Short-Term TSLA Price Movements - 2016

[mmd]

I read the delivery note carefully. Here is the question I have.
18345 produced + 2615 en route at end of Q1 = 20960
14370 delivered + 5150 en route at end of Q2 = 19520
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Difference: 1440 . Where did these go?

 

[TSLADream]

I read the delivery note carefully. Here is the question I have.
18345 produced + 2615 en route at end of Q1 = 20960
14370 delivered + 5150 en route at end of Q2 = 19520
-----------------------------------------------------------------------------
Difference: 1440 . Where did these go?

Good question. Also what did they do for the first two months of the quarter as the report shows 50% of production happened in the last month. Something is not right. Did they count right?

 

[schonelucht]

Here's something else I can't explain away except as bad to worse : they delivered 14370 cars in Q2. 2615 of those were produced in Q1 and in transit at the start of the quarter so that gives us 11755 cars produced this quarter and delivered this quarter. Add in the 5150 cars that are in transit now. That gives us a number of 16905 cars produced this quarter for customers. Yet they produced 18345 cars! That means they added 1400 cars to their loaner/inventory fleet. That's strikes me as a very large number of cars that eventually will get sold at a big discount. Expect all kind of inventory items on the balance sheet to explode (at a financing cost of course)...

 

[NicoV]

a. Follow EU Market Situation and Outlook and Tesla Europe Registration Stats
b. It's in the shareholder letter : 15.5k (12.8k S/2.7k X)

Q1 15500 -> 1200/week
Q2 18345 -> 1400/week
Q3 starts at 2000, ends at 2200/week : 2100/week ->27300
Q4 starts at 2200, ends at 2300/week: 2300/week -> 29900

Q1+Q2+Q3 (est)+Q4 (est): 91045

So Tesla currently estimates to produce about 91K S+X in 2016. I'm happy with that.

The biggest risk of 2015/2016 is now behind us (the ramp of the Model X).
We also have a Model S refresh behind us. I would be very surprised if there was yet another refresh in 2016.
Q3 ->Q4 increase seems rather low (remember Q3->Q4 2015), but this may really be limited by capacity (Q1/Q2 was limited by productivity due to low Model X productivity).

Q3+Q4 estimated production is significantly higher than '50K produced and delivered in the second half'.
If production stays at the currently reported 2000/week for the rest of the year (that would probably be the first time in Tesla's history that H2 didn't grow beyond Q2's exit rate), that's still over 50K produced (most likely also delivered) in second half.

I have the feeling that 50K might be their low estimate for H2 2016.

 

[schonelucht]

@mmd you beat me to it! My guess is loaner/inventory fleet. Also, some of those deliveries may have been inventories produced quite some time ago, making the gap even bigger (but I don't think it's going to be a big effect, may 100 cars or so)

 

[anon]

At least one very positive take on the news: Tesla will make as many EVs in 6 months as it did in all of 2015

Perhaps the 2,400/week announcement will get better press coverage than we think? Even 2,000/week was always described as a stretch before and probably not achievable routinely, so this is really a big step up.

 

[anon]

One thing to remember when calculating annual numbers: I think there will probably be 1 week of downtime for maintenance in July and then of course Christmas+Thanksgiving gives almost 1 week of lost production in Q4. Having said that, perhaps some of the maintenance happened earlier this year during some downtime for Model X (following the back seat issue) and the Model S refresh - I see to remember reading on the forum that production had dramatically slowed at that time, although I can't find a good link just at the moment.

 

[mrdoubleb]

Estimated wait times.

Thought so... But looking at estimated wait times alone tells you nothing. Wait times != demand.

Wait times are, obviously, partially impacted by demand, but may also be a result of production batching, availability of parts, shipments of finished products in batches, etc. E.g. they produced 2x the number of S than X in Q2. So you could argue S production was 2x and wait times are still equal despite this fact, so S demand must have been 2x as well. Probably just as iffy of a deduction as yours.

But you could argue in the opposite direction as well. Tesla was saying in the Q1 ER, that "Q1 Model S net orders rose 45% compared to a year ago, ...and a more than 160% increase in orders from Asia compared to a year ago". So if wait times are equal, does that mean X net orders grew 45% and 160% as well? Maybe, maybe not.

I continue to argue that the surest way to scope demand is customer deposits in relation to deliveries. So if deposits grow that means demand is accelerating compared to production. If production is also accelerating that means demand is even growing faster than that. And the other way around as well... you get the idea. Of course, this is not a 100% perfect way either as Founders and Sig deposits can influence the drops and rises in deposits... but as those deliveries start to wind down, the total here will be a more and more accurate metric of demand.

 

[TSLADream]

I am not sure about Q3 but I am more optimistic for Q4 demand. Many of the Tesla admirers will be attracted by the low-priced Model S 60 option. Hopefully, Model S demand picks up in Q3 as well.

 

[flankspeed8]

I am not concerned. The bears were right on this one though. Enjoy the ride.

I would just challenge the premise that people who doubted the estimates are all bears. There was a lot of empirical evidence in the other threads, specifically the X forum that 6-7 months into production, they were still not delivering in a reliable manner. Even in the S forum, posts about longer delivery times were starting to occur. Even the Inside EV numbers showed a miss to be possible, but it was dismissed and attacked by some. It seems that anyone who questions this can be attacked as a bear or short seller. I hope that Tesla will start to offer more transparency on a more frequent basis so we don't have to live on a 3 month roller coaster. What do they have to fear by releasing MONTHLY delivery and production numbers?

