Is it demand, or is it supply? I'm seeing late February delivery estimates for the US on S and X vs February for the 3.
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First I think theres a finite amount of people that will buy a sedan that costs 75k+, also they don't advertise and haven't meaningfully refreshed the car. also still lack on luxury amenities that other premium cars have.
This isn't true. If demand was higher at current prices, Tesla could easily produce 120k Model S/X year.
It's clearly demand. Even Elon says so.
In Q4 2018 earnings (https://seekingalpha.com/article/42...-2018-results-earnings-call-transcript?page=3):
Q: ... do you continue to see S and X demand of 100,000 annually?
Elon: For S and X, we did eliminate the 75 [indiscernible] of S and X and product model differentiation relative to 3 and then Y that's coming out. I think we could see a slight decline in total vehicles, but I think the net cash flow from S and X is likely to be very similar. So probably no major change in net cash flow for S and X.
In other words, Elon basically says at current prices demand is a bit lower than 100k Model S/X per year.
Depends how you look at it, he said:
Could see a slight decline in total vehicles.
That is not saying there is currently a decline in demand. Further, he was speaking to the future when the Y comes out.
Past 2 years (from deliveries letters):
Q1 '17 was 13,450
Q2 '17 was 12,026
Q3 '17 was 14,065
Q4 '17 was 15,200
Q1 '18 was 11,730
Q2 '18 was 10,930
Q3 '18 was 14,470
Q4 '18 was 13,500
I see what you mean about a steady rate. But that can still be on the supply side. It is also in a limiting price point. It may actually be a good sign that is it is holding up since the cars tend to last a long time, so the pool of buyers needs to continue to grow as more in pool acquire a Tesla.
I don't think it would be stuck at 50k if there were no Model 3. A lot of people purchased Ss but would have preferred a smaller, more affordable car. I'm impressed that Model S and X sales are even maintaining 100k with Model 3 available. If Tesla can achieve the same margins with Model 3 that they do with S and X then everything will be OK.
You can also use the same logic for Model 3... namely, that there could be a lot of people who purchased the Model 3 but would have preferred a larger crossover. Thus, when the Model Y comes out it could negatively impact demand for Model 3.
The supply side is not limited for Model S/X. It's completely demand at this point. That's very clear.
Also, Elon was speaking about 2019 in that previous quote about Model S/X demand, not when Y comes out.
Yes you can use the same logic for future Model 3 demand after the Y is available, but we're talking about S demand. Model S demand didn't level off until the Model 3 started shipping. I'm pretty sure you see my point. I'm just not sure if you agree with it.
I recall that the 18650 battery supply is limited to 100k per year.
Amazing that s and x sales increased in Jan 19 over Jan 18 with the Model 3 out in force and the tax credit halved.
Brando
Active Member
http://ir.tesla.com/static-files/0b913415-467d-4c0d-be4c-9225c2cb0ae0
Sorry for this post, I really must learn to let people read for themselves. Just accept the fact that trolls/shorts will continuously mis represent for their own reasons. Tesla guidance seems steady at ~100,000 and I'd expect them to lean toward profits with Model S/X while leaning toward volumes with Model 3/Y. Interesting times and we shall see.
PS - thanks to DaveT for all his efforts.
note: cheapest Model S now $85,000 +options +sales tax+ license fees +insurance [+ finance?]
Luxury car for sure, and perhaps more of a limo than a taxi - (operating cost seem to matter for some).
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Is this a bad thing that Model S and X sales drop? They did there job and now it's time for the 3 + Y to take over. The S and X can be for the uppity ups who love spending 85+k on a car. 
It's all about a fast transition to sustainable energy.
It's all about a fast transition to sustainable energy.
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JRP3
Hyperactive Member
They only dropped relative to December, which is true of just about every first month of the q relative to the third month of the q -- especially dec to Jan. But Jan 2019 s and x sales are up over Jan 2018 s and x sales -- the only monthly metric that matters. and really only quarterly or longer trends are relevant.
S and x sales aren't down.
Singer3000
Member
If they sold another 20k units of S&X per year, they’d get maybe $150m extra gross margin per quarter. What would it cost in terms of capex (including to lift the 18650 bottleneck), management time and demand inducing measures?
Maybe I’m misunderstanding the argument. But is this really where you want Tesla to be focused right now, when there’s much easier very high volume, high margin demand to be met by releasing SR Model 3, Model Y and Pickup and whatever else might be in the pipeline?
Maybe I’m misunderstanding the argument. But is this really where you want Tesla to be focused right now, when there’s much easier very high volume, high margin demand to be met by releasing SR Model 3, Model Y and Pickup and whatever else might be in the pipeline?
