Is Tesla stalling homologation/deliveries to foreign markets to get more cash faster?

linaser · Oct 22, 2012

This topic was part of the “How many P-cars before first Sig for Europe?” thread, but the discussion has shifted to the question above, so I thought it would make sense to open a poll on that.

Before you decide, please read the following arguments:

Lets say they have two reservations:
a) European Sig. Model S, 40k$ (=liability to reservation holder), Price: 95k$
b) U.S. general production P85, 5k$ (=liability to reservation holder), Price: 90k$

Depending on what reservation Tesla will fulfill first different things happen:

a) Tesla manufactures/delivers the European Sig. reservation first:
- Tesla will get an additional 55k$ in cash (they already have 40k$)
- Tesla will recognize 95k$ as additional revenue

b) Tesla manufactures/delivers the U.S. P-P85-car reservation first:
- Tesla will get an additional 85k$ in cash (they already have 5k$)
- Tesla will recognize 90k$ as additional revenue

What this means is that if Tesla wants to have more money in their bank accounts, which they can use to pay bills and wages, then they probably will try fulfill the U.S. P-P85-Reservation first. This could mean, that Tesla could stall homologation / manufacturing for foreign markets to get their hands at more cash faster.

If their goal is to get as much revenue as fast as possible and they are satisfied with their cash situation, they would probably not try to delay foreign deliveries as long as possible.

So what do you think; Is Tesla stalling foreign homologation/deliveries to get more cash faster?

Doug_G · Oct 22, 2012

I really doubt that has even crossed their minds. They just need to get their production ramp done and the money will take care of itself.

ckessel · Oct 22, 2012

They have $200 million from the stock offering. They have no need to play games to accumulate more cash.

NigelM · Oct 22, 2012

linaser said:
So what do you think; Is Tesla stalling foreign homologation/deliveries to get more cash faster?

Seriously? I'm Sig Special List #183, I don't have my car yet and I'm not alone. If Tesla was delivering P3,000 in the U.S. and was stalling there might be something to talk about but otherwise this is "moon landing" speculation.

Doug_G said:
I really doubt that has even crossed their minds. They just need to get their production ramp done and the money will take care of itself.

+1.

Grendal · Oct 22, 2012

I agree with Doug, Tesla is hopefully completely focused on getting their ramp up complete so they are manufacturing at full capacity. At this point that is what will make or break this company. They have a proven great product. They have the factory and the people to build that product. They have a long line of customers waiting to buy and receive the product. What they are missing at this point is having the product to give to thoise customers. The ramp up to full production capacity while maintaining build quality has to be priority #1.

ElSupreme · Oct 22, 2012

I agree that Tesla has not even made a decision yet. I expect they have a Homologation group that is working towards an EU spec car (assuming they have a Canadian spec car all done). When that group finally gets approval from the EU, and figures out a RHD layout then Tesla will ask themselves this question. My bet is they do the EU Signatures as quickly as practical, to open up new markets and sell more cars.

But right now they aren't even thinking about it.

Oyvind.H · Oct 22, 2012

Grendal said:
I agree with Doug, Tesla is hopefully completely focused on getting their ramp up complete so they are manufacturing at full capacity.

Fingers crossed that they`ll make more than 20.000 cars next year, as the demand is growing! A year waitinglist is just too much to get the much needed volume up.

Laumb · Oct 22, 2012

Im betting that if Tesla gets another 20'000 reservations after the car hits the streets in orker parts of the world. Magne after a few months, they will ramp up..
I don't know where in the factory model X is going to be made, but an extra shift on Model S ramps it up to 40k cars / year. Then when the dust settles they May use one shift on the model X instead. Also it will be pretrained straff, so no big problems there.

Ramp up in May maybe, with a backlog on S at ~20'000 cars from that date would suit a second shift well.

_____
Tapatalkin' from iTalatut.

spatterso911 · Oct 22, 2012

Of course, much of this speculation is based upon the premise that ALL sigs will deliver before production models, Canadian, European or otherwise. It is also entirely possible that each market is considered separate and distinct, and regardless of what is going on in one market (US), the other markets are moving at the quickest pace possible with the plan being that the sigs in that respective market will start delivery before the production models start in that respective market. Homologation may be the hold up and deciding factor.

But let's look at other factors, specifically for the EU markets. Deliveries will require loading the cars on a transport ship and transporting to a distant port, arriving, unloading, performing PDI and arranging for final deliveries to awaiting customers. This process could easily take a 2 weeks to a month or more, and I really don't see US production deliveries stopping completely while this process occurs.

What I see regularly posted is angst that US production models will start delivery before sigs in the Canadian or EU markets. I think based upon the above, it's entirely possible, nee likely, that that will happen, but the Canadian and EU sig-reserved customers will start receiving their cars before any production cars arrive to those destinations.

Doug_G · Oct 22, 2012

Tesla did say that production of Canadian Signatures would follow completion of USA Sigs, and they have confirmed that recently. That said, they did not make that promise for European sales. AFAIK the plan was always to launch European sales a bit later on.

spatterso911 · Oct 22, 2012

Doug_G said:
Tesla did say that production of Canadian Signatures would follow completion of USA Sigs, and they have confirmed that recently. That said, they did not make that promise for European sales. AFAIK the plan was always to launch European sales a bit later on.

