I would agree with this assertion. If TM deliver 50K in 2015 and model X launch is sucessful. Then we should NOT see SP lower than 200 in Q1 2016. But in between, there are still many variables, so I won't be surprised to see SP under 200 or even hit 52-week low in bear attacks.
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Hogfighter
Professional Lurker
Do you believe that demand is an issue (in 2015, anyway)? As Elon has stated, there are many levers that they can pull to increase demand.
Yes, it's an issue especially before the 70D release. Now we shall see how well market respond to 70D and how well Elon's other levers work?
Hogfighter
Professional Lurker
How is it an issue? Please...I'm not being argumentative. I'm trying to understand why a significant portion of investors and analysts choose to disbelieve Elon et. al. when they state, over and over, that demand is not an issue.
They spend no money on advertising. A large percentage of luxury brand purchasers have absolutely no idea what a Tesla is, particularly outside of California. I understand that there may be demand concerns when producing 100,000 cars per year, but right now I simply cannot wrap my brain around the fact that otherwise intelligent people insist that there was a demand issue in 2014, and one today.
I understand that demand has been 'artificially' high when they introduced the P85D, and now the 70D....but come on, that's what all companies do: release similar new versions of a product. How many people do you know sporting around with an iPhone 2?
They spend no money on advertising. A large percentage of luxury brand purchasers have absolutely no idea what a Tesla is, particularly outside of California. I understand that there may be demand concerns when producing 100,000 cars per year, but right now I simply cannot wrap my brain around the fact that otherwise intelligent people insist that there was a demand issue in 2014, and one today.
I understand that demand has been 'artificially' high when they introduced the P85D, and now the 70D....but come on, that's what all companies do: release similar new versions of a product. How many people do you know sporting around with an iPhone 2?
What if the 1k -> 2k upgrade is something that happens in Q4?? so we are at a 1k/wk rate for Q1-Q3 and the 2k/wk rate happens Q4? 55k is then appropriate guidance. So the S production = 1k/wk and X production ramps from 0-1k/wk by the end of Q4.
green1
Active Member
Yup, demand will be an issue forever, as Tesla sells vehicles as fast as they can make them and doubles their production every year trying to keep up.
I'm waiting for the "see, we were right all along!" posts when Tesla is selling a million cars a year and finally has to advertise for customers as their production finally outstrips supply.
There's just no countering the extreme biases that some people have against Tesla. No amount of success will be enough for them.
I'm waiting for the "see, we were right all along!" posts when Tesla is selling a million cars a year and finally has to advertise for customers as their production finally outstrips supply.
There's just no countering the extreme biases that some people have against Tesla. No amount of success will be enough for them.
I don't believe Adam Jones is any better or a more reliable source for Tesla Motors information than many of the other analysts that follow the stock. In fact I'd put DaveT and Sleepyhead from this forum (where did these guys go to?) as better Analysts than Adam Jonas.
Last November AJ wrote a research report that said Tesla was about to ditch the gull wing doors on the Model X:
http://www.streetinsider.com/Analyst+Comments/Is+Tesla+%28TSLA%29+Going+to+Ditch+the+Model+X+Gull-Wing+Doors%3F/10026354.html
Let's not forget AJ is a paid analyst and has to report "news" to justify his own salary. What good is a hypothetical earnings preview 3 weeks in advance of the actual event when the biggest component (deliveries) is already known. It will all come down to guidance and I don't believe AJ has any particular insight into this.
I think you might find the partial answer from stock performance. If demand is NOT an issue, say 50K model S demand from US alone in 2015, then
Who cares about China market?
Who cares about FX issue in EU sales?
Who cares about low gas price?
Why Elon carefully lowball 2015 guidance to 55K, instead of blowout 70K?
Why Elon introduce P85D in a sudden, then 70D in a sudden in the cost of GM?
Why online order wait time reduced by at least a month compared to Q4 given production rate flat?
Why Elon emphasized demand is not an issue again and again while not showing an encouraging quarter since 2014 Q1?
