By on April 4, 2019

Tesla Model 3, Image: Tesla

Following a rocky first quarter of 2019, Tesla’s decidedly lackluster production and delivery report sent the automaker’s stock tumbling in pre-market trading.

Not only were analyst estimates missed, in some cases by a mile, production actually fell at Tesla’s Fremont, California assembly plant, sparking concern that demand is drying up for the company’s EV offerings. A dip back into the red — something CEO Elon Musk warned of, not long after predicting the opposite — seems unavoidable.

While the roughly 63,000 vehicles Tesla delivered in the first quarter represents a 110 percent uptick from a year earlier, it was a 31 percent drop from the previous quarter. Analysts were expecting 76,000 deliveries.

The company’s stock tumbled more than 10 percent following the report’s release.

Tesla blames the dismal numbers on the difficulty in getting cars to new markets like Europe, as well as China. “This caused a large number of vehicle deliveries to shift to the second quarter,” the company said in a statement. “At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.”

Even factoring in those oceangoing vehicles, the total still trails the previous quarter’s deliveries. Total production last quarter was 77,100 vehicles — 62,950 Model 3 and 14,150 Model S and X. Q4 2018 figures totalled 86,555 vehicles (61,394 Model 3; 25,161 Model S/X).

Spend two seconds on Markets Twitter and you’ll inevitably see sleuthy images of dusty U.S. parking lots stocked full of new Tesla builds. While all of those stashed cars could be proof of declining demand for certain models, reduced production figures are harder to ignore. And analysts are having a hard time ignoring it.

“It’s a disappointment. There’s no way around that,” said Gene Munster (per Bloomberg), a managing partner of venture capital firm Loup Ventures. “The big question is, what is demand?”

Tesla’s star, the Model 3, saw 50,900 deliveries last quarter, which is at least in the ballpark of analysts’ average estimate of 51,750. The previous quarter? 63,150 Model 3 deliveries.

Model 3 aside, deliveries for the older (and pricier) Model S and X were the worst since Q3 2015. Joseph Spak of RBC Capital Markets said in a note that the decline in Model S and X sales stands to see Tesla lose out on $1 billion in revenue.

“To us, this signals that the tax subsidy cut in the U.S. was a significant hit to these premium vehicles and/or Model 3 is having a bigger cannibalization impact,” he said.

At the dawn of the new year, Tesla’s $7,500 federal tax credit dropped by 50 percent due to the automaker hitting the 200,000-vehicle cap two quarters earlier. The company’s volume model carries a lower price than the Model S and X, increasing the chances of a reduced incentive swaying buyers away. While Tesla tried to compensate for the incentive loss with two price cuts, a disjointed (and partially aborted) plan to drop its retail stores and bring sales online forced the company into a price hike.

First-quarter income will be “be negatively impacted,” Tesla stated, blaming the outlook on “lower than expected delivery volumes and several pricing adjustments.”

Still, the company reaffirmed its forecast of 360,000 to 400,000 vehicle deliveries in 2019, adding that it ended the quarter with “sufficient cash on hand.”

Cowen analyst Jeff Osborn stated the obvious in a note to investors, claiming, “Tesla continues to struggle as a ‘real car company.'” Others took a long view, with Bernstein analyst Toni Sacconaghi writing that Tesla’s Q1 slump was not totally surprising, and that the company has made huge inroads in the mid-priced sedan market. (The average selling price of a Model 3 last year was $57,000, FactSet claimed, per CNBC.)

To Wedbush analyst Dan Ives, the quarter counts as an “air pocket.”

[Image: Tesla]

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64 Comments on “Tesla’s Balloon Bursts in Q1; Deliveries Impress No One...”


  • avatar
    indi500fan

    4000 vehicles a week for Q1. Fremont is gonna have to hit it hard to make Musk’s half million prediction for 2019. Like 13,000 a week…

    • 0 avatar
      SCE to AUX

      “Still, the company reaffirmed its forecast of 360,000 to 400,000 vehicle deliveries in 2019”

      That’s not 500k, but it will still be hard to hit.

