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Tesla set delivery records, but that's still not enough for Wall Street



Photo : Drew Angerer ( Getty )

The Morning Shift All your daily car news in one convenient place. Isn't your time more important?

Tesla hit an important milestone, but still fell slightly below analysts' predictions, both public and private companies want UAW vs. General Motors strike is coming to an end and Brexit is still very bad for the UK. All this and more in The Morning Shift for Friday 4. October 2019.

1st: Tesla In A Twist

Both Wall Street and Elon Musk had high hopes for potential sales of Tesla; Results in the third quarter were expected to be in the top 100,000 cars. That didn't happen, a Tesla press release showed – but it still meant that Tesla set a new quarterly sales record. It was better than the second quarter, but still a few thousand less than the desired 100,000 mark.

The Verge has more:

Tesla delivered “about 97,000” cars around the world in the third quarter of 2019, slightly off the previous record of 95,356 the company set in the second quarter … It Tesla's total delivery for the year brings up to around 255,000 cars, which means the company has already shipped more cars in 2019 than it did last year. [19659010] But it also means that Tesla must set a new record in the fourth quarter (and then some) if it wants to reach the low end of the estimate it offered at the beginning of the year, which was that the Silicon Valley carmaker would deliver between 360,000 and 400,000 cars in 2019. Tesla is expected to start production at its third Gigafactory in China by the end of the year, which can help the company reach that goal.

Things still look relatively good for Tesla. Sales are not declining, which is a solid sign of itself – there's still a chance the carmaker can set a new record in the fourth quarter.

Still, Wall Street is not impressed, and it has consequences. From Los Angeles Times :

The hour after Tesla announced its numbers, the stock price fell as much as 6%. It was down 3% at 5:30 pm. EDT. The company has a market value of $ 43 billion.

"Reaching their production targets will be a Herculean task," said Wedbush analyst Dan Ives. "Tesla needs to catalyze demand."

[…]

"When Elon Musk says they aim for 100,000 deliveries, you're hoping for 102,000. Not 97,000," said Gene Munster, a managing partner at venture capital firm Loup Ventures, in an interview with Bloomberg. " This is a credibility hit, this is a textbook example that Elon is not disciplined and has trouble managing expectations. "

Venture capitalists! Will they ever be happy? (No.)

There is also this problem with the Model 3 being the new hotness, but not the car that brings the margins:

As deliveries rose, the company faced revenue and margin problems – the aging Model S sedan and Model X SUV – whose prices could easily exceed $ 100,000 – yield higher profit margins than Model 3. As the less expensive Model 3 gains advantage against S and X, the company's average sales price drops, which affects sales growth. According to the Facts, Tesla's average sales price for all down from $ 97,600 in December 2018 to $ 55,600 in the second quarter of the year.

Interestingly, Tesla chose not to include the economy in the recent press release, so we can't know if the company is actually making a profit with all these record sales. As The Verge notes, the company lost $ 408 million in the second quarter and $ 702 million in the first quarter; the former had a delivery rate more in line with what we just saw.

2. location: New York State Comptroller Wants UAW Strike To Be Over

As UAW vs. GM strike power on, the higher ups are starting to get antsy. Especially New York State Comptroller Thomas DiNapoli, who has concerns about the New York Pension Fund's 3.8 million GM shares.

From Automotive News :

Crain & # 39; s New York Business an affiliate Automotive News received a letter on October 1, DiNapoli sent to GM CEO Mary Barra, expressing concern about the strike, which began 18 days ago, and how it could impact the New York Pension Fund's 3.8 million GM shares. Both the company and the union have signaled significant progress in the ongoing negotiations for a new contract, in which GM has offered a lift and payout to its employees in exchange for the opportunity to hire workers on a "temporary" basis for several years at a time.

[…]

"As an investor, I am concerned about reports that estimate the company's lost revenue between $ 50 and $ 100 million per day during the strike," he wrote, noting that a two-month labor struggle in 1998 the company cost $ 2 billion. "It is conceivable that the strike can similarly result in significant losses unless a resolution is quickly achieved."

