Demand

[bonaire]

Supercharging is not valued at $4000 by Tesla so I don't see how you come up with that number.

Also including a adapter for and increase the price makes zero sense as Tesla is trying to get the price dow.

Same way they valued the MS60* $8500 less to purchase than the MS75 that lives inside it. Arbitrary and large enough to trigger further sales demand. This is the Demand thread, after all. Lowering by $2000 is not enough to trigger heavy demand.

Lower $4000 on the pre-order, $4500 to add later. I bet they use a number similar to this once it is out.
And a company cannot directly resell electricity without becoming a utility company so this maybe why they must buy SCTY which is a utility company, by law. Perhaps they have the right licenses to resell power in the Solar City entity. SuperCharging units sold by kWh is one thing - but I think it will be eventually resold as something else, such as SuperCharger time. Because you can park at the SC for 2 hours while walking around a mall and block others' use. Time works to get you in and out and pay attention to blocking others. And if you forget and stay connected 2 hours, you pay for it - good for Tesla overall. It is like EZ-Pass. If you mis-use it, they make you pay. If you use it correctly, you get a discount.

 

[cluster]

Anyone think they will introduce/reintroduce MS 50 and MS 40? If so, what time would it be?

 

[dandurston]

Anyone think they will introduce/reintroduce MS 50 and MS 40?

Tesla isn't going to sell another EV with less than 200 miles range. So a MS 55 is plausible be unlikely since it's such a small change.

More likely, once the 3 comes out Tesla won't need to try as hard to move downmarket as a $60g Model 3 will carry more margin than a $60g Model S. I wouldn't be surprised if Tesla moves to something like 75/90/110 a year from now.

 

[cluster]

Tesla isn't going to sell another EV with less than 200 miles range. So a MS 55 is plausible be unlikely since it's such a small change.

More likely, once the 3 comes out Tesla won't need to try as hard to move downmarket as a $60g Model 3 will carry more margin than a $60g Model S. I wouldn't be surprised if Tesla moves to something like 75/90/110 a year from now.

Yeah, I understand the >200 miles argument. I am actually speculating what other measures they will use to stimulate the demand.

 

[dandurston]

I think Tesla is mostly there now to the demand they want (~25k/qtr). Over the next year I think we're mostly just going to see demand stimulated by offering a lower price MS 60 without supercharging, announcing AP2, Tesla entering new markets and hopefully some favourable Model X reviews/publicity.

 

[dc_h]

stopped in Oak Brook Illinois store today (US Holiday). The store was very busy, which they say is normal Friday to Sunday. Sales a brisk, but no details. They have four S and X for test drives and overnight tests. They only had one of each for test drives, the other three on loan. Probably more inventory then most stores, but interesting detail on inventory impact.

 

[schonelucht]

I think Tesla is mostly there now to the demand they want (~25k/qtr).

Why?

 

[neroden]

100K/year is roughly the limit on the Model S production line capacity as originally stated. They may be able to squeeze out a bit more from the existing production line (120K, maybe?), but we're not gonna see 200K per year until there's a major retooling, which won't be done again until after Model 3.

I don't think Model X has hit target demand yet.

 

[TMSE]

100K/year is roughly the limit on the Model S production line capacity as originally stated. They may be able to squeeze out a bit more from the existing production line (120K, maybe?), but we're not gonna see 200K per year until there's a major retooling, which won't be done again until after Model 3.

I don't think Model X has hit target demand yet.

You mean 100k/year production limit is for S alone? In addition, X has 100k limit?

 

[vgrinshpun]

100K/year is roughly the limit on the Model S production line capacity as originally stated. They may be able to squeeze out a bit more from the existing production line (120K, maybe?), but we're not gonna see 200K per year until there's a major retooling, which won't be done again until after Model 3.

I don't think Model X has hit target demand yet.

The limit is actually 2,500 cars per week (combined MX and MS), but there were speculation by some analysts that Tesla might keep old body production line (with nominal capacity of 1,000 cars/week), while increasing capacity of general assembly line to match. This would be consistent with a response Elon gave few quarters back to Andrea James' question about maximum MS/MX production that is possible without taking into account GF output - he said 150K, may be 200K/year.

Assuming 48 production weeks/year, the 2,500 cars/week yield 120K/year, while 3,500 cars/wee - 168K/year.

 

[bonaire]

100K/year is roughly the limit on the Model S production line capacity as originally stated. They may be able to squeeze out a bit more from the existing production line (120K, maybe?), but we're not gonna see 200K per year until there's a major retooling, which won't be done again until after Model 3.

I don't think Model X has hit target demand yet.

You mean "target demand" in what they want the demand to be? Or what it actually is.

 

[neroden]

By "target demand" I mean the demand which they originally were targeting when they made their capital investments way back when. Nothing more. We already know that Model S has exceeded their target demand, and that Model X is well under their target demand. Projections are hard!

