Is the third quarter push for deliveries really good for Tesla’s future?

[N5329K]

If you don't mind me asking what price did they offer you?

PM sent.
Robin

 

[3Victoria]

Production is ramping as planned and expected, and quality maintained. They sold off many or most of their demo and loaner cars, for discounts as expected, and which they need to refresh anyway. They will likely demonstrate a profitable quarter ... so much for the 'lose $ on every car' FUD. Its all good.

 

[flankspeed8]

I hold a Model 3 reservation, and received a call from the local store asking me if I was really, really sure I wanted a 3 when I could pick up an S this month. They offered me a 75 downrated to 60 in my color (exterior and interior) of choice, with all the bells and whistles (leather, a/p, etc etc) for just a 30% premium over what I expect to spend on the Model 3 in the summer of 2018, with very advantageous terms.
I was sure the Model S was too big to comfortably share my garage with the other cars (all family cars live in the garage...it's the law), and the "calculated fuel savings" estimate Tesla (mistakenly) includes in the final price bears no resemblance to my reality, but I have to admit I was (and still am) tempted.
If it worked on me it must be working on a whole bunch of people.
Robin

I think this is going to become more common the closer we get to the M3 launch and it is a win-win for both parties. Instead of of the EOQ rush and fire sales they should implement dynamic pricing towards the EOQ as that might be a little more orderly.

edit: where are you located. I am kind of surprised that I have not received a call yet. The S is a little to big for me and my garage so it is not as tempting, but if the price is right...

 

[3mp_kwh]

WRT:

• The EOQ push broke Tesla’s simple “no-discount” model. Discounts were everywhere. Now many potential buyers will just wait for EOQ discounts to get a good deal.

There's still only one apparent rule to any discounting that was witnessed. It was the (majority) reduction in the price of the $8,500 battery upgrade. That's it. I'll admit I was checking inventory every several hours, and saw each the sudden bump above 500 and just how suddenly 300+ cars vanished from the site. With almost no exception, that is the only specific discount beyond P90D that was being offered. It was a portion of the full $8,500, so they actually made more money on every converted "60" order. Well played.

So, I don't think Tesla has established a pattern of discounting even if technically they did it for a number of cars with sunk costs inside them (typically AP, "75"s). Otherwise, just like all along Tesla will keep enjoying their custom configuration customers. I think too many people of wealth hate going back and forth about this stuff, to save several thousand.

 

[bonaire]

Regarding inventory blow-out. Let's say selling an additional 2000 cars at $12k discount average. That is $24 Million revenues. To some big automakers, that's their ad-budget. Call it Q3 marketing - and who knows, maybe they will even put the discounts into a marketing financial bucket. Not a huge sum of discounting. And were the discounts to new names coming in, existing owners buying a 2nd for their family, early upgrade to P100D rather than wait out AP 2.0? Who knows. but it is added to the about 3000 overhang from Q2 to be a 5000 unit boost in Q3 that may not have happened without it. Could it cannibalize Q4? I think so - somewhat, maybe brought back 500 actual reservation holders into Q3. Maybe also brought in 1000 Model 3 reservationists to become MS 60 owners in Q3. All in all, a complex soup of issues.

I don't think it hurts Tesla but if the number is sub 24,000 it may hurt their chances of a large stock sale in Q4 because the street wanted to see a substantial unit-sale increase and ability to meet early year guidance of 50,000 in H2. If sales and active selling didn't make Q3 at lease nearly half of the guidance, they can continue to believe that Tesla offers "shoot for a bigger number than possible" guidance and may not offer the level of stock sale support. Then again, many of the investment bankers really just want to earn the fees for being a stock-runner for a short period of time and are not long-term investing. They want to sell those issued shares to the longer-term long-equity funds like T. Rowe Price, Fidelity and others, including (gulp) pension funds who put their pensioners' money on the line hoping and believing that the financials make sense to do so.

I think they had to do the firesale for Q3, though. Otherwise grand total unit sales may have only been 20,000-21,000 and that's well under half the H2 guidance.

And let's not forget that Elon Musk said they weren't going to be doing end of quarter pushes anymore. So you got that to think about too.

 

[N5329K]

I think this is going to become more common the closer we get to the M3 launch and it is a win-win for both parties. Instead of of the EOQ rush and fire sales they should implement dynamic pricing towards the EOQ as that might be a little more orderly.

edit: where are you located. I am kind of surprised that I have not received a call yet. The S is a little to big for me and my garage so it is not as tempting, but if the price is right...

On the Monterey Peninsula, in California.
Robin

 

[3mp_kwh]

Regarding inventory blow-out. Let's say selling an additional 2000 cars at $12k discount average. That is $24 Million revenues. To some big automakers, that's their ad-budget. Call it Q3 marketing - and who knows, maybe they will even put the discounts into a marketing financial bucket. Not a huge sum of discounting. And were the discounts to new names coming in, existing owners buying a 2nd for their family, early upgrade to P100D rather than wait out AP 2.0? Who knows. but it is added to the about 3000 overhang from Q2 to be a 5000 unit boost in Q3 that may not have happened without it. Could it cannibalize Q4? I think so - somewhat, maybe brought back 500 actual reservation holders into Q3. Maybe also brought in 1000 Model 3 reservationists to become MS 60 owners in Q3. All in all, a complex soup of issues.

Looks like some perfect fodder for Seeking Alpha. From where did we come up with this "$12k average discount"?