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Tesla's 2016 tally shows vehicle deliveries fell short of target

Forbes logo Forbes 3/01/2017 Alan Ohnsman, Forbes Staff

© Visitors check out a Tesla 90D electric car at the Motor Show 2016 in Essen, Germany. (AP Photo/Mart...

Tesla had its best year to date in terms of production and deliveries of premium electric vehicles in 2016, yet the company led by billionaire tech industrialist Elon Musk fell short of its annual volume goals owing to changes in vehicle hardware.

The California-based maker of clean transportation and energy products built 24,882 Model S sedans and Model X SUVs in the fourth quarter and a total of 83,922 vehicles last year, up 64% from 2015, Tesla said in a statement. Yet deliveries in the quarter were an estimated 22,000 units, based on a preliminary review, below a target of at least 25,000 for that period. Likewise, full-year deliveries came in at an estimated 76,230, which was below the lower end of Tesla’s target for 2016 of at least 80,000 deliveries of its namesake vehicles.

While the company cautioned that the final figure could be a bit higher when full-year financial results are released, it conceded that production challenges related to the adoption of new hardware for its semi-automated Autopilot driving system affected manufacturing operations in the fourth-quarter. The change announced in October included the addition of multiple cameras, radar and sonar sensors, and a new high-powered computer that Musk said would allow Teslas to soon be able to operate in full autonomous mode.

“Q4 vehicle production was weighted more heavily towards the end of the quarter than we had originally planned,” Tesla said. “We were ultimately able to recover and hit our production goal, but the delay in production resulted in challenges that impacted quarterly deliveries, including, among other things, cars missing shipping cutoffs for Europe and Asia.”

By the company’s count, about 6,450 vehicles were still in transit to customers when the quarter ended, and thus couldn’t be added to its full-year tally. Because Tesla sells vehicles directly to individual customers, the company doesn’t count a sale as a delivery until the buyer takes possession.

The shortfall comes after Tesla moved forward with its $2 billion acquisition of solar power provider SolarCity, following shareholder approval in November, and as it prepares to ramp up production of batteries at its Gigafactory in Nevada this year.

Musk has promised to start building and delivering Tesla’s first mass-market vehicle, the Model 3 sedan, by the end of 2017 and ramp up sales of solar roofs and battery packs for home and business power storage. Last year, nearly Tesla got nearly 400,000 reservations for the new model, which is to have a base price near $35,000.

While Tesla has delayed new debt or stock sales to raise capital to accelerate production of vehicles and power products, Barclays analyst Brian Johnson estimates such a move is coming soon. “In our model we assume a $1.5 billion equity raise” in the first quarter of 2017, Johnson said in a research report this week. He also expects the company to miss its target of delivering Model 3s by year end.

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