200,000th US Delivery

[mongo]

If you look at troy's delivery tab for the months april 2018/may 2018/june 2018 and count the amount of model 3 us cars (850) and multiply by 14, you will see that already around 12000 cars are scheduled to be delivered in this quarter. What you are suggesting is that tesla , will do no end of quarter 'californian' push, put on all costs of produced cars in this quarter and all revenue for next quarter. If it would be a difference for 100 or 200 million dollar, maybe tesla would do it.. but this sort of difference will run in the billions. I think what tesla will do is produce as many cars as possible in the next quarter, but for the rest the 200000 limit , will be reached in this quarter.

Billions? One billion in model 3s is 20,000 cars in revenue, perhaps 30k cars in materials. The 200k EV criteria is for sold vehicles in US. Tesla can handle a couple week delay to extend the credit.

No reason to not build as many as possible, need to keep the parts inventory flowing.

 

[ValueAnalyst]

Remember that time when 12 voters thought 200,000th delivery would be in April? Fun times.

 

[pz1975]

Remember that time when 12 voters thought 200,000th delivery would be in April? Fun times.

So you make a poll and then eventually make fun of some of the people that participated in your poll?

 

[ValueAnalyst]

So you make a poll and then eventually make fun of some of the people that participated in your poll?

You make it sound like I made fun of specific people, while I was just reminiscing about the past hindsight 20/20. Please do not distort my post.

 

[pz1975]

You make it sound like I made fun of specific people, while I was just reminiscing about the past hindsight 20/20. Please do not distort my post.

Fair enough - I’ll take your word on it. Just sounded like you were laughing at those people for being wrong.

 

[SW2Fiddler]

You make it sound like I made fun of specific people, while I was just reminiscing about the past hindsight 20/20. Please do not distort my post.

Feedback is a gift. It really sounded that way (poke-funny) to me too. One could reconsider the wording of a post that some people are taking in a way you didn’t intend. Before the edit timer dings.

 

[BioSehnsucht]

As long as the parts for those cars are still within their 60-day (IIRC) window before having to pay the suppliers, it doesn't matter to Tesla if they're sold in Q2 or Q3 after being produced in Q2. They might represent "billions" but they don't have to pay the suppliers for a while so they might pull it off if they can then deliver them fast enough in Q3 without any effective hit to the bottom line (when ignoring quarterly reports and looking big picture). Their only costs will be storage, and possibly more overhead during delivery phase since they need to deliver them faster than normal once Q3 rolls around. This will translate almost directly into another quarter of people buying more options than they would otherwise (since they'll justify them as being "paid for" by the $7500 credit), which actually means more sales of higher margin cares and more profit for Tesla in the future.

 

[ValueAnalyst]

As long as the parts for those cars are still within their 60-day (IIRC) window before having to pay the suppliers, it doesn't matter to Tesla if they're sold in Q2 or Q3 after being produced in Q2. They might represent "billions" but they don't have to pay the suppliers for a while so they might pull it off if they can then deliver them fast enough in Q3 without any effective hit to the bottom line (when ignoring quarterly reports and looking big picture). Their only costs will be storage, and possibly more overhead during delivery phase since they need to deliver them faster than normal once Q3 rolls around. This will translate almost directly into another quarter of people buying more options than they would otherwise (since they'll justify them as being "paid for" by the $7500 credit), which actually means more sales of higher margin cares and more profit for Tesla in the future.

I don't think the connection between point-of-purchase option uptake and an extended tax credit as direct as people believe. Further, federal tax credit may be uncapped/adjusted anyway, for which other OEMs seem to be want.

I continue to question whether or not Tesla will slowdown its mission for minimal (potential) benefit down the line, or if it will continue to ramp Model 3 ASAP in order to get as many Model 3 reservation holders tax credits as possible in Q3, while also staying true to its mission statement.

It's not clear to me yet, but it will be by the Shareholder Meeting on June 5.

