Tesla’s Production outlook for Q2 ??

[FloridaJohn]

It's not that hard to stockpile a few thousand extra cars, and it's even easier to ship them.

By June, a few thousand cars will be less than a week of production. I think they would have to stockpile 10,000 cars or more to delay delivery of number 200k until July.

I really hope I’m wrong, but I am skeptical this will work out to everyone's benefit. I think financial pressures on Tesla are stronger than their desire to delay the end of the full credit.

 

[ChrisH]

People have waited over two years. They aren’t going to cancel if they have to wait a few extra weeks.

 

[dhanson865]

By June, a few thousand cars will be less than a week of production. I think they would have to stockpile 10,000 cars or more to delay delivery of number 200k until July.

You took me too literally on "a few thousand cars"

5,000 cars, 10,000 cars, 15,000 cars, 20,000 cars it's all a few thousand cars in the grand scale of things.

They have to ship cars at that scale no matter what, it isn't impossible to or an unmanageable burden to not give them to customers for a couple of weeks.

In a recent month Ford sold 68,243 F-150 trucks, that's about 30 days supply for them. It's common for dealerships to be holding 75 days supply so there are hundreds of thousands of F-150s sitting around waiting to be sold and or shipping around from place to place. And that's only one model. Ford has a wider selection than that.

look at the top selling list from that month (US sales not world sales)

• Ford F - Series PU 68,243 (best selling vehicle)
• Chevrolet Silverado PU 42,282
• Nissan Rogue 38,119 (best selling SUV)
• Dodge Ram PU 33,299
• Toyota Camry 30,865 (best selling Sedan)
• Toyota RAV4 29,867
• Honda CR-V 25,852
• Honda Civic 25,816
• Chevrolet Equinox 24,053
• Toyota Corolla / Matrix 23,535
• Ford Escape 21,033
• Ford Explorer 20,860
• Honda Accord 19,753
• Nissan Altima 19,703
• Jeep Grand Cherokee 17,468
• Nissan Sentra 17,148
• Toyota Tacoma PU 16,817
• Ford Fusion 16,721
• Dodge Caravan 16,443 (best selling mini van)

anything on that list has more cars sitting around or in shipment than we are talking about for Tesla to hold back for a couple of weeks. When a new model year comes out something on that list that sold 15,000 to 20,000 in a month they are shipping out 3 to 4 times that many cars to stock the dealerships. Easily stockpiling tens of thousands of new cars all over the country times dozens if not hundreds of types of cars.

Now look at it clumped for just Ford or just Toyota

• Ford F - Series PU 68,243 (best selling vehicle)
• Ford Escape 21,033
• Ford Explorer 20,860
• Ford Fusion 16,721

• Toyota Camry 30,865 (best selling Sedan)
• Toyota RAV4 29,867
• Toyota Corolla / Matrix 23,535
• Toyota Tacoma PU 16,817

Both manufacturers/dealerships have to deal with more than 4 car types, this is just the top 4 for each. But still it dwarfs the numbers we are talking about.

Tesla has the means they just do it the same as anyone else would and they only have to worry about stock piling one specific car, the S and X they can make to order and clear the lots.

 

[ℬête Noire]

So do you think that Tesla might open up the configuration of AWD during Q2 with the statement that AWD will not be delivered until later in Q3. Then work to figure out how to roll the line to AWD and back to RWD during Q2 when they are OK to shut the line down for days at a time.

Then they can burst high volume deliveries of RWD July 1 and follow with high volume deliveries of AWD after that.

Curious, is it confirmed they can't run both AWD & RWD out of production at the same time in a ratio split like happens at some other automaker plants? For example my Bolt came out of a mix production facility shared with Sonics, because it's the same basic body.

Those are actually a lot different from each other compared to AWD<->RWD M3. We know the RWD & AWD share the same frame and basically the same harness. There's a cavity there in the RWD variant ready for the front transaxle. It only requires the extra high voltage lines (which have channels already in the frame to them), whatever control wiring harness, and a change in the bottom parts for the front suspension assembly.

 

[ℬête Noire]

Yes, I fully agree with your statement.

