What Do Tesla’s 4Q16 Car Deliveries Suggest?



Tesla’s 4Q16 deliveries

Tesla (TSLA), an electric automaker, released a press statement on January 3, 2017, to reveal its 4Q16 vehicle production and deliveries. According to the statement, the company delivered about 22,200 vehicles during the fourth quarter. It reflects a 27% year-over-year rise from 17,478 vehicle deliveries in 4Q15. However, its 4Q16 deliveries were ~11% lower than 24,821 units delivered in the third quarter last year. Now, let’s take a closer look and find out what it means for investors.

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4Q16 production improves

Tesla’s vehicle production continued to improve on YoY (year-over-year) basis in the fourth quarter last year. The company produced about 24,882 vehicle units in 4Q16—an impressive improvement of 77% from 14,037 vehicles produced in 4Q15. However, the number of vehicles produced in 4Q16 was ~1% lower than 25,185 vehicles produced in the previous quarter.

Note that these deliveries and production figures include Model S and Model X deliveries. The company started Model X deliveries towards the end of 3Q15.

Note that Tesla’s annual vehicle production is still just a fraction of the annual vehicle production of mainstream automakers (XLY) including General Motors (GM), Ford (F), and Toyota (TM).

What does it mean for investors?

Tesla expected to deliver about 50,000 vehicles in 2H16. However, its actual 2H16 deliveries stood at ~47,021—about 6% lower than the guidance. The company suggested that delayed production due to short-term challenges and the transition to new Autopilot hardware were two reasons for the lower deliveries.

Notably, the company plans to produce 500,000 vehicles per year starting in fiscal 2018. Therefore, Tesla still has much bigger production and delivery goals to achieve in the coming years. At this time, investors might be concerned about Tesla’s plan to shift its focus from Model 3 to other products such as energy products. It might not be easy for the company to digest everything after having too much on its plate.

Overall, Tesla needs to overcome short-term challenges and demonstrate consistency in its delivery and production rate growth to keep optimism alive among its investors.

In the next part, we’ll discuss Tesla’s valuation multiples before of its 4Q16 earnings.


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