EU Market Situation and Outlook

[schonelucht]

From http://money.cnn.com/2015/01/13/autos/elon-musk-china-sales-charging/index.html?source=yahoo_quote (warning video autoplays)

Despite the drop in sales Musk seemed unfazed, saying that Tesla sales were "surprisingly excellent" in Europe, more than making up for the dip in China.

What are we missing here? Europe registrations are not knocking it out of the ball park as far as we can see. Is this a statement about sales going forward in '15 Q1? About D or X model uptake? Or rather how they expected a drop in Europe with the rise of the dollar and the surprise is how well sales are holding up? All in all, good news about Europe (certainly better than I would have predicted) and looking forward how this plays out over the next months.

 

[uselesslogin]

From http://money.cnn.com/2015/01/13/autos/elon-musk-china-sales-charging/index.html?source=yahoo_quote (warning video autoplays)



What are we missing here? Europe registrations are not knocking it out of the ball park as far as we can see. Is this a statement about sales going forward in '15 Q1? About D or X model uptake? Or rather how they expected a drop in Europe with the rise of the dollar and the surprise is how well sales are holding up? All in all, good news about Europe (certainly better than I would have predicted) and looking forward how this plays out over the next months.

I think it is a statement on booked orders in Q4 and therefore they would be reflected in Q1 deliveries and registrations.

 

[bh1783]

Well they also ban motorcycles from highways in Korea (not that anyone follows it). They actually have signs on the highway that ban electric vehicles.

 

[Ingenieur]

From http://money.cnn.com/2015/01/13/autos/elon-musk-china-sales-charging/index.html?source=yahoo_quote (warning video autoplays)



What are we missing here? Europe registrations are not knocking it out of the ball park as far as we can see. Is this a statement about sales going forward in '15 Q1? About D or X model uptake? Or rather how they expected a drop in Europe with the rise of the dollar and the surprise is how well sales are holding up? All in all, good news about Europe (certainly better than I would have predicted) and looking forward how this plays out over the next months.

European sales were ca. 9500 in 2014.

1800-1900- Q3, ca. 2300 in Q4, so H2 is down more then 20%, mostly due to Norway though. I see 2015 same level of ca. 10k with growth in other markets making up for Norway decrease. Ok but nothing to write home about

 

[smac]

View attachment 68510

I've verified the numbers which also have 2014 deliveries, but some countries haven't specified smaller companies.

477 have been registered in the UK as at end of September (474 left on the road). Complete 2014 figures will probably be out next month, but are only broken down by quarter)

TESLA MODEL S - How Many Left?

I was a reservation holder and got my car in Q3 for the purpose of the stats.

 

[jhm]

Given that the Swiss franc is no longer pegged to the euro, do we see any issues for Tesla? Specifically with the decline of the euro against the US dollar, I am wondering if Tesla will have raise euro denominated prices. It seems Tesla could maybe get away with not raising prices for a while, but now with the Swiss franc gaining substantially on the euro, it seems this exposes Tesla to arbitrage. One could buy a Model S in euros in a neighboring country, export to Switzerland and pocket the difference between francs and euros. Is this much of a concern?

 

[chillong]

Given that the Swiss franc is no longer pegged to the euro, do we see any issues for Tesla? Specifically with the decline of the euro against the US dollar, I am wondering if Tesla will have raise euro denominated prices. It seems Tesla could maybe get away with not raising prices for a while, but now with the Swiss franc gaining substantially on the euro, it seems this exposes Tesla to arbitrage. One could buy a Model S in euros in a neighboring country, export to Switzerland and pocket the difference between francs and euros. Is this much of a concern?

Well, first of all its not very easy to just buy a car in Germany and then sell it in Switzerland, especially not a brand like Tesla where buyers expect hassle free service etc. Second, Tesla will get more from their CHF sales (not that they are that many) so probably they will adjust the CHF prices at some point and this arbitrage is no more.

 

[Auzie]

Given that the Swiss franc is no longer pegged to the euro, do we see any issues for Tesla? Specifically with the decline of the euro against the US dollar, I am wondering if Tesla will have raise euro denominated prices. It seems Tesla could maybe get away with not raising prices for a while, but now with the Swiss franc gaining substantially on the euro, it seems this exposes Tesla to arbitrage. One could buy a Model S in euros in a neighboring country, export to Switzerland and pocket the difference between francs and euros. Is this much of a concern?

