From Bloomberg
Elon Musk’s unveiling of a new electric vehicle that Tesla Inc. won’t deliver to customers for another year and a half rekindled concerns about the company’s cash position.
The Model Y crossover the chief executive officer debuted late Thursday at Tesla’s design studio in Hawthorne, California, will start being delivered to customers in the fall of next year, later than some analysts anticipated. The company began taking $2,500 pre-orders, a bigger ask than the $1,000 it has charged to reserve a Model 3 sedan.
“More expensive customer deposits for Model Y are likely to reinforce bear concerns about Tesla’s cash,” Toni Sacconaghi, an analyst with Sanford C. Bernstein Co., said in a report Friday. “We expect initial orders to be notably lower than Model 3.”
Tesla fell as much as 2.7 percent to $282.10 shortly after the open of regular trading. The shares are down about 13 percent this year.
Musk showed off a blue prototype of the mid-sized Model Y, which is roughly 10 percent bigger than its best-selling Model 3. Three higher-end editions of the new vehicle will be available initially, with a standard version available in spring 2021 priced at $39,000 and equipped with a 230-mile battery.
Getting the new vehicle into production on schedule will be key for Tesla to build on the momentum of its Model 3, a less-expensive sedan that’s catapulted the automaker up the sales charts and helped Musk post back-to-back quarterly profits for the first time. The new Model Y may also help Tesla shift its lineup toward the tastes of U.S. consumers, who are increasingly ditching sedans for roomier crossovers and SUVs.
“The biggest surprise was Model Y initial shipments will begin in the fall of 2020, a year later than we had anticipated,” Gene Munster, a managing partner of venture capital firm Loup Ventures, wrote after the event. “This timing likely implies the company is postponing the costly Model Y ramp in 2019 to conserve cash.”
Missing Buzz
Musk, 47, took the stage before a crowd of customers and fans, but was uncharacteristically subdued. He spent much of his presentation talking about the company’s struggles with manufacturing.
“He was not the usual charismatic Elon Musk. He was super low-key,” said Michael Harley, executive editor of Kelley Blue Book, who was at the event. “He was almost apologetic. It was a bit of a reality check. People in the crowd like the car, but Musk only spent a fraction of his time talking about it.”
Only one of the new models was driven onto the stage, where it shared the limelight with other, older vehicles. At the 2016 unveiling of the Model 3, by contrast, Musk showed off three cars and flashed the rising number of customer deposits on screen as they rolled in from people eager to be among the first in line to reserve them.
At the Model Y’s unveiling, Musk said nothing about taking orders or deposits, although Tesla’s website allows people to submit fully refundable pre-orders.
The Model Y is making its official debut after a rough patch for both Tesla and Musk. In late February, the company announced it would finally offer a $35,000 version of the Model 3, though it linked the ability to do so with a plan to close almost all of its stores and pivot to online-only ordering.
This blindsided employees and investors alike, and Tesla backtracked 10 days later, saying in a blog post that more stores would remain open but vehicle prices would have to rise by about 3 percent on average worldwide.
Meanwhile, the U.S. Securities and Exchange Commission has reignited its battle with Musk over his use of Twitter early this year, after the billionaire tweeted about the company’s annual production outlook without clearing the post in advance with a designated in-house lawyer. The SEC’s next filing in the ongoing saga is due with a federal judge in New York by March 19.
