Is Tesla Motors Inc (NASDAQ:TSLA) Playing A Trick With Its Vehicle Delivery Numbers?

Tesla Motors Inc (NASDAQ:TSLA) set itself a target to deliver between 80,000 and 90,000 vehicles in 2016. Though the company remains on track to hit its 22,000 units delivery target in 3Q, its deliveries so far in 2016 are tracking on the low-end of the target.

Story continues below

Discount mechanism

In what seems to add a twist into Tesla’s delivery story, a Pacific Crest analyst recently claimed that Tesla was using discounts to enable it to hit its delivery target for 2016. The discount mechanism is seen as a way of making Tesla vehicles more affordable, thus contributing to more sales. Claims of discounting at Tesla imply that the company is struggling to reach its delivery target for 2016, which is a closely watched metric for many investors in the company.

However, in what seems to be a polite rejoinder to analyst Brad Erickson’s claims of a discount mechanism, Tesla published a letter that the company’s CEO wrote to employees reminding them of their no discount and no negotiation policy when selling any Tesla car.

“It is absolutely vital that we adhere to the no negotiation and no discount policy that has been true since we first started taking orders ten years ago,” wrote Tesla CEO Elon Musk in a letter to staff also published on Twitter.

Demand swap between Model 3 and Model S

Though Tesla rebutted claims that it was trying to adopt a low pricing policy to boost deliveries, the company didn’t seem to have much to say about another claim made by the same Pacific Crest analyst: the issue of demand for Model 3 shifting to Model S.

According to Erickson, many customers who placed pre-orders for the Model 3 are converting to the cheaper version of the Model S. As per the last update, Model 3 reservations were nearing 400,000 units. Customers who want to pre-order a Model 3 must make a deposit of $1,000. However, checks by Erickson revealed that some of those customers who reserved a Model 3 are now settling for the Model S that costs $66,000.

Though the analyst says the trend of Model 3 pre-orders converting to Model S may not necessarily be a bad thing, it seems to cast doubt on the quality of Model S demand.

Tesla stock rose 0.22% to $206.27 in the last session. The stock is down 14% YTD and down almost 18% for the year.

An ad to help with our costs