Right now I see no new invites. I am afraid that points to not ramping up deliveries. It is apparent to me that we have a lot of risk that Tesla will have greater problems getting through Q2.

We will just have to watch and see what happens.

I'm not as concerned about this. The reasons are:
1) the more deferrals they have built up, the more straggler configurations they'll get out of the deferral pool. So this could easily be a slow wave build-up that they didn't initially anticipate, and so had gotten a bit ahead of where they wanted to be on the invites.
2) They might also be adjusting their buffers around this, to avoid having too many deferrals outstanding that they could get swamped if there is a run an configurations when they announce AWD pricing (which I expect will be happening soon) and then open AWD configuration.
3) They seem to have sent a lot of invites Canada last week, they might be looking to see how that's shaking out first?

 

[ℬête Noire]

I think financial pressures on Tesla are stronger than their desire to delay the end of the full credit.

What financial pressure matters a week or two in when they get maybe $20mil in sales on the books? They've got credit line to absorb that sort of bump, especially if it's a planned bump rather than unplanned where they'd have a bunch of 3rd party supplies coming in with no cars to put them in to get sales to cover the invoice from the 3rd party.

 

[DanL3]

Curious, is it confirmed they can't run both AWD & RWD out of production at the same time in a ratio split like happens at some other automaker plants?

I am sure they can and will run both AWD and RWD on the same line. When they start AWD it will cause some confusion and problems at first and therefore slow down the line. Then need to fix those problems and smooth it out before doing it in high volume, In the end they may run AWD and RWD at the same time or they may run one option on Monday and the other on Tuesday. It ultimately does not matter the plan they choose. What matters is that they practice the plan and get it running smoothly so that they can deliver as many cars as possible during the $7500 rebate quarters.

By the way. this same discussion is true for the SR cars. What matters is that they can deliver as many cars as possible during the $7500 and later rebate quarters.

 

[ℬête Noire]

I am sure they can and will run both AWD and RWD on the same line. When they start AWD it will cause some confusion and problems at first and therefore slow down the line. Then need to fix those problems and smooth it out before doing it in high volume, In the end they may run AWD and RWD at the same time or they may run one option on Monday and the other on Tuesday. It ultimately does not matter the plan they choose. What matters is that they practice the plan and get it running smoothly so that they can deliver as many cars as possible during the $7500 rebate quarters.

Ah, yeah that makes sense. I read it more as they'd do a significant length switch to AWD (week/weeks). Totally agree that taking the [inevitable] production delay hit in Q2 to work out those kinks prior to the start of Q3 seems like exactly the plan.

Running full days of one or the other may give them enough granularity to adjust to order demand smoothly.

By the way. this same discussion is true for the SR cars. What matters is that they can deliver as many cars as possible during the $7500 and later rebate quarters.

SR is going to be a bit stickier wicket as their current plant is to add the first ones of those in late Q4, right in the middle of the year-end (and hopefully end-of-$7500) push.

 

[DanL3]

SR is going to be a bit stickier wicket as their current plant is to add the first ones of those in late Q4, right in the middle of the year-end (and hopefully end-of-$7500) push.

I would expect SR in 2019 Q1. Remember that they are behind now on the 2500/week and did not push out the SR I expect they will be very busy making all the LRs they can in Q4.

 

[ℬête Noire]

I would expect SR in 2019 Q1. Remember that they are behind now on the 2500/week and did not push out the SR I expect they will be very busy making all the LRs they can in Q4.

I do wonder if they'll have separate, relatively dedicated streams at the Gigafactory for SR and LR packs. How different their layouts are inside, how much turn-around it is to switch from one to the other. 50% more capacity using the same cells is going to look different, it's a matter of 2/3 of the LR looks almost exactly like the SR and the rest is basically empty space in the SR OR they have a lot of non-overlap.

Ultimately I expect down the road they'll end up with 3:2 sales mix of SR:LR. They might be leering of over-commitment on LR? So would want to avoid bringing production up to the full 8k/week M3 target using only LR.

Also, depending on rate of deferral conversion to LR-AWD sales, and also how well they can hit sustained production in Q3/Q4, they might actually be getting near the end of "1st production" variant demand from US reservations near the end of this year.

