By on October 3, 2016

Tesla Model X

After a second quarter that was anything but hot, Tesla Motors surprised analysts by delivering 24,500 vehicles in the third quarter — a 10,000-unit jump over the previous tally.

The healthy delivery numbers allow CEO Elon Musk to stick to his promise of 50,000 deliveries in the second half of this year, reports Bloomberg. Still, the production boost failed to buoy the company’s stock, meaning Musk’s fundraising plans won’t be easy.

In total, Tesla moved 15,800 Model S sedans and 8,700 Model X SUVs over the past three months, topping estimates by several thousand units. Actual production output totaled 25,185.

The tally was helped by a late June production ramp-up, and a late August email urging employees to get the lead out. In it, Musk pep-talked workers into “building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical … ”

Despite the attractive numbers, Tesla stock rose just 1.66 percent this morning. To fund Model 3 production, Musk plans a number of fund-raising actions, including stock offerings. While surpassing a production target is nice, share prices are still down significantly from the start of the year. Whether or not that keeps investors at home remains to be seen.

BNL Finance predicts that Tesla will need to raise $5 billion by the end of the year.

The third quarter saw Tesla dream up new ways to move its existing products, including the addition of a base Model S that retails for $66,000 before government incentives, and a limited two-year lease program.

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62 Comments on “Tesla’s Production Push Pays Off, But Stock Remains Stagnant...”


  • avatar
    Kenmore

    When will the Mars Edition be announced?

    Shouldn’t take long; they already make cars that kill the occupants.

  • avatar
    pmirp1

    That’s a lot of luxury cars. This really is good news for Model 3. The reason people want to buy model 3 and not an electric from GM or VW or Audi, is because of great brand that Tesla has. When you buy a model 3 (eventually), you are buying into a luxury electric brand. When you buy a Bolt(or equivalent from Audi or some other legacy brand eventually), all you are buying into is a old ICE company. The electric game is Tesla’s to lose

    • 0 avatar
      Kyree S. Williams

      I like Tesla a lot. I would consider one of their vehicles. However, I don’t know that they are a true luxury brand. The Model S and X have lots of toys, including items predominantly in the luxury domain like air suspension; however, materials quality and fit-and-finish are a mixed bag, and they don’t feel as substantial as I’d like a luxury car to. The fact is that the Nissan Maxima I drove last week—which at $32K is a third the price of many Model S units—felt more “luxurious” than a Tesla.

      I’d say that Tesla is more of a premium specialty brand than a luxury brand. Like Lotus. Hell, their first car literally *was* a Lotus. And that will be made plain when the Model 3 hits, because it’s going to be a rather barebones car compared to the previous models, in order to hit the target price-point. Fortunately, Tesla will be able to do that in a way that looks chic, such as having the instrument panel and infotainment system be a sleek, iPad-like shared interface in the center of the dashboard. The Model 3 will also give up some of the Model S and Model X’s features, like the free Supercharging. But Tesla does electric, and it does electric very well. All things considered, put any Tesla at the same price point as any GM electric car, and the Tesla will be the more-desirable vehicle every time for most people. Especially if the competing brand is Chevrolet.

      That does not mean, however, that the Bolt will go unappreciated by the market. The fact of the matter is that it’s here (or very close to being here), when the Model 3 is not, and it is also quite competitive. The styling isn’t even as bad as I originally thought it was. Also, I do think that once Audi, Lexus, Cadillac or Mercedes-Benz finally deigns to make a competitive, full-sized luxury electric vehicle, Tesla may be given a run for its money, because those brands will better serve people who want a traditional luxury experience in a car that happens to be electric.

      To summarize: Yes, Tesla has established itself as the premier brand for usable electric vehicles, but don’t underestimate other automakers’ potential to put up viable competitors on the market.

      • 0 avatar
        pmirp1

        Kyree Williams, I think you are thinking luxury as in old school values. You are talking materials quality, and fit and finish as though an old school 60 year old who enjoys nice leather and glass polish wood in a Lexus cares for.

        That is NOT the point of Tesla.

        The point is being clean. One with the environment. Modern. Hip. It is the type of virtues that any company kills for to target.

        I have to laugh when you say it is a mid-luxury car. As though to convince yourself somehow of those old school values. I can only speak to Atlanta market. Here in our northern leafy (most leafy suburbs in the country), the Tesla cars are driven and seen in the most exclusive neighborhoods. And in intown and mid-town, all the cool hip well off younger generations who have moved in drive them. It is absolutely being purchased by Mercedes, and BMW “would have been” drivers.

