Can Tesla hit the 35000 a year target in 2014?

daniel Ox9EFD · Aug 2, 2014

The challenge:
If we take deliveries so far -
Q1 7535
Q2 7579
And that Telsa expects a similar number to Q2 for Q3, due to plant shutdown, so lets say -
Q3 ~7600

This ads up to 12286 cars that need to be delivered in Q3 to meet the 35000 mark.
Of course, to answer the question how realistic is this, we need to ask two questions -
1. Can the factory output be increased fast enough?
2. By how much does demand exceed supply?

For the first question, we need to take into account the upgrades to the production line starting from august 4th onwards, as well as the cars currently on their way - 8,763 built - 7579 delivered = ~1200 cars for Q3 that we know of. The missing number here is the production rate following the production line upgrade.
For the second question, an estimate could start from the wait lines. Wait line * delivery rate ~= demand - supply. At least as a first approx.

Any thoughts?

Thanks,
Daniel

blakegallagher · Aug 2, 2014

the answer to number 2 is by a very wide margin. They hammered that pretty well in the earnings call. Demand is so strong that they have intentionally limited how many stores they are building because they can not keep up with current sales. They sounded very confident of 35k deliveries. I have bet all my money and margin on it.

daniel Ox9EFD · Aug 2, 2014

Ok so wait line * delivery rate is not a good estimate of demand because they can open new stores. It is a good lower limit though.

Lets say for now you are right and demand will not be an issue, I'd like to see the numbers on production work out. ~12K is a large jump from ~7.5K.
Production rate following upgrade would be helpful.

Ssssly · Aug 2, 2014

Per the press release, production at the factory in Q2 was 8,763 and would have been 11k in q3 if they didn't shut down. This is 25% improvement without factory upgrades.

So I infer that after the retool, they can exceed the 12k required to meet 35k.

I'd also expect that they are improving the logistics for non-domestic to assist with fewer cars in transit.

Tedkidd · Aug 2, 2014

blakegallagher said:
the answer to number 2 is by a very wide margin. They hammered that pretty well in the earnings call. Demand is so strong that they have intentionally limited how many stores they are building because they can not keep up with current sales.

That bullish at $220? Hmmm.

I'd like to understand that demand/storefront thing better. What happens to sales when a new store is opened? Are sales increases geometric when they open a store? (my impediment is money, I don't care that there is no store near me, my aunt & uncle bought a car 600 miles from a store...)

Be interesting to see how they think those numbers will connect going forward.

DaveT · Aug 2, 2014

daniel Ox9EFD said:
The challenge:
If we take deliveries so far -
Q1 7535
Q2 7579
And that Telsa expects a similar number to Q2 for Q3, due to plant shutdown, so lets say -
Q3 ~7600

This ads up to 12286 cars that need to be delivered in Q3 to meet the 35000 mark.

Your numbers are off:

Q1 2014 deliveries were 6,457 (http://files.shareholder.com/downlo...72170x0xS1193125-14-187459/1318605/filing.pdf). Not 7535.

Q2 deliveries were 7,579 (http://files.shareholder.com/downlo...8f57412777/Tesla Q2'14 Shareholder Letter.pdf).

Q3 deliveries are guided at 7,800.

That means Q4 deliveries must be at least 13,184 to meet their 35,000 vehicles delivered guidance for 2014.

That said, if you listen to the conference call Elon and his team seemed uber-confident that they would meet the 35,000 vehicle guidance for 2014.

uselesslogin · Aug 2, 2014

DaveT said:
Your numbers are off:

Q1 2014 deliveries were 6,457 (http://files.shareholder.com/downlo...72170x0xS1193125-14-187459/1318605/filing.pdf). Not 7535.

Q2 deliveries were 7,579 (http://files.shareholder.com/downlo...8f57412777/Tesla Q2'14 Shareholder Letter.pdf).

Q3 deliveries are guided at 7,800.

That means Q4 deliveries must be at least 13,184 to meet their 35,000 vehicles delivered guidance for 2014.

