Tesla Has A Shot At 100,000 Vehicles This Quarter

 | Sep 27, 2019 05:27AM ET

Tesla (NASDAQ:TSLA) shares rallied strongly to the news that the company was within shouting distance of a 100,000 vehicle delivery milestone.

The eccentric CEO Elon Musk who has been criticized by analysts, market watchers and law enforcement, is in the habit of charging up his employees before quarter-end. That’s what his email was supposed to be doing, when it said,

“We have a shot at achieving our first 100,000 vehicle delivery quarters…Net orders are tracking to reach about 110k, so demand is strong.”

The email somehow leaked out and the contents picked up by EV-focused news website Electrek. If Tesla hits that mark, it will be an encouraging sign, increasing the chances of its reaching the deliveries originally targeted.

The original target was to deliver 360,000 to 400,000 vehicles this year. But the company managed just 63,000 in the first quarter, increasing it to 95,200 in the second. If third and fourth quarters come in at 100,000 each, it will be 358,000, or at around the low end of the guided range.

And if fourth-quarter deliveries improve upon the third quarter levels, the company would have silenced most everyone. Because practically no one thought they’d match guidance.

As the email said, right now, “The challenge is making sure that we have the right car variants in the right locations and rallying as much of our company resources as possible to help with end of quarter deliveries.”

Musk did say that demand for the vehicles remains strong, but investors expect a large chunk of that to come from China because of the country’s initiative to boost EV adoption and the brand’s popularity there.

Tesla’s Chinese factory is expected to produce 3,000 Model 3 EVs by the end of the year. Musk said in August that building progress at its Shanghai factory was “mind blowing” and that he has never seen anything like it. So once that comes online, there will be more cars that are also closer to the market to which it’s selling, which should therefore accelerate deliveries.

Tesla continues to make losses, but the key to profitability is stepping up sales. Since that part is going well, I feel incrementally positive about the company.