        I think you need to consider 400,000 pre-orders as a sign of the goodwill that Tesla has created. Like I said, it is their game to lose. No one else is even close.

        This is the LUXURY brand of 21st century.

        • 0 avatar
          VoGo

          pmirp1
          I am a huge fan of Tesla, and have a deposit on a Model 3. But I think Kyree makes good points about Tesla, especially around the quality of the interior.

          I am tempted to buy a current Tesla, but the truth is that the seats, leather and general quality of the interior are not in the same league as my 11 year old Audi A6.

          You can say that these are old world standards and that they aren’t important any more, but I think that as Tesla seeks to move from 100K units annually to 500K and beyond, the buyers it needs to attract won’t have much patience for Nissan level quality.

          • 0 avatar
            Kyree S. Williams

            “…but I think that as Tesla seeks to move from 100K units annually to 500K and beyond, the buyers it needs to attract won’t have much patience for Nissan level quality.”

            Oh, no…the Nissan felt *better* than the Tesla.

          • 0 avatar
            VoGo

            Yikes! I haven’t been in the new Maxima, Kyree, but I trust you that the interior is superior to Tesla’s.

            I’m having trouble getting past that C-pillar.

          • 0 avatar
            pmirp1

            VoGo, Everything you state confirms what I said to Kyree. You are an Audi owner (or prior owner). You understand German brand material quality is superior (or old school luxury brand’s). YET, you put deposit down for Tesla.

            You are the exact type customer they have won over. The former German brand customer who knows new luxury values are different than past. Tesla has won the preception game when it comes to electrics, just like Toyota has won the hybrid perception game.

          • 0 avatar
            Kyree S. Williams

            To be clear, there are plenty of people willing to make concessions for Tesla products. Yes, an S-Class for the same $100K is a much nicer place to be; however, there’s nothing on the road like a Tesla.

            But once Mercedes-Benz puts up a car that both gets Tesla-like range *and* feels like an S-Class…Tesla may lose some of those sales. That’s all I’m saying.

          • 0 avatar
            dal20402

            pmirp, so what happens to Tesla when we get an Audi full electric that has Tesla-like range and typical Audi interior quality?

            People can tell the difference. They just like both the Tesla brand and long-range electric driving enough that they put up with subpar-for-the-price interiors. Soon they won’t have to.

          • 0 avatar
            Pch101

            “so what happens to Tesla when we get an Audi full electric that has Tesla-like range and typical Audi interior quality?”

            Audi will have the dubious privilege of losing money, too.

        • 0 avatar
          dash riprock

          The electric game is Tesla’s to lose

          and sadly they are on their way to losing it.

        • 0 avatar
          jkross22

          “This is the LUXURY brand of 21st century.”

          They’re the lifestyle brand more than anything else.

        • 0 avatar
          Kenmore

          Oh, *do* lecture Kyree, pmirp. He’s such an old fuddy-duddy without a clue.

      • 0 avatar
        redliner

        Tesla is “Luxury” like a new iPhone. It’s a disposable sort of luxury, not like a coach-built automobile from 100 years ago.

        Doesn’t matter though… It only has to make it through the end of the lease.

    • 0 avatar
      SCE to AUX

      @pmirp1:

      Besides branding, there are other reasons people buy Teslas:

      1. Supercharger network – the competing network coverage is uneven.
      2. Performance – nobody else comes close.
      3. Style – nobody else comes close.
      4. Support – EVs are Tesla’s only game, and customer support is mostly very good.
      5. Novelty – Tesla is the new cool kid in town, for now.

      All of this could change in a short time as the market evolves.

      • 0 avatar
        pmirp1

        SCE to AUX, All valid points. Add to that a new sales model.

        Those points you bring up are what luxury is about now. I mean seriously, Kyree talks about luxury as in leather and wood and workmanship. Even mid-level brands like Buick give you nice leather and wood and workmanship.

        Luxury today is defined by being at the leading edge. Something that as long as Elon Musk leads that company Tesla will have, and the old school big auto companies won’t be able to match.

        • 0 avatar
          VoGo

          pmirp1,
          You are making good points, but I would argue that unless Tesla can at least match Buick or Maxima for interior quality, they are going to have challenges in broadening sales.

          This is especially true at the current $70-80K price point.

