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Tesla (TSLA) Falls Short of Achieving Q3 Delivery Target

Zacks Equity Research

Tesla TSLA delivered a record 97,000 vehicles globally in the third quarter but it still fell short of Elon Musk’s target of 100,000 vehicles.

It delivered 79,600 Model 3, and 17,400 Model S and X cars in the three months ended September 2019 compared with 55,840 Model 3, and 27,660 Model S and X cars in the third quarter of 2018.

With an aim to increase delivery numbers, Tesla announced in September 2019 that it will offer customers 2 years of free supercharging and other incentives.

Tesla expected deliveries in 2019 to be between 360,000 and 400,000 units. It will be possible only if the company can deliver around 105,000 vehicles in the fourth quarter of 2019.

Almost all Model 3 orders were received from customers, who previously did not have reservations, thereby demonstrating strong organic demand.

Tesla delivery numbers provide the information as to how the company is executing ahead of its quarterly earnings release date.

Apart from vehicle delivery, factors such as cost of sales, foreign exchange movements and mix of directly leased vehicles influence the company’s quarterly results.

Tesla’s China-based factory is expected to produce 3,000 Model 3s by the end of the year. Musk said in August that progress at its Shanghai factory was “mind blowing” and he never saw 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.

While Tesla has been bearing the brunt of increasing R&D and SG&A costs, which have been denting profits; rising Model 3 delivery, which accounts for the bulk of its overall deliveries, is likely to aid its prospects.

Tesla, Inc. Price and Consensus

Tesla, Inc. Price and Consensus

Tesla, Inc. price-consensus-chart | Tesla, Inc. Quote


Zacks Rank & Stocks to Consider

Tesla currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Auto-Tires-Trucks sector are Douglas Dynamics, Inc PLOW, currently sporting a Zacks Rank #1 (Strong Buy), and Lithia Motors LAD and SPX Corp. SPXC, carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lithia Motors has an expected earnings growth rate of 12.8% for 2019. The company’s shares have gained 65.5% year to date.

Douglas Dynamics has an expected earnings growth rate of 11.7% for 2019. The company’s shares have gained 22.1% year to date.

SPX has an estimated earnings growth rate of 22.7% for 2019. Its shares have gained 39.2% year to date.

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