Published: Feb 10, 2015 2:22 p.m. ET

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Electric-car maker at risk of not meeting key delivery goal

By
CLAUDIA
ASSIS
ENERGY REPORTER

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Tesla has to deliver more than 11,000 Model S sedans if it is to meet its 2014 delivery goals.

SAN FRANCISCO (MarketWatch)—Tesla Motors Inc. needs to meet its ambitious delivery goals when the electric-car maker reports fourth-quarter earnings on Wednesday—or risk its shares falling deep into the red.

The delivery number is a top concern for Tesla TSLA, -2.61% investors, particularly after Chief Executive Elon Musk last month warned of weaker sales in China. Tesla is scheduled to report fourth-quarter results, including quarterly and yearly delivery numbers, on Wednesday.

The electric-car maker has set a goal of delivering 33,000 Model S sedans in 2014, down from a previous goal of 35,000. That means Tesla, which delivered 21,821 vehicles in the first nine months of the year, needs to have delivered more than 11,000 in the fourth quarter. It delivered 22,477 cars in all of 2013.

The 2014 goal is a steep, but not impossible, one, Wall Street has said.

Some of the doubters, however, include analysts at Stifel, who said in a note Tuesday that Tesla will fall short of that goal and report instead 31,750 cars delivered.

Unlike other car makers, Tesla doesn’t report monthly sales. Instead, it reports quarterly deliveries, without providing much detail, when it releases quarterly results.

That opens the door to some widely varying and often conflicting sales estimates. According to two recent estimates, for instance, Tesla’s Model S pulled ahead of Nissan Motor Co.’s Leaf to become the best-selling electric car in the U.S. in January.

Casting further doubt on the delivery estimates, production at Tesla’s Fremont, Calif. factory took a hit in the summer as the assembly line had to be retooled to handle both the Model S and the coming Model X, the SUV Tesla hopes to start selling this summer.

The factory retooling was the main reason Tesla cut its 2014 delivery goal.

That means that Tesla already factored in the assembly line snag, “and they won’t want to miss twice,” said Efraim Levy, an analyst with Capital IQ. “They cannot afford to miss it.”

Tesla shares have taken a beating in the past three months, and are down more than 10%. They have gained 6.8% so far in February, however, and nearly 11% in the past 12 months.

Levy said he would also be eager to hear what Tesla will have to say about lower retail gasoline prices.

A buyer considering a Model S—which starts at $70,000—might not be looking at saving gas money, but lower gas prices will have an impact on Tesla’s Model 3, the mass-market electric car Tesla hopes to sell in two to three years. That car is expected to sell for about $35,000.

“If you believe gas prices will stay low, that has an impact,” Levy said. Tesla’s stock valuation is predicated on Tesla becoming a large-scale car maker, and it won’t get there without the Model 3.

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CLAUDIA
ASSIS

Claudia Assis is a San Francisco-based reporter for MarketWatch. Follow her on Twitter @ClaudiaAssisMW.
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