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Tesla will make 500,000 cars this year, Musk says

  • Ville Heiskanen

    Bloomberg

Singapore   /   Wed, February 20, 2019   /   01:45 pm
Tesla will make 500,000 cars this year, Musk says A Tesla car charges at a charging station in Beijing. (Reuters/Thomas Peter)

Elon Musk said Tesla will make about 500,000 cars this year, a prediction that’s difficult to gauge given the chief executive officer’s proclivity for setting stretch goals.

The number Musk put in a Twitter posting late Tuesday is roughly in line with his previous comments, depending on which figures investors paid attention to when Tesla reported earnings Jan. 30.

In a letter to shareholders, Musk and his chief financial officer forecast as many as 400,000 total vehicle deliveries this year. But within hours, the CEO told an analyst on Tesla’s earnings call to expect sales for just the Model 3 to reach as many as 500,000 units in 2019.

To Musk’s credit, Tesla did make substantial progress in mass-manufacturing electric vehicles last year, after overcoming the “production hell” he predicted the company would go through starting in the fall of 2017. Total deliveries more than tripled last year.

Still, making 500,000 vehicles in 2019 will be difficult based on the guidance Musk and CFO Deepak Ahuja gave late last month: that Tesla may need until the end of this year to reach a weekly production rate of 7,000 Model 3s.

If the company were to average that pace for the full year, without taking any time off at its plant in Fremont, California, it would assemble almost 365,000 of those cars. Tesla produced another roughly 101,500 Model S sedans and Model X crossovers last year, but has dialed back output of those models in early 2019.

Musk and Ahuja, who is retiring, said in the shareholder letter the expiration of the full federal tax credit in the US at the end of December probably pulled ahead some Model S and Model X demand and cautioned deliveries probably will be lower in the first quarter than a year ago.

To expand its business in China, Tesla is building a plant in Shanghai, though it’s expecting to start production there late this year.

The electric-vehicle maker kicked off this year on a dull note, with fourth-quarter deliveries slightly lagging expectations. Multiple price cuts have followed for the Model 3 sedan to compensate for the gradual elimination of government incentives in the US Tesla’s quarterly profit, reported in late January, also missed estimates.