Tesla (NASDAQ:TSLA) Model S Luxury Sedan Lost its “Recommended” Rating + Earnings FLASH

Tesla (NASDAQ:TSLA) Model S Luxury Sedan Lost its “Recommended” Rating + Earnings FLASH

Tesla (NASDAQ:TSLA) Model S Luxury Sedan Lost its “Recommended” Rating + Earnings FLASH


  • The M-3 sedan, seen as Key to Tesla’s profitability, debuted in CR’s with “Average” reliability.
  • M-X SUV is rated “Much Worse Than Average”
  • The M-S luxury sedan dropped to “Below Average” from “Above Average” and is not recommended.
  • Tesla actually made money last Quarter reported net income of $311.5-M on $6.1-B of automotive revenue.

FLASH: Tesla (NASDAQ:TSLA) reported a net profit, positive cash flow and wider-than-expected margins for the latest Quarter late Wednesday, delivering on CEO Elon Musk’s promise to turn the EV maker profitable as higher production volumes of its M-3 began to pay off.

Tesla reiterated that it expected to repeat its net profit in the current Quarter, helping drive the company’s shares up 14% in after hours trading.

CEO Elon Musk surprised investors by delivering on his pledge to make Tesla profitable for only the 3rd Quarter in its 15-year history at 1.75/per diluted share or $311.5-M on $6.1-B of automotive revenue.

“We can actually be cash flow positive and profitable in all Quarters going forward,” Mr. Musk said, qualifying that he excluded those in which a big debt payment comes due, such as Q-1 of Y 2019. Mr. Musk reiterated that Tesla right now does not plan to raise equity or debt, leaving that open for the future.

Mechanical Issues Persist

The M-S, which starts at $74,500, dropped to “Below Average” from “Above Average” last year

Tesla high-end Model S sedan lost its “recommended” rating and the EV maker slid overall by 6 spots to almost the bottom in Consumer Reports magazine’s annual reliability survey.

Every domestic automaker landed in the bottom 50% of the magazine’s new-car reliability rankings, which include data collected for more than 500,000 vehicles.

The survey, which ranked 29 brands in the US market, was released Wednesday.

“It’s the complexities that have really dragged down Tesla,” said Jake Fisher, the magazine’s director of auto testing. “The majority of the problems that we are seeing with Tesla truly are mechanical issues.”

The M-S appears similar to the model launched 6 years ago, but Tesla has made significant mechanical and software changes over the past few years, including making air suspension and AWD standard, he said. That can hurt reliability as more complexity is added.

Toyota Motor Corp.’s Lexus and Toyota brands took the Top 2 spots, as they have for 6 years running. The survey results can be found at CR.org/reliability.

The magazine’s annual survey of new vehicle reliability predicts which cars will give owners fewer or more problems than their competitors, based on data collected. Its scorecard is influential among consumers and industry executives.

Tesla’s ranking slid to #27, ahead of only General Motors Co’s Cadillac brand and Volvo.

The M-S, luxury sedan which starts at $74,500, dropped to “Below Average” from “Above Average” last year, and its overall score denied it Consumer Reports’ “Recommended” tag. Owners reported suspension problems and other issues, including the extending door handle, the magazine said.

Tesla’s Model X SUV remained “Much Worse Than Average” with ongoing problems, including the falcon-wing doors and center display screen. The M-3 sedan, seen as key to Tesla’s profitability, debuted with “Average” reliability.

In May, Consumer Reports recommended the Model 3 after its latest tests showed a software update improved the car’s braking.

Other domestic brand rankings included: Ford Motor Co’s Ford and Lincoln brands at #’s 18 and 20; GM’s Buick, Chevrolet and GMC brands at #’s 19, 23 and 25; and Fiat Chrysler Automobiles’ Dodge, Jeep, Chrysler and Ram brands at #’s 21, 22, 24 and 26, respectively.

Rounding out the survey’s top five were Japan’s Mazda Motor Corp, which registered the biggest gain, by nine spots; Subaru and Hyundai Motor Co’s Kia brand.

HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Neutral (0.01) Neutral (0.20) Neutral (0.05) Neutral (-0.21)

Stay tuned…

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