Tesla reports 70% rise in quarterly deliveries

Tesla could potentially be on its way to meet its half-yearly delivery targets, if this trend continues.

Tesla Motors Inc. has disclosed that its third quarter deliveries have risen by 70% to 24,500 cars due to cheaper leases, discount on some vehicles, and production improvements.

For a company that has missed two consecutive delivery targets in the previous 2 quarters, deliveries are a key metric of its performance.

These improvements has now brought tesla closer to meeting its target of 50,000 vehicles in the second half of 2016.

In its statement the company has stated that it expects fourth-quarter deliveries to be “at or slightly above” the third quarter’s.

In July Tesla had reported that its third quarter deliveries included the 5,150 vehicles in transit, at the end of the second quarter.

Meeting the delivery target for its third quarters is critical for Tesla since the money-losing car manufacturer is hoping to raise fresh funds from the equity market later this year. Those funds will be used for building its factory for the Model 3 sedan due, due for late 2017 and for its planned acquisition of SolarCity Corp.

It is scheduled to release its third quarter financial results sometime in early November.

According to Jason Wheeler, Tesla’s Chief Financial Officer, if second-half production and delivery targets are met, the company has a “great chance of being non-GAAP profitable”. Wheeler however did not provide any figure as to what those delivery targets are.

Interestingly, last month, Tesla had begun advertising its showrooms and inventory cars “at favorable prices and ready for expedited delivery.” This raised concerns among analysts that discounts could undermine Tesla’s margins.

Last week, an internal memo written by Elon Musk, which was later published, stated that employee’s should follow the company’s policy of not offering discount on new cars.

The note was in response to a criticism by Brad Erickson, an analyst at Pacific Crest Securities, on discounts offered by Tesla on its Model S inventory cars, not the built-to-order ones for specific customers, to lift its third quarter earnings.


Categories: Entrepreneurship, HR & Organization, Strategy


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