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EU Market Situation and Outlook

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I don't understand why people expect the sales of a car to just continue growing after 4 years.The Model S is getting older and the refresh really wasn't significant. Meanwhile Mercedes launched the E-Class and Porsche the new Panamera. BMW 5-Series and Audi A6 are following soon.

Almost all cars have the cycle of high sales when they launch and then dropping numbers. The only reason Tesla was a bit different in the beginning was that the production ramp up was slower and it took some time for EVs to catch on. In addition the currency exchange rate also doesn't help Tesla, which btw. is already interesting regarding the UK where I don't think they have adjusted it yet.
 
I don't understand why people expect the sales of a car to just continue growing after 4 years.

It is because Tesla has not reached market saturation in terms of mindshare or geographic footprint. Tesla is not even in Southern Italy or the Iberian Peninsula. Up to now 10% of Europeans that buy cars in this class know about Tesla? As we get closer to 50% and then 100% of Europeans knowing about Tesla and having a local service center many expect Model S sales to grow.
 
is it because Europe is waiting for model X? I thought Europeans do not prefer SUVs like MX.

Or, is it due to something else?

My guess is stronger Dollar vs Euro, Pound Sterling,and Norwegian Kroner.

And a bit of "osbourning" with Auto Pilot II and Model 3 on the horizon.

Europeans keep harping Model S is too big. Many even say Model 3 is too big and want something smaller.

Switzerland 2016 June YTD 795 Model S
Switzerland 2015 June YTD 638 Model S

Difference is 157 units or up 19.7%

The Swiss Franc is doing just fine against the USD.
 
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If you look at the charts, the EUR/USD is pretty much exactly the same for 2015 and 2016. The big fall for the Kroner happened in 2014 and British sales are actually going up. I don't think currency exchange rates can explain the drop between 2014 and 2015.


I am talking about 1st half 2015 vs 1st 2016.

And the drop in the Pound is recent. That effect, if any, will be in the second half.
 
I would guess for Germany there are at least three contributing factors:

1) The price hike. Model S price has risen year after year and is now way beyond what would be considered good value by many potential customers.
2) SUV's have become quite popular in recent years, so waiting for Model X might have been a reason for some.
3) Model 3 on the horizon. I would wager most people who can afford a model from the current lineup have by now bought their S or ordered their X. But many people who want a Tesla can't afford an S or X, so they are waiting for the 3. I am sure Model 3 numbers in Germany will be quite impressive. For example I know only of one colleague who has a Model S, but quite a few who have put down reservations for a Model 3.

I am particularly interested in seeing how Model X registrations develop over here. The numbers show 16 for June, the first month with separate numbers for Model X. Haven't got access to the July numbers as yet.
 
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The big fall for the Kroner happened in 2014
It happed in 2014 AND 2015, and Tesla waited a bit to adjust the price to the new exchange-rate (which happened in a lot of smaller price adjustments in this years), so most of the time the car was lower priced then if they had used the official at-the-time exchange from US price to Norwegian price. But now it is about correct, except for the Model X where they seems to use an higher exchange-rate then the official/what they use on the Model S, probably in an expectation that the NOK should continue to fall.
 
I am talking about 1st half 2015 vs 1st 2016.

Makes no difference at all : average exchange rate in the first half of 2015 : 0,895735 eurocents to the dollar; first half of 2016 : 0,89609 eurocents to the dollar. Less than a tenth of a percent difference.

And the drop in the Pound is recent. That effect, if any, will be in the second half.

I thought you were talking about 1st half of 2015 vs 1st of 2016.
 
Makes no difference at all : average exchange rate in the first half of 2015 : 0,895735 eurocents to the dollar; first half of 2016 : 0,89609 eurocents to the dollar. Less than a tenth of a percent difference.



I thought you were talking about 1st half of 2015 vs 1st of 2016.

In 1st half of 2016 is when we saw previous run up in the dollar manifest in higher Tesla prices and lower deliveries . Like many companies, Tesla tries to resist price hikes based on currency fluctuations.

Yes, I made mistake lumping the pound in with other European currencies.

End result is stronger dollar has led to higher prices in European currencies than have led to lower deliveries.

