2014 1 QTR predictions/results

[GravityPull]

You are making the assumption that Tesla will firstly serve the US market, then Norway and what's left over with regard to demand is pushed elsewhere. However that doesn't add up. Firstly in any given quarter the order of production is EU first, the US because all EU cars are in transit for at least a month. So how can Tesla know when to stop the EU production and concentrate on US to exactly fill demand? The only practical alternative is that Tesla is prioritizing markets leaving a pre-determined portion to be picked up by specific regions and then moves a certain percentage around based on changing conditions (i.e. Denmark changing subsidy at end of year required a pull of cars there dropping some others back). They know that any end of quarter push at the very end will get shipped closer and closer to home finally with only factory deliveries in the end. They can easily prioritize as they know the US demand is robust.

Now the reason the US numbers have leveled out or started to slowly drop while total production increases is that Tesla wants to really get a global presence. They ship cars further and further out expanding markets etc. Norway in March is the only fluke I see though Elon did promise last year that Norway would get some true love in Q1 and Q2 due to them being so revolutionary in policy and acceptance. So basically Elon remembers those who supported the company well. He wants to make Norway a PR case, a country where Teslas make up 10% of total sales and will probably soon make up even more. This is a true big PR case for EVs and can be sold globally. It's definitely worth sending 500-1000 more cars to Norway at cost of US deliveries.

Now when Tesla expands production rapidly to 8k, 10k, 13k cars a quarter and the US numbers remain ~4k, THEN I will start to think there may be a level there. But at 6-7k it just means that Elon's keeping the US level at 4k and getting EU to the other 4k. It'll become even tougher with China and others being added that probably also want 4k or more per quarter. So in fact we may very well see the whole year with limited US production just because Tesla needs to send cars also to EU and Asia in respectable numbers to feed in the market and create the exponential growth effect for the future by cars driving around. Also it's kind of hard to facilitate major supercharger expansion in EU without cars in EU, hence draining US production in favor of EU one is indeed a logical thing to do as local cars explain better the financing of the network.

Hi Mario
i always enjoy your comments.
When US deliveries drop shouldn't the time on the Waiting List increase?

 

[callmesam]

Hi Mario
i always enjoy your comments.
When US deliveries drop shouldn't the time on the Waiting List increase?

Not if production is increasing.

 

[Mario Kadastik]

Hi Mario
i always enjoy your comments.
When US deliveries drop shouldn't the time on the Waiting List increase?

Yes, if demand were significantly above supply. However I think orders are a function of waiting time too. Still many people prefer to get the car on the lot. Some are ok with 1 month wait, some (less) with 3 month and far less with 4+ months. So if the delivery estimate starts to slip beyond that, then the demand drops off somewhat. Once it gets shorter it picks up again but yes, that correlation can be somewhat used that the in and out flows are about on pace. One also has to remember that Tesla had pent up demand in early 2013 and that pre-booking took some chewing threw time. But we'll see in the coming few quarters how it goes.

 

[dirkhh]

Yes, if demand were significantly above supply. However I think orders are a function of waiting time too. Still many people prefer to get the car on the lot. Some are ok with 1 month wait, some (less) with 3 month and far less with 4+ months. So if the delivery estimate starts to slip beyond that, then the demand drops off somewhat. Once it gets shorter it picks up again but yes, that correlation can be somewhat used that the in and out flows are about on pace. One also has to remember that Tesla had pent up demand in early 2013 and that pre-booking took some chewing threw time. But we'll see in the coming few quarters how it goes.

I don't think that's true. People have waited years for their Model S. And similarly have had their Model X reservation for a long time. I can see a strong argument that US demand is reaching some plateau right now. Could be people are waiting for AWD, or they want to see the Model X, or maybe there really are just 4k people per quarter in the US who are ready for a $70k+ EV. But if the deliveries are flat and the wait time is flat that means one of two things
a) demand is flattening out
b) Tesla is planning a massive increase in production / US deliveries in April/May and that's modeled into their delivery time estimate.

 

[justdoit]

I remember Elon mentioning a while back that as they shipped to a region demand would grow in that region. And that makes perfect sense. People in that region now start to see the vehicle, the owners talk about it to others, local news coverage, etc. I believe this is what's happening in some parts of Europe and why it's good for Tesla to start focusing more on international deliveries. It's going to be nice to see the month over month growth in deliveries in different regions. Already looks like Germany is doubling every month.

 

[marvinat0rz]

Are these autodata numbers even remotely correct? If so, I'm buying May calls tomorrow. Do we have a line on the earnings date yet? (Before or after options expiry?)

Tesla Motors (TSLA) Sales News - TheStreet

The TheStreet writer must truly be smoking the good stuff, claiming that a gross profit margin of 32% is "lower than desirable".

