Investor's Corner
Tesla registers another strong batch of Model 3 VINs as Musk sees end to production hell
Just a day after registering more than 6,000 new Model 3 Dual Motor AWD vehicle identification numbers, Tesla has filed for another batch of 2,226 VINs for the compact electric car. With this latest filing, Tesla has registered 15,430 Model 3 for July so far, bringing the total number of registrations to 71,827.
#Tesla registered 2,226 new #Model3 VINs. ~60% estimated to be dual motor. Highest VIN is 71827. https://t.co/UNJGKI2Hb5
— Model 3 VINs (@Model3VINs) July 12, 2018
The newest batch of filings comes at a time when Tesla is hard at work attempting to prove that it can sustain the “burst” rate for the Model 3 the company displayed during the final seven days of Q2 2018, when 5,000 of the vehicles were produced in one week. While the electric car maker managed to hit its Model 3 production targets for the second quarter, doubts about the company’s capability to maintain its optimal levels of production caused Tesla’s stock to plummet.
While doubts about the company’s capability to effectively scale the Model 3’s production are understandable, recent signs from Tesla indicate that the present quarter would end with far better figures than that of Q2 2018. In a statement to Bloomberg Businessweek, Elon Musk admitted that while the past year has been very challenging, he remains optimistic about the company’s chances for the coming year.
“The past year has been very difficult, but I feel like the coming year is going to be really quite good. (We) still (have) one foot in hell. Manufacturing hell will be over in a month,” Musk said.
Musk’s latest statement comes amid reports from the Tesla community stating that the automaker’s investor relation team headed by Senior Director of Investor Relations Aaron Chew held a meeting with investors and analysts last Tuesday. According to reports, Chew gave some new updates on the Model 3’s production, stating that GA3 is currently running at 4,000 vehicles per week while GA4, which is set up in a sprung structure on Fremont’s grounds, is producing 1,000 cars weekly.
Chew also reportedly stated that Tesla is expecting GA3 to ramp to 5,000 Model 3 per week while keeping GA4 at 1,000 weekly by the end of July. With this setup, Tesla would be producing 6,000 vehicles per week, but realistically sustaining a 5,000 a week rate for the rest of Q3 2018. From this point, Tesla would be ramping the Model 3’s production at a deliberate pace, targeting 7,000 cars per week for Q4 2018 and 10,000 per week by mid-2019.
Considering Tesla’s targets for the coming years, the company must be able to tick off the Model 3’s manufacturing from its to-do list. Tesla, after all, has a long list of projects ahead, including the recently-announced Gigafactory 3 in China, the Model Y, the Tesla Semi, the next-gen Roadster, Gigafactory 4 in Europe, and the Tesla Truck. If Tesla is to finish all these projects, it would have to start earning revenue from the Model 3; and for this to happen, the production of the vehicle must be fully optimized.
With Elon Musk’s estimates that production hell is ending in a month, however, together with Andrew Chew’s statement to investors regarding the Model 3’s sustained production rate for Q3 2018, Tesla could very well end the year with enough momentum to start 2019 on a strong note.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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