Short-Term TSLA Price Movements - 2015

[mitch672]

My 12V battery alerted me it was on the way out yesterday morning, so I called Tesla Watertown MA service center and went in this morning to get it changed out.

What surprised me was, I was almost unable to navigate from the entrance to where you park. The place is jammed up with Model S's awaiting to be delivered... Not only was every parking space taken, cars where lined up side by side in the areas normally used to back out or in of the spaces.. must have been well over 100 Model S's on the property. I asked them about it, "end of month deliveries". so there is a concerted effort to get as many as possible delivered by March 31st (end of quarter). while I was waiting, a delivery was done.. FYI, this was at 11AM on a Saturday. all techs where working, looked like a normal Monday-Friday workday.

 

[Auzie]

Agree. Those so called pent up demand often skewed the real average demand, so it's no surprise to see California/Norway demand declined YoY after initial new model launch. The similar thing happened on China and the pent up demand lasted even shorter time period. For 2015, my personal worry is where the 50% growth comes from? I don't expect 50% growth from California and Norway because they are already "saturated" compared to other markets. I think 50% growth is a bold prediction from Elon, the end results all depend on how well the under penetrated markets ramping up? How well the new SW features can stimulate the demand? How well the sales team work on that goal? How well the X release not canniblize S demand? IMO, it's not an assured growth as Elon stated. Investors should not take that for granted.

I am also concerned about 50% growth with S only. It is very US-centric car and the most of the demand in 2015 is likely to come from US, driven by D. I am not convinced that Cal, Norway or any other market is saturated, it is not saturated for as long as ICE cars in Tesla's price range and above are selling in these markets.

Tesla team just needs to find creative ways to sell more cars. That might be an easier task amongst all the tasks that they have already completed.

2015 might be choppy.

 

[maoing]

That's good news to antipicate a Q1 beat.

My 12V battery alerted me it was on the way out yesterday morning, so I called Tesla Watertown MA service center and went in this morning to get it changed out.

What surprised me was, I was almost unable to navigate from the entrance to where you park. The place is jammed up with Model S's awaiting to be delivered... Not only was every parking space taken, cars where lined up side by side in the areas normally used to back out or in of the spaces.. must have been well over 100 Model S's on the property. I asked them about it, "end of month deliveries". so there is a concerted effort to get as many as possible delivered by March 31st (end of quarter). while I was waiting, a delivery was done.. FYI, this was at 11AM on a Saturday. all techs where working, looked like a normal Monday-Friday workday.

 

[Papafox]

Agree. Those so called pent up demand often skewed the real average demand, so it's no surprise to see California/Norway demand declined YoY after initial new model launch. The similar thing happened on China and the pent up demand lasted even shorter time period. For 2015, my personal worry is where the 50% growth comes from? I don't expect 50% growth from California and Norway because they are already "saturated" compared to other markets. I think 50% growth is a bold prediction from Elon, the end results all depend on how well the under penetrated markets ramping up? How well the new SW features can stimulate the demand? How well the sales team work on that goal? How well the X release not canniblize S demand? IMO, it's not an assured growth as Elon stated. Investors should not take that for granted.

- - - Updated - - -



When the wait time was more than a quarter, it's hard to conclude. But current wait time shrinked to less than 3 months, it's true to california because it's close to factory and convenient for delivery. Say all the 2014 Q3 orders delivered in Q4 plus some extra P85D orders made right in Q4. So using Q4 delivery number to conclude Q3 demand can only be overestimate instead of underestimate.

Should Tesla have a problem with demand, they can do what every other auto manufacturer does: advertise. The reason you see no advertising is because it's not needed at present. Tesla has every incentive to advertise instead of idling workers if a demand issue presents itself, and I see no advertising being done. China wasn't a case of a mature market. It was a case of speculators giving an inaccurate impression of demand in that country. As you know, Tesla believes the problem is related to perceptions about ease of charging and is working on this issue, with statements that progress is being made.

