Tesla saw its share price fall 6% in afterhours trading yesterday despite the fact that the electric vehicles brand delivered record shipment numbers over Q3. Investors were disappointed that the final figure of Tesla cars delivered to customers over the three-month period was, in the end, only 97,000. 99,000 had been forecast and co-founder and CEO Elon Musk again shot himself in the foot by having announced just a week ago that Tesla “had a shot” at hitting six figures for the first time. That added to the sense of anti-climax when the final record figures fell 2000 short of expectations and another 1000 plus short of the hope Musk had unwisely stoked.
Yesterday’s drop in the Tesla share price reversed sharp gains that had been recorded after Musk made that typically overly optimistic statement. However, there are signs that Tesla is moving in a positive direction following a sticky patch during which production and shipping targets regularly fell behind schedule and below targets. The new record shipments level set in Q3 follows on from a strong second quarter that saw shipments of 95,356 vehicles beat forecasts for 91,000.
The company does have to keep that progress up, however, if it is to defy the critics to finally start turning annual profits. Tesla’s valuations is significantly higher than those of either General Motors or Ford – the traditional giants of the U.S. auto manufacturing industry. That’s despite the fact that the turnovers and profits of both companies outstrip those of Tesla by many multiples. Tesla’s huge P/E multiple has always been founded on the company’s future potential, polished to a gleaming promise of domination of the EV market by Elon Musk.
Tesla has become the leading ‘brand’ in the EV market over the past decade but the problem is that market is still relatively small. The big worry is if Tesla’s position will be strong enough to hold off competitors by the time its market becomes a genuinely significant one and starts to rival that for traditional vehicles with internal combustion engines.
And new competitors to Tesla’s models will now start to arrive thick and fast. A wave of new EV models developed by major automakers will start to make shore from next year. Many will be cheaper than Teslas, often offer similar performance, and range from inexpensive compact vehicles, to seven-passenger people-carriers and a pickup truck. And these mass-market offerings will be accompanied by pricier, sexier entrants from Europe’s most prestigious automakers, with histories (unlike Tesla) of delivering on time.
Cheaper models include a pared-down Mini Cooper and the eagerly awaited 2020 FordBronco Scout, which will both sell for under $30,000. Volvo’s Polestar was especially designed to compete for the Model 3 market, which comprises the rump of Tesla sales – 79,600 of Q3’s 96,000 vehicles delivered.
At the high end of the market, competing with Tesla’s more expensive Model S and X cars, competition will come from Mercedes’s new EV minivan. Porsche will release an EV SUV alongside its Turbo Taycan sports car and even Aston Martin will enter the EV space with a luxury $200,000-plus model.