Tesla Stock Falls 10 Percent On Lower Model S Volume Numbers

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2012 Tesla Model S Signature

2012 Tesla Model S Signature

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The price of Tesla Motors shares fell 10 percent yesterday, closing at $27.66--down $3 from the previous day's ending price--due to a reduced revenue forecast.

As described in a statement filed with the SEC, Tesla Motors [NSDQ:TSLA] says it will have sold only 2,700 to 3,225 cars by the end of the year, rather than the 5,000 it had previously forecast.

As noted on Business Insider and elsewhere, Tesla said it was ramping up production more slowly than anticipated, due in part to difficulties at some parts suppliers in delivering parts on time.

The company said it had built 255 Model S vehicles as of last Sunday, September 23, with 77 of those assembled just last week.

Tesla now projects that it will build more than 300 Model S cars, and deliver between 200 and 225 of them, by the time the quarter ends on Sunday.

During the fourth quarter, starting Monday, it expects to deliver between 2,500 and 3,000 vehicles, generating revenue of $400 million to $440 million--a reduction from its earlier projections of $560 million to $600 million.

Gross margin will fall due to the reduction in projected Model S sales, Tesla said, as well as delays in payments from Daimler for development work on powertrains for its Mercedes-Benz B Class E-Cell.

Third-quarter revenue is projected at $44 million to $46 million.

The company plans to deliver more than 20,000 Model S vehicles next year, it said.

Finally, Tesla said it has now fully drawn down the $465 million in low-interest loans from the Department of Energy under the Advanced Technology Vehicle Manufacturing program.

On Monday, the company was granted a waiver from a loan requirement specifying a specific ratio of assets to liabilities; it has until the end of October to come up with a proposal for speedier repayment of its DoE loan.

A spokesman for the department said Tesla had made all required payments to date on the loan, which the company said it expects to repay before its 10-year term.

2012 Tesla Model S, brief test drive, New York City, July 2012

2012 Tesla Model S, brief test drive, New York City, July 2012

Enlarge Photo

Principal repayments are to begin in December; interest payments began in February.

Tesla said it will have to raise additional capital if it is to avoid requesting yet another modification to the loan terms. It plans to sell 4.34 million additional shares, which it expects will raise $128 million to $148 million.

Tesla also said it had approximately 13,000 outstanding reservations for the Model S, up from 11,500 at its last report, and expects to add 2,600 more in the fourth quarter.

None of this should be surprising, given Tesla's opaque statements on production volume and its refusal to release monthly sales figures.

And given the major quality challenges suffered by Fisker Automotive, Tesla is perhaps better served by going slowly and doing everything it can to maintain the quality of a smaller number of Model S vehicles.

It simply goes to show that making cars is extraordinarily challenging and consumes ferocious amounts of capital.

Will Tesla Motors survive? Give us your thoughts in the Comments below.


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Comments (13)
  1. If all this amounts to is a 3 to 6 months shift in their plan, I think they will be fine. I think more telling will be when they are able to produce as many cars as they like, will the customers be there in sufficient numbers to justify the capital expense that went into making the vehicle.

  2. Realities of gearing up production of a new plateform set in. If Tesla delivers more than ~#2450 Model S's in Q4; it will have manufactured/sold more cars in a single quarter than in all previous quarters combined! A great prequel to year ten.

  3. This will not be an issue. The people that have driven the car LOVE IT!! That will keep them going.

  4. Obviously 3000 units produced by year's end would still be an impressive achievement but after being so adamant about the 5000 number Tesla allowed its sceptics quite a triumph and further incentives to keep idle speculations about its chances of survival alive, which in itself is not helpful for Tesla's future. Musk's credibility took a blow here and he needs to make sure now that no further downward revisions of production numbers are necessary.

    This is a long term thing though. I think the future of Tesla will become clear by the end of 2013. That's when we'll have a clearer picture about Tesla's ability to deliver and keeping interest in its products going.

