Tesla tops Wall Street estimates with 112,000 vehicle deliveries in fourth quarter - CNBC

Tesla Model 3 are located in a Tesla Service Center.

Silas Stein | picture alliance | Getty Images

Tesla delivered a record 112,000 vehicles globally during the fourth quarter, significantly topping Wall Street estimates and achieving an ambitious year-end sales goal of CEO Elon Musk.

Wall Street expected Tesla to deliver 106,000 vehicles to customers during the fourth quarter, which would have just met the company's annual delivery goal of between 360,000 and 400,000 vehicles, a 45% to 65% increase from 2018.

Tesla said it delivered approximately 367,500 vehicles last year, an impressive 50% increase from 2018.

Shares of Tesla were up by about 2% in pre-market trading to roughly $440 per share, a 39% increase over the last 12 months.

Tesla's deliveries are a closely watched number in the industry, providing the closest proximation to sales. It tracks vehicles that have been sold and physically delivered to customers. The number is a barometer for how the company is performing ahead of releasing its quarterly earnings.

Tesla said it delivered 92,550 Model 3 cars and 19,450 Model S and X vehicles during the fourth quarter. The company was expected to deliver 87,900 Model 3, 9,800 Model S and 9,300 Model X vehicles, according to an average of analysts surveyed by FactSet.

Investors were also watching production numbers. In the third quarter of 2019, Tesla delivered more cars than it produced. It manufactured 96,155 vehicles and delivered 97,000 vehicles, setting two personal records for the company, but raising questions about the strength of its manufacturing capabilities.

The electric-car maker said it has produced just under 1,000 cars that are ready for sale at its new factory in Shanghai. Tesla started delivering vehicles to Chinese customers late last month.

Tesla said it will "continue to focus on expanding production" in both the U.S. and China, where the company reports it has demonstrated production run-rate capability of greater than 3,000 units per week. That production rate, according to Tesla, excludes local battery pack production that began in late December.

'Major feather in the cap'

Daniel Ives, managing director of equity research at Wedbush Securities, called Tesla's deliveries to end the year "impressive" and "another step in the right direction" for its Fremont assembly plant in California. Soundly beating Wall Street's estimates in the quarter "was another major feather in the cap for Musk & Co.," he said.

"While part of this recent rally has been a massive short covering, it has also been driven by underlying fundamental improvement as the company's ability to impressively not just talk the talk but walk the walk has been noticed by the Street and the optimism around the story has grown markedly from the dark days seen earlier in 2019," Ives said in a note to investors Friday morning.

Earlier this week, Musk made personal appearances at the company's Fremont car plant and delivery center to cheer on employees and Tesla fanatics who volunteered to deliver cars to customers ahead of the year-end deadline.

Customers who received their cars in 2019 qualified for an $1,875 tax credit. But if the car was ordered in 2019, and delivered in 2020, they would not qualify.

Tesla is now shipping its vehicles to more locations around the world than ever before, including in the U.K. and China.

This broader customer base is one reason why Tesla assured investors in Q3 that it would hit the low end of its prior guidance of 360,000 to 400,000 deliveries for the full year. The company also wrote then: "Deliveries should increase sequentially and annually, with some expected fluctuations from seasonality. We are highly confident in exceeding 360,000 deliveries this year."

Increasing build rates

Last quarter, Tesla said it was "positioned to accelerate" growth through production of vehicles at its new plant in Shanghai, and by "increasing build rates on our existing production lines."

In 2018, Tesla sold 245,240 vehicles including 145,846 Model 3s, the company's mid-size, four-door sedan that started production in 2017. By the end of the year in 2018, Tesla said it had already achieved a delivery run-rate of more than 350,000 vehicles annually.

Since then, Tesla has made changes to its main car plant in Fremont, California, to ramp up production and improve the quality of Model 3s built there, to repair its paint shop (which experienced multiple fires in recent years) and to make way for production of its forthcoming SUV, the Model Y, at that location. It also attained financing for, built and began vehicle assembly at a major new factory in Shanghai.

Tesla shares gained more than 20% in 2019, partly owing to sales of the Model 3. Tesla's newest battery electric sedan became the best-selling luxury vehicle on the US market in 2018 and remained in the top spot throughout the past year. However, with production and sales of the Model S and X in decline, Tesla's revenue also declined in the third quarter of 2019, year-over-year, and the company is facing pressure to generate profits consistently.

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2020-01-03 13:18:00Z
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