Tesla has a reputation as a luxury car maker because their first cars were in that price range, but Elon's goal was always mainstream. They had to start on the upper end because wealthier car buyers are more likely to take a chance on an unknown car and the cars were going to be a lot more expensive at first due to the cost of battery cells.
Tesla may be in a wait and see about the S and X's future. If sales slump, but 3 and then Y sales are strong, they may drop them for a while to concentrate on 3 and Y sales. If a 3/Y production line can make much more profit per year than an S/X line, it makes sense to switch them over.
It helps boost the value of the S/X already on the road. Then when Tesla's finances are stable they can bring back the S and/or X built on a modified 3 platform. Stretch and widen the chassis and mate it with a new body and appoint the interior to compete with European luxury cars, they would be much more economical to produce, would sell well as the reintroduced classic, and would appeal to those who want the biggest and best. These cars could also serve those who want the longest range EV possible.
Another possibility would be to make a new X on the same platform as the pickup and the new S on a modified 3 platform, or drop the S entirely. The way the market is going, larger cars like the S are not as popular outside North America and sedans sales are tanking in NA. In another 10 years sedans the size of the S will be niche cars like Maybachs. There will probably be very few large sedans sold anywhere. Even the venerable Camry, Corolla, and Accord might not be sold in the US anymore.
Tesla may be in a wait and see about the S and X's future. If sales slump, but 3 and then Y sales are strong, they may drop them for a while to concentrate on 3 and Y sales. If a 3/Y production line can make much more profit per year than an S/X line, it makes sense to switch them over.
It helps boost the value of the S/X already on the road. Then when Tesla's finances are stable they can bring back the S and/or X built on a modified 3 platform. Stretch and widen the chassis and mate it with a new body and appoint the interior to compete with European luxury cars, they would be much more economical to produce, would sell well as the reintroduced classic, and would appeal to those who want the biggest and best. These cars could also serve those who want the longest range EV possible.
Another possibility would be to make a new X on the same platform as the pickup and the new S on a modified 3 platform, or drop the S entirely. The way the market is going, larger cars like the S are not as popular outside North America and sedans sales are tanking in NA. In another 10 years sedans the size of the S will be niche cars like Maybachs. There will probably be very few large sedans sold anywhere. Even the venerable Camry, Corolla, and Accord might not be sold in the US anymore.
The Curious Case of Decreasing/Stagnating Model S Demand and What That Means for Tesla's Long-Term Future
Alright, so here's the gist of the argument.
Model S/X demand has weakened gradually over the past several years.
This is evidenced by Tesla effectively lowering the price (ie., including more range, features, etc. in the price) but sales not increasing.
If Tesla didn't add features/range for the same price, then most likely sales would actually decreased.
Gradual weakening of Model S/X demand wasn't forecasted by many, if any, bulls.
In fact, we may get only 45k Model Ss sold in 2019 if Tesla sells slightly more Model Xs than Ss and if total unit number is 95k units.
If EV demand is growing and the Tesla Model S is a far superior car than its competitors, then you'd imagine demand to be increasing, not decreasing.
This is concerning. But not so much for Model S's sake, but for Model 3 and Model Y.
What's to say that the Model 3 doesn't go through the same decreasing demand (or stagnating demand) as the Model S?
Perhaps when Model Y comes out, it will hit Model 3 demand some.
Perhaps when other EVs come out in next few years, that will hit Model 3 demand some.
ICE cars at $35k are very good. And might be better for most people than a 220 mile Model 3. (Now a $35k Model 3 that had 300 mile range would be different.)
Tesla struggling with achieving decent margins on their $35k is concerning. It's shows poor execution and poor planning. And it also limits their demand. And bulls might say Tesla will fix that. But it might not be that easy.
I'm not saying Model 3 is doomed by any means, but what I am saying is what if long-term demand (meaning in 10 years time) for the Model 3 is 500-600k cars/year... roughly the same as it is now.
And what if demand for Model Y is similar, maybe slightly more at 600-700k cars/year.
Side note, the problem with the Model Y is twofold. First, the Model Y will cost more than the Model 3 because it'll be a slightly bigger car. So maybe $3000 more. But it's likely that the Model Y will have less range than the Model 3. So, let's say 200 miles. That range is not acceptable. So, maybe Tesla will need to offer a higher standard range, but that only increases the price, which decreases total addressable market (aka demand).
So, if Tesla is doing 90-100k Model S/X per year, 500k Model 3, 600k Model Y... and this number isn't growing and is stagnant for the next several years (or decade), then where does the massive revenue growth that Tesla needs come from?
The pickup? That's just one line and it's questionable if Tesla's pickup will sell over 300k cars a year.
Semi? Again, just another line and won't bring in as much revenue as Model 3 and Y.
Energy? Talk to me when it brings in at least $1B/year in profit.
