San Francisco - Tesla Motors reported fourth-quarter
deliveries that fell short of its own forecasts, sending shares lower in
after-market trading, as production delays continue to plague the carmaker led
by CEO Elon Musk.
The Palo Alto, California-based maker of electric cars
and energy-storage products delivered about 22 200 vehicles in the final three
months of last year, according to a statement Tuesday. The total trailed the
automaker’s projection for 25 000 units and brought its full-year tally to 76 230
vehicles, below its forecast for at least 80 000 units.
Musk has a history of setting ambitious targets and
timelines for Tesla and coming up short, including his calls for how soon the
Model X sport utility vehicle and less-expensive Model 3 sedan would
follow the top-selling Model S. The pressure on Tesla to make good on its goals
has risen following the merger last year of the carmaker with solar-panel
installer SolarCity, since both have typically reported losses and burned cash.
“There is a high risk of execution missteps, a challenged
track record on meeting timelines, cost challenges, and potential impact from
an otherwise full plate of initiatives in ’17,” Brian Johnson, an analyst at
Barclays, wrote in a report earlier on Tuesday. Johnson said there’s a “high
probability” Tesla will announce a delay for Model 3 and estimates zero
deliveries of the model for 2017.
Read also: Tesla's factory hell is over, says Musk
Short-term production issues related to new hardware for
the Autopilot driver-assistance system contributed to transport delays or
prolonged delivery of about 2,750 cars to customers, according to Tesla. The
Autopilot-related challenges began in late October and lasted through early
December.
Tesla fell 2.1 percent to $212.50 as of 7:52 p.m. in New
York after the close of regular trading. The shares slumped 11 percent last
year, the company’s first annual decline since its initial public offering in
June 2010.
Musk’s ambitions
Musk is trying to transform Tesla from a niche seller of
high-priced electric vehicles into high-volume manufacturer making 500 000
autos annually in 2018 - nearly six times the number of cars and SUVs it
produced last year.
While the 76,230 vehicles Tesla delivered in 2016 was a
record and up 51 percent from a year earlier, the company has a ways to go to
be considered a mainstream player. By comparison, Ford Motor sold 72 089
F-Series pickups in the month of November alone.
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Tesla has been counting on keeping sales of its Model S
sedans and Model X SUVs strong while consumers await the Model 3, which is
planned for volume production in late 2017. Musk urged workers in August to cut
costs and deliver every car possible, which contributed to Tesla reporting a
profit for the three months ended in September, its first in eight quarters.
‘Payback’ quarter
“They flipped every switch to get every vehicle delivered
in the third quarter,” Kevin Tynan, an auto analyst with Bloomberg
Intelligence, said by phone. “The fourth quarter is the payback. It feels like
the Model 3 can’t get here fast enough because demand for the Model S is
softening as it gets deeper into its life cycle.”
Tesla completed its acquisition of SolarCity in November,
taking on the solar installer’s $2.89 billion debt load. Last month, the
company increased its borrowing capacity under two credit agreements by about
$500 million.
Musk’s ambitious production goals depend in part on its
battery factory east of Reno, Nevada, which is close to beginning battery-cell
production. Tesla is giving investors a tour of its so-called Gigafactory on
Wednesday.
BLOOMBERG