Musk’s leaked email shows Tesla to make record deliveries in second quarter
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(Reuters) – Tesla Inc is on course to deliver a record number of cars in the second quarter, beating the 90,700 it sent to customers in the final quarter of last year, according to an internal email from Chief Executive Officer Elon Musk to staff.
A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, U.S. March 31, 2016. REUTERS/Joe White
Musk’s email, widely posted on social media and authenticated for Reuters by a source familiar with the matter, also said the company had on average produced 900 Model 3 cars per day this week, bringing it closer to a target of 7,000 per week.
Demand for Model 3 sedan and Tesla’s other cars has moved to the top of investors’ list of concerns around the company after it reported slack first-quarter demand for its vehicles against a backdrop of U.S.-China trade tensions.
Musk is battling to convince investors that demand remains high for Model 3, the sedan targeted to propel Tesla to sustainable profit, and that it can be delivered efficiently and swiftly to customers around the world.
In the email sent late on Wednesday, Musk also said the company had racked up over 50,000 net new orders this quarter as of Tuesday.
“It’s the usual Elon Musk scheme: spread positive mood with good news. Elon is a marketing man, but the Tesla reality is sobering,” Nord LB analyst Frank Schwope said.
The company faces major challenges, including launching production in China, overhauling its U.S. retail and service operations, and developing new models, including a high-volume Model Y SUV and a Semi commercial truck.
Musk has been in the past pulled up by the U.S. Securities and Exchange Commission for disclosing Tesla’s production outlook on Twitter.
Under a deal with the SEC, Musk had 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 crucial delivery and production numbers violates the agreement with the SEC.
The regulator could not be immediately reached for comment, while a Tesla representative did not respond to requests for comment.
Tesla had reported a 31 percent fall in first-quarter deliveries and had warned 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 time.
The carmaker is building a factory in China to produce its Model 3 electric vehicles in the world’s largest auto market and to escape a rise in tariffs on cars imported from the United States.
Tesla shares, down for six consecutive sessions as Wall Street worried over the company’s future and ability to keep investing, were up 3% shortly after Reuters published the confirmation of Musk’s mail. They had been trading down around 2.5%.
“While we are critical of Tesla’s execution, we think people have been way too eager to assume the worst case scenario,” said Roth Capital analyst Craig Irwin who has a “neutral” rating on the stock.
“Tesla is the EV industry leader for a reason, and we expect the company to remain successful.”
Reporting by Vibhuti Sharma and Sayanti Chakraborty in Bengaluru; Editing by Bernard Orr and Anil D’Silva