Let's continue with pure discussion. It's OK ending with agree or disagree. Nobody knows the Model S demand, even Elon. Elon is in try and estimate mode. Elon first tried P85D/S85D, but looks the pent up demand is not sustainable into Q1, so he released 70D, then we'll see if that can lead to demand hike into Q2/Q3 until Model X release. China demand is a wildcard this year. TSLA suffered big from China failure. But China could again become the huge catalyst in 2015/2016, we just don't know the timing yet. It's rumored that Tesla could get 17% vehicle purchase tax waived in April/May timeframe. Also P85D/70D attracted a lot buying interests.
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- Thread starter Chickenlittle
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Which leaves me with a conclusion that Tesla is continuing to be production constrained until they increase the throughput (across **all** production processes) to 2500 cars/80 hrs week and go through the ramp-up. At that point (some time in the first half of next year) they might **really** test the depth of the demand.
As a little time-travel exercise, the following is what Elon said during the Q1 2013 ER about what company will do in 2014:
I would say that TM gets "F" for this "testing the depth of the demand" effort: they produced more than 35,000 vehicles during the year **and** exited 2014 with a backlog of 10,000 cars.
My prediction is that a sum of the 2015 production and year end backlog for MS will be more than 60K
dennis
Model S Plaid
Well that is one interpretation of the facts. It is also quite possible that the P85D/S85D/70D are part of a well orchestrated series of Model S "mid-life kickers" by Tesla. All car companies do this to boost demand as a product line ages. They also do "facelifts" part of the way through the product life cycle for the same reason. It takes huge amounts of R&D and capital to bring a new car model to market. They need to have sufficient demand for 5-7 years to get the necessary ROI. Without mid-life freshening demand will just naturally die off.
chickensevil
Active Member
In addition it is very likely that these were just natural steps toward the Model X instead of being primarily driven by demand. Does it have the side effect of demand increase? Sure. But the dual motors are clearly there to put it in something to derisk the Model X. It is also speculated (though we have no direct comments or proof of this one like we do the dual motors) that the 70D is directly for the Model X. We know the Model X will only come in dual motor and the larger battery is great because it is a bigger vehicle.
Another thing that must be also considered is that these product updates (85/P85D, 70D) take months to design, test, and implement into manufacturing. It is not a spigot that is being controlled based on previous quarter demand. It is part of strategic planning that must be completed **before** real time demand generation response.
As a reminder, these are quotes from Elon 3 quarters ago (Q2 2014 ER):
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sundaymorning
Active Member
Complete BS to say no one knows what demand looks like. Elon can guage demand better than any of us here can, that is why there is a guidance of 55k for 2015. Extrinsic factors such as port strikes, seating issues are non calculable, extrapolate a 5% difference for those unpredictable "Devine intervention" type events. Stick with the facts until it changes. Right now, there's no change in that fact.
chickensevil
Active Member
Thanks for that reminder. I had forgotten all about the "R&D is better than it appears" comment. That seems like oh so long ago now... haha!
Hogfighter
Professional Lurker
And it was over 2 years ago that Elon was asked about an AWD, and George Blankenship cautioned him about saying anything.
China wait time jumped from June to late July for all models. Strong demand? Used to be in sync with US in last a few months, right now it's the latest in non-RHD markets. Per Vigrin's spreadsheet, China 85D/P85D wait time switched to June on 04/06, so it jumped about 1.5 months 0.5 month later.
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I bet it's great news and it correlates with my observation. Elon won't waste the Q1 CC opportunity to brag the improvement. If that's the case, it'll make 55K guidance a stronger case and market will welcome that.
Just to follow-up to Maoing post, I've updated the wait time tables. The summary of chages are:
It appears that average delivery time across all markets is creeping back up. Assuming roughly 50%-50% split between NA and the rest of the markets, and taking into account that NA wait time is around 7 weeks, and at least 11 weeks in the rest of the world, the average works out to 9 weeks (or 9,000 cars assuming that production is at around 1,000 cars a week). We are through the historically slow period in car sales and orders should pick up during the spring.
- Delivery estimate for 85 in Australia went from June to August
- Delivery estimate for 85, 85D and P85D in China went from June to late July
- Delivery estimate for 70D in Hong Kong changed from late August to late September, 85 - from late June to late September, 85D and p85D - from September to Late September
It appears that average delivery time across all markets is creeping back up. Assuming roughly 50%-50% split between NA and the rest of the markets, and taking into account that NA wait time is around 7 weeks, and at least 11 weeks in the rest of the world, the average works out to 9 weeks (or 9,000 cars assuming that production is at around 1,000 cars a week). We are through the historically slow period in car sales and orders should pick up during the spring.
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It's interesting that what I would have guessed is the most popular model has the shortest wait time. Is the factory planning to go flat out on only 70D production for the rest of the second quarter? If so, it should bode will for margins though since Tesla historically prioritises high yield cars.
This wonders me too, any idea how 70D could have higher margins?
I mean its basicly 85D with 15 less Kwh, assuming 300$/KWH, its 4500 less cost, 5500 less profit, lets say 5000. price is 10000 less, 12%, so thats 4400-4900 adjusted impact on Gross Margin.
It seems cells are same as 85D.
The only way i can see it is that people buy more options but is there any proof for that thesis?
I mean its basicly 85D with 15 less Kwh, assuming 300$/KWH, its 4500 less cost, 5500 less profit, lets say 5000. price is 10000 less, 12%, so thats 4400-4900 adjusted impact on Gross Margin.
It seems cells are same as 85D.
The only way i can see it is that people buy more options but is there any proof for that thesis?
green1
Active Member
green1
Active Member
How about you look at it the other way, assume that each 70D sale is replacing a 60 instead of an 85D, in this case they're making a fortune.
chickensevil
Active Member
The current price you pay for the upgrade is 667$/kWh and since that is all you are paying for now to go from 70D to 85D that is quite a cost. Consider previously that a 10k upgrade was for not just a bigger battery (25kWh upgrade) but also for Supercharging (they got rid of the tire upgrade a while ago). So this seems like more reason to think that the 85 will be going away to be replaced by a larger pack. Otherwise the 70D - 85D just became a horribly expensive upgrade. This could be the reason for the huge uptake in the 70D as consumers realize it likely isn't worth the 10k. I bet orders for the 85 and 85D fell through the floor.
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