After Tesla posted a surprise quarterly profit that beat estimates, Elon Musk may have finally won his bragging rights.
In an early morning tweet highlighting the achievement in Q3 2019, Musk prioritized what he has been criticized about in the past – setting overambitious timelines and then falling behind schedule – while placing the unexpected Q3 profit near the bottom of the list.
Tesla Q3 results:
– Shanghai Giga ahead of schedule
– Model Y ahead of schedule
– Solar installs +48% from Q2
– GAAP profitable
– Positive free cash flow
— Elon Musk (@elonmusk) October 23, 2019
Tesla Model Y production heading in the right direction
The Tesla CEO sounded most excited about during the earnings call when he touched on the upcoming Model Y crossover. Not only are the production plans for the Model Y ahead of schedule, but the crossover could also end up outselling all the other Tesla cars combined:
“I’ve actually recently driven the Model Y release candidate and think it’s going to be an amazing product and be very well received. I think it’s quite likely to — just my opinion, but I think it will outsell Model S, Model X and Model 3 combined.”
Musk confirmed the crossover will be launched in summer next year rather than in the fall.
Will the Model Y kick the Model 3 to the curb?
Musk’s assertion that the Model Y might outsell all other Tesla cars combined is curious given it is more expensive than the current Tesla best-seller the Model 3. The Model 3 has attracted buyers due to its lower price and if a more expensive car ends up beating its sales figures, as well as those of the Model S and Model X, then this would be a stunning reversal of the trend. The Model 3 starts at $39,490 while the Model Y’s starting price will be $48,000.
In Tesla’s third quarter, Model 3 sales totaled 79,703. This was a 3% quarter-on-quarter increase and 42% year-on-year growth. Model 3 deliveries were nearly five times the combined sales of the Model S and Model X.
China, here we come
The Shanghai Gigafactory has been built in record time and according to the Tesla CEO, he is ‘not aware of any factory of this magnitude in history being constructed in such a short period of time’. The trial production of the Model 3 at the Chinese plant started earlier this month.
This will likely increase Tesla’s sales in China, the world’s largest car market since they will be cheaper as there will be no import duties imposed. Tesla has also stated that China could become its largest market for the Model 3 sedan.
Regarding Tesla’s non-motoring division, Musk also highlighted the growth of the company’s solar business. Per Tesla’s senior director of energy operations, solar deployments grew by ‘almost 50%’ in the third quarter. Energy storage deployments went up by 15% to hit an all-time high.
What did Elon Musk conveniently forget to mention?
Of course, Musk cherry-picked the best news to broadcast. Among the inconvenient facts that he left out include the massive cannibalization of the sales of the Model S and Model X by Model 3. Year-on-year Model S and Model X deliveries fell by 37% while Model 3 sales increased by 42%.
Another inconvenient fact that Musk left out includes that solar deployments also fell year-on-year by 54%.