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Tesla Stock Up 6% as Company Announces Model 3 Production Record

05 April, 2018, 02:01 | Author: Kristi Dunn
  • Tesla stock drops after Elon Musk jokes about bankruptcy and investors expect more bad news

Production numbers are finally officially in: The first quarter of the year saw Tesla (NASDAQ:TSLA) produce 34,494 vehicles overall, up 40% from the previous quarter.

The announcement Tuesday that it was producing its Model 3 vehicles at a rate of a little more than 2,000 cars per week at the end of March fell short of its target output of 2,500 a week. Tesla produced 2,020 Model 3s last week and plans to produce another 2,000 this week, as well as 2,000 Model S and Model X cars.

The company now expects the Model 3 production rate will increase through the second quarter and said it would make 5,000 units a week in "about three months". Total production over the quarter was 9,766 Model 3s, an average of 800 per week. Tesla also hopes to achieve an ideal combination of positive operating cash flow, good gross margin, and high volume.

Mr. Musk has been glorified by investors and the media as the one with all the answers: previous debt raises and equity issuances to fund Tesla, a company which has been churning through an incredible amount of cash each year, have only sped up. Tesla shares have fallen roughly 16% this year, a larger drop than the S&P 500's 3.2% decline.

This story will be updated.

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In the first two months of this year, 36,000 vehicles were imported from USA, including Teslas, Lincolns and Mustangs, according to China's PCA. A photograph showed Musk apparently slumped unconscious beside a Model 3, holding a cardboard sign reading "Bankwupt". If you nnoticed, the Model 3 production was a fourfold increase over Q4 of 2017, and the company anticipates that it will continue to increase Model 3 production rates by quarter. Tesla has built up a die-hard fan base, with some half-million people putting down US$1,000 reservations for the Model 3 since it was unveiled two years ago. With the continuous Model 3 "production hell', Tesla is likely to find fresh funding more expensive and more hard to get, according to analysts". The EV maker exports a sizable chunk of its output to China where demand for hybrids and electrics - grouped together as "New Energy vehicles" by the government - is higher than in the USA, and Teslas are the most luxurious EVs on the market.

"The bigger concern is they are sacrificing Models S and X production to fix Model 3", said analyst Dave Sullivan, of AutoPacific Inc., "which generates a lot less revenue". By mid-morning the stock was trading 3 percent higher, around $260 a share.

The results are a bit of a mixed bag for Tesla.

Investors raised their bets against Tesla Inc shares by 10 per cent since mid-March, according to data provided by S3 Partners LLC on Tuesday, betting the market has misjudged the electric vehicle maker's prospects. It's the company's first lower-cost, high-volume auto and is crucial to its goal of becoming a profitable, mainstream automaker.

That means that profitable Model S and X sales were sacrificed in favor of unprofitable Model 3 sales.


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