I'm expecting a roughly 1:1 X:S ratio, worldwide. This is because the premium SUV market is significantly larger than the premium sedan market, but the X is not as good an SUV as the S is a sedan, so I figure the two factors basically cancel out.
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I think that at least part of the reason is that many people don't know about Tesla, and it's not until they see a few of them around that they go and explore. In other words, volume breeds more volume. Tesla's production ramp for the X has been much faster than it was for the S, so it takes a little while for the demand to catch up.I agree it is just one data point and let's not make too much of it. Just pondering why Model X could be had sooner than a newly ordered Model S... Basically a month+ delivery time for Model X in the U.S.? That is very quick.
I agree - and know from first hand experience- that Model X deliveries outside of U.S. are a slow, slow trickle.
- Production ramp for the MS needed to have the worldwide sales/service centers "still built up"
- existing sales/service centers are out there now and "accept" the MX build rate into their midsts
- Ratio of reservations of the MX through Sept 2015 (when serial numbers stopped) was lower than most of the early 2013 MS series throughput, so I doubt that it will reach 1:1 correspondence with MS.
I would like to see the market studies and consumer feedback analysis on what would make the 1:1 take rate occur. The "benefits" for going Tesla over anything from Escalade to Land Rover to Porsche is based on a few things. Smooth acceleration (a positive) - range limited to the supercharger network (a negative). Must repair only at Tesla service stations (a negative if travelling). Can a family be happy with a Honda Pilot and spending $35k. Yes. Do they "need" the acceleration or to "go green" no, it's a personal choice. So, the realistic aspects of this are speculation on all of our parts. And yes, do they need the AP 2.0 autonomy? If it truly proves out as a major increase in safety over non, it may bring people in - but it is a $10k entry fee currently. Will it be $10k in the Model 3 or a lower price for that vehicle? For the soccer mom who must have a battle tank and feel safer due to these features, it may be a selling point. But it has to go from "interesting cool futuristic thing" to "consumer demand" to flourish. The media will be a big battlefield for this autonomous marketplace and of course, this is all related to kicking the labor out of the taxi,delivery,trucking,etc. vehicle jobs. So, autonomous "must succeed" because business owners are really looking forward to ditching those labor costs.
Can a family be happy with a used Honda Fit and spending much less. Yes. Relevance, zero.
In February when you estimated 65k, Tesla guided for 80-90k. They are on track to hit the low end of guidance despite more issues with model X ramp in 1H than imagined. Re: your q4 estimate, aren't you concerned you will be off by another 3-4k like your were in q3? Also your recent predictions related to falling gross margin in q3 were completely wrong, as was your prediction that tesla would have an extended shut down in q4 while blaming a supplier to cover up lack of demand. And it looks increasingly likely that your prediction that Tesla could only have a good q3 at the expense of a weak q4, seems unlikely. Considering they exited q3 with over 5k in transit.
Couple points are that the 5k "in transit" were not visible in October or even some transparent November sales. Where did they go?
Also, I am forcasting 21.5k for Q4. That puts the total roughly 75k. that is equi-distant between my Feb 2016 65k and the 80-90k guidance. Without the September sales cycle, 70-72k would be the annual sales total. Look over Europe sales in a few days and even the insideevs.com sales numbers by Saturday. I want to know where the 5000 in transit ended up. And where the 35k Model X reservations ended up from 1/1/16. I know Tesla is non-committal in making a reservation "go to fruition" but holding deposits from Feb 2012 through now and not requiring someone to complete the reservation indicates that "reservations" may not so reliable in determining true demand. The thread is about demand and not "showing some form of interest". Demand is known as a confirmed order. Not speculative, refundable deposit.
dennis
Model S Plaid
@bonaire, I believe the root cause of you missing your forecasts about Tesla's deliveries and gross margins is that you distrust/underestimate Tesla's ability to manage its business. I find this attitude very common among people who are short the stock (do not know if that includes you).
Example 1: "Without the September sales cycle, 70-72k would be the annual sales total". Tesla gave guidance to WS for 80K-90K vehicles, which was then revised down to 80K because of the Model X ramp issues. They are managing their business to meet or exceed that guidance. So of course they will use whatever sales and marketing tools they need to generate enough demand to reach 80K. The area where they have fallen down in the past is when they have production issues, such as the Model X, which has nothing to do with demand. With Elon's focus now on manufacturing and the new VP hopefully those issues are behind us.
