Tesla has posted a surge in electric-car deliveries that could prove pivotal to earning an elusive profit and overcoming a series of distracting missteps by CEO Elon Musk.
The company handed over 83 500 vehicles in the third quarter, doubling its total in the prior three months. Of those deliveries, 55 840 were Model 3 sedans, in the range of what Tesla forecast as it finally started to mass-manufacture the sedan. The shares were down 1% as of 10am on Tuesday in New York.
The results could prove to be a watershed moment for Musk, who jeopardised his future with Tesla during the quarter by prematurely claiming he had the funding and investor support to take the car maker private. He settled fraud charges brought by the Securities and Exchange Commission last week by agreeing to pay US$20-million and step down as chairman. The agency initially sought to bar him from serving as an officer or director, which could have overshadowed the progress the company has made in manufacturing more vehicles.
Tesla produced 53 239 Model 3s in the quarter, in line with the 50 000 to 55 000 range that the company had forecast. An additional 8 048 of the sedans were in transit to customers.
While Musk, 47, has predicted Tesla will report a profit and positive cash flow for the quarter, the company was cagey in its statement on Tuesday, saying it’ll share information about financial performance in its third-quarter earnings report. When the company released production and deliveries results three months ago, it reaffirmed guidance for positive net income and cash flow in the third and fourth quarters.
Tesla pointed to headwinds that may have contributed to the reluctance to address profitability. Trade tensions between the US and China have boosted tariffs on the company’s vehicles to 40%, compared to 15% for other imported cars.
To get around those duties, Tesla said it’s accelerating construction of a factory in Shanghai. The company sealed an agreement with the city’s government in July to start building its second car assembly plant in the world and said at the time that the first vehicles will roll off the line within roughly two years. It’ll take another two to three years for the factory to reach its capacity to build about 500 000 vehicles annually.
Tesla and its supporters went to great lengths to boost deliveries as the quarter came to a close. Owners volunteered in droves at stores and service centres to help answer questions for customers, many of whom are new to electric cars. The company also offered incentives including free charging and referral-programme perks to entice purchases.
Musk has been candid on Twitter about Tesla still having kinks to work out in smoothly getting cars into the hands of customers. He’s responded to several frustrated buyers to apologise for delays and said the company has left what he called “production hell”, only to end up in “delivery logistics hell”.
Still, Musk has said problems such as a shortage of vehicle carriers will be easier to solve than the manufacturing woes that plagued the company after Model 3 output began last year. — Reported by Dana Hull, with assistance from Tom Randall and Esha Dey, (c) 2018 Bloomberg LP