anticipating that there would be an S, X upgrade and this really is kind of a game- changer of an upgrade. So, I think we are seeing an uptick in demand and we expect to see that to be quite significant. And we are also out of the seasonality of Q1 with few people just generally don’t like buying cars in winter and we are getting past the overhang of that tax credit cliff, which for us ended in the U.S. on December 31. So, these were all very positive factors. We also have just a lot of markets where there is program or tapped into demand, especially for Model 3. So we will be really saying the right-hand drive Model 3 and expect to see significant demand in right-hand drive countries. Overall, I feel really good about the way things are headed. In light of this answer and the various data points noted above, why anyone believes his rosy forecast is beyond me. I don’t think even Musk himself believes it... Which raises that question: Given that Tesla was doing a kitchen sink quarter anyway, why didn’t the company reduce guidance to a level it could meet or exceed? It couldn’t... at least, not without risking bankruptcy. And it’s possible that Tesla will never report another profitable quarter – ever.
WHY DIDN’T TESLA CUT GUIDANCE? As noted above, in its first-quarter earnings release, Tesla estimated second-quarter deliveries between 90,000 and 100,000 vehicles and reaffirmed that it expects to deliver between 360,000 and 400,000 vehicles this year. It makes no sense that Tesla would miss first-quarter deliveries by a mile, yet reaffirm annual guidance. Mathematically, this means that Tesla increased its guidance for the rest of the year, which flies in the face of all available evidence. Naturally, this was the first question a Wall Street analyst asked on the conference call. Musk surely knew the question was coming, but he whiffed, giving a vague, rambling answer... Yes. We do see strong demand for vehicles, both S, X, and 3. The standard range plus Model 3 with autopilot included at $39,500 is just an incredibly compelling vehicle and affordable to probably something on the order like the top 40% income earners in the U.S. and Europe. So, it’s – I think we will see a lot of interest and demand in that. We are. And then with the upgraded S and X, I think a lot of people were kind of Whitney Tilson is the founder of Empire Financial Research and edits its flagship newsletter, the Empire Investment Report . Prior to that, he worked at the Boston
Consulting Group and later founded and ran the Kase Capital Management hedge fund, which he grew from $1 million to nearly $200 million.
American Consequences
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