 

[ItsNotAboutTheMoney]

I don't think that's true. People have waited years for their Model S. And similarly have had their Model X reservation for a long time. I can see a strong argument that US demand is reaching some plateau right now. Could be people are waiting for AWD, or they want to see the Model X, or maybe there really are just 4k people per quarter in the US who are ready for a $70k+ EV. But if the deliveries are flat and the wait time is flat that means one of two things
a) demand is flattening out
b) Tesla is planning a massive increase in production / US deliveries in April/May and that's modeled into their delivery time estimate.

c) Demand is increasing or decreasing.
Car purchases vary during the year. We don't have any normal month with which to do a year-to-year comparison. We don't even have certainty on wait times.

 

[GravityPull]

Yes, if demand were significantly above supply. However I think orders are a function of waiting time too. Still many people prefer to get the car on the lot. Some are ok with 1 month wait, some (less) with 3 month and far less with 4+ months. So if the delivery estimate starts to slip beyond that, then the demand drops off somewhat. Once it gets shorter it picks up again but yes, that correlation can be somewhat used that the in and out flows are about on pace. One also has to remember that Tesla had pent up demand in early 2013 and that pre-booking took some chewing threw time. But we'll see in the coming few quarters how it goes.

Hi Mario
i own a Model S, have made a lot off the stock and I always thought demand in US would keep increasing due to the incredible quality and innovation the car possesses. Am well aware Tesla has never paid for advertisements but the US dropping delivery numbers combined with NO Increase in wait list time has me very concerned.
If demand in US began to level off 12-15 months after Model S started and this 12-15 mo. leveling also occurs in Europe and China we will need Model X to save the day until Gen III is ready! Isn't Gen III expected in 2017?

 

[Todd Burch]

I don't think that's true. People have waited years for their Model S. And similarly have had their Model X reservation for a long time. I can see a strong argument that US demand is reaching some plateau right now. Could be people are waiting for AWD, or they want to see the Model X, or maybe there really are just 4k people per quarter in the US who are ready for a $70k+ EV. But if the deliveries are flat and the wait time is flat that means one of two things
a) demand is flattening out
b) Tesla is planning a massive increase in production / US deliveries in April/May and that's modeled into their delivery time estimate.

The type of people who would wait years for a Model S probably already have the car by now. That doesn't mean there aren't a lot of people willing to wait 2 months.

 

[DaveT]

Demand for the Model S in the U.S. is NOT decreasing. I don't have time at the moment to detail everything but here's the summary version:
1. Last summer (prior to the big Europe ramp) U.S. wait time was down to 1 to 1.5 months approximately*.
2. When European deliveries ramped in Fall, delivery time increased to 2 months approximately*. Tesla increased production of cars but that was not enough to fill demand in U.S and Europe, as a consequence wait time in the U.S. increased.
3. During Q1 2014 wait time was still at 2 months approximately*. During this time Tesla was increasing production but still was not enough to meet demand in U.S. and Europe.
4. Wait time currently in the U.S. appears still to be about 2 months approximately*. This could be lowering a bit (to 1.5-2 months) since I speculate Tesla is starting to ramp production even faster of late.
5. It has been reported (during Tesla's investor roadshow in Europe in March) that Tesla is intentionally holding back advertising/marketing in the U.S. to prevent demand from increasing too fast so that they can expand into Europe and Asia. Tesla does not like the fact that buyers need to wait 2+ months for the car.

In summary, demand in the U.S. is alive and well. Tesla is in full control.

*note: it's extremely difficult to generalize wait time because it varies according to the time of quarter the order was placed. For example, an order in the U.S. placed a month prior to quarter end usually will get delivered by quarter end (this happened in almost all recent quarters). But generally speaking, wait time has increased from summer of last year. IMO many of the news reports are spreading FUD claiming that wait time hasn't increased since summer last year. This isn't true according to my observations.

 

[FluxCap]

Dave has it right.

Unless Putin takes the whole world/market down the toilet (which is sadly plausible at this moment), this data-ignorant "weakening Tesla demand" nonsense will be really good for my bank account in May when my June TSLA calls launch upward faster than a Falcon 9.

I mean people, in the last week the short order cook at my local diner, and a dogwalker on the street independently brought up their admiration for Tesla Motors to me having no clue I was an investor/owner. EVERYONE WANTS ONE.

 

[30seconds]

Plus Asia covers a lot more than China. Roll out is coming to japan (personally i think the tech factor and existing charge infrastructure is going to drive significant sales in Japan), Singapore, Korea, Australia ...

at end of the day it's the total annual sales that matter, not really the geographic mix

- - - Updated - - -

Plus Asia covers a lot more than China. Roll out is coming to japan (personally i think the tech factor and existing charge infrastructure is going to drive significant sales in Japan), Singapore, Korea, Australia ...

at end of the day it's the total annual sales that matter, not really the geographic mix

 

[DaveT]

Update: Ok, here's some data to back up my claims.

The gist of the FUD going around is saying that wait time was 2 months during the summer of 2013 and is still 2 months. But during that time Tesla ramped European deliveries, so U.S. demand/sales must have decreased during that time.

Well, in reality wait time was not 2 months during summer of 2013. Rather, it was closer to 1 month (and not just at the end of the quarter). And wait time increased to 2 months after they ramped European production and continues to be around 2 months.

