Advertisements

Tesla Model Y Will Crush The Crossover Competition, Here’s Why

There’s a lot of EV crossover competition coming down the pike but don’t expect established gas-engine automakers to suddenly wrest the EV market from Tesla.

In short: The Tesla Model Y will dominate the EV crossover category because it’s the most recognized EV brand – certainly in the U.S.

With over 500,000 VIN registrations for the Model 3, it’s not a giant leap of faith to see the Model Y – with a starting price of $39,000 for the 230-mile range version – garnering market share and mind share quickly.

Crossover competition has arrived

Yes, the EV crossover competition has already arrived in the U.S., including the Audi e-Tron, Hyundai Kona EV, Jaguar I-PACE, and the Kia Niro EV – not to mention the 2020 Chevy Bolt (with an upwardly revised range of 259 miles), and the Nissan Leaf S Plus.

Today In: Innovation

But, remember, all the above EVs are from traditional automakers. They’re ICE vehicle makers first, EV makers second. And right now EVs are a distant second in sales. Don’t believe me? Go visit the U.S. dealer lots of any of those car manufacturers. It’s wall-to-wall gas-engine vehicles (with a few exceptions in markets like Los Angeles).

Still don’t believe me? Check out this sales chart from InsideEVs for the month of September. The much-vaunted Audi e-Tron sold a whopping 434 copies, the Hyundai Kona EV 190, The Jaguar I-Pace, 160, Kia Niro EV 90 etc.

Even if you allow for lack of availability because the above are just coming on the market, long-established nameplates like the Nissan Leaf (in its current iteration as the 226-mile-range Leaf S Plus) and the BMW i3 are not going gangbusters, with sales of just over 1,000 for the Leaf and half that for the i3 in September.

The only EV really in the running at all in September was the Chevy Bolt* with 2,125 copies sold, according to InsideEVs.

And the Model 3? Over 19,000 sold in September, about 8 times the closest competition. It’s not ludicrous to expect that the Model Y will post monthly numbers certainly higher than, for example, a Bolt EV. And probably much higher.

Model S and X will bow to the Model Y, launch to happen in summer

Meanwhile Tesla is ramping up production of the Model Y earlier than expected.

Regarding Model Y, we’re also ahead of schedule on Model Y preparations in Fremont, and we’ve moved the launch timeline from full 2020 to summer 2020. There may be some room for improvement there, but we’re confident about summer 2020.

Elon Musk, October 24, 2019, third quarter earnings conference call (via Seeking Alpha).

And Tesla’s priorities are pretty clear as the company gets ready for Model Y production. In responding to a question from an analyst on the October 24 call Musk said:

The Model S and X are really niche — they’re really niche products. I mean, they’re very expensive, made in low volume. To be totally frank, we’re continuing to make them more for sentimental reasons than anything else. They’re really of minor importance to the future.

Musk also mentioned that Tesla will “build out more facilities for Model Y production at Shanghai.”

Production glitches are the X factor

Of course, a surge in Model Y deliveries in, let’s say, early 2021 is dependent on Model Y manufacturing being as ready as Musk claims. And the CEO has a tendency for excessive bullishness and exaggeration when it comes to expectations.

Barring an unforeseen event, however, Tesla is more ready now for large-scale mass production than it was back in July of 2017 when it faced a year of production hell and was in the throes of becoming a high-volume car manufacturer.

NOTES:

The Long Range and Performance variants of the Model Y —which you can order now from Tesla’s website – start at $48,000 and $61,000, respectively.

*In the spirit of full disclosure, I drive a 2018 Chevy Bolt.

Follow me on Twitter.

I was a founding member of CNET news and hardware editor at CNET, a contributing technology reporter for the New York Times, and a reporter and editor at the Asian Wall Street Journal Weekly — the latter in Japan, where I lived for ten years. Currently a contributing reporter for Fox News.

