Analysis
6 Aug 18

Model 3 finally brightens Tesla’s future

With 38,617 sales in 7 months, Tesla’s most accessible EV set an all-time yearly record in the US for a single model, Inside EVs reports. The same platform estimates that in July, Tesla shifted 14,250 units of the Model 3, equally setting a record for any electric or plug-in vehicle.

The Californian EV maker reported a 52 percent market share of the Model 3 among “mid-sized premium sedans” in the second quarter of this year. Other models included in Tesla’s basket are the Audi, A4, BMW 3 Series, Jaguar XE, Mercedes C-Class and Lexus IS.

Increasing losses, rising stock

In its Q2 report Tesla admits having set another record: it made a loss of $712 million. What should have been the first quarter in the black turned out to be the sixth consecutive red trimester. However, sales increased to $3.57 billion and the cash position improved dramatically, two indicators that promptly caused Tesla shares to surge by 9 percent.

In the meantime, production of the Model 3 has been ramped up to 5,000 units per week. Tesla wants to hit 10,000 by the end of this year. In 2019, over 350,000 EVs should roll off Tesla’s assembly lines, making the company structurally profitable. In fact, already in Q3 2018 does Tesla expect to be in the black.

Later this year, Tesla should start building the entry-level version of the Model 3 - indeed, the one that was announced to have a price tag of $35,000. The next step in Tesla's strategy is to start exports to Europe and Asia, somewhere in the first half of 2019. Logically, this coincides with the production start of the RHD models.

China factory

Tesla does however fear for the effects of the Chinese-American trade war. To counter these and boost its sales on the mega market that is China, Tesla will be building a factory in Shanghai. Tesla is the first foreign OEM that is allowed to build a production centre in China without a local partner being involved.

That is good news and possibly bad news. On the bright side, there is less risk of Tesla having to share its technological knowhow with a Chinese rival. On the not-so-bright side, it will have to manoeuvre through levels of bureaucracy with local and national governments before the factory gets built, says Tu Le, head of Chinese auto consultancy Sino Auto Insights (source: CNN Money).  

Chinese authorities will likely want to influence everything from how Tesla stores customer data to its local suppliers, which could delay the project. Tesla is aiming to build the factory in two years. According to Le, that seems very, very optimistic.

Picture copyright: Instagram/My Tesla Adventure  

 

Authored by: Dieter Quartier