Tesla’s First Model 3 Rolls Off the Line, as Company Stock Takes a Beating
There’s a pair of seemingly contradictory events happening for Tesla right now. On the one hand, the first Tesla Model 3 supposedly rolled off the assembly line this week, a major achievement for the company. Given the company’s huge valuation and its long-stated goal of building the Model 3 as the first “mainstream” electric vehicle for the masses (a goal since arguably surpassed by other manufacturers), you’d think investors would be thrilled. Instead, the stock has taken a hammering over the past seven days, leaving GM once more in the position of the world’s most valuable car manufacturer.
What gives? Several things.
Data and image by Bloomberg
So why is Tesla simultaneously getting hammered in the stock market while it makes steady progress on its technological goals and ramps up vehicle production? (The NYT notes that Tesla has improved vehicle production by 40 percent from a year ago.) There’s a rather substantial gap, I think, between how investors and technology fans view the company. If you’re a fan of as a company that’s been at the cutting-edge of EV technology, charging stations, and battery manufacturing, than rolling the off the assembly line is a huge deal and further evidence that Tesla is delivering on its goals and promises.
For investors, the picture is a little murkier. The company is building an inventory of vehicles it hasn’t sold, and predictions for Model 3 shipments have been dropping. The stock may well be overvalued on its own merits; I don’t normally touch stock predictions or discussion, but articles on Tesla and its high valuation are common enough these days that I’m not advancing an argument so much as simply noting it exists. Bloomberg certainly isn’t wrong when it notes that Tesla continues to face stiff headwinds, and that analysts have been predicting rosy quarters and relatively quick turnarounds that haven’t really materialized.
Ultimately, how you view this situation comes down to whether you view Tesla as an engineering company or a mass manufacturer. The difficulty, of course, is that the company is (and must) establish itself as both.