Tesla deliveries on the rise
Results may signal a turning point after Musk’s troubles with watchdog
San Francisco -Tesla posted a surge in deliveries of electric cars that could prove pivotal to earning an elusive profit and overcoming a series of distracting missteps by CEO Elon Musk.
The company handed over 83,500 vehicles in the third quarter, doubling its total in the previous three months. Of those deliveries, 55,840 were Model 3 sedans, in the range of what Tesla forecast as it finally started to mass-manufacture the sedan. The share price was 1% down at 10am on Tuesday in New York.
The results could prove to be a watershed for Musk, who jeopardised his future with Tesla during the quarter by claiming prematurely he had the funding and investor support to take the car maker private.
He settled fraud charges brought by the US Securities and Exchange Commission last week by agreeing to pay $20m and step down as chairman.
The agency initially sought to bar him from serving as an officer or director, which could have overshadowed progress the company has made in manufacturing more vehicles.
Tesla produced 53,239 Model 3s in the quarter, in line with the 50,000 to 55,000 range that the company had forecast. An additional 8,048 of the sedans were in transit to customers.
While Musk has predicted Tesla will report a profit and positive cash flow for the quarter, the company was cagey in its statement on Tuesday, saying it would share financial performance information in its third-quarter earnings report. When it released production and delivery results three months ago, it reaffirmed guidance for positive net income and cash flow in the third and fourth quarters.
Tesla pointed to headwinds that might have contributed to the reluctance to deal with profitability. Trade tension between the US and China have boosted tariffs on the company’s vehicles to 40%, compared with 15% for other imported vehicles. To get around those duties, Tesla said it was accelerating construction of a factory in Shanghai. The company sealed an agreement with the city’s government in July to start building its second car-assembly plant.
It said at the time that the first vehicles would roll off the line within roughly two years. It would take another two or three years for the factory to reach its capacity to build about 500,000 vehicles a year.
Tesla and its supporters went to great lengths to boost deliveries as the quarter came to a close. Owners volunteered in droves at stores and service centres to help answer questions from customers, many of whom are new to electric cars.
The company also offered incentives, including free charging and referral-programme perks to entice purchases.
Musk has been candid on Twitter about Tesla still having kinks to work out in getting cars into the hands of customers.
He has responded to several frustrated buyers to apologise for delays, saying that the company had left what he called "production hell" only to end up in "delivery logistics hell".
Still, Musk has said problems such as a shortage of carriers will be easier to solve than the manufacturing woes that plagued Tesla after Model 3 output began last year.