Example 2: Your belief that GM was going to decline last quarter, even though the CFO, who is quite credible, gave guidance that it was going to improve. You apparently thought the discounts used to meet the sales target were some last minute thing and not factored into the CFO's statement made with 8 weeks left in the quarter. Again, underestimating Tesla's management.
As for the Model X deposits as a measure of demand, I don't think we can generalize from the Model X case. Let's face it, the launch was a disaster - 12 months to get to volume production, lots of service visits for early customers, black eye in the press that still continues, and missing features like a folding 2nd row option. Some deposit holders went for Model S, some abandoned the Model X for who knows what, some took delivery, and others are still waiting, either for assurance that the quality has improved or for a folding 2nd row in the 7 seater, which hopefully will happen in Q1 after they have ramped up production of the new seat and delivered the 5 seaters. The good news is the people I encounter who own the X love it.
While some demand for Model X will return as word of mouth and the reviews improve, I believe that to reach its max potential in 2017 Tesla may need to roll out some marketing and sales incentives. I don't know what those might be, but as we have seen with the Model S Tesla can be quite creative in driving demand.
Dennis, Not trading it. I used to but found the market manipulation too strong to be at all a viable stock trade. I've been long and also short and also have sold short puts (synthetic long). I may wait a bit until Q4 numbers come out and possibly short some OTM puts to make some money off the bears. I'm making too much in other areas to pay much attention to Tesla other than to keep on my path to trying to estimate the true sales potential.
My estimate in February was based on "what products were for sale at the time." There were so many "alterations" of the same suit during the year to cause upgrades (trade-ins) and the 3-year 2013 lease trade-ins mid-summer were met with good opportunities for "the next car" in new lease deals and discounts that Q3 was well beyond most of our expectations.
In terms of investing - the smartest investing I've done was in products that I have had no emotional connection to. Actually, one was in a company called PowerOne. I had just installed a Solar array and really liked the inverters (PowerOne Aurora). So, I bought stock. Bunch of it. Followed the company and they were bought out by ABB (a big electric supplier player) with 60% upside - watch ABB as they make things like DCFC dual-head stations, battery storage, solar inverters, and lots more. Anyway - the stock nearly paid for the out of pocket costs of my solar array. I even gave away a block of stock to my son's college and they installed 6 Chargepoint EVSE stations at school (and the arrangement allows support of 12 EV parking spots with shared cables) and some teachers have bought plug-ins due to this. I turned a win into advocacy. Also, matching funds from the state's renewable bucket of money helped too.
A teaming of say ABB and the European automakers could be a huge "thing" in Europe. But we need to find out what their kWh pricing will be for those drivers.
I don't know if I estimated GM going down? Did I? if I did, I wonder why. Model X are still being delivered and also a lot of the P100DL started to get delivered. This quarter, Model S and P100DL also being delivered so GM should be as good as Q3, though I don't think sales will be as good in total units.
The primary "compare" in the auto world to Tesla is Porche. Lots of McMansion neighborhoods have Cayennes and similar cars for "the wife". But around my area, I see all kinds. Go west 5-10 miles, most cars are beaters. Go east 5-miles and everyone lives near a country club and homes are $1M plus.
I look at a combination of things. First, "churn" - how many guys are on their 3rd or 4th Tesla now. That is a good number of sales. yes, I've seen popular bands 3-4 times on the same tour before and I know the deal. When you're a fan, you want the latest thing. However, the real positive for Tesla is the number of "lookie lous" - those who will line up at an auto show and want to sit in it, and talk about it. Sure, many cannot afford it but maybe the Model 3. My primary concern is can the company survive without continued help from new stock sales, new bond sales and more. The Solar City buy was what it was. Saved the company (SCTY). In a way it was like "reveal the D" event. That saved Tesla. Imagine what sales would be today if the top car was a P90+ or P100+ RWD at $130K. If the D had not been done on the heels of the bond sale for the Gigafactory in 2014, I doubt things would look as rosy today. I do think MS owners churn into new models far more than Model X owners will. This is a headwind on the demand cycle of MX. And MX came out with DWD and big battery up front. What upgrades and changes will cause the churn to occur (trade-in, trade-up?) If bought as a family car, and if the wife has trouble with parts (FWD, whatever) - wives can be very judgemental and "get me out of this car" type reactions have occurred. How many more Teslas will "the wife" want if they get burned on going to the service bays more often than their Lexus?