Take a look at Hawaii as a mature market. Hawaii may well have a higher percentage of Tesla owners than any state on a per capita basis. At a Honolulu car show last week, Tesla was mobbed. I walked through the ten or so cars in the Honda section, it looked like a ghost town, and with a single Model S in the Tesla section Honolulu's two sales employees were swamped. Fortunately, Tesla owners showed up and pitched in, but they were swamped, too. My point is that Hawaii has excellent Model S penetration already and yet the show proved that there's significant demand still out there.

 

[Auzie]

There is a lot of speculation on waning demand in some markets, I thought the issue deserves more clarity.

Demand vs Deliveries in 6 Tesla markets, mathematical presentation, simple logic.

Definitions of markets
Total Market = North America without Cal + Cal + Europe without Norway + Norway + Oceania without China + China = M1 + M2 + M3 + M4 + M5 + M6


Demands in respective 6 markets

Total Demand = D1 + D2 + D3 + D4 + D5 + D6
All D1 to D6 are unknown variables


Total Production gets arbitrarily split into Deliveries into 6 markets

Total Production = Del1 + Del2 + Del3 + Del4 + Del5 + Del6
All Production and Del1 to Del6 are known variables


Scenario: Total Demand > Total Production

(D1 + D2 + D3 + D4 + D5 + D6) > (Del1 + Del2 + Del3 + Del4 + Del5 + Del6)

And that is all we know.

There is no way to deduce values of 6 unknown Demand variables based on known Delivery variables as we do not have sufficient number of defined relationships between the unknown and known variables.

Tesla arbitrarily prioritizes deliveries to some markets as they see fit, to best optimize their production and shipment schedules.

Only when we start getting inventories in some markets we may be able to calculate the Demand in such market:

Dn = Deln - Inventory

This scenario is highly unlikely as Tesla will not ship to any market without orders. Inventory is likely to stay in Fremont.

Scenario of saturated demands:

Total Production = (Del1 + Del2 + Del3 + Del4 + Del5 + Del6) + Inventory = (D1 + D2 + D3 + D4 + D5 + D6) + Inventory

Short presentation:

Production - Inventory = Delivery = Demand

It follows that only when we see Inventory at Fremont we may be able to say that all 6 markets are saturated at the current demand.

It is difficult to say anything about demand in any single market before we get inventories as there is no visibility.

Demand is not fixed, it is dynamic and can be changed.

The current China situation suggests some inventory in that market, hence China demand speculations may be well placed and that market needs to be developed. That inventory possibly could have been absorbed in one of the other markets, but was shipped to China due to management missteps.

 

[FANGO]

My 12V battery alerted me it was on the way out yesterday morning, so I called Tesla Watertown MA service center and went in this morning to get it changed out.

What surprised me was, I was almost unable to navigate from the entrance to where you park. The place is jammed up with Model S's awaiting to be delivered... Not only was every parking space taken, cars where lined up side by side in the areas normally used to back out or in of the spaces.. must have been well over 100 Model S's on the property. I asked them about it, "end of month deliveries". so there is a concerted effort to get as many as possible delivered by March 31st (end of quarter). while I was waiting, a delivery was done.. FYI, this was at 11AM on a Saturday. all techs where working, looked like a normal Monday-Friday workday.

This is normal tesla behavior. They're usually there on Saturdays anyway, and EOQ there are often lots of deliveries scheduled. It doesn't necessarily mean a beat or no beat. Though there was a lot less of an EOQ rush last quarter, which I think just means everyone knew they were far from meeting goals.

 

[Matias]

Tesla Model S, Nissan LEAF, BMW i3 Top US Electric Car Sales In February | CleanTechnica

February 2015 U.S. sales 2000, February 2014 1800? Where does the 50% growth come from?

 

[Drax7]

Tesla Model S, Nissan LEAF, BMW i3 Top US Electric Car Sales In February | CleanTechnica

February 2015 U.S. sales 2000, February 2014 1800? Where does the 50% growth come from?

New car sales are over 75 million cars per year if I remember, and tesla can't sell 55,000 cars per year.? Sales anxiety is the new range anxiety. When elon says sales will be around 55,000 I take him at his word. And if tesla could produce more they would sell more. The performance and quality of the car are unique and superb, and every car sold basically adds a new sales person
to the team, and that keeps growing .

