Tesla car demand below estimates

Electric car company Tesla said that its deliveries rose less than 2% in the third quarter, missing Wall Street estimates and sending its shares down nearly 6% in trading after the bell.

Total deliveries came in at a record 97,000 units for the quarter, but was below analysts’ estimates of 97,477 vehicles, according to IBES data from Refinitiv.

The company, led by billionaire Elon Musk, is under pressure to ramp up production, while proving that there is sustainable demand for its vehicles and that it can turn a profit, even as traditional luxury car makers begin to roll out their own electric models.

The company has set a target to deliver 360,000 to 400,000 vehicles in 2019, which means that it needs to deliver at least 104,800 vehicles in its final quarter to meet the low end of its full-year forecast.

“Looks like the 360k bottom end of 2019 forecast is starting to look a bit iffy,” Roth Capital Partners analyst Craig Irwin said.

The company’s Model S and X vehicles are also facing challenges from the recently launched all-electric SUVs from Audi and Jaguar Land Rover.

Deliveries of the two high-priced models fell 1.4% to 17,400 from the second quarter and came in below analysts’ estimates of 18,829 vehicles. The company also delivered 79,600 Model 3 sedans in the third quarter, beating estimates of 79,470, but the pace of growth was just 2.6% from the previous quarter. The Model 3 is the linchpin of Tesla’s growth strategy and Musk is under pressure to deliver the vehicle to new international markets efficiently, while guarding working capital. Tesla said its orders in the third quarter exceeded deliveries and that it was therefore entering the fourth quarter with a backlog.

China is emerging as a major market for Tesla and the company plans to start production this month at its new Shanghai plant.

Reuters