Tesla's Model 3 deliveries were awful - but the company still set a sales record for 2017
- Despite the disappointments of the Model 3, Tesla set a record for deliveries in 2017.
- It has created a solid business around the Model S and Model X luxury cars.
- As the Model 3 continues its march through production hell, Model S and Model X now represent a life raft for Tesla.
As expected, Tesla's mass-market Model 3 fell well short of expectations for full-year deliveries : just over 1,500 for the entire fourth quarter, after the company predicted production of 5,000 per week.
The Model 3 number was weak, but no one expected it to be strong. CEO Elon Musk said Tesla would be in production hell with the car, and production hell the company is in.That makes it easy to overlook the positive side of the Tesla 2017 story: that the company delivered 100,000 vehicles for the first time in its 14-year history. In fact, more than 100,000, a beat on the company's own projections even with the poor Model 3 roll-out.
Tesla said that it sold 101,312 Model S sedans and Model X SUVs in total, a clear sign that the company has created a core business of high-priced luxury vehicles. In 2018, there will be questions about whether that level of demand for Tesla's costliest cars is sustainable, but the numbers prove that Tesla is the one to beat with its monopoly on the upper-end electric vehicle trade.
No doubt about it - Model 3 is a big problem a getting bigger with every month that Tesla struggles to assemble what is, basically, a mid-size sedan. Any major automaker with hundreds of thousands of pre-orders for such a car would be swiftly satisfying that demand.
General Motors, for example, sold twice as many Chevy Bolt EVs - priced at the same level as the Model 3, and with comparable range - in just December as Tesla managed for the entire quarter.
But the Model S and X business, if it holds up, is now a life raft for Tesla. And it will need one, potentially, as it continues to alter its goals for Model 3 deliveries in 2018 - and the revenue that comes with it.Get the latest Tesla stock price here.