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Tesla's bears (TSLA) are facing another nightmare, this time a leaked email from Elon Musk, obtained by Elektrek. Investors may recall that in July, an e-mail leaked by Tesla Automotive President Jerome Guillen suggested the company take a big step forward in production. This surge in production came after the company set a delivery record in the second quarter.
What the leaked email from Musk revealed
Yesterday, Electrek reported that the leaked email from Musk had revealed that the CEO thought Tesla had a chance to deliver 100,000 cars in the third quarter. In the second quarter, Tesla delivered deliveries and record production. Shipments increased 51% sequentially and 134% year-over-year (year-on-year) to 95,200 vehicles. Many critics were skeptical that Tesla would reach this milestone in the third quarter as tax credits were reduced on July 1. This tax credit was probably one of the main drivers of the second quarter record.
Last year, the company's cars were eligible for a $ 7,500 tax credit. This credit fell to $ 3,750 at the beginning of the year and $ 1,875 on July 1. It should be phased out in 2020. Without this credit, consumers may be less likely to buy Tesla's cars.
New markets for Tesla Model 3
One thing could make up for the loss of incentive. Tesla Model 3 has been deployed overseas this year. These new markets have contributed significantly to the company's deliveries. Vehicle demand is high in the United Kingdom, South Korea, New Zealand and Australia.
The Model 3 became the third-best-selling car in the UK in August, and Tesla is expected to post strong sales in Europe. In addition, Piper Jaffray estimates that the company's shipments to China are gaining ground and have increased 175% year-over-year in the third quarter.
10,000 vehicle deliveries in the third quarter
According to the Musre report written by Electrek, "we have a chance to reach our first quarter delivery of 100,000 vehicles, which is an incredibly exciting milestone for our company!", He added. . Elektrek notes that "it is very likely that this goal is very achievable, " as Musk sent the e-mail "barely 5 days before the end of the quarter. "
Tesla generally strives to stimulate deliveries by the end of the quarter. This quarter, Tesla announced the free overfeed and offered discounted stock vehicles to accelerate deliveries.
Tesla's challenge to raise shipments
Electrek reports that Musk also wrote:The challenge is to make sure we have the right car variants in the right places and to leverage our company's resources to facilitate end-of-quarter deliveries.. "Tesla is trying to improve its delivery logistics to minimize delivery delays and improve its finances.
A leaky email creates a nightmare for bears
The recently leaked email surprised the bears. Tesla shares rose more than 6% yesterday as a result of the company's attacks. Since the beginning of the year, TSLA has lost 27%. It underperformed the S & P 500 (SPY) and Dow Jones Industrial Average (DIA) indices, which rose by 18.8% and 15.3%, respectively. Tesla's Chinese rival, NIO (NIO), has been in free fall since its release of Q2 2019, weaker than expected. The stock of NIO has decreased by about 28% since the publication of 24 September.
Tesla's profitability worries
Profitability remains Tesla's main concern. The company achieved record deliveries in the second quarter, but these were offset by a larger than expected loss. Therefore, while Tesla could set a new delivery record in the third quarter, the question of whether the company can be profitable remains a concern. Credit Suisse (CS), for example, estimates that Tesla's third-quarter shipments could be a positive surprise, but that margins could be a bigger concern.
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