As we think about the required factory run rate, keep in mind that the plant will almost surely be shut down for a week between Christmas and New Years.
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Geturchiru:
I am wondering if this is the first poster from India, a place where Tesla has no plans at the moment to sell. Not in the near future, perhaps not even in the distant future ?
I am wondering what is the level of knowledge or awareness about Tesla over there?
On the EV front, there is one model by Tata motors - Reva - that is more like an NEV.
I am wondering if this is the first poster from India, a place where Tesla has no plans at the moment to sell. Not in the near future, perhaps not even in the distant future ?
I am wondering what is the level of knowledge or awareness about Tesla over there?
On the EV front, there is one model by Tata motors - Reva - that is more like an NEV.
Chickenlittle
Banned
It is confusing since they guided on deliveries but provided run rate last qtr (7200 in qtr). Does the total delivery of 33k include refilling pipeline or again selling out?
Zzzz...
Member
You could estimate India market attractiveness for Tesla by looking how direct competitors doing in that market. Models that directly compete with Model S are:
Are Panamera, A7, CLS class, A8, 7 series, S-class, XJ, Lexus LS etc got substantial sales in India? If yes, Tesla should and would enter India market. If no - sorry, not atm. Idk much about India market. But MS is competing in it segment, which is defined by price range, CURB, performance, perception of luxury etc. If Panamera doing Ok on that market, MS will have a great chance to outperform Porsche in such segment. In fact Tesla will sell more MS worldwide than Porsche Panameras this year.
One could not and should not compare Tesla MS to econoboxes like Leaf or Volt. NVM Reva. It does not mean that no one is cross shopping Leaf vs Model S, it just mean that number of people who could potentially afford MS on a given market is relatively low if sales of sedans from segment Tesla Model S belong to is low.
chickensevil
Active Member
Probably a mix of the two since I know the stores never gave up *all* of their cars and the service loaners never ditched *all* of their loaners. At least, not in NOVA/MD/DC area, and I assume this would be the case elsewhere. I was at Bethesda, MD store like days before the end of September and they still had one test car and one floor model (a 60 and an 85 I believe). I also got a loaner car from Rockville (an S60) like a week before the end of the month and they had at that point talked about how they had a certain number of cars that were on hand for loaners. Granted, I suppose they could have hypothetically sold every single one of them off, but I think more than likely they retained some cars by the end of the Quarter to use for their obligations to the stores, test, and loaner fleet (they aren't making the same mistake they made last December).
Note that all of these cars I observed were made prior to the change over on the factory and didn't have the new autopilot hardware. So I expect that they will finish cycling these cars out (or probably already have, I haven't had a chance to get back over to either location recently) and backfilling them with current cars fresh off the line.
Zzzz...
Member
About above chart: Tesla will sell at least 17k units in US this year, next year Tesla should outperform S-class in US and most models mention above in terms of worldwide deliveries, getting close to S-class sales numbers worldwide.
Its from Reva now acquired by Mahindra not Tata. The car they have is all electric and looks like a toy car that you see in cartoons with two doors and a 100km range. Range is not a problem for city driving. It costs double than the entry level cars(which are like hot sellers here) obviously!! and to add no incentives from govt. and people here usually do not maintain two cars hence a very low adoption and only seen in 4-5 cities.
Coming to Tesla, I'll be surprised if .1% of those with access to internet(10% of total?) have even heard about it.
EDIT: The best selling luxury car maker Audi managed 10k units in 2013 but mostly A3, A4s and Q3s and I'm sure 90% of those are chauffeur driven or young enthusiasts(read rich people's kids) so the market for MS will be very less right now. May be Model 3 can reach some good numbers if released with SC infrastructure.
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From the recent 10Q:
On the face of it, that sounds to me as though someone in Finance fell down on the job regarding currency hedging. Now, given European sales' share of overall numbers, this could be very minor: we could be discussing all of a few basis points of gross margin - Tesla doesn't say. Comments?
This was addressed on the conference call. Tesla does not hedge. I originally explained it but then thought I should just copy/paste from the transcript so I am editing this post to show Elon's words:
"Correct. There is effectively product hedging in the sense that we're delivering cars in Europe, North America and Asia and obviously just started delivering cars in Japan that does provide a natural hedge, a most efficient hedge really for currency. But there are occasionally adjustments we need to make in the purchase price and at some point in the near future.
We're probably going to have to adjust the price of our car in euros upwards because there has been a 7% change in the exchange rates of the euro versus the dollar. So we'll periodically have to make pricing adjustments if the exchange rate band gets too wide. I would certainly encourage anyone in Europe to purchase their car soon because we probably will have to make an adjustment there."
Chickenlittle
Banned
Yes I heard that as well. In the past others with louder voices have claimed they do but with yen being devalued, batteries are getting cheaper already
That was most useful, useless - thanks.
Now, as someone whose specialty - back around the Miocene-Pliocene divide - was International Trade & Finance, I will say "Excuse me, Mr. Musk, but what you just said makes absolutely no sense in any way, shape or form". Not for an organization based in, manufactured in, and whose financials are derived in the currencies of one of those regions (USA, of course). That is not, Not, NOT either a natural hedge nor a most efficient currency hedge.
