I Usually Never Listen to Tesla Short Thesis' But....

[mdevp]

Sorry if its been posted before I tried to skim over but couldn't find anything (haven't posted in awhile) What do people think about Tesla sales vs comps when they all will pretty much have the 7500 credit for a long time.
What I'm worried about is that huge sales surge of anything right before any rebate ends. I've talked to people buying and they all are think the Tesla rebate ends and doesn't taper off, I wonder if 2Q will look great then 3Q and the rest of the year will not...Thanks

 

[CoastalCruiser]

I think I understand your question. Perhaps there will be a drop in sales when the Federal tax credit gets cut in half, or after it tapers to zero. And other brands will still have the credit. Could happen.

But for any buyer that takes the time to educate themselves, many may realize that the super charger network makes it worth it to purchase the Tesla even if the bottom line cost is higher. Not to mention the other advantages of the Model 3. It will be interesting to see what happens.

 

[Unpilot]

If Tesla had viable competitors today that might be an issue. But as the poster above states there is NO competitor if you want a viable car that is not restricted to the city.

 

[commasign]

Tesla Model 3 in particular is priced very competitively. If you go to the BMW website and price out a 340i xDrive with navigation, driver assistance, and adaptive cruise control, it's about the same price as a Model 3 LR AWD with autopilot. Same goes for a base BMW 320i vs Model 3 SR RWD. Honestly, in the long run, I don't think the lack of a tax credit will matter.

 

[skitown]

I think the mostly likely scenario is that Q2 will be a delivery "miss" as Tesla targets their 200K delivery on July 1st, thus setting the stage for two more full quarters of the $7500 federal credit. Let's face it, the way that law was written was weird, but is what it is. So, the next 6 months will be huge IMO. And then the way the credit cuts in half and then in half again over the following two more quarters will make for more of a soft landing. I fully expect Tesla to up their game across those final two quarters creating a soft landing. And by then, there will be tens of thousands of Model 3s running around boosting demand in a way we've never seen before. In other words, I'm not worried at all.

 

[Fellsteruk]

In the UK the credit is about half what you guys get but I didn’t buy a Tesla or an EV because of the rebate.

I’m not sure no rebate would make much of a difference, would it...?

I’d have still placed my order even if no rebate.

 

[J X 3]

They focus deliveries on US while the credits are available and then shift more towards international.
Folks that have reservations will know what's what while MS&X have a 2-3 months waiting period so any impact won't be visible in next few quarters.
Beyond that, they can tune their offering and if nothing goes wrong, they should have above 25% auto margins in second half 2019 so room to adjust while keeping margins at 25%.
Geo expansion will help demand too.
S&X could use a major upgrade in first half of 2019 and if they do have that, they could even aim for above 100k units per year. If no upgrade and they are still limited at 100k, the competition is more of a problem than tax credits - E-Pace, Mission E, the Audi.
For M3 long term sustained demand is hard to grasp and too early for now. It's likely (but not certain) that demand will be there once more are on the road and more folks get to ride in one.
It would be reasonable to see a large wave of cancellations in Q2 from folks that wanted the base model with full tax credits but that's a one time thing and it's not all bad. Base model with no options is much lower margins and drags ASP down too.

 

[jelloslug]

People said the same thing about Toyota and the Prius when it's tax credits went away. Sales continued upward for years and years after that.

 

[Icey]

I’d have still placed my order even if no rebate.

Same here down in Australia, Bugger all rebates. Still purchased one.

 

[wdolson]

There has always been misunderstandings about the tax credit. We had a very long thread about it where the same questions got answered over and over again. If people think the incentive ends at 200K, then they will likely be pleasantly surprised to find its still going after July 1. Sales may dip very slightly July 1, but Tesla will be up to their armpits with deliveries, so it won't make much difference for a month or more by which time sales will have picked up again.

Tesla's profit margin per car is extremely large for the car industry and is getting bigger as they achieve economies of scale and other cost cutting. There are a lot of rumors of a Model S and X refresh coming early next year, right around the time the incentive gets cut. They were originally planning it for later this year (according to the rumors) which was probably when they originally thought the incentive would get halved.

As part of the refresh the cost of production of the S and X might go down (switch to 2170 battery cells, sharing parts with the Model 3, ans/or other economizing measures). When they have saved money in the past on production they have either pocketed the savings or effectively reduced the price of the car by keeping the price the same and adding features. This time they could cut the prices of the S and X so the cost is about the same or a little cheaper for those who lose the incentive. The Model 3 can't achieve such cost savings yet, but they might tweak the price down a little to compensate.

 

[Gen3]

In the UK the credit is about half what you guys get but I didn’t buy a Tesla or an EV because of the rebate.

I’m not sure no rebate would make much of a difference, would it...?

I’d have still placed my order even if no rebate.

A big rebate will make a difference with the lowest price models. Not so much with higher prices

 

[MXWing]

In 6 months, Tesla can probably reduce costs for Model 3 based on economy of scales and lower cost of technology to compensate for some of loss of credits.

PM3 beats a BMW M3 not counting any credits at all.

Does BMW have credits on the M3?

 

[adaptabl]

Tesla's profit margin per car is extremely large for the car industry and is getting bigger as they achieve economies of scale and other cost cutting. There are a lot of rumors of a Model S and X refresh coming early next year, right around the time the incentive gets cut. They were originally planning it for later this year (according to the rumors) which was probably when they originally thought the incentive would get halved.

That is not been proven. We will see in a few days what the cost are.

 

[Joe F]

I tried to drive the rebate; It didn't do so well...

I then drove the MS everywhere. Best and fastest car I've ever owned, rebate or not.

 

[Peteski]

In the UK the credit is about half what you guys get but I didn’t buy a Tesla or an EV because of the rebate.

I’m not sure no rebate would make much of a difference, would it...?

I’d have still placed my order even if no rebate.

Same here. I would have bought my Model X regardless. There is simply no competition at the moment.

 

[30seconds]

The international demand at these price points will be substantially larger than the US demand.

In other words, demand for $80k+ cars is disproportionate to the US as it is the largest / second largest market but with a smaller population than Europe or China.

When you get to the $40k range these, plus other areas of the world kick in substantially.

 

[tivoboy]

The international demand at these price points will be substantially larger than the US demand.

In other words, demand for $80k+ cars is disproportionate to the US as it is the largest / second largest market but with a smaller population than Europe or China.

When you get to the $40k range these, plus other areas of the world kick in substantially.

I have to take a bit of a stance with this thinking. In most international markets where Tesla operates, the price points for these types of cars and competitors cars is SIGNIFICANTLY higher than in the USA. Relative to other options and incomes, western european, UK, Asia market pricing is much higher. So, that international buyer is much less price sensitive when a car like this is 60K, 70K or higher.

 

[H2050]

U.S. is not the only country wanting Tesla.

Even if there is ZERO demand in North America, China will easily fill the M3 Quota, and there is Europe and the rest of the world.

 

[mdevp]

What I am thinking if I were a Machiavellian CEO of Jaguar is make very little profit margin on the Etype, and you have the 7500 rebate. You blame the low profit margin on ramping up, that'll make the lowest optioned Jag w/90kWh on par with M3 LR dual. Right? not 100% sure.

 

[AviP]

i'm on the cusp of canceling my order. Line waiter for the SR AWD. Between cramped back seats and loss of the rebate, I can't justify the $41K. I already have a bunch of vehicles that have limited use and this would add to it. Too bad those back seats suck!