How Much Would A Model 3 Delay Cost Tesla?

+20.06%
Upside
174
Market
209
Trefis
TSLA: Tesla logo
TSLA
Tesla

Tesla Motors (NASDAQ: TSLA) recently announced that new reservation holders of the Model 3 should not expect to get their vehicles delivered until “mid 2018 or later”. The company meant that it could only fulfill orders it already received according to the time line it had previously announced. This is because, according to the company’s anticipated production schedule, it can only produce the number of vehicles for which it has already received orders. However, due to some misunderstanding, some media companies interpreted it as a suggestion that the delivery schedule for the Model 3 had been pushed back by at least half a year. As a result, trading volume for the Tesla stock jumped and the stock price fell subsequently.

According to company management, this is most likely not going to happen. Below we take a look at the impact of such a delay. were it to happen, on the Trefis price estimate for the company.

gen 3 market share

If the delivery of the Model 3 is delayed, then we assume that all deliveries planned for the subsequent period are pushed a year later. The picture below shows the impact of changing these assumptions on the net income and price estimate for the company. As you can see, net income can be expected to decline by 38% and as a result there could be a 8.25% reduction in the Trefis price estimate.

gen 3 impact

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Tesla Motors

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