  • avatar
    Jerome10

    Popcorn in microwave…

  • avatar
    stingray65

    The market for $50K+ sedans of any sort is getting mighty thin by the day, and how many people want to risk paying big money for what is increasingly looking like an orphan car brand with indifferent build quality. It is already difficult to impossible to get repair parts for Teslas (other than taking parts off a wrecked one), so how will it be a year or two after Tesla goes belly up?

  • avatar

    I am still shocked there is even this much demand for these kind of vehicles. For some reason customers will only purchase Tesla electric cars. For example, last year only 600 purchased the CT6 electric vehicle from Cadillac. GM and Ford are going to take a red lnk bath on their EV vehicles. The bolt is already a flop.

    • 0 avatar
      RSF

      akear- I think the answer is that by far people want gasoline powered trucks and suv’s. Electric is a very small niche. A LOT has to happen for this market to become mainstream.

      • 0 avatar
        theBrandler

        You know, I think you are spot on. I used to want an electric car, you know, instant power and quite ride. But then I got a GTI – oh the sound this thing makes!!! I don’t want a quiet car, I just want more angry sounds every time I down shift while I turn dino juice speed!!!

    • 0 avatar
      SCE to AUX

      The CT6 is a plug-in hybrid, sort of like the terrible ELR. I have long maintained that Cadillac buyers don’t want the hassle.

    • 0 avatar
      bullnuke

      The EV market appears to be repeating the history of battery-electric vehicles from 100 years ago when electrics were marketed as doctor’s cars and vehicles for the ladies who didn’t want to soil their gloves with oil from the engine crank. The impetus for the market is somewhat similar in modern times – “Green Planet-Saving Technology” against “Noisy, dirty, and stinky petroleum-powered vehicles” and the result seems the same. The negatives of EV’s – range anxiety and the need for long recharge periods for the batteries – give most folks pause before consideration of purchase. True, modern battery technology is miles ahead of the old lead-acid storage batteries powering the old Detroit Electric’s and allows greater range but the current motoring public requires vehicles with the freedom to move about vastly longer distances in a timely manner compared to those folks in years long past. EV’s make more sense as zero-emission metropolitan area taxi’s and local delivery vehicles as well as short range commuter vehicles where range and charge time are relatively minor issues – Detroit Electric’s final vehicles were taxi’s in the 1930’s and, small EV delivery vehicles have long been part of industry in manufacturing plants. Tesla was fortunate to strike while the market was politically motivated and ready for a revival of EV’s but that market has indeed been saturated much as the market for the retro-design Chrysler PT Cruiser/Chevrolet HHR arrived, became saturated, and went away.

      • 0 avatar
        Vulpine

        The abilities of the modern BEV far exceed those of the old Detroit Electrics, etc. Today’s BEVs are capable of timely recharging even on the road with an effective and growing high-speed charger network that allows the road trips those century-old models could not. Charging times today are relatively insignificant as well, since most non-local refuelings tend to include time to grab a snack or even eat a sit-down meal.

        • 0 avatar

          Funny you should say that. As I read your comment I am at Whole Paycheck getting lunch as my Model 3 charges.

          Samich discounted $1.60 today as a Prime member. Electricity is complementary. Thanks Jeff.

        • 0 avatar
          Asdf

          Today’s BEVs are NOT capable of timely recharging, there’s NO effective and growing high-speed charger network, and charging times today are NOT relatively insignificant. You’re so full of [email protected] it beggars belief.

          • 0 avatar
            Vulpine

            Really, Asdf? The crap is those who are so closed minded that they refuse to see the future when it’s right under their nose. I may be a Boomer baby but I saw a far different future ahead than my parents ever imagined.

          • 0 avatar
            bunkie

            Where I’m working now, the parking structures have numerous vehicle charging stations and there are plenty of BEVs to occupy them with the Model 3 being the most common. BEVs are like phones. You simply adapt to plugging them in whenever you get the chance. The fact that doing so, in many case, doesn’t take you out of your way is actually an improvement over visiting gas stations.

