Tesla is not so much a car company as it is a cult of personality mixed with a quasi-religious belief in the disruptive superiority of Silicon Valley.
Late yesterday, Tesla Motors reported that it did not produce even close to the number of Model 3 cars that it predicted it would in the third fiscal quarter of 2017.
That is objectively not good news for Tesla. The company has put a staggeringly high amount of pressure on itself to increase production on the Model 3 with a speed that is literally unprecedented in the history of manufacturing. Essentially, Elon Musk has staked the future of his car company on the notion that he can make one million cars a year by 2020. Tesla made 83,922 in 2016… total.
So in the cutthroat world of public market trading it stands to reason that Elon cannot afford even the merest suggestion of a hiccup in a manufacturing ramp-up plan that he has actually referred to as “Production Hell.”
The automaker built only 260 Model 3s during the quarter ended in September, less than a fifth of its 1,500-unit forecast. Output of the sedan that starts at $35,000 — roughly half the cost of the least expensive Model S — was lower than expected because of unspecified “bottlenecks,” according to the company.
Ah, so more a production “shart” than a “hiccup.”
A major miss on production goes to the heart of Tesla’s notional value. If it can’t come close to delivering on its primary goal, logic holds that Tesla cannot survive. Therefore trading on Tesla stock must have been disastrous today, right?
Wondering where this thought experiment lost its way? We’ll give you a hint: it was somewhere between “Elon” and “Musk.”
See, Tesla is not so much a car company as it is a cult of personality mixed with a quasi-religious belief in the disruptive superiority of Silicon Valley. In the eyes of Tesla believers, Elon Musk is a prophet and Tesla is his church. Tesla’s stock doesn’t trade on data, it trades on the current of faith and doubt among the Tesla faithful.
Like all public companies, Tesla has to deal with financial projections on a quarterly basis, but unlike almost any other public company, it has gamed the system so that Elon always revels in the accretive bigotry of low expectations. Just last week, Morgan Stanley analyst Adam Jonas wrote a note on Tesla that was more of a Tesla fanboy Reddit post than it was flinty-eyed financial analysis. Tesla’s results today fly in the face of Jonas’s predictions. We can guarantee you that his faith is not shaken.