 

[FloridaJohn]

You took me too literally on "a few thousand cars"

5,000 cars, 10,000 cars, 15,000 cars, 20,000 cars it's all a few thousand cars in the grand scale of things.

They have to ship cars at that scale no matter what, it isn't impossible to or an unmanageable burden to not give them to customers for a couple of weeks.

In a recent month Ford sold 68,243 F-150 trucks, that's about 30 days supply for them. It's common for dealerships to be holding 75 days supply so there are hundreds of thousands of F-150s sitting around waiting to be sold and or shipping around from place to place. And that's only one model. Ford has a wider selection than that.

Sorry for taking you at your word. I'll try harder next time.

Even still, it is a lot harder for Tesla to stockpile cars than it is for Ford.

There is a little difference between Ford, for example, and Tesla. The number one difference is that when Ford ships a car/truck to a dealership, it is considered "sold," since the dealerships are actually purchasing the vehicles from Ford. Tesla, on the other hand, owns those cars until they reach the customer's hands.

Another difference is that there is currently only 74 Tesla Service Centers. If they were to stockpile 68,000 cars, that would mean 919 or so cars that need to be parked somewhere at each service center. Ford, on the other hand, has 3,000 dealerships. They would only have to park about 23 cars at each dealership to stockpile the same 68,000 cars.

So Tesla would have a much more difficult time finding a place for those cars, and they have to take the financial hit directly for doing so, unlike Ford who can count those cars sold and stick the dealerships with the inventory. Of course, each dealership is stuck with a lot less inventory anyway.

 

[FloridaJohn]

OK, I have run some numbers and I can come up with a scenario where they can build around 20k Model 3s this quarter and still stay under the 200k mark. I think it will take some luck and planning to make it happen though.

By my calculations, I think we only have around 21,000 cars left to be sold in the US until we hit 200k. The Model 3 ramp is going to have to be as slow as possible to 5,000/week to hit that. And they have to export nearly all the S & X cars built this quarter, and send a bunch of the Model 3s built to Canada. But there is a somewhat reasonable path to make that happen.

If they are making more than 3,000/week by the end of April it is much harder to do, though.

 

[Moderatefan]

And they have to export nearly all the S & X cars built this quarter

This is not going to happen. They are not that well financially and profit from S/X is likely higher. So, they will sell all of them to any willing buyers. If U.S. sales are to stay below 200K, it will happen due to optimizing M3 sales.

 

[ℬête Noire]

This is not going to happen. They are not that well financially and profit from S/X is likely higher. So, they will sell all of them to any willing buyers. If U.S. sales are to stay below 200K, it will happen due to optimizing M3 sales.

They won't move all sales outside the US but wait times have been increasing for S & X, suggesting sales demand is outstripping their current production capabilities. That means they can shift more than usual overseas this Q without losing sales and sitting on inventory.

 

[Moderatefan]

without losing sales and sitting on inventory.

Why would they sit on inventory if you claim they can't produce enough to satisfy demand? If I order S/X right now the delivery is June, i.e. +2-3 months. Anybody who already ordered in the last 2 months should get theirs w/o delay. I'd be pissed if I was S/X buyer and they added 3 months to my previous delivery estimate just so that other people can save money on M3. So, however many already ordered, they are getting theirs in Q2 and some future orders as well.

 

[ℬête Noire]

Why would they sit on inventory if you claim they can't produce enough to satisfy demand?

"....without losing sales and without sitting on inventory." If that more verbose wording makes the intended meaning clearer?

If I order S/X right now the delivery is June, i.e. +2-3 months. Anybody who already ordered in the last 2 months should get theirs w/o delay.

You assume this hasn't been planned? They made the choice about the Canada diversion a long time back, at least as far back as late Feb when the Delivery Estimator page dates were moved. If they started weighting S & X orders towards non-US then, and "June delivery" (which has been a thing for a while IIRC) is actually "June 31st delivery"? That's consistent with such a strategy, right?

 

[Moderatefan]

"....without losing sales and without sitting on inventory." If that more verbose wording makes the intended meaning clearer?
You assume this hasn't been planned? They made the choice about the Canada diversion a long time back, at least as far back as late Feb when the Delivery Estimator page dates were moved. If they started weighting S & X orders towards non-US then, and "June delivery" (which has been a thing for a while IIRC) is actually "June 31st delivery"? That's consistent with such a strategy, right?

