It was reported by Electrek that Tesla is apparently on track with their Model 3 quarterly ramp but below their 6,000/week target.
The ramp is just so big that small misses don’t really matter. Worrying about such precise measurements misses the big picture.
Tesla even coming close to their targets means that Q3 deliveries would jump about 90% from Q2. If they continue this pace delivery will be up to 3X by Q2 next year from this year’s Q2.
Being high or low from those weekly, monthly, or quarterly targets misses the point.
…And Really Misses The Point For Earnings
What’s most exciting about the story is of course earnings. Earnings are what drives stock prices.
Any data that expects Tesla comes anywhere close to their production or delivery targets means huge things for earnings.
Analysts were in shock on Q2 as S&X gross margins jumped from Q1. They were up anywhere from 500-1000 basis points from Q1 to Q2.
Why?
CEO Elon Musk said, “as we improve efficiency, then gross margin and so the profitability per car just improves dramatically.”
Well, you saw that in Q2.
What happens to gross margins if deliveries even come close to being up 90% in Q3 from Q2?
What’s going to happen to gross margins when deliveries are up 3-fold by Q2 next year?
We think gross margins are going to jump.
Shorts Missing The Forest For The Trees
Even with all the communication blunders or smart short stories out there, they all get erased as production ramps 90% sequentially and 3-fold year-over-year.
Remember, “as we improve efficiency, then gross margin and so the profitability per car just improves dramatically.”
That’s now.
Q2 deliveries were up 36% sequentially and gross margins jumped. So for Q3 if deliveries are up 90% sequentially what’s going to happen to gross margins? Look out.
