Employees at Tesla’s Shanghai Gigafactory building Model 3 electric sedans.
Tesla managed to meet its 2019 delivery guidance with a strong fourth quarter led by shipments of Model 3 sedans and has an upbeat outlook on business in China for the year ahead, prompting shares of Elon Musk’s electric vehicle company to trade at about $448, their highest ever.
The company said early Friday that it got 112,000 vehicles to customers worldwide, including 92,550 Model 3 and a combined 19,450 units of the pricier Model S and X, each of which sell for about $100,000. Total deliveries for the year were about 367,500, just above Tesla’s forecast for delivering at least 360,000 vehicles. (Earlier in 2019, Musk thought it might reach 400,000 units.)
Tesla cofounder and CEO Elon Musk.
Tesla rose more than 4% to $448.24 in morning Nasdaq trading on Friday, even as the overall index declined out 1%. Forbes estimates that the steady runup in the value of Tesla shares in the past few weeks has pushed Musk’s net worth past $27 billion, as he is the single biggest shareholder.
The stock is likely benefiting from the company’s rapid opening of its new Gigafactory in Shanghai, China, where the first locally built Model 3s are to be delivered to customers next week. Construction of the $5 billion Chinese project continues but the first phase is opening in less than a year, far faster than industry observers expected.
“We continue to focus on expanding production in both the U.S. as well as our newly launched facility in Shanghai,” Tesla said in a statement. “Despite breaking ground at Gigafactory Shanghai less than 12 months ago, we have already produced just under 1,000 customer salable cars and have begun deliveries.”
The company claims it’s also “demonstrated” it can achieve a production rate at the Shanghai plant of more than 3,000 cars a week. That figure excludes the production of battery packs in China, which only began late last month, it’s unclear when it will attain that 3,000/week rate.
In its decade as a public company, Tesla has been an influential force for the electric vehicle market but also a highly volatile player that has often struggled to deliver on all of Musk’s ambitious plans. The company has yet to report a full-year profit, but attaining sustainable production and sales in China will go a long way to finally achieving that, barring unexpected impediments.
“Model 3 production rates continue to move higher (~6.7k/week in Q4:19, up ~9% sequentially) and Shanghai deliveries should be the next catalyst to drive volume growth,” Ben Kallo, an equity analyst with Baird, who has an Outperform rating on Tesla, said in a research note. “Importantly, the factory appears to be ramping faster than we expected, with demonstrated run-rate production capability of 3k units/week and local battery production underway.”
Vehicle production, solely at Tesla’s Fremont, California, plant in 2019, totaled 104,891 units, including 86,958 Model 3s. For the full year, Tesla built just over 365,000 electric cars and crossovers.
Because the company doesn’t work with car dealers and distributes all of its vehicles itself, Tesla can’t book revenue from a vehicle sale until it has been delivered to a customer. As a result, there’s typically more lag time between the production and sale of a vehicle than at conventional auto companies.
Tesla’s Shanghai Gigafactory appears to have become operational in less than one year.