Don't make it emotional (though, the auto business is 80% emotional, isn't it?) - if you want to invest, just be careful. The "Demand Thread" is trying to figure out just what the Demand really is. And one way to forecast the future is through past numbers. They evolve. Watch the oil patch too as realistically - we will run out of "easy" oil eventually. Will it be 40 years? 60 years? It will happen in our grand-childrens' lifetimes. So, we can see that lately, there are dozens of new announcements from many automakers turning up their EV fronts. Daimler announced 11 billion investment in EVs. That is huge. And that is only one player. There will be "no winner" in the EV space. EVeryone will be making it. And actually, I accidentally capitalized the V in EVeryone but that is the point. In racing terms, Tesla "took a flyer" - running out front of the pack and making a lot of noise while doing it. But the race is long (decades) and time is on the sides for those who waited. Toyota's announcement yesterday was yet another "sleeping giant" awakening. I attended the "EV Tech Expo" in Michigan in September. There is a lot going in in the EV space.
One area of respect I will give Tesla would be if they contact all "long time" reservation holders of the MX and MS non-confirmed reservations and offer them a 30-day confirm or refund window. Keeping someone's money for four years or more just to show on the books as larger "Customer Deposits" is not a transparent business practice. If they choose not to confirm the reservation, move the money to Automotive Revenue and cancel the reservation.
My estimate in February was based on "what products were for sale at the time." There were so many "alterations" of the same suit during the year to cause upgrades (trade-ins) and the 3-year 2013 lease trade-ins mid-summer were met with good opportunities for "the next car" in new lease deals and discounts that Q3 was well beyond most of our expectations.
In terms of investing - the smartest investing I've done was in products that I have had no emotional connection to. Actually, one was in a company called PowerOne. I had just installed a Solar array and really liked the inverters (PowerOne Aurora). So, I bought stock. Bunch of it. Followed the company and they were bought out by ABB (a big electric supplier player) with 60% upside - watch ABB as they make things like DCFC dual-head stations, battery storage, solar inverters, and lots more. Anyway - the stock nearly paid for the out of pocket costs of my solar array. I even gave away a block of stock to my son's college and they installed 6 Chargepoint EVSE stations at school (and the arrangement allows support of 12 EV parking spots with shared cables) and some teachers have bought plug-ins due to this. I turned a win into advocacy. Also, matching funds from the state's renewable bucket of money helped too.
A teaming of say ABB and the European automakers could be a huge "thing" in Europe. But we need to find out what their kWh pricing will be for those drivers.
I don't know if I estimated GM going down? Did I? if I did, I wonder why. Model X are still being delivered and also a lot of the P100DL started to get delivered. This quarter, Model S and P100DL also being delivered so GM should be as good as Q3, though I don't think sales will be as good in total units.
The primary "compare" in the auto world to Tesla is Porche. Lots of McMansion neighborhoods have Cayennes and similar cars for "the wife". But around my area, I see all kinds. Go west 5-10 miles, most cars are beaters. Go east 5-miles and everyone lives near a country club and homes are $1M plus.
I look at a combination of things. First, "churn" - how many guys are on their 3rd or 4th Tesla now. That is a good number of sales. yes, I've seen popular bands 3-4 times on the same tour before and I know the deal. When you're a fan, you want the latest thing. However, the real positive for Tesla is the number of "lookie lous" - those who will line up at an auto show and want to sit in it, and talk about it. Sure, many cannot afford it but maybe the Model 3. My primary concern is can the company survive without continued help from new stock sales, new bond sales and more. The Solar City buy was what it was. Saved the company (SCTY). In a way it was like "reveal the D" event. That saved Tesla. Imagine what sales would be today if the top car was a P90+ or P100+ RWD at $130K. If the D had not been done on the heels of the bond sale for the Gigafactory in 2014, I doubt things would look as rosy today. I do think MS owners churn into new models far more than Model X owners will. This is a headwind on the demand cycle of MX. And MX came out with DWD and big battery up front. What upgrades and changes will cause the churn to occur (trade-in, trade-up?) If bought as a family car, and if the wife has trouble with parts (FWD, whatever) - wives can be very judgemental and "get me out of this car" type reactions have occurred. How many more Teslas will "the wife" want if they get burned on going to the service bays more often than their Lexus?
