Analyst: Tesla Model X Production Hitting Benchmarks, Tesla On Track To Produce 80,000-Plus EVs In 2016

Tesla

JUN 10 2016 BY STEVEN LOVEDAY 22

Aerial View Of Tesla Fremont Factory

Aerial View Of Tesla Fremont Factory

Pacific Crest analyst Brad Erickson recently toured the Tesla Fremont Factory. Following his visit, he informed his clients that the company seems to be on schedule with Tesla Model X production. He also saw confidence in the new direction following the initial quality concerns.

Tesla Model X

Tesla Model X

Tesla will exit the second quarter producing 2,000 combined Model S and X vehicles per week. This puts the company at the 80,000 to 90,000 yearly target. Erickson voiced concerns about the company’s spending and is skeptical about Tesla being able to pull off a half million cars by 2018.

Erickson’s note to clients (via Barron’s):

After a Fremont factory tour and updated channel checks, we are more positive on Tesla in the near term. Our Sector Weight rating still assumes a more-achievable longer-term production ramp and profitability versus the company’s lofty targets; however, solid near-term execution could improve sentiment, causing the market to become less skeptical of these longer-term challenges.

Model X production run-rates are hitting benchmarks. In a tour led by VP of IR Jeff Evanson, commentary indicated that Model X production is ramping in line with Q2 expectations, and we found the tone incrementally more confident regarding potential further quality issues for X.

Company appears to be tracking toward annual delivery targets. With a steep 2H ramp, we maintain that the upside opportunity appears limited; however, if Tesla can exit Q2 at 2,000 cars produced per week (as was the expectation as of last print), it would likely not have to increase much on a per week basis throughout 2H to meet the midpoint of target ranges.

Optimism could rise again, but we remain Sector Weight on more-achievable longer-term targets. While we think the stock’s reaction after last quarter illustrated significant investor skepticism around the accelerated Model 3 production ramp, we believe shares could see further appreciation in the near term on improving sentiment and near-term targets appearing more readily achievable. Over the medium to longer term, however, the size of potential cash burn continues to concern us, and we believe the 2018 plan laid out by management for half a million deliveries could prove overly ambitious and carries with it extreme financial risk if production missteps were to occur again.

Sources: Barron’s, Electrek

Categories: Tesla

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22 Comments on "Analyst: Tesla Model X Production Hitting Benchmarks, Tesla On Track To Produce 80,000-Plus EVs In 2016"

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I just hope they have the Model X quality up to par. It will get pricey if they have to keep providing free repairs to them for manufacturing defect issues.

Good news for Tesla.

Wonder how this affects the Model 3 buyers counting on the tax credit. Mid-2017 they hit the 200K mark. By the time Model 3 is released, it will be almost gone.

Remember that the sunset is spread over many quarters. Tesla is trying to increase production so that more people will fit in each of the quarters. The more they can deliver in those quarters, the more that will get the credit or lower amounts of the credit.

The 200k limit is for US cars, so it is unlikely that they will hit it until early 2018.

Early 2018, then if you read the credit rules, it’s until the end of the NEXT quarter that it drop and again the quarter after that, so quite a few in the fir 6-9 months will get credits.

Let’s hope Washington DC pulls their heads out of their collective —— and extend the tax credit to a significantly higher number or a future date like 2020

Not enough people signed the petition to renew it, bothered.

If half the people who put a reservation on a Model 3 signed it– the issue would have been forwarded to the White House.

I don’t get why people choose not to participate in that, as it would have been in their best self interests, to do so…

The White House has already proposed ways to improve the fed. tax incentive. But the White House doesn’t write the budget. The House of Representatives does, in accordance with the Origination Clause of the US Constitution.

“All Bills for raising Revenue shall originate in the House of Representatives”.

The White House has no power to modify or extend the current program. Only the Congress has that power. Sending a petition to the White House is meaningless. If you want something put through the Congress, you have to be willing to vote out the party currently controlling Congress.

Petitions are not a shortcut around that political reality.

Hopefully enough voters “pull their heads out of their collective —— ” and doesn’t vote the party into power who has officially put in their budget proposal that they will kill ALL manufacturing incentives for ALL green energy products.

While we talk about whether or not the tax incentive will last to 200,000+ units, one party is planning on simply ending it completely.

scott franco (No M3 FAUX GRILL!)

“We were wrong”.

Three words. Not a whole article.

I’m reminded of this article: http://www.streetinsider.com/Analyst+Comments/Stifel+Positive+on+Tesla+(TSLA)+Following+Model+X+Launch%3B+Concerns+Appear+Overblown+for+Now/10931697.html

… in which an analyst labeled Model X production fears as “overblown” with a price target of $400.

The car did not ship in volume for six months.

Tesla stock pumpers certainly promote unrealistic expectations for Tesla’s performance as a company, but at least they don’t resort to promoting smear campaigns about a successful company which is doing good in this world… as short-selling Tesla bashers like you do.

Pushmi-Pullyu,

Tesla’s ongoing success is obviously driving these trolls crazy.

Yes. Witness the smear campaign promoted by Daily Kanban and that professional Tesla basher Niedermeyer. Rather a “swiftboating” attack; trying to turn Tesla’s biggest advantages — attacking its record for safety and its very proactive treatment of any potential safety problems.

I’d have thought that the serial Tesla bashers on InsideEVs wouldn’t have stooped so low as to join in that. Sadly, I was wrong; they joined right in. They’re even more despicable than I thought.

I really do wonder how they sleep at night. They must not like themselves much.

Actually, I believe their self-hate is being channeled to Tesla. There is a weird profit aspect mixed into this, too. Tesla is, at least in their minds, The Devil. Why not make some stock-market money off something you seek to destroy, while you’re at it? 😉

Conspiracy Cults are scary. But that’s how they sleep at night. Sleeping is the least of their problems…

Looking like the show is ready to hit the road. Come an see the show, it’s a dynamo…
https://www.youtube.com/watch?v=0VsifANR96s

At this point the question is demand rather than capacity. Based on recent incentives and lower priced models Tesla is not production constrained, but demand constrained. It is unlikely that Model X can hit sales targets. Also starting in Fall there will be new competition, longer range BMW i3, VW eGolf and eventually Chevy Bolt and lastly, yes Tesla Model 3.

While this is a bit anecdotal, it does pertain to the concept presented here. I will be picking up my X in Tampa on Wednesday (6/15). The delivery specialist was a bit delinquent in sending me an email, so I called. He told me that they were swamped with the X’s being readied for delivery and said, ‘wait till you see when you get here’. So, whether on the factory floor, or sitting at the end point lot, it does appear that the X’s are appearing in much greater numbers…thankfully.

flmark, I would invite you to check out EV Fest 2016, http://www.evfest.ca – and since last December when a local coworker received his Tesla Model S 90D, and drove it from here, in Toronto, ON, to Key West, FL, during our Christmas break, Tesla has added Superchargers in Erie, PA, and Grimsby, ON! (And many other spots, too!)

I would love to have you drive the Model X and come up for EV Fest 2016 as a personal exhibiter, and as a guest speaker, if the dates fit your schedule and available time!

By hitting 2000 cars a week they would not have to increase much throughout 2H to reach 2016 target.

But if you can nearly double your production in 1H while battling severe production problems with Model X, why would you stop there?
Tesla can use all the money sales can bring in. So the logical expectation for 2H is they keep ramping up and increase sales.

And they have to train all those new factory workers before Model3 starts production. What better way to do that than by producing actual cars?

At 2k/week they’re close to maxing out their assembly line. The recent price cut (aka S 60) may indicate they’re close to maxing out customer demand, as well.