Tesla CEO Elon Musk Says the Automaker is On Track for the Biggest Sales Quarter in its History
Despite Tesla's falling stock and analyst predictions about Tesla's ability to become profitable, the Model 3, the automaker's first mass-market electric car, remains widely popular with consumers and the company is on track for its biggest quarter in its history.
A leaked email from Tesla CEO Elon Musk to employees revealed that Tesla might finally be solving many of its production and logistics problems. The email to employees noted that Tesla is on track to deliver a record number of cars in the second quarter.
Chief Executive Officer Elon Musk said that the automaker will surpass the 90,700 vehicles it delivered to customers in the final quarter of of 2018, making Q2 the highest sales quarter in Tesla history.
Musk's email, which was widely shared on social media and authenticated for Reuters by a source familiar with the matter, said the company had on average produced 900 Model 3 sedans per day this week, bringing it closer to a target of building 7,000 cars per week.
Musk also said the company had racked up over 50,000 new orders this quarter as of Tuesday.
Here is the email sent to Tesla employees:
Subj. Exciting Goal!
Date: May 22, 2109
As of yesterday we had over 50,000 net new orders for this quarter. Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!
In order to achieve this, we need sustained output of 1,000 Model 3′s per day. Almost all parts of the Model 3 production system have exceeded 1,000 units on multiple days (congratulations!) and we've averaged about 900/day this week, so we're only about 10% away from 7,000/week.
If we rally hard, we can do it!
Thanks for your hard work.
The positive tone of the email boosted Tesla's stock price for the first time in seven days after it was verified by Reuters.
Last week, Tesla stock price fell to its lowest level in two years to $186.22 after Musk said that Tesla only has about 10 months worth of cash reserves left unless "hardcore" cost cutting efforts are made. Tesla share price rose nearly 3% on Thursday closing at $195.49.
Tesla's shares had reached $387.46 last August after Musk tweeted about taking Tesla private, which got him in hot water with the U.S. Securities and Exchange Commission (SEC).
Under a deal reached with the SEC after Musk tweeted last August about taking Tesla private at $420 a share, Musk agreed to get some of his statements reviewed by Tesla's legal counsel before publication, including financial statements and unreported production and delivery numbers."
It was not immediately clear if Musk's mail to employees detailing delivery and production numbers violates his agreement with the SEC.
Musk is trying to convince wary investors that demand remains high for Model 3 and that it can be delivered quickly to customers around the world.The Model 3 is key to Tesla achieving and maintaining profitability.
Despite the ramp up in production and deliveries, Tesla still faces major challenges, including building a factory in China, overhauling its U.S. retail and service operations, and developing new models, including the Model Y crossover and a semi-truck.
California-based Tesla is also facing competition from global automakers introducing their own fully-electric models to compete with Tesla, including Audi and Mercedes Benz.
Tesla's China factory, which is currently under construction, will allow the automaker to avoid steep tariffs on cars imported from the United States, as trade tensions continue between China and the Trump administration.
China has threatened to raise tariffs by an additional 25% on autos shipped from the U.S. if a favorable deal cannot be reached. China is the world biggest auto market, and an important one for Tesla. Both side have suspended the tariff increases as negotiations continue.
Tesla warned earlier that profit would be delayed until the latter half of the year as it struggled with shipments of Model 3 to China and Europe due to longer transit times.
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