            It has been a long time since I burned an entire tank of gas in one go. Even my longest current drive (206 miles) is well within the range of a Model 3 and, if I want, there are even superchargers at three points along the way. Range isn’t nearly the issue that people think it is. A few asjustments would cover 90% of the typical usage patterns. As for the tires trope about electric cars being “virtue machines”, I want one because it goes like a rocket and it’s the first car ina very long time that has really wowed me. It’s not cheap. But compared to what is offered at the same price by other manufacturers, it’s fairly priced for what it can do.

      • 0 avatar
        SCE to AUX

        @bullnuke: You’ve bought the lies.

    • 0 avatar
      ToolGuy

      I think it’s instructive to look at some other product categories. The little handheld battery-powered ‘weed trimmer’ we had in the 70’s sucked. Battery powered drills/saws have improved considerably – no they still don’t replace all corded tools.

      Rechargeable weed trimmers and leaf blowers are taking over for light-duty use. Even rechargeable lawn mowers (ex. 80 volt models) are starting to make sense for smaller lots – no, not for your lawn service – LOL.

    • 0 avatar
      HotPotato

      The Cadillac CT6 isn’t an electric car. It’s a plug-in hybrid that costs as much as a Tesla Model S. File it next to the Cadillac ELR in the book of pricey not-quite-electric cars that nobody wanted.

      The Chevy Bolt has done quite well for an early-adopter niche vehicle. But the Tesla Model 3 Standard Range is finally available, so I don’t see that continuing. If the choice is between a plasticky narrow Honda Fit clone without fast charging or a fast sexy Tesla with Supercharger capability for the same money, I’m putting my money on the Tesla getting the sale.

  • avatar
    JimZ

    the question that will be answered very soon is “How big is the EV market outside of the Elon Musk Fan Club?”

    I’m seriously considering an EV for my next car in a year or two, but I’m not expecting car/truck buyers to shift over en masse anytime soon. Gas is still too cheap (yes, $2.78/gal where I am is still cheap.)

    • 0 avatar
      SCE to AUX

      Nobody should justify an EV based upon gas savings, although that is a benefit.

      • 0 avatar

        Stop calling me nobody.

      • 0 avatar
        Vulpine

        When it comes to money, SCE, every penny counts. Sure, BEVs are pricier up front than equivalent ICEVs today, but at roughly half the fuel cost, that adds up to more than the difference in price over the life of the car. That doesn’t even consider the effects of the BEV on our living atmosphere, where the BEV’s power now puts less than 50% of the pollutants (not just carbon dioxide but all the monoxides and sulfur oxides, etc. as well) through power plants which themselves are being slowly supplemented and replaced by solar, wind, tide and hydro-electric renewables. Even if fossil fuels retain 30% of the overall power grid (they’re already falling towards 50%) that still means less than 30% of the overall pollutants put out by all the cars, trucks and other transport means over time.

        Sure, BEVs currently hold somewhere between 2%-3% of the global automotive market but that number looks to shift rapidly as more come available and their prices grow more equivalent to the ICEVs. I may not see BEVs dominate the market before I die, but the generation after me–15 years to 20 years younger than me, will see it. I only hope they also see the way to reverse the temperature trends that we failed to stop. Doing so will probably mean the end of fossil-fuel-powered flight to get there. 18 years ago, I saw what one week of no commercial aviation could do to the average temperatures where I live; I only hope others realize what it could mean towards our changing climate to do so for more than one week.

      • 0 avatar
        rpn453

        Total cost of ownership should be a factor in any vehicle purchase. For the average person, it should be one of the biggest factors.

        Isn’t fuel cost a big part of that?

        Are you suggesting that you like your EV so much that people who have the means and the appropriate usage patterns should buy an EV regardless of TCO? That’s fine, but doesn’t include the many who are struggling and just need economical transportation. They’re so consumed with the financial shape they’re in, they can’t enjoy the luxury of EV life.

