TSLA Market Action: 2018 Investor Roundtable

[abasile]

I've been slowly accumulating shares over the last couple of weeks, as I had previously sold a fraction of my shares in late October at just over $325 and another batch of shares early this month at $362. I've bought back the majority, and currently have no plans to sell. (FWIW, in recent years, I've never sold more than a total of about a third of my TSLA shares, but I'm not above trimming my "oversized" position if I think it makes sense.)

Had a limit order to buy at $325 today, but it doesn't look like it'll be executing.

While it would have been great to see every single Model 3 sold out in Q4, with demand well above supply, I'm also happy that virtually every American who is prepared to buy one of Tesla's current models and take the full $7500 credit is able to do so. Kudos to Tesla's production teams for making this happen! I do expect that US demand will be low in Q1, but with untapped international markets and potential demand levers for the US, this should not be material to Tesla's future.

 

[Sudre]

I don't know if it's been mentioned but if Tesla only had 100 sales locations in the USA would that not mean there are only an average of 30 cars at each store?
Are there not over 200 locations in the US?

I don't even think that is the case. If Tesla only had 100 sales location then that number could simply be the number of cars on trucks going to stores.

You would also have to subtract out the 800-1000 cars coming off the assembly line today or is Fremont closed today?

To add to that simply add up how many cars you think Tesla could have built in Q4. Add the number of cars going to customers at the end of Q3. Then subtract the 3000 inventory cars. That's a really solid number of cars sold this quarter. To me that gives a minimum of 63K sold.

 

[kyzhk]

Checked out one of the Paramus NJ storage lots. They did sell about 15 since I checked a few days ago, still have about 40ish left. Lots of dual motor. Store was busy but nothing like Q3. They still had a Model S and 3 in the showroom for sale

How do you know if there were no new shipment between then and now?

 

[elasalle]

EM tweeted this link in the past hr:
US Tesla Stores and Galleries Special Hours

So safe to assume only these have inventory ...

 

[Zaxxon]

Yeah Fred's at it again. He presents it as a "I'm just telling you info" story, but really where is the story? Why is it newsworthy? Yawn.

Clicks. And it's certainly being used by those with bearish views, such as this guy who constantly posts negative trash about Tesla on a Volvo forum I frequent..

I guess my point was that it is not bad. This is another ridiculous Tesla being held to a different standard item. Any other auto manufacturer would be thrilled to have so little inventory. Three days of production in inventory is nothing. As you rightfully point out, there are many possible reasons why there is inventory. Just very frustrating at times how absurd the info cycle is on Tesla, and how items that would not even be reported for other car manufacturers become breaking news for Tesla. Oh well, just another “normal” day for Tesla I guess.

As a matter of fact, I was at my Volvo dealer today to have a software update applied (required for a safety recall). Aside from wondering why at the end of 2018 I have to come in for a software update to a connected car, I was taken aback by the fact that this Volvo dealer's lot was full of unsold vehicles! Further, there appeared to be no massive effort to unload every last car so as to avoid negative press about disappearing demand for Volvo vehicles. /s

As far as Fred's "3 days of inventory" - that is easy to explain.

Besides trying to close as many Tesla sales in Q4 as possible, the company is producing as many vehicles as they possibly can in Q4.

Indeed. A side effect of attempting to ensure that every American buyer who is prepared to purchase a Tesla by 12/31 can do so is necessarily overproducing. (Or accepting that you will leave willing buyers out there with no car.) When Tesla began pushing the idea that they're going to get anyone who wants a car in 2018 into a vehicle by 12/31, then if you took them at their word it became a guaranteed outcome that there would be unsold inventory across Tesla's store footprint.

Something I forgot to reply to Anton's post is that while it may be true that (almost) everyone in USA who wants a Tesla is buying it now in Q4 to get the full $7,500 IRS credit, he neglected to mention the viral nature of Tesla sales. All of these new Q4 USA vehicles will generate viral sales among friends and family of 2019 Q1-Q2 models with a $3,750 IRS tax credit. If a buyer is price-sensitive, they can forgo the $5,000 AutoPilot option initially, save their money and add it later if they want it. Since the IRS tax credit does not affect sticker price, it is kind of a delayed gratification situation anyway.

