Website wait times for delivery change

[pGo]

Now this cannot be right. In China, S60, S85 delivery is stated for April. But the Ds are stated for May. Why Tesla, why?

 

[breser]

On one hand I get why they are doing what they are doing with shifting deliveries and focusing on as many of their high GM cars as possible with the shortest delivery time as possible, but seriously it would be much easier on the logistics most likely if they wouldn't lump all US sales into 1 month to 1.5 months and instead did a better job of just spreading them throughout the quarter. You can only fit like, what? 8 cars on a carrier. So get 8 orders queued for one locations then ship them out. They already use the excuse of "filling the pipe" as to why there is a huge disparity between production and deliveries... we get it. So make it easier on overall logistics and spread the US out over the entire 3 months and give your poor service and delivery staff a bit of a break here.

For the overseas stuff, they should just queue enough to fill one shipment at a time before sending them off. Maybe they are doing that, and since they are so low volume that is why they have to lump, say, all EU into a 1 month stretch (or whatever), but seriously, this is just crazy. At some point, they are going to have to shift from this delivery method to just spreading it out evenly. Might as well start today. /rant

I entirely agree. You get good service from the delivery team if you can manage to get them to deliver your vehicle during the slow time. Otherwise it's very difficult to get responses out of them.

From what I was told it's 7 cars per truck.

 

[Auzie]

On one hand I get why they are doing what they are doing with shifting deliveries and focusing on as many of their high GM cars as possible with the shortest delivery time as possible, but seriously it would be much easier on the logistics most likely if they wouldn't lump all US sales into 1 month to 1.5 months and instead did a better job of just spreading them throughout the quarter. You can only fit like, what? 8 cars on a carrier. So get 8 orders queued for one locations then ship them out. They already use the excuse of "filling the pipe" as to why there is a huge disparity between production and deliveries... we get it. So make it easier on overall logistics and spread the US out over the entire 3 months and give your poor service and delivery staff a bit of a break here.

For the overseas stuff, they should just queue enough to fill one shipment at a time before sending them off. Maybe they are doing that, and since they are so low volume that is why they have to lump, say, all EU into a 1 month stretch (or whatever), but seriously, this is just crazy. At some point, they are going to have to shift from this delivery method to just spreading it out evenly. Might as well start today. /rant

It is my experience that people on the job usually figure out the best way to do their job. The best way may not be so obvious to outsiders, as constraints are usually not visible.

 

[chickensevil]

It is my experience that people on the job usually figure out the best way to do their job. The best way may not be so obvious to outsiders, as constraints are usually not visible.

And that's fair, which is why I tried to think about some of those when I was talking about the overseas stuff. That batching a bunch of orders for Europe (for example) is likely cheaper for them overall to do one big shipment rather than onesie / twosies. And I am sure there are other things that we are not privy to which causes them to do their orders in a certain way.

But what is clearly obvious is that they try to plan as many deliveries as they can around hitting end of quarter numbers for the shareholder meetings. I get it, they can't book revenue until the car is delivered and people really hate on them for missing delivery targets even though it is production that should really be the focus right now... but seriously, this is one known "constraint" in their modeling that should be kicked to the curb. We will have one bad quarter as we shift into delivering this way (because production vs deliveries are going to take an even more serious deviation), but then it should balance back out over all and maybe even retreat some on the ratios.

When they are doing 500k a year it just won't make sense to try to front load all deliveries into one quarter. Now I did seem to notice that it seems like they are trying to slowly shift in this direction since both the wait times and the reports of people taking deliveries in the US have somewhat balanced out now, so it might be something they are already working toward. But I just know that the old way is not sustainable indefinately and it just add complication to the process. when over 50% of deliveries are to NA (currently) and you are essentially boxing *all* those deliveries into 1 to 1.5 months out of the quarter. So instead of needing trucking services for say, 500 dedicated trucks that are able to go back and forth and handle multiple deliveries in a quarter, they need like 1500 trucks all at once to handle the deliveries... that can't be cheap.

 

[breser]

Now I did seem to notice that it seems like they are trying to slowly shift in this direction since both the wait times and the reports of people taking deliveries in the US have somewhat balanced out now, so it might be something they are already working toward.

I agree with almost everything you're saying. I've been saying this since I understood how they were handling this stuff last year. However, I'm not convinced they're really started to make shifts. I do think the focus on particular markets right now is less strict, but I think that's being driven by the priority they're putting on P85D orders. There's been hardly any 85D orders in the US delivered. My delivery in Seattle would have been a full two weeks before the first one at the factory (if not for a week delay due to a drive unit that needed to be replaced). I expect to see a ton of deliveries come Late March of 85Ds. Because the European ones they've been making will finally arrive and the US ones will start for real.

All that said I think this will ultimately naturally resolve itself. Eventually production capacity is going to outstrip the ability to fill transportation to specific regions. They're going to have to start spreading things everywhere. But I'm not convinced we're there yet. Probably by the end of the year though. To which I predict we have a quarter this where they explain on the CC why inventory is higher due to this change.

