Near-future quarterly financial projections

[EinSV]

More signs of a strong Q1 from Electrek, which is reporting that Tesla North America has delivery targets that match Q4 2019.

With China production and sales on the rise, Europe sold out and a significant number of Ys being delivered, I expect record deliveries for Q1, barring major interruptions at the end of the quarter. Even if coronavirus disrupts deliveries in some regions, IMO we're still likely to exceed current pessimistic market consensus by a large margin.

h/t @KarenRei

Tesla Cybertruck is already boosting sales, keeping momentum without tax credit - Electrek

What’s the objective evidence for “black swan” Q1 deliveries?

Two months into the quarter I see:

• No material price reductions
• Low inventory worldwide
• No material Fremont production shutdowns except at beginning of January (please lmk if I missed any)
• Guidance that MY production would not impact M3 production
• Record deliveries in China in January for 1st month of quarter
• Strong European incentives and demand for EVs, especially in UK, France, Germany — three largest European car markets
  
• Model 3 new orders shifted to May delivery throughout Europe and Asia relatively early in quarter — “sold out” for Q1 outside NA
• Likely increasing China deliveries through end of Q1 as GF Shanghai ramps
• Small but larger than expected contribution from Model Y deliveries

Looks to me that a record delivery quarter is much more likely than a “black swan” quarter.

Most likely scenario IMO is a surprise to the upside on deliveries.

 

[gerebgraus]

More signs of a strong Q1 from Electrek, which is reporting that Tesla North America has delivery targets that match Q4 2019.

With China production and sales on the rise, Europe sold out and a significant number of Ys being delivered, I expect record deliveries for Q1, barring major interruptions at the end of the quarter. Even if coronavirus disrupts deliveries in some regions, IMO we're still likely to exceed current pessimistic market consensus by a large margin.

h/t @KarenRei

Tesla Cybertruck is already boosting sales, keeping momentum without tax credit - Electrek

Could we stop this wrong info. " Europe sold out" is. Go e.g. New & Used Electric Cars | Tesla and you will see some unsold inventory car. If you switch to other European countries you will see something similar. The number of these inventory cars will skyrocket by the 20th. when deliveries arrive with many yet unsold mostly higher end inventory cars. The fact that you cannot order with guaranteed delivery this quarter does not mean that it is "sold out".

 

[thx1139]

What is the expectation of Q1 deliveries?

Q1 2019 was 77K production and 63K deliveries
Q4 was 105K production and 112K deliveries.
<1000 China produced and delivered
Do we have delivery numbers by region?

I would expect Q1 deliveries to be higher in regions outside US simply because there are more and Q1 2019 was 1st time Tesla delivered so many outside of the US and they simply are better at it logistically now. China also should be higher with the production facility in Shanghai even with the Coronavirus shutdown for a couple of weeks.

So you add in Model Y launch in March that should be just gravy.

 

[EinSV]

Could we stop this wrong info. " Europe sold out" is. Go e.g. New & Used Electric Cars | Tesla and you will see some unsold inventory car. If you switch to other European countries you will see something similar. The number of these inventory cars will skyrocket by the 20th. when deliveries arrive with many yet unsold mostly higher end inventory cars. The fact that you cannot order with guaranteed delivery this quarter does not mean that it is "sold out".

I don't think it's "wrong info" although we may disagree on semantics.

If Tesla had doubts that they could sell the cars on the way to Europe it's highly unlikely they would have switched expected deliveries to May from March so early, as that discourages customers who want faster delivery from ordering.

Feel free to disagree but IMO they are clearly signaling they expect to sell essentially everything they have shipped to Europe this quarter (esp Model 3s). Some will be sold out of inventory v. through the pre-order process.

 

[The Accountant]

OK, I started a poll on Twitter. You can find it here.