I would think that production of Canadian sigs would follow a natural progression from US sigs, given the proximity and decreased homologation requirements. I'm betting that's what we'll see in reality. The EU, OTOH, will likely get their cars a bit later on as you pointed out, similar to how US versions of european cars are typically significantly delayed to market (sometimes up to a year time difference).

Laumb · Oct 22, 2012

But then again, Canadian cars are pretty much the same as European cars. The lights Are the same (well, in Norway and the other northern countries), except South europe where theyre not required to be on at all times.

The only real difference I see is power/charging and crash-testing, as there are not any emissions to talk About..

_____
Tapatalkin' from iTalatut.

spatterso911 · Oct 22, 2012

Laumb said:
But then again, Canadian cars are pretty much the same as European cars. The lights Are the same (well, in Norway and the other northern countries), except South europe where theyre not required to be on at all times.

The only real difference I see is power/charging and crash-testing, as there are not any emissions to talk About..

_____
Tapatalkin' from iTalatut.

True, but I would say that lights are a minimal change-over. 3-phase charging and crash testing is a delayed/slow modification. I could be totally wrong, and they have 3-phase charging completely figured out and ready to implement. I'd be very doubtful that the crash testing is completed though.

linaser · Oct 23, 2012

Grendal said:
I agree with Doug, Tesla is hopefully completely focused on getting their ramp up complete so they are manufacturing at full capacity. [...] The ramp up to full production capacity while maintaining build quality has to be priority #1.

I think, you're right Tesla should and is focusing on production ramp up. But is focusing on one thing not always the same as reducing efforts in other areas? What I mean is, that Tesla could be delaying European homologation because it is much easier to just continue manufacturing for the U.S. market. Keeping more money in their accounts, might not be the main reason, but that fact could help Tesla in making the decision to delay European homologation.

ElSupreme said:
... My bet is they do the EU Signatures as quickly as practical, to open up new markets and sell more cars. But right now they aren't even thinking about it.

As a EU Sig reservation holder I certainly do hope, that they are thinking about how and when they will make efforts to complete European homologation and start manufacturing.

I think Tesla should try do accommodate European Signature reservation holders, who are paying a premium mainly to get their cars early and that they should not delay homologation on purpose, because it is more convenient to continue to manufacture U.S. general production cars for 6 months or so.

v12 to 12v · Oct 23, 2012

If Telsa was interested in cash over customers they would have delivered Washington State cars earlier or on time.
Their deposit money is still sitting in escrow while their deliveries seem to lag behind some other regions.

KBF · Oct 23, 2012

While I'm slightly impatiently waiting for my Signature, I do believe that if it was up to Tesla they would in fact deliver all the Sigs worldwide first and it is not some sort of intentional/planned delay, especially not for cash purposes. Homologation is a two-way deal; they depend on bureaucracies, to slowly grind their way forward. I imagine that the EU is worse than Canada to deal with since it is a more complex entity.

Brian H · Oct 24, 2012

v12 to 12v said:
If Telsa was interested in cash over customers they would have delivered Washington State cars earlier or on time.
Their deposit money is still sitting in escrow while their deliveries seem to lag behind some other regions.

I don't think the deposits are in escrow. Refunds are paid out of cash on hand.

v12 to 12v · Oct 26, 2012

Brian H said:
I don't think the deposits are in escrow. Refunds are paid out of cash on hand.

Washington State is the only state that requires deposits to be held in escrow. It is even mentioned in the financial reports.

linaser · Nov 5, 2012

seekingalpha.com : Tesla Motors' CEO Discusses Q3 2012 Results - Earnings Call Transcript : Elon: said:
So we believe that there is very little to get the European spec in homologation ready for production. We could start production of those units sooner than kind of the March, April timeframe next year. But there is not really a need to do that, since we can fully install our production with North American demand, rather than increase the complication of managing all those cars in Europe. And we want to stay focused in North America just for a few more months, before we start ship cars over to Europe, and then Asia shortly thereafter.

So Elon is saying essentially, that they're stalling European deliveries, because it's less complicated to manufacture cars for the U.S. market.

I had somehow hoped, that Tesla would be going the extra mile for long time Signature reservation holders in Europe.

As it seems, there are no major technical or administrative reasons, why they couldn't start manufacturing for the European market very soon.

I have to admit, that for me as an early Sig Reservation holder (#14) in Europe, this is kind of disappointing.

Andvib · Nov 7, 2012

long time lurker chiming in..

linaser - I think you are right, and I agree that it is kind of disappointing for us Europeans. On the other hand, they might start in Europe with essentially a "version 1.5" or similar. More stable and more functions software. Better supporting sports seats were indicated in the recent European test drives. I think they will need to design and include headlight washers too, as I think they are mandatory in the EU if you have xenon headlights (not sure). AWD is a given at some point but maybe not first half of 2013?

Is Tesla stalling homologation/deliveries to foreign markets to get more cash faster?

Is Tesla stalling homologation/deliveries to foreign markets to get more cash faster?

Yes, Tesla is prioritizing U.S. P-Cars to get more cash faster

No, Tesla is doing the best they can to get Sigs to foreign markets as fast as possible

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