DiNapoli has been a supporter of the UAW lately, and his concern here can be identified as concern for New York's retirement system. He urged GM to maintain and enlarge the US-based operations, and to get around to wrapping up negotiations as quickly as possible.

The full letter can be reached here here .

3.: Meanwhile, Canada's Losing Cash

However, not everyone is calling for an end to the strike of the goodness of the heart. After all, both people and companies are losing money here. Canada's Linamar Corp., a GM subcontractor, has been bleeding money since it began. Specifically, it reports up to $ 750,000 per day Automotive News .

Here is more from the article:

“The resulting decline in GM orders is currently projected to impact Linamar earnings at a rate of up to $ 1 million CAD [per] today ($ 750,000 USD) in strike , "the supplier told investors in a post on the site.

Linamar did not say what parts it supplies to GM vehicles. [19659010] […]

Linamar on Thursday also warned that global production of light vehicles in the third quarter to The end of the year is expected to be down from the company's June forecast.

Linamar does not necessarily work from a DiNapoli standpoint by asking GM to hurry up and negotiate a much better contract, choosing a more business-centric view, which illustrates the spider web effect that can happen when one member of an industrial complex falls out of action, you have to wonder how many other companies are seeing similar rates of financial fatigue.

Fourth: Large Britain's car sales are quite depressing compared to the rest of Europe

Big bad Brexit proves to be a disaster for the car industry. We have talked about it before but every month the sales will just continue to confirm that yes, everything sucks in fact.

This week's reminder comes from Bloomberg : [19659009] UK Car sales lagged behind other major European markets in September as consumers withheld purchases due to uncertainty surrounding Brexit.

Last month's 1.3% increase, driven by fleet demand rather than consumers, fell below the prediction, the Society of Motor Manufacturers and Traders lobby group said Friday. France and Germany grew 17% and 22% respectively. Year-to-date registrations in the UK fell 2.5%.

"We expected a more substantial increase in September, similar to those seen in France, Germany, Italy and Spain," said SMMT chief Mike Hawes in that statement. "Instead, consumer confidence is undermined by political and economic uncertainty."

It makes sense. When the world around you is in turmoil, most people think of more important things than knowing a car.

And things are likely to get even worse as the actual deadline for a Brexit decision creeps towards us. Not only will people be less likely to buy, but automakers will likely struggle to produce.

However, it was a bright hope light, and there appear to be electric cars:

Battery-powered car sales more than tripled to 7,704 units in September, driven by deliveries of models including the Tesla Model 3 and Nissan Blad. Sales of plug-in hybrids increased by 23%, according to data from the group.

The future may be bleak, but at least it will be electric.

Fifth: Volkswagen is ready to share EV knowledge

When we talk about electric cars, the Volkswagen Group chats with other automakers to gather their EV technology know-how. to make more efficient vehicles, reports Automotive News .

It would be a big step forward to promote the market. Car manufacturers willing to share information do not have to do everything that distinguishes research, design, testing and manufacturing alone – it can instead be a team of manufacturers who work in unison.

From Article:

"Given the huge research and development investment required for the transition to battery-electric cars, many smaller luxury names may be interested, including Aston Martin, McLaren and Maserati," said Bloomberg Intelligence analyst Michael Dean . "You couldn't exclude BMW and Mercedes-Benz, which would provide a German premium solution," he added.

[…]

Offers to share electrical expertise are already being promoted, with Ford Motor Co. which agreed earlier this year to use VW's most important electric car platform for a high-volume car in Europe. The deal is worth between $ 10 and $ 20 billion over six years, and manufacturers are in talks to add another model that will be based on VW technology.

If the automotive industry plans to go electric anytime soon, perhaps just the most economical and most effective means of developing the necessary technology.

Reverse: Sputnik Takes To The Skies


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