LNG: TESLARATI

Tesla (NASDAQ:TSLA) has announced that it would be posting its financial results for Q1 2019 after the market closes on Wednesday, April 24, 2019. The company would be issuing a brief advisory with a link to its Q1 2019 Update Letter, which will be accessible from Tesla’s Investor Relations website. A live Q&A session is set for 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time) to discuss the electric car and energy company’s financial results and outlook.

Tesla’s Q1 2019 earnings call comes after a challenging quarter that saw electric car deliveries fall by around 30% compared to Q4 2018. In Q1 2019, Tesla produced a total of 77,100 vehicles, comprised of 62,950 Model 3 and 14,150 Model S and X. Deliveries reached a total of 63,000 vehicles, comprised of approximately 50,900 Model 3 and 12,100 Model S and X. At the end of the first quarter, Tesla had approximately 10,600 vehicles in transit to customers.

The drop in Tesla’s production and deliveries in the first quarter was met with notably bearish sentiments from Wall Street. RBC analysts called the results “very disappointing.” Cowen and Co analysts suggested that Tesla’s “cash was likely dangerously low” following the company’s payment of a $920 million convertible bond obligation in cash at the beginning of March. Analysts from JP Morgan noted that “Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected.”

Despite its lower-than-expected delivery and production numbers, Tesla was still met with some optimism from its supporters. Canaccord Genuity analysts noted that while they were disappointed in the shortfall of deliveries in Q1, they “continue to believe that the new lower-priced Model 3 variant will spur additional demand.” Loup Ventures highlighted that it remained “focused on underlying demand” for the company’s vehicles like the Model 3. More recently, Nomura noted that while Tesla will likely have a challenging 2019, the electric car maker is nonetheless a “true disruptor” of the auto industry.

What is rather interesting is that Tesla is conducting its Q1 earnings call earlier than expected. Tesla usually releases its first-quarter earnings call in early May, as could be seen in the date of Q1 2018’s Q&A session. The company previously held earlier-than-expected earnings calls in October 2016, October 2018, and January 2019, and those quarters all proved to be profitable.

It should be noted that while the early date of Q1’s earnings call is a rather bullish sign, Elon Musk himself has been very conservative about the first quarter. When Tesla launched the $35,000 Standard Model 3 in March, Elon Musk noted that he does not expect the company to be profitable in the first quarter. “Given that there is a lot happening in Q1, and we are taking a lot of one time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely,” the Tesla CEO said.

While it remains to be seen if Tesla is conducting its early first-quarter earnings call due to positive news on profitability, all eyes will be on the company as it is expected to release some updates on a number of its ongoing and upcoming projects, including Gigafactory 3 in Shanghai, the $35,000 Standard Model 3, the Full Self-Driving suite, the Solar Roof, and updates on future products like the Tesla Pickup Truck and the Tesla Semi. 

Tesla’s announcement for its Q1 2019 earnings call can be accessed here. 

Tesla shares (NASDAQ:TSLA) are seeing some recovery on Wednesday amidst a cautious yet optimistic outlook from Nomura Instinet, which recently initiated its coverage of the electric car maker. In a note on Tuesday, the financial firm’s analysts dubbed Tesla as a “true disruptor” of the auto industry, being a company that is forcing legacy carmakers to develop competitive electric vehicles.

Nomura Instinet analyst Christopher Eberle gave Tesla a “Neutral” rating, which is the equivalent of a “Hold.” A price target of $300 per share was also listed for the company. Eberle explained his rationale behind his stance on Tesla, stating that the electric car maker will likely see another volatile year this 2019. “We are cautious near term, as we navigate the breakneck pace of Tesla’s global expansion,” he said.

Despite his Neutral rating on the company, Eberle nevertheless highlighted Tesla’s massive potential. The analyst likened Tesla to some of the tech industry’s biggest players, noting that the Silicon Valley-based company is pioneering electric cars the same way that Salesforce.com Inc. pioneered the Software-as-a-Service (SaaS) business model.

