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Tesla Q1 Sales - This does not compute

Tesla Q1 Sales - This does not compute

John Graham of Torque News estimates U.S. Model 3 sales for 2019:
Q1 = 60,000 cars delivered
Q2 = 44,000
Q3 = 39,000
Q4 - 51,000

Tesla Model 3 2019 Sales Forecast
Tesla's sales for the Model 3 in the U.S. will not continue to grow. This isn't only due to demand in the U.S. dropping as those who want a Model 3 get one. Rather, Tesla will start to dilute its U.S. sales by sending Model 3 cars to other markets in increasing numbers. The real wild card here is the never delivered upon promise by Elon Musk and Tesla to offer a $35K version of the Model 3. Were Tesla to actually honor this, the Model 3's sales would be limited again only by production. We are betting Tesla does not deliver a car that costs $35K to a consumer before incentives (state and federal tax credits and rebates).

Tesla Model S and Model X
Both models have hit a plateau in sales. Our estimate is that the Model 3 begins to be more parasitic to the Model S as Tesla ramps up special performance editions of the 3 that overlap the S.
Model X = 25,000
Model S = 20,000

Joseph Spak @ RBC Capital, a bear, projects Tesla will deliver 52,500-57,000 Model 3s in the first quarter, they penciled in 21,000 sales to Europe, 6-7,000 in China, the rest in the U.S. (24,500 to 29,000).

On the other side of the coin, Bloomberg's production tracker, which has been more accurate than the analysts when it comes to the Model 3 say Tesla built 80,000 in Q1, far higher than the average analyst estimate of 64,400.

The flies in the ointment will be: 1) how many M3s are in transit; and 2) the state of the global economy in 2019, storm warnings are out and Tesla won't be immune if the global economy starts to tank.

Bloomberg's record on M3 sales:
2018 Q1 9,285 estimated -5%
2018 Q2 27,975 -2%
2018 Q3 53,457 +0.4%
2018 Q4 61,113 -0.5%
2019 Q1 79,856

Put your money down on the analyst you like, but Bloomberg has the best track record by far.

The contrast with this is Tesla's faux pas of late. We've seen them be all over the place on pricing. We've seen them announce store closings and firings of store staff to reduce costs to be able to afford selling the $35K Model 3. We've seen them back off that announcing only some stores will be closed. We've seen Tesla announce a few months delay in the first M3 deliveries. We've seen Musk exhort his troops to deliver more cars ASAP. Tesla has even resorted to tasking its test semi trucks to deliver cars.

What does all this mean?

I think we'd be better off expecting Tesla to announce M3 production closer to Bloomberg's estimate beating the Wall Street consensus. The question is how many of those cars are still on ships bound for Europe and China. We do know that Norwegians will register 7,000 M3s this month alone. We know that German automakers are in a huff because so many in a market loyal to the German auto industry are buying M3s. We know deliveries are proceeding apace in France. It doesn't stand to reason that little Norway with a population of around 7 million will by itself account for a third of the analysts' projected sales in the EU.

Of course, the analysts are now predicting a loss for Tesla in Q1. Musk himself seems worried about it. They did have to pay off that $900+ bond in February.

My guess: Net income will be around zero. What will this do to the stock? I've about given up on figuring that out. GM announces it's closing plants and/or offshoring production and Wall Street shrugs. Tesla is building another gigantic factory in Shanghai, has plans for another in Europe and is rapidly expanding production capacity in California and Nevada and the stock gets hammered.

I also don't get the analyst who predicts weak 2nd and 3rd quarters for Model 3 sales. Jaguar and Audi aren't coming with their new EVs this year. GM's Bolt will go on tax credit window starting tomorrow. There is the Leaf, but locals prefer Teslas if they can afford them. The 1st Q is always the slowest in the car industry. If the economy holds on for a while — my guess is 2020 will not be fun for any of us — there is no reason to predict such a dire dip in Tesla deliveries. Even if you hang your hat on the tax credit phase out as the reason, $3,750 is still around for another quarter and $1,875 for the remainder of the year. Getting the $35k M3 out the door is far more important.

Confusing, ain't it?

carlk | 31 marzo 2019

Analysts make predictions out of no real knowledge. I'm not even talking about those outright liars. Sometimes they could move the stock a little and sometimes not. They'd do it again the next month or next quarter for the same purpose, to see if they could move the stock a little so to justify their existence. Very few of them, and those usually are bulls, are knowledgeable enough to do a deeper analysis of how company's long term performance matches its business model.

Chunky Jr. | 31 marzo 2019

Bloomberg has stated they think their model is running too high right now. They aren't sure how high, but it sounds like they expect the numbers to be off. Hopefully not too much.

Tesla2018 | 31 marzo 2019

Tesla will have their best first quarter sales number in history.
Just dont tell anybody its because they didnt start selling most Model 3s until the beginning of the second quarter last year!

greg | 31 marzo 2019

Every analyst seems to be simultaneously predicting absolutely tanking US demand, soaring [then tanking] international demand and record production and the only way to reconcille the difference is by them inventing a huge piles of "in transit" and/or "stashed away in the desert" piles of unsold Model 3's, X's and S's.

