delivery rate was by no means a small miss either. Tesla actually underachieved by over 2,000 EVs. That is still a long way away from a home run. Its business philosophy appears to be soaked in ambition. Their motivational approach to projections is all good and well if you forgive the fact that they are entirely misleading. If analysts and investors can’t rely on Tesla Motors’ self-made, short-term forecasts then what assurance is there for the long-term.

Did Tesla know it won’t meet its goals?

Indeed, Tesla Motors Inc made a mammoth promise a few months back. The world’s best EV maker said its vehicle production would increase ten times over within two years. From pushing out around 50,000 EVs at the end of 2015 to 500,000 in 2018. Half a million looked pretty far-fetched even when it was just 4 years away. Now that the goal has been moved up by two whole years, it looks a lot more unlikely.

Granted, a lot more facilities will be up and running by then, but Tesla isn’t new to expansion either. Yet the company has still never quite hit the nail on the head with its projections. Granted again, Tesla is a very young automaker and finds itself growing too rapidly for its own pockets. However, a fair idea of where it will stand in the next few months is not asking for much either.

If investors weren’t distracted by the charismatic CEO Elon Musk and flashy EVs that he and his company produces, one might start to see a different aspect to Tesla’s “ambitious” statements. At this stage, investors might be wondering if these assurances, whic are never met, are made out sheer naivety or whether Tesla Motors is intentional overstating its capacity. The former is forgivable and a bit frustrating. The latter would mean Tesla purposely misleads the public in order to drum up publicity and investment.

What Tesla needs

This does not seem unlikely when you look at what Tesla needs in orders to succeed. The high demand for its products is already established. The luxury EV producer reinvented the way we look EVs today and its flagship Model S is at the top of the U.S.’s best-selling luxury sedans as a result. Next year’s Model 3 has no definitive release date yet already stirred up around 400,000 pre-orders.

Tesla just needs to sell enough cars to make it a profitable business, and thatnis my the Model 3 is key. But this means ramping up production and expanding itself in the process. That requires funding. Funding can only be derived from investors and investors are not likely to place their money on a stagnating firm. Perhaps Tesla overstates its capacity in order to builds confidence.

Tesla needs Model 3 to work

The Model 3 concept that is due to arrive next year is a prime example of how Tesla sought maximum investment on an idea. The company promises an all-out EV with a huge range of normal benefits. Among these was “free Supercharging,” as stated by Musk at the car’s unveiling. A few months later though, the firm discovered that that wouldn’t be possible with the cheap EV. The CEO said this is because engineers cannot figure out a way to make Supercharging cheaper as well. Model 3 buyers will have to pay extra to recharge.

No doubt Musk and co. know that a huge plus of buying a Tesla is the money saved on being able to refuel for free. But nearly 400,000 paid pre-orders later and that aspect is now impossible. An optimistic guess, or intentional deception?

Musk is even reported to have given out some untrue numbers via his twitter feed to rally investors.

What are your thoughts on the matter? Is Tesla Motors a compulsive liar of a firm that only redeems itself in the long-run? Or could the company be as innocent as it looks with its projections.?

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