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Tesla: 3-Month Model 3 Delay

Nov. 01, 2017 5:12 PM ETTesla, Inc. (TSLA)411 Comments
Bill Maurer profile picture
Bill Maurer


  • Company now says 5,000 Model 3's per week late in Q1 2018.
  • Q3 net loss of $619 million GAAP, or $2.92 per share non-GAAP.
  • Cash burn tops $1.4 billion in quarter.

After the bell on Wednesday, we received third quarter earnings results from Tesla (NASDAQ:TSLA) which can be seen in this investor letter. As I detailed in my earnings preview article, the company was likely to report a huge loss and bad Model 3 news, and the stock had been declining in recent weeks as a result. Unfortunately for investors, the company did not provide good news on Wednesday, sending the stock closer to $300 a share.

While Tesla went into lengthy explanations of how the Gigafactory is the main cause of the Model 3 bottlenecks, and that at the Fremont factory certain operations can do high-volume short burst production, the main takeaway is that management now expects to hit 5,000 units a week in production for the Model 3 late in Q1 2018, three months later than originally forecast. The company also has eliminated guidance for hitting 10,000 units per week sometime in 2018, now just talking about implementing that capacity after it hits the 5,000 per week rate.

As for Q3, the numbers were even worse than I could have imagined. Total revenues came in at $2.98 billion, which was between my estimate and the average street forecast. Total automotive revenues were below my forecasts, not showing tremendous sequential growth despite over 4,000 more deliveries, lending credence to the discounting notion that bears have been talking about. Energy storage and service/other revenues came in above my expectations, but overall those are very low margin at this point.

While Tesla guided for gross margins under 20%, I thought that the added Model S/X sales would get it close despite the Model 3 shortfall. Unfortunately, that wasn't the case, with Tesla coming in at 18.3% GAAP and 18.7% non-GAAP. Operating expenses jumped by 8% sequentially, a lot more than I expected, and I already was forecasting a number that was higher

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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