      • 0 avatar
        HotPotato

        Depends where you live. In parts of California, the gas station owners are paying insane rent just like everyone else, and gas is $4 a gallon. (Doesn’t help that the oil refiners have a history of Enron-ing the crap out of the state’s gasoline market, pretty flagrantly in Shell’s case, but that’s another story.)

    • 0 avatar
      TS020

      In my part of the world a vehicle has to hit 5.3L/100km or less to be more cost efficient in “fuel” than a Tesla. My Fiesta diesel averages around 4.5L. It costs less per km to drive my Fiesta than it does a Tesla. That’s a combination of high electricity price s and Tesla’s being thirsty mofo’s compared to the competition.

      • 0 avatar
        rpn453

        I’m surprised that any ICE car could be cheaper to fuel than an EV anywhere.

        Last time I ran the numbers here in the Canadian prairies, a gallon of gasoline or diesel was similar in cost to a “gallon” of electricity as referenced on the EPA tests. So I’d need an ICE consuming 2L/100km or less to match an EV. Probably better, as fuel costs have increased significantly since then and electrical costs have not.

        The Model 3, at 1.8Le/100km, beats the Leaf and Bolt on the EPA cycle. The Model S isn’t far behind. What EVs are significantly more efficient?

  • avatar
    dividebytube

    I wanted to like the Bolt but seeing one at the car show, and the single one I’ve seen in the wild, has disappointed me.

    An EV has to be “something special” for it work. Maybe Tesla is just the rich man’s flavor of the year? I don’t know. I do like how the S looks and, if I had the money, would consider one.

    btw, neighbor the street over has Tesla 3. I wwent by it yesterday while taking the dog for a walk. The car was plugged in, powered by the weediest and oldest looking yellow extension cord plugged into an outside 120V outlet.

  • avatar
    Vulpine

    Considering that nearly every brand saw significant drops in sales over this past quarter, singling out Tesla is more prejudicial than balanced reporting. Personally, I’m willing to wait and see rather than assuming this is anything more than cyclic activity on a brand that doesn’t even have a full lineup of vehicles to market yet.

    • 0 avatar
      stingray65

      Was any other automaker saying they had hundreds of thousands of deposits and a huge backlog of orders for cars they had yet to produce? Why not just crank them out in ever increasing numbers if so many people are eager to buy them? Why are there parking lots full of dusty Teslas if they are already sold?

      • 0 avatar
        Vulpine

        @stingray: Tesla is not a mature automaker yet; they don’t even have a full lineup of models to offer. But there are those who want–need– to compare Tesla with mature automakers in order to make themselves feel good about opposing a brand that is changing the motoring paradigm.

        Tesla is cranking out increasing numbers and they are selling them… though not all in one place or even in one country. Last year showed us that Tesla can work with the American market–they’ve only shipped about two months worth of production overseas so far and they’re trying to fill active orders based on what they’ve already produced before pushing out the el-cheapo versions.

      • 0 avatar
        HotPotato

        Their answer for the cars in lots is that they’re trying to ship units to European buyers now, and that does seem to be happening: it’s the top-selling car in Norway and Holland and starting strong in Germany, and there are like 11,000 of them in transit. Seems pretty legit.

  • avatar
    EBFlex

    And Misk is blaming the SEC and their witch-hunt for him when he is once again over promising and under delivering.

    He’s a fraud

    • 0 avatar
      bunkie

      You can call Musk a lot of things, but “fraud” isn’t one of them. He has, already, delivered reusable rockets and lots of really appealing and functional electric cars. I think he suffers from an inordinate amount of optimism and, at times, questionable judgement. But he has kept his promises when It comes to delivering the hardware. Time will tell if Tesla will survive. I certainly hope they do because, it is clear to me, that electric cars are no longer the future, they are viable options for the here and now and Musk and Tesla are, almost single-handedly, responsible for making them so.

      • 0 avatar
        JimZ

        “He has, already, delivered reusable rockets ”

        yeah, the 7,000 people employed by SpaceX are there to just sit around and watch him build them.