Yes, in transits could be larger than usual. But Tesla did send almost all their Q1 production in the early part to China, and Europe, leaving almost no production available for local US buyers.

I'd take Bloombergs numbers with a lot of salt.

Something the Bloomberg tracker has trouble with is US v International deliveries due to the VINs appearing in the [US] VIN registry as blocks of VINs but no record of when the VINs themselves for individual vehicles were "delivered" being available they cannot accurately track all international deliveries. So with the bulk of deliveries overseas this quarter, Bloomberg is flying blind.

And Bloombergs numbers are always hastily "corrected" after every quarter actuals are released, in the process rewriting their prediction history to make their estimates look better than than they are.

However consider that Norwegian deliveries are running at 6114 Model 3s for Q1 2019, and around 1000 combined for S/X, so while Norway is no doubt one of the biggest EV markets in Europe, it pales into signifcance with the Chinese EV market deliveries.

As for profitability, Musk said that they excluded the quarters where they choose to pay back big loans from cash/operations when counting the "always profitable in every quarter going forward" statement he made.

I think they'll just break even for Q1 on profit, given the bond payments and the higher delivery costs for international deliveries.

However demand is clearly not going away. Musk said they can't make enough cars during the Q4 result call some 2 months back. Don't think its slackened off any since then either.

Sure **some** buyers might be still holding out for the $35K Model 3 [with full tax credit!], but then they'll be wasting their time and then complaining about the long wait to get a $35K Model 3 when they finally can order one.

The smart US buyers will be ordering and taking delivery of $38K SR+s in Q2 to ensure they can maximise the tax credits on offer. Everyone else outside the US will take what they can get.

dmm1240 | 1 aprile 2019

Bloomberg does appear uncertain. Here is what they had to say about it on 3/25:

Lately we’ve seen an especially large number of VINS coming to us from across Europe—most notably Norway, Germany, Netherlands and Switzerland—as well as a surge of Standard Range Plus models reported from 19 states and provinces in the U.S. And Canada. VINs reported to us in the last few days have increased our total estimate for the quarter to about 81,000.

To put that number in perspective, it's not far from what most analysts expect for total Tesla production—including the Model S and Model X. Outspoken Tesla bull Ross Gerber, the fund manager for Gerber Kawasaki, who recently toured Tesla’s factory, predicts 72,000 Model 3s. A spreadsheet of more than 50 estimates gathered by Twitter users shows an average production forecast of 69,118.

As we’ve written before, we tend to agree with most people who think our model is running too high. Our model is based on two datasets of Vehicle Identification Numbers—VINs registered with safety regulators prior to production and VINs reported to Bloomberg after delivery. We think both could be distorted by the international rollout. If so, we’ve identified several improvements to our model that could prevent a repeat in the future. But making such changes before seeing this quarter’s reported data would be arbitrary, so if we're wrong, we’ll just take our knocks and make the changes for next quarter.

While we urge caution with our top-line numbers this quarter, the model is still worth looking at. Given the negative sentiment around Tesla this quarter, including recent analyst cuts to delivery forecasts and estimates for long-term demand, the Model 3 Tracker suggests that Tesla's production, at least, remains surprisingly strong.
____________________________________________

We'll know for sure in a couple of days one way or the other.

reed_lewis | 1 aprile 2019

I always love analysts who all seem to agree on a number that they pull out of a hat, and then when the company does not meet that 'magic number' they believe that the company is failing.

reed_lewis | 2 aprile 2019

More SPAM from carylouder007 Flagged!

jordanrichard | 2 aprile 2019

carylouder007 Flagged

jimglas | 2 aprile 2019

must have been good, cary got poofed

reed_lewis | 2 aprile 2019

Just links to some sort of fabric thing or the like. Pretty useless, but if SPAM is called out, people usually flag.

greg | 3 aprile 2019

Tesla announced Q1 deliveries an hour or so ago.

(see here: http://ir.tesla.com/news-releases/news-release-details/tesla-q1-2019-veh...)

Seems delivered in total stated as:
"Deliveries were approximately 63,000 vehicles, which was 110% more than the same quarter last year, but 31% less than last quarter. This included approximately 50,900 Model 3 and 12,100 Model S and X."

Production was stated as:
"In the first quarter, we produced approximately 77,100 total vehicles, consisting of 62,950 Model 3 and 14,150 Model S and X."

Leaving in-transits about 10,600

The difference between production less deliveries less in transit is I assume for "inventory". As Tesla don't count cars that are made/being shipped but not fully paid for by a customer as "in transit". So these car must be inventory cars even if they will have a buyer tomorrow.

kcheng | 5 aprile 2019

"Joseph Spak @ RBC Capital, a bear, projects Tesla will deliver 52,500-57,000 Model 3s in the first quarter, they penciled in 21,000 sales to Europe, 6-7,000 in China, the rest in the U.S. (24,500 to 29,000)."

So, that guy was the closest.

greg | 6 aprile 2019

@kcheng
"So, that guy [Joseph Spark] was the closest."

Nope.

The original post had this prediction:

"John Graham of Torque News estimates U.S. Model 3 sales for 2019: Q1 = 60,000 cars delivered"

Not far from the actual. Better than the Joseph Spark dude who was 10K-6K lower.