Tesla (NASDAQ:TSLA) Cannot Deliver Cars Means Tesla Cannot Deliver Profits

Tesla (NASDAQ:TSLA) Cannot Deliver Cars Means Tesla Cannot Deliver Profits


Tesla (NASDAQ:TSLA) may have emerged from ‘production Hell”as the company met Wall Street expectations producing 80,142 vehicles in Q-3, about 50% more than its prior high set in it’s last Quarter, that according to the company.

The latest numbers included 53,239 M-3s, just under the 5,000 or so cars Tesla has been producing per week at its peak in an all-out sprint at the end of the Quarter. While less than the 6,000 M3’s per week Tesla said was its targe in July.

An investment analyst from Instinet who toured the company’s Fremont, California, factory on 25 September said M3 production was “organized and brisk” in spite of delays from manufacturing stations such as body welding and paint, sure as Elon Musk head butted the EVs down the line.

Getting the cars to customers has proved challenging and a Key reason is those $1,000 placeholder do not have owner/driver financing and Tesla does not offer it to its customers.

Tesla did manage to deliver 83,500 EVs in the most recent Quarter. The number of M3s it delivered (55,840) was also slightly higher than analysts’ consensus of 55,600.

Tesla said in a 2 October statement that “delivery and outbound vehicle logistics” are now its main challenges.

Around 400,000 customers who deposited $1,000 are still waiting in line for a M3. It’s not clear when/if they will all get their cars.

The M3 is supposed to start at $35,000, but the cheapest models offered on Tesla’s website are priced at $49,000.

  • Bait & Switch!

Even among those receiving cars, customers are complaining about long waits and unresponsive service from Tesla.

“Sorry for difficulties delivering your Tesla due to high volume!” CEO Elon Musk wrote on Twitter on 28 September. “Critical to show that environmentally sustainable is financially sustainable.”

Short sellers, or the investors betting against Tesla, have been photographing staging areas for Tesla vehicles in California, New Jersey, and Arizona for months, and speculating that demand is not matching up to supply.

Tesla has been collecting hundreds of cars at empty lots and industrial sites as they await deliveries or, in some cases, receive service due to quality issues.

Manufacturing irregularities plagued Tesla’s initial M3 launch when customers complained of ill-fitting body panels and wind noise.  While recent reports show improving quality, vehicles are still showing up in lots with bar-coded stickers or grease pencil markings noting pending repairs such as scratches or dents.

Tesla is now racing to deliver a profitable Quarter.

In an e-Mail sent to employees, and submitted to the US Securities and Exchange Commission), CEO Musk told employees on 30 September that “we are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow Sunday,” he wrote. “If we go all out tomorrow, we will achieve epic victory beyond all expectations. Go Tesla!!!”

Even if Tesla can sustain these production bursts, the company’s problems do not end there.

Once Tesla fixes its delivery challenges, servicing all those cars is next big issue, then there is the staggering debt coming due in November and in March 2019

Mr. Musk has plans to bring its collision repair services in-house with same-day service ”for repaired car to be better than before accident,” as he tweeted in September, sure…

HeffX-LTN’s outlook from Tesla shares is Bearish to Very Bearish

Stay tuned…

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