        • 0 avatar
          tnk479

          @pmirp1 – you’re right about Tesla being at the leading edge of electric vehicles right now but, I think you’re wrong about why. Big automakers don’t want to make electric vehicles in significant quantities today because they are too busy making profits today, quarter after quarter, and delivering value to their shareholders, which they must do. Tesla by contrast, is busy losing hundreds of millions every quarter and diluting its shareholders. I do get their mission – sure they are losing money today but once they ramp up this Model 3 the volume will make them profitable. I doubt that, but, I am aware of the business case. I’m sure you feel this is all for the greater good – you’re entitled to that opinion and I won’t wade into that debate. But what you need to appreciate is that electric vehicles are not currently made profitably by Tesla or anyone else. Big automakers are taking a more measured, conservative approach. I bristle at this idea that the war is over and the EV market is lost. Watch what happens over the next four years and you will see. As EV’s become even marginally profitable and the supply chain ramps up for them, big automakers will ramp up and make their profits. Tesla will remain a niche player. Consumers aren’t as loyal as you think. In three years we will be talking about would be Tesla Model 3 buyers buying BMW and Audi electric vehicles instead.

          • 0 avatar
            Kenmore

            Great comment, tnk479.

            Here are some free paragraphs to use in your future ones. ‘Cause you’re worth reading.

            ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶

          • 0 avatar
            JimZ

            “Consumers aren’t as loyal as you think.”

            the other thing to think about is that the Tesla fan base is going to be the bulk of early adopters. These folks will buy a Tesla, warts and all. Once they have their car(s,) though, the uphill battle is winning over (and keeping) customers who are used to Honda/Toyota reliability.

          • 0 avatar
            shedkept

            @Jim Z Good point.
            From J.D. Power:

            “High Quality = High Loyalty: Expected reliability remains the most important consideration when purchasing a new vehicle, cited by 49% of owners. J.D. Power has studied consumer behavior from when they purchase or lease their new vehicle through when they are back in the market for their next vehicle in order to measure the impact initial quality has on brand loyalty.[1] Among owners who experience no problems with their vehicle in the first 90 days, 54% stay with the same brand for their next vehicle. Loyalty drops to 50% among owners who experience one problem with their vehicle and to 45% among those who experience three or more problems.”

            Tesla may have issues passing this test.

          • 0 avatar

            Bingo. Here in the green leafy burbs where we see a lot of Tesla, they are a fashion accessory. The folks who buy them would otherwise buy a 5, an E class, or some Lux Mommytrux. Once someone comes out with a better electric mousetrap, these folks are GONE. The early days of gas cars are full of dead brands.
            Being first is nice, but once GM/Toyota/BMW/MB get up to speed, niche won’t cut it.

        • 0 avatar
          dash riprock

          But they can greatly exceed Tesla in scale and manufacturing sophistication.

          Tesla should be a brand and outsource the manufacturing to Magna or some other 3rd party.

          • 0 avatar
            pmirp1

            dal20402, we have seen the answer to your question play out before.

            What happens if Audi or Mercedes or BMW introduce a full electric in future? I am sure they will be able to sell a few of those(see i3 and i8, emphasis on few), but who they hurt are their own ICE range. Someone who buys an AUDI electric, is someone that is already ok with AUDI even though the parent company is behind Dieselgate.

            Proof: GM came out with Volt hybrid after Prius. And while Volt is competitive, and while Chevy is an established player, not many people associate Chevy with hybrids.

            The effort of a AUDI or Mercedes or BMW, is at this point a “ME TOO” move. It is not passionate like the way Tesla and Musk preach about electrics. People get that. That is why it is Tesla’s game to lose, but I just don’t see it. They have religion about electrics, it is all they do, it is their survival, they are building Giga factory, infrastructure. This is a movement, not just a vehicle.

  • avatar
    shedkept

    Bob Lutz in the latest R&T. (Road and Track)

    “Contrary to the Musk-besotted faithful, I believe the whole house of cards is going to collapse. Model S sales have slowed dramatically in recent months.
    The Model X appears to refuse to let itself be built. The battery GIgafactory is a white elephant, and at press time Tesla has announced a deal to buy the cash-hemmoraging SolarCity, putting two gigantic money eaters together and hastening the ultimate catastrophe. I don’t know what Musk’s megastrategy is or if he even has one. Two things are sure:
    He knows how to enthuse people and get their money, and he doesn’t have a clue about actually running a car company.”

    • 0 avatar
      heavy handle

      Gotta respect Lutz’s opinion on this. If anyone knows how to run a car company into the ground it’s him!

      • 0 avatar
        JimZ

        Horses**t. GM’s product quality and design was on the upswing after his arrival. GM was run into the ground by Thomas Murphy, Roger Smith, Bob Stempel, Jack Smith, and Rick Wagoner.

        and lest you forget, Lutz was the driving force behind getting the Volt program approved. In case you were going to paint this as him being an “EV Hater.”

        His point- which you missed- is that Tesla is not very good at the “car building” part of the business. They are not very well built and many of the “gee whiz” features they incorporate are problematic at best.

