I remember them saying on the CC that R&D isn't just model X, there's a lot of other things going on that we are keeping close to the chest.
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I remember them saying on the CC that R&D isn't just model X, there's a lot of other things going on that we are keeping close to the chest.
That could just be the AWD Model S and the soon-to-be-introduced stationary storage line. They said that before we knew either of those were coming.
FredTMC
Model S VIN #4925
Yep. 100 agree. Tesla is a growth story. All operating profit goes back into growing the business. Gross Margins are very healthy and are getting better and better as efficiencies are realized on MS production.
This may not be the right thread for this, but can we talk about the Q1 numbers? I have not been satisfied with the explanation.
Aren't they at 1100/wk production? I know it isn't less than 1000/wk.
So they entered the quarter with 1400 cars that had been produced, but not delivered. They also ended Q1 with some cars that had been produced and not delivered. They said that the 1400 were cars they could not deliver due to weather. Fine. So they got delivered in Q1.
Q1 is a "short quarter". Fine. So maybe its 12 weeks due to the calendar. Say everyone got a week off for holidays. Thats 11. Heck lets call it a 10 week quarter.
10*1100=11,000 cars produced. They started the quarter with an easy 1400 they could deliver. so they had 11,000+1400 - [Q1 EOQ pipeline cars] cars they could have delivered. Further, we know that the China market (and only the China market) has a stuffed channel. So there is less reason for the EOQ pipeline to be unusually large. So lets charitably say that the 1400= [Q1 EOQ pipeline cars]. Should they not have delivered 11,000 cars?
I haven't heard a satisfactory answer for this. Can someone explain without a faith-based explanation ("Elon isn't lying")?
Here are they only answers I can come up with:
1) the standard Bear answer: They don't have enough demand so they are slackening production.
2) The "D" really fouled up their production mix. The "D" uptake is so high that their china channel, ROW channel and other inventory of RWD cars are unloved and moving slowly. So they had to basically start over producing D models in Q1 and had to work through supply and efficiency hiccups which reduced their throughput to <1000/wk temporarily. Cars that were in progress at the end of Q4 were abandoned in droves as reservation holders switched orders to "D".
3) 1100/wk or 1000/wk are artificial due to overtime. their natural capacity with normal staffing is like 900/wk and that is what they did. Still, that reflects lack of demand.
4) other?
Someone make me feel better about the Q1 numbers pls
Aren't they at 1100/wk production? I know it isn't less than 1000/wk.
So they entered the quarter with 1400 cars that had been produced, but not delivered. They also ended Q1 with some cars that had been produced and not delivered. They said that the 1400 were cars they could not deliver due to weather. Fine. So they got delivered in Q1.
Q1 is a "short quarter". Fine. So maybe its 12 weeks due to the calendar. Say everyone got a week off for holidays. Thats 11. Heck lets call it a 10 week quarter.
10*1100=11,000 cars produced. They started the quarter with an easy 1400 they could deliver. so they had 11,000+1400 - [Q1 EOQ pipeline cars] cars they could have delivered. Further, we know that the China market (and only the China market) has a stuffed channel. So there is less reason for the EOQ pipeline to be unusually large. So lets charitably say that the 1400= [Q1 EOQ pipeline cars]. Should they not have delivered 11,000 cars?
I haven't heard a satisfactory answer for this. Can someone explain without a faith-based explanation ("Elon isn't lying")?
Here are they only answers I can come up with:
1) the standard Bear answer: They don't have enough demand so they are slackening production.
2) The "D" really fouled up their production mix. The "D" uptake is so high that their china channel, ROW channel and other inventory of RWD cars are unloved and moving slowly. So they had to basically start over producing D models in Q1 and had to work through supply and efficiency hiccups which reduced their throughput to <1000/wk temporarily. Cars that were in progress at the end of Q4 were abandoned in droves as reservation holders switched orders to "D".
3) 1100/wk or 1000/wk are artificial due to overtime. their natural capacity with normal staffing is like 900/wk and that is what they did. Still, that reflects lack of demand.
4) other?
Someone make me feel better about the Q1 numbers pls
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
This may not be the right thread for this, but can we talk about the Q1 numbers? I have not been satisfied with the explanation.
