Should Tesla publish monthly sales numbers?

[AudubonB]

I entered this thread pre-opinionated to say "No, they should not". Thinking about it just a little more got me to wondering about how Tesla could, if it so desired, singe the King of Spain's beard just a little bit more by...wait for it...

...publishing daily sales numbers.

They could do it; it wouldn't cause any additional work for them; it would give Ford and Toyota and GM and VW and BMW conniption fits, and it certainly would throw one heckuva fistful of sand into the FUD-machine.

 

[evme]

When other manufacturers report sales. Do they report sales to consumers or sales to the dealer?

 

[mrdoubleb]

I beleive from a TSLA point of view this may be a bad idea. Look at how much FUD is out there today by deliberately "misunderstanding" data. So imagine when we have the first month of the Q focusd on filling those boats for the rest of the world and US deliveries suffering, than things turn the other way around for the end of the quarter... we all know and understand this, but do you want 15 headlines per day on SA about Tesla's sales collapsing, etc. as bears pervert the truth?

 

[ItsNotAboutTheMoney]

When other manufacturers report sales. Do they report sales uto consumers or sales to the dealer?

Consumer.

 

[jhm]

I entered this thread pre-opinionated to say "No, they should not". Thinking about it just a little more got me to wondering about how Tesla could, if it so desired, singe the King of Spain's beard just a little bit more by...wait for it...

...publishing daily sales numbers.

They could do it; it wouldn't cause any additional work for them; it would give Ford and Toyota and GM and VW and BMW conniption fits, and it certainly would throw one heckuva fistful of sand into the FUD-machine.

Yeah, I think daily could be really cool. In fact, they could put a cumulative delivery counter right on their web page for everyone to see.

The curious thing about reporting frequency is that as frequency goes up the significance and attention goes down, not up. For example, the Summer Olympics happen only once every four years and people all over the globe tune in and pay attention. If the Olympics happened every summer then, it would not be that big of a deal. So reporting Tesla's sales every quarter makes it a pretty big deal and anyone trading around ER is pretty fixated on whether the next ER will be a hit or a miss. Reporting daily would end this obsession. Traders would pretty much ignore the daily gains in cumulative sales as this information filters smoothly into valuations. So I see frequent reporting of sales as a technique for de-emphasizing this metric of growth.

 

[AudubonB]

Yeah, I think daily could be really cool. In fact, they could put a cumulative delivery counter right on their web page for everyone to see.

The curious thing about reporting frequency is that as frequency goes up the significance and attention goes down, not up. For example, the Summer Olympics happen only once every four years and people all over the globe tune in and pay attention. If the Olympics happened every summer then, it would not be that big of a deal. So reporting Tesla's sales every quarter makes it a pretty big deal and anyone trading around ER is pretty fixated on whether the next ER will be a hit or a miss. Reporting daily would end this obsession. Traders would pretty much ignore the daily gains in cumulative sales as this information filters smoothly into valuations. So I see frequent reporting of sales as a technique for de-emphasizing this metric of growth.

PreCISE​ly!!!! It defuses the situation.

 

[jhm]

Question, if Tesla were to post cumulative sales daily on their website, how would you use that information to make trades?

 

[TexasEV]

It's just financial porn that is best ignored by long-term investors.

 

[Johan]

Question, if Tesla were to post cumulative sales daily on their website, how would you use that information to make trades?

I guess the point would be that there wouldn't be much trading on that metric anymore, by anyone.

 

[dalalsid]

I guess the point would be that there wouldn't be much trading on that metric anymore, by anyone.

On the other hand some SA writers would have article-fodder daily! Peak sales in whichever market the orders were lower on a day than the day before . But yes I totally support the daily updates.

 

[Robert.Boston]

Perhaps a real-time ticker, with cumulative orders. That way the analysts would have to work to build a time series.

The problem with daily/real-time is that cancellations would be quickly visible. I'd hate to see another f**e, say, and suddenly 500 orders get cancelled. Wouldn't the press have fun with that?

 

[jhm]

On the other hand some SA writers would have article-fodder daily! Peak sales in whichever market the orders were lower on a day than the day before . But yes I totally support the daily updates.

