Bloomberg Sums Up Tesla’s Sales And Production Miss In Q2 2016

JUL 8 2016 BY MARK KANE 41

Tesla Motors Car Deliveries - Q2'2016

Tesla Motors Car Deliveries – Q2’2016

Bloomberg released quick summary of the Tesla Motors preliminary sales result for second quarter, about 15% below forecast.

Tesla delivered 14,370 vehicles, consisting of 9,745 Model S and 4,625 Model X, while the original target was for 17,000.   With the sales release Tesla did note 5,150 customer deliveries just missed the cut-off to be counted in Q2, and were “in transit” at June’s end.

However, the production of 18,345 was lower than the target of 20,000 by over 8%, and there is no justifiable “get out of jail free” card that can be put on that; as EVs not made, are EVs not made…for whatever the reason.

With 29,180 deliveries in the first half of the year, and an estimated 50,000 in the second half, Tesla barely will touch its lower target of 80,000 to 90,000 deliveries.

That’s brings questions whether Tesla will be able to expand the production and sales to meet even more ambitious goals for the Model 3?

“Tesla’s ongoing difficulty in managing launch and production of its vehicles reinforces our concerns around its ability to launch the Model 3 well and reach its pulled-forward goal of 500,000 deliveries in 2018,” Emmanuel Rosner, an analyst with CLSA, wrote in note to clients. He reiterated his sell rating and $200 target for the shares.

The carmaker has had trouble getting its vehicles to customers fast enough to meet its targets even after increasing production. Tesla said 5,150 cars were still on trucks and ships making their way to clients who ordered them, and will be delivered in the first part of this quarter. Tesla is increasing output at its Fremont, California, factory with an eye toward making 500,000 cars a year by 2018 — an ambitious timeline that also depends on the carmaker’s battery factory east of Reno, Nevada, coming online with battery-cell production.

Tesla missed its deliveries forecast for the second time in a row this year. In the first quarter, the company blamed the shortfall on “hubris” in adding in too much new technology that led to part shortages for the Model X.”

Inside Tesla's Fremont Factory

Inside Tesla’s Fremont Factory

source: Bloomberg

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41 Comments on "Bloomberg Sums Up Tesla’s Sales And Production Miss In Q2 2016"

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Why not just “Low Ball” everyone on your numbers then you’ll look like you killed it…..lol

“Underpromise and overdeliver” works really well for a lot of reasons.
But not if hype/cachet is part of the secret sauce. Tesla is building great cars, but the hype/cachet is part of the reason they are selling so well at the current price point.

Seems like there is a formula. Musk promises. Tesla issues stock. Tesla fails to deliver. Musk makes a bigger promise. Tesla sells stock. Repeat.

As long as there are willing buyers for new stock issues why should anything change.

And yet they have been growing 50% year over year for a few years now, and can realistically keep that going for several more years. That’s why there are buyers, not because of the lofty promises.

I agree, s.
I just wish they hadn’t predicted 60% growth. LOL!
I think Tesla is hugely important and that they build great cars that sell in large part due to the cachet that Musk has brought to the brand. And cachet can be lost over time. Another falcon wing fiasco would be worse than over-estimating production levels, but almost always being late doesn’t exactly add luster to the Tesla image.

I too wish Tesla would be a bit more conservative with their targets.

With that said, if Tesla’s management didn’t push for impossible goals, and then settle for “only” amazing results, maybe they wouldn’t have gone from a startup with no sales, to the top selling EV.

Sure it would be nice if all high-growth companies hit all their targets, the same way some 50 or 100 year old well established company has steady sales that are easy to predict and steady. But that just isn’t how it works.

In a stock you can choose a low-growth rate company that consistently hits targets, or you can choose a high-growth company that has volatile quarters.

There are no magical pink unicorns that are both high-growth, with atomic clock-like consistent quarterly results. They don’t exist.

You sum up pretty well my own ambivalence about Tesla continually hyping its growth in production.

Perhaps hype is necessary in a startup, to attract investments. But I think it’s time, past time, for Tesla to grow up a bit, and approach its projections of growth in more conservative terms. There is something to be said for under-promising and over-delivering.

In the long run, over-promising and under-delivering just makes people more skeptical of your next projection. Time for Tesla to put on its “big boy” pants, stop acting like a startup, and start acting like a company with a valuable reputation worth protecting by cutting back on the hype.

All, of course, just my own opinion.

Don C –

Meh. It isn’t that Tesla never delivers what they say they will deliver, it is that they are consistently late by a quarter or two. But they do actually deliver in the end.

Tesla will make their target of 80,000 to 90,000 deliveries over a 1 year span. It just won’t be Q1-Q4 of 2016. But they very much will succeed in delivering those numbers when the 1 year span from 2106 Q2, Q3, Q4, plus Q1 2017 are added up.

They are late on Model X ramp-up. Yawn.

Does it really matter in the long term? Not at all. If they announced dozens of EV’s, but failed to deliver, that would be a problem (VW/Audi).

