Elon Musk brushed off Wall Street’s worries about slumping demand for Tesla’s Model 3, and said the company had a “decent shot at a record quarter on every level” in the three-month period ending June 30.
The comments brought a 4 per cent rally in the electric carmaker’s shares in after-market trading on Tuesday, extending a June rebound that had already added 22 per cent to its share price. However, Tesla’s stock is still 40 per cent below its level of six months ago due to worries about demand and the difficulty of making a profit as the company cuts the price of the Model 3 to reach a bigger market.
“I want to be clear, there is not a demand problem. There’s absolutely not,” Mr Musk said at the company’s annual shareholder meeting in Silicon Valley. “Sales have far exceeded production — and production has been pretty good.”
He added that 90 per cent of orders for the Model 3 were coming from people who had not been on the company’s reservation list, indicating that it was reaching a new set of customers.
Tesla’s vehicle deliveries slumped by 31 per cent in the first quarter, prompting the worries about weakening demand. The company blamed the performance on the lag that came from delivering its first Model 3s to international markets, and predicted that it would rebound in the second quarter.
Despite his optimistic comments on Tuesday, Mr Musk didn’t give any specific financial or production targets.
“We didn’t get any hard evidence regarding Tesla’s deliveries for Q2 or the status of the Chinese factory,” said Karl Brauer, executive publisher for Autotrader and Kelley Blue Book. Those were the two issues that would define the company’s progress and progress in the nearer term, he added.
Mr Musk did not specify any particular records he thought Tesla would break with its second-quarter results. He also added a note of caution, saying the company might not beat his optimistic forecast, though “it’s going to be very close”.
However, setting quarterly records for things like revenues and the number of vehicles delivered would require Tesla to significantly exceed current Wall Street targets. These call for revenue of about $6.22bn and deliveries of 70,000-80,000. In the fourth quarter of last year — Tesla’s best to date — revenue was $1bn higher than this and vehicle deliveries hit a record of 90,700.
Much of the shareholder meeting was taken up with the kind of longer-term issues that Mr Musk’s fans revel in, but which critics claim are distractions from the company’s severe financial and logistical challenges. These included its plans to run a robotaxi service, future new models, and the need to greatly increase its battery production to power a growing fleet of electric vehicles.
The Tesla chief executive hinted at a diversification into mining so that Tesla could guarantee a supply of the raw materials it will need as it tries to scale up battery production. “We might get into the mining business — a little bit at least,” he said. “We’ll do whatever we have to.”