Musk only promised profit Q3/Q4 not Q2.
Q2 just have to show Tesla is hitting 5K/week on Model 3 and decent amount of Model 3 in transit for delivery.
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Q2 just have to show Tesla is hitting 5K/week on Model 3 and decent amount of Model 3 in transit for delivery.
If Elon no longer has any use for Wall Street, will he care if Q2 financials are worse than they would have been due to intentionally delayed deliveries until Q3 ? Other than the cost to store / buffer them (which is not insignificant), in the end, it should all come out "even". If anything it will make Q3 look better than it should ...
Waiting4M3
Active Member
Good point. The M3 stashed "in transit" will not affect cash balance. It will make the delivered vehicles much lower, causing lower gross margins. This actually makes more sense when I go back and re-read the Q1 investor letter:
"grow Model 3 gross margin from slightly negative in Q1 2018 to close to breakeven in Q2 and then to highly positive in Q3 and Q4"
My guess is that Q2 will see 35-40k M3 produced, compared with Q1's 9677, the margin should improve dramatically, so Tesla's wording "slightly negative in Q1 2018 to close to breakeven in Q2" never made sense. For example here is a rough mock up:
But if Tesla stashes 18k M3 in transit and deliver in Q3, it will look like this, which fits the close to breakeven Q2 margin:
RTPEV
Active Member
Absolutely correct. First of all, he tweeted as much that he didn't care about a particular quarter's results if it meant maximizing the tax credit for buyers:
Elon Musk on Twitter
Second, even the most anti-Tesla Wall Street types will see the "15,000 cars in transit" statement in their 2Q delivery report and realize exactly what's going on and know that the 3Q revenue will be all that much higher due to the large number of cars "in transit". 2Q would most likely be another net loss quarter anyway if they were going full steam ahead, so might as well put all your eggs in the 3Q basket AND eliminate the headwind vis a vis GM otherwise starting in 4Q18. It's not just an altruistic strategy for Tesla, but a sound business one.
Third: there is no parking lot crisis! I am sure that Tesla's strategy would be to get all those cars distributed to hubs very close to the end delivery centers. Sure, they may not fit in the parking lots of delivery centers themselves (I know the Raleigh one in particular, while capable of holding 30+ vehicles, only does so by cramming them in--although I think they could squeeze in another 15 or so behind the sales center; the Charlotte delivery (service) center is actually at an old car dealership so PLENTY of room to stash a lot of vehicles (I counted 265 spaces, not counting the aisles they could use if they had to, and still leaving room for employee and customer parking).
Yes, logistics wise, each delivery center might have to find and contract out a vacant lot and arrange for security, and then there is the matter of having to transport batches of vehicles, but spread out among all the delivery centers across US, the impact at each is manageable as opposed to trying to stockpile somewhere in the bay area. Plus all those cars will be all ready to go ASAP in July.
Actually, it does impact the cash balance. In Transit = $2500 per Model 3.
There's a staging/storage lot at Burbank Airport down in SoCal that has been spotted. Tesla definitely had plan and executed it.
Waiting4M3
Active Member
So the best case would be for Tesla to have those customers having finalized the order, and paid the $2500 before the end of the quarter, and for the cars to be delivered after the end of quarter. Then the $2500 will be on the balance sheet as customer deposit. I think this is feasible, you pay the $2500 once you finalize configuration, right?
Yes. It is also considered non-refundable. Maybe it ($1000+$2500) can be moved from customer deposit to AR? I am not sure how Tesla does it.
Hmmm, that would more than they delivered total to date before this quarter. Not sure it will be that many. Wishful thinking though. LOL
Take a short drive just south of the Fremont DC on Fremont blvd. Tesla appears to have leased some office buildings (really they leased them for the parking lots) to store cars for the DC. Every nook and cranny of this parking lot is filled with Model 3's. Google Maps
Reddy Kilowatt
Active Member
mekberg
Member
Have you watched the Now You Know videos of their Model 3 with snow tires? I don't think AWD is a requirement if you live in an area with decent plow coverage.
Reddy Kilowatt
Active Member
No I have not. Canada is great at snow removal. down south here we dont get enough snow for the plow gangs to get proficient at it. Plus we have so many foreigners who have never seen snow much less drive in it wrecking all over the place.
It's hard here but I went ahead and got the RWD, and hope for the best. I assume the weight will help a lot. No need to stick the bags of sand in the trunk.
Do you have a link to the video?
mekberg
Member
navguy12
Active Member
It's two reasons.
Number one, there is an excellent chance the Ontario $14,000 EV rebate disappears immediately after the 7th of June. No sunset period, just gone.
Number two, stereotypes aside, Canada has essentially an urban population. Roads get plowed and salted. Smart folks use good winter tires and common sense.
navguy12
Active Member
But do get good winter tires. At temps below 7C, they are worth the cost.....and you end up spreading tire wear over two sets of tires.No need to stick the bags of sand in the trunk.
davedavedave
Member
As an expat Canuck who's home is Virginia now... I just can't imagine winter tires here. . Last winter we had about an inch on the ground twice, for a total of male 8 hours before it melted. I hear you about the traction benefits even above freezing, but realize that it's also rare to find a stretch of open road around here and get over 100kmh for more than a click or two!
navguy12
Active Member
A buddy of mine lives down in Raleigh Durham and every winter he gets to live the one day (a year) when the whole town shuts down for an inch of snow
RedOctober
Member
I ran into 3 young men at a SC in Ontario the other day who informed me they were picking up their Model 3’s in Toronto next week. The southern part of Ontario doesn’t get much snow anymore so RWD will be good for those owners. Also, I wasn’t aware they were shutting down production again. That will fuel more comments about Tesla struggling.
Daliman
Member
In Toronto area the International Centre is being used for deliveries. 200-250 there today and multiple trucks unloading. Canada's time has come, hit the accelerator.
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