I have concerns about macroeconomic outlook in Eu zone. The sales of Tesla cars, being high-end market, are sensitive to prevailing economic climate. It is not clear yet how Eurozone developments will unfold, but signs are not encouraging.

 

[maoing]

I echo that. With strong US dollar, demand uncertainty from Europe and China, I hardly imagine Elon will give bold 2015 guidance.

I have concerns about macroeconomic outlook in Eu zone. The sales of Tesla cars, being high-end market, are sensitive to prevailing economic climate. It is not clear yet how Eurozone developments will unfold, but signs are not encouraging.

 

[Auzie]

I echo that. With strong US dollar, demand uncertainty from Europe and China, I hardly imagine Elon will give bold 2015 guidance.

The situation in Eurozone could go either way. Central Bank will start buying bonds, that may help if they pull it right. Low oil prices certainly help. Even potential Greece's exit from Eurozone may turn out for the good.

My expectation for Tesla's sales in both European markets and China markets is an increase in sales, simply on the back of increasing awareness of car superior technology.

It is difficult (perhaps impossible) for anyone, including Elon, to predict the future demand. He may be able to comment on the current order rate being higher than the current production rate.

 

[maoing]

I have no objection of sales increase. The uncertainty is if the increase will be 50% or more?

The situation in Eurozone could go either way. Central Bank will start buying bonds, that may help if they pull it right. Low oil prices certainly help. Even potential Greece's exit from Eurozone may turn out for the good.

My expectation for Tesla's sales in both European markets and Chinese markets is an increase in sales, simply on the back of increasing awareness of car superior technology.

 

[Auzie]

I have no objection of sales increase. The uncertainty is if the increase will be 50% or more?

Welcome to the guessing game of investing :smile:

It is difficult (perhaps impossible) for anyone, including Elon, to predict the future demand. He may be able to comment on the current order rate being higher than the current production rate.

 

[jhm]

It's not really predicting demand. It's about creating demand. New features like D and Autopilot build demand. Better charging infrastructure like adding supercharges and destination charging build demand. Expanding into new markets builds demand. Marketing new products like the Model X builds demand. Better sales experiences like shortening the wait time for delivery builds demand. Always doing right by the customer builds demand. Tesla is actually very good at building demand. Where they are most challenged is in scaling up production fast enough. It will be an awful long time before Tesla runs out of huge opportunities to create new demand. They've got a $2 trillion auto market to address and have only tapped about $3.3 billion. Moreover, their core technology have many other nonautomtive markets to address like commercial trucking, construction equipment, aviation, and stationary energy storage. If you're worried about whether you can make accurate demand predictions, you're thinking way too small. Look to the opportunities to address and create new demand.

 

[Auzie]

The situation in Eurozone could go either way. Central Bank will start buying bonds, that may help if they pull it right. Low oil prices certainly help. Even potential Greece's exit from Eurozone may turn out for the good.

My expectation for Tesla's sales in both European markets and China markets is an increase in sales, simply on the back of increasing awareness of car superior technology.

It is difficult (perhaps impossible) for anyone, including Elon, to predict the future demand. He may be able to comment on the current order rate being higher than the current production rate.

It's not really predicting demand. It's about creating demand. New features like D and Autopilot build demand. Better charging infrastructure like adding supercharges and destination charging build demand. Expanding into new markets builds demand. Marketing new products like the Model X builds demand. Better sales experiences like shortening the wait time for delivery builds demand. Always doing right by the customer builds demand. Tesla is actually very good at building demand. Where they are most challenged is in scaling up production fast enough. It will be an awful long time before Tesla runs out of huge opportunities to create new demand. They've got a $2 trillion auto market to address and have only tapped about $3.3 billion. Moreover, their core technology have many other nonautomtive markets to address like commercial trucking, construction equipment, aviation, and stationary energy storage. If you're worried about whether you can make accurate demand predictions, you're thinking way too small. Look to the opportunities to address and create new demand.

jhm, I think we agree, you call it building demand by adding features etc, I call it selling on the back of superior car technology

 

[jhm]

jhm, I think we agree, you call it building demand by adding features etc, I call it selling on the back of superior car technology

Absolutely. Moreover, this technology will also drive down cost over time to the point where Tesla has an absolute cost advantage over any ICE technology. So in strictly economic terms EVs will come to dominate the auto market and likewise battery packs in the other markets I mentioned. So in the near term Tesla competes on superior technology and in the longterm on lower cost if necessary.