 

[v12 to 12v]

Now this cannot be right. In China, S60, S85 delivery is stated for April. But the Ds are stated for May. Why Tesla, why?

Newly designed seat shipment delays?

 

[vgrinshpun]

Following the posts in the last couple of days about changing delivery time estimates for new orders, I checked delivery in all regions, noting the following changes since the previous change made 26 days ago:

• US and Canadian delivery estimates for 60, 85 and 85D changed from Late April to May
• GB and Australian estimates for 85D changed from August to September
• GB and Australian estimates for P85D changed from July to September
• Chinese estimates for 60 and 85 changed from April to May
• Oddly, the 85D estimate for Netherlands changed from Late June to May, while all other European estimates for 85D remained unchanged. I suspect that this is just a website bug

It appears that changes in delivery estimates for the D models in right hand drive markets (GB and Australia) are likely due to the delay in completion of the development of these models. This is consistent with the reports from the TMC Australian "The D thread", indicating that delivery dates for the existing D orders in Australia are being pushed back to September as well. I think this might be due to primary focus being on introduction of Model X in Q3.

Regarding the pGo question (now moot) of why previous estimates for D models in China were lagging 60 and 85 models, the most likely answer is that D models for Chinese market were not scheduled to be manufactured until sometime in April, hence May deliveries. It needs to be recognized that MS variants for different markets have differences in design due to local charging issues, regulations, etc. I believe that introduction of the new models for various markets to the manufacturing process is staggered, so that manufacturing team can concentrate on one introduction of new variant at a time.

So, once again, the delivery time for non-D models in China is defined by the rate of incoming orders and manufacturing window allocated for production of the cars for Chinese market. The delivery time for D models, on other hand, is defined by the time of production schedule for the initial launch of the D models for Chinese market.

 

[maoing]

Except RHD markets, it's worth noting that EU coutry wait time didn't increase for entire February and all othe LHD market movement is less than 1 month (late April --> May). Elon stated that EU order # surprisingly good in Q4 CC, but personally I suspect EU order # decrease in Q1 because of the price hike. With uncertain China order #, it's important to monitor EU order # (wait time) closely.

 

[maoing]

By comparing Vigrin's 12-06-14 and 02-27-15 (good for today 03-10-15 also) .

It looks to me the wait time generally reduced from 3 months to 2 months for NA, China and major EU markets for 60/85/P85D (85D has exception for EU). We can assume the sample point both at the last month of Q4 and Q1. Assuming Q4 and Q1 have similar production rate, so the order rate looks slowed down in Q1. This echoes my suspect earlier that "surprising good" order rate in Q4 is mainly due to pent up demand for D models and European folks jumped in before price raise.

 

[vgrinshpun]

One has to be careful making these comparisons, otherwise it could be apples and oranges.

Firstly, since the increment of the updates is once in two-four weeks, it is accurate only to compare wait time for the date it is posted, because as time is passing by, the comparison will include contemporaneous data with the data that is outdated, in this case by almost two weeks.


Second, the proper way to count is by weeks, not months.


Here is, in my opinion, the proper way to analyze this. On 12/06/2014 the wait time was updated to March, so assuming this means the beginning of March, there was a total of 12 weeks wait. On 02/27/2015 the wait time was updated to May, so assuming this means the beginning o May, there was a total of 9 weeks wait. So, as appoint of clarification, the net change is 3 weeks, not a month.

Another factor, which is harder to pin, is how many **production** weeks is included in the period. There was at least one week when factory was not operated during the first period, as Elon mentioned during the Q4 ER call, so the total backlog was 11 weeks times the average weekly production within the period. It is not clear that the factory will we off during the second period, so the difference in this case will be two weeks, not a month.

Regarding the reason for the reduction in backlog, whether it is 2 weeks worth of production or 3 weeks, the initial increased demand for the D models, I believe, is only partially responsible for the difference. Another substantial factor, as I mentioned in our exchange on this topic before, is the fact that sales of cars in US are quite cyclical. Last two months of the year always have higher auto sales than first months of the year.

 

[maoing]

This is just ballpark analysis, so it doesn't mean to be very accurate. But it looks clear that backlog dropped in Q1.
Assume 12 weeks wait time in Q4 and 9 weeks in Q1. It's reduced by just 3 weeks. But the NA wait time needs to deduct 1 week transportation, EU/China wait time needs to deduct 3 weeks transportation roughly. Given Q1 production rate stay flat with Q4, so it's reasonable to expect wait time increase instead of decrease if S demand can increase 50% in 2015.

So the actual backlog wait time:
Q4:

NA: 11 weeks
EU/China: 9 weeks

Q1:

NA: 8 weeks (dopped 3/11=27%)
EU/China: 6 weeks (dropped 3/9=33%)

Note: Major EU country wait time didn't updated for about 6 weeks, hope we can see sth. updated soon.

