Investor's Corner
Tesla’s final Model 3 push for Q3 unfolds as ‘delivery logistics hell’ gets addressed
Over Q1 and Q2, Tesla has exhibited a tendency to expedite its Model 3 production and deliveries in the final month of a quarter. The company did this last March when it was struggling to produce 2,500 Model 3 in a week, and the same strategy was adopted in June as Tesla attempted to hit its then-mythical target of producing 5,000 Model 3 in one week.
This third quarter, Tesla is going for something more ambitious. The company aims to produce 50,000-55,000 Model 3 between June and September while achieving profitability at the same time. To accomplish these goals, Tesla would have to not only produce, but also deliver the Model 3 to as many reservation holders as it can. Such a scenario has resulted in new challenges for Tesla, with Elon Musk dubbing the circumstances as “delivery logistics hell,” which the company is now experiencing just as it left “production hell.”
Earlier this week, Elon Musk admitted to the company’s difficulties in delivering the Model 3 while apologizing to a reservation holder whose delivery had been delayed multiple times. In his response, Musk noted that “delivery logistics hell” should be solved faster than “production hell,” as the issues are far more tractable. Musk also stated that Tesla is making rapid progress in addressing its Model 3 delivery issues.
With less than two weeks to go before the end of the third quarter, reports from the Tesla community are starting to indicate that the company is indeed addressing its delivery challenges. Megan Gale, the reservation holder that Musk responded to earlier this week, recently posted an update stating that the center in her area is getting Model 3 deliveries out in a rapid manner. She was also finally able to receive her Model 3 Performance.
Tesla’s Model 3 delivery push does not seem to be exclusive to the United States, either. Social media posts from Model 3 reservation holders in Vancouver suggest that Tesla is pushing deliveries until 10 p.m. every day, as part of its attempt to deliver the electric car en masse to Canada.
Vancouver #Tesla $tsla is delivering Model 3s until 10pm everyday. Demand is insane. pic.twitter.com/rKHN86wj3z
— Hanky Frunk (@rocketL49) September 19, 2018
Tesla has been laying the foundations for faster deliveries of the Model 3 for the past couple of months. At the beginning of Q3, Tesla started rolling out the 5-Minute Sign & Drive delivery program as a way to expedite the handover process of the Model 3. Elon Musk also announced that the company is looking to eliminate paper contracts in the delivery process. Earlier this month, Tesla also held a “First Come, First Serve” delivery day for Long Range RWD Model 3 units in CA, where first-day reservation holders were able to acquire vehicles that are ready to be driven home.
While it remains to be seen how many Model 3 would be produced and delivered this quarter, both Elon Musk and board member Kimbal Musk have teased that the company would likely surprise the market at the end of Q3. In a letter to employees, Elon Musk noted that Tesla is “about to have the most amazing quarter in (its) history, building and delivering more than twice as many cars as (it) did last quarter.” Kimbal, on the other hand, noted in a recent segment of CNBC‘s Closing Bell that September is an exciting month for Tesla, considering that the number of Model 3 that would appear in US roads within the next couple of weeks would be astonishing.
“This month is an exciting month for us. You know, it’s really gonna blow people’s minds how many Model 3s are gonna appear in America in just the next couple of weeks,” he said.
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.
Tesla is not sparing any expense in ensuring the Cybercab is safe
Tesla’s Elon Musk gives timeframe for FSD’s release in UAE