Also, in Q1 we're going to lose something like half of the production that has been going to the US--that'll all be going to Europe for some time to come. If they are just now starting to saturate demand for the current configs in the US at current production levels, that's a pretty great balancing act they've completed.

Finally, I visited my local sales/service center today to drop off some year-end munchies for the staff. They're planning to be there until midnight, despite not being listed on Tesla's official New Year's Eve Sales-o-Rama Extravaganza page. The lot was less full than at the end of Q3, but still had a bunch of cars to be delivered. Showroom floor vehicles were still there.

 

[Zaxxon]

EM tweeted this link in the past hr:
US Tesla Stores and Galleries Special Hours

So safe to assume only these have inventory ...

No, not safe. As per my prior post, I was just in our local gallery and they've still got the showroom cars, plus dozens in the lot (many of which I'm sure will be delivered today). Our gallery is not on that list, but does plan to be open until midnight. I'm not sure how they decided which locations to list.

 

[sundaymorning]

If the market is afraid of 3,000 inventories I suggest it dumps all the autos, which are sitting on 100,000s per manufacture.

 

[X Fan]

A few days ago I was told by a Tesla sales agent in Chicagoland that a high level of Model 3 inventory will be maintained after the year ends. Most orders will be delivered rather quickly from inventory cars in the most commonly requested configurations. It will be only requests for configurations not in inventory that will be made-to-order in Fremont.

This makes sense for high volume cars like the Model 3. The ability to receive almost immediate delivery should incentivize many potential buyers, especially those whose current cars have developed problems. Tesla is becoming a mainstream car company.

Agree with this....if Europe/Asia's deliveries will be later in Quarter, having product for NA is a benefit.

 

[ClimateOptimst]

The shorts are going crazy over this, seeing it as blatant manipulation from Elon, e.g.
EVdefender on Twitter

So CarsofNight, on the Electrek discussion boards who has friends/relatives working the battery pack lines at GF1 & has been a reliable source of info previously, says they've been producing & shipping 6,000+ M3 packs per week to Fremont since mid November. If it's assumed they averaged 4,500 packs/week the 6 weeks prior they've created at least 63,000 M3 packs this quarter. If inventory has also decreased from 8,000 cars at the end of Q3 to 3,000 now, they should be in good shape for Q4 production & delivery numbers. it'd be hard to believe they won't positively exceed Q3 given that things are running smoother & everyone knew/wanted & was anticipating a big push this quarter to maximize the $7500 tax credit.

 

[dmvevguy]

Shocked that Electrek has this much influence over our stock price. I feel Fred's entire sentiment this year has been negative towards Tesla. Pavduh Electrek!

 

[RobStark]

You are then not comparing it to dealers, you are saying that not-rushed is better than rushed. That's fine.

But claiming it is relevant for comparison (Tesla service centers to legacy dealerships) is wrong. For one, as was already pointed out, that did not include used car sales which increase the "business" of a dealership. So it is not a metric for how busy a dealership is. It also does not capture the square footage you mention. If Tesla had three service centers that were the size of small towns the metric would be higher and by your take implying they were busier.

In short, it is only useful as a comparative metric if you are comparing similar things. For example, a Ford to GM dealership might work. But not for Tesla to others. They are just too different.

Comparing a Ford to GM dealer network might work? LOL.

Tesla also processes some trade ins. It sells used Teslas.

Traditional dealerships sell most trade-in whole sale at auction and only retails the cherries.

Just because two things are not exactly the same or almost identical does not mean they can not be compared.

 

[Electroman]

Elon more controlled on Twitter as well

 

[Fact Checking]

The problem is that Wall Street expectations seem to be super high. IIRC consensus was ~65k and even Tamberino at GS is expecting 62-63k.

That's just the usual "set expectations too high to engineer the 'miss' you want to profit from" fraud.

How the SEC is able to tolerate such a blatant conflict of interest that bearish analysts have ...

 

[M3Rider]

So, 5k less than last quarter.