Aren't they at 1100/wk production? I know it isn't less than 1000/wk.
So they entered the quarter with 1400 cars that had been produced, but not delivered. They also ended Q1 with some cars that had been produced and not delivered. They said that the 1400 were cars they could not deliver due to weather. Fine. So they got delivered in Q1.
Q1 is a "short quarter". Fine. So maybe its 12 weeks due to the calendar. Say everyone got a week off for holidays. Thats 11. Heck lets call it a 10 week quarter.
10*1100=11,000 cars produced. They started the quarter with an easy 1400 they could deliver. so they had 11,000+1400 - [Q1 EOQ pipeline cars] cars they could have delivered. Further, we know that the China market (and only the China market) has a stuffed channel. So there is less reason for the EOQ pipeline to be unusually large. So lets charitably say that the 1400= [Q1 EOQ pipeline cars]. Should they not have delivered 11,000 cars?
I haven't heard a satisfactory answer for this. Can someone explain without a faith-based explanation ("Elon isn't lying")?
Here are they only answers I can come up with:
1) the standard Bear answer: They don't have enough demand so they are slackening production.
2) The "D" really fouled up their production mix. The "D" uptake is so high that their china channel, ROW channel and other inventory of RWD cars are unloved and moving slowly. So they had to basically start over producing D models in Q1 and had to work through supply and efficiency hiccups which reduced their throughput to <1000/wk temporarily. Cars that were in progress at the end of Q4 were abandoned in droves as reservation holders switched orders to "D".
3) 1100/wk or 1000/wk are artificial due to overtime. their natural capacity with normal staffing is like 900/wk and that is what they did. Still, that reflects lack of demand.
4) other?
Someone make me feel better about the Q1 numbers pls
I think your error may be that you're thinking production in Q1 was even throughout the quarter. This is likely false though: Tesla are ramping up, and with the addition of AWD to the line I think there was quite a ramp (sloping up curve) in production during Q1. This means more cars were produced toward the end of the quarter than in the beginning. The closer toward the end of the Q a car is produced, the less likely it is to be delivered that quarter.
Remember the numbers you're trying to reconcile (production rate and cars delivered) have different "units": PRODUCTION vs DELIVERIES so you can't just divide one with the other.
Thanks for the answer. I think its this last bit that I have heard over and over and don't get. Yes, they are different. The factory can produce A and the delivery specialists will deliver B. But the bear argument that needs refuting is that they are diverging. Why, if they have a production capacity of ~11,000 did their capacity to make deliveries get worse in Q1? It isn't enough to observe the units are mixed. Essentially this should be true:
Deliveries=Production-[cars produced in quarter and not delivered yet] - [cars built for the loaner/service/marketing fleet]+[cars produced in the prior quarter delivered this quarter].
10,030= 11,000 - X-Y+1,400
10,030=12400-[X+Y]
2370=X+Y
2370=[cars produced in quarter and not delivered yet] + [cars built for the loaner/service/marketing fleet]
That seems really excessive. Maybe this happened because, as you say, the D production was really pushed to the end, so they had no way to do the "window dressing" they usually do avoiding cars in transit at the end of the quarter. I hope this is the case, and I will be listening to confirm this. Otherwise I am worried about slackening demand, or perhaps "osborning" as buyers get spooked about what other miracles are just around the corner, or wait and see for the X.
Another theory might be that they are slowing down on purpose for some other reason. Just as they had an incentive to drag their feet on production of RWD cars prior to D, perhaps there is some other new offering coming and they are in the same situation.
It is all very worrying. We can say that they met guidance for Q1. But when they gave that lowball guidance, it felt like that was for the port strike, seat supply flux etc. But it seems they ironed that out and should have done much better than guidance.
Perhaps they created inventory to not destroy their lowball Q1 guidance and cause trouble for themselves in Q2. Great, I am looking forward to a Q2 monster beat, but as a stockholder this will be a money loser if the Q1 financials show a ballooning inventory. The bears will have 2.5 months to say they were right, demand is in the basement.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
OK first I think your math is sound. Second I dont find the "2370=[cars produced in quarter and not delivered yet] + [cars built for the loaner/service/marketing fleet]" that outrageous. Remeber next quarter it's more or less only the new D cars being built, there will a few Xs built toward the end there but mostly symbolic. Then in Q3 they need to really scale up X, so it will be challenging. Remember guidance for the year is 55k and we're at 11k for the first quarter. Assuming Q3 will be challenging they better build a lot of cars in Q2 (where they're still only building Ss) so I would think that they need a high production rate going in to Q2 i.e. they did make a LOT of cars toward the end of Q1 and there are more than 2000 cars in the pipeline exiting Q1. If we get good Q2 guidance in the call this will be confirmed IMO, and will be very good news.
