Cars and Drivers

Tesla's 55,000 Car Sales Forecast Is Tiny

Tesla Motors Inc. (NASDAQ: TSLA) reports that it will only deliver 55,000 Model S and X vehicles this year. The number has been overshadowed by the manufacturer’s plan to launch a new home battery system. Yet, car sales are still the core of Tesla’s business, and that business is remarkably tiny.

The main event at Tesla now is its Powerwall. Bloomberg reported that, based on analysis by its researchers, which includes the production rate of the Tesla battery factory:

That was the message from Tesla Chief Executive Officer Elon Musk this week while discussing, for the first time, the early response to his new product line of storage batteries designed for use in homes and businesses. The numbers are impressive. In the first few days of reservations since the battery announcement late on April 30, Tesla booked orders worth roughly $800 million in potential revenue.

ALSO READ: Tesla Analyst Duel: Very Bullish vs. Most Bearish

Excitement about a new, less expensive model car has also drawn the spotlight away from the small number of cars Tesla will deliver. According to Extreme Technology:

So it’s significant that Tesla is still targeting $35K for its upcoming electric 3 Series fighter, the Model 3. And earlier this week, CEO and real-life Tony Stark character Elon Musk set March 2016 for its official unveiling, 10 months from now, in a conference call with financial analysts. An SEC filing in late April made it seem like the Model 3 will at least miss the 2017 model year, thanks to limits in manufacturing capacity. And Tesla certainly isn’t known for meeting its release date targets.

Before that release target, Musk needs to show that he can sell $70,000 cars in enough volume to prove he can draw sales away from Mercedes, BMW, Audi and Lexus, which among them sell well over a million vehicles in the United States each year, though many of them are hybrid and near-electric cars.

In black and white, Tesla’s most recent forecast, as stated in its quarterly earnings report:

In Q2, we expect to produce about 12,500 vehicles, representing a 12% sequential increase. We plan to deliver 10,000 to 11,000 vehicles in Q2, and we are still on track to deliver approximately 55,000 Model S and X cars in 2015. As part of our strategy to optimize operational efficiency while scaling for higher deliveries, we are shipping cars using less expensive rail, rather than by truck, to more regions in the United States and Canada

The sequential number should worry investors, as should rumors of sales problems in China, the world’s largest car market.

When the interest in Tesla becomes overheated, it is worth remembering how small a company it is.

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