 

[Matias]

That really doesn't answer the question. U.S. is not growing at 50% rate, Europe is not growing at 50% rate, China is not growing at 50% rate. So where does the 50% growth come from? I present this question in good faith.

 

[EnergyMax]

That really doesn't answer the question. U.S. is not growing at 50% rate, Europe is not growing at 50% rate, China is not growing at 50% rate. So where does the 50% growth come from? I present this question in good faith.

Tesla is production constrained. Also, Tesla reported they would be able to remove some of those constraints beginning in Q2 '15, as Q2 and Q3 is when sales will be sloping up again.

 

[Matias]

OTOH, if demand grows 50% YoY, one would expect delivery times to grow?

 

[dha]

OTOH, if demand grows 50% YoY, one would expect delivery times to grow?

not if production is ramping 50% YOY

 

[Matias]

not if production is ramping 50% YOY

And that returns us to the first question. Deliveries are not growing 50% YoY, so something doesn't hold water.

 

[EnergyMax]

And that returns us to the first question. Deliveries are not growing 50% YoY, so something doesn't hold water.

Presumably, Tesla factors in their production ramp when estimating deliveries.

 

[maoing]

Tesla not resorting for traditional advertise doesn't mean it's not advertising. Elon's tweets is much better than multi-million dollar budget commercial. Also the demand issue is not lacking absolute demand, it's kind of softer demand than Elon's anticipation, i.e. 50% minimum YoY growth for S. So far Tesla still maintains 2-3 months wait time, so it can still claims that demand outspace production. But once Tesla using advertisement, then it actually confesses that demand isn't that rosy than Elon's prediction official rather than the speculation here and there.

Should Tesla have a problem with demand, they can do what every other auto manufacturer does: advertise. The reason you see no advertising is because it's not needed at present. Tesla has every incentive to advertise instead of idling workers if a demand issue presents itself, and I see no advertising being done. China wasn't a case of a mature market. It was a case of speculators giving an inaccurate impression of demand in that country. As you know, Tesla believes the problem is related to perceptions about ease of charging and is working on this issue, with statements that progress is being made.

- - - Updated - - -

Q1,Q2 production rate stays flat with Q4, but wait time reduced. That would make Tesla hesitate to ramp up production in 1st half of 2015 before X debut, otherwise the wait time would be further reduced.

Presumably, Tesla factors in their production ramp when estimating deliveries.

 

[FredTMC]

Elon's "secret weapon" for demand has yet to be revealed. Per last EC, he said sometime this year

Bottom line regarding demand is that we have NO idea what their current demand is and what their current production rate is at (until they report it).

All these industry reports of sales per month in certain geographies are inaccurate. They really don't know.

 

[Johan]

I'm thinking maybe the secret weapon is the X. Secret in the sense that it will contain some truly innovative features that will make it highly desirable.

 

[maoing]

agree or disagree. If X is truely amazing, then it'll generate a lot of demand for X, but it'll canniblize S demand at the same time. The real challenge is Q3/Q4 which shoould deliver at least 33K cars per guidance, X prodution will be ramping up, what if S demand is not sufficient to saturate the production capacity?

I'm thinking maybe the secret weapon is the X. Secret in the sense that it will contain some truly innovative features that will make it highly desirable.

 

[dmunjal]

New car sales are over 75 million cars per year if I remember, and tesla can't sell 55,000 cars per year.? Sales anxiety is the new range anxiety. When elon says sales will be around 55,000 I take him at his word. And if tesla could produce more they would sell more. The performance and quality of the car are unique and superb, and every car sold basically adds a new sales person
to the team, and that keeps growing .

That's not a fair comparison. What is the market for $100k cars worldwide? A fraction of that 75 million.

 

[Phil Seastrand]

Tesla not resorting for traditional advertise doesn't mean it's not advertising. Elon's tweets is much better than multi-million dollar budget commercial.

But Twitter doesn't reach people that aren't following Tesla. Advertising is beneficial to attract new buyers, and we don't see any of that yet.