Tesla Motors Inc (TSLA) Does A U Turn On Delivery Of Cars


The news of Tesla Motors Inc (NASDAQ:TSLA) is taking a U-turn on the company’s delivery target of its vehicles. This has not come as a surprise to several investors. Given the struggle it had last year, everyone was very well aware that the CEO, Elon Musk, has kept a very tough target of 55,000 vehicles deliveries in the current year. Now, the company has reduced its targeted figure to 50,000 – 55,000 vehicle deliveries.

3Q Delivery Estimation

Obviously, investors punished Tesla Motors Inc (NASDAQ:TSLA) stock in the extended hours of trading on Wednesday by dragging down over 5%. On the back of 11,507 electric vehicle deliveries in the second quarter, the company is projecting a delivery of 12,000 vehicles in the third quarter. Even this is going to be a tough target since it could deliver only around 1,600 vehicles in July if reports are to be believed.

As far as the Model X sports utility vehicle is concerned, the electric vehicle maker expects to commence delivery in the late third quarter. The company indicated that the testing process is going on very well. However, any delay in the commencement of the delivery will result in a big threat to the further reduction in delivery of vehicles in the current year. A One week delay will result in an approximately 800 vehicles delivery shortage.

Choice Between Quality And Numbers

Tesla Motors Inc (NASDAQ:TSLA)’s Musk and CFO, Deepak Ahuja, said that if the company needs to select between the quality of the product and the quarterly numbers, it would prefer to go with the former. The company’s objective is to establish a long-term value and believes that its first priority is to deliver great cars.

Tesla Motors Inc (NASDAQ:TSLA)’s CEO comments clearly suggest that they will not worry about falling short of the targeted delivery of vehicles. The first two quarters witnessed 21,537 vehicle deliveries. This meant that 14% short of the 25,000 vehicles delivery mark which half way mark of revised target level. Therefore, it will not be a surprise if the company revised downwards further when it announces third quarter results.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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