2014 1 QTR predictions/results

[dirkhh]

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).

That's utter nonsense. Production has at least tripled since last summer and shipments in the US are up compared to last summer. I 100% agree with you.

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.

I happen to have bought my car last summer (July). Wait for an S85 or P85 was said to be "about 4 weeks", wait for an S60 was "about 2 months". Wait times today are longer, without a doubt.

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).

Again, totally agree. I'm basing this on Elon's guidance that was for a down quarter and our expectation that they will actually show an up quarter. With that and the high quality data we have on Europe we can make an educated (wild ass ) guess that US deliveries are about flat. That's what I started with. But until someone comes with hard data, that's not worth much.

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".

Here I disagree. When doing weight loss or any type of strength training you use the term "to plateau" to indicate a period of time where you don't see improvement before the next ramp up. That's certainly how I am interpreting the current data. The demand in the US right now isn't accelerating. Bring in the next trigger (and spring weather could be enough for that already) and I wouldn't be surprised if demand went up again in Q2.

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.

I think that's reaching a bit. There never was any marketing. So Tesla didn't "pull back". Which means that after the first 18 months there is indeed (assuming the sales guesses are correct) possibly a plateau.

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.

No, here your optimism gets the better of you. I don't follow that argument. Yes, of course, Tesla could accelerate things by advertising. But they never advertised before and demand kept increasing. If it is no longer increasing then that would be a plateau. Not a peak, not a maximum. There is no data for that. But possibly a plateau.

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.

Totally correct on the last point.

Thanks for the details, that really helps me understand. I respectfully disagree on some details, but overall I think we are on the same page.

 

[brianstorms]

We also don't seem to have any very recent, anecdotal evidence from factory tours re the weekly production rates. Either the NDAs are doing their job, or Tesla has hidden those "this week / last week" production count screens that used to be here and there, or the tour attendees just aren't lookin', or something.

 

[vgrinshpun]

There is some sliver of hope that TM did ramp up during the quarter, but the evidence is speculative/circumstantial, see my post back on 3/23:

Short-Term TSLA Price Movements - 2014 - Page 282

 

[Bgarret]

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).

Sorry...I'm not being very clear. N. American Model X reservations make up 80% of outstanding reservations. Those estimated 10,732 reservations (today) equate to $45 million and $52 million roughly of whatever the Q1 reservation total that will be disclosed at Q1 earnings. In Q4, N. American and European Model X Signature and Production reservations (the only numbers we have any data for and what has been up to know the majority of reservations) could only explain less than half of Tesla's disclosure for reservation deposits....so, barring the entire country of Sri Lanka having shadow reservations for a Sig S, my sort of Occam's Razor explanation for the rest of the $88 million of reservation $ is about half from US Model S reservations or $44 million/$2500 = about 17,600 with the balance coming from reservations from Hong Kong, China, Britain, Japan, and outliers. That would be about 3-4 months of production to burn through and I think it has been fairly consistent for a while. If the reservation number - the growing X deposits goes down, that could be a concern.

 

[DaveT]

Sorry...I'm not being very clear. N. American Model X reservations make up 80% of outstanding reservations. Those estimated 10,732 reservations (today) equate to $45 million and $52 million roughly of whatever the Q1 reservation total that will be disclosed at Q1 earnings. In Q4, N. American and European Model X Signature and Production reservations (the only numbers we have any data for and what has been up to know the majority of reservations) could only explain less than half of Tesla's disclosure for reservation deposits....so, barring the entire country of Sri Lanka having shadow reservations for a Sig S, my sort of Occam's Razor explanation for the rest of the $88 million of reservation $ is about half from US Model S reservations or $44 million/$2500 = about 17,600 with the balance coming from reservations from Hong Kong, China, Britain, Japan, and outliers. That would be about 3-4 months of production to burn through and I think it has been fairly consistent for a while. If the reservation number - the growing X deposits goes down, that could be a concern.

Here's my projections/estimates for reservations held by Tesla at end of Q4 2014. Notes:
- I used Model X reservations numbers from mostly this thread, Model X Reservation Tally | Forums | Tesla Motors and Model X Tally, and added notes under my figures below.
- For China Model S reservations, I'm unclear if the reservation price is still 250,000 yuan or not (I'd like for someone to correct this if it's wrong).
- I didn't spend a ton of time on this, so feel free to correct me where I'm wrong.

U.S. Model X reservations (end of Q4 2013):
1050 sig x $40k = $42m
7250 regular x $5k = $36m
(note: #7255 regular X reserved on 1/1/14. #1070 Sig X reserved on 1/5/14.)

Europe Model X reservations (end of Q4 2013):
200 sig x $40k = $8m
1200 regular x $5k = $6m
(note: #202 Europe X signature reserved 12/21/13. #1407 regular Europe X reservation reserved 1/20/14. #1057 regular Europe X reserved 11/10/13. #1324 Europe X reserved 1/7/14)

China Model X reservations (end of Q4 2013):
80 sig x $40k = $3.2m
600 regular x $5k = $3m
(note: #764 China X reservation on 3/9/14)

Canada/Hong Kong/Asia/Australia/other (end of Q4 2013)
120 sig x $40k = $4.8m
800 regular x $5k = $4m
(Note: #305 Canada regular X reserved 1/2/14.)

