Tesla
It seems that when Musk proclaimed earlier this year that the vehicles would make their appearance first in July, he wasn't kidding around. According to a series of tweets Musk posted about the exciting release, the $35,000 Model 3 cleared regulatory requirements two weeks ahead of schedule and the first 30 buyers will allegedly obtain their automobiles during a handover party on July 28th.
"Tesla remains on track with management guidance (if not slightly ahead), which in and of itself is a positive relative to prior product launches that were later than originally anticipated." said Consumer Edge Research Analyst James Albertine. This indicates that perhaps Musk's penchant for setting extremely ambitious goals in order to achieve better results is finally paying off, tarnishing rumors that the Tesla stock is overvalued.
That isn't to say that Tesla hasn't run into some roadblocks of its own lately. On Monday, the automaker admitted that it had undergone a "severe shortfall in production of 100-kilowatt battery packs that use new technologies and are made on new assembly lines". This has caused the growth rates of Tesla's output in the second quarter to fall drastically, capping at a meager 25,708 cars. This is why perhaps, despite the announcement of the Model 3 release, Tesla's stock has continued to plummet since Monday, falling by almost 5%.
The new Model 3 line may be successful measured relatively against itself, but it still can't detract from the fact that Tesla's other lines need to be salvaged. The company has produced luxury cars in relatively lesser numbers, selling them at a normal baseline cost of $90,000. Last year, Tesla made about 85,000 vehicles in contrast to General Motor's
In addition to its factory at Fremont, Tesla has constructed a considerable $5 billion plant in Nevada that is tasked with manufacturing batteries for Tesla's electric cars. The company's burgeoning relationship with China is not only signified by its interest in establishing a factory near Shanghai, but also through "Chinese internet giant Tencent Holdings acquiring a 5% stake in the company", making up a significant portion of the $1 billion invested in Tesla through stock and debt offerings.
Given that Tesla lost $397 million this year, it needs to not only retain all the investment it can get, but also attract new investors by releasing a successful mass market car line. The Model 3 could just be the outlet for this, but only if it delivers on its promises and fares well with consumers.
- https://www.ft.com/content/546f2947-817b-3b0a-9fb2-7d63f1eef86e
- https://www.nytimes.com/2017/07/03/business/tesla-model-3-elon-musk.html?ref=business
- https://www.washingtonpost.com/news/innovations/wp/2017/07/03/teslas-model-3-its-mass-market-car-expected-to-roll-off-factory-floor-friday/?utm_term=.2ed13f5d62e9
- https://www.google.com/finance?q=NASDAQ:TSLA