Musk’s Model Y reignites concerns about Tesla cash – Daily News

on Mar16
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Elon Musk’s unveiling of a new electric vehicle that Tesla Inc. won’t deliver to customers for another year and a half rekindled concerns about the company’s cash position.

The Model Y crossover that the chief executive officer debuted late Thursday in Hawthorne, California, will start being delivered to customers in the fall of next year, later than some analysts anticipated. The company immediately began taking $2,500 pre-orders, a bigger ask than the $1,000 it charged at first to reserve a Model 3 sedan.

“More expensive customer deposits for Model Y are likely to reinforce bear concerns about Tesla’s cash,” Toni Sacconaghi, an analyst with Sanford C. Bernstein Co., said in a report Friday. “We expect initial orders to be notably lower than Model 3.”

Tesla shares fell 5 percent to $275.43 as of noon Friday in New York. The stock is down about 16 percent this year.

At Tesla’s design studio, Musk showed off a blue prototype of the mid-sized Model Y, which is roughly 10 percent bigger than its best-selling Model 3. Initially, three higher-end editions of the new vehicle will be available, with a standard version scheduled to arrive in spring 2021 that will be priced at $39,000 and equipped with a 230-mile battery.

By showing the Model Y now and yet keeping most customers waiting until the second half of next year, Tesla risks undermining momentum for the Model 3, which catapulted the automaker up the sales charts and helped Musk post back-to-back quarterly profits. Investors are counting on the Model Y to help the company better meet the demands of consumers who are increasingly ditching sedans for roomier crossovers and SUVs.

Missing Buzz

Musk, 47, took the stage before a crowd of customers and fans, but was uncharacteristically subdued. He spent much of his presentation talking about the company’s struggles with manufacturing.

“He was not the usual charismatic Elon Musk. He was super low-key,” said Michael Harley, executive editor of Kelley Blue Book, who was at the event. “He was almost apologetic. It was a bit of a reality check. People in the crowd like the car, but Musk only spent a fraction of his time talking about it.”

Only one of the new models was driven onto the stage, where it shared the limelight with other, older vehicles. At the 2016 unveiling of the Model 3, by contrast, Musk showed off three cars and flashed the rising number of customer deposits on screen as they rolled in from people eager to be among the first in line to reserve them.

At the Model Y’s unveiling, Musk said nothing about taking orders or deposits, although Tesla’s website allows people to submit fully refundable pre-orders. Whereas Model 3 customers put down $1,000 deposits and then had to pay $2,500 to configure and order, Model Y buyers will pay only the latter amount, according to the company.

Still, the costlier initial charge to Model Y customers “suggests Tesla remains in a precarious cash position,” Jeffrey Osborne, an analyst at Cowen & Co. with the equivalent of a sell rating on the shares, wrote in a report. “We remain concerned about the company’s liquidity.”

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