Thus, wait time actually increased after they ramped European production.

Now, I'm not going to say that U.S. sales has increased per se since I believe Tesla is intentionally holding back U.S. demand due to the need to expand to Europe and Asia. If Tesla didn't hold back U.S. demand then Europe and Asia would be pushed out even further, and that would not be good for Tesla's customers in those areas.

But what I am saying is that I don't see any evidence that demand in the U.S. is decreasing by any means.

Ok, here's some data I gather some time ago about VINs that cover the period of last summer. You can see wait time was down to almost a month during the summer of 2013. Then, it grew to 2 months during the Fall (due to Europe ramp) and continues to be about that.

 

[Bgarret]

I don't understand analysts in general and this math problem in particular: basic if/then statement -

If there were approximately 1100 Signature X reservations at the end of Q4 (Disco Ducky) at $40k each (total of about $44 million)

and if there were about 7500 Model X reservations at $5k each (about $35 million)

and if the reservation deposits at the end of Q4 were $163 million.....

and if the only other reservations are for Model S at $2500 or $5000 each (depending on geography) THEN

Demand for Model S = $163 - $40 - $35= $88million with a VERY conservative number of $4000/reservation = 20,000 reservations


all from where? China? Norway? Tesla is production constrained with an order backlog of about 20,000.

Anyone? Buehler? Barclays?

 

[DaveT]

and if the only other reservations are for Model S at $2500 or $5000 each (depending on geography) THEN...

You're leaving out Model S sig reservations (ie., China, RHD countries, etc.).

 

[Bgarret]

You're leaving out Model S sig reservations (ie., China, RHD countries, etc.).

Which at the outside could equal??

 

[Larken]

Unless Putin takes the whole world/market down the toilet (which is sadly plausible at this moment)

You mean unless US and NATO can keep their fingers away from something that is none of their business, right?

 

[DaveT]

Which at the outside could equal??

Not sure. But there's also Model X sigs for Europe, Asia, etc. Also, some countries' deposit is greater than $40k (ie., UK is equivalent $50k USD, I believe).

 

[dirkhh]

DaveT, I clearly am missing something. Here's my logic - please tell me where I'm wrong:
Sales from Q4 to Q1 in the US didn't increase much (if at all - we still don't appear to have solid numbers).
For all we know, wait times are about the same (Q4 to Q1 - I'm not talking about YoY comparison).
So one possible explanation is that the demand stayed roughly the same.

Why is this completely unreasonable, and blind and ignorant to the known data?

 

[DaveT]

DaveT, I clearly am missing something. Here's my logic - please tell me where I'm wrong:
Sales from Q4 to Q1 in the US didn't increase much (if at all - we still don't appear to have solid numbers).
For all we know, wait times are about the same (Q4 to Q1 - I'm not talking about YoY comparison).
So one possible explanation is that the demand stayed roughly the same.

Why is this completely unreasonable, and blind and ignorant to the known data?

We're talking about two different things. I'm addressing the FUD that's claiming that U.S. demand has been decreasing since summer of last year (they claim wait time was 2 months in summer 2013 and still 2 months, so with Europe ramp in fall that means U.S. reservation rate has decreased). I'm refuting that by saying that wait time in summer 2013 was not 2 months, but was 1 month and wait time did increase with Europe ramp. Thus, I'm saying the FUD claims of using wait time to justify a decrease in U.S. demand is not valid.

Regarding your logic, there are some key factors to point out:
1. We don't have Q1 U.S. sales data. AutoData has been very off in the past and shouldn't be used. I haven't seen factory reports of weekly production numbers. Q1 quarterly production numbers haven't leaked. We're basically in the dark as to the actual Q1 2014 production numbers (or at least I'm in the dark). So, to base an argument that Q1 2014 U.S. sales didn't increase much isn't very strong because we just don't have the data to support that (or to deny it).

2. Even if U.S. deliveries were stagnant from Q4 2013 to Q1 2014, that doesn't mean that U.S. demand has "plateaued" like some people are claiming. Tesla claims they've been holding back on marketing/advertising in the U.S. market (presumably so they can have the opportunity to expand into Europe and Asia). If that's true, then the stagnant U.S. deliveries could be intentional on Tesla's part to "stall" demand/orders of the Model S. In other words, "plateaued" implies that demand has reached some kind of "peak". However, if Tesla chose to "stall" demand that would imply that demand is much greater than Tesla wants or desires at this time, and they've chosen to "block" demand until they have a chance to expand into Europe/Asia. This is different than U.S. demand "plateauing". Rather, this means that U.S. demand is healthy and probably organically growing (in terms of awareness, etc) but is temporarily being held back by Tesla until they choose to "flip the switch" and activate more demand.

3. Lastly, we don't know Tesla's productions numbers for Q1 2014 either. This means that Tesla could have increased production more than many of us expect (ie., over 7500 cars) and it's entirely possibly that U.S. deliveries actually increased in Q1 2014 (vs Q4 2013). We just don't know yet as Tesla has not released any figures.

Hope this helps.