“Similar to some of the software greats’ disruption of enterprise hardware, Tesla is a true disruptor of the automotive industry, in our view. It forces legacy combustion engine behemoths to scramble to develop competing products without cannibalizing their cash flow machines—keeping them comfortably at a distinct disadvantage, similar to what Salesforce did when it pioneered the Software-as-a-Service (SaaS) business model,” the Nomura analyst said.

Eberle also likened Tesla to Apple Inc., since the electric car maker’s vehicles are a product of vertical integration. “We see similarities to Apple’s disruption of the handset market (iPhone) and liken the Supercharger network and over-the-air (OTA) software updates to the iOS and iTunes ecosystem. The SaaS model will flip Tesla from customer service laggard to a leader, in our view. Tesla is fundamentally changing not only the way cars are built but also how they are bought and sold. To us, this is similar to what Apple did with the advent of the iPhone, Amazon did with books (and eventually everything), Netflix did with video, and Salesforce did with software,” the analyst wrote.

The Nomura analyst’s points highlight a notable and unique advantage that is practically exclusive to Tesla owners today. With the company’s expansive Supercharger Network, long, comfortable road trips are possible, and with free over-the-air software updates, vehicles literally get better the older they get. These are advantages that non-Tesla owners do not get to experience today, at least not to the same degree. Eberle’s comments about Tesla ushering a change among traditional auto also ring true, as shown in the release of premium electric vehicles such as the Jaguar I-PACE and the Audi e-tron.

Tesla stock remains divisive in Wall Street. Among the 30 analysts covering the company, 12 currently consider TSLA shares a “Buy,” 7 rate the stock a “Hold,” and 11 consider Tesla a “Sell,” according to FactSet. The average price target for the electric car maker is currently at $322.29, which is 18.4% higher than Tuesday’s closing price of $272.31.

As of writing, Tesla shares are trading 0.86% at $274.66 per share.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

A new Tesla and electric car-friendly bill is expected to be introduced by a bipartisan group of US lawmakers this Wednesday. Dubbed as the “Driving America Forward Act,” the bill aims to grant each automaker a $7,000 tax credit for an additional 400,000 vehicles, which will be counted on top of the 200,000 cars covered by the existing $7,500 tax credit.

The bill boasts sponsors from both sides of the aisle, including Democratic Senators Debbie Stabenow and Gary Peters, Republican Senators Lamar Alexander and Susan Collins, as well as Democratic Representative Dan Kildee. At a dinner last week, Stabenow argued that the existing cap for electric vehicle tax credits needs to be adjusted in the quickest time possible. “We have a cap that’s got to go up. I want to get this done as soon as possible,” the senator said.

It’s not just pure electric cars that will be covered by the Driving America Forward Act, as the bill also aims to extend the hydrogen fuel cell credit through 2028. While the phaseout period of the bill is shorter at just nine months, its 400,000-vehicle window holds great potential for boosting electric car sales in the United States.

Estimates note that the bill is estimated to cost $11.4 billion. As noted by Reuters, all but $91 million of the total funding will be used for the $7,000 tax credit.

The Driving America Forward Act is backed by several automakers, including electric car pioneer Tesla, American automakers GM, Ford Motor Co, and Fiat Chrysler Automobiles NV, Japanese automakers Toyota Motor Corp, Honda Motor Co, and Nissan Motor Co, as well as German carmakers BMW AG and Volkswagen AG. In a statement, GM President Mark Reuss expressed his support for the bill. “The EV tax credit provides customers with a proven incentive as we work to establish the U.S. as a leader in electrification,” he said.

While the bill enjoys widespread support from automakers, environmental groups, and other organizations, it will likely face opposition from the White House. Last month, the Trump administration proposed the immediate elimination of the $7,500 tax credit. Senator John Barrasso, a Republican who chairs the Environment and Public Works Committee even proposed a legislation back in February that will impose a highway user fee on electric vehicles.

Sales reports from Switzerland have revealed that the Tesla Model 3 was the country’s #1 best-selling car in March 2019, bar none. This marked the first time that an all-electric vehicle was able to top the country’s sales charts, which include vehicles powered by an internal combustion engine.