Here is my 2 cents: I think there are multiple reasons. First, a production average of 1100 per week for the quarter is likely too high. As you noted, the baseline production is closer to 800 per week and they can only make more cars by employing overtime (until the new production line in white is built). Given the port strike and uncertainty of parts delivery, they likely were much closer to 800 per week early in the quarter. Why schedule overtime production without certainty of parts? This would be consistent with the low delivery guidance given in the Q4 call in February, when the port issue was still unresolved. Second, it appears that Tesla did not do the big end of quarter push to deliver every car possible as they have done in the past. I believe this was done on purpose to get off the roller coaster of stress put on the employees every 3 months (I applaud this decision as it is no way to run a company long term). In other words, the 1400 from Q4 may have been largely offset by purposely allowing cars to slip to Q2 to even out deliveries across the entire quarter.
This should set up for a very big Q2; which is in line with the excitement surrounding the 70D
Phil Seastrand
Member
How many 70Ds were built during the quarter? Sounds like quite a few have been delivered to the various media outlets and to showrooms. These would count towards PRODUCTION, but not towards DELIVERY.
Inventory from 2014
I got some snips from TM 2014 Report that hopefully shed more light on few numbers.
Production rate may be above 1000/week.
Tesla finished 2014 with significant finished goods inventory
ASP of $110k gives inventory number of 3600 cars.
That number includes:
Service Centers cars
Stores cars
Pipeline (transit) cars
China inventory cars
Service Centers Cars & Rangers
There were 159 Service Centers and 95 Rangers in 2014.
If each Center had say 5 cars then total cars for this category is 5 x 159 + 95 = 890
Stores
Table below shows Tesla stores, I counted them on a map on Tesla website
If each store has say 8 cars, total no of cars in the stores is 928
My assumption of 5 and 8 cars allocation to Service Centers and Stores respectively might be incorrect. I would appreciate more correct information.
Pipeline + China inventory = 3600 - 890 - 928 = 1782
I do not know what is the split of these two categories. If China inventory is about 1000 cars then the pipeline is several hundred cars.
This may not be the right thread for this, but can we talk about the Q1 numbers? I have not been satisfied with the explanation.
Aren't they at 1100/wk production? I know it isn't less than 1000/wk.
So they entered the quarter with 1400 cars that had been produced, but not delivered. They also ended Q1 with some cars that had been produced and not delivered. They said that the 1400 were cars they could not deliver due to weather. Fine. So they got delivered in Q1.
Someone make me feel better about the Q1 numbers pls
I got some snips from TM 2014 Report that hopefully shed more light on few numbers.
Production rate may be above 1000/week.
Tesla finished 2014 with significant finished goods inventory
ASP of $110k gives inventory number of 3600 cars.
That number includes:
Service Centers cars
Stores cars
Pipeline (transit) cars
China inventory cars
Service Centers Cars & Rangers
There were 159 Service Centers and 95 Rangers in 2014.
If each Center had say 5 cars then total cars for this category is 5 x 159 + 95 = 890
Stores
Table below shows Tesla stores, I counted them on a map on Tesla website
If each store has say 8 cars, total no of cars in the stores is 928
My assumption of 5 and 8 cars allocation to Service Centers and Stores respectively might be incorrect. I would appreciate more correct information.
Pipeline + China inventory = 3600 - 890 - 928 = 1782
I do not know what is the split of these two categories. If China inventory is about 1000 cars then the pipeline is several hundred cars.
The Miami beach store where I live, has one car in the show room and one for test driving, and it's an active store.
Hardly 8 cars, the most I've ever seen is 3 cars total between show room and those for test during, over the last 2 years .
Tesla remains production constrained, says Elon, I'll take his word over that of the FUD crowd.
