Tesla shares climb despite ‘hubris,’ production delays
Shares of Tesla Motors rose another 3.4% Tuesday as excitement continued to build over the electric-car maker’s next model.
Investors didn’t appear shaken by Tesla’s report Monday that a shortage of parts reduced the number of Model X crossovers it could build in the first quarter.
Tesla shares closed Tuesday at $255.47, up $8.48, to its highest price since September. The rise was fueled by interest in the debut last week of its first sedan for the mass market, the Model 3. By Saturday night, two days after the unveiling, Tesla had received orders for more than 276,000 cars, according to CEO Elon Musk.
The unveiling was followed by Tesla’s disclosure that supplier parts shortages on its Model X crossovers reduced its projected deliveries. The automaker, which has its auto plant in Fremont, Calif., says it delivered 12,420 of its Model S luxury electric sedans in the first quarter, but only 2,400 of its new Model X crossovers.
In unusually frank terms, the automaker said, “The root causes of the parts shortages were: Tesla’s hubris in adding far too much new technology to the Model X in version 1, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house.”
The shortage involved only about six out of 8,000 unique parts that go into the Model X, which is distinguished among SUVs by its unique rear upward-opening gull-wing-style doors, the company said. Tesla did not specify which parts were in short supply.
“The Q1 delivery count was impacted by severe Model X supplier parts shortages in January and February that lasted much longer than initially expected,” the com- pany said in a statement. “Once these issues were resolved, production and delivery rates improved dramatically. By the last full week of March, the build rate rose to 750 Model X vehicles per week, however many of these vehicles were built too late to be delivered to their owners before end of quarter.”
Tesla says it is on track to deliver 80,000 to 90,000 new vehicles this year, having addressed its delivery shortcomings.
Analyst James Albertine of Stifel said in a note to investors Monday that he is concerned that the Model X is an “over-engineered product.”