Tesla published its third quarter production and delivery figures on Friday 2 October. Deliveries came in well above expectations, and the shares rose about 5 per cent by the middle of the session.
Two things about that sentence deserve more attention than the rise itself.
The first is what “above expectations” was measured against. Going into the report, estimates from major banks ran from roughly 421,000 to 482,000 vehicles. That is a spread of about sixty thousand cars, or the entire quarterly output of a mid-sized manufacturer, published by professional analysts about a company that reports the same metric on the same schedule every three months. Prediction market contracts had drifted down through September toward the low to mid 470,000s. In the previous quarter, Tesla had beaten its own company-compiled consensus of 406,024 by about 74,000 units.
When the consensus is that wide, beating it is close to a formality. The company could have delivered any of four quite different quarters and still cleared somebody’s number, and the headline would have read the same way.
The second thing is what was not in the release. The figures were global. There was no breakout for the United States.
That omission is not a scandal. Tesla has never been obliged to publish a regional split in its quarterly delivery note, and the detail arrives later in the financial statements. But it matters for interpretation, because the two biggest questions hanging over this particular quarter were American demand after the expiry of the federal purchase credit and Chinese volumes during a weak summer. A global total answers neither, while sounding as though it has.
This is a pattern worth recognising far below the level of a trillion dollar carmaker.
Every business has a number it leads with and a number it keeps in the drawer. Total revenue is a wonderful figure for a cafe owner who does not want to discuss what happened to the lunch trade. Total customers served is excellent cover for an average spend that has been sliding for six months. Neither is a lie. Both are true totals that happen to be assembled out of a part doing well and a part doing badly, and the aggregate is chosen precisely because it holds them together.
The discipline is in reversing the habit internally. The number you publish can be the total. The number you manage by should be the split, and the split should be the thing that makes you uncomfortable at the Monday meeting rather than the thing that makes the week sound fine.
Tesla delivered more cars than most people expected in a quarter that was supposed to be difficult, and the market paid up for it immediately. That is a real result and the shares reflected it.
The interesting conversation is three weeks away, when the regions are published.
Source: Yahoo Finance, “Tesla shares jump after global car sales top estimates”