Hardly 8 cars, the most I've ever seen is 3 cars total between show room and those for test during, over the last 2 years .
Tesla remains production constrained, says Elon, I'll take his word over that of the FUD crowd.
Thanks for the info on no of cars in stores. Different stores may have different no of cars, but most likely my assumed no of 8 per store is too high.
If Stores have less than 8 cars, and say Tesla Service Centers have less than 5 cars, that means that China inventory is likely higher than my estimation.
The inventory calculation of 3600 could be higher if ASP of inventory cars is lower than $110k.
With regards to the discussion on Q1 production vs. delivery numbers, here's the relevant part of the talk from conference call Q4 2014:
"
Ryan Brinkman - JP Morgan
Okay, that’s helpful. And then just last question, is there any additional color you can give us on just the cadence of sales and production throughout 2015 - beyond - I’m curious why the deliveries are expected to be flat in 1Q versus 4Q given that they should benefit from the push out of those holiday deliveries and why production is forecast down sequentially too given that the full year has [guided] [ph] up so much and sort of beyond 1Q, what can you tell us in terms of when you expect to the implied inflection to occur in 2Q or 3Q what the catalyst is for that, whether it’s a capacity bump up again or Model X or something like that. Thanks.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Yes. And just clarify, [indiscernible] estimated 28%, that’s 28% excluding ZEV credit. So if you added ZEV credit on top of that it would be, I don’t know, 29% or 30% something like that. So yes, in terms of the production from Q4 to Q1 being relatively flat, there is a couple of reasons that, they’re actually two fewer weeks of production in Q1 versus Q4. One is because we had to give – we wanted [indiscernible] and certainly so gave people the first week of January off, because they have been working for Christmas and New Year’s and Thanksgiving in a lot of cases. So they just, just to give people a break we didn’t operate the factory in first week of January. And also [indiscernible] and then there is also one fewer production week in Q1. So that’s basically minus two weeks.
And then, in Q1 we’re focused on productivity improvement and making a groundwork for higher volume in the remainder of the year. But obviously if you do the math, it doesn’t mean there is going to be a very big scale up as you get towards the end of the year.
Deepak Ahuja - Chief Financial Officer
And we had over 10,000 orders on hand, so it’s not a demand issue that we’re delivering and providing this number, get a lot of cars in transit as we are again, adjusting our global mix of deliveries.
Ryan Brinkman - JP Morgan
Okay, all right.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
A lot of cars in transits. It's kind of crazy.
Ryan Brinkman - JP Morgan
Thank you."
As I mentioned in another thread in response to maoing, expect the number of cars in transit to grow, not to shrink.
---
edit:
"
Our next question comes from Dan Galves with Credit Suisse. Your line is open.
Dan Galves - Credit Suisse
Hi, thanks good evening. I just had a question on the delivery guidance, if you adjust that for in this additional in transit vehicles I am just trying to get a sense of whether you feel like that’s your best guess on kind of your max production for 2015 because my sense coming to the year around a 1000 a week is you could produce a lot more than that. So I am just getting a sense of - what part of that is demand constraint and what part is production constraint?
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Well, I mean we are all going to try to do a little better than the 55 number. So we’re saying 55 plus, but we’re going to try do a little better than that. But it is - it’s really dependent on how the X ramp goes that can have quite a – if it happens, okay, later, it’s going to [indiscernible] that could affect the delivered number quite significantly, also when I say delivered, it’s like we got to also factor in, it’s like lots of cars in ships…
Deepak Ahuja - Chief Financial Officer
Correct, the gap between production and delivery time.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Yes.
Deepak Ahuja - Chief Financial Officer
And then we need to consider there could be disruption during launch of X and so when you are looking at that broad number of 55,000 or [indiscernible] there are things we need to consider through the year what happens.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Yes, this 55 is like a number we’re pretty comfortable with achieving on deliveries and, yes, we are [indiscernible] making a conscious decision to focus on productivity this quarter, not just on ramping production, and production stability, in order to get that efficiency, like when we need to be building a firm foundation before future growth. And if we just in helter-skelter, production ramp, trying to just grow production numbers is really hard to get productivity and that kind of fixes the foundational elements. So the conscious decision this quarter to say to people we really better improve our core productivity. I mean running out of parking spaces. Our Fremont plan is pretty big and it’s hard to park. So we need to just get these productivity improvements in place so we can grow our production volume without proportionately growing headcount.
