EU Market Situation and Outlook

[Gerasimental]

Does anyone know what became of Merkel's plan to cover up to 90% of the cost of businesses' fleet costs?

Germany Expected to Approve Tax Incentives for Electric Cars

All the news I read afterwards just focused on planning to extent charging infrastructure and giving ev owners special privileges.

 

[chillong]

Per a request, here is what I have for 2014 YTD (I'm missing just a few for November).
View attachment 65467

for Switzerland (http://www.auto-schweiz.ch/fileadmin/3_Statistiken/Autoverkaeufe_nach_Modellen/ModellePW2014.xls), the November number is 33.

 

[JEU]

The Model S is now sold with a $15.000 "discount" in Norway compared to the US-price. This is due to the strong USD and weak NOK (Norwegian krone, mostly due low oilprice)

Since 10th october the NOK has lost 15% to USD, Tesla has not updated the prices. Therefore I ordered a S85D today.. Many others on the norwegian forum is doing the same thing.. I guess this will mean that Tesla will sell a bunch of cars with little or no proffit next year if the currency rates stay at this level

 

[virtuesoft]

The Model S is now sold with a $15.000 "discount" in Norway compared to the US-price. This is due to the strong USD and weak NOK (Norwegian krone, mostly due low oilprice)

Since 10th october the NOK has lost 15% to USD, Tesla has not updated the prices. Therefore I ordered a S85D today.. Many others on the norwegian forum is doing the same thing.. I guess this will mean that Tesla will sell a bunch of cars with little or no proffit next year if the currency rates stay at this level

Tesla must have a USDNOK hedge in place. I know they've said in the past that they do not hedge currencies but it just doesn't make sense that the prices have been adjusted everywhere apart from Norway. There is no way they would leave the price the same and take a loss on each car sold to Norway.

 

[Ingenieur]

Im not sure about other eu but german prices rose by 3-4 % but euro fell more like 12-13% this year, maybe some of that is covered by falling prices fro eu suppliers

 

[RobStark]

Or Tesla could keep their Krone profits in Norway for a while to expand superchargers,stores, and service centers.

 

[Ingenieur]

It has no impact on income statment if they transfer money or not, the sales/profits in NOK are stated in Dollars

 

[32no]

The Model S is now sold with a $15.000 "discount" in Norway compared to the US-price. This is due to the strong USD and weak NOK (Norwegian krone, mostly due low oilprice)

Since 10th october the NOK has lost 15% to USD, Tesla has not updated the prices. Therefore I ordered a S85D today.. Many others on the norwegian forum is doing the same thing.. I guess this will mean that Tesla will sell a bunch of cars with little or no proffit next year if the currency rates stay at this level

How is it a $15,000 discount?

The Model S50 is currently 466,200 krone which is $78,410. US price is $71,070, add a 20% VAT to get $85,284 which is only $6875 more than what the current price is...

Even if you take the P85D which is $105,670 in the US, it costs 683,000 krone which is $114,735. A 20% VAT on the US price is $126,804, which is only $12,069 more than the current price.

 

[RobStark]

It has no impact on income statment if they transfer money or not, the sales/profits in NOK are stated in Dollars

But they don't have to buy dollars with krone. When they buy Norwegian assets they effectively get the same discount that Norwegian Model S buyers are getting.

 

[Ingenieur]

But it is not reflected in the income statement, their Norwegian SGAA are obviously lower due to lower currency, but its not much i assume. So unless they find a way to source cheaper stuff from norway, the impact is negative.
Basicly if they sell something for 100 Kroner, and kroner is 20% lower, they effectively sell it for 80. Now they have 5 Kroner of SGAA costs in Norway, its just 4 now, but most likely not nearly enough to make up for lost revenues/profits. Maybe we should start a thread and check out how the EU prices changed last few months. I dont quite understand it

 

[RobStark]

Yes, Tesla gets the raw end of the deal.

But it might be largely mitigated. Not just current operation cost. But expansion.

