Figures lie and liars figure is an expression that goes back to the dawn of time. A trained statistician can make numbers sit up and bark like a trained seal. Tesla Q3 deliveries totaled 11,580 cars according to an official company announcement last Friday. Some people immediately put up banner headlines proclaiming the “miracle” that sales were up 43% compared to the same quarter last year. CNN Money trumpeted “Tesla posts another strong sales quarter.” That’s good news, right?
Of course it is. But what isn’t good news is that Tesla will need to deliver nearly 17,000 more cars by the end of the year in order to meet Elon Musk’s pledge from last April that the company will deliver ~55,000 cars in 2015. Musk backed away from that figure during his August conference call with investors, saying the final number might be more like 50,000 cars.
By the time the books are closed on 2015, that number could be down to 47,000 cars — or less. Tesla had been expecting a big bump in deliveries in the 4th quarter from the Model X. After all, nearly 30,000 people have reserved one. Why not just crank up the assembly line and start filling those orders? The answer appears to be, it can’t.
6 cars were delivered to customers on September 29, one of them being Elon Musk’s personal car (all black with white interior). The other 5 went to early company investors. It is widely believed those cars were hand-built pre-production prototypes meant to meet the letter if not the spirit of Musk’s promise that Model X deliveries would begin “in the third quarter.”
The company is being ominously quiet about when real production of the Model X will begin. Some observers think full production may be as much as 6 months away. In the meantime, deliveries of the Model S sedan to customers in North America fell to 5,400 vehicles in the third quarter, according to Inside EVs (note, however, that InsideEVs, like every other outlet estimating North America Tesla sales, is essentially guessing). That’s down from an estimate/guess of 6,900 cars in the first quarter and comes despite a much ballyhooed customer referral program designed to boost Model S sales.
So what’s the problem if cars get delivered a few months late? The problem is that Tesla is burning through cash at a prodigious rate. Yes, new technology takes time to establish a foothold in the marketplace and even more time to gain acceptance. But sooner or later, Tesla has to start making money. Can Tesla Motors find its way through the pitfalls that every startup faces and become self-sustaining financially?
Elon Musk is a master at promoting his “the glass is half full” perspective and getting others to buy into his vision. If he has a weakness, it is his tendency to over-promise and under-deliver. These are treacherous times for Tesla Motors and there are storm clouds on the horizon. If Tesla falls short of its delivery goals for the year, it might not make much difference to its customers, but it could make a huge difference to the investors who are bankrolling the Tesla experiment.
Musk will be leading the 3rd quarter conference call with analysts and investors shortly. Investors are not customers. Those pesky numbers are all they care about. It will be interesting to hear what Musk has to tell them about the financial health of his company.