Tesla (TSLA) spikes after leaked email from Elon Musk hints at 500k deliveries

Tesla (NASDAQ: TSLA) spiked after a leaked email from CEO Elon Musk said it “would be exciting if we can exceed” half a million vehicle deliveries in 2020.

At 12:14 PM EST, TSLA stock was trading at $420.52. After a Tweet from @DeltaOne indicated that Elon Musk had sent an email to Tesla employees saying that if the company’s goal of delivering half a million cars could be exceeded, it would be exciting.

By the time the Tweet caught traction, the stock had spiked to over $428.

It undoubtedly would establish 2020 as a groundbreaking year for the electric automaker. Despite having both of its production plants closed due to the pandemic in 2020, Tesla would still accomplish the 500,000 delivery goal set for itself at the beginning of the year.

ELON MUSK IN MAIL TO TESLA EMPLOYEES SAYS “WOULD BE EXCITING IF WE CAN EXCEED” 500,000 ANNUAL PRODUCTION IN 2020$TSLA

— *Walter Bloomberg (@DeItaOne) October 7, 2020

For perspective, Tesla delivered between 367,000 and 368,000 cars in 2019. During the year, it only had one fully-operational production facility, which is in Fremont, California.

Tesla officially started delivering cars from the Giga Shanghai production plant in China in January. The facility is currently producing the Model 3 sedan at a rate of about 200,000 vehicles annually. With Tesla’s 2019 production figures from Fremont, which have expanded due to the Model Y’s introduction, Giga Shanghai’s output should put the automaker well over its 500,000 car goal.

However, things rarely go according to plan. Shanghai was completely closed for several weeks in February, and Fremont was shut down for nearly a month and a half. The closings put a significant dent in Tesla’s Q2 numbers, and the company only delivered 90,891 cars. To keep pace with the yearly goal, Tesla needs to keep an average of 125,000 cars per quarter.

After a record performance in Q3 with 145,036 units produced and 139,300 cars delivered, Tesla is on its way to achieving its goal. However, the company will need to deliver around 190,000 cars in Q4 to achieve the 500,000 vehicle threshold.

The fourth quarter has been Tesla’s strongest period in past years. In 2019, Tesla delivered 112,095 cars to owners compared to the 95,356 and 97,186 in the second and third quarters, respectively.

Whether Tesla reaches its 500,000 car goal for the year comes down to a couple of things: Manufacturing efficiency and demand. The company has plenty of demand, and one of its main focuses has been to increase manufacturing accuracy and efficiency. Musk has been vocal about the challenges that have come from mass-producing cars, but Tesla has managed to overcome the adversity through experience.

At the time of writing, TSLA was trading at $429.08, up 3.66% on the day.

Disclaimer: Joey Klender is a TSLA Shareholder.

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