Hi Troy @Troy
I don't have a Twitter account and thus cannot ask you there.
You mention in a recent post that Shanghai was closed from Jan 24 to Feb 19.
There have been discussions on this board that the factory re-opened on Feb 10th with all lines working and up to 2,000 employees.
What is your source for the Feb 19 re-opening date?
Thanks

 

[Thekiwi]

What do you guys think about the delivery numbers & earnings this year, if CV-19 outbreak leads to large scale shutdown of society in EU and US ? It is starting to look like a "black swan" event to me.

I would be more worried in the short term if we didn’t have Shanghai pumping out MIC 3s & the model Y starting US deliveries, which should alleviate impact somewhat of any near term slowdown of S/X/3 in EU & US. Biggest issue would be a shutdown of Fremont and/or Nevada factories due to risk of staff getting CV, but that would only be temporary.

It’s already had some impact in Q1 (less China output in Feb than planned) so there is some impact already on revenue & earnings.

I do think the odds of a “large scale shutdown of society in EU/US” is very unlikely, but certainly there can be some large economic disruptions coming from a big drop in travel & any activity involving being around large groups of people.

 

[gerebgraus]

I don't think it's "wrong info" although we may disagree on semantics.

If Tesla had doubts that they could sell the cars on the way to Europe it's highly unlikely they would have switched expected deliveries to May from March so early, as that discourages customers who want faster delivery from ordering.

Feel free to disagree but IMO they are clearly signaling they expect to sell essentially everything they have shipped to Europe this quarter (esp Model 3s). Some will be sold out of inventory v. through the pre-order process.

I am sorry but "expect to sell essentially everything they have shipped to Europe" (and I agree with that) and "sold out" is not the same thing. It is a different statement.

 

[Doggydogworld]

What is the expectation of Q1 deliveries?

Q1 2019 was 77K production and 63K deliveries
Q4 was 105K production and 112K deliveries.
<1000 China produced and delivered
Do we have delivery numbers by region?

I would expect Q1 deliveries to be higher in regions outside US simply because there are more and Q1 2019 was 1st time Tesla delivered so many outside of the US and they simply are better at it logistically now. China also should be higher with the production facility in Shanghai even with the Coronavirus shutdown for a couple of weeks.

So you add in Model Y launch in March that should be just gravy.

I expect 93k deliveries in Q1:
Model 3/Y
24k Europe
34k US
10k China
10k ROW
--------
78k Total

Plus 15k S/X. I may be a little low in the US. China, as always, is a black box.

 

[dc_h]

Q4 was 105K production and 112K deliveries.

I think production will be 112 and deliveries 105, just to be symmetric. +5000 Model Y, + 8000 MIC 3, minus 3000 Fremont 3 and minus 3000 SX.
ASP will be higher in Q1, but adding inventory instead of depleting hits cash flow by 400 million, but not profit so much.

 

[mrdoubleb]

So I think it`s too early to call Europe right now. January was as OK, but normally we would have expected a mid-February pick-up as the first ships arrive. As many have noted, shipments started later than last quarter and we are still collecting official February registration data. I think we should have a better idea by the end of this week. On the other hand, 7 ships were sent to Europe (Q4 had 8), so if they can pull off March deliveries, we may not be too far behind last quarter, but 1 ship could be as much as 3-4.5k cars. (Of course we don`t know how many cars were on those 7 ships, though Troy is doing some math with # of loading/unloading days data).

Long story short, the only thing we do know right now is that in the 3 countries where we have near real-time data (Netherlands, Norway, Spain) registrations are 10% of what they were same time last quarter. I would not panic because of that though, as anecdotal evidence (Twitter pictures from delivery centers) suggest Germany is picking up nicely and as I said March could be bigger than ever due to a ~2 week delay in shipments compared to Q4.

Honestly, in terms of the SP this all may be irrelevant. I highly doubt we will surpass Q4 global totals, but that was never a realistic expectation as Q1 is traditionally the weakest in the car business. We will definitely surpass Q1 2019 which was really low. If Troy is right, anything in the 95-100k range would be awesome in my book for any Q1. However this will surely be framed in the media as a sequential decline of ~15% even if that is a false narrative.

