TSLA Tesla Inc

By Tim Higgins 

Tesla Inc. has begun delivering its newest car, the Model Y compact sport-utility vehicle, the Silicon Valley car maker said Monday on Twitter, undeterred by the outbreak of the novel coronavirus that has raised concerns about global economic growth.

Tesla initially planned for deliveries of the SUV to start in the fall, but Chief Executive Elon Musk pulled that date forward and said they would commence by the end of this month. The accelerated timeline was announced before the U.S. was hit with the Covid-19 virus that was first discovered in China and subsequently shut down much of that country.

Industry auto sales in China plunged 79% in February from a year ago and analysts are expecting the U.S. to be heavily hit as companies, schools and communities have taken to self-quarantining. Tesla, which opened a new factory in China recently, has said expansion plans there would be delayed because of the outbreak. The spread out the outbreak to Europe has forced some rival car makers to shut some of their plants.

Enthusiasm for Tesla's anticipated growth this year, fueled by the China factory and the anticipated arrival of the Model Y, helped push the company's stock to records before retreating in recent weeks amid a broader market downturn as investors braced for the economic impact from the pandemic. Mr. Musk has appeared unfazed by the health crisis, saying this month on Twitter that "the coronavirus panic is dumb."

"Even in this terrible environment, there must be some consumers eagerly awaiting it," David Whiston, an analyst for Morningstar Research Services, said.

Traditionally, Tesla's first deliveries go to employee customers. The company didn't respond to questions about the inaugural delivery.

Work at Tesla's California factory has continued even while other Silicon Valley companies have asked staff to work from home. Mr. Musk on March 9 congratulated employees for making the company's 1 millionth vehicle, a red Model Y.

Mr. Musk began the year predicting Tesla's growth would continue this year with sales rising at least 36% above last year and topping 500,000 vehicle deliveries.

But Wall Street has become skeptical about that figure. Joseph Spak, an analyst for RBC Capital Markets, lowered his outlook for Tesla, slashing his expectations for total sales this year to 364,600 vehicles from his previous expectations of 525,200. Analysts surveyed by FactSet, on average, now predict 495,000 deliveries for this year, down from 510,000 estimated on Feb. 28.

Analysts also expect Tesla to post a loss for the first quarter, which would end its run of two consecutive profitable periods.

Tesla typically depends on an end-of-the-quarter push to hit delivery targets, Mr. Spak said. "That now seems very challenged," he said in a note to investors.

While car production has begun stopping in Europe, U.S. factories remained largely open for now. That could change amid a possible parts shortage in coming weeks from suppliers affected in Europe and China.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

March 16, 2020 16:45 ET (20:45 GMT)

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