(Bloomberg) -- The good and the bad Elon Musk were on full display Wednesday, when Tesla Inc. released its much-awaited third-quarter delivery figures.
The good: Musk’s relentless drive to ramp up output helped push deliveries to a record 97,000 units. The bad: Because he had recently hyped the idea -- in typical Musk-ian fashion -- of reaching 100,000, investors came away disappointed with the final number. Tesla shares sank rather than rallying immediately after the release.
“When Elon Musk says they are aiming for 100,000 deliveries, you are hoping for 102,000. Not 97,000,” Gene Munster, a managing partner at venture capital firm Loup Ventures, said by phone. “This is a credibility hit. This is a textbook example of Elon not being disciplined and having difficulty managing expectations.”
Tesla shares fell as much as 7.1% to $225.93 as of 9:53 a.m. in New York. The stock has fallen 32% this year.
Tesla delivered 79,600 Model 3 sedans, plus 17,400 Model S cars and Model X crossovers in the quarter. Analysts were warning ahead of the report that because the company has relied on its much cheaper sedan to grow, total average selling prices probably declined and may have dragged revenue down from a year ago. The carmaker, which last reported a drop in 2012, will release earnings in the coming weeks.
“If you look at the mix of S and X deliveries to Model 3s, profitability is likely to be a challenge,” Dan Ives, an analyst at Wedbush who rates Tesla the equivalent of a hold, said by phone.
Going into the quarter, Tesla said its order backlog was expanding. It announced in July it would no longer disclose the number of vehicles in transit to customers every three months.
The company did, however, report for the first time in its quarterly deliveries statement the portion of vehicles that were subject to lease accounting, a level of disclosure it usually holds off on until earnings.
Tesla said 15% of Model S and X and 8 percent of Model 3 deliveries were leases. That’s up from about 10% and 5.6% in the previous quarter, which is likely to hurt revenue, according to Joe Spak, an analyst at RBC Capital Markets. He expects automotive revenue to drop both from a year ago and the second quarter.
What Bloomberg Intelligence Says:
“Tesla’s missed 3Q delivery target and 2% sequential volume gain may be a sign that pushing into untapped markets isn’t the demand bonanza the company expected. China will be key to boosting deliveries by the 8% needed in 4Q -- to a record 105,000 -- to reach the bottom of Tesla’s guidance.”
-- Kevin Tynan, senior autos analyst
Click here to read the research
Tesla didn’t say in its statement Wednesday whether it’s still expecting to deliver 360,000 to 400,000 vehicles this year. The company will have to hand over roughly 105,000 cars in the last three months of the year to hit the low end of that forecast.
“Just as they tend to move their sales to the end of each quarter, they also tend to go out in the fourth quarter with a bit of a bang, so I think they’ll get there,” Alan Baum, an independent auto analyst in West Bloomfield, Michigan, said in a Bloomberg Television interview.
Tesla doesn’t disclose deliveries by region, but the U.S., China, Norway and the Netherlands were its biggest sources of revenue in the second quarter.
That pecking order may have changed in the latest three-month period. Tesla topped the Dutch sales charts last month, boosted by tax incentives that can save drivers several hundreds of euros a month on vehicle leases. The government plans to dial back some of those subsidies next year.
(Updates with Thursday opening share price in fourth paragraph.)
--With assistance from Chester Dawson, Romaine Bostick and Joe Weisenthal.
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