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Tesla 1Q production numbers - lower than forecast

Tesla bears were kicked in the chops, after what looked like a miss in sales numbers the session prior, less than 15 thousand vehicles for the quarter, the company suggested that they would deliver somewhere in the region of 80 to 90 thousand vehicles for the year. Here are the sales numbers -> On Track for Full-Year Delivery Guidance. To put this into context, I read that last year there were 116 thousand electric vehicles sold globally, of the plug in kind. That sounded a bit low to me. Bearing in mind that the global car market is somewhere in the region of 83 million vehicles, China at 21.1 million and North America at 20.6 million. Europe sales were (including Russia) at 18.8 million units. Basically those three regions account for all of the consumer related vehicles, Toyota sold over 10.15 million units as the number one seller globally.

And then Tesla had, by Saturday night in a tweet from Elon Musk, pre-orders for 276 thousand units of a car that is expected to be delivered at the end of 2017. And currently, they can't make more than 15 thousand vehicles (including the highly prized Model S and newer Model X) a quarter. The company wants to deliver 500 thousand vehicles per annum by 2020, at that size and scale, they wouldn't even be 5 percent of the total global sales of Toyota. I am guessing what Musk and the gang are looking for here, the final point would be a desirable, above average price. A Toyota Corolla "starts" at 17,300 Dollars, the Tesla Model 3, even though it is affordable, costs double that of the Toyota Corolla. On a comparable basis, the BMW i series, the electric vehicle, sees the lower end model start at 42,400 Dollars. I can't help then think that the Tesla is superior in every way to the lower end BMW, even pricing!

For the last quarter, Tesla had component supply problems with half a dozen parts of the roughly 8000 that go into a Tesla. As the release says: "missing even one part means a car cannot be delivered. Tesla is addressing all three root causes to ensure that these mistakes are not repeated with the Model 3 launch. That is what investors what to hear, the company needs to address the production problems so that it can become a profitable business in the long run. A mass market product that will cause the other manufacturers to change and reinvent themselves, to give the consumer what they want, a clean energy vehicle. For the time being, lower mainstream energy prices means that Tesla is swimming against old school mentality. That too will change, of that I have little doubt. It is, and always will be a high Beta stock, which has a small place in wide portfolios.


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