Tesla misses delivery deadline. Does the automaker need a course correction?
Tesla missed its vehicle delivery target for the second consecutive quarter, adding to the company's challenges as it deals with the fatal crash last week of one of its self-driving cars and a controversial bid last month to buy solar installation firm SolarCity.
Tesla Motors Inc. has been having a bumpy ride lately.
The electric car company missed its delivery target for the second consecutive quarter, delivering just 14,370 vehicles, according to a Tesla statement Sunday. And that's down by 450 deliveries from the first quarter.
Tesla's goal to deliver 80,000 to 90,000 vehicles in 2016 might be imperiled by these misses, adding to a list of recent woes for the company. This news comes on the heels of Tesla CEO Elon Musk's offer buy the solar installation firm SolarCity Corp., which received mixed reactions, and the announcement that federal officials were investigating a fatal crash involving a Tesla Model S that had been in a semi-autonomous mode.
In a statement, Tesla blamed the April to June quarter's dismal numbers on an "extreme production ramp" that meant almost half of the production happened in the last four weeks of the quarter, and 5,150 ordered vehicles that had yet to be shipped at the close of the quarter. The company predicted it will deliver about 50,000 vehicles in the second half of the year, a number that would bring the year total almost to 80,000, the lower end of Tesla's yearlong goal.
Tesla is poised to break new ground with its Model 3 sedan, the company's first mass-market car, which is set to go into production in late 2017, Reuters reports. The vehicle has generated excitement and 373,000 reservations have been made for the car that will start at $35,000 before tax breaks.
But that enthusiasm may be dampened by the accident that killed 40-year-old Joshua Brown, who was using Tesla's Autopilot feature on a Model S sedan. The vehicle failed to automatically activate the brakes and crashed into a tractor-trailer truck. That incident has led to an investigation of 25,000 Model S sedans by the National Highway Traffic Safety Administration, which had previously awarded it the highest safety rating of any car it ever tested.
That hasn't been the only setback for Tesla.
Ten years ago Mr. Musk laid out an ambitious plan for his electric car company. And, as The Wall Street Journal's Christopher Mims writes, "that has largely come true."
But Mims adds that "Mr. Musk’s ability to largely deliver on a 10-year plan inspires confidence," he also says Musk "pushes boundaries, sometimes to the breaking point."
As Musk pushes for Tesla to acquire SolarCity (as suggested in his 2006 plan), investors for both companies had a mixed response. Musk is chairman of the board for SolarCity and plans to spend as much as $2.8 billion for the photovoltaics company.
As Mims writes:
Mr. Musk clearly wants to change the world – quickly – and thinks doing so requires bucking conventions of corporate structure. That is certainly understandable, up to a point.
Along the way, though, he is inevitably involving many others. Mr. Musk should consider whether some of his ambitions have grown so outsize that they are risky not only for his companies but for the investors and customers along for the ride."
This article contains material from the Associated Press and Reuters.