Tesla stated at the beginning of 2020 that their goal was to produce 500,000 electric vehicles by the end of this year’s quarter in spite of the disruption caused by the global pandemic.
Tesla said last week that it delivered 139,300 vehicles in the third quarter, which is a record for the EV manufacturer. But that didn’t seem to encourage analysts who are still skeptical about Tesla reaching its end year target. For the EV company to hit its target, it needs to significantly increase production in the last quarter to will add to its current figure of 330,000 so far this year.
The delivery push will be helped by its Shanghai factory, which is the only production facility outside of the US borders. Since December 2019, Giga Shanghai has delivered Model 3s and intends to produce 150,000 units this year.
In a new email to employees, Musk stated that he sees Tesla reaching production of 500,000 vehicles in 2020:
“It will be tough but super exciting if we can exceed 500,000 cars made in a single year for the first time in Tesla history. When we started Tesla just over 16 years ago, I never thought we would get this far, but, thanks to your hard work and ingenuity, we actually have a chance of making half a million cars in a single year.”
The Tesla CEO says it has to increase the production output from Tesla in Q4:
“It all comes down to Q4. Please take whatever steps you can think of to improve output (while increasing quality).”
Tesla’s third-quarter sales jumped 44 percent as global demand for its electric vehicles outpaced that of most other automakers and the company had a surprising $104m net profit from April through June.
Tesla has weathered the coronavirus pandemic better than most car companies. Second-quarter global sales rose 2.5 percent over the first quarter despite virus precautions forcing the shutdown of its only US assembly plant. Still, sales fell 4.8 percent from the second quarter of 2019.
But Tesla’s quarterly report could put another $3 billion in Chief Executive Elon Musk’s pocket. On Tuesday, the EV car maker saw the six-month average of its stock market value hit $250 billion, a milestone toward triggering the fourth of 12 tranches of options to buy Tesla stock at a discount.
Each tranche gives Musk the option to buy 8.44 million Tesla shares at $70 each, about a sixth of their current price. At Tesla’s current stock price of $420, Musk would theoretically be able to sell the shares related to the upcoming tranche, plus three other tranches that vested in recent months, for a combined profit of $11.8 billion, or almost $3 billion per tranche. Musk’s first tranche was worth about $700 million in May, when it vested, but its value has increased along with Tesla’s stock price.
Tesla’s stock has surged 400% in 2020 as the company increased sales of its Model 3 sedan, giving it stock market value of almost $400 billion. After Tesla said it delivered a record 139,300 vehicles in the third quarter, investors are now awaiting the company’s quarterly financial report.
Musk’s net worth has quadrupled since mid-March when he ranked No. 31 on Forbes’ World’s Billionaires list, with a net worth of $24.6 billion. Not that any of this matters to Musk. The entrepreneur said he’s indifferent to his standing on the Forbes list of billionaires. “I really couldn’t care less. These numbers rise and fall, but what really matters is making great products that people love.”