 

[vgrinshpun]

This is just ballpark analysis, so it doesn't mean to be very accurate. But it looks clear that backlog dropped in Q1.
Assume 12 weeks wait time in Q4 and 9 weeks in Q1. It's reduced by just 3 weeks. But the NA wait time needs to deduct 1 week transportation, EU/China wait time needs to deduct 3 weeks transportation roughly. Given Q1 production rate stay flat with Q4, so it's reasonable to expect wait time increase instead of decrease if S demand can increase 50% in 2015.

So the actual backlog wait time:
Q4:

NA: 11 weeks
EU/China: 9 weeks

Q1:

NA: 8 weeks (dopped 3/11=27%)
EU/China: 6 weeks (dropped 3/9=33%)

Note: Major EU country wait time didn't updated for about 6 weeks, hope we can see sth. updated soon.

I think that deducting time for transportation in order to ascertain the backlog is actually wrong, i.e. will produce inaccurate result. What you might be missing is that the same average delivery time was built into the previous period as well, so due to carry-over from one period to another, subtracting delivery time from the backlog of orders expressed in weeks of production is wrong, unless there are drastic changes in delivery time from period to period.


Consider the following example for illustration purposes, ignoring the weeks factory was shut down for retooling for simplification.

As was mentioned in my previous post, on 12/06/2014 there was total of 12 weeks of wait time. According to your logic we need to subtract delivery time, assume 3 weeks average across all markets. So total backlog would be 9 times average production rate. The key thing to note here that using this logic we are not including last three weeks of the production within the 12 week wait period in the backlog calculated in previous sentence.

On 02/27/2015 there was a total 9 weeks of waiting time. According to your logic, assuming average delivery of 3 weeks, the backlog on 02/27/2015 was 9-3=6 weeks worth of production. But we also need to include three weeks of production that were excluded from the previous period, yielding backlog of 9 weeks worth of production.

So in summary, due to carry over effect illustrated above, subtracting delivery time as shown in your post is not a correct way to account for the backlog based on waiting time.

 

[maoing]

Thanks for pointing out. I think you are right that the transportation time from previous quarter will overlapped with current wait time. So overal 12 weeks wait time reduced to 9 weeks, it means about 25% backlog drop. We'll see what happens for the next wait time update.

 

[Auzie]

I think that deducting time for transportation in order to ascertain the backlog is actually wrong, i.e. will produce inaccurate result. What you might be missing is that the same average delivery time was built into the previous period as well, so due to carry-over from one period to another, subtracting delivery time from the backlog of orders expressed in weeks of production is wrong, unless there are drastic changes in delivery time from period to period.


Consider the following example for illustration purposes, ignoring the weeks factory was shut down for retooling for simplification.

As was mentioned in my previous post, on 12/06/2014 there was total of 12 weeks of wait time. According to your logic we need to subtract delivery time, assume 3 weeks average across all markets. So total backlog would be 9 times average production rate. The key thing to note here that using this logic we are not including last three weeks of the production within the 12 week wait period in the backlog calculated in previous sentence.

On 02/27/2015 there was a total 9 weeks of waiting time. According to your logic, assuming average delivery of 3 weeks, the backlog on 02/27/2015 was 9-3=6 weeks worth of production. But we also need to include three weeks of production that were excluded from the previous period, yielding backlog of 9 weeks worth of production.

So in summary, due to carry over effect illustrated above, subtracting delivery time as shown in your post is not a correct way to account for the backlog based on waiting time.

Great explanation. I would just like to add that the size of Tesla's delivery pipeline is unlikely to stay the same from quarter to quarter, it is more likely to grow as sales grow.

 

[TSLAopt]

Thanks for pointing out. I think you are right that the transportation time from previous quarter will overlapped with current wait time. So overal 12 weeks wait time reduced to 9 weeks, it means about 25% backlog drop. We'll see what happens for the next wait time update.

Or perhaps tesla has the SAME backlog but planning to increase production by 25% or more over the next month or so which would reduce the current backlog wait time but not the actual back log of orders

 

[32no]

Or perhaps tesla has the SAME backlog but planning to increase production by 25% or more over the next month or so which would reduce the current backlog wait time but not the actual back log of orders

Well Tesla plans to go from 9,500 delivered to about 12,500 delivered in Q2, which is in line with a 25% increase coming soon.

 

[FredTMC]

U.S. wait times will go up a lot in a few more weeks because tesla will be focused on EU and APAC orders.

I'd like to see the same journalist write about the INCREASING wait times when this happens. I won't hold my breath for these articles. The NEGATIVE bias is palpable.

 

[MikeC]

U.S. wait times will go up a lot in a few more weeks because tesla will be focused on EU and APAC orders.

I'd like to see the same journalist write about the INCREASING wait times when this happens. I won't hold my breath for these articles. The NEGATIVE bias is palpable.

I'm sure they'll write about increasing wait times...and imply that the reason is production problems.

 

[pGo]

P85D for US now moved to late April. A bit of a slap to that journalist.

 

[maoing]

Less than 3 weeks left for March, so it could be a forced move that no enough time left to source, produce and deliver a fresh P85D order. I'm monitoring EU and US wait time closely to see when it can be back to at least 3 months wait time.

P85D for US now moved to late April. A bit of a slap to that journalist.