Tesla Highlights Used-Car Sales Growth Amid Model 3 Production Delay

Model 3; courtesy of Tesla

Tesla Motors Inc. reported a growth in used-car sales and completed deliveries, in the midst of a continued Model 3 production delay, according to the company’s earnings yesterday.

Tesla reported completed deliveries of 28,425 Model S and Model X vehicles and 1,542 Model 3 deliveries in the fourth quarter. Model X deliveries grew 28% year over year, according to the report. Tesla did not break out numbers for the Model X deliveries. However, Tesla reported that combined orders for Model S and Model X “grew significantly” in 2017 as compared to the year prior. “There had initially been concerns about whether Model 3 would cannibalize Model S and Model X; it seems the opposite is true,” Tesla wrote in the report.

The company also does not break out country-specific data. However, recently eliminated tax incentives for electric vehicles in Hong Kong and Denmark has contributed to a decline in Tesla sales in those countries, according to a published report. The tax brakes in Hong Kong began last April and are slated to last until at least March.

“Our launch in Hong Kong in 2010 was one of Tesla’s earliest, and we remain committed to our customers here, affirming that commitment with the opening of our second Service Centre last year,” a Tesla spokesperson told Auto Finance News, adding, “We remain hopeful that the Government will continue to encourage more electric vehicles on the road and preserve Hong Kong’s lead in clean, sustainable living.”

As Tesla continues to face headwinds on the ramp-up of its Model 3 vehicle, the automaker has seen a continued increase in used vehicles purchased. “Service and other revenue decreased by 5% compared to 3Q17 but increased by 81% compared to 4Q16,” according to the report. “Used-car sales were the main driver of this year-over-year growth.”

Additionally, Model S and Model X production during 4Q17 were limited to 22,137 vehicles due to a reallocation of some of the manufacturing resources to Model 3 production.

Tesla does not detail customer Fico averages or delinquencies in its earnings, but a recent Moody’s Investors Service presale report for Tesla’s first securitization — backed by $608 million in leases — said the weighted average Fico was 767, lower than that of the auto lease ABS pools securitized by competitor OEMs.

Additionally, Tesla held $832.6 million in outstanding lease contracts as of Sept. 31, 2017, with 0.75% delinquent over 30 days, according to the presale.

Model 3 production is expected to advance toward a rate of 2,500 vehicles a week by the end of the first quarter and 5,000 by the end of the second quarter, according to the report. This is in line with a previously adjusted delivery update released on on January 3.

More information was also shared about Tesla’s planned ridesharing network, which first was first posted on Tesla’s website at the end of 2016 with a mention that more details would be released the following year, but have yet to materialize.

“We expect to operate at kind of a shared autonomy fleet where Tesla’s kind of like a combination of Uber or Lyft and Airbnb, I guess,” Tesla’s Chief Executive Elon Musk said on the earnings call. “… You can opt to have your car enter a shared fleet or not, and then Tesla can also operate its own fleet in places where there are not enough people sharing their vehicles, so that’s a pretty significant opportunity.”

Tesla declined to share more information than what is available from the Master Plan, Part Deux on the ridesharing service.

Separately, Tesla former president of global sales and service, Jon McNeill, announced his departure following the earnings call in order to join Lyft as the chief operating officer.

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Editor’s note: This blog was written by Emma Sandler, a Tesla stockholder (and waterbottle owner), but neither the author nor AFN directly profits from its publication.

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