Dan Galves - Credit Suisse
That makes a lot of sense. "
So, they haven't produced more than 1,000 cars per week on a constant basis. I reckon they had 10 weeks of production with a slower re-ramp-up in the second week of January at 700 and then 9 weeks with an average of 1,100 cars per week. So production number should be between 10,500 and 11,000 cars. Cars in transit as of April 1st could be around 2,000. So, the delivery number of 10,030 make a lot of sense.
Also consider that EM mentioned during a trip through Europe last year that the waiting times are far too long. I remember him stating that they aimed for a median duration between order and delivery of 6 weeks. To achieve that, you HAVE to improve production stability and efficiency as well as the whole delivery transport chain.
EDIT 2:
Anybody who doesn't understand the difference between production and delivery, think about this more practically: Every Model S which rolled out of Fremont factory between 01st January 2015, 00:01 a.m. and 31st March 2015, 23:59 p.m., is considered "produced" in Q1. Every car produced in the last 2-3 weeks in March has a high probability to get delivered (i.e. picked up and paid for by the individual customer) in Q2, i.e. after April 1st. Simply due to normal transportation time, scheduling with the customer and final payment, etc. All those cars produced between mid March and 31st of March are most likely therefore "in transit". If production capacity is above 1,000 cars per week, then it's quite logical to assume that number of cars in transit will be above 2,000 cars.
"
Ryan Brinkman - JP Morgan
Okay, that’s helpful. And then just last question, is there any additional color you can give us on just the cadence of sales and production throughout 2015 - beyond - I’m curious why the deliveries are expected to be flat in 1Q versus 4Q given that they should benefit from the push out of those holiday deliveries and why production is forecast down sequentially too given that the full year has [guided] [ph] up so much and sort of beyond 1Q, what can you tell us in terms of when you expect to the implied inflection to occur in 2Q or 3Q what the catalyst is for that, whether it’s a capacity bump up again or Model X or something like that. Thanks.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Yes. And just clarify, [indiscernible] estimated 28%, that’s 28% excluding ZEV credit. So if you added ZEV credit on top of that it would be, I don’t know, 29% or 30% something like that. So yes, in terms of the production from Q4 to Q1 being relatively flat, there is a couple of reasons that, they’re actually two fewer weeks of production in Q1 versus Q4. One is because we had to give – we wanted [indiscernible] and certainly so gave people the first week of January off, because they have been working for Christmas and New Year’s and Thanksgiving in a lot of cases. So they just, just to give people a break we didn’t operate the factory in first week of January. And also [indiscernible] and then there is also one fewer production week in Q1. So that’s basically minus two weeks.
And then, in Q1 we’re focused on productivity improvement and making a groundwork for higher volume in the remainder of the year. But obviously if you do the math, it doesn’t mean there is going to be a very big scale up as you get towards the end of the year.
Deepak Ahuja - Chief Financial Officer
And we had over 10,000 orders on hand, so it’s not a demand issue that we’re delivering and providing this number, get a lot of cars in transit as we are again, adjusting our global mix of deliveries.
Ryan Brinkman - JP Morgan
Okay, all right.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
A lot of cars in transits. It's kind of crazy.
Ryan Brinkman - JP Morgan
Thank you."
As I mentioned in another thread in response to maoing, expect the number of cars in transit to grow, not to shrink.
---
edit:
"
Our next question comes from Dan Galves with Credit Suisse. Your line is open.
Dan Galves - Credit Suisse
Hi, thanks good evening. I just had a question on the delivery guidance, if you adjust that for in this additional in transit vehicles I am just trying to get a sense of whether you feel like that’s your best guess on kind of your max production for 2015 because my sense coming to the year around a 1000 a week is you could produce a lot more than that. So I am just getting a sense of - what part of that is demand constraint and what part is production constraint?
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Well, I mean we are all going to try to do a little better than the 55 number. So we’re saying 55 plus, but we’re going to try do a little better than that. But it is - it’s really dependent on how the X ramp goes that can have quite a – if it happens, okay, later, it’s going to [indiscernible] that could affect the delivered number quite significantly, also when I say delivered, it’s like we got to also factor in, it’s like lots of cars in ships…
Deepak Ahuja - Chief Financial Officer
Correct, the gap between production and delivery time.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Yes.