 

[u00mem9]

If they deliver 25k cars this quarter, but reached that number by exceptional techniques, they still have demand growth the accomplish.

This quarter has brought a new level of horse trading that, while typical for the rest of the auto industry, was very rare for Tesla in the past. Pre refresh discounts of 30%, and a large shift toward inventory production. If it can become the new normal, that meets their goal. On the other hand, Elon Musk himself said it was extreme effort to prep for another capital raise.

 

[bonaire]

I am willing to say that the Q2 unit deliveries were held back by a control call to try to make Q3 huge, if they do happen to do 25k, then the words "100,000 annualized" will be in the press. Companies have done it before. But I find it a tough one to see happening due to the Model X Vin assignments I've been tracking and how they have slacked off in August versus July. It just means Q4 will be very hard to match that 25k again. More likely 22k and a reasonable party will ensue with growth lines drawn to show that "we're on our way to 50k" - assuming that they had hit 2200/wk once or twice during Q3. However, whatever number is presented will have 3k lowered from it because of the 5150 "still in transit" at end of Q2. If the run rates are what they are and demand is what it is - then you would also expect 5000 in transit to exit Q3. Basically, smooth production, transit and delivery processes occurring. If they do not produce a number indicating "number still in transit" for Q3, then the end of Q2 was gamed and cars held back from final delivery at end of June in order to create a more Huuuuge "trump-like" Q3 with no indication of repeat in Q4.

More calls will be made across the Model 3 database of reservations to try to entice early purchase of a "better car, no waiting" MS 60 or 60D. Just like PowerWall reserations were called to see if they wanted to buy a Solar PV system from Solar City the past year after the reservations were taken for the powerwalls.

 

[Oil4AsphaultOnly]

I am willing to say that the Q2 unit deliveries were held back by a control call to try to make Q3 huge, if they do happen to do 25k, then the words "100,000 annualized" will be in the press. Companies have done it before.

Wow, that's pretty delusional. You're claiming that Tesla incurred higher OpEx (idle the workers to avoid delivering product) during Q2 (and all the associated drop in stock value) just so that they can make Q3 look better? Versus, delivering the "extra" 3k in Q2, and reducing any concerns about delivering 80k for the year.

I'd go with Occam on this one and say that Q2 was bad, because production couldn't ramp and all the recent incentives was to get demand to match up with current production capabilities (and to get buyers to stop waiting for AP2.0 and model 3).

 

[dennis]

I am willing to say that the Q2 unit deliveries were held back by a control call to try to make Q3 huge, if they do happen to do 25k, then the words "100,000 annualized" will be in the press. Companies have done it before. But I find it a tough one to see happening due to the Model X Vin assignments I've been tracking and how they have slacked off in August versus July. It just means Q4 will be very hard to match that 25k again. More likely 22k and a reasonable party will ensue with growth lines drawn to show that "we're on our way to 50k" - assuming that they had hit 2200/wk once or twice during Q3. However, whatever number is presented will have 3k lowered from it because of the 5150 "still in transit" at end of Q2. If the run rates are what they are and demand is what it is - then you would also expect 5000 in transit to exit Q3. Basically, smooth production, transit and delivery processes occurring. If they do not produce a number indicating "number still in transit" for Q3, then the end of Q2 was gamed and cars held back from final delivery at end of June in order to create a more Huuuuge "trump-like" Q3 with no indication of repeat in Q4.

More calls will be made across the Model 3 database of reservations to try to entice early purchase of a "better car, no waiting" MS 60 or 60D. Just like PowerWall reserations were called to see if they wanted to buy a Solar PV system from Solar City the past year after the reservations were taken for the powerwalls.

Please dispense with the conspiracy theories. They were busting their butts to produce as many cars in June as they could once they finally resolved some Model X issues and ramped up production of the Model S after the hiatus for the facelift/refresh changes.

As for you last point, it is nice to know that Tesla realizes the cars (or any $60K+ product) don't sell themselves. So they must actively engage in marketing and sales techniques. What a concept.

 

[u00mem9]

Wow, that's pretty delusional. You're claiming that Tesla incurred higher OpEx (idle the workers to avoid delivering product) during Q2 (and all the associated drop in stock value) just so that they can make Q3 look better? Versus, delivering the "extra" 3k in Q2, and reducing any concerns about delivering 80k for the year.

I'd go with Occam on this one and say that Q2 was bad, because production couldn't ramp and all the recent incentives was to get demand to match up with current production capabilities (and to get buyers to stop waiting for AP2.0 and model 3).

I think he is saying they let 5k cars build up on lots to basically add them to Q3 deliveries. No idle workers, as the delivery centers were pretty busy fixing X doors. I'm not saying I agree, but that is how I interpreted his post.

BTW, don't expect to get any production / inventory numbers in the Q3 report...they will focus on deliveries (this time).