Tesla sold 1,094 units of the Model 3 in Switzerland last month, as indicated by the numbers of sales statistics site Auto Schweiz. The Model 3’s figures were around 27% higher than the second-ranking vehicle in the country, the widely popular Skoda Octavia, which sold 801 units in March. The Model 3’s feat represented significant milestones for the Silicon Valley-based automaker, as it was able to achieve a record market share of 4.3% in Switzerland’s auto market. These are impressive figures, especially since deliveries of the Tesla Model 3 only started in February.

The Model 3’s strong performance in Switzerland bodes well for the inherent demand for the vehicle, particularly as the country does not offer incentives for consumers purchasing electric cars. For the Model 3 to perform well among Swiss car buyers, it needed to impress potential customers. Based on the vehicle’s March 2019 sales figures, it appears that the electric sedan has done just that.

The news of the Model 3’s feats in Switzerland comes not long after it was revealed that the vehicle helped Norway set new records in March. Norway made history last month when the Norwegian Road Federation (NRF) stated that nearly 60% of all vehicles sold in the country were all-electric. Over March, Norway registered over 18,000 vehicles, 10,316 of which were all-electric. Among this number, 5,315 were Tesla Model 3.

It should be noted that Tesla’s international push for the Model 3 is only beginning, with the company so far only sending the vehicle to several European territories and China. Tesla is expected to deliver the Model 3 to other regions this year, such as those that utilize right-hand-drive vehicles. While concerns are abounding among Tesla’s skeptics in the United States about the Model 3’s demand, it seems simply far too early to dismiss the potential of the electric vehicle in the international market just yet.

Elon Musk himself admits that the Model Y SUV will likely outsell the Model 3 when it starts getting released. Nevertheless, the all-electric sedan will likely maintain strong sales figures, thanks to territories like Europe, which still host a healthy sedan market. This was emphasized by Tesla in its Q3 2018 Update Letter, when the company noted that the “mid-sized premium sedan market in Europe is “more than twice as big as the same segment in the US.”

Less than a week after meeting with Elon Musk and his legal team at Judge Alison Nathan’s Manhattan chambers, the Securities and Exchange Commission is throwing shade towards the Tesla CEO once more. In a recent statement, SEC Commissioner Robert Jackson argued that the agency’s request to hold Musk in contempt due to his February 19 Twitter post was “reasonable.”

The SEC’s latest remarks about the Tesla CEO was related on Monday in Washington. While addressing reporters, Jackson stated that the point of the contempt case is to have future oversight, while preventing Musk from continuing his inappropriate Twitter behavior. “The idea (is) that we would have future oversight to prevent future problems from recurring,” the SEC Commissioner said.

During the hearing, SEC attorney Cheryl Crumpton argued that Musk has not expressed any initiative to follow the terms of his agreement with the agency, which required that tweets with material information be reviewed before they are posted. As punishment for his alleged violation of his settlement, Crumpton called on the court to give Musk a series of escalating fines. The SEC also asked the court to order Musk to report monthly as a way to show his compliance with the settlement.

Judge Nathan, for her part, announced after hearing the arguments of the SEC and Musk’s legal team that the two sides to must arrange a meeting and send a letter to the court within two weeks. If the two sides could not reach an agreement by then, the judge noted that the SEC and the Tesla CEO’s legal team will hear from her in due course.

Commenting on the results of the hearing, the SEC Commissioner stated that the judge took very “reasonable” steps. “I understand those who are skeptical and who feel that it’s innovative relief – to me, it was important relief and I thought enforcement took very reasonable steps, both to the nature of the relief and our oversight of that relief,” Jackson said.

Elon Musk and the SEC’s latest row resulted from a tweet posted on February 19, where Musk indicated that Tesla will produce “around 500K” cars in 2019. The statement echoed one of the CEO’s statements from the first quarter earnings call, when he estimated that Tesla could produce “maybe in the order of 350,000 to 500,000 Model 3s” this year. Musk posted a follow up to his tweet a few hours after, explaining that the ~500K figure corresponds to the company’s annual run rate.

The SEC promptly jumped on Musk’s tweet, particularly as the message did not pass through a review process. The agency argued that the post violated Musk’s settlement terms last year, which required tweets with material information to be reviewed before they are posted. Musk’s legal team contests this claim, stating that the post simply echoed a forecast that had been publicly known since the Q4 2018 earnings call.