Deepak Ahuja - Chief Financial Officer
And then we need to consider there could be disruption during launch of X and so when you are looking at that broad number of 55,000 or [indiscernible] there are things we need to consider through the year what happens.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Yes, this 55 is like a number we’re pretty comfortable with achieving on deliveries and, yes, we are [indiscernible] making a conscious decision to focus on productivity this quarter, not just on ramping production, and production stability, in order to get that efficiency, like when we need to be building a firm foundation before future growth. And if we just in helter-skelter, production ramp, trying to just grow production numbers is really hard to get productivity and that kind of fixes the foundational elements. So the conscious decision this quarter to say to people we really better improve our core productivity. I mean running out of parking spaces. Our Fremont plan is pretty big and it’s hard to park. So we need to just get these productivity improvements in place so we can grow our production volume without proportionately growing headcount.
Dan Galves - Credit Suisse
That makes a lot of sense. "
So, they haven't produced more than 1,000 cars per week on a constant basis. I reckon they had 10 weeks of production with a slower re-ramp-up in the second week of January at 700 and then 9 weeks with an average of 1,100 cars per week. So production number should be between 10,500 and 11,000 cars. Cars in transit as of April 1st could be around 2,000. So, the delivery number of 10,030 make a lot of sense.
Also consider that EM mentioned during a trip through Europe last year that the waiting times are far too long. I remember him stating that they aimed for a median duration between order and delivery of 6 weeks. To achieve that, you HAVE to improve production stability and efficiency as well as the whole delivery transport chain.
EDIT 2:
Anybody who doesn't understand the difference between production and delivery, think about this more practically: Every Model S which rolled out of Fremont factory between 01st January 2015, 00:01 a.m. and 31st March 2015, 23:59 p.m., is considered "produced" in Q1. Every car produced in the last 2-3 weeks in March has a high probability to get delivered (i.e. picked up and paid for by the individual customer) in Q2, i.e. after April 1st. Simply due to normal transportation time, scheduling with the customer and final payment, etc. All those cars produced between mid March and 31st of March are most likely therefore "in transit". If production capacity is above 1,000 cars per week, then it's quite logical to assume that number of cars in transit will be above 2,000 cars.
Last edited:
Here is revised Inventory split:
Total cars inventory, end of 2014, was 3600 at $110k ASP.
159 Service Centers
95 Rangers
116 Stores
If cars allocation is 3 to each store and service center and 1 for rangers, then total no of cars required for this footprint is 920.
3600 - 920 = 2680
2680 includes China inventory, cars in transit and undelivered cars at various stores at the end of 2014.
Total cars inventory, end of 2014, was 3600 at $110k ASP.
159 Service Centers
95 Rangers
116 Stores
If cars allocation is 3 to each store and service center and 1 for rangers, then total no of cars required for this footprint is 920.
3600 - 920 = 2680
2680 includes China inventory, cars in transit and undelivered cars at various stores at the end of 2014.
Thanks all, this helps. I guess there is an element of slowing down to work on the factory a bit to enable the inflection in production numbers, and a bigger EOQ funnel.
Newb, for the last paragraph there (quoted above) I don't understand why people keep bringing this up. This has been used as the answer too much, and it is correct but irrelevant I think. (not picking on you, lots of people have said the same thing). Of course cars produced in the last few weeks of the quarter are not delivered in that quarter, but those are offset by those similar cars from the previous quarter. So it is only meaningful if there is a reason the EOQ Q1 not-delivered number is different from the EOQ Q4 not-delivered number. AND we entered Q1 with a bonus 1400 cars. So if anything, an alien from space would have expected a 1400 Q on Q increase in deliveries, if all else held constant (same length of quarter, same exact production rate).
The question is why were these numbers out of balance, or why was production lower, or both? If in this thought experiment the overhang was 3000 for each quarter, they should balance out they they would have delivered 13,000 cars, assuming a 1000/wk runrate. Actually 13,000+1400 since as far as I understand the 1400 were cars they were planning on delivering in Q4 but could not, so they were from earlier in Q4.