That said, you certainly can make the case that it is a "sales volume" hedge, or, as Mr. Musk stated, "product hedging". China or US or Norway or Germany or Australia, etc., could evoke stronger demand during any one period, likely offsetting a weakening demand in one or more other regions. BUT - absolutely no reason not to set up currency hedges atop same in order to smooth the finances when brought back to the home currency of the USD.
Elon really needs to learn the difference between a "hedge" and "diversification of risk." Having sales in many markets with many currencies diversifies risk, but it doesn't hedge it. An example of a true hedge is this: Tesla buys batteries from Panasonic in yen, and sells Model Ss to Japanese in yen. Those car sales hedge Tesla's exposure to yen/dollar variations (i.e., Tesla needs to buy fewer yen with dollars to pay Panasonic). Some of Tesla's euro exposure may be hedged by its purchases from Daimler, though I'm not sure which currency those supply agreements are written in.
I do have to wonder why Tesla's finance department doesn't use forward currency markets to actually hedge their FX exposure. It's a very efficient, liquid market.
My guess is that Tesla have not employed currency hedge yet as they did not come across that bridge in their business yet. Most of their sales was in NA, so no need to hedge. That is changing quickly and they will learn even more quickly that they better hedge or their revenues will be subject to too many uncontrollable variables.
Currency hedging is a necessity for Tesla, unless they wish to diversify their car making business with currency speculation business and develop some competencies there as well. I doubt it though, most likely they will start currency hedging like most other businesses do.
chickensevil
Active Member
Currency hedging should we bother?
Assuming things haven't substantially changed over the past two years, it would seem that hedging has little benefit... If not possibly causing harm.
Assuming things haven't substantially changed over the past two years, it would seem that hedging has little benefit... If not possibly causing harm.
That article refers to hedging for investors, not businesses. The two species are very different animals.
The article makes a point that for investors, hedging reduces volatility, thus reducing the risk. That comes at a cost, as there is a cost to hedging.
If Tesla does not hedge, its revenue will be heavily influenced with USD fluctuations across the globe, thus increasing uncertainty and volatility.
Hedging is not that relevant for Tesla yet as US market is the largest revenue driver. If some other foreign market overtakes US market, then hedging may be more relevant.
Imagine a scenario: Tesla sells 90% of their cars in Europe. Euro is dropping against USD further and further, with no signs of recovery. Hedging may help to protect the revenue against continuous unfavourable exchange rate moves. It might be easier to hedge than to continually chase the exchange rate by revising the sale price.
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chickensevil
Active Member
There were other discussions which referenced small businesses in that equation and I would contest that given how little of their revenue is coming from foreign exchange it isn't as big of a deal for them right now. Which I think is also your point, Auzie.
They were also getting one over on the euro back about a year ago which is why they dropped the price by a couple thousand because it was becoming more favorable for Tesla. So since I don't think the European situation is likely to continue to get better in the short term the fluctuation is very likely to go south again which would make it back in a positive direction for Tesla.
I was honestly trying to find the point where paying for a hedge would be worth it to counter the exchange over a period of one year (since I assume they will revise the price about once a year).
Although they could just add the cost of the hedge into the sale price of the car (assuming it isn't that bad) and then it doesn't cost the company anything. Is that the angle that large companies tend to take?
They were also getting one over on the euro back about a year ago which is why they dropped the price by a couple thousand because it was becoming more favorable for Tesla. So since I don't think the European situation is likely to continue to get better in the short term the fluctuation is very likely to go south again which would make it back in a positive direction for Tesla.
I was honestly trying to find the point where paying for a hedge would be worth it to counter the exchange over a period of one year (since I assume they will revise the price about once a year).
Although they could just add the cost of the hedge into the sale price of the car (assuming it isn't that bad) and then it doesn't cost the company anything. Is that the angle that large companies tend to take?
For a start-up business, there is an asymmetric outcome to a symmetric risk. The $/€ rate may be symmetric, but an earnings miss causes greater harm than an earnings beat causes benefit. The cost to hedging is quite small, because there are just as many parties facing the other side of the risk.
@chickensevil, one can't assume that you can pass on the cost in the sales price. After all, if you could raise the price without affecting demand, why didn't you in the first place? In this case (where Tesla has effectively monopolistic pricing of its product), effectively all of the incremental cost of hedging will come out of profits. But, i think it would be money well spent.
@chickensevil, one can't assume that you can pass on the cost in the sales price. After all, if you could raise the price without affecting demand, why didn't you in the first place? In this case (where Tesla has effectively monopolistic pricing of its product), effectively all of the incremental cost of hedging will come out of profits. But, i think it would be money well spent.
chickensevil
Active Member
They have stated that the only price inflation over seas vs US is whatever they have to add on top to balance out the shipping and fees and such... so wouldn't the hedge be just a "fee" that they are adding on to the price? The car is already the same cost or substantially cheaper than competitor options (MB, Audi, BMW) in Europe, so I don't see how this would be an issue.
They are already tacking on this price fluctuation by changing the price every 6 months or whatever anyway. I don't see how this would really be an issue. I assume the hedge would come out to at most 1k per car. Anything more than that and it seems like it would be some crazy cost for a hedge and they shouldn't bother with it.
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