 

[mongo]

I continue to question whether or not Tesla will slowdown its mission for minimal (potential) benefit down the line, or if it will continue to ramp Model 3 ASAP in order to get as many Model 3 reservation holders tax credits as possible in Q3, while also staying true to its mission statement.

I think you may be setting up a false dichotomy there.
Tesla does not need to slow down the ramp nor delay their mission to extend the tax credit. They can keep producing cars at max rate (and logistically need to in order to keep part deliveries smooth) and just shift distribution (aka the huge Canada delivery event) and delay sales a couple weeks.

(Even if it does not change option uptake rate, purposely doing something to help the purchasers is great good will / differentiator)

 

[wdolson]

If you look at troy's delivery tab for the months april 2018/may 2018/june 2018 and count the amount of model 3 us cars (850) and multiply by 14, you will see that already around 12000 cars are scheduled to be delivered in this quarter. What you are suggesting is that tesla , will do no end of quarter 'californian' push, put on all costs of produced cars in this quarter and all revenue for next quarter. If it would be a difference for 100 or 200 million dollar, maybe tesla would do it.. but this sort of difference will run in the billions. I think what tesla will do is produce as many cars as possible in the next quarter, but for the rest the 200000 limit , will be reached in this quarter.

Tesla has done the end of quarter push to keep the numbers up for the investor critics. Up until now, Elon has known that for a year, Tesla was going to lose money and there was little he could do to shut up the critics about it. But he also is wise enough to do something that will get a lot of short term criticism if there is a big back end payoff.

Delaying the 200.000th US delivery until July 1 has big payoffs in the second half of the year. With six months of full tax credit with a hard deadline that is well known will help keep Model X and Model S sales up as people who may have been waiting for the rumored refresh will jump at whatever is available to get in before the tax credit declines. Pushing a bunch of US sales from Q2 to Q3 will make Q3 very profitable, and he also knows that something very bad would have to happen for Q4 to also not be very profitable. Model 3 production is right now up close to the profitable region and it will be close to maxxed out for the one line running by the end of the year. They will probably be setting up the second line by the end of the year.

There is lots of upside for Tesla to take their lumps Q2 and push sales to Q3 to maximize the tax credit phase out in their favor (and in favor of their customers). I expect over the next month Model 3s will be stashed in locations all over the US. Any service/delivery center with space will be warehousing cars and I suspect they will be stashing some at the Gigafactory.

 

[Cattledog]

I suspect they will be stashing some at the Gigafactory.

Yup, that's the beauty of cheap land and direct connections.

 

[ValueAnalyst]

I think you may be setting up a false dichotomy there.
Tesla does not need to slow down the ramp nor delay their mission to extend the tax credit. They can keep producing cars at max rate (and logistically need to in order to keep part deliveries smooth) and just shift distribution (aka the huge Canada delivery event) and delay sales a couple weeks.

(Even if it does not change option uptake rate, purposely doing something to help the purchasers is great good will / differentiator)

Two questions:

1. What’s the max number of cars Tesla can deliver in Canada in 2Q?
2. Where will Tesla house 10,000+ units in the last two weeks of June?

 

[ValueAnalyst]

Tesla has done the end of quarter push to keep the numbers up for the investor critics. Up until now, Elon has known that for a year, Tesla was going to lose money and there was little he could do to shut up the critics about it. But he also is wise enough to do something that will get a lot of short term criticism if there is a big back end payoff.

Delaying the 200.000th US delivery until July 1 has big payoffs in the second half of the year. With six months of full tax credit with a hard deadline that is well known will help keep Model X and Model S sales up as people who may have been waiting for the rumored refresh will jump at whatever is available to get in before the tax credit declines. Pushing a bunch of US sales from Q2 to Q3 will make Q3 very profitable, and he also knows that something very bad would have to happen for Q4 to also not be very profitable. Model 3 production is right now up close to the profitable region and it will be close to maxxed out for the one line running by the end of the year. They will probably be setting up the second line by the end of the year.