Total Model X reservation amount: $107 million


China Model S reservations (end of Q4 2013):
700 x $40k = $28m
(note: China reservation is 250,000 yuan or $40k USD equivalent, not sure if they've lowered the price yet or not. Tesla to Sell Model S Sedan in China From $121,000 - Bloomberg)

U.S. Model S reservations (end of Q4 2013):
4000 x $2.5k = $10m

Europe Model S reservations (end of Q4 2013):
125 sig x $40k = $5m
3000 x $2.5k = $7.5m
(note: sigs going to western Europe and still needing to go to UK and non-western European countries)

Asia (non-China) and rest of world Model S reservations (end of Q4 2013):
100 sig x $40k = $4m
1800 x $2.5k = $4.5m
(note: #33 Japan S signature reserved 4/1/13)

Total Model S reservation amount: $59 million

Total reservation amount held by Tesla at end of Q4 2013: $166 million

 

[Blvr888]

Trying to link Alcoa's 1Q presentation stating "Record automotive sheet revenue" and 2Q Outlook where "Auto demand expected to stay strong". I guess, currently TSLA accounts for a big chunk of Alcoa's automotive production. Any thoughts?

 

[Mario Kadastik]

The only comment I'd make is that the EU Sig X reservation is €40k which is ~$52k. But I'm not betting my head on it, that's what I remembered.

 

[aznt1217]

Trying to link Alcoa's 1Q presentation stating "Record automotive sheet revenue" and 2Q Outlook where "Auto demand expected to stay strong". I guess, currently TSLA accounts for a big chunk of Alcoa's automotive production. Any thoughts?

Ford's F150 also...

 

[InTheShadows]

I think another QoQ auto sales issue that I haven't seen addressed is that Q1 is always very weak in the US.

 

[Chickenlittle]

Ford's F150 also...

Have commented in other parts of forum about alcoa for about 5 months. May not belong here but the auto section of company will supply aluminum for f150 with more than 20X material than model s. Also gm pickups in 2 years. They also supply extremely light weight commercial truck wheels that is very popular. Problem for them was that aluminum as commodity very cheap so they have "decommoditized" their products and guidance is through the roof with their special alloys

 

[ItsNotAboutTheMoney]

I think another QoQ auto sales issue that I haven't seen addressed is that Q1 is always very weak in the US.

US auto market driven by used car sales trends | Chemicals The Economy

Well, it varies year to year depending on weather and economic factors. I think it's usually similar to Q4, as Presidents Day sees the beginning of a push, and then March is much strong. It's really January that sucks. Q2 and Q3 are the larger sale quarters.

However, the problem is that overall "car sales" numbers are really "light vehicle sales" and the type of vehicles sold vary, are seasonal and are impacted by fleet sales, which Tesla doesn't have right now. If there's seasonal variation for PEVs it would really make sense that Q2 and Q3 would be much stronger in cold-winter states, but states like CA should be flatter, which means Tesla should be flatter.

Tesla has build-to-order, so it depends on purchase habits as to whether there'd be a lag compared to normal inventory sales.
Tesla doesn't have incentives and heavy advertising, so there also wouldn't be any big holiday pushes.

In other words, this is new and different and there's a lot of wild guessing going on.

 

[Bgarret]

Thanks Dave...the added color on China X and rest of the world S was helpful.

 

[GravityPull]

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.

View attachment 46864

Thanks Dave
Assuming that this sample of data is an accurate depiction of the rest of US deliveries last summer it makes one more confident that demand in US is fine!

 

[TSLAopt]

Thanks Dave
Assuming that this sample of data is an accurate depiction of the rest of US deliveries last summer it makes one more confident that demand in US is fine!

VP is Tesla was on Bloomberg West tonight and mentioned that they disagree with the Barclays report about US demand plateauing.
mentioned that people get confused by Tesla's business model as there is a big difference between sales and orders and they are trying to expand globally at the same time as being supply constrained. Was a good segment.

 

[DaveT]

VP is Tesla was on Bloomberg West tonight and mentioned that they disagree with the Barclays report about US demand plateauing.
mentioned that people get confused by Tesla's business model as there is a big difference between sales and orders and they are trying to expand globally at the same time as being supply constrained. Was a good segment.

Nice. Here's the link for others.
Tesla Business Model's Right for Consumers: Sproule: Video - Bloomberg

Simon Sproule is the new VP of Marketing and Communications. He just started this month, April 2014. He was previously with Nissan.
Join LinkedIn | LinkedIn

He seems pretty knowledgable about Tesla already.

 

[Citizen-T]

I'm not buying any story about demand issues until I see Tesla begin traditional marketing. If demand is an issue, they've got the entire usual tools at their disposal for giving it a kick. Why aren't they using it?

 

[brianstorms]

I wish Simon didn't use the "So, look..." prefix for every answer to the reporter.

Harry Shearer would love this (he does a whole segment each week in his radio show about the "So's" of the week...

 

[vgrinshpun]

So my hunch about production ramp-up was right, the question on timing remains open.

http://www.teslamotorsclub.com/show...Movements-2014?p=612457&viewfull=1#post612457

As of April 8 factory output is 700 cars/week:

http://www.streetinsider.com/Manage...+Goldman+Sachs+Citing+Management/9369354.html

 

[hobbes]

Good article on street insider, thanks for posting! Makes me look forward to Q1 report. Seems you made a good educated guess for deliveries there.

 

[marvinat0rz]

Given the verified production ramp and Autodata's estimated numbers of US deliveries, we could be looking at a significant beat in the number of cars delivered in Q1. At the very least, the increased production makes the US delivery numbers for Q1 seem plausible.