Tesla Reports Record Output as Musk Delivers on Broader Goal

Niraj Chokshi(The New York Times)

Tesla said January 3 that it had produced over 100,000 vehicles and delivered even more in the fourth quarter of 2019, meeting a goal it had laid out to investors and ending the year on stronger footing than at the start.
In a statement, the electric-vehicle maker said it delivered 112,000 cars in the final three months of last year and produced a record 104,891, showing healthy demand as it continues to focus on global growth.
“When you deliver more cars than you produce, you get into your bank more cash than you spent,” said Pierre Ferragu, an analyst with New Street Research. He said that would enable Tesla to continue its expansion, including its manufacturing presence in China, where cars are beginning to roll off a Shanghai assembly line.
Ferragu estimated that Tesla had delivered 60,000 vehicles in North America and 52,000 internationally in the fourth quarter. The company did not provide a breakdown.
The most recently released figures put Tesla’s total deliveries for 2019 at 367,500, which the company said was 50 percent more than in 2018. It had forecast deliveries of 360,000 to 400,000 for the year, and analysts said the company could deliver as many as half a million vehicles in 2020.
The news caps a volatile year for Tesla, which turned a corner in the second half of 2019 after the strain of a $1.1 billion loss in the first half. After falling as low as $177 in June, the company’s stock price started to soar in late October, when Tesla reported a third-quarter profit. The stock hit a record closing price January 3, $443.01, up 3 percent for the day even as the overall market declined.
The new record price surpassed a milestone of $420. In 2018, Tesla’s chief executive, Elon Musk, said he had “funding secured” to take the company private at that price. The deal turned out to be less solid than Musk had made it seem, attracting the scrutiny of federal regulators and resulting in his stepping down as chairman.
Expectations for the year ahead are mixed. Some analysts predict Tesla’s stock will rise above $500 because of increasing interest in electric vehicles and the company’s strong recent performance. Others say the company is greatly overvalued.
By most accounts, however, Tesla underwent a difficult yet successful evolution in the last year as it ramped up production and sales of its less-expensive Model 3, shifting away from its larger and lower-volume Model X and Model S.
“Those transitions are usually never seamless, never easy,” said Jed Dorsheimer, an analyst with Canaccord Genuity. “They’re bumpy, and they can be ugly. But the company executed pretty well.” He expects Tesla’s stock to reach $515 as demand for electric vehicles accelerates.
The Model 3 accounted for more than 80 percent of the cars produced and delivered by Tesla in the fourth quarter.
Tesla announced the first deliveries of the nearly 1,000 cars it has produced so far at its Shanghai factory, less than a year after breaking ground. Until now, Tesla output had been limited to its assembly line in Fremont, California. The company said it had demonstrated an ability to produce more than 3,000 vehicles per week at the Shanghai plant.
Such news has heartened optimistic analysts like Ferragu and Dorsheimer, but others are more skeptical about the year ahead for Tesla.
While the company has been a leading maker of electric vehicles, it faces growing competition from established carmakers and startups alike, said Craig Irwin, an analyst with Roth Capital Partners.
“Yeah, they’re the innovator,” he said. “Yeah, they’re aggressively out there first on the technology, and they’ve done a superb job. But others will be in that market, too. It’s not just going to be exclusively for Tesla.”
To Irwin, the company’s stock is “egregiously” overvalued because many investors still treat Tesla as a company defined by aggressive growth even though it has matured into something different.
“Now it needs to be treated like an automotive company,” he said.
Tesla had also benefited in recent years from a federal tax credit on electric vehicles that effectively lowered the cost of its vehicles by as much as $7,500. But the credit began phasing out after Tesla sold 200,000 qualifying cars and was fully eliminated at the end of last year.
That may be an advantage for Tesla rivals that are able to offer the credit. But analysts do not expect the loss of the tax credit to have a major long-term effect on sales for Tesla, a well-known brand at a time when demand for electric vehicles is rising.
In addition to its global expansion, Tesla plans to begin deliveries of its all-electric, midsize SUV, the Model Y, in the fall. Thanks to a significant overlap in components with the Model 3, the company should be able to save on production costs for the Model Y, analysts said, though some question whether the new SUV will eat into demand for the Model 3.

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