Autos

Tesla Is Sticking It to Wall Street Critics Again

Elon Musk, the co-founder and CEO of Tesla, is celebrating on Twitter after the company over-performed expectations of analysts and delivered far more cars in the last quarter than expected.

This isn’t all too surprising as Tesla is the leader of the electric car market and 3 of its cars hold spots on the list of the 5 Best Selling Electric Cars of 2019. This over-performance is a notable finger to pessimistic Wall Street critics who said, among other things, that Tesla simply can’t meet production demands.

This record delivery of over 95,200 cars is both higher than analyst predictions (the average of which was about 89,000 vehicles) and the record for deliveries by Tesla, which was about 90,700 vehicles. This stellar performance caused it’s stock value to make gains as shareholders became reassured that the company can indeed deliver the goods. 

Still not convinced?

However, some analysts are still not convinced about Tesla’s sustainability as a company and some think that this over-performance was a fluke. One of the key reasons they say that is because the Federal Electric Car Tax Credit can no longer be claimed for Tesla’s cars after 2019.

This tax credit is based on the number of cars that a company has delivered. By delivering so many cars, the company has reduced its tax credit from the $7,500 that other electric car companies enjoy to a mere $1,875 currently. And again, that tax credit will become $0 by year’s end. 

The loss of that tax credit will mean higher prices for Tesla’s vehicles. Its cars are presently positioned for the premium car market, so a lot of people who can afford an $80,000 Tesla likely will not care too much about losing that tax credit.

However, the loss of that tax credit will affect the idea of having an affordable electric car that anyone can buy. That dream won’t die as a result of not having those tax credits, but it will mean that the company will have to find more ways to make an affordable electric car.

A new Elon Musk

Though Tesla’s share prices jumped at the announcement of its recent over-performance, Tesla’s stock prices are known to be fickle, especially to the whims of Musk’s tweeting fingers. One analyst, according to IBTimes, attributed a recent tweet about Musk deleting his Twitter to a small increase in Tesla’s stock price. Though Musk didn’t actually delete his Twitter, the analyst thought that the tweet had a positive effect nonetheless. 

This is not the first time that Musk’s Twitter has had an effect on Tesla’s stock value. Musk’s infamous “Funding Secured” tweet led to many internet memes as well as a brush with the law because the Security and Exchange Commission (SEC) found the tweet to be in violation of its regulations. His tweet caused a collapse of Tesla’s stock value as well as a lawsuit from the SEC that led to an eventual settlement with them.

One of the terms of the settlement was that a lawyer must approve of anything Tesla related before Musk can tweet about it. Because of that, Tesla’s stocks have become more stable than before. However, it must be noted that though his run-in with the SEC is one of the more recent legal troubles that Tesla’s faced, it wasn’t the first and it won’t be the last.

The Federal Trade Commission (FTC) has also been looking into Tesla’s operations. Traditional automakers and some lawmakers have complained about Tesla doing direct-to-consumer sales of its cars. Tesla’s claims about its advanced driver assist technology have also got the company into murky waters, as consumer groups, according to Automotive News, have demanded that the FTC investigate those claims. Regardless of these troubles, Tesla’s recent over-performance has allowed Musk to once again stick it to his Wall Street critics.