If I had to guess whether Q1'20 will have more or less deliveries than Q4'19, I'd guess more, but I think it will be very close.
If I remember correctly, vehicles were sold out for 2019 quite early in a lot of markets (including US), so they should have a decent order backlog going into 2020. Order backlog also increased in both Q2 and Q3, and at the time of the Q3 call the order rate in Q4 was higher than at the same time in Q3. We don't have exact numbers here, and we don't know for sure what happened to the order backlog in Q4, but considering how many cars went to The Netherlands, I wouldn't be surprised if the total order backlog was still significant at the end of Q4.
Most importantly, I think Q1'19 is still too fresh in people's minds and everybody is too influenced by that. It was an extremely weird quarter where so many things happened:
- A huge cut in the US federal tax credit
- A lot of bad press and dropping SP
- A transitionary period from US M3 reservations to generating US organic demand. Q4'18 US M3 sales numbers were super bloated because of reservations.
- Start of international deliveries that caused huge logistics challenges
If one looks at other years, there were years with somewhat large drops like Q1'18 where S+X deliveries dropped by 23% (28,425 -> 21,815), but also
an increase in deliveries in Q1'17 (22,026 -> 25,915) due to the missed shipping deadlines in Q4'16 that resulted from introducing new autopilot hardware.
I don't think a whole lot can be learned about Q1 seasonality by studying Q1'19, because it was just too unusual, but judging from Q1'18 and Q1'17, I think a lot (maybe most) of the drop in deliveries can be attributed simply to selling inventory in Q4, and replenishing inventory in Q1.
Tesla actually produced more S+X in Q1'18 (24,728) than in Q4'17 (22,140), so in that specific year it was 100% due to changes in inventory.
We can of course expect Tesla to replenish inventory in Q1'20 as well, but apart from that I think they should be able to deliver nearly as many M3 as they can make. Order backlog and demand appear very strong, because they just increased prices for M3 twice in Q4'19, and I think the only market that is probably going to see a significant (temporary) sequential decrease in M3 demand is The Netherlands, although even there the tax credit is still significant. The "bijtelling" tax may have gone up from 4% to 8% for EVs, but it's 22% for normal cars, so the incentive is still very large.
Even if we assume a 23% drop in both MS+X and M3 deliveries like Q1'18 (but I expect M3 to be a lot less, because inventory replenishment should be less as a % of total sales), that'd leave us with ~15k MS+X deliveries and about 71k M3 deliveries,
for a total of 86k non-Giga 3 deliveries in Q1'20. But I think Tesla could surprise here because order backlog and demand appears to be very strong right now (price increases, and no discounting/incentives at all at end of last two quarters).
That just leaves Giga 3. I think we've seen enough signs that demand is going to be no problem. They should already have an order backlog into the tens of thousands. So that just leaves production. They've demonstrated production capability of 3k/week, although I doubt they'll sustain that throughout the quarter. They could, but I wouldn't count on it. I think it could be anywhere from 15k to 35k total in Q1 from Giga 3, so even on the very low end I'd expect
at least 100k total deliveries in Q1'20. On the high end, I could see them maybe doing
120-125k total deliveries in Q1'20. All in all, I think 110k is a pretty good over-under for Q1'20 deliveries.
Yes, RoW will drop a bit, but Giga 3 should (more than) make up for that in my opinion.
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