There is lots of upside for Tesla to take their lumps Q2 and push sales to Q3 to maximize the tax credit phase out in their favor (and in favor of their customers). I expect over the next month Model 3s will be stashed in locations all over the US. Any service/delivery center with space will be warehousing cars and I suspect they will be stashing some at the Gigafactory.

Your argument assumes that Tesla can not achieve profitability without gaming around June 30. I don’t think this is a safe assumption.

 

[mongo]

Two questions:

1. What’s the max number of cars Tesla can deliver in Canada in 2Q?
2. Where will Tesla house 10,000+ units in the last two weeks of June?

1. Very good question. Theoretically, up to the number of Canadian orders (for existing build types). What that number is... ? If they build AWD/P in June and ship them north, it will reduce total units and utilize the Canadian demand.
2. Which 10k? The 10k that were built the last two weeks of June (standard delivery delay), or 10k build previously? Tesla has been renting properties for use of the parking lots (including the International Center in Canada, and Pilot? In Michigan) VW found space for 350k vehicle long term... Worst case GF1, then bus in the employees to pick up their cars...

 

[ValueAnalyst]

1. Very good question. Theoretically, up to the number of Canadian orders (for existing build types). What that number is... ? If they build AWD/P in June and ship them north, it will reduce total units and utilize the Canadian demand.
2. Which 10k? The 10k that were built the last two weeks of June (standard delivery delay), or 10k build previously? Tesla has been renting properties for use of the parking lots (including the International Center in Canada, and Pilot? In Michigan) VW found space for 350k vehicle long term... Worst case GF1, then bus in the employees to pick up their cars...

Perfect. Thank you.

 

[wdolson]

Your argument assumes that Tesla can not achieve profitability without gaming around June 30. I don’t think this is a safe assumption.

Tesla's expenses other than M3 build up this year are fairly low. Elon has said that R&D continues, but they aren't throwing vast sums at it right now. They upped the rates for supercharging so the expansion could pay for itself, though it probably isn't yet, they have cut into the drain from it. The GigaFactory expansion continues, but the pace has slowed and the factory is generating revenue making both battery packs and stationary power storage.

They have aid they make around 20% profit per Model 3 built. If the average sales price is $55K, and they make 5K a week for the last 25 weeks of the year, that's $1.375 billion on top of profits from Model S/X production and solar revenue. If they only average 4K cars per week for the last 25 weeks of the year, that's still $1.1 billion.

Their volume by the end of Q2 is going to be pretty close to profitability. I listened to the Q1 earnings call and Elon said Q2 will be another loser, but he has no doubt Q3 and Q4 will be profitable. Elon is often not very accurate about what real world humans can achieve in x amount of time and tends to give optimistic predictions about when they will release something, but he's usually pretty accurate about analyzing numbers and making a call based on what he sees. In this case, I will take him at his word. He may be slightly optimistic. Q3 may only be profitable because of transferred income from Q2, but I expect Q4 will be profitable on its own.

 

[Waiting4M3]

<snip>
Any service/delivery center with space will be warehousing cars and I suspect they will be stashing some at the Gigafactory.

Could explain the giant parking lot they just paved at the north side of the factory...

 

[BioSehnsucht]

They might also just be about to expand GF1 again, which means the existing parking lots get demolished for foundations. Or even that those existing lots are too small ...

 

[wdolson]

Could explain the giant parking lot they just paved at the north side of the factory...

I was thinking the same thing.

They might also just be about to expand GF1 again, which means the existing parking lots get demolished for foundations. Or even that those existing lots are too small ...

Doesn't mean both could be true. They may be building new employee parking there, but will temporarily store Model 3s for a short while, then open the lot to employees.

 

[ivengo]

With this information in hand https://insideevs.com/monthly-plug-in-sales-scorecard/ how many cars are left to be delivered in US in June before 200K threshold is passed?