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Tesla (TSLA) appears to be preparing to take the electric car race to a higher level. Jerome Guillen, president of the auto industry, recently told employees that the company plans to make a big leap forward in production and is entering a new recruitment phase as well. According to Bloomberg's e-mail release, the company headed by Elon Musk is "getting ready" to increase production after announcing car deliveries and record production figures in the second quarter at the beginning of the month.
"As we continue to increase production, let your friends and neighbors know that there are lots of exciting new jobs coming up in Fremont and Giga," Guillen wrote to his employees.
The quality of the Tesla car improves
In recent years, some media have suggested that the quality of Tesla cars is deteriorating as it only aims to increase the production rate of the car. In March 2018, NBC News reported that Tesla "claims that the electric car manufacturer is tolerating serious quality problems at its assembly plant in Fremont, California."
Earlier this year, Consumer Reports also raised questions about the quality of Tesla's car, saying "reliability was a weak point for Tesla" and that "their reliability was not consistent."
However, Tesla seems to have solved its reliability issues, as evidenced by Guillen's recent email to employees. While referring to the company's record second quarter, he says Tesla "has broken new records in all production lines in terms of performance and efficiency." At the same time, "the quality of his cars also reaches records," he added.
Q2 2019 record of car deliveries
On July 3, the Tesla stock jumped 4.6% after the company released quarterly delivery and production data for cars much better than expected on July 2nd after market close.
In the second quarter, the electric car manufacturer delivered 95,200 automotive units to its customers, an increase of 133.5% over the 40,768 deliveries made in the quarter ended June 2018. Second-quarter car deliveries also recorded a strong sequential increase of 51.1%. The company plans to deliver 360,000 to 400,000 units of cars in 2019, of which 158,219 are already delivered in the first half. Similarly, Tesla production in the second quarter increased 63.2% year-on-year and 12.8% sequentially to 87,048 cars.
A nightmare for Tesla bears
Since its inception, Tesla has been heavily criticized for having run into problems with peers and many Wall Street analysts. Although some analysts have expressed optimism after the company announced record vehicle deliveries for the second quarter earlier this month, the bears remain skeptical about the company's future growth.
Wedbush analyst Dan Ives called the figures "feather in the ceiling for Tesla" because "the numbers were even better than bull estimates".
In contrast, some other Wall Street analysts have continued to point to other issues that Tesla may face in the future. Credit Suisse analyst Dan Levy believes the company "still has to face a further cut in US electric vehicle tax credit". John Murphy, an analyst at Bank of America, pointed out that the higher contribution of the cheaper model 3 "will likely result in margin pressures, earnings and cash flow".
Colin Langan, an analyst at UBS, who has already reduced his target on Tesla three times this year, said: "The pace of deliveries in the second quarter does not change our cautious view of Q2 results." two units just two days before Tesla crushed his estimate by delivering 95,200 cars.
Guillen's recent e-mail leak suggests that Tesla is preparing to disappoint his critics and stand strong by further increasing his production. A significant increase in production should not only help the company meet its 2019 targets, but also become profitable in a sustainable manner.
A nightmare for other car manufacturers
In recent years, the growing demand for electric vehicles and Tesla's ability to attract customers have encouraged traditional manufacturers to step up their electric car development programs.
However, these mainstream manufacturers, such as General Motors (GM), Ford Motor Company (F), Fiat Chrysler Automobiles (FCAU), Toyota (TM) and Honda (HMC) have not been able to replicate the Tesla's success in electric cars. has succeeded.
According to the latest data compiled by insideevs, Tesla has sold about 67,650 model 3 units in the US market in the first half of 2019. During the same period, Toyota's sales of Toyota's Prius Prime hybrid, GM's Chevrolet Bolt EV, Ford Fusion Energi Hybrid hybrid cars and Honda Clarity PHEVs were established at 8,605, 8,281, 3,606 and 6,543, respectively.
Before the success of Tesla cars in recent years, no traditional manufacturer was aggressively trying to switch from gasoline cars to electric cars. The profitability of car manufacturers on gasoline cars tends to be higher than that of electric vehicles, which justifies their reluctance to switch from gasoline cars to electric cars.
In fact, Fiat Chrysler's former CEO, Sergio Marchionne, in 2014, said: "I hope you do not buy it because every time I sell one, it costs me $ 14,000 While referring to the Fiat Chrysler 500e electric car.
About a year ago, when Tesla managed to produce 7,000 cars for the first time in seven days, its CEO, Elon Musk rented the Tesla team in a tweet. Steven Armstrong, president of Ford of Europe, reportedly followed Musk on Twitter saying that the Ford team produces 7,000 cars in about four hours. Interestingly, Ford is far behind the competition in the electric car segment. To accelerate the development of its electric car, Ford is expected to announce today its partnership with Volkswagen.
Tesla is steadily increasing its market share in the electric car segment, and signs of improved production and sales could prove to be a big problem for other automakers.
Does the market underestimate Tesla?
In July, the Tesla share rose 6.8% from 2.0% and the S & P 500 and NASDAQ indices by 2.4%. However, TSLA is still down 28.3% since the beginning of the year because of the massive losses recorded in the first half of 2019.
Tesla's Chinese competitor, NIO (NIO), grew 34.1 percent in July. NIO has released its car delivery figures for the second quarter on July 10. During the quarter, the company's car sales dropped 10.9% sequentially to 3,553 units of car, which remains higher than analysts' estimates. Although investors appear to have extraordinary confidence in Tesla's competitors, including NIO, they seem to ignore the positive developments at Tesla in the last quarter.
GM, Ford, Fiat Chrysler and Toyota have recorded gains of 14.9%, 33.2%, 6.9% and 9.2% respectively since the beginning of the year, while Honda is down 0.7 %.
Ford will release its second quarter results on July 24, while the largest US automaker GM is expected to announce its quarterly results on Aug. 1. Tesla has not yet announced the date of its second quarter results, but it is expected to release its earnings report. in the first week of August.
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