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Tesla Cuts Model S Production Goal For Third Quarter To 500, Analyst Reports

 
4,095 views Jul 18, 2012
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Tesla Motors said today it would cut the third-quarter production target for its 2012 Model S all-electric sport sedan, according to a stock analyst who follows the company.

A report by Wunderlich Securities analyst Theodore O'Neill notes that Tesla is now saying it would probably only deliver 500 cars through the end of September, down from a previous target of 1,000.

It still expects to deliver about 5,000 cars by the end of 2012, meaning an average of 1,500 cars a month from October through December.


The delays were attributed to unspecified production execution issues.

Green Car Reports has asked Tesla for confirmation of the report, and will update this story if we receive further information.

[UPDATE: In response to a question asking for confirmation of the report, Tesla spokesperson Shanna Hendriks replied, "Tesla's plan has been and continues to be a focus on quality while ramping up production of Model S. This plan has not changed, and there have been no unexpected challenges or issues."

That translates to "no comment"; you may draw your own conclusions.]

Tesla delivered its first production Model S in late June, and is now slowly ramping up production of the pioneering electric luxury sedan.

It has said it expects to deliver 15,000 cars during 2013, once its assembly plant in Fremont, California, is up to a steady production rate.

The news caused Wunderlich to downgrade Tesla Motors stock and change its recommendation to Sell, setting a new target price of $28 per share--down from its previous target of $49.

Two other analysts, Jefferies Group and Maxim Group, left their Buy ratings for Tesla stock unchanged.

Tesla Motors [NSDQ:TSLA] stock declined steadily throughout yesterday; today the stock price climbed until about 1 pm and then began to fall.

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Comments (13)

  1. fb_1792677598 avatar George Parrott Posted: 7/18/2012 11:44am PDT

    I had a direct contact with Tesla yesterday (17 July) and it was repeated that they are still at only "1-2 cars a day production," and they plan to "ramp up production very slowly to make sure that every car is perfect when it leaves the plant."
     
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  2. Chris O avatar Chris O Posted: 7/18/2012 11:49am PDT

    Sounds like just speculation games to me. A rumour of a slower than expected ramp up of production hardly seems to warrant almost halving the price target for Tesla stock. I didn't even know a 1000 units for third quarter production existed. There is a lot of short selling of Tesla stock going on and I guess the short sellers need this sort of games to make a profit.
     
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  3. fb_100000005296979 avatar Kent Beuchert Posted: 7/18/2012 12:54pm PDT

    Having invested in thinly traded stocks in the past, rumors (always false) started by short sellers are a common occurrence. For larger public companies this doesn't happen near as often due to the fact that there are a large number of outstanding shares, and the number of investors they can provoke to sell won't make much of a difference in the stock price. However, this story is
    obviously not false (since no categorical denial by the company)
    and a slower than expected start up production is highly unlikely to spook investors - that sort of thing is commonplace in the auto industry. Nor do shorties control the reporting media
    or what they decide to publish. Shorties usually disseminate using blogs. The media decides what they publish
     
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  4. fb_1799141900 avatar Tom Moloughney Posted: 7/18/2012 4:42pm PDT

    I'm not too concerned with the early production numbers, just get it right. Personally I'd be happy if they are pumping out 1500 per month by the end of the year. I'm much more concerned with the quality reports on the delivered cars. I want to hear there are few defects, no recalls (ala Fisker)and everybody that gets one loves it. That, plus some in depth reports once journalists get extended time with them. Let them slowly ramp up production at the pace they are comfortable with, just make sure the quality is there.
     
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  5. CDspeed avatar CDspeed . Posted: 7/18/2012 4:47pm PDT

    I'd rather see them ramp up production slowly so they don't end up with the same quality issues that have plagued the Fisker Karma.
     
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  6. fb_1559222512 avatar Xiaolong Li Posted: 7/18/2012 4:58pm PDT

    I work on far more expensive engineering products. This is nothing out of the "norm". You would rather slow the ramp to ensure good quality than ship as much as you can but end up with high failure rate and piss off the customers...

    I like Tesla's approach to quality. EV community don't need any more ammunitions for the naysayers.
     
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  7. Mark Stang avatar Mark Stang Posted: 7/19/2012 12:30am PDT

    "I like Tesla's approach to quality. EV community don't need any more ammunitions for the nay Sayer"
    A few months ago I wrote that Tesla needs to have many Signature edition Model S ready for the June 22 launch date. It appears that they had maybe 10 cars or so ready for buyers. I was hoping that they would have had at least 50 to 100 cars ready for the Deposit holders. I like that Tesla is paying close attention to detail unlike Fisker who suffered from poorly fitting body panels and one car started on fire and burned down an owners garage. If Tesla wants to be a manufacture to the masses it needs to ramp up production soon or they risk being known as a boutique manufacture and could loose some of the deposits 10,000 cars=833 per month/yr
     
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  8. fb_1559222512 avatar Xiaolong Li Posted: 7/19/2012 2:58pm PDT

    Agreed. But you would rather be late than on time with a broken product.. Ideally, you would deliver both.. But Tesla is still a fairly small company. Making cars on massive scale is NOT as easy as it looks..
     
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  9. Samos avatar Samos . Posted: 7/20/2012 4:06am PDT

    for an individual depositor who may have plonked their money down 12 months ago, the last thing they would want is to ask for the car early if it is not really ready - Tesla is probably smart in trying to ensure consistent early very good news, slowly building a lot of credibility - it does wonders for a 'new' company

    tesla, i wish i had the dosh to buy one!
     
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  10. robok2 avatar robok2 Posted: 7/20/2012 6:08am PDT

    Not a big deal at all to the rational, one would think. And most here obviously get that. But the extreme overreaction by a few does briefly show why it's tough to be a small maker on the way up. Yes, get things correct, things will be fine and this will be all be long forgotten if you get volumes where you say later this year.

    This happens on initial launches for many vehicles, it's just not that visible if the production launch on a Fusion or a Malibu is delayed or volume reduced. Published in industry publications, perhaps, but not affecting share price or creating inflated reactions to a minor event, if that.
     
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  11. bklyn11234 avatar Terkel Nielsen Posted: 7/20/2012 1:33pm PDT

    This news combined with the limited access they've been giving journalists tells me the car is not ready for prime time. It seems they made a big show of delivering a couple cars to some friendly investors just to say they are on time and boost the stock price. Elon's definitely a showman.
     
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  12. Roy_H avatar Roy Harvie Posted: 7/21/2012 1:59pm PDT

    "Tesla Motors said today it would cut the third-quarter production target for its 2012 Model S all-electric sport sedan"

    Link to press announcement please.

    I would certainly expect GCR to verify such a claim before posting this article. Also stated is that the production is cut to 500 cars, but from what?
     
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  13. Roy_H avatar Roy Harvie Posted: 7/21/2012 2:06pm PDT

    Oops, missed the original target statement of 1000. Still would like to be assured this is official information and not just one man's claim.
     
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