That said, if you listen to the conference call Elon and his team seemed uber-confident that they would meet the 35,000 vehicle guidance for 2014.

If the limiting factor has been batteries all along and still are then probably they can run the line at a higher run rate in Q4 using batteries delivered in Q3. Maybe they will do 1,200/wk. in Q4 but have to step back down to 1,000/wk in Q1. I guess we'll find out.

FredTMC · Aug 2, 2014

uselesslogin said:
If the limiting factor has been batteries all along and still are then probably they can run the line at a higher run rate in Q4 using batteries delivered in Q3. Maybe they will do 1,200/wk. in Q4 but have to step back down to 1,000/wk in Q1. I guess we'll find out.

Yes, and i don't think they've ever ran a third shift (graveyard). They could (at higher labor cost).

schonelucht · Aug 3, 2014

There are 63 working days in the fourth quarter. Let's say 60 days of production where they have a reasonably chance to still deliver the car that quarter. To cover deliveries with production they need to be producing at an average of 220 cars/day. I suspect nearly full october production will go to China and all november production will go to Europe. To avoid US waiting times to go up too drastically, I suspect they will be also emptying a chunk of their very substantial pipeline (easily 3000-4000 cars more produced than delivered by october)

Robert.Boston · Aug 3, 2014

With the web site showing deliveries of newly-ordered 60s in "late December", it's clear that Tesla has nearly sold out its annual production. So, demand isn't the issue. I doubt production is an issue, either, unless there's a major glitch in getting the new lines operational. Tesla doesn't need to produce 13,000 cars in Q4, as there is already a pipeline that's filling.

To the extent that there's a potential miss, I think it will be down at the Delivery Specialist level. Remember that huge rush last December to get Norwegian cars delivered? We might see that again, globally.

chickensevil · Aug 3, 2014

They have said now that by the END of Q3 they will be at the 1K a week run rate and will be going slightly higher than that as they be it the year. There is roughly 13 weeks in Q4 with a 1K a week run rate that doesn't seem that hard to hit the target. You just need a couple extra in there somewhere.

And as stated the website shows the wait times sitting in December already... Even if they demand rate falls through the floor at this point there is no way they don't finish filling out December to hit their target.

daniel Ox9EFD · Aug 3, 2014

DaveT said:
Your numbers are off:

Q1 2014 deliveries were 6,457 (http://files.shareholder.com/downlo...72170x0xS1193125-14-187459/1318605/filing.pdf). Not 7535.

Q2 deliveries were 7,579 (http://files.shareholder.com/downlo...8f57412777/Tesla Q2'14 Shareholder Letter.pdf).

Q3 deliveries are guided at 7,800.

That means Q4 deliveries must be at least 13,184 to meet their 35,000 vehicles delivered guidance for 2014.

That said, if you listen to the conference call Elon and his team seemed uber-confident that they would meet the 35,000 vehicle guidance for 2014.

Thanks for the correction. I took the numbers from a news report after I couldn't access the files via the Tesla website.

If they expect 11k in Q3 without the shutdown, then 13k seems more reliable, even if it means pushing in some extra hours. Can it be assumed from this that the battery shortage is being alleviated?

@Tedkidd, I don't think the demand/storefront relation is linear, for the reason you mentioned. But Elon said that they can increase demand by opening more stores, I take it that its at least close enough to linear that for the time being they have a lever on demand.

On a site note, DaveT are you the same Dave from the google talk - Teslas decision to open-source patents - part 2 - YouTube ?
If so would you be doing more of those? I came across it by total accident and it was quite informative, certainly on the battery front.

Thanks,
Daniel

DaveT · Aug 3, 2014

daniel Ox9EFD said:
On a site note, DaveT are you the same Dave from the google talk - Teslas decision to open-source patents - part 2 - YouTube ?
If so would you be doing more of those? I came across it by total accident and it was quite informative, certainly on the battery front.

Yep, you can access other recorded google hangouts from here, Google+ video hangouts (TSLA other investments) . The last one was just a few days ago.

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Can Tesla hit the 35000 a year target in 2014?

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