Don't make it emotional (though, the auto business is 80% emotional, isn't it?) - if you want to invest, just be careful. The "Demand Thread" is trying to figure out just what the Demand really is. And one way to forecast the future is through past numbers. They evolve. Watch the oil patch too as realistically - we will run out of "easy" oil eventually. Will it be 40 years? 60 years? It will happen in our grand-childrens' lifetimes. So, we can see that lately, there are dozens of new announcements from many automakers turning up their EV fronts. Daimler announced 11 billion investment in EVs. That is huge. And that is only one player. There will be "no winner" in the EV space. EVeryone will be making it. And actually, I accidentally capitalized the V in EVeryone but that is the point. In racing terms, Tesla "took a flyer" - running out front of the pack and making a lot of noise while doing it. But the race is long (decades) and time is on the sides for those who waited. Toyota's announcement yesterday was yet another "sleeping giant" awakening. I attended the "EV Tech Expo" in Michigan in September. There is a lot going in in the EV space.
One area of respect I will give Tesla would be if they contact all "long time" reservation holders of the MX and MS non-confirmed reservations and offer them a 30-day confirm or refund window. Keeping someone's money for four years or more just to show on the books as larger "Customer Deposits" is not a transparent business practice. If they choose not to confirm the reservation, move the money to Automotive Revenue and cancel the reservation.
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To refresh your memory, in the quoted language below from mid-September (a couple weeks before the end of the quarter), you predicted GMs would drop 2%, possibly below 20% for non-GAAP margins. Instead, non-GAAP margins increased to 25%.
Also, you suggest that discounting is what led your estimates astray, but as a reminder you predicted 18,650 Q3 deliveries in late August -- after the discounting was well underway -- a miss of over 30%:
Website wait times for delivery change
And after Q3 delivery numbers came out in early October, you predicted full year deliveries of 70K, which translated into a Q4 delivery prediction of 16.5K.
Website wait times for delivery change
This will likely be a miss of 50% or more.
I agree with the point in your post above that it is better to take emotions out of investing. You might consider whether your negative feelings about Tesla, which are all over your @bonairevolt Twitter feed, are impacting the objectivity of your analysis.
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Wow, this is you NOT paying much attention to Tesla?
Oh no, discounting did not get underway "in earnest" until Sept 10th. It was the day I asked a Tesla rep about getting a 75 but having it de-tuned to a 60 and paying $8500 less. He said - yes, we can. Then a day later, all the 75s got discounted by $7500 instead.
30 minutes a day. That's about it. Also, quick note on the GM. If they really are "that good" don't you think that possibly the price of the cars is too high? People are willing to pay it but if the discounting is so good, let's see a nice overall $5k downward price adjustment to do even better. That would cause a 10-20% or more sales unit increase. Or, stop discounting entirely and "earn" the larger GM through controlling the sales flow a little tighter. As Elon says "no new car will be discounted" - but they are discounting new cars if the feature(s) are not the most-current. By rolling out new features now-quarterly, you can keep discounting old stock by a good 5+ k per unit. And up to $30K for high-end models. I expect the 90D to get big discounting once the non-P 100D MS comes out. So, is AP2.0 the end and it's all software from now on? Or will other physical changes come out next year to cause new upgrade again? How evolved are things so far because new features and upgrade-churn have been very important.
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Since Tesla doesn't wait for model year changes to add features this is exactly the same thing that all other OEMs do with "new" outdated models.
Any comments on the insideevs.com numbers? 1400 MS and 900 MX in November.
Monthly Plug-In Sales Scorecard
Monthly Plug-In Sales Scorecard
dc_h
Active Member
Perhaps good analysis, but bad assumptions. Bonaire is detailed and methodical, but tends to bearishness.
China sales are one of the bigger black boxes, yes. I don't even know where Jose gets his Chinese data and I only have one highly unreliable source to cross-check it with. I know Chinese EV demand is massive, but I have no way of telling how it'll be distributed between different manufacturers.
Guess I should learn to read Chinese. :-(
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