How Can Tesla (TSLA) Improve Sales for Q4 After Major Customer Dissatisfaction?


Tesla (TSLA) is rolling into winter hoping to finish the year on a high note, but the electric car company is hitting some bone-chilling problems. The Model 3 doesn’t work in the snow – and that could cause a lot of issues for a lot of Americans. The first half of the year, the electric car company struggled. Delays kept the Model 3 from rolling out, but it finally did — and the third quarter delivered high profits. Blogger Bill Maurer comments on what’s down the road in terms of product success as well as international sales.

First, he hits on the feedback from customers in the states and Canada as they start to report major issues with the cars including the door handles, which are embedded inside the door and are designed to pop out of place. The problem? They’re not. This is exceedingly difficult for people who live in cold climates. They go out to get to work on a cold winter morning and are met with a car door that won’t open. It’s the opposite climate of that in California, where cars are produced and tested. A week after the reports, Tesla said they fixed the problem by updating the software with 2018.44.2, otherwise known as “Cold weather improvements.” Let’s see how those pan out…

Maurer goes on to note the fourth quarter will be telling, due to politics and red tape. Tax breaks are set to ease up on the first day of the year in the U.S. and the Netherlands. China is also amid a trade war — and large tariffs there have hurt sales so much, Tesla is bringing prices down.

Tesla Motors Club reported sales estimates were low in Europe for October 2018.  “If that trend continues, and Tesla can’t get Norway/Netherlands to pick up the pace quite a bit, the company will need a major sales push in the US to offset these losses plus those seen in China,” Maurer asserts.

The blogger says many will be focusing on the success of the Model 3, as they see it as a major symbol of TSLA’s ability: “Tesla has guided to lower margins in the automotive and energy businesses in Q4 due to sales mix, seasonality, and tariffs. The question remains can any of that sequential decline be offset by larger volumes? Tesla will likely need another big quarter of credit sales if it wants to match Q3’s profit, given additional operating expenses as well as interest costs with rates on the rise. Will we also see a lot more service costs as a number of Model 3’s hit the shops for repairs and other fixes? Should Model 3 sales fall short and Model S/X sales not recover to last year’s levels, some will question if the company can profit at all this quarter. Of course, things get even tougher in the first quarter of 2019, after tax breaks wind down quite a bit and vehicle sales drop in the dead of winter,” Maurer said.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star blogger Bill Maurer has a yearly average return of 7.5% and a 54% success rate. Maurer has a -6.1% average loss when recommending TSLA, and is ranked #79 out of 6,570 analysts.

The jury is out on Tesla. TipRanks reviewed 26 analysts and the results are divided. Eight are bullish, eight are sidelined and ten are bearish. The consensus price target stands at $326.91, showing about a 4% downside. (See TSLA’s price targets and analyst ratings on TipRanks)

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