If you are a savoy long-term investor, hitting targets a quarter or two late isn’t what you worry about. It is the long-term progress that matters. And NOBODY in their right mind would suggest that Tesla’s growth has been anything but astounding.

I would go into my rant about quarterly results being over-hyped and antithetical to long term investment. But every serious investor already knows all about that.

DonC said:

“Seems like there is a formula. Musk promises. Tesla issues stock. Tesla fails to deliver. Musk makes a bigger promise. Tesla sells stock. Repeat.”

Gosh, if one didn’t know better, one might almost think that DonC was obsessed with Tesla’s stock price, due to his apparently almost permanent investment in shorting Tesla stock. 🙄

Looks like this guy, who’s clearly suffering from TES*, is projecting his own obsession onto others.

*Tesla Envy Syndrome

“Tesla envy happens when other people have, ahem, long positions and yours is too short.” — Jim Whitehead

There is no way Tesla will pull off 500k cars in 2018! If they manage produce 100k model 3:s on top of what they are producing now, that would be an amazing feat itself! 400k model 3:s? Not a chance!

I agree. As a huge Tesla fan and modest shareholder, I still doubt their ability to get to 500k in 2018. I thought their original plan for 500k in 2020 was unrealistic, but now I hope they hit that number in 2020 at least, which will still be amazing!

Huge fans don’t doubt. Liar. Every single misinformer these days claims they love what they bash.

I’m gonna take that as sarcasm. If so, LOL.

unfortunately, Not, but obviously and Always worth the laugh anyway.

certain names will appear in every article on Tesla — scrolling is your Only defense, and bothering to respond is utterly futile.

RexxSee is a dyed-in-the-wool conspiracy theorist. I wouldn’t pay too much attention to what he posts.

For the record, and speaking as a big Tesla fan myself, I also doubt the company’s ability to deliver 500k cars in 2018, or to even reach that run rate by the end of that year.

Perhaps RexxSee thinks I’m a TSLA stock-shorting FUDster, too. 😛

S — Yup, Tesla will probably be late.

But the Model 3 will be a massive success anyways.

So there it is.

I agree with you too. The bar has been set pretty high.

To be honest, If Tesla could deliver 90K Model S and X and 100K Model 3s in 2018, they would be killing it. I would much rather see them get the quality right than to hit 500K with lots of problems.

I’m a bit more optimistic for 2018. With a better SuperCharger network, new markets, autopilot2, 100kWh pack or more, I can see 100.000 S and X be delivered, and maybe 250.000 model 3. So not 500.000, but 350.000, and then 550.000 in 2019 (with Model Y first deliveries).

2019.

I just want model three

Thats what the doctor ordered for your oil addiction. I’m self medicating with a 2016 Leaf but I also have a gas guzzler..I put down $1000 deposit for a model 3 to cure my oil addiction.

They’re already outgrowing the space needed to deliver all these cars. The last weeks of previous quarters are going to be a permanent look.

Not true whatsoever.

The NUMMI factory has already produced 500K cars per year before Tesla even owned it. Plus, Tesla bought a lot of land around it. Also, EVs have fewer parts and simpler assembly than ICE models.

Tesla can easily produce 500K cars per year in the US alone. With factories in Europe and China, they could easily produce over a million.

Ah pjwood1 said running out of space to ‘deliver’ not produce. No one is dubbing the factory capabilities. It’s the existing store network that will be under stain causing longer delivery times.

Bret said: “The NUMMI factory has already produced 500K cars per year before Tesla even owned it.” Really? I challenge you to find any credible source claiming that the NUMMI auto assembly plant ever produced 500,000 cars in one year. When I Googled the subject a few months ago, what I found said that it had never achieved better than about 250,000 cars in any year. In fact, the under-performance of the plant is one reason it was closed. With Tesla doing a lot more in-house manufacturing and assembly of parts and sub-assemblies than legacy auto makers, I strongly question that the Fremont plant will ever achieve 500k cars per year, or even 400k. Anything in excess of, let’s say, 350k Tesla cars from that one factory would surprise me. Anything in excess of 400k would surprise me greatly. “Tesla can easily produce 500K cars per year in the US alone.” Not at the Fremont plant. And I strongly doubt Tesla will expand that one plant. Labor costs in California are very high. Of course it’s possible that Tesla will move a lot of the parts manufacturing and subassembly work out of the main plant, to satellite factories in the… Read more »

She told me she’d be ready at 8:00.

She wasn’t…..

*laugh*

That pretty much sums it up. She’s gonna be late. It’s just a fact. Folks just have to pull their big boy pants up and live with it. Plan for it. Accept reality.

Throwing a hissy-fit about it isn’t going to change a thing.

And that’s OK. Markets include promises in company valuations so when profits are not realised there is a small correction no one cares about.

With Tesla being overdepended on stock value for financing their operations, and the stock itself being inflated, the risks are much larger. Every small correction may end up with a big one if investors panic.

But when she came 20min late, she looked great!

What I wanna say; More important than units is the QUALITY of each built car. I bet a lot of the non deliveries has to do with a large back-log on Model X issues finally solved.