Yeah, 8k in transit is, supposedly, cars already sold and those unsold, but likely in Q3 there was none unsold in transit.
So, my feeling is that since Elon stated that cars unable making it to a customer before EOY were released for sale in closer regions, should make for less inventory in transit. It is possible that Tesla caught up with backlog and even staged some extra inventory in the stores for the EOY sales, thus reducing the number of customers waiting for the cars in transit. There probably will be a minimal amount of those in some regions, like few Ks, so likely the 3k inventory is that being unloaded and prepped just in time for EOY sales, plus the last couple of days worth of production making it to the closest stores...I think the 3.3k number is pretty lean and we have chances of beating last Q's 8k to a smaller number.

I’m pretty baffled by the numbers. 3000 and all cars not being sold by 12-31 released for sale, so nothing in transit in N America, so inventory should be down from Q3. Could be cars on boats to China and Europe, but Europe doesn’t sound legal yet so only China seems possible. Would love to see 6-10,000 cars in transit to China to beat potential tariff reinstatement. Production numbers also seem murky, with some reports making it sound like cars flying out of Fremont, but Troys reliable methodology showing flat production and flat deliveries. I don’t see how Troys numbers can’t be at least 5% low based on the combination of all the Vicky and other ad hoc production reports, but am I just seeing what I want to see?

I am pretty sure that Elon's guidance will be upheld, i.e. produced/delivered at least 2-3k "more" than Q3. That is my min. estimate and I'm not believing smaller numbers from Troy etc.
I'm comfortable with 58-60k produced and 2k more delivered. Anything in addition is a "beat expectations" for me.

The China/Europe is a more interesting and time appropriate discussion.

Looks like China orders are open, but won't be delivered until March
Tesla has opened up Model 3 orders to customers in China – TechCrunch
And Europe deliveries will start in Feb.

I think this article caught the demand dynamics expectations pretty good
How Will Europe Approach Tesla Model 3? And What Do European Deliveries Mean About US Demand? [Updated] | CleanTechnica

I.e. Q4 only U.S. deliveries to maximize $7.5k credit, then sharp fall in U.S. demand for high trims for Q1/Q2 and deliveries going to China/Europe, then demand returning in U.S.

In fact, after SR is released around this point then sum of all trims sustained demand will exceed Freemont production again and soon after we will see GF3 starting production to start serving local demand and Freemont output mostly going to N.A./Europe. As China output increases, the leasing of M3 may be uncorked in case there's any extra inventory. I don't see any issues for the next year with selling everything they make. And hopefully, after that we'll see increase in migration of ICE owners to EV.

Personally to me a big consideration was installation of charging solution with all the questions around options and costs. Once it's out of the way, buying an EV is an easier decision.
I will be putting in a reservation for Y and start saving for one. This is a straightforward next step after owning a Model 3.

 

[tsunamiofhurt]

EM tweeted this link in the past hr:
US Tesla Stores and Galleries Special Hours

So safe to assume only these have inventory ...

OR, maybe, these are the only stores who are behind their quarterly goal and are working on NYE as a result.

 

[SteveG3]

Shocked that Electrek has this much influence over our stock price. I feel Fred's entire sentiment this year has been negative towards Tesla. Pavduh Electrek!

This Electrek story received repetition through Reuters, MarketWatch, etc. Of course, this is not typical of Electrek articles.

 

[anthonyj]

Just wait until Fred hears about this

 

[Mich]

Guys, just calm down. The numbers will be fine.

 

[dhrivnak]

It was a rather poor judgement and wording from electrek. 3300 cars is about half a week of production, which is actually rather good compared to rest of industry.

Actually I think a half week of inventory would be considered AWESOME. Remember that inventory includes cars on trains, boats and trucks making their way to stores. If the number was 0 then there would be nothing in transit which is another problem in the making.

 

[tivoboy]

Yeah, 8k in transit is, supposedly, cars already sold and those unsold, but likely in Q3 there was none unsold in transit.

So technically I don’t think there any cars “in transit” that can truly be considered as “sold” as it relates to either delivery, revenue coming in, revenue recognition, or fulfillment of delivery with respect to the federal tax credit amount for 2018. It might, however, be enough to obligate Tesla to pay any missed amount of the full 7500$ tax credit for delivery for not actually delivering prior to EOY2018