Actually i still did not make myself clear. Q1 was bad not because of low delivery like some people focused on, but the combination low delivery, no production growth and low ASP/margin of 3 and low delivery, low production and low ASP/margin of S/X.
For 3, delivery was not a major problem, the main negative effect to financials are just cash flow(too many cars in transition). Production growth is because of Panasonic slow corporate culture(compared to tesla). While we can sustain short term effect by holding, in the long term, tesla has to control the cell production to complete the real vertical integration. We can't imagine the blood of your production: cell, is out of control like this for the next phase of hyper growth. Low ASP/margin is the part I have serious problems with. On ASP tesla has direct control and it completely botched it in Q1. Some people claims the current price is their long time goal. Well, you do not sell laptop cheap in the 90s. You have to accumulate enough profit and reach enough production growth to finally decrease your price. You do not sell cheap when there is no production growth nor enough profit.
For S/X, delivery by itself was not a problem. There was a seasonal effect/tax credit cliff. They should start upgrading S/X at the beginning of Q1 so they won't have to concede the demand narrative to FUD. Well, if you say they had no immediate plan to upgrade S/X, then is it exactly the definition of bad planning? Low ASP was similar to 3 that exposed their lack of solid understanding of demand elasticity. I think some people on this message board have much better understand than the pricing/financing people at tesla. Because they claimed tesla could easily calculate the demand elasticity by using the data. Well, apparently, tesla either did not or could not.
I always admire the pace of innovation rooted in tesla culture and it is the foundation of my investment thesis. But you really need some experienced hands in the finance department. What I see is clear financial planning/execution failure. Back in December when the SP was $350+, tesla could have sell couple billion convertible bonds. Because let's be realistic, you need money to fund growth. Your free cash flow is not enough.(If it is enough at this stage, you grow to slowly)
BTW, I am really happy to see the first price increase of m3 today. If Elon believe FSD is near, you have to price your products according to it.
Ofcourse hindsight is 20/20 and all problems can be blamed on bad planning (I've seen teams do it in multiple companies over decades).
They did some unwinding of the wave in Q1 unwittingly, but this needs to be a commitment and they need to continue to work on it. For example in June they still need to continue sending cars to EU/China. If they don't do that, the wave will be back.
Ofcourse hindsight is 20/20 and all problems can be blamed on bad planning (I've seen teams do it in multiple companies over decades).
They did some unwinding of the wave in Q1 unwittingly, but this needs to be a commitment and they need to continue to work on it. For example in June they still need to continue sending cars to EU/China. If they don't do that, the wave will be back.
