Musk defies skeptics, meets Tesla delivery goal; shares
hit record
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[January 04, 2020] By
Munsif Vengattil and Tina Bellon
(Reuters) - Tesla Inc <TSLA.O> beat Wall Street estimates for annual
vehicle deliveries and met the low-end of its own target, sending shares
to a record high in a vindication for Chief Executive Elon Musk after a
few turbulent years.
Boosted by demand for its mass-produced Model 3 sedans as overseas sales
pick up, Tesla on Friday said it delivered 112,000 vehicles in the
fourth quarter, including 92,550 Model 3s and 19,450 Model S/X SUVs,
which was above expectations of 104,960 vehicles, according to IBES data
from Refinitiv.
The Silicon Valley carmaker delivered approximately 367,500 vehicles
during all of 2019, just meeting the low end of its target to deliver
360,000 to 400,000 vehicles in 2019.
Tesla shares were up as much as 5.5% at $454, touching a record high.
The stock has had a strong run in recent months after posting a rare
profit in the latest quarter and news of China ramp up. With a market
valuation of more than $80 billion, Tesla is far outstripping those of
traditional carmakers General Motors Co <GM.N> and Ford Motor Co <F.N>.
The delivery results defy skeptics of Musk, whose mercurial behavior
over the last two years came under close scrutiny from federal
regulators and shareholders of Tesla.
Musk, who has more than 30 million Twitter followers, has a history of
firing off tweets that resulted in an investigation by the U.S.
Securities and Exchange Commission and a defamation trial against him.
The Tesla CEO settled the SEC complaint for $20 million in 2018 and a
Los Angeles jury cleared Musk in the defamation case in December.
"Elon has Tesla executing right on track," said Roth Capital Partners
analyst Craig Irwin.
CHINA RAMP-UP
Tesla also provided an update on its Shanghai factory, which has started
churning out Model 3 cars. It said the plant demonstrated a production
run-rate capability of more than 3,000 units per week.
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China-made Tesla Model 3 vehicles are seen at the Shanghai
Gigafactory of the U.S. electric car maker in Shanghai, China
December 30, 2019. REUTERS/Yilei Sun
The run-rate shows that the factory appears to be ramping faster than expected,
Baird Equity Research analyst Ben Kallo said. "Shanghai deliveries should be the
next catalyst to drive volume growth."
The $2-billion factory, Tesla's first car manufacturing site outside the United
States, is the centerpiece of its ambitions to boost sales in the world's
biggest auto market and avoid higher import tariffs imposed on U.S.-made cars.
A company representative on Thursday said that Tesla will deliver its first
China-made Model 3 sedans to the public on Jan. 7.
The Model 3 is Tesla's most affordable car, with lower-range versions available
starting at $35,000.
Analysts in the past have questioned how rapidly Tesla's vehicle sales will grow
as government subsidies for electric vehicle purchases dwindle in the United
States, China and other markets. Some analysts consider those subsidies the
biggest driver for Tesla purchases.
Traditional automakers largely relying on fuel-powered vehicles on Friday
reported a decline in fourth-quarter U.S. sales and saw their shares tumble as a
widening conflict with Iran pushed oil prices more than $2 a barrel on Friday.
Fiat Chrysler Automobiles NV <FCHA.MI> <FCAU.N> on Friday said it saw a
2% fall in U.S. auto sales, while GM reported its fourth-quarter U.S. deliveries
were down more than 6%
"The recently escalating geopolitical uncertainties driving oil prices higher
are likely to create a tailwind for TSLA shares," Canaccord Genuity analyst Jed
Dorsheimer said.
(Reporting by Munsif Vengattil in Bengaluru, Tina Bellon in New York; Editing by
Arun Koyyur and Nick Zieminski)
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