 

[Alfred]

jhm, I think we agree, you call it building demand by adding features etc, I call it selling on the back of superior car technology

Correct, but there are also limitations. In much of Europe, particularly in the South, markets for large cars are limited. Sales have to be made by winning market share in a relatively small slice of the total market and this will slow penetration.

I just watched a few days ago someone giving up trying to park a Range Rover in a Zurich parking and a driver damaging his Mercedes E when hitting border stones in the same place. Most private and public parkings were just not built for cars wider than about 1.8m without mirrors. Only a few public parkings built recently are comfortably negotiable with large cars in Zurich. When talking to prospective owners, this is the most frequently raised issue.

 

[schonelucht]

The situation in Eurozone could go either way. Central Bank will start buying bonds, that may help if they pull it right. Low oil prices certainly help. Even potential Greece's exit from Eurozone may turn out for the good.

I think whatever increase in lending supply and consumer spending the bond buyback program will have, is largely offset by the fall of the EUR on the short term with regards to sales of Tesla cars. Therefore I expect lackluster numbers in continental Europa for 2015. Two exceptions : UK and obviously Switzerland since of yesterday. On the other hand, Elon's remark about Europe holding up surprisingly well is a counterpoint to my view.

For the medium term (2016 and beyond) policy on incentives may be key. I expect the Netherlands to have a less generous offering by then and Germany possibly to introduce some incentives as soon as the large German car makers have a better portofolio of full electric cars.

 

[Ingenieur]

I think whatever increase in lending supply and consumer spending the bond buyback program will have, is largely offset by the fall of the EUR on the short term with regards to sales of Tesla cars. Therefore I expect lackluster numbers in continental Europa for 2015. Two exceptions : UK and obviously Switzerland since of yesterday. On the other hand, Elon's remark about Europe holding up surprisingly well is a counterpoint to my view.

For the medium term (2016 and beyond) policy on incentives may be key. I expect the Netherlands to have a less generous offering by then and Germany possibly to introduce some incentives as soon as the large German car makers have a better portofolio of full electric cars.

The problem with new German EV law is that it basicly defines EV as everything with plug (correct me if am wrong but that is my impression), so a 15 Miles S-Class with Plug gets treated same as BEV.

There will be tons of PHEV whose plugs will remain virgin im afraid

 

[Auzie]

Correct, but there are also limitations. In much of Europe, particularly in the South, markets for large cars are limited. Sales have to be made by winning market share in a relatively small slice of the total market and this will slow penetration.

I just watched a few days ago someone giving up trying to park a Range Rover in a Zurich parking and a driver damaging his Mercedes E when hitting border stones in the same place. Most private and public parkings were just not built for cars wider than about 1.8m without mirrors. Only a few public parkings built recently are comfortably negotiable with large cars in Zurich. When talking to prospective owners, this is the most frequently raised issue.

I agree about the size of model S not being a fit for some market segments. That is certainly a deal breaker for me. Model 3 may be a better fit, 20% smaller, but we have to see it first.

 

[VolkerP]

Economic woes in EU don't seem to pan out as expected. Germany achieved 1.5% growth and a balanced budget, first time since 1961 (i.e. Kennedy).
Whereever Model S sales numbers go from the current 800 per year, it doesn't make a big dent in Tesla's balance sheet.

Model 3 will be very appealing to the European market. But as soon as BEV technology is cheaper than ICE technology, it will be a race for the cheapest source of battery cell in large numbers. It will compare to the race of DRAM memory chip producers: You will have a short period to reap your investment, before competition builds an even larger factory and lowers production cost further.
Tesla is one giga factory in the lead.