In a well-leaked report that may finally arrest the inexorable decline in Tesla shares (not to mention bond prices) seen over the past few weeks, Tesla confirmed yesterday’s Jalopnik leak and announced that “in the past seven days, Tesla produced 2,020 Model 3 vehicles” missing its own forecast of 2,500, and adding that “in the next seven days, we expect to produce 2,000 Model S and X vehicles and 2,000 Model 3 vehicles.”
So as GM is eliminating monthly sales updates, is Tesla introducing weekly (non-GAAP) guidance?
Commenting on the production ramp which has cost the stock so dearly in recent weeks, Musk said that “it is a testament to the ability of the Tesla production team that Model 3 volume now exceeds Model S and Model X combined. What took our team five years for S/X, took only nine months for Model 3.”
Overall, Musk said Q1 production totaled 34,494 vehicles, a 40% increase from Q4 “and by far the most productive quarter in Tesla history.” Of these, 24,728 were Model S and Model X, and 9,766 were Model 3. And here is some typical Elon Muskina hyperbole:
The Model 3 output increased exponentially, representing a fourfold increase over last quarter. This is the fastest growth of any automotive company in the modern era. If this rate of growth continues, it will exceed even that of Ford and the Model T.
So… 2,000 cars, which is 20% below the company’s recent target of 2,500, and 60% below the Sept 2017 forecast of 5,000 per week. Maybe Musk is not exactly clear what Model T growth was like, but it was a “little” higher.
In total, Tesla delivered 29,980 vehicles in Q1, of which 11,730 were Model S, 10,070 were Model X, and 8,180 were Model 3, also below the sellside estimate of 8,786.
Tesla also said that it still sees a target production rate of about 5,000 units per week in about three months, in line with the company’s previous target, and “laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow. As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.”
Translation: expect an equity raise at any moment.
Finally, Musk wanted to “share two additional points about Model 3” with investors:
- The quality of Model 3 coming out of production is at the highest level we have seen across all our products. This is reflected in the overwhelming delight experienced by our customers with their Model 3’s. Our initial customer satisfaction score for Model 3 quality is above 93%, which is the highest score in Tesla’s history.
- Net Model 3 reservations remained stable through Q1. The reasons for order cancellation are almost entirely due to delays in production in general and delays in availability of certain planned options, particularly dual motor AWD and the smaller battery pack. As described above, owner happiness with the product is extremely high.
And his parting words: “We would like to thank our customers, suppliers and investors for their continued patience and belief in Tesla.”
Which, when filtering Elon Musk-speak, suggests that potential Model 3 customers are aggressively yanking their deposits from the company in the latest “depositor run.”