So, what if Tesla gets stuck in the luxury market, and that luxury market isn't growing much and isn't big enough to continue to grow Tesla's revenue at a pace it needs.
Does Tesla need to get into the economy market? But they're not ready and won't be ready for years. The Camry and Accord are just too good at $20-25k. And Toyota can gradually electrify their cars over the next 5-10 years.
Maybe Tesla needs true energy storage breakthrough? But we can't count on that.
Tesla Network ain't coming any time soon.
Perhaps the Tesla bulls have underestimated the competition. Cheap ICE cars are actually very good. They do the job of getting from point A to point B very well and very cheaply. Autonomy also will likely become a commodity with many big tech companies completely willing to give it for free. And the transition to EVs is moving slow, slow enough that companies like Toyota can take their time but still get in the game with the help of Panasonic selling them cheap cells, probably almost as cheap as Tesla gets them.
Does Tesla really want to fight it out with the likes of Toyota for cheap, low margin manufacturing? I hope not as that's not a very sexy business and will command very low P/E multiples.
So, how does Tesla get to a trillion dollar market cap again? Or even a $500B market cap?
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@EinSV I read your reply to my other post, but would like to hear your thoughts on this one as well.
other bulls - please don't be alarmed. I'm still very long TSLA. But I'm sick of hearing shallow reasoning and "faith-based" hope for Tesla's future. Tell me rationally if and how my thoughts above are incorrect.
Alright, so here's the gist of the argument.
Model S/X demand has weakened gradually over the past several years.
This is evidenced by Tesla effectively lowering the price (ie., including more range, features, etc. in the price) but sales not increasing.
If Tesla didn't add features/range for the same price, then most likely sales would actually decreased.
Gradual weakening of Model S/X demand wasn't forecasted by many, if any, bulls.
In fact, we may get only 45k Model Ss sold in 2019 if Tesla sells slightly more Model Xs than Ss and if total unit number is 95k units.
If EV demand is growing and the Tesla Model S is a far superior car than its competitors, then you'd imagine demand to be increasing, not decreasing.
This is concerning. But not so much for Model S's sake, but for Model 3 and Model Y.
What's to say that the Model 3 doesn't go through the same decreasing demand (or stagnating demand) as the Model S?
Perhaps when Model Y comes out, it will hit Model 3 demand some.
Perhaps when other EVs come out in next few years, that will hit Model 3 demand some.
ICE cars at $35k are very good. And might be better for most people than a 220 mile Model 3. (Now a $35k Model 3 that had 300 mile range would be different.)
Tesla struggling with achieving decent margins on their $35k is concerning. It's shows poor execution and poor planning. And it also limits their demand. And bulls might say Tesla will fix that. But it might not be that easy.
I'm not saying Model 3 is doomed by any means, but what I am saying is what if long-term demand (meaning in 10 years time) for the Model 3 is 500-600k cars/year... roughly the same as it is now.
And what if demand for Model Y is similar, maybe slightly more at 600-700k cars/year.
Side note, the problem with the Model Y is twofold. First, the Model Y will cost more than the Model 3 because it'll be a slightly bigger car. So maybe $3000 more. But it's likely that the Model Y will have less range than the Model 3. So, let's say 200 miles. That range is not acceptable. So, maybe Tesla will need to offer a higher standard range, but that only increases the price, which decreases total addressable market (aka demand).
So, if Tesla is doing 90-100k Model S/X per year, 500k Model 3, 600k Model Y... and this number isn't growing and is stagnant for the next several years (or decade), then where does the massive revenue growth that Tesla needs come from?
The pickup? That's just one line and it's questionable if Tesla's pickup will sell over 300k cars a year.
Semi? Again, just another line and won't bring in as much revenue as Model 3 and Y.
Energy? Talk to me when it brings in at least $1B/year in profit.
So, what if Tesla gets stuck in the luxury market, and that luxury market isn't growing much and isn't big enough to continue to grow Tesla's revenue at a pace it needs.
Does Tesla need to get into the economy market? But they're not ready and won't be ready for years. The Camry and Accord are just too good at $20-25k. And Toyota can gradually electrify their cars over the next 5-10 years.
Maybe Tesla needs true energy storage breakthrough? But we can't count on that.
Tesla Network ain't coming any time soon.
Perhaps the Tesla bulls have underestimated the competition. Cheap ICE cars are actually very good. They do the job of getting from point A to point B very well and very cheaply. Autonomy also will likely become a commodity with many big tech companies completely willing to give it for free. And the transition to EVs is moving slow, slow enough that companies like Toyota can take their time but still get in the game with the help of Panasonic selling them cheap cells, probably almost as cheap as Tesla gets them.
Does Tesla really want to fight it out with the likes of Toyota for cheap, low margin manufacturing? I hope not as that's not a very sexy business and will command very low P/E multiples.