And we shall see stock price well above 300 at this point.
There is no doubt TM has NO demand issue at this point. The issue is demand rate might not catch up with projected production ramp up rate unless some more effective levers deployed.
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That's the way to delibrately slow down the production ramp up in order to hide demand issue. If that's the case for TM, then it won't be effective forever.
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AJ is not 100% correct. But historically his analysis is closer to reality than the rest analysts and his note is more relevant to SP.
Who cares about China market?
Who cares about FX issue in EU sales?
Who cares about low gas price?
Why Elon carefully lowball 2015 guidance to 55K, instead of blowout 70K?
Why Elon introduce P85D in a sudden, then 70D in a sudden in the cost of GM?
Why online order wait time reduced by at least a month compared to Q4 given production rate flat?
Why Elon emphasized demand is not an issue again and again while not showing an encouraging quarter since 2014 Q1?
And we shall see stock price well above 300 at this point.
There is no doubt TM has NO demand issue at this point. The issue is demand rate might not catch up with projected production ramp up rate unless some more effective levers deployed.
- - - Updated - - -
That's the way to delibrately slow down the production ramp up in order to hide demand issue. If that's the case for TM, then it won't be effective forever.
- - - Updated - - -
AJ is not 100% correct. But historically his analysis is closer to reality than the rest analysts and his note is more relevant to SP.
green1
Active Member
All your "who cares" and "why" arguments are easily answered.
Because people want a story to slag Tesla. Facts are irrelevant.
As for why they would ramp up in Q4 and not earlier. What if the ramp up is simply realized by opening the MX line? Then why would it be earlier? It's not about "deliberately slowing down" ramp up, it's about ramping up as fast as they can, and it not being fast enough for people.
Because people want a story to slag Tesla. Facts are irrelevant.
As for why they would ramp up in Q4 and not earlier. What if the ramp up is simply realized by opening the MX line? Then why would it be earlier? It's not about "deliberately slowing down" ramp up, it's about ramping up as fast as they can, and it not being fast enough for people.
The D variants are also about improving the car. Elon has been very clear about his short vs. long term goals including pushing the Model S to be the best car on the planet and changing product mix due to customer demand. From the earlier Conf Call comments it seemed that the 85D models quickly became the majority of orders. This plus the need for a larger base battery for the X probably led to the 70D. I think that the introduction of the P85D the 85D or the 70D were due to superior product characteristics and short term considerations about ramp were not that important.
Perfectlogic
Member
It seems like you are making the assumption that because TSLA hasn't appreciated in the past year that means something must be going poorly for Tesla. I would like to point out that the market not always is rational to say the least, TSLA has been a volatile stock and right now it just happen to be more undervalued than normally (imo) as Tesla is executing pretty much according to plan with excellence guidance for the year. Regarding demand the wait time is around 2 months right now which is the same it has been for a while AFAIK which points to increased demand as production has been climbing. Another thing to keep in mind is that with the X launch coming up soon now this might slow S demand as some want to see the X before they make up their mind on what to buy, I actually think this is pretty significant and makes the current demand seem more impressive.
FredTMC
Model S VIN #4925
As I said recently, I thought that teslA might pre-announce Q1 deliveries and they did...
I don't think Tesla has any intention whatsoever of missing on delivery guidance. I believe they think 55,000 deliveries is conservative and achievable or they wouldn't have provided that guidance.
IMHO, whenever they happen to miss guidance, it's because of unforeseen problems, not because the the guidance was a "stretch goal".
I think Elon musk has every intention of underpromising and overdelivering on a more consistent basis. He's no fool.
I don't think Tesla has any intention whatsoever of missing on delivery guidance. I believe they think 55,000 deliveries is conservative and achievable or they wouldn't have provided that guidance.
IMHO, whenever they happen to miss guidance, it's because of unforeseen problems, not because the the guidance was a "stretch goal".
I think Elon musk has every intention of underpromising and overdelivering on a more consistent basis. He's no fool.
Who cares about China market? Bears, shorts, and anxious longs.