        • 0 avatar
          heavy handle

          In his own mind, Lutz was the promoter of all good ideas, and nowhere to be found whenever something went wrong.

          He fiddled while Rome was burning, but it wasn’t his fault! Nothing was ever his fault.

          I find it very hard to take the guy seriously.

      • 0 avatar
        Pch101

        Bob Lutz has a mixed track record, but he got the Explorer to market, which not only contributed to Ford’s bottom line but also impacted the entire industry.

        • 0 avatar
          VoGo

          Lutz was at Ford Trucks for a year. I’m sure he was instrumental in shepherding the Explorer’s development, but claims that he “got it to market” say more about Lutz PR than Lutz actual accomplishments.

    • 0 avatar
      VoGo

      Lutz’ assertions beg to be refuted.

      “ Model S sales have slowed dramatically in recent months.”
      Yes, because production has shifted to the higher priced Model X. That’s a good thing. Lutz should keep in mind that Tesla sells everything they make. He’s never worked for a carmaker that could say that.

      “The Model X appears to refuse to let itself be built.”
      The numbers above certainly are in contrast. Tesla is now hitting its production targets easily.

      “The battery Gigafactory is a white elephant”
      Only if we expect that battery manufacturing won’t continue its rapid growth.

      “Tesla has announced a deal to buy the cash-hemmoraging SolarCity, putting two gigantic money eaters together and hastening the ultimate catastrophe. I don’t know what Musk’s megastrategy”
      The idea is to build a virtuous cycle, in which energy is captured from the sun, stored for use and then used for transportation. The megastrategy is to have a leading position in all 3 parts of that vision.

      “He knows how to enthuse people and get their money, and he doesn’t have a clue about actually running a car company.”
      Certainly Musk knows how to enthuse people, to a far higher degree than Lutz ever has, so I can see why Lutz would be jealous. Tesla is learning to build cars – it is a startup – but they are marching down the learning curve quickly. As it is, Tesla leads the industry in battery technology, AV, electronics and power delivery. These are the skills that all the ICE manufacturers are so desperately trying to develop.

      • 0 avatar
        redmondjp

        Only one problem: this virtuous cycle megastrategy that you speak of is not even close to a sound business model. I’m a big supporter of alternative energy, but there is no way this is going to work out well.

        It’s no different than Nicola Tesla thinking that he was going to broadcast free power to everybody.

        Tesla is in a massive cash crunch. They need to raise $5B by the end of the year? And how much more will they need next year?

        I worked for a heavy-truck components manufacturing company which practiced open-book management. The entire company (janitors, line workers, everybody) was bussed to an auditorium quarterly and we all saw the financials. One of the things that our CFO always stressed at the meetings was cash flow. This is what will do in Tesla. When you run out of cash and you can’t even pay your workers, the doors close.

        • 0 avatar
          VoGo

          redmondjp,
          I encourage you to short TSLA and profit from your insight.

          • 0 avatar
            dash riprock

            2 major problems with shorting tesla

            Huge interest in shorting tesla and the costs are indicative of this.

            Tesla, is not presently being evaluated on its financial strengths and weaknesses. It is a hyped stock and therefore may see (in my view) quick and sudden uptakes based on news. Elon is a proficient promoter.

            So, to short Tesla(over 28,000,000 shares), you have to pay through the nose and be willing to bear a margin call if hype drives the stock up.

            I strongly believe the stock will crash but much less sure of when. Too much belief in Elon tweets, and too much self interest from the investment bankers to believe the share price will decline significantly in the near term.

            But if you wish to wager on whether or not tsla is above $213 a share in 3 years, I am interested in that wager.

          • 0 avatar
            Pch101

            Shorting a stock such as Tesla is a bad idea because you can run out of money before the market runs out of stupid.

            Shorting a stock is not simply the flip side of going long. The short seller is borrowing the stock, not buying it, and that carries additional burdens.

            http://www.investopedia.com/university/shortselling/shortselling3.asp

            Anyone who equates short selling with taking long positions doesn’t know much about stock trading.

            In any case, it’s foolish to equate market cap with a good business. Surely even the fanboys must know that stocks can be overvalued.

          • 0 avatar
            JimZ

            “I encourage you to short TSLA and profit from your insight.”

            a car company’s stock price has nothing to do with their ability to build cars. Just look at F. quarter after quarter of profits, but no movement in share price.

            you’re reading from the Apple playbook.

            “If Apple leads on marketshare, pound on marketshare. If Apple leads on profits, pound on profits. If Apple leads on neither, pound on the AAPL stock price.”