Unlike traditional companies that have saturated most markets, Tesla needs to expand everywhere. Aggressively.

Perhaps, the net result is better than paying for hedges.

 

[Ingenieur]

I dont think the growth in Norway will make much difference, the Norwegian market is most likely the most saturated for tesla.
If you are looking for a real white Swan, look at Yen falling, if the contractual prices are in Yen, lets say there 15k$ batteries worth in average vehicle (before packaging costs), yen rising from 100 to 120 means 3k $ cost reduction. So this may make up all of the lost profits in Europe - Norway, nobody seems to talk about it, all things equal, this would increase gross margin by 3%

 

[JEU]

How is it a $15,000 discount?

The Model S50 is currently 466,200 krone which is $78,410. US price is $71,070, add a 20% VAT to get $85,284 which is only $6875 more than what the current price is...

Even if you take the P85D which is $105,670 in the US, it costs 683,000 krone which is $114,735. A 20% VAT on the US price is $126,804, which is only $12,069 more than the current price.

At the other side of the scale a well equiped P85D without winther tires cost in Norway 883.000NOK = $117.700. The same spec in USD is $136000. So the difference is $18300 on a car like that. All prices without VAT and other fees. Shipping to Norway is also a significant cost..


The Model S is still selling very good in Norway after they lanched AWD, Norway has a lot of hills and snow, so AWD is very popular..

 

[matbl]

How is it a $15,000 discount?

The Model S50 is currently 466,200 krone which is $78,410. US price is $71,070, add a 20% VAT to get $85,284 which is only $6875 more than what the current price is...

Even if you take the P85D which is $105,670 in the US, it costs 683,000 krone which is $114,735. A 20% VAT on the US price is $126,804, which is only $12,069 more than the current price.

Ehm, what?
683000 NOK is with today's exchange rate ~90100 USD.
Your calculation seems to be based on a NOK/USD exchange rate of 5.95 which hasn't happened since early June. Current rate is about 7.58.

 

[Yggdrasill]

I don't think the money can realistically be used for expansion. If Tesla sells 4000 Model S/X in Norway in 2015, that's about 2.5-3 billion NOK, or 329-395 million USD (415-500 million USD a few months ago). How many superchargers would that pay for? How many service centers?

It may be that the effects can be mitigated to some extent with various tactics, but I think it's obvious that there will be a loss of revenue, unless Tesla increses the pricing. Increasing the pricing is not ideal, however, because the pricing is already right at the top of what very many people can afford. A 20% increase in price could halve sales.

 

[32no]

Ehm, what?
683000 NOK is with today's exchange rate ~90100 USD.
Your calculation seems to be based on a NOK/USD exchange rate of 5.95 which hasn't happened since early June. Current rate is about 7.58.

Yeah you're right. That's a $15,000 discount on the P85D before any other costs (including VAT)... That is pretty extreme, I hope Tesla does something about it...

 

[Robert.Boston]

You can't lose money on every sale but make it up in volume....

 

[Martini]

Does Tesla have a predictable pattern for timing of international price adjustments due to currency movements? That is, do they adjust quarterly or on any kind of schedule?

 

[Yggdrasill]

You can't lose money on every sale but make it up in volume....

Agree. But it isn't clear if Tesla is losing money at current prices in Norway. I hope that Tesla has managed to hedge against currency fluctuations to a sufficient degree.

If the pricing is adjusted up by 20%, even I would need to closely consider whether I would still buy a Model X. I might have to wait until a Model 3 crossover is for sale. (The only thing that might save me in the event of a 20% price hike is that I've hedged against the currency fluctuations by owning a significant amount of TSLA stock. But I'd need TSLA to be over 250 USD.)

 

[matbl]

Does Tesla have a predictable pattern for timing of international price adjustments due to currency movements? That is, do they adjust quarterly or on any kind of schedule?

No. My guess is that they do it when currency contracts expire. And no company details their currency contracts...