The end of the fourth quarter is not far off, and it looks like Tesla will once again set EV delivery records, grow demand for its vehicles and silence its short-sellers.
If Tesla is able to sustain these delivery numbers into the coming quarters and truly have the free cash flow and profit promised by Musk, then all of the negative chatter is just that, and Tesla truly is the world's most disruptive $50 billion automotive upstart.
Here are estimates of Q4 delivery and production numbers from reliable sources, followed by some news and chatter.
A profitable $35,000 Model 3?
Tesla has said that it cannot be profitable on a $35,000 Model 3 without consistent 5,000-unit production weeks.
Current estimates for Q4 2018 are production of 60,750 Models 3s and 25,116 Model S+X combined, for a total of 85,866. Total projected deliveries for the quarter are 61,976 Model 3s and 27,872 Model S+X combined, for a total of 89,848. These conservative numbers come from Tesla enthusiast Troy Teslike and his Tesla VIN tracker and database. Those figures and other estimates can be found here.
If accurate, it means that Tesla has been able to sustain a Model 3 run rate of roughly 5,000 units a week (versus 4,300 units per week last quarter), and perhaps that a profitable $35,000 Model 3 is within reach.
Musk said, in the previous earnings call, that ramping to 7,000 units a week (or 1,000 per day) is possible with minimal capex. According to Electrek, Musk asked production staff to reach a production output of 50 units per hour by the end of this month — a monthly output of about 30,000 units — or 7,000 per week.
European Model 3 sales have yet to contribute to demand, pending EU homologation.
China price cuts, trade war and the Gigafactory
Last week, Reuters reported that Tesla will cut prices on the Model X and Model S in China by 12 percent to 26 percent to counter the blow of 40 percent trade-war tariffs on American-built cars.
While we’re in the region, there’s a bit of a dispute over Tesla’s October sales numbers in China. According to the China Passenger Car Association, Tesla sold just 211 cars for the month in China, down 70 percent from last year in the world’s biggest market for EVs.
A Tesla spokesperson told Fortune that the report is "wildly inaccurate” and off by a "significant" margin. Tesla did not disclose the actual figure. Cui Dongshu, secretary general of the CPCA, told the South China Morning Post that sales figures are based on deliveries to end buyers.
Last month, Tesla secured a 9-million-square-foot plot of land in Shanghai for its next Gigafactory, according to the Shanghai Bureau of Planning and Land Resources. Aaron Chew, Tesla's senior director of investor relations, was quoted by RBC research analyst Joe Spak as saying that Tesla will fund the Shanghai Gigafactory with $1.3 billion of low-interest local debt, along with $700 million in equity from Tesla over the next two years. Tesla has not indicated that construction has begun in China.
Winter with a Tesla
My ’72 Datsun 240Z needed full choke on winter mornings — and upstate New York played havoc with vehicle reliability, although that didn’t get a lot of press.
It does when you’re Tesla.
Tesla just released a software update to help the Model 3 adapt to cold weather issues plaguing chilly owners such as frozen windows, doors, door handles and charge ports. And EV charging in winter becomes a challenge if the heater is pulling 5 kilowatts.
Musk tweets and miscellaneous stuff
Musk tweeted that Tesla’s priorities, in order of resource priority but not necessarily production ramp, are: Model Y, solar roof tiles, pickup, Semi truck and Roadster.
Speaking of solar roof tiles, local TV reports that there are 800 people working at Tesla’s 1.2-million-square-foot Buffalo solar plant. That exceeds local employment goals at the factory now devoted to building these controversial roof tiles.
Musk tweeted that Tesla might be interested in working with Daimler on an electric Sprinter van. A spokesperson for Daimler said that the firm appreciates Musk’s interest in the van but provided no additional comment.
The CEO tweeted that Model 3 deliveries are expected in Taiwan in the middle of 2019.
General Motors’ recent restructuring news and plant closings are a potentially positive development for Tesla, according to Goldman Sachs. The investment bank claims that GM’s shift might give Tesla another route to gain capacity for the Model Y — by potentially allowing the purchase of a former GM plant at a favorable price.
Tesla just lost its head of global security after less than a year’s employ. Here’s a list of senior executive departures since 2016. Is this normal turnover for a hard-driving auto startup with a demanding CEO?
Biggest year for Tesla and EVs
We’re about a month away from the end of Tesla’s quarter and what will be the biggest year ever for the company.
Tesla’s Model 3 is just crushing its EV rivals in the U.S. According to Inside EVs, Tesla sold 17,750 units of its Model 3 in October. In a very distant second is the Chevrolet Bolt with 2,075 units, followed by 2,001 units of the Toyota Prius Prime, 1,935 units of the Honda Clarity and 1,475 of the Chevy Volt. Tesla has sold more than 95,882 Model 3s year-to-date.
A short-term challenge for Tesla is being profitable in the final quarter of the year. A longer-term challenge is financing its many development projects without a capital raise.