Month and a half wait for a California delivery does not sound like demand constrained:
2017 Investor Roundtable:General Discussion
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Tesla has been pushing out US custom orders for several weeks now. Since the end of June Tesla has just build a few US cars here and there, And I don't think that they have been building cars for customers outside the US the whole time, since a lot of them were already finished by the end of June and those markets are simply not that big (we are talking 10k+ cars) unless Korea now suddenly has thousands of sales.
These are all US cars from the spread sheet that have gone into production since the end of Q2...
These are all US cars from the spread sheet that have gone into production since the end of Q2...
...because they build for international deliveries at the beginning of every quarter.
All about maximizing in-quarter build/delivery. Cars made for further away are built at the beginning.
Besides, 1.5 months wait for a custom-order car... that's peanuts. Custom orders of German cars often take much longer.
But it doesn't take 1.5 months to build a car, so obviously the extra time involved is because production rate is lower than demand rate. Not sure how any other conclusion can be drawn.
sundaymorning
Active Member
Here's the attachment of my friends order. About 1.5 months wait time. This is a 100D, not a 75... if the wait is this long for a 100D, which Tesla prioritizes, the 75 must be a tad bit longer wait.
Attachments
Oh dear... a queue for custom-made orders is not the same as production constraints.
It takes time to JIT in materials and Tesla (like other manfacturers, though more aggressively) batches regions for logistics.
Just because you can't build all cars immediatel from order does not mean you are production constrained in any useful sense of the word.
No factory can build 1000 today and 0 tomorrow. Hence the demand is averaged out over time. Only if that average production is less than demand, are you production constrained and delivery times keep going up and up... or you have to anti-sell, not create demand levers...
Nobody in their right minds would claim Audi is production constrained for A4 just because it can take 3 months to factory order one. That's just normal custom-order logistics.
I don't think there are any items in a custom order that are exotic and not readily available off the shelf parts that go into many of the cars, especially since Tesla seems to like to use highly optioned top line models for demo/loaners. Fact is if they were demand constrained as you claim that means there are effectively empty spots in the production line waiting for vehicles to be slotted in. That does not equate to a 1.5 month wait. It's not as if Tesla builds dozens of different models.
mmd
Active Member
Doesn't matter when you custom order. Till Sep 20th, it will be "delivery by Sep 30". If it is the long queue causing 1.5 month delay, how does it shrink near the end of each quarter? Every quarter we see the same story.
There can be many reasons for the delayed delivery of custom ordered cars. The factory could be closed (throttling). An analyst once reported only 50% up time from his channel checks.
Slow delivery by trains is another.That alone can add a month.
Fixing defective cars at the service centers also take time sometimes.
But the constant pulling of demand levers proves it beyond doubt. Since 2015, Tesla is pulling one lever after another. Yet, Model S sales have not grown since its 2015 peak.
There can be many reasons for the delayed delivery of custom ordered cars. The factory could be closed (throttling). An analyst once reported only 50% up time from his channel checks.
Slow delivery by trains is another.That alone can add a month.
Fixing defective cars at the service centers also take time sometimes.
But the constant pulling of demand levers proves it beyond doubt. Since 2015, Tesla is pulling one lever after another. Yet, Model S sales have not grown since its 2015 peak.
Analysts come up with all sorts of nonsense, as do you.
Example:
Specific example I'm using is a California car, so no.
And that has exactly what to do with a newly ordered car's projected date? Keep grasping at straws...
Well, first of all we do not know if there really is a 1.5 month wait in this case. Plenty of stories recently of California caes being built in one week from confirmation. But 1.5 months certainly is plausible and normal IMO, not a production constraint, in the automotive industry.
Second, I was generally listing things that affect manufacturing. It is not useful to call a factory production constrained just because individual orders have leadtimes. It is the overall situation that matters. All factories adjust man power and material logistics to fit current demand levels and that affects speeds too. Being production constrained is something else...
My guess in this specific case:
We know Tesla builds orders for non-California locations early in the quarter (the further away, the earlier in the quarter it is built). This is done to optimize in-quarter build and delivery to as many places as possible.
In such a scenario California cars being built late in the quarter can simply be because other orders are batched ahead of it until a cutoff date where they can no longer be delivered in-quarter and are again pushed to the next.
