Tesla’s (NASDAQ:TSLA) M-3 Production Spike Not Sustainable
Recall that on 30 November it was reported that Tesla (NASDAQ:TSLA) produced 1,000 M-3 sedans in 1 day, the reports were based on a leaked internal e-Mail from CEO Elon Musk to all employees.
Shares shot up on the news, as has happened after prior spike in M-3 production runs.
In his e-Mail, Mr. Musk ‘demands’ that employees work to make this spiked production rate sustainable. This seems extremely unlikely to me, given the company’s prior failures to turn spiked rates into sustained production of the M-3.
The over extended share market reaction should cool off as investors realize that this run is no different from Mr. Musk’s past runs at high volume production for the every-man EV M-3 Sedan.
Over the past several weeks we discussed the company’s continuing failure to hit a long standing goal of consistently producing 5,000 M-3s weekly. This has been a Key issue, despite numerous 1-off spiked production drives in past months.
The latest spike occurred this week, with the stated aim of hitting a production rate of 7,000 M-3s/week.
Last week lots of MSM outlets reported that Tesla had achieved its 7,000 M-3s goal on that 1 week attempt. Based on the contents of a leaked e-Mail from CEO Musk to all employees, many outlets reported that Tesla had produced 1,000 M-3s in a 1 day.
Tesla shares shot up on the hyped up news.
The market’s reaction looks irrational to me, given that Tesla has done this before, and they have repeatedly proven unsustainable.
I expect this market cool off as Tesla is forced to return to a more stable, lower production rate.
The fact is that the M-3s production rate has been trending down for weeks, according the Bloomberg Model 3 Tracker, and the forward-looking trend shows further drops in production ahead.
Now, add to that the fact that President Trump is seriously considering to eliminate all of the tax and green credits that are available to entice consumers to buy the EV, and auto companies that Tesla sells the green credits to that make up a large percentage of it revenue.
And so far there is no such thing as a $35,000 Tesla M-3 car.
|HeffX-LTN Analysis for RACE:||Overall||Short||Intermediate||Long|
|Bullish (0.33)||Neutral (0.10)||Very Bullish (0.54)||Bullish (0.33)|
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