Source: Tesla Model Y Will Crush The Crossover Competition, Here’s Why

126K subscribers
Road Comforts Model 3 Custom Fit Floor Mats Now on Amazon! https://amzn.to/2W8ZNzA https://www.roadcomforts.com Shop our Tesla inspired boutique https://www.liketeslakim.com/boutique Patreon supporters get bonus content and free merch. https://www.patreon.com/LikeTesla Follow on – Instagram – https://www.instagram.com/LikeTeslaKim Twitter – https://twitter.com/LikeTeslaKim Facebook – https://www.facebook.com/liketesla/ Get free Supercharging with our referral. http://ts.la/pedram1618 $10 off any order over $100 on EVANNEX use code “elonbucks” https://evannex.com 15% off Tesla Accessories from Abstract Ocean http://www.abstractocean.com?aff=Like… $100 off T Sportline when spending $500 or more http://rwrd.io/256pkm2 Equipment and accessories seen and used in videos: *Magnetic phone mount. It is amazing! https://amzn.to/2TQHBXA *Seatback covers – http://amzn.to/2h4y76G *Child seat protectors – http://amzn.to/2gro8bL *Dashcam: BlackVue Dual Channel (front & back cams) http://amzn.to/2wxMeur *Cameras and stabilizers http://amzn.to/2kKr70P http://amzn.to/2kKnZ58 http://amzn.to/2kRkKwa *GoPro external microphone – http://amzn.to/2kiezRV *Editing Software – http://amzn.to/2vBRPB2 #Tesla #ModelY Video details: There’s been a lot of exciting buzz around the upcoming release of the Tesla Model Y as numerous images are being leaked of pre-production Y’s being transported around Teslas Fremont factory in California as well as being tested in the wild too. Also, Clean Technica is reporting of an unofficial leak that Model Y could possibly begin production as early as Q1 2020 as opposed to the late Q3 2020 which was what Tesla initially promised. We’ve also, independently received a similar leak of possible lines shutting down at the Fremont factory for retooling and maybe some big news for Tesla and Model Y fans as we head into the new year. Goal with Model Y has always been to start ramping as quickly as seamlessly as possible because you’ll probably remember the hellish ramp of both Model X and Model 3 over the past couple of years. Good news here is that there the 3 and Y will share about 3 out of every 4 parts with one another according to Elon Musk, and he’s even said he expects the manufacturing costs of the Y to be pretty similar to Model 3, making developing the car, building it and mass producing it a whole lot easier on the company. Tesla has also been pretty crafty in how they’ve priced the Model Y. It costs about $4 thousand dollars more than a Model 3, but it opens up quite a bit of room for growing its profit margin, since Tesla didn’t have to spend much more than they already -had- to develop Model 3. Model Y is also in a unique spot, because unlike the 3 that is in a weakening sedan market, the global midsize SUV market is on fire. Last year, it grew by about 7% and account for the SUV market accounts for about 4 of every 10 cars sold worldwide. And that number continues to grow year over year. Tesla expects that the Model Y could easily be its most profitable product ever, and possibly bring in more revenue that all of the S,X and 3 sales combined. On that note, Tesla has never been one to be early to the party. Whether its an unveiling event start time or expected product launches, but once you add some of the dots with the parts parity between the Model 3 and Y, the images of pre-production Y’s on trucks and on roadways. Plus some of the possible leaks that if there ever was a Tesla to be delivered ahead of schedule, it would be Model Y then it really makes for an exciting upcoming coupe of months. We know, they’ll be four variants offered. Standard range Long range rear wheel drives, plus Dual motor and Dual motor Performance models. Prices start around $39,000 for the base model and go as high as $61,000 for the dual motor performance. All cars will get premium interior and sound. The panoramic glass roof is also standard just like the Model 3. Model Y is expected to offer 7 seats, but that’ll add $3 thousand to the price tag and isn’t currently expected to be released until 2021. What I can say is that the pre-production model that I test rode in, didn’t seem like it would be the most comfortable 3rd row for an adult but again those can all change. An automated trunk will be standard on the Y, plus there will be a tow bar. Although towing capacity has yet to be publicized. The Y will also have 66 cubic feet of storage with the second row folded down. That is more than 20 cubic feet better than Model 3 with seats down.

Advertisements

Tesla Gets Ready To Report After Upside Surprise On Q2 Vehicle Deliveries

Getty Images
Getty Images

Key Takeaways:

  • Tesla earnings this afternoon follow strong Q2 deliveries
  • Stock on a roll since falling below $200 a share this spring
  • Lower product prices raise questions for some analysts

Considering all the big news Tesla (TSLA) delivered over the last two weeks, its Q2 earnings report this afternoon might seem a bit anticlimactic.

Arguably the biggest (and best) news of the quarter is already digested. The company reported better-than-expected car deliveries for the second quarter. Earlier this month, TSLA said it delivered 95,200 total vehicles in Q2, ahead of Wall Street’s estimate for 91,000. That’s the widest beat in at least three years, according to market forecaster FactSet.

It’s also a huge turn-around from the company’s disappointing 63,000 in Q1, and might reflect some buyers deciding to jump in ahead of the Federal tax credit on TSLA’s cars being halved on July 1, Forbes noted. In Q2, the Model 3 posted deliveries of 77,550, surpassing consensus estimates on Wall Street for 74,100. Combined deliveries for the Model S sedans and Model X SUVs were 17,650, beating estimates of 16,600, according to FactSet data.

The delivery data also might confirm that the March quarter wasn’t quite as bad as people had thought, because thousands of the company’s cars were in transit at the end of March, but those deliveries ended up occurring in Q2. In other words, deliveries over time might be a little smoother than the quarter-to-quarter numbers show.

Shares Took Another Wild Ride in Q2

Smoothness isn’t a word often associated with TSLA, either the company itself or its shares. The Q2 was no different, with TSLA bouncing back quickly from a May sell-off that carried shares of the company down below $200 for the first time since late 2016. Shares recently were back above $250.

