Model 3 Miss as Expected, Production Ramp Encouraging
Tesla released Dec-17 production numbers highlighted by 1,550 Model 3 deliveries, below the Street’s published numbers calling for 5,250, but in line with investor expectations. Model S and X deliveries totaled 28,320, above Street expectations of 26,550. It appears outperformance was driven equally by Model S and X.
The Model 3 has been available for two quarters, and in both quarters has missed production targets. Despite these issues, we remain upbeat that Model 3 is beginning to ramp nicely. Tesla’s reported 793 Model 3s produced in the last 7 days gives us enough information to roughly model the slope of the Model 3 production curve for the Dec-17 quarter.
Estimated Model 3 Production by week:
- 1st week of Dec: 50
- 2nd week of Dec: 175
- 3rd week of Dec: 420
- 4th week of Dec: 793
This ramp has the markings of the exponential production curve that Musk has promised. In other words, the ramp is beginning, albeit later than expected.
Minor tweaks to our Tesla model. Overall, tonight’s news has little impact on how we think about the Tesla model over the next 5 years. Below are our changes for 2018 and 2019, 2020-2023 had no changes. Link to updated model here.
Conclusion. These results further validate our thesis that EV and autonomy will take longer than most think, but eventually will be more impactful than most can imagine. Our optimism around Tesla’s ability to capitalize on the shift to EV, autonomy, and renewable energy has not changed.
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