Will the recent successful launch of the Model X result in improved investor confidence in Tesla? Considering that the unveiling/launch is yet another feather in the caps of Tesla and Elon Musk, one would presume that it would mark ever-growing confidence in the company, but who can say for sure? The market is “unpredictable” — as they say.
The pre-order backlog should, at the very least though, help to push up Tesla’s delivery numbers for at least the next year, and presumably far longer. With a backlog of 20,000 to 30,000 pre-orders — and considering Musk’s recent comments that the backlog would be cleared out in 8-12 months — that means that the company will presumably produce an average of around 2,000 Model Xs a month. And the pre-orders have jumped a great deal since the unveiling.
That certainly makes for a pretty nice boost to sales, one would guess. (How many Model S sales will rely be cannibalized by the new offering? The two models are, after all, rather different.)
Mark Hibben provides some further thoughts:
Bears who have argued that Tesla would not be able to meet the minimum production goal this year of 50,000 vehicles are probably going to be proved wrong. Tesla built over 12,000 model S sedans in Q2 for a total of 23,967 vehicles for the first half. A total build for the year of 48,000 Model S sedans appears perfectly achievable, leaving only 2,000 Model X crossovers to be built in all of Q4. Once again, perfectly achievable.
The production ramp from 2,000 Model X SUVs per quarter to 2,000 Model X SUVs per month may hit snags, but this is to be expected. It may take most of the first quarter of 2016 to achieve the 2,000 vehicles/month production rate. Given the backlog, Model X production will probably boost revenue in 2016 by at least 50%. It’s a little early to try to estimate profitability since we don’t know what the mainstream pricing for the Model X will be. Musk indicated at the event that Model X would be about $5,000 more than a comparably equipped Model S.
That would not be enough to get Tesla in the black. Let’s hope that actual pricing for the Model X runs higher. As I’ve pointed out in the past, Tesla has needed to charge more than $100K per Model S to break even on a GAAP basis. Last quarter, average revenue per Model S was only $77k.
One presumes, though, that Tesla’s disinterest in charging more for its vehicles is that, once the Gigafactory is up and running current sale prices will be profitable. Taking a temporary loss while establishing lower price tags than would otherwise be possible could well be worth it to the company simply for the sake of building the brand (and, really, building the market as well).
Also, with regard to the X, while something like a 70 kWh option will be available, Musk tweeted last night that its estimated time of arrival was about 12 months from now. It looks like Tesla is aiming to make as much cash as possible on the higher-end Model X versions (i.e. 90D and P90D) before offering the lower-cost, lower-range versions.
I think the biggest question for investors right now, though, is whether or not Tesla will be able to ramp up Model X production at a decent rate.