 

[anon]

Here's something else I can't explain away except as bad to worse : they delivered 14370 cars in Q2. 2615 of those were produced in Q1 and in transit at the start of the quarter so that gives us 11755 cars produced this quarter and delivered this quarter. Add in the 5150 cars that are in transit now. That gives us a number of 16905 cars produced this quarter for customers. Yet they produced 18345 cars! That means they added 1400 cars to their loaner/inventory fleet. That's strikes me as a very large number of cars that eventually will get sold at a big discount. Expect all kind of inventory items on the balance sheet to explode (at a financing cost of course)...

This is interesting and another piece of unwelcome news. Remember though that they sold off a lot of the inventory fleet in the previous few months to try to make up delivery numbers in Q4 and Q1, so they ended up using CPO cars as inventory. They therefore needed to replenish the inventory and loaners again now with newer models. One other thing: they needed to send Model X display vehicles to all stores, along with refreshed Model S display vehicles. This would have been a non-negligible number of vehicles.

 

[Curt Renz]

Although if you read the article, they incorrectly suggest that MX deliveries in q2 were down on MX deliveries in q1.

Sigh

Also in need of correction:

Investors have taken a dim view of the company's prospects since it announced a deal to acquire SolarCity, another company founded by Musk. The news crushed the company's stock, which also took a hit after a driver perished behind the wheel of Tesla's self-driving Model S.

Actually, Tesla shares gained 2.0% on Friday following the Thursday post-market announcement of a driver perishing, and have nearly recouped the losses that followed the announcement of a SolarCity bid. Also, Autopilot does not truly mean fully self-driving (autonomous); that's still years away.

 

[NicoV]

This is interesting and another piece of unwelcome news. Remember though that they sold off a lot of the inventory fleet in the previous few months to try to make up delivery numbers in Q4 and Q1, so they ended up using CPO cars as inventory. They therefore needed to replenish the inventory and loaners again now with newer models. One other thing: they needed to send Model X display vehicles to all stores, along with refreshed Model S display vehicles. This would have been a non-negligible number of vehicles.

Selling their inventory in Q4 a few months before the Model S refresh seems to be the smart thing to do.

 

[schonelucht]

Good point on stocking stores with demo X cars. Could we ball park how many X demo cars the average American store has?

 

[Causalien]

We head to $150 until next quarter. If they try to close SCTY deal this quarter, it will fail due to doubt on execution. Which means that SCTY will need a bridge loan from someone to tied over for 2 more quarter. 1 quarter to wait out the hit on confidence (assuming Q3 will be good) and a second quarter to close the merger. I expect another loan from SpaceX.

 

[TSLADream]

I think we should be able to predict demand by new sign ups at TMC. Monthly active users etc. I can't imagine someone placing an order and not coming to TMC while still waiting for the car.

 

[TMSE]

Good point on stocking stores with demo X cars. Could we ball park how many X demo cars the average American store has?

There are about 250 Tesla retail and service locations around the world. Each retail location need one of each of S & X for display, and may be 2 of each for demo. So, about 6 for each retail location. Service locations may need about 4 to 6 loaner cars.

So, 1440 extra cars, if equally distributed, will amount to about 5 to 6 cars per location, which is reasonable.

 

[Papafox]

Model X backlog is barely bigger than model S backlog so I am certainly not as optimistic as Tesla management. Model S deliveries declined to a level last seen in the fourth quarter of 2014. It's quite clear that demand on the S stalled big time and that the 60kWh model was an emergency measure to pump demand up. My prediction is a big nose dive on the margins too. Not just in Q2 but also Q3 and Q4 since the 60 is going to need to take up a much bigger share of the sales then we anticipated. Sorry, but I will sell all my positions in Tesla and only buy in again after a huge adjustment.

Margin is affected by both the revenue and cost sides of the equation. Don't forget the cost advantage of producing large numbers of vehicles per week and having the assembly line running efficiently. Consider the difference between 14,xxx deliveries and 22,xxx deliveries in a quarter. You'll have a margin hit for some 75kwh batteries sold at 60kwh prices, but the overall effect in 3Q and 4Q could be positive.

 

[maoing]

We should trust the European delivery numbers more. It's the only solid information that we had that was consistently under performing during the quarter. You can find my questions about why they were not improving all over the relevant thread. Unfortunately my own bias wanting to see something positive prevented me from drawing the right conclusion.

Thanks for your EU number analysis. I sold almost my remaining shares on Friday by figuring out weak EU sales doesn't bode well for Q2 number, but didn't expect so bad though.

 

[schonelucht]

There are about 250 Tesla retail and service locations around the world. Each retail location need one of each of S & X for display, and may be 2 of each for demo. So, about 6 for each retail location. Service locations may need about 4 to 6 loaner cars.

So, 1440 extra cars, if equally distributed, will amount to about 5 to 6 cars per location, which is reasonable.

Not sure if I understand you correctly, but this quarter saw an addition of 1400 cars to the loaner/inventory fleet. I don't think that's reasonable?