            I don’t own shares of either TSLA or AAPL, so trying to beat me over the head with their share prices misses the mark by a huge distance.

            Tesla builds sh!t cars which are rescued by the fact that- as of now- they are the only electric vehicles which can go more than ~100 miles on a charge. Oh, and they’re also rescued by the fact their CEO replies to tweets.

            the Volt is one of GM’s highest-quality, most reliable cars, and it’s an order of magnitude more complex than anything Tesla builds. Tesla can’t even figure out how to build a car with doors which open reliably. and some of you are lining up to give your Geek Tom Brady a lot of money.

          • 0 avatar
            VoGo

            So many excuses.

            I have learned from the reactions to my suggestion that the internet is full of people who love to criticize, but are afraid to take action to back up their words.

          • 0 avatar
            Pch101

            When it comes to your precious Tesla, your rebuttals are sorely lacking.

            The way to bet against Tesla is to avoid buying the stock as an investment.

  • avatar
    shedkept

    I’m still scratching my head over this:

    “Tesla claims that one its cars operating in Autopilot mode was not to blame for a collision with a bus in Germany on Wednesday.
    The company claims the accident in Ratzeburg was unavoidable because the bus swerved into the vehicle’s lane.”

    https://blog.nader.org/2016/09/09/federal-regulation-saves-millions-of-lives/

    “Today, the challenges remain in the upgrading of the operational and safety aspects of motor vehicles, especially large trucks, improvements in highway infrastructure and handling drivers distracted by cell phones or under the influence. Much is being written of futuristic self-driving, autonomous vehicles. Don’t be taken in with the hype, or the arrogant reliance on algorithms. It will be many years, if ever, until the entire vehicle fleet is converted into unhackable, driverless machines.”

    • 0 avatar

      Today,I watched lines of cars in a few places NOT pull off of a green light, as each driver was clearly looking down at a cell phone…each car had a four-five second delay as the phone was tended to. People are far stupider than any algorithm can account for.

  • avatar
    SCE to AUX

    “share prices are still down significantly from the start of the year”

    TSLA opening price, 4-Jan-2016 = $230.72

    TSLA price as I write = $214.62

    I wouldn’t describe a 7% change in stock price over 9 months’ time as “significant”.

    • 0 avatar
      tnk479

      Okay but you’d have to admit Tesla stock seems to be trending ever so slightly downward since it’s zenith at almost 300$. The market seems to be starting to analyze Tesla with a little more care and caution which I expect to increase. The institutional investors will surely be watching their GAAP results with a more discerning eye as Tesla continues to burn cash, dilute shareholders, and attempts to get to Model 3. Also, of some concern, in a market that is in love with SUV’s, the ratio of Tesla sedan to it’s SUV is 2-1. The CEO thought it would be 1-1. My guess – the rear doors, odd rear seats, odd cargo configuration, and quality concerns are holding buyers back. Model X is under-performing while Model S is outperforming the market for luxury sedans. So one hit and one turd — the problem is that Model X quality issues may continue to harm margins and make it more difficult for Tesla to perform financially, which is everything to this company.

      http://seekingalpha.com/symbol/TSLA

  • avatar
    shedkept

    Stagnant:
    stagnant |ˈstaɡnənt|
    adjective
    (of a body of water or the atmosphere of a confined space) having no current or flow and often having an unpleasant smell as a consequence: a stagnant ditch.
    • showing no activity; dull and sluggish: a stagnant economy.

    May qualify for both definitions. ;)

  • avatar
    Vulpine

    Anybody following the stock will see a 4%+ jump in price today, not exactly stagnant even if not record breaking. Still, what pretty much everyone is waiting for is confirmation of the potential offered by the Model 3, which won’t see pre-production for another few months outside of testers for in-house use and for NHTSA crash-testing (these have to be completed before the car can be legitimately sold to consumers, IIRC.)

  • avatar
    shaker

    I just hope Musk’s workers don’t revolt before the Model 3 comes out.

  • avatar
    WheelMcCoy

    It’s silly to hope or expect meeting (or exceeding) production numbers will move a stock up. The Wall St. adage is “buy on rumor, sell on news.”

    This is news.

  • avatar
    3CatGo

    What will happen to the stock when they hit 200,000 Model S’ sold and the tax credit goes away? It looks like they are around 150,000 now. And those 400,000 people who put deposits on the Model 3, only half of them will get that sweet, sweet credit. The other half will come up short.

    Also, because the credit is non-refundable, does it apply only to the first 200,000 who claim it, or to the first 200,000 cars? I would guess most people buying a 3 would have a $7,500 tax liability, but I’m sure some will not.

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