        @[email protected]

        I give far, far more credit for SpaceX’s success to Gwynne Shotwell, not least because she keeps Elon the hell out of their day-to-day operations and maintains discipline.

        • 0 avatar
          bunkie

          Who would all have magically come together of their own accord to build the Falcons, Merlins, Raptors and Dragons. Yes, it’s the people of SpaceX who do the work. But to deny Musk’s role in creating SpaceX in the first place is wrong. Would Ford Motor have happened without Henry Ford? I doubt it.

          • 0 avatar
            JimZ

            “Coming up with the idea” is not the hard part.

          • 0 avatar
            Vulpine

            @JimZ: Coming up with the idea IS the hard part for most people; making it work is easy by comparison.

            However, Musk did more than just come up with the idea; he also made it work far more inexpensively than anyone wanted to believe, going so far as to have his team design, test and certify a specific rocket motor valve in a mere three months that a rocket engineering specialist company wanted to charge hundreds of thousands of dollars and take 18 months to develop for him. That event and others are described here: https://www.airspacemag.com/space/is-spacex-changing-the-rocket-equation-132285884/

            Now, keep in mind that the article is now going on 7 years old, so Musk did this BEFORE all the arguments about how he is such a fraud, etc.

  • avatar
    Rasputin

    They would have to pay me to take an electric vehicle.
    An EV is just not feasible for me. While one would work for trips around town, I am often traveling far & wide through the non-urban Mid-Atlantic and Mid-West Sates. While I enjoy driving, even on 400 – 700 mile trips, I can do without the added hours of charging, to say nothing of the anxiety of trying to find a charging station before I run out of juice.

    • 0 avatar
      Vulpine

      Nobody has said that the EV is all things for all people. However, I believe you exaggerate the “anxiety” you would feel towards trying to find a charging station. With at least one brand, the car will find it for you and tell you how to get there. And as far as driving through the non-urban Mid-Atlantic, I’m seeing many, MANY opportunities to charge, especially if those long trips include overnight stays (which would be pretty normal for such trips anyway.)

  • avatar
    APaGttH

    …At the dawn of the new year, Tesla’s $7,500 federal tax credit dropped by 50 percent due to the automaker hitting the 200,000-vehicle cap two quarters earlier. The company’s volume model carries a lower price than the Model S and X, increasing the chances of a reduced incentive swaying buyers away. While Tesla tried to compensate for the incentive loss with two price cuts, a disjointed (and partially aborted) plan…

    First quarter without the incentives and deliveries crater. I guess you do need to rob from the poor and give to the rich to sell EVs.

  • avatar
    stuki

    While production is down, they are shipping 3s en masse to Europe now. So the “In Transit” numbers aren’t just empty excuses. The sustainability of “take deposits for $35K cars; then start by filling orders for $60K ones paid for by CA tax breaks and privileges, then $60K ones paid for by the Norwegian Government, and then hope that costs have come down enough to not flat out lose money on the lower priced ones by the time you build those” is still up in the air, though….

    Upside is, Europe (interestingly enough, mainly Europe south of Scandinavia. But there are few things more unlimited than the amount of other people’s money provincial politicians are willing to throw at compensating for the inferiority complexes they feel next to their peers from larger, more central and “sophisticated” places….) has geography and driving patterns much more amendable to BEVs than much of the United States.

    • 0 avatar
      ToddAtlasF1

      The European auto industry is gearing up to flood Europe with more EVs than the child slaves in the cobalt mines ever dreamed of. Three years from now, the European market will be as important to Tesla as it is to NASCAR.

      • 0 avatar

        You lost me at NASCAR

      • 0 avatar
        HotPotato

        If they make a good-faith effort to build the Mercedes E300 of EVs, Tesla will have trouble. But the Euro makers have never made a good-faith effort to build greenmobiles. Their eco-diesels turn out to have been emissions cheaters, and their plug-in hybrids aren’t nearly as good as a $7000 used 2011 Chevy Volt. Tesla should be okay until they get serious.