Who cares about FX issue in EU sales? Bears, shorts, and anxious longs.
Who cares about low gas price? Bears, shorts, and anxious longs.
Why Elon carefully lowball 2015 guidance to 55K, instead of blowout 70K? Production constraints
Why Elon introduce P85D in a sudden, then 70D in a sudden in the cost of GM? Osbourne effect; Model X preparation (dual motors, 70kWh battery)
Why online order wait time reduced by at least a month compared to Q4 given production rate flat? Not enough info from inexact dates that are updated at random intervals and we don't know that the production rate is perfectly flat
Why Elon emphasized demand is not an issue again and again while not showing an encouraging quarter since 2014 Q1? Production constraints
And we shall see stock price well above 300 at this point.
There is no doubt TM has NO demand issue at this point. The issue is demand rate might not catch up with projected production ramp up rate unless some more effective levers deployed. This is a fair statement, key word being "might".
FredTMC
Model S VIN #4925
If production rate starts to catch up with demand then tesla will simply pull more of the demand generating levers... Including the mysterious "demand secret weapon". Hopefully we will find out what this weapon is at some point.
I'm not sure how many folks still believe "secret weapon" here. I used to have some hope, but it disapeared when TM released 70D in cost of GM. Usually price cut is the last resort to stimulate demand.
FredTMC
Model S VIN #4925
Elon had something very specific in mind... "Against the dealers". I'm sure this'll come up on earnings call if he doesn't reveal it before then. He's not going to get a pass on this statement. He will certainly reveal it at some point IMO.
It reminds me very much of the "trigology" of announcements a few years ago.
If Elon can provide solid proof that demand isn't an issue instead of just mouth saying again and again, then all below highlights are not an issue for stock price. A few things TM can choose to do to dismiss the demand doubts:
1) backlog order # in quarter report. TM did it in Q4 ER with 10K model S backlog, but I think it's not a strong number because 3400 of them are due to the 2014 delivery miss, so essential backlog number is only 6400 net. We should see either backlog # keep going up if production stays flat or at least keep flat if production ramping up to prove strong Model S demand. For Q1 ER, I anticipate to see at least 10k Model S backlog orders to prove strong demand. But the current order wait time doesn't support this thesis.
2) reasonable QoQ delivery/guidance growth to justify a growth story stock. It's not good to only see 2% QoQ growth for Q1 and actually it's negative if excluding 1400 undelivered cars from Q4.
1) backlog order # in quarter report. TM did it in Q4 ER with 10K model S backlog, but I think it's not a strong number because 3400 of them are due to the 2014 delivery miss, so essential backlog number is only 6400 net. We should see either backlog # keep going up if production stays flat or at least keep flat if production ramping up to prove strong Model S demand. For Q1 ER, I anticipate to see at least 10k Model S backlog orders to prove strong demand. But the current order wait time doesn't support this thesis.
2) reasonable QoQ delivery/guidance growth to justify a growth story stock. It's not good to only see 2% QoQ growth for Q1 and actually it's negative if excluding 1400 undelivered cars from Q4.
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Perfectlogic
Member
Even if the S demand doesn't increase from around 1k/week, at least until China gets some traction, then Tesla would still be in a pretty good place right now with the X launch incomming. Assuming X demand similar to S the total would amount to 100k/year, that is more than $10B of high margin revenue, not too shabby for a car company still in its infancy building out infrastucture and with a large part of the consumers not even aware of the product, and a lot still filled with misinformation. Taking the current $26B valuation into consideration I would definately not say that TSLA is priced for a higher demand than that having not tapped into the much greater lower priced market yet.
Your points are fair and I guess the question is how much does Tesla really care about convincing doubters?
If investors don't want to believe what they're saying, they don't have to. It just means that those who are confident in demand will have more time to get in at lower prices. I believe Elon that he does not care about short term fluctuations in stock price.
We know there will be lulls on the way up and we have been in one for a while. We also know that there will be a production jump in 2H 2015, Model X, stationary storage, etc. Lots of catalysts coming up.
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