The exact point when currency fluctuations turn into higher prices and when exactly that turns to lower orders and when exactly those lower orders turn into lower deliveries is beside the point.
 
The exact point when currency fluctuations turn into higher prices and when exactly that turns to lower orders and when exactly those lower orders turn into lower deliveries is beside the point.

Sure, by handwaving exact timings it's possible to support any conclusion. Anyway, we'll see with the introduction of the 60 to the European market if sales pick up in Q3/Q4 versus Q1/Q2.
 
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The 60 is the right car for "most people" (many of those "most people" who also don't know what DC or AC is or what power/energy are). just under 200 mile range on average and most people don't drive that much per day. If they did, it would be 1000+ weeks and 50,000 mile years.

At least 45% or more of orders by named customers since June 11th re-introduction of the MS60 appear to be that MS60 variation, including to HongKong, Europe and other. The reason is people are not lured into range anxiety issues as they once were a few years ago. The more they know, the less on-board energy *and* power is needed. And, as more superchargers exist, range anxiety drops. And economically, the MS 60 is good. What they are doing with the car is back-loading it with "value" such that as a CPO they can sell it for more. How much more? maybe $4000 more - and not $9000 as a CPO option. A CPO MS60 in 3 years will definitely not be $9000 cheaper than a CPO "switch-flipped" MS75. In fact, the same kind of buyer will be wanting them to "un-switch-flip" the CPO down to a 60 if the delta is too large. At the same time, the Model 3 and other cars on the market will make MS75 or 90 even less desirable on battery capacity alone. The power aspects (hot acceleration) of P90D and P90DL will be a calling card and 3-4 year old cars will be under a demand cycle of appx 50% of original price. Just as we see now with the P85+ and P85 RWD sales. The value Musk talked about on the ER Q&A session may be good to talk-up with banking partners ("we will get thousands more at CPO time when we sell a 60 today, 75 as CPO - good for residual value") but what will that true value delta be in 3-years that the market will bear? Nobody knows - too far off.
 
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Statistics of the public disclosure by a statistically significant percentage of custom orders. Since Tesla does not produce a print of the model variety orders or sales, there is no way to validate anything other than ASP (via gross vehicle revenues divided by delivery count). But the MS60 is very popular ever since June 11. And hardly anyone is stating they want a 75. Some want 90s and P90Ds. But the 75 looks "off the charts ignored" versus the 60 and 90. They sure made a lot of inventory P90D and P90DL - those can be used to make first-timers "giddy" during test drives and then even offered on big discount over letting a buyer custom order something. As we have seen, mileage, old fascia and age accumulate as discounting allowances. Not unlike dealerships of ICE vehicles.

It's simply business and economics and does not look different than any other evolving product.

Another consideration is this.
MS60 attracts in Model 3 buyers today - as they indicated on the Q2 ER Q&A call.
Where they discussed "Model 3 buyers wanted a way to get a Tesla now..."
Those Model 3 buyers may have this thought "Well, I was only going to get about 50-55 kWh in a Model 3 anyway and wasn't going to have Supercharger access standard, so MS 60 makes sense."
 
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Europe demand has been impacted by reduced or eliminated tax benefits in Norway and Denmark.

I think it is time to start complaining loudly about and to agencies who are not offering even more tax fund incentives to give to EV buyers in large quantities. From CA CARB to Norwegian legislators to Denmark tax administrators. There is a lot of blame to go around in governments not offering far more money to EV enthusiasts. I think there should be a march on all world governments by EV clubs shouting for more funds to be given out to them.
 
I think it is time to start complaining loudly about and to agencies who are not offering even more tax fund incentives to give to EV buyers in large quantities. From CA CARB to Norwegian legislators to Denmark tax administrators. There is a lot of blame to go around in governments not offering far more money to EV enthusiasts. I think there should be a march on all world governments by EV clubs shouting for more funds to be given out to them.
You realize someone has to pay for all that stuff in the end? Gas is already taxed incredible high taxed in most of Europe. Denmark and Norway tax the ***** out of premium cars. Here in Germany people are already pissed off with all the renewable energy which resulted in a hike in their electricity bill.