Q4 2017 Shareholder Letter

[ConcordeSST]

I just read through the Q4 2017 shareholder letter, and I noticed an interesting phrase on page 5:

"With demand outpacing production, we plan to optimize the options mix in order to maximize gross margin."

This implies to me that they plan to focus on higher margin configurations. Do people think this was in reference to the S and X only, or is this possibly a sign that they intend to prioritize Model 3 Long Range with PUP over the Short Range? It makes me wonder if there is some truth to the belief that those wanting LR or AWD will possibly receive their vehicles before those opting for the base SR model despite being behind them in the queue.

Thoughts?

 

[ℬête Noire]

They are already doing that with LR, the question is really for how much longer. It will be interesting to see if they do it with AWD at all, effectively cutting back or stalling RWD orders when AWD comes online.

 

[eSpiritIV]

I really hope the next round is NOT AWD with PUP and LR.

I only want AWD SR and maybe PUP

 

[ℬête Noire]

I really hope the next round is NOT AWD with PUP and LR.

I only want AWD SR and maybe PUP

On the "self interest" front, for my own vehicle if it meant getting it earlier:
- wife demands PUP
- I demand LR
- I would entertain a $3500 AWD option (and the buy it I suspect), below would be an automatic buy, above would be a Deep Think

 

[206er]

I really hope the next round is NOT AWD with PUP and LR.

I only want AWD SR and maybe PUP

It would be equally frustrating and hilarious if they decided to put off the SR in favor of offering what could be a $60-70k version of their "affordable" car.

Still waiting, less patiently than ever, for the affordable version of this car to emerge...

I only want a base SR to buy, but would be interested in a higher priced version if they were to unveil a competitive leasing program.

 

[crmatson]

I'll take AWD + PUP + LR as soon as possible please.
Heated steering wheel would be great too

 

[crmatson]

Agree that it would be nice to deliver a $35,000 version as advertised soon as well.

 

[ConcordeSST]

Agree that it would be nice to deliver a $35,000 version as advertised soon as well.

I'm wondering if they'll deliver the 35K version as advertised to meet their stated goals on paper, but then trickle it out with much longer delivery estimates versus those who opt for higher optioned vehicles.

 

[smak]

I just read through the Q4 2017 shareholder letter, and I noticed an interesting phrase on page 5:

"With demand outpacing production, we plan to optimize the options mix in order to maximize gross margin."

This implies to me that they plan to focus on higher margin configurations. Do people think this was in reference to the S and X only, or is this possibly a sign that they intend to prioritize Model 3 Long Range with PUP over the Short Range? It makes me wonder if there is some truth to the belief that those wanting LR or AWD will possibly receive their vehicles before those opting for the base SR model despite being behind them in the queue.

Thoughts?

This is for S/X.

 

[gregincal]

Do people think this was in reference to the S and X only

I think that statement in the letter was in reference to the X and S only.

 

[smak]

We know that, because optimizing the mix of model 3 would LOWER the price.

2 of the 3 remaining major options are lowering the price.

So if it were about Model 3 it would be NOT optimizing the mix.

 

[electracity]

I really hope the next round is NOT AWD with PUP and LR.

I only want AWD SR and maybe PUP

There may never be AWD with SR.

 

[ℬête Noire]

We know that, because optimizing the mix of model 3 would LOWER the price.

2 of the 3 remaining major options are lowering the price.

So if it were about Model 3 it would be NOT optimizing the mix.

Do we know what the gross margin is on on Model 3 (with LR and PUP)?

 

[ℬête Noire]

There may never be AWD with SR.

Pretty sure the configurator leak implied it was to be an option?

 

[SMAlset]

Conference call starts in a few minutes. ( ir.tesla.com -- you'll need to sign in for the audio). Thanks @ConcordeSST for linking to the letter.

 

[electracity]

Conference call starts in a few minutes. .......

I tune in for the highly compressed classical music.

 

[P85Dave]

I just read through the Q4 2017 shareholder letter, and I noticed an interesting phrase on page 5:

"With demand outpacing production, we plan to optimize the options mix in order to maximize gross margin."

This implies to me that they plan to focus on higher margin configurations. Do people think this was in reference to the S and X only, or is this possibly a sign that they intend to prioritize Model 3 Long Range with PUP over the Short Range? It makes me wonder if there is some truth to the belief that those wanting LR or AWD will possibly receive their vehicles before those opting for the base SR model despite being behind them in the queue.

Thoughts?

No one should be surprised when they release a Model 3 with Performance + AWD for a very significant premium with delivery in a month from or two from when the order is placed with no other requirements such as an existing reservation or current Tesla ownership. Tesla has always delivered higher margin models with a higher priority and it would be very silly of them not to do so.

I am happy with whatever helps them increase revenue/income as that will help them with the Model 3 ramp and other products.

 

[stevezzzz]

There may never be AWD with SR.

The Model 3 Delivery Estimator (for those of us current owners with first-day reservations) still shows Dual Motor AWD with a choice of LR or SR battery packs, and a Jul-Sep 2018 delivery window. I think there would be a huge outcry if they were to take the SR pack off the table entirely. But it wouldn't surprise me if those who order AWD with the LR pack get their cars earlier in the delivery window than those who order AWD and the SR pack.

 

[McRat]

I think they should deliver the most profitable version they can configure. Which will probably be the 3LRD w/PUP w/AP2. Forcing FSD would probably not be wise, and could cause problems. It's one thing to allow people to purchase an option that isn't available yet, it's another thing to make it 'standard' equipment to complete the sale.

Then as sales taper, move down the price range. They can sell all the $70k Model 3's they can build at this stage of the game.

Personally, I'd prefer a 3LR RWD with no PUP but with AP2, but if all there is available is a fully trimmed car, I'll take it. I doubt I'm alone in the 'load it up if necessary' crowd.

IMO, it is important for Tesla to stop bleeding cash.

 

[Moderatefan]

Is it correct there was no info on the current production rate or total for Jan?