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Tesla Reports Upbeat Production Data: ETFs in Focus

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Tesla Motors (TSLA - Free Report) had nearly a 50% jump in production sequentially from its all time high in the second quarter.  The company produced 80142 cars which included 53239 Model 3 vehicles (see: all the Technology ETFs here).

For this quarter, management of Tesla had forecast that it would build 50000-55000 Model-3 vehicle units and deliveries were expected to surpass these figures. Combined with Model S and Model X deliveries, it basically projected deliveries in the range of 73000-83000 units (read: Top Performing Active ETFs & Tesla's Best-Case Scenario).

The deliveries in the third quarter were 83500 vehicles: 55,840 Model 3, 14,470 Model S, and 13,190 Model X. The production of Model-3 vehicles was in line with the estimates. In aggregate, 26903 units of Model S and X vehicles were produced, slightly higher than Q2 and in alignment with the full-year guidance. Deliveries of Model 3 vehicles were helped by the 11,166 units which were in transit at the end of Q2. At the end of Q3, 8048 Model-3 vehicles were in transit.

Deliveries in these quarters’ surpassed more than 80% vehicles delivered in the whole of 2017 while Model 3 deliveries were twice the number in the previous quarters. The overall supplies of Model 3, S and X have increased 105% sequentially and 219% year over year.

The ongoing spat between Washington and Beijing is affecting the business of Tesla in China. The company said “we were able to significantly increase Model S and X deliveries notwithstanding the headwinds we have been facing from the ongoing trade tensions between the US and China.” Tesla added, “Those trade tensions have resulted in an import tariff rate of 40% on Tesla vehicles versus 15% for other imported cars in China.”

Tesla pointed that they are losing out on the government cash incentives that is available to domestically produced electric vehicles in China. These account for 15% or more of Manufacturer Suggested Retail Price (MSRP). As a result, the company is at a cost disadvantage of 55%-60% to any other locally produced car in China. To overcome this deficiency the processes at the Shanghai based Gigafactory has picked up pace.

Per CNBC, Tesla signed a cooperative agreement with Shanghai authorities “start building Gigafactory 3, a new electric vehicle manufacturing facility in Shanghai,” which will be producing 500000 vehicle units in two-three years time after the initial production starts.

Tesla wishes to continue its service of direct deliveries to customers at their homes and offices that began in Q3. The overall target of 100,000 Model X and S deliveries for the year 2018 was intact. This kind of strong production numbers that have met estimates is a positive sign and we can expect to see some pricing action in these related ETFs:  

ARK Industrial Innovation ETF (ARKQ - Free Report)

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvement and advancements in scientific research related to robotics, energy storage, innovative materials, alternative energy sources, infrastructure development, space exploration, autonomous vehicles and 3D printing. This approach results in a basket of 41 stocks, with TSLA occupying the top spot holding 11%. AUM is $183.2 million and expense ratio is 0.75%.

ARK Innovation ETF (ARKK - Free Report)

Like ARKQ, this is also an actively managed fund that follows the same strategy but provides exposure to genomic companies, industrial innovation companies or Web x.0 companies. In total, the fund holds 45 securities in its basket, with Tesla occupying the top position, holding 10.9% share. AUM is $1.37 billion and expense ratio is 0.75%

VanEck Vectors Global Alternative Energy ETF (GEX - Free Report)

This ETF tracks the Ardour Global Index Extra Liquid, focusing on global companies that are primarily engaged in the business of alternative energy. The fund holds about 30 stocks in its basket with AUM of $86.5 million and expense ratio of 0.63%.Tesla occupies the third position in the basket, with 9.5% allocation.

ARK Web x.0 ETF (ARKW - Free Report)

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 44 stocks in its basket, with Tesla occupying the top position at 8.6%. AUM is $643.3 million it charges 0.75% as expense ratio (read: Should You Invest in the ARK Web x.0 ETF (ARKW - Free Report) ?)

First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report)

This fund tracks the Nasdaq Clean Edge Green Energy Index. AUM is $92.7 million and expense ratio is 0.60%. In total, the product holds 38 U.S. securities, with Tesla Motors taking the second spot with 8.2%.

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