Just 2 weeks ago Model X was introduced to the European Press (!!). So new things take time, innovative quality products even more.

I wish they can build a million cars a yr by then “if they can build them right” …However., I’m sure that this, nor the 500,000 will happen at least for the next 5 to 7 yrs…

Tesla is in a funny situation now, whereby they have so little credibility with their guidance that they *have* to keep overpromising. Because they’ve missed their past guidance so consistently, the market already discounts, and will continue continue to discount, their forecasts. They’d have to underpromise for at least a few quarters before the market catches on, and in that period the stock would be artificially depressed.

hmmm…

You mean the long term institutional investors who collectively own 63% of TSLA shares, can professionally correctly price the value of TSLA shares, by simply relaxing and doing the math?

That they are still capable of doing their own math to calculate Tesla long term growth, regardless of whether or not Tesla technically hits their targets on time or not?

And that the professionals aren’t actually phased by quarterly misses, and continue to increase their positions. Because even though Tesla is really lousy at writing predictions, they are actually very very good at growing sales. And their underlying numbers still prove that.

http://www.nasdaq.com/symbol/tsla/institutional-holdings

Four Electrics said:

“Tesla is in a funny situation now, whereby they have so little credibility with their guidance…”

LOL!

That’s rich, coming from one of our handful of regular Tesla FUDster short-sellers on this website.

Talk about having no credibility left!

And, Four Electrics, you can take the obvious cure for your TES at any time. Just sell off your short position!

I wonder how many other other, would be change agents, ideas are hindered or left on the bench due to wall streets narrow image of progress. They stifle innovation for the sake of quarterly returns. As if they were a kid jumping up and down screaming for a second cookie. So hard to make the changes we need when so many have either their foot on the brake or their hand out… Companies used to be run by engineers instead of bankers. Tesla does not fit their mold.

Wall Street runs by manipulating stock prices up and down using the media like Bloomberg; been doing this for years; the banksters don’t care which way the stock moves as long as it moves.

Tesla makes them lots of money when they short the stock on Elon’s missed estimates and numbers.

Funny how media focuses on current month expectations. Looking at year-over-year growth percent in production numbers, few manufactures are seeming YoY growth in production.

In the BEV segment, few manufactures have a BEV model that delivers over 2000 units per month; let alone multiple models with 200o+ deliveries per month!

It’s not a matter of “if” Tesla will deliver larger production numbers … just a matter of when.

The larger question is “when will other manufactures be capable to exceed Tesla’s BEV delivery numbers?”

Not in a 5 to 10 years.

Panasonic is that big. Tesla sells that good.

Brian_Henderson said: “Funny how media focuses on current month expectations. Looking at year-over-year growth percent in production numbers, few manufactures are seeming YoY growth in production.” Indeed. It’s very disheartening the way investors concentrate so much on short-term investments, rather than taking the long view. And so analyst sites like Bloomberg, unfortunately, also tend to focus on short-term thinking. Not that short-term investor thinking is any new phenomenon. I was surprised, when reading a book about the laying of the first Transatlantic cable (A Thread across the Ocean: The Heroic Story of the Transatlantic Cable), that even back in the 1850s, investors were generally unwilling to wait more than 5 years for a return on investment. But I think the situation has gotten much worse in the last few decades, with “corporate raiders” buying companies and selling them off for parts, as if the jobs involved, and the effect on the economy of the loss of those jobs, were of no value or concern whatsoever. Long-term, Tesla is one of the fastest-growing major companies the world has seen in a long time. And… at the risk of posting something contrary to my complaints about focusing on Tesla stock prices here,… Read more »

People here seem to forget that the beginning of Q2 had a Model X 3rd row recall that slowed production extensively. The production miss was less than one week’s worth of production.

This also has almost no bearing on the Model 3, as the production issues are about a very complicated vehicle. The Model 3 is a far simpler proposition in comparison and Tesla has been gearing up for Model 3 production for years alsready. Even if Tesla misses Model 3 estimates by 10%, the numbers we are now talking about still represent phenomenal growth.

Give Tesla a pass they are saving humanity from a horrible oil addiction.

Dear InsideEVs staff:

While we* appreciate the fact that Tesla’s corporate performance does affect its ability to make and sell cars, including its ability to get the much-anticipated Model ≡ into production, at the same time we wish to gently remind you that the name of this website is InsideEVs… and not InsideTeslaStockTrading.

An occasional article on the subject of Tesla’s corporate performance may be appropriate, but lately articles concerning the coverage of Tesla by financial news sources, such as Bloomberg, seem to be appearing here with noticeably increasing frequency.

We’re not saying that a Bloomberg article on the subject isn’t appropriate for InsideEVs to cover, but perhaps a moratorium on the subject for at least a few days following this would be appropriate.

Articles directly related to Tesla’s stock price, such as this one, attracts comments from Tesla stock short-sellers like flies to… manure.

*I think I can safely say in this particular case, that I speak not only for myself, but for a large number of your regular readers. I think I’m on safe grounds here because I’ve seen similar opinions expressed repeatedly, altho generally more succinctly.