Elon Musk says ‘there is not a demand problem’ with the Model 3
Tesla hosted its annual shareholder meeting Tuesday. A lot — a whole lot — happened since the last time CEO Elon Musk faced stockholders in this formal setting a year ago.
There’s been a months-long battle between Musk and the Securities and Exchange Commission, shareholder lawsuits over his allegedly false claim that he had the money to take Tesla private, and a revolving door of executive shakeups. And that’s just the boardroom drama.
But Musk made it clear that he didn’t want to rehash the past: “I don’t think it’s worth going over those things,” he told the audience.
Instead, he painted a promising outlook of Tesla’s future, telling the room that Tesla’s Model 3 sedan is selling faster than Tesla can build them. He said that self-driving capabilities are just a year away. Musk also hyped the new vehicle models that are in Tesla’s pipeline, including the Model Y, a lower-cost SUV, as well as a semi truck and a pickup.
Wall Street woes
Musk might have been optimistic on Tuesday, but investors are having a harder time following along. Tesla is no longer the darling of Wall Street that it once was: The stock has plunged more than 30% since the start of 2019, and recently dipped below $200 a share. The stock closed Tuesday at $217 per share, but hasn’t been above $300 in months.
There are also some questions about the company’s Model 3. The vehicle became the bestselling US luxury car, which spurred the first back-to-back profitable quarters in the company’s history. But the loss of half of a tax credit for buyers led to the biggest drop in sales in the company’s history and a much bigger than expected loss in the first quarter of this year.
Shares rose 3% after hours during the shareholder meeting, though. And Musk says Tesla is in a great position, calling it “financially insane” not to invest in an electric vehicle that isn’t capable of being updated with fully autonomous driving.
Musk also gave a full-throated rebuke to the idea that the Model 3 is not attracting enough buyers in the United States.
“I want to clear up: There is not a demand problem,” he said. “Absolutely not.”
He said the Model 3 is outselling all its US competitors combined. Citing Edmunds and automaker data, Musk boasted that it is the top-selling car by revenue out of all vehicles — including other electric, gas and diesel vehicles.
“Sometime next year,” Musk said, Tesla will roll out “autonomous driving” capabilities that don’t require any supervision from drivers. From there, the company will look to convince regulators that its cars can operate with nobody inside.
Tesla is also looking to ramp up its battery production and create cheaper batteries, another plan that is important for its future.
Looking ahead: Shanghai, Model Y, ‘Cyberpunk Truck’
The Model Y may reach full production volume before the end of 2020, Musk said.
And Telsa’s design for a pickup, which the CEO referred to as the “Cyberpunk Truck,” will be unveiled this summer.
“It’ll look like it came out of a sci-fi movie,” Musk said of the truck. “It’ll be really cool, I think.”
Musk added that the Shanghai factory is being built rapidly, and it will be key to allowing Tesla to compete in the massive Chinese car market.
Eventually, he added, Tesla wants to have a “car factory on each continent.”
After a tumultuous year like the one Tesla just endured, it could have been awkward for the CEO to face investors. But Musk received a friendly reception: Shareholders who attend annual meetings are typically individual investors — not institutional investors, analysts or the short sellers with whom Musk often battles.