Tesla making a big push to beat previous delivery record

X Scalper

Analysts’ fear is that even if Tesla does show marked improvement in deliveries this quarter, Musk will achieve this at the expense of profitability. And with a shrinking U.S. tax credit posing a threat to demand in the second half of the year, Tesla’s efforts to hand over more Model 3s overseas could further compromise earnings because of relatively higher shipping and other administrative expenses.

“I would short it. We are short it,” Alexander Roepers, founder of Atlantic Investment Management, said of Tesla’s stock on Bloomberg Television. The hedge fund has $1.5 billion under management. “If they achieve margins like General Motors on 2021 earnings and trade at a multiple twice General Motors, they should drop 55 percent from here,” he said of Tesla.

Before turning 48 on Friday, Musk wrote to Tesla staff that they could set a new record for deliveries if they were to “go all out” as the quarter came to a close. He tweeted that his birthday plan was far from exotic: he’d spend it working on Tesla logistics.

Tesla has said it expects to deliver 360,000 to 400,000 cars in 2019, but handed over just 63,000 in the first quarter. That’s heaped pressure on the company to ramp up its delivery operations both at home and abroad.

The whims of government incentives for electric-car purchases has complicated matters. Canada initially exempted Tesla from a $5,000 Canadian ($3,806) rebate it started offering to other battery-powered models on May 1 because the Model 3 was too expensive to qualify. The company started offering a cheaper, shorter-range version that’s now eligible.

Analysts and customers alike point to the Canada incentive, a $3,750 federal tax credit in the U.S. and demand from countries including Norway and the Netherlands as reasons Tesla may have a shot this quarter at coming close to the record 90,700 cars the company delivered in the last three months of 2018.

“I’d be shocked if they come in below 89,000,” Hanna said. “I think North America is strong because of Canada, and Europe is strong. The real question mark is China.”

Tesla makes all of its vehicles at its lone auto assembly plant in Fremont, Calif., and while it doesn’t report vehicle sales by region, registration data suggests it’s still highly reliant on its home state for sales. Expenses associated with scaling up deliveries in China, where the company is building a car and battery assembly plant, sets up a “challenging stretch ahead,” Bloomberg Intelligence analyst Kevin Tynan wrote in a report this month.

While there are reasons to be anxious about Tesla’s future, John Booth’s focus last week was on getting his Model 3 before the U.S. tax credit toward Tesla purchases shrinks to $1,875 as of July 1. The polygraph examiner took delivery of his car on Monday in Costa Mesa to more or less wipe out the cost of long commutes into Los Angeles.

“Only had the car for a few days, but everything so far is real nice,” Booth wrote in an email. He and his wife were one of about 10 couples picking up their cars on Monday. The staff at Tesla’s store “did a nice job, even with them being busy.”

Zach Nussbaum, 29, drove a Tesla for the very first time on Friday, when he picked up his blue Model 3 at a service center in Austin, Texas, and drove it home.

“The tax credit was important to me because it’s going to get cut in half,” Nussbaum said by phone. He has little regard for Tesla’s doubters: “I ignore the naysayers and I just listen to actual people who own the car.”

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