  • avatar
    newenthusiast

    Given my usage (hauling up to 5 kids plus gear a few days a week who all want to charge their devices en route, and then often placing paddle boards on the roof and/or hauling jet skis on the weekends), I’m not sure that that there is an electric on the market that could be my one car. I could see getting something like the Pacifica Hybrid though. Not sure how that tows.

    But a purely electric vehicle? I’m not sure that there is one that fits the bill right now. As long as its price competitive with any other vehicle that fits my needs, I’d look at one in the future.

    Important point, however: I never buy new, so all these incentives are a moot point. I’d buy it like any other car. Look at its price, condition, and any available maintenance history (the more thorough, the better).

  • avatar
    mike978

    Both bulls and bears have rationales to support their positions. The second quarter will be crucial because many of those rationales will either be verified or negated. The Model 3 is the US should do well based on the SR and SR+ specs coming out as well as the tax credit halving in Q3, thereby pulling some demand forward to June. Additionally the rationale that shipments to China and Europe caused delivery issues should recede since shipments started in January, so Q2 will be the first full quarter. If Q2 is weak then it really will prove demand is limited. Early July will be interesting.
    Also if Model 3 sales are demand constrained then Tesla has a long wait until the Model Y comes out in Q3/Q4 2020.

  • avatar
    rickkop

    Tesla needs to address how they sell cars. If I’m going to put a deposit down on a car I’d like to at least see it in person not to mention a test drive. They want you to buy the car and then after you take delivery if you don’t like it you can return it. Right, I wonder how that works. Used or preowned are even worse. They send you a few terrible out of focus pictures to decide from if you want to buy or not. Again, if I’m buying a used car, I’d like to see it first.

    • 0 avatar
      mike978

      They are keeping the stores open and test drive availability – which is a good thing.

    • 0 avatar
      bunkie

      I went for a test ride (I didn’t want to use my test drive opportunity) two weeks back. It was a nice demonstration of the car and its capabilities. I just walked in on a whim and was in the seat a few minutes later. I didn’t;t get a hard sell or anything else. Actually a much better experience than what ‘ve experienced at a lot of car dealers. Also, if you don’t like the car, you can return it within, I believe, 7 days for a full refund.

  • avatar
    mike978

    What I don`t understand is why there is not a $70K version of the Model S. Most manufacturers have overlap between their models, top level A4’s cost more than base A6, top level A6 cost more than base A8 etc.The gap between the top Model 3 and the base Model S is over $20,000. The S has competition later this year from Porsche and the X has competition from the e-Tron.

  • avatar
    Art Vandelay

    Well, honestly, I’d be most likely to replace my F150 with an electric truck. In theory things like regenerative braking and instant torque should make towing better. Depends on range and charge time/availability though. Won’t know that until one hits the market.

    I track my car though. Nothing serious, but it is a ton of fun. The model 3 “track mode” review of the car actually on the track made an ev taking up that spot in my garage way less likely. Think it was under 20 laps on a charge with serious performance degregation in around 10. That takes away a hobby so probably not going there.

  • avatar
    228

    I used to drive Tesla and I no longer do. Reasons? Crappy customer service, crappy treatment of owner, crappy software, low grade interior materials, you can get much more comfortable car for $90K with normal controls you can feel without taking eyes off the road. Look at, say, BMW X5 forums and check survey on what car people traded in for the new BMW. Lots of Tesla owners.

  • avatar
    kushman1

    There is only demand for the 3/Y or just one cuv/sedan and they probably should’ve started like Alfa with just the 3/Y vs s/X. History will show though that they should’ve just put out a sports car and transit style van for physical build and then just build and supply OS, components and parts to control the market. There’s so many OEM’s that would’ve partnered with them but now they dug their own grave going all in.

    • 0 avatar
      HotPotato

      They did some of what you say early on. If you bought a Toyota RAV4 EV or a Mercedes-Benz 250e, you were buying a Tesla…albeit one stuffed into an existing shell and crippled with a small battery pack. The OEMs later severed those relationships to develop their own stuff instead of paying a potential competitor…the plan only works if they’re willing to play ball.


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