Home / Technology / Tesla’s First Model 3 Rolls Off the Line, as Company Stock Takes a Beating

Tesla’s First Model 3 Rolls Off the Line, as Company Stock Takes a Beating

There’s a pair of seemingly contradictory events happening for Tesla right now. On the one hand, the first Tesla Model 3 supposedly rolled off the assembly line this week, a major achievement for the company. Given the company’s huge valuation and its long-stated goal of building the Model 3 as the first “mainstream” electric vehicle for the masses (a goal since arguably surpassed by other manufacturers), you’d think investors would be thrilled. Instead, the stock has taken a hammering over the past seven days, leaving GM once more in the position of the world’s most valuable car manufacturer.

What gives? Several things. Bloomberg has an exhaustive report on the topic and how Tesla has performed over the past few quarters, but we’ll discuss the highlights. The company’s vehicle sales haven’t been great (they’ve been roughly flat when averaged across the last three quarters). Tesla is building more cars than it is selling, and it admitted a huge problem earlier this month with 100kW battery pack production that led to a 40 percent shortfall in delivered vehicles (the problem was supposedly resolved in June). Tesla has also sharply cut back its estimates for how many Model 3s it will deliver this year, according to Bloomberg’s estimates.

Bloomberg

Data and image by Bloomberg

So why is Tesla simultaneously getting hammered in the stock market while it makes steady progress on its technological goals and ramps up vehicle production? (The NYT notes that Tesla has improved vehicle production by 40 percent from a year ago.) There’s a rather substantial gap, I think, between how investors and technology fans view the company. If you’re a fan of Tesla as a company that’s been at the cutting-edge of EV technology, charging stations, and battery manufacturing, than rolling the Model 3 off the assembly line is a huge deal and further evidence that Tesla is delivering on its goals and promises.

Tesla Model 3 red and blue

For investors, the picture is a little murkier. The company is building an inventory of vehicles it hasn’t sold, and predictions for Model 3 shipments have been dropping. The stock may well be overvalued on its own merits; I don’t normally touch stock predictions or discussion, but articles on Tesla and its high valuation are common enough these days that I’m not advancing an argument so much as simply noting it exists. Bloomberg certainly isn’t wrong when it notes that Tesla continues to face stiff headwinds, and that analysts have been predicting rosy quarters and relatively quick turnarounds that haven’t really materialized.

Ultimately, how you view this situation comes down to whether you view Tesla as an engineering company or a mass manufacturer. The difficulty, of course, is that the company is (and must) establish itself as both.

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