Where they go from here depends partly on whether TSLA can meet its delivery goals for the remainder of 2019. As Barron’s noted, TSLA delivered 158,000 cars in the first half—a number it might update when it reports earnings. Its goal for the year is 360,000 to 400,000, meaning it has to do a lot better in the next six months than it did in the first six months of 2019.

It might be interesting to listen to the company’s earnings call to see if executives provide investors a road map of how they plan to get to that point, especially considering the falling government tax incentives for electric car buyers.

Vehicle production was another Q2 highlight, rising to a record 87,048, TSLA said. That included 72,531 of its Model 3 and 14,517 of its Model S/X. Customer vehicles in transit at the end of the quarter were more than 7,400.

Even as it tries to grow production, TSLA has been under pressure to cut costs. The company has made workforce cuts this year, and this month it announced a revamping of its vehicle lineup. The company cut back the total number of vehicles available, making its lower-end Model 3 more affordable while raising prices on its higher-end Models S and X.

It did this, it said in a statement, “To make purchasing our vehicles even easier.” The pricing adjustment, it added, is “in order to continue to improve affordability for customers.”

Tesla said it’s reducing the price of the Model 3 by $1,000 to $38,990. The company will no longer sell the standard range versions of the Model S and Model X, raising the minimum amount people have to pay for those cars. The base version of the Model S is rising to $79,990 from $75,000, while the price of the Model X is increasing to $84,990 from $81,000.

However, lower prices for the Model 3 could mean lower margins for TSLA, which might lead to pressure on profitability. Speaking of which, analysts don’t expect a profitable Q2 despite the big deliveries. This would be the second “red” quarter in a row for the company, a troubling sign after it posted consecutive profitable quarters in the second half of 2018. The decision to lower prices also has some analysts questioning whether demand is there for TSLA’s vehicles.

In a sign that TSLA continues to work on expense control, it said it made “significant progress” in Q2 “streamlining our global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to our working capital position.”

Cash Check

The company’s cash position is usually something analysts monitor at earnings time, and this quarter is no different. Tesla’s wallet looked lighter at the end of Q1 due to a bond payment, expansion costs, and a high number of vehicles in transit, analysts said. One question is whether that improved in Q2, and whether management can meet its forecast for positive free cash flow in the quarter. That might help soothe chronic worries about how quickly TSLA goes through cash.

Among investors, TSLA shares continue to see a lot of love from the Millennial generation. The company’s stock has been a long-time favorite of younger investors, according to the Investor Movement Index, or the IMX, a proprietary, behavior-based index created by TD Ameritrade designed to indicate the sentiment of retail investors.

For TSLA, the “magic” price point in early June seemed to be $200 a share. When the stock fell below that, retail investors appeared to become buyers and come back into the stock in a heavier way.

It’s pretty impressive how TSLA continues to attract younger people to its stock. People are buying what they know, but, like anything, it’s also important to do the research before buying.  Caveat emptor applies to any stock, not just TSLA.

thinkorswim chart

200 CLUB: Shares of TSLA appeared to get a lot of buying interest earlier this year when they fell briefly below $200 a share. Data source: Nasdaq. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

thinkorswim

Tesla Earnings and Options Activity

For Q2, TSLA is expected to report adjusted earnings of negative-$0.42 per share, up from negative-$3.06 the prior-year quarter, on revenue of $6.42 billion, according to third-party consensus analyst estimates. That revenue would represent a 60.4% rise from a year ago.

Options traders have priced in an 5.5% stock move in either direction around the coming earnings release, according to the Market Maker Move™ indicator on the thinkorswim® platform. Implied volatility was at the 21st percentile as of this morning.

Weekly options activity has been higher in the 240- and 245-strike puts and the 275- and 285- strike calls.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: Tesla Gets Ready To Report After Upside Surprise On Q2 Vehicle Deliveries

Tesla Says Plant Worker Injuries Stayed Flat In 2018 Amid Production ‘Hell’

Tesla’s push to more than double production of its electric vehicles last year wasn’t pretty; in fact CEO Elon Musk said it would be “hell.” In 2018 the injury rate at its main assembly plant stayed flat as the company expanded safety procedures and contended with news stories that highlighted worker injuries and questioned the thoroughness of its injury reporting practices……….

Source: Tesla Says Plant Worker Injuries Stayed Flat In 2018 Amid Production ‘Hell’

2 Reasons To Sell Tesla: $920M And $26,250

A little more than two months from now, Tesla — in which I have no financial interest — could have a considerably lower cash balance. How so? The terms of a $920 million convertible bond make me think that come March 1, Tesla will have to part with at least a third of its remaining cash. Is Tesla stock overvalued? On January 18, Tesla traded at 22% below its June 2018 all-time high and it lost 13% of its value in the wake of CEO Elon Musk’s decision to cut 7% of its employees……..

Source: 2 Reasons To Sell Tesla: $920M And $26,250

%d bloggers like this:
Skip to toolbar