American Consequences - May 2019

quarter, when Tesla reported $210 million in profit and generated positive $1.24 billion in operating cash flow. That led Musk to say on the conference call in January that he was “optimistic about being profitable in Q1 and all quarters going forward.” Oops. Believe it or not, the quarter could have been much worse. On that same call, Musk admitted... Over half of our global deliveries [are] occurring in the final 10 days of Q1. This was the most difficult logistics problem I have ever seen and I have seen some tough ones. So I will say it again... We literally delivered half of the entire quarter’s deliveries were [sic] in the final 10 days of Q1. That’s insane. Tesla board members are selling all the shares they can, as fast as they can...

For once, I think Musk is telling the truth. I agree with him: It is insane to deliver more than half of a quarter’s deliveries – worth roughly $2 billion – in the last 10 days. WEAK DEMAND I’d be willing to overlook Musk’s erratic behavior, the operational chaos, executive departures, etc. if Tesla’s cars were still selling like hotcakes. But all of the evidence I can find shows that, now that Tesla has fulfilled the backlog for the Model 3, demand has fallen off a cliff. Musk has promised that deliveries will rebound strongly from the first quarter’s dismal number of only 63,019 cars to between 90,000 and 100,000. But I think the company will be lucky to match that number of deliveries in the second quarter. As you can see, the first quarter was weak...

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American Consequences

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