 

[Oil4AsphaultOnly]

I think he is saying they let 5k cars build up on lots to basically add them to Q3 deliveries. No idle workers, as the delivery centers were pretty busy fixing X doors. I'm not saying I agree, but that is how I interpreted his post.

BTW, don't expect to get any production / inventory numbers in the Q3 report...they will focus on deliveries (this time).

I suppose that could be a reasonable interpretation of what bionaire said, but keeping the cars on the lots is still a labor intensive side-project. Look at the fremont factory parking situation to see the additional headache keeping extra cars on the lots induces: Tesla is having trouble managing its Fremont factory parking: EVs being ICEd and overcrowding

Besides, that idea still contradicts Tesla statement that the 5k were in-transit.

Edit: on what basis do you think production won't be noted in the end of quarter report?

 

[bonaire]

I think he is saying they let 5k cars build up on lots to basically add them to Q3 deliveries. No idle workers, as the delivery centers were pretty busy fixing X doors. I'm not saying I agree, but that is how I interpreted his post.

BTW, don't expect to get any production / inventory numbers in the Q3 report...they will focus on deliveries (this time).

Exactly, almost, yes. But the buildup was more like 2500 since that is half the 5150 and usually there are like 2000 in transit. "Cars in transit" on 6/30 does include cars that are dirty on the sales lots not yet ready for sale or deliveries planned for 1st two weeks of July for cars "already landed" at sales locations. The one near my house was full of dozens of cars, some dusty and dirty from truck travel and some with "Customer" stickers on the windows - on July 2nd. Those would be considered cars-in-transit. So would inventory refresh cars not yet ready for loaner/demo purposes. Remember, a "net new order" is also a loaner refresh turn. And many were marked as Marketing and Inventory cars as well, during my walk through the lot on July 2nd. Research requires verification. Interestingly - inventory and marketing cars had a lot of May production dates and customer cars June. Little bit of channel stuffing there to prepare for Q3. Also, my Vin # tracking has blocks of inventory Vins that fit the pattern. It's not a short list - I'm close to 5000 tracked international elements now. Consistent and thorough. Too bad that Asia is not visible. I do more actual research than some of these wall street "analysts".

What I do expect is the ev-cpo.com site to show a diminishing inventory count through 9/30 - an exhaustion of selling as many as possible to hit the number. I don't expect the build-up that occurred at end of Q2. I expect a dwindling. Then resurgent wave of inventory again into October for Q4 selling again. The stock drop off due to Q2 sales was short and worse on the day that they announced the Solar City buy-out. That was probably calculated and effectively a sales manager knows how to "work the numbers" on a quarterly basis in order to work up a lather of sales in the coming quarter. Remember - a SALE is a DELIVERY. Deliveries held into Q3 will make it shine. Nothing wrong with that when you need to sell $3.5-4.0 billion in stock to buy Solar City. Solar City's purchase was announced on June 22nd, and plenty of time to plan for the blow-out Q3. If anyone here ever worked for a public company before and had to "balance" sales quarter to quarter, including handling Q3 selling to government agencies which "dump money" during September, you know what this is all about.

Board room discussion may be something like this. "How do we come up with the cash to contain Solar City buy-out.... Blow out Q3, go to market with TSLA shares.... Sounds good, but how?.... Hold back Q2 a bit, maybe a lot...... Ok, how.... Build lots of inventory mid-to-late June and ship them.... But that hurts revs and cash.... Cash is pending - known customers have reservations and will pay in Q3, when we actively sell hard into Q3 and end strong, deliver lots of known reservations on MX, do P100DL, call M3 reservations to entice MS60..."

To run a business like this, you have to be on the edge of conspiracy theory. But in the board room - all ideas are conspiracy to figure out how to do the best, most beneficial deals. Remember, they did "Reveal the D" early, as they said. But do you know why?

 

[dennis]

Exactly, almost, yes. But the buildup was more like 2500 since that is half the 5150 and usually there are like 2000 in transit. "Cars in transit" on 6/30 does include cars that are dirty on the sales lots not yet ready for sale or deliveries planned for 1st two weeks of July for cars "already landed" at sales locations. The one near my house was full of dozens of cars, some dusty and dirty from truck travel and some with "Customer" stickers on the windows - on July 2nd. Those would be considered cars-in-transit. So would inventory refresh cars not yet ready for loaner/demo purposes. Remember, a "net new order" is also a loaner refresh turn. And many were marked as Marketing and Inventory cars as well, during my walk through the lot on July 2nd. Research requires verification. Interestingly - inventory and marketing cars had a lot of May production dates and customer cars June. Little bit of channel stuffing there to prepare for Q3.

So your theory is that Tesla could have made their 17,000 car forecast for Q2 but deliberately tanked it by 2500 cars (they delivered 14,370). Dumb idea, and Elon is not dumb.