Elon Musk Says Tesla Has 'Absolutely' No 'Demand Problem'

Both versions of Elon Musk -- the visionary leader and the always entertaining showman -- showed-up at Tesla’s lively annual stockholders meeting Tuesday at Mountain View, California.

Musk the visionary talked about Tesla’s plans for the Tesla Gigafactory Europe and his sports car-like pickup, among many other things.

On the other hand, Elon the entertainer told a delighted audience Tesla had designed a submarine car that’s a much improved version of the one piloted by James Bond 007 (played by Roger Moore in this case). And, he had to go and say something confounding like Tesla planning to enter the mining business to bolster its electric battery supply chain.

Musk spent an hour and a half updating shareholders on Tesla’s doings over the past year. He immediately tackled the elephant in the room -- the alleged drop in demand for Tesla electric vehicles (EVs) harped on by Wall Street analysts.

“I want to be clear: there is not a demand problem,” asserted Musk at the start of his presentation. “Absolutely not.”

Wall Street analysts remain concerned demand for Tesla’s EVs is slowing faster than expected on account of the slash in the full federal EV tax credit. They also correctly pointed out the cheapest $35,000 version of the Model 3 materialized for only two months. This means every Tesla EV is more expensive than the average transaction price for other cars in the U.S.

In answer to these concerns, Musk told shareholders there is no demand problem and Tesla is still finding new customers. He said 90 percent of orders being received are from customers who aren’t holding a reservation for the Model 3.

“Sales have far exceeded production, and production has been pretty good,” noted Musk. “So, we’re actually doing well, and we have a decent shot at a record quarter on every level. If not, it’s going to be very close.”

In January, Musk said “the inhibitor” to buying a Tesla is “affordability” because “people literally don’t have the money to buy the car.”

Musk reiterated Tesla’s plan to build a Gigafactory on every continent. Gigafactory 3 is rising in Shanghai, China while the next one, in Europe, might begin construction by 2021.

Musk and JB Straubel, Tesla co-founder and now CTO, showed a picture of a green field in Europe. They jokingly said this would one day be their Gigafactory in Europe.

But if they weren’t joking, that field will be a plot of land somewhere in Germany, which is the leading contender for Gigafactory 4. Musk said Tesla intends to determine and announce the location for Tesla Gigafactory Europe by the end of the year.

Musk also said Tesla might give the lithium mining business a shot to protect its battery supply chain as its vertical integration strategy demands.

“We might get into the mining business, I don’t know, maybe a little bit at least,” he said. “We’ll do whatever we have to to ensure that we can scale at the fastest rate possible.”

The backdrop for the shareholders meeting was one of Tesla’s worst quarters (Q1 2019) in decades. Tesla shares closed at $217 Tuesday, down 36 percent compared to same time last year when they traded at $342.

Analysts have spent the last few weeks ganging-up on Tesla and predicting its demise on account of slowing demand and financial hurdles. This flood of negativity, however, subsided when Tesla staged a modest rally of sorts starting last week. That rally ended Wednesday when Wall Street began bleeding again and tech stocks like Tesla bled the most.