But, I am not re-asking the question. My uneasy answer is that they slowed down production for non-nefarious reasons, probably had 1.5 weeks of shutdown, and they indeed increased the size of the funnel exiting the quarter, probably because it was impossible to do window dressing due to the D ramp up, and possibly outfitting a little more for stores and service centers. This is a satisfactory answer for now, but in my mind it won't work 2 quarters in a row.
My understanding is that the 1,400 cars were not the full overhang, but the unplanned overhang. So, in your example above, if 3,000 cars is the planned overhang, Tesla came out of Q4 with 4,400 undelivered.
As factory production rates ramp up, so to will the planned overhang (assuming that the planned overhang is a fixed number of weeks of production). Naturally Tesla tries to organize deliveries geographically to minimize that overhang.
I think a reduction in window dressing could well account for at least a large part of that difference, as a number of anecdotal reports on the forum this time suggested that it wasn't anything like as significant as before. This may be due to more than just the impact of D production: as the guidance was so low that they knew the could comfortably exceed it, why bother with the added expense and employee pressure resulting from window dressing? They may have made a decision to finally move away from window dressing by lowering guidance enough to not need to do it. Having said that, I am still a bit concerned and this might also mean lower guidance in future quarter than might otherwise have been expected.
Yes, I agree. Tesla has been running about 2-3 weeks of production rate in finished goods inventory per quarter in the past 5 quarters. Q4 2014 was particularly high, with an extra 1,400 vehicles (1.4 weeks). If Tesla didn't have those seat problems, we'd probably be looking at Tesla making their guidance of 33,000.
This is part of the reason I don't believe the reports about 1,000 to 2,000 "stranded" vehicles in finished goods inventory in China. We know that 1,400 of them were P85D's for North America delivery. Normal is 500-1,000 demo/service cars and 1,500-2,000 or so in various stages of delivery representing 2-3 production weeks. As the production increases and the number of galleries and service center increases, the amount of finished goods inventory also increases as an absolute dollar amount. There isn't yet another 1,000 or 2,000 inventory in China.
I received this mail today:
--------------
Tesla Announces Release Date for First Quarter 2015 Financial Results
PALO ALTO, CA -- (Marketwired) -- 04/22/15 -- Tesla (NASDAQ: TSLA) announces that it will post its financial results for the first quarter ended March 31, 2015, after market close on Wednesday, May 6, 2015. At that time, Tesla will issue a brief advisory release containing a link to the Q1 2015 Shareholder Letter, available on the company website. Tesla management will hold a live question & answer webcast at 2:30pm Pacific Time (5:30pm Eastern Time) to discuss the Company's financial and business results and outlook.
What: Tesla Q1 2015 Financial Results and Q&A Webcast
When: Wednesday, May 6, 2015
Time: 2:30pm Pacific Time / 5:30pm Eastern Time
Shareholder Letter: http://ir.teslamotors.com
Webcast: http://ir.teslamotors.com (live and replay)
Approximately two hours after the Q&A session, an archived version of the webcast will be available on the Company's website.
For additional information, please visit http://ir.teslamotors.com.
Source: Tesla Motors, Inc.
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Tesla Announces Release Date for First Quarter 2015 Financial Results
PALO ALTO, CA -- (Marketwired) -- 04/22/15 -- Tesla (NASDAQ: TSLA) announces that it will post its financial results for the first quarter ended March 31, 2015, after market close on Wednesday, May 6, 2015. At that time, Tesla will issue a brief advisory release containing a link to the Q1 2015 Shareholder Letter, available on the company website. Tesla management will hold a live question & answer webcast at 2:30pm Pacific Time (5:30pm Eastern Time) to discuss the Company's financial and business results and outlook.
What: Tesla Q1 2015 Financial Results and Q&A Webcast
When: Wednesday, May 6, 2015
Time: 2:30pm Pacific Time / 5:30pm Eastern Time
Shareholder Letter: http://ir.teslamotors.com
Webcast: http://ir.teslamotors.com (live and replay)
Approximately two hours after the Q&A session, an archived version of the webcast will be available on the Company's website.
For additional information, please visit http://ir.teslamotors.com.
Source: Tesla Motors, Inc.
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