Called it! Despite the assurances of Elon Musk, the Tesla Model X has been delayed, again, with production now slated to begin in the third quarter of 2015. Musk has also downwardly revised Tesla production goals from 35,000 vehicles this year to 33,000, following a disappointing third-quarter financial report.
Tesla says it delivered 7,785 cars in the three months making up Q3, which is the most deliveries to date no doubt thanks to a retooling in August that allows for increased production. Even so though, Musk expects overall deliveries for 2014 to just barely miss the 35,000 unit mark the company had been aiming for. That’s disappointing, but not entirely unexpected as Musk had likely counted on the launch of the Model X to make up those numbers. Tesla Model X production is now officially delayed until the third quarter of 2015 for “testing and validation”, meaning Musk wants to work all the bugs out rather than deliver a half-baked product.
“Making one of something is quite easy,” Musk said. “We need to make a bunch to know it’s [a problem] there.” Considering there haven’t been any Tesla Model X test mule spottings in quite some time, I’d say Musk is right to want to delay the launch to perform further testing. The Model S has set a high bar and will be a tough act to follow, so even though some people might not be too excited for yet another Model X delay, it’s probably for the best. Even so, Musk promised production of the Model X would begin in 2013, then 2014, then the first half of 2015. Now we’re into the second half of 2015, and I wouldn’t blame some people who placed deposits for getting antsy.
Moving on, for the third quarter of 2014, Tesla posted non-GAAP revenue of $932 million, which is up 55% from a year ago, while GAAP (Generally Accepted Accounting Practices) revenue was $852 million. That equals either a non-GAAP income of $3 million in Q3, or a loss of about $75 million using the GAAP method, equaling either a gain of $0.02 per share, or a loss of about $0.60 per share. At the close of the market yesterday TSLA shares were down to about $230 each, though after hours trading has since brought it back up to close to $250 a share. With both Toyota and Daimler also dumping their shares in Tesla though, the stock price has settled in a more realistic place right now.
Despite posting a loss and admitting they won’t quite meet their production numbers, Musk remains bullish for the final quarter of 2014, saying he expects to earn between $0.30 and $0.35 per share in Q4. He also says that he expects the battery Gigafactory to produce its first battery pack by the end of 2016 (though actual price reductions probably won’t come until 2018) and thinks that selling 50,000 Model S sedans next year should be relatively easy. But can Tesla meet its goal of selling 75,000 vehicles in 2015? If the Model X does actually launch in the third quarter, then I’d say it’s possible considering there are already over 20,000 reservations for the all-electric SUV.
Tesla is chugging along, though Musk has shown he’s still a mere mortal with yet another Model X delay, and every Tesla announcement isn’t necessarily going to be a good one. But if you’re a Tesla fan, hearing that Musk wants to get the Model X right, rather than rush it into production, is a refreshing change of pace from say the video game world, where incomplete products are brought to market to the chagrin of eager buyers. Musk and Tesla Motors can’t afford to make that kind of mistake with the promise to “patch” their cars later.
A few other housekeeping items…the Dual Motor 60 kWh Model S has already been disconintued, as has the P85 package. Also gone from the option package are green and brown hues for the Model S, once again limiting your options when it comes to color schemes. Also it appears the Dual Motor AWD upgrade will cost $5,000, rather than $4,000 as initially stated.
As important as the Model S was, the Model X is even more important to Tesla’s future as an automaker. Let’s get it right Elon. You can read the entire shareholder’s letter here.