PS: Of course, Model Y ramp could surprise on the positive side, while Corona could have a bigger impact than we expect.

 

[ReflexFunds]

I expect 93k deliveries in Q1:
Model 3/Y
24k Europe
34k US
10k China
10k ROW
--------
78k Total

Plus 15k S/X. I may be a little low in the US. China, as always, is a black box.

So far I am leaning towards total Q1 deliveries (3,Y, S &X) of:
North America: 59k (flat QoQ supported by Y and stock wealth)
EU: 29k (-20% QoQ all due to Holland tax driven timing)
Asia: 18k (flat QoQ)

Total: 106k

North America likely to be lower if supply chain disruptions in China impacted Fremont production during Q1. Asia could be higher if cell supply and other suppliers ramp in March at GF3.

I think consensus is likely around 100k.

 

[Fact Checking]

Could we stop this wrong info. " Europe sold out" is. Go e.g. New & Used Electric Cars | Tesla and you will see some unsold inventory car.

Can you see more than a couple of hundred inventory units?

That would mean 97% of the cars on ships (25,000+) are sold, and the new car configurator was rightfully switched to May delivery two weeks ago, right?

So while technically there's always going to be residual inventory due to the very heterogeneous and geographically dispersed European Union, I think it's fair to call 90%+ inventory depletion three weeks into February an effectively "sold out" quarter, right?

 

[gerebgraus]

Can you see more than a couple of hundred inventory units?

That would mean 97% of the cars on ships (25,000+) are sold, and the new car configurator was rightfully switched to May delivery two weeks ago, right?

So while technically there's always going to be residual inventory due to the very heterogeneous and geographically dispersed European Union, I think it's fair to call 90%+ inventory depletion three weeks into February an effectively "sold out" quarter, right?

Sold out means that you no longer can buy the car. That is not essentially true now, but it is totally false.
The configurator switched to May when production for European deliveries was completed. That does not tell me the level of unsold inventory that went to the ships and I am unable to guess how Tesla optimized it. It looks to me that Tesla with Model 3-s are supply constrained although not as much as it was last quarter. We know what happened last quarter. Last quarter at this point Tesla shipments covered all existing orders and a lot of high end, long range and performance models. So the Model SR+ -s were essentially sold out. There were plenty of long range models that were essentially sold out by the end of quarter. Performance models were not sold out even at the very end of the year. It is possible that again standard range is essentially sold out and there are and will remain plenty higher end models. (This was true in North America as well by the way with the twist that at the end in California there were unsold performance models and unhappy SR+ custormers who were promised, but not received their car by the end of the year.) If I really wanted to guess I think that levels of inventory will be slightly higher, i.e. healthier. It is good to have some inventory. Some customers will not wait for months for their car, so if there is no inventory that sale is lost.
Bottom line: The fact that you cannot order in Europe with guaranteed delivery just means that production in the quarter for Europe has ended. It is unrelated to the fact about the percentage of yet unsold inventory on the ships. The more supply-constrained Tesla is the more they steer customers to higher ASP and profit cars by filling up inventory with these cars. I do not have sufficient information about the Model 3 order level, or Tesla's optimization to allocate battery cells between Model 3 and Y to guess the percentage. For Q1 profit/loss this has significance because if influences the ASP of the cars.

 

[Troy]

Here is where I'm at currently. I will update this on 11 March.

48K USA
6K Canada
28K Europe
11K China
4K Rest of APAC
97K Total

 

[Svetlin]

Here is where I'm at currently. I will update this on 11 March.

48K USA
6K Canada
28K Europe
11K China
4K Rest of APAC
97K Total

Could the 4k Rest of APAC be a bit too low with 2 ships to S. Korea and 1 ship to Taiwan that have plenty of time to unload and deliver? Plus maybe some containers to Australia, NZ, Japan?

 

[Fact Checking]

Sold out means that you no longer can buy the car. That is not essentially true now, but it is totally false.
The configurator switched to May when production for European deliveries was completed.