So, how does Tesla get to a trillion dollar market cap again? Or even a $500B market cap?
----
@EinSV I read your reply to my other post, but would like to hear your thoughts on this one as well.
other bulls - please don't be alarmed. I'm still very long TSLA. But I'm sick of hearing shallow reasoning and "faith-based" hope for Tesla's future. Tell me rationally if and how my thoughts above are incorrect.
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A few more encouraging thoughts to brighten up your day.
Are Tesla's cars really that disruptive, in the sense that they contain features or technology that other companies can't copy or catch up with?
In typical software/tech companies, the pace of technological change is so fast that it creates new opportunities that when seized and taken advantage of, sometimes it's difficult for others to compete. Sometimes seizing those opportunities leads to network effects or platform advantages (ie., iOS developer community with iPhone can't be easily copied).
In terms of Tesla, perhaps Tesla bulls have overestimated the disruption of EVs. While electric vehicles are revolutionary in the sense that they are changing the way cars are powered, are they really changing much about the core function of cars? Cars still drive from point A to point B, whether they are electric or ICE. From the outside they look the same. Similar cargo space. Overall, similar functions.
In other words, just having an EV (compared to an ICE) doesn't radically improve or change my life. At least mine.
Sure you can argue it's better for the world, which EVs are, but that's a tough sell to the individual.
You might argue that Tesla has an advantage in autonomy. But Tesla's long-term competitive advantage in that area is questionable, especially when you have some of the largest tech/software companies vying for that field (ie., Google, Apple, NVDA, Intel, and a whole host of others).
These large tech/software companies will give autonomy for free to car makers. And the autonomy will be good. These companies know what they are doing, especially in regards to software and AI.
The reality is that EVs still cost more than ICE cars, and that's the big bottle neck. But even if EVs costed less than ICE, would that fundamentally change the driving experience for people? Or rather will people still use cars to get from point A to point B?
Now, the iPhone was truly disruptive technology. They took the form factor of a phone, but gave the first real mobile web browsing experience, first real mobile multimedia experience, and launched the world's largest platform for developers. They called it a "phone" but really people didn't buy it to make phone calls. It was all the other revolutionary features.
So, tell me what revolutionary features (besides autonomy which is highly competitive) is Tesla really providing?
Or are Tesla cars still providing the same basic feature that ICE cars provide, transport from point A to point B?
Are Tesla's cars really that disruptive, in the sense that they contain features or technology that other companies can't copy or catch up with?
In typical software/tech companies, the pace of technological change is so fast that it creates new opportunities that when seized and taken advantage of, sometimes it's difficult for others to compete. Sometimes seizing those opportunities leads to network effects or platform advantages (ie., iOS developer community with iPhone can't be easily copied).
In terms of Tesla, perhaps Tesla bulls have overestimated the disruption of EVs. While electric vehicles are revolutionary in the sense that they are changing the way cars are powered, are they really changing much about the core function of cars? Cars still drive from point A to point B, whether they are electric or ICE. From the outside they look the same. Similar cargo space. Overall, similar functions.
In other words, just having an EV (compared to an ICE) doesn't radically improve or change my life. At least mine.
Sure you can argue it's better for the world, which EVs are, but that's a tough sell to the individual.
You might argue that Tesla has an advantage in autonomy. But Tesla's long-term competitive advantage in that area is questionable, especially when you have some of the largest tech/software companies vying for that field (ie., Google, Apple, NVDA, Intel, and a whole host of others).
These large tech/software companies will give autonomy for free to car makers. And the autonomy will be good. These companies know what they are doing, especially in regards to software and AI.
The reality is that EVs still cost more than ICE cars, and that's the big bottle neck. But even if EVs costed less than ICE, would that fundamentally change the driving experience for people? Or rather will people still use cars to get from point A to point B?
Now, the iPhone was truly disruptive technology. They took the form factor of a phone, but gave the first real mobile web browsing experience, first real mobile multimedia experience, and launched the world's largest platform for developers. They called it a "phone" but really people didn't buy it to make phone calls. It was all the other revolutionary features.
So, tell me what revolutionary features (besides autonomy which is highly competitive) is Tesla really providing?
Or are Tesla cars still providing the same basic feature that ICE cars provide, transport from point A to point B?
Brando
Active Member
For Tesla in a decade to reach 1/2 the size [in number of vehicles sold] of Daimler and BMW
(~2.5 million vehicles each) should impress most everyone.
To explain stock prices, seems to allude most everyone.
I'm impressed, even if I can't explain/understand stock prices.
(~2.5 million vehicles each) should impress most everyone.
To explain stock prices, seems to allude most everyone.
I'm impressed, even if I can't explain/understand stock prices.
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