New Developments For Tesla

About: Tesla (TSLA)

Quality Issues

See this list of issues with the model X.

Deliveries

New reports on inventory building in the US: here, here, here, here and here.

It seems Tesla cannot sell all cars it has built. I expect it will sell substantially fewer cars than the maximum expected deliveries (136k, see here). So maybe 126k? Would still be a record. We can only guess the reason why it builds more cars than it can sell. I still think it has to honor its purchase obligations to Panasonic.

I remember similar allegations of Tesla having sold fewer cars in the US than reported numbers implied in Q3 2019. Fleet sales near the end of the quarter could be responsible for that.

But I am not the only one having doubts about reported delivery numbers. Others think Tesla might play with the definition of "deliveries". See here. For example allegedly Tesla is registering cars from 2016 on its own name. See also here.

Stock price still too high

In an interview Musk repeated the stock price is a bit high, but expected Tesla to be worth more within 5 years. He did not say he expected to stock have a higher price in 5 years, btw. So he might achieve a higher value for Tesla simply by issuing more shares.

Investors should interpret this as a repeated warning, similar to his warning in May. He could have said he expected Tesla to be worth more in one year but he did not. So very likely he expects the stock to be lower in a year. It might even be that he did not say he expected the stock to be higher in a year because of what he knows as an insider.

Outlook

With the new inventory buildup the fourth quarter does not look great for sales in the US. Model Y sales might not offset decreasing model 3 sales. In Europe competition will be even more difficult, for instance against the new EV from Volkswagen. Sales in Netherlands might be somewhat better than in the first 9 months of 2020 because certain tax incentives will be reduced from 2021. All in all I still think European sales will be lower in the fourth quarter of 2020. I think sales in China will be OK for another quarter, but no substantial growth there either.

All in all I think more and more investors will realize the growth story is over. We will see more closures of the factories in Fremont and Shanghai. That will not be good for the stock price. My opinion on the stock is therefore still strong sell.