With all the flack Tesla gets for its inability to consistently meet its stated production goals, it’s easy to overlook the fact that demand for the Model 3 has remained incredibly strong for more than two years now. And with Tesla finally getting a handle on production, Model 3 sales may be primed to explode in 2019.
Looking ahead to the next year, analyst Dan Ives believes that Model 3 demand remains robust and that consumers are growing more interested in the mass market EV as demand for bulkier cars like SUVs slows down. What’s more, Ives’ note relays that Tesla should see a nice boost in sales as the company continues to expand across Europe.
Ives’ note reads in part:
We also believe the roadmap for European Model 3 delivery/shipments appear on schedule for the next few months as the window has now opened up for customers in a host of European countries to order Model 3’s with production ramping significantly in January to meet high demand.
While it will be interesting to see if the expiration of the generous $7,5000 federal tax credit will have any impact on demand, Ives doesn’t believe this will be the case.
With all that said, we believe based on US consumer demand metrics and steady production with no major speed bumps/bottlenecks out of Fremont that Tesla is poised to deliver a robust 4Q, which will be another major step forward for the company on its path to sustainable profitability and cash flow generation on the heels of a transformational Model 3 growth opportunity for the coming years.
Ives also believes that Tesla’s recent price cuts in China will bode well for boosting overall sales.
All of this is rather encouraging for Tesla’s bottom line. Remember, strong Model 3 deliveries is the primary reason why Tesla finally managed to turn a quarterly profit this year. Specifically, Tesla during the recent September quarter delivered 56,065 Model 3 vehicles to customers and finished the quarter with a net income of $312 million. Notably, Model 3 deliveries accounted for approximately 80% of all Tesla deliveries for the quarter.
Lastly, you may remember that Elon Musk sent an email to Tesla employees this past November wherein he said that the goal is for Model 3 production to hit 7,000 units per week by the end of November. We’ll find out if Tesla managed to reach this goal once the company posts its earnings report for the holiday quarter early next year.
