Tesla Posts Best Ever Sales Quarter
October 02 2016 - 10:00PM
Dow Jones News
Tesla Motors Inc. posted its best sales quarter ever as the
electric-vehicle maker prepares to raise the added cash it needs to
begin production of its Model 3 sedan, which is aimed at the mass
market.
Chief Executive Elon Musk wanted a strong third quarter to help
build his fund-raising case for the Model 3's production line and
for the company's Gigafactory, a massive battery-making facility in
Nevada.
On Sunday, Tesla said third-quarter global deliveries of its
vehicles more than doubled from a year earlier to 24,500. They
included 15,800 Model S sedans and 8,700 Model X sport-utility
vehicles. An additional 5,500 cars were in transit to customers and
will be counted in fourth-quarter sales, said the company, which is
based in Palo Alto, Calif.
The results suggest that Tesla's sales haven't been hurt by the
June 30 disclosure of a fatal crash in Florida involving the driver
of a Tesla Model S who was using the car's Autopilot feature.
Federal regulators are investigating the crash, which the
company said was the first known fatality involving Autopilot,
which can take control of a car in certain driving conditions.
Tesla has since begun rolling out software updates to the feature,
which is regarded as a major step toward a self-driving car. Mr.
Musk says the updates to Autopilot would have prevented the
crash.
The company said its third-quarter production rose 37% from the
second quarter to 25,185 vehicles. It also reiterated its forecast
that it would produce 50,000 vehicles in the second half of 2016,
and said sales and production during the fourth quarter would be
flat to slightly better than in the third quarter. Tesla delivered
fewer than 30,000 vehicles during the first six months of the
year.
Mr. Musk is under pressure as he handles the scrutiny of the
fatal Tesla crash and tries to merge his company with SolarCity ,
where he is chairman. After the merger, Tesla said it planned to
tap the debt market or issue shares before the end of the yearto
raise money for the needs of the combined companies and for
bringing out Tesla's new Model 3 car.
The $35,000 sedan, slated for next year, is Mr. Musk's bet that
he can bring an electric vehicle to mass-market customers, riding
the wave of excitement behind the pricier Model S since it went on
sale in 2012.
After Tesla began taking reservations for the Model 3 this year,
strong demand led it to say it would hit its sales target of
500,000 annually in 2018, two years earlier than expected.
Mr. Musk's success drumming up interest in electric vehicles has
spurred traditional auto makers to push harder into that market.
General Motors Co. plans to bring out a fully electric Chevrolet
Bolt later this year.
Ahead of raising cash in the fourth quarter, Mr. Musk urged
employees to limit spending and increase sales. "The third quarter
will be our last chance to show investors that Tesla can be at
least slightly positive cash flow and profitable before the Model 3
reaches full production," Mr. Musk wrote in a memo that Bloomberg
News reported on last month.
The pressure to produce sales apparently got to some within the
organization. Last week on the social news site Reddit, a customer
detailed allegedly aggressive sales techniques by Tesla, including
the mention of a discounted sales price, an apparent violation of
company policy.
Mr. Musk investigated the matter and, in a memorandum posted on
Twitter last Wednesday admonished his employees for offering
discounts on "a small number of cases."
"It is absolutely vital that we adhere to the no-negotiation and
no-discount policy that has been true since we first started taking
orders 10 years ago," he wrote. "This is fundamental to our
integrity and we maintained this policy even through the terrible
depths of the great recession."
He said that it is fine to discount floor models or those
damaged before delivery, but "never—and I mean never" a new car in
pristine condition, he wrote. "This is why I always pay full price
when I buy a car and the same applies to my family, friends and
celebrities, no matter how famous or influential."
(END) Dow Jones Newswires
October 02, 2016 21:45 ET (01:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Tesla (NASDAQ:TSLA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tesla (NASDAQ:TSLA)
Historical Stock Chart
From Sep 2023 to Sep 2024