Tesla Motors' (TSLA - Get Report) production guidance in recent years has become the automotive version of the Peanuts football gag, with the company seemingly always coming up short of expectations. Tesla is running out of time to show it can get its act together.
The automaker made its own holiday weekend fireworks on Sunday when it announced it had delivered 14,370 vehicles in the second quarter, short of its 17,000-unit forecast. Tesla also missed its target for the first quarter, after missing full-year initial guidance in both 2014 and 2015.
Tesla blamed the most recent miss on what it called an "extreme production ramp" late in the quarter that had pushed some expected deliveries into July. That is at least a more optimistic explanation than what was given in the first quarter, when supplier shortages and issues relating to its newer Model X were to blame, but investors on Tuesday morning sent shares of Tesla down more than 3% following the news.
Investors in Tesla are much more interested in the long-term potential of the company than any one quarter's results, valuing the money-losing company at a mind-boggling 62 times forward earnings projections on the idea that it will one day dominate a world full of electric vehicles. But cracks in that faith are beginning to show, particularly after Tesla's puzzling announcement last month that it wished to acquire troubled SolarCity (SCTY) for $2.8 billion and add that company's massive debt to its own balance sheet.
Tesla, which has delivered 29,190 vehicles so far this year, said in its latest release that it still believes it can deliver 50,000 vehicles in the second half. If so, the company would come close to hitting the low end of its goal of 80,000 to 90,000 units for the year. But given its past history that 50,000 number, which would nearly match its full-year total in 2015, seems very much in doubt, as do the company's more lofty goals for the years to come.
In the next two years Tesla hopes to begin production of its lower-cost Model 3, with CEO Elon Musk claiming Tesla could produce 500,000 vehicles annually by 2018 and nearly 1 million by 2020. Critics have scoffed at those goals, noting they far exceed the capability of Tesla's sole plant and arguing that Tesla has neither the time nor the capital to build out additional manufacturing capacity any time soon.
As quarters tick on toward 2018 with Tesla unable to hit much more modest goals, the headline-grabbing future projections appear even more laughable.
Tesla, of course, has the ability to make the laughing stop. The company's explanation for the second-quarter miss, that it was busy ramping up production until late in the second quarter and pushed some scheduled deliveries into the third, implies the current quarter should be off to a strong start and that production is indeed on the rise. If Tesla is really capable of producing 50,000 cars in six months, and if there really is demand for those vehicles, there is seemingly nothing stopping the company from delivering oversized results three months from now.
There's nothing wrong with investing based on a grand vision for the future but at some point you need to see evidence that vision is grounded in reality. For Tesla, that day is coming sooner rather than later.