Elon Musk Retrenching to Kill Industry Giants MBZ & BMW, Sure…
$TSLA, $BMWYY, $DDAIF
A bit over 1 year ago Elon Musk strode on to a stage to unveil his Tesla Model 3 ($35,000 ). The 5 seat EV accelerates as fast as the the best-selling luxury sport sedans in America the BMW 3 Series and the Mercedes C Class, it costs about the same.
The crowd loved it up.
Then after taking in about 400,000 deposits at $1,000 each, Mr. Musk ramped up his production plans 2X and Key production executives ankled the fledgling electric carmaker and he started to sleep on the floor in his office.
Now, just 3 months from the “official” start of production, Mr. Musk seems to think he can match the performance of those top luxury brands, but outsell them in the US in 1 year with virtually no dealer network, he is audacious.
I have been following Tesla for at least 8 years and it is worth taking a moment to appreciate just how high Mr. Musk has set the bar with his unmitigated hyperbole.
He publicly disclosed detailed production targets in a call with investors last month painting a bright picture.
This is what he said, as follows:
- The company is placing orders with suppliers for “1,000 cars a week in July, 2,000 a week in August, and 4,000 a week in September.”
- Then plans to increase production to 5,000 cars a week by the end of this year, and 10,000 a week by the end of Y 2018. To put that in context, the company is able to make 2,000 of both the Model S and Model X cars a week.
For Mr. Musk to hit all of his targets, and historically his target hitting record is light, Tesla needs to build about 430,000 Model 3s by the end of next year.
That is more than all of the EV (cars) sold world-wide last year.
He says his rollout will begin in California and move East, focusing on US 1,000 depoist reservation holders. Even if 50% of the Model 3 inventory shipped to other countries, US sales under the Musk targets would outpace the BMW 3 Series and the Mercedes C-Class combined.
Another wild forecast Mr. Musk reiterated on that investor call is that he thinks it can build 500,000 total cars next year.
Model S and Model X growth would continue, but at a slowing rate.
Pay attention people.
To sell that many $35,000 sedans in the US would be unprecedented based on what we know about car the US markets today and how people spend their dollars, it could but it will not happen.
Most Wall Street analyst agree that Tesla cannot make or sell 500,000 electric cars next year, and Musk has a long history of never making a deadline that he set. He is a clever guy, but not a miracle worker.
Last Friday, Mr. Musk fired off 50 Tweets, among them was a micro-mini video clip, a glimpse of what he calls a “release candidate” Model 3.
Note: that term is typically used in the software industry, referring to a final version that is almost ready for public release.
There is demand for the Model 3 among Tesla’s 30,000 employees, the majority of whom are unable to afford the pricier Model S and Model X.
Mr. Musk is putting that interest to use, releasing the 1st several thousand Model 3’s to employee reservation holders for testing a huge discount. So, that es early problems are identified, they can be fixed at the work site.
A Key goals of last week’s Tweet storm is the downplaying expectations for new features. Mr. Musk said there will be just 1 display with no additional gauges or heads-up-display projected at the windshield.
Also, the dual-motor all-wheel drive, and high performance versions of the Model 3 will be delayed for up to a year to keep the rollout simple.
The company is keeping it simple, so there is nothing new to unveil in April. All of his fantasy car ideas have been scrapped.
If Tesla is actually able to produce 500,000 cars in Y 2018, there is the Big Q of whether it will be able to sustain that kind of demand, which would establish it as the leading US luxury car manufacturer.
Tesla has had plenty of pain in getting its new Enhanced Autopilot hardware suite to match the performance of the prior Autopilot. So, expect that whatever Tesla has planned for self-driving features will be delayed too.
The stock is overbought, and as I still see it, a Wild speculation, prudence is the Rule.
|NASDAQ:TSLA||278.3||31 March 2017||0.38||278.73||279.68||276.32||3,294,300|
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Bullish (0.25)||Neutral (0.10)||Bullish (0.40)||Bullish (0.25)|
Have a terrific weekend.