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April 5, 2019 by Guest contributor
Originally published on EVANNEX.
By Shankar Narayanan
Tesla's shipments fell by 31% in the first quarter compared to the previous quarter, as the company run by Elon Musk struggled to deliver cars to its customers in international markets. The company said that about 10,600 cars were in transit, compared with 2,907 cars in transit at the end of the fourth quarter of 2018.
Tesla also reported that over the last three months it has delivered 63,000 S, X and Model 3 models (with 77,100 vehicles produced), which is below analysts' average estimates. , which were 73,500.
Even if Tesla had managed to deliver all the cars that the company had manufactured between January and March 2019, it would still have been lower than the sales record of the fourth quarter of 2018 with 90,700 units. Tesla cited bottlenecks in shipments to Europe and China to explain lower than expected shipments.
The company said: "Due to a massive increase in shipments to Europe and China, which has sometimes been 5 times higher than previous record delivery levels, and to many of the challenges we faced for the first time, we have Aircraft delivered only half of the quarter figures in March. 21, ten days before the end of the quarter. This resulted in a large number of vehicle deliveries in the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers around the world. "
Although Tesla's shipments during the first quarter of the 19th increased by 110% over the first quarter of 2018, we became accustomed to the fact that the company reported massive sequential increases in quarterly shipments. But this time, Tesla broke its sequence of sequential growth after six quarters. The last time Tesla failed to report an increase in sales in the next quarter, it was in the second quarter of 2017, when the company was not yet ready to begin production of Model 3.
But Tesla's problem during the first quarter was not just the number of Model 3 units that were taken in transit; The production and delivery of flagship vehicles, the S and X models, has also been a huge success, shattering Tesla's overall numbers.
Aside from the 10K + units that were in transit, Tesla lost sales of its 10K units as S and X models. The drop in shipments of higher-priced S and X model vehicles will certainly put additional pressure on its quarterly revenues. like its operating margins.
Tesla started the quarter with $ 3.7 billion in cash and had to repay a $ 920 million bond in March. The launch of Model Y and foreign expansion spending will also impact the Company's cash balance in the first quarter. The drop in shipments will hurt Q1 revenue and could eventually turn Tesla's net profit into red.
The first quarter of 2019 now seems like a hard pill to swallow for investors, but it's certainly not a dreadful scenario that requires panic.
Tesla started model 3 shipments to Europe in early February and China in late February. Tesla's fight to deliver cars to North America during the ramp-up of Model 3 production in 2018 is well-documented and the company has been busy putting its logistics in order for several months.
Europe and China are much larger markets for Model 3 and the company will need a little time to shape its distribution network to manage volume. Tesla reiterated its goal of "360,000 to 400,000 vehicle deliveries in 2019" and it is clear that Tesla is counting on Model 3 sales in Europe and China to achieve this goal.
Shankar Narayanan is the editor of 1redDrop.com. Holds an MBA from Kent State University and an engineering degree from Madurai Kamaraj University. He has been an active contributor to leading financial websites such as SeekingAlpha and GuruFocus, and has a penchant for business, finance and technology.
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