TESLA TROUBLES: Deliveries Plummet – By Todd Horwitz, Bubba Trading

 

Tesla’s Deliveries Plummet

Tesla on Wednesday announced it delivered about 63,000 cars in Q1, below analysts’ expectations of 76,000 deliveries. It also said it produced approximately 77,100 cars during the quarter. However, the company reaffirmed full-year guidance of 360,000 to 400,000 vehicle deliveries in 2019, which should reassure investors given this quarter’s miss. It also said that approximately 10,600 vehicles were in transit to customers, reflecting unexpectedly strong demand in China and Europe toward the end of the quarter.

Breaking the numbers down by model, the company says it delivered approximately 50,900 Model 3s and 12,100 Model S and X vehicles. It produced 62,950 of its new Model 3 vehicles and 14,150 Model S and X cars.

Tesla books its sales when a car is delivered. Concerns of a slow start to 2019 have raised questions about the company’s ability to deliver on ambitious sales targets after it struggled for nearly two years to increase production of the Model 3, its lowest-priced vehicle. Tesla had slashed the Model 3’s starting price three times during the quarter, finally reaching its long-promised base of $35,000, suggesting to some analysts that demand for more-expensive versions had plateaued.

Last quarter was the first sales period for Tesla after the phaseout of U.S. tax credits went into effect, dropping to $3,750 from $7,500 for buyers. It eventually goes away next year. On Wednesday, Tesla attributed the slowdown to challenges associated with taking the Model 3 overseas for the first time, noting it had only delivered half of the entire quarter’s vehicles 10 days before the period ended. The company cautioned that lower-than-expected sales volumes along with several price cuts would negatively affect first-quarter income. It said it planned to end the quarter with “sufficient cash on hand.” 

David Whiston, an analyst at Morningstar Research Services, said the Model 3 “should bounce back in Q2 if the transition challenges to delivering in Europe and China are behind them.” “Eventually one wants them to be able to service customers globally at the same time rather than prioritizing certain geographies in a quarter,” Mr. Whiston added. Tesla said it delivered 50,900 Model 3 cars in the first quarter, down 20% from 63,359 the preceding three months. Analysts had expected 54,600 vehicles in the latest quarter. Sales of the more-expensive Model S car and Model X sport-utility vehicle collectively fell to 12,100 from 27,602 during the fourth quarter.

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.