To asses demand vs. production, we must look beyond the leadtime of a single order anyway.
dennis
Model S Plaid
More b.s. If you check the Model S spreadsheet from last quarter the latest confirm date that was delivered within the quarter was June 7th. For Q1 it was March 10th.
For someone who follows Tesla so closely, you conveniently overlook pertinent facts. Elon has stated in multiple conference calls that the S+X final assembly line is capable of producing approximately 25K cars/quarter. Tesla uses pricing, feature changes, etc. to match demand to that production ceiling. If they could produce 30K S+X, I'm sure they would find other incentives to generate demand for 30K S+X per quarter.
Look. Nobody here is claiming there isn't a ceiling in Tesla's production capacity. If there suddenly was a demand for 50K Model S/X a quarter, the car would definitely be production constrained.
However, all we have to do is look at how Tesla has been meeting their guidance in the past year when (I argue) they at the very latest stopped being production constrained.
In that time Tesla has had to both revise guidance downwards as well as when they do meet their guidance, they are hitting the low end of that guidance. They are not hitting the high-end and it is because there isn't enough demand. Tesla would not be guiding above production capacity, that is not a realistic assumption quarter after quarter anyway.
Now, as a completely different question, the need for demand levers and Model 3 anti-selling suggests the demand without such levers is down even more compared to what it used to be earlier in Tesla's history - what I have called the inherent demand. That is even worse than their demand with levers for Model S/X.
dennis
Model S Plaid
More b.s. Check the Model S delivery spreadsheet. The shortest confirm to delivery time in Q1 was 3 weeks. In Q2 it was 2 weeks.
With the greater availability of inventory cars there is no need to rush CA custom orders out the door to reach the quarterly goal.
I'm not talking delivery time, that's irrelevant for factory capacity.
I am talking time to build from confirmation. There definitely have been cases where a car has been built within a week of confirmation, which in factory terms is pretty much immediately.
adiggs
Well-Known Member
Piling on with @dennis...
Heck - I had a Model X Signature reservation for most of 5 years, but didn't finally actually buy and take delivery (until WE were ready due to other stuff) AND we had what turned into a 2-3 day overnight test drive during the July 4th weekend. We looked at, sat in, and sniffed the new car fumes in a half dozen or more X's to figure out the combination that we ended up with.
The cars do a really good job of selling themselves, but they don't ACTUALLY sell themselves (and especially / exclusively via a web page).
This being an investment thread, maybe a better way to think about it - THIS investor would be very unhappy to see Tesla decide that it needed 0 showroom and test drive cars in order to convert potential buyers into actual buyers.
There's a reasonable argument to make around whether providing S/X service loaners is a good business practice - I'm in favor, but that's a lot of $$ in inventory to provide that service. Even if you decided to end that practice, how many cars do you need at each location to give buyers in this $100k range a good taste of the available mix. 10-20 cars per location? I counted 109 locations in the US on Tesla's website is a quick 1-2k cars.
That might make for 10k cars worldwide, and on annual sales of 100k units, that is 1/10th of a year worth of inventory. Relative to the rest of the auto industry, that sounds like an inventory light model to me.
Yep, the weekend test drive--real time use with the windshield, having it in the garage (trying the FWDs in the garage), seeing the ease the kids get in and out of the X--was key to convert this fence sitter to a buyer. Tesla still needs inventory vehicles in their fleet.
dennis
Model S Plaid
I assume you follow the German auto industry. Therefore you know that there is a predictable pattern of demand/deliveries after a new platform 3 series, S Class, 7 series, etc. is introduced. It builds in the first 12-24 months as all of the variants (e.g. coupe, M3) are ramped into production. By 30-36 months demand and deliveries have peaked and a pretty steep drop begins. Sometimes this can be goosed up a little with a mid-cycle refresh, but generally it continues until year 6 or 7 when the next new platform is introduced.
Model S, which has just started it's 6th year of deliveries, has not followed that pattern. Part of this is the continued spread of awareness about Tesla and Model S. In addition Tesla has used battery variant changes, price tweaks, etc. to induce demand that would otherwise not be there in the normal pattern we see in models from Mercedes, BMW and others.
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