  5. Disappointing, if expected, news, but I'll agree that there's no need for panic or overreaction, either. This proves little in either direction about Tesla long term, IMHO, but it does add fuel to the skeptics, of course. And the future viability of Tesla itself doesn't just depend on fans like most of us here, it depends on skeptics and critics, too, as well as writers.

    It does go to show why many fans like myself aren't particularly confident about Tesla's viability as an independent OEM. Too many things beyond your control, and minor problems are amplified far too much. Overall, Tesla has done well, but too many of these types of issue and they won't be able to recover like an OEM that has other income streams.

    Think long term...

  6. I agree that closing one's eyes for the enormous problems of a giant undertaking like starting a car company is not helpful; OTOH I do get quite fed up with John Voelcker's tendency to jump on every bit of bad news to invite futile speculations about Tesla's imminent demise. I appreciate that he feels that Tesla stands about a snowball's chance in heck of survival but I think it has become too much his base attitude for all reporting on Tesla which seems rather unproductive in the context of a blog about green vehicles. I feel he owes his readers an article about 10 reasons why Tesla might in fact have a bright future.

    Honesty is the key though. The only thing that bothers me more than sceptics is sceptics pretending to be fans.

  7. Despite John's having explained it to you many times, he's not supposed to be a fan, he's a journalist. There are plenty of sites that never question anything Tesla does and you're welcome to spend your time there if you prefer, of course. I'd say he's mostly objective but I'm not the one getting bitter and angry every time even a question about Tesla is raised.

    As for the childish "sceptics pretending to be fans" dig, hilarious. As in the sense that your mind apparently isn't strong enough to grasp the fact that people can be fans of the products while still maintaining doubts about whether or not Tesla will make it on its own.

    The speculation about Tesla is out there so expecting it to be absent from GCR because you're a fan is silly.

  8. Might I add your free not to respond to my comments. It's not really your place to speak for John Voelcker and your general tone is just to riddled with aggression and petty insults for you to be the sort of people I would be interested to have any discussion with. but that I already explained to you many times.

  9. Then write your own "Tesla Is Perfect and Anyone Who Dares Criticize Any Aspect of it Is Anti-EV" article... Just stop the constant whining about every sentence you think shoudl be written differently. Nobody's forcing you to be a crybaby or come to a site which you do nothing but badmouth.

    And I'll respond to anything I choose, since unlike you, I actually attempt to speak rationally.

    And eventually, could you please look up "your," "you're," "it's," and "its," as well as "loose" and "lose?" If you want to seem superior to others, spelling like an elementary school student doesn't exactly help your cause.

  10. I'd like to put in a good word for Voelcker on this issue.

    Firstly, this is national news and showed up on Reuters home page. So it is not like Voelcker was hunting for bad news.

    Secondly, the whole article (save the last three paragraphs) are neutral factual statements. Looking at the last three paragraphs, only the first one IMHO can be seen as negative toward Tesla (regarding the opaqueness). The other two strike a neutral tone IMHO.

    He didn't dig into Musk, like he could have, regarding Musk's recent comments that people shorting the stock would experience as "Tsunami of pain".

  11. Nothing unexpected. Ramping up a major new platform is difficult for any company with high tech products. Even Apple has issues meeting demand with its new phones...

    The problem is that as long as orders continue to increase and production continue to ramp up, it will be fine. I agree with the slower but higher quality rampe approach.

    Now, how the "conservative" media spin this "story" during election year is another topic by itself...

  12. I was greatly concerned about Tesla's viability when they stopped selling the Roadsters. I didn't think they would be able to make it to the Model S. I am glad they proved me wrong. We need nimble, innovative car companies to design the products of the future. I hope they are able to sell enough luxury cars to develop a lower cost model in the near future.

  13. FYI, TSLA is up 4% today and its stock has done better than Ford in the past 2 year, 1 year, 6 month and 3month comparison..

    Both have received so called "green loan" from the DOE. Tesla got less than 1/10 the loan that Ford got.

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