Sorry, but this is a 100% misunderstanding of Tesla's batch building process and their inventory management strategy.

They don't build to order Model 3's anymore - haven't for over a year. They have significantly reduced the number of configuration options, so they can send cars when they are not sold yet.

The configurator switching to May means that all generic inventory in Europe or on the way to Europe was sold. Since Tesla knows consumer preferences and take rates pretty well, my guess is that there's less than 10% residual inventory left.

 

[gerebgraus]

Sorry, but this is a 100% misunderstanding of Tesla's batch building process and their inventory management strategy.

They don't build to order Model 3's anymore - haven't for over a year. They have significantly reduced the number of configuration options, so they can send cars when they are not sold yet.

The configurator switching to May means that all generic inventory in Europe or on the way to Europe was sold. Since Tesla knows consumer preferences and take rates pretty well, my guess is that there's less than 10% residual inventory left.

sorry, but this is a 100% misunderstanding of Tesla's batch building. They definitely take into consideration the existing orders when they design the batches.

 

[Fact Checking]

sorry, but this is a 100% misunderstanding of Tesla's batch building. They definitely take into consideration the existing orders when they design the batches.

Of course, which what I wrote: they take customer preferences into account, which obviously includes pending orders - but they send inventory before it's sold.

That the configurator switches to next quarter while barely any of the ships have arrived strongly signals that most of that inventory is sold.

If it wasn't, if there was still plenty of generic inventory on the ships with all possible configurations present and weighted by popularity in Europe, they'd still be keeping the configurator open, as they'd be able to meet any new order with their existing inventory.

 

[Fact Checking]

sorry, but this is a 100% misunderstanding of Tesla's batch building. They definitely take into consideration the existing orders when they design the batches.

Sorry about my snippy reply, let me try this again:

• After 12 months of European Model 3 sales Tesla probably has a pretty good understanding of future orders and the configuration mix in particular.
• There's 3 main variants (SR+, AWD, P), 5 colors, two interiors. (Wheels can be swapped at delivery centers I believe.) That's 30 variants - but about 10 probably represent 90% of the orders: white interior is geography dependent, Performance is maybe 5% take-rate, white is the most popular (and least expensive) color.
• This means that Tesla probably can, with pretty high confidence, estimate the quarter's remaining new orders and put such cars on the ships - in addition to already ordered cars of course.
• This means that they can run the configurator after the last ship has left, up until the point some major configuration variant is entirely depleted - say white SR+.

Do you have a different mental picture of their inventory allocation system?

 

[gerebgraus]

Sorry about my snippy reply, let me try this again:

• After 12 months of European Model 3 sales Tesla has a pretty good understanding of future orders and the configuration mix in particular.
• There's 3 main variants (SR+, AWD, P), 5 colors, two interiors. (Wheels can be swapped at delivery centers I believe.) That's 30 variants - but about 10 probably represent 90% of the orders: white interior is geography dependent, Performance is maybe 5% take-rate, white is the most popular (and least expensive color).
• This means that Tesla can, with pretty high confidence, estimate the quarter's remaining new orders and put such cars on the ships - in addition to already ordered cars of course.
• This means that they can run the configurator after the last ship has left, up until the point some major configuration variant is entirely depleted - say white SR+.

No problem. The reason they do not run the configurator after the last ship has left because they do optimize the yet unsold inventories not just based on their best prediction for future orders but also for optimizing Tesla's financial interest. E.g. last quarter that we understand pretty well they have shipped the SR+ -s that had already been ordered and the inventories were higher end.
They could have stated that SR+ -s cannot be ordered, but that was not their choice. Both last quarter and this quarter they cut off delivery promise for the quarter roughly at the time of the last batches. Also the cars are likely batched together by delivery centers at the shipment to minimize logistics cost. 30 configurations are still too big numbers to send a multiples of each to all delivery centers.
Otherwise i do not really think we disagree.