I sold may shares in Tesla today, not because of the so called decline in sales in September, but because there may be a fall-off in sales in the 4th quarter due to most buyers waiting until February to get all-wheel drive. Very interested in thoughts by others on this possibility.
The performance buyers wanting all-wheel drive and nonperformance buyers not wanting all-wheel drive can get a model S in December, but are there enough of these buyers to meet 4th quarter goals? First quarter of 2015 should be a good one. Will there be a 4th quarter warning during the the call next week?
CORRECTION: I realized I basically double counted the way the lag from start of production to delivery helps Tesla with this transition by looking at both ends of the change. Rather than reworking the whole post, the bottom line comes to a little over a 4 week window of production, or ~4,000 orders, that needs to be filled from people on the existing backlog who are content to stick with a rear wheel drive car. That's assuming P85 deliveries begin 12/15. If they start 12/1, roughly 2,000 orders, worst case, if by December deliveries they mean 12/31, a little over 6,000 orders.
I'd guess the Model S backlog was over 10,000. If the wait in China is still 4-6 months, I'd say there's considerably more than a 10,000 order backlog. I wouldn't completely dismiss there being a potential gap of rear wheel drive orders drying up before P85D comes online, but I'm not concerned that there will be a large gap. As Curt well pointed out, this company is about much larger future aspirations than a
potential logistical hiccup on the order of about 1,000 cars. fwiw, if this did happen, I would expect them to build those ~1,000 rear wheel vehicles for use as loaners, so possibly something for Wall Street to make some silly noise about, but actual business results wise, pretty much a non issue.
ORIGINAL POST:
I was somewhat concerned about this at the time of the announcement. If you look at the logistics though, I think we are fine. It takes Tesla 2 weeks to build a Model S and IIRC 3-6 weeks to deliver it depending if it's local (North America) or shipped to another continent. The announcement was 10/9. People are locked into their cars when it starts production. So basically, Tesla had people who were locked into their existing orders up through cars starting production 10/9 and rolling off the production line 10/23. So, even if you take the low end of the 3-6 week delivery timeframe, Tesla already had cars locked in place through about 11/14 (adding in 3 weeks delivery time to 10/23). So 11/14 is about where they need orders from their backlog sticking around after the 10/9 announcement.
Coming from the opposite side of the transition, P85D deliveries begin in December, let's say December 15. Again, it takes two weeks to build the cars and a minimum of about 3 weeks to ship. So, if they are looking to deliver P85Ds beginning 12/15, they need to start production of P85Ds 5 weeks earlier, about 11/19.
Putting both sides of this transition together, they just would need about a weeks worth of production (about 1,000 cars) out of their backlog (pretty sure over 10,000) to be happy with an existing rear wheel drive order, and not switch to D to avoid a gap before P85D production starts. So, unless I made a miscalculation, I don't see any Q4 worries from this transition. Of course, how they do from P85D starting in December to 85D and 60D starting in February possibly causing Q1 2015 issues would be another question to look into.