Ok, so we're talking about U.S. buyers of S/X being discriminated against, with overseas deliveries happening much quicker and U.S. buyers sitting in line waiting for Q3? I don't believe this. First of all, they may lose U.S. sales if buyers decide they don't want to wait that long and buy another brand car. Secondly, overseas deliveries for today's order are also estimated to be in June/July.

I really see no reason to risk S/X sales, which bring in more cash when the same can be done with M3 - just send them to Canada, Mexico etc. and stage some extras on the parking lots across the country for July 1.

 

[ℬête Noire]

Ok, so we're talking about U.S. buyers of S/X being discriminated against...

 

[Weezer Fan]

So, I got my invite to configure my Model 3 today!!!!! Non-owner, line waiter on 3/31 in Denver. I would really like the AWD, but do not want to loose $3750 AND pay $4-5K more for the car. So, I have read every entry on this thread. Here is what concerns me: There are thousands of people who got their configure emails before I did and decided to wait for AWD. So, just because AWD is released, doesn't mean my order will make it under the wire. I also worry that my RWD could get pushed back, if my order is placed after AWD is released. However, it snowed today and I had to drive 40 minutes downtown. (Sucked for Rockies home opener BTW). I thought, "I really want AWD". I don't want to mess with switching tires out 2x a year. But, this car is already stretching my budget.

Wondering how long I can wait to make my decision?

 

[Howdus]

You took me too literally on "a few thousand cars"

5,000 cars, 10,000 cars, 15,000 cars, 20,000 cars it's all a few thousand cars in the grand scale of things.

They have to ship cars at that scale no matter what, it isn't impossible to or an unmanageable burden to not give them to customers for a couple of weeks.

In a recent month Ford sold 68,243 F-150 trucks, that's about 30 days supply for them. It's common for dealerships to be holding 75 days supply so there are hundreds of thousands of F-150s sitting around waiting to be sold and or shipping around from place to place. And that's only one model. Ford has a wider selection than that.

look at the top selling list from that month (US sales not world sales)

• Ford F - Series PU 68,243 (best selling vehicle)
• Chevrolet Silverado PU 42,282
• Nissan Rogue 38,119 (best selling SUV)
• Dodge Ram PU 33,299
• Toyota Camry 30,865 (best selling Sedan)
• Toyota RAV4 29,867
• Honda CR-V 25,852
• Honda Civic 25,816
• Chevrolet Equinox 24,053
• Toyota Corolla / Matrix 23,535
• Ford Escape 21,033
• Ford Explorer 20,860
• Honda Accord 19,753
• Nissan Altima 19,703
• Jeep Grand Cherokee 17,468
• Nissan Sentra 17,148
• Toyota Tacoma PU 16,817
• Ford Fusion 16,721
• Dodge Caravan 16,443 (best selling mini van)

anything on that list has more cars sitting around or in shipment than we are talking about for Tesla to hold back for a couple of weeks. When a new model year comes out something on that list that sold 15,000 to 20,000 in a month they are shipping out 3 to 4 times that many cars to stock the dealerships. Easily stockpiling tens of thousands of new cars all over the country times dozens if not hundreds of types of cars.

Now look at it clumped for just Ford or just Toyota

• Ford F - Series PU 68,243 (best selling vehicle)
• Ford Escape 21,033
• Ford Explorer 20,860
• Ford Fusion 16,721

• Toyota Camry 30,865 (best selling Sedan)
• Toyota RAV4 29,867
• Toyota Corolla / Matrix 23,535
• Toyota Tacoma PU 16,817

Both manufacturers/dealerships have to deal with more than 4 car types, this is just the top 4 for each. But still it dwarfs the numbers we are talking about.

Tesla has the means they just do it the same as anyone else would and they only have to worry about stock piling one specific car, the S and X they can make to order and clear the lots.

But these companies had years to develope their dealer networks. Tesla won't let their delivery centers sit idle with nothing to do and find a place to store these cars.