The interesting thing about having a credible daily source is that if the FUDsters have any success moving the price on a misleading interpretation, then you quietly enter into the counter trade on the basis of knowing the facts and applying a fair interpretation. A little while later, the rest of the market catches up on the same basis, and you pocket the difference. This also works if someone should try to hype up sales beyond a reasonable interpretation of the daily counter. So either the counter protects you from hype and FUD or you can arb the distortions, either way, it's a win for shareholders.

 

[The Blue Owl]

The interesting thing about having a credible daily source is that if the FUDsters have any success moving the price on a misleading interpretation, then you quietly enter into the counter trade on the basis of knowing the facts and applying a fair interpretation. A little while later, the rest of the market catches up on the same basis, and you pocket the difference. This also works if someone should try to hype up sales beyond a reasonable interpretation of the daily counter. So either the counter protects you from hype and FUD or you can arb the distortions, either way, it's a win for shareholders.

I agree.

I see no reason to believe it would add to volatility, as some suggested. If anything, it should decrease it. More accurate information means, by definition, less uncertainty, and volatility is simply how the market prices uncertainty into the stock.

That doesn't mean that observed volatility would necessarily go down, since a sizeable fraction of market participants have proved time and again incapable of forming rational thoughts on the subject of Tesla, no matter how much information they're given. But it would help rational investors make better short-term decisions, as you noted.

 

[jhm]

Perhaps a real-time ticker, with cumulative orders. That way the analysts would have to work to build a time series.

The problem with daily/real-time is that cancellations would be quickly visible. I'd hate to see another f**e, say, and suddenly 500 orders get cancelled. Wouldn't the press have fun with that?

I find that in crisis situations the truth is often more reassuring than the worry. Investors might worry that 500 orders could be cancelled, but when you look at the ticker and see that only 91 have been canceled, you breathe a sigh of relief. Moreover when you check back later you see immediately that more orders are coming online. The ability to recover confidence quickly in a crisis is really key to minimizing the damage.

 

[techmaven]

Tesla's monthly delivery data is definitely volatile. If you look at the Barclay's graph of NA deliveries over the past year for instance, the difference between the 1st month and the last month of a quarter can approach 2:1.

Imagine if Tesla had released monthly information while the plant was shut down for 3 weeks. The overreaction to both the lows and the highs would be far higher than it is today.

Other car manufacturers have significant amounts of inventory sitting on lots to buffer production variances. Tesla does not. For example, Cadillac churned out a couple thousand ELR's pretty quickly and then that plant switched back to making other cars. That inventory now sits on dealer lots and it might take a year or more to sell through that inventory. Other car manufacturers are able to produce a car model in volumes exceeding demand and then switch to another car model. They have other plants to produce vehicles when one plant is idled for upgrades, maintenance, or whatever. They have inventory sitting at dealer lots. All of that buffers the variance and therefore the monthly sales figures are usually not in a demand constrained environment and reflect actual demand. Tesla's build to order model of a single car combined with production constraints means that the delivery variance reflects a single plant's production and delivery delays that would need smoothing in order to make sense of it.

The biggest problem is that people are still equating deliveries to demand which is not true for Tesla, at least not yet. The only reason to have more granular data is to have more insight into Tesla's business, specifically customer demand. However, none of the delivery information will give you a true view of customer demand since Tesla is clearly still production constrained.

 

[The Blue Owl]

Tesla's monthly delivery data is definitely volatile. If you look at the Barclay's graph of NA deliveries over the past year for instance, the difference between the 1st month and the last month of a quarter can approach 2:1.

Imagine if Tesla had released monthly information while the plant was shut down for 3 weeks. The overreaction to both the lows and the highs would be far higher than it is today.

[...]

The biggest problem is that people are still equating deliveries to demand which is not true for Tesla, at least not yet. The only reason to have more granular data is to have more insight into Tesla's business, specifically customer demand. However, none of the delivery information will give you a true view of customer demand since Tesla is clearly still production constrained.

You're right, but I agree with jhm that it would allow those who understand Tesla to make better trading decisions. If the bears insist on giving me their money because they cannot interpret the information, why not take it?

As it is, the FUD merchants are still at it, except there is less reliable information in the market to be used by the other side.

 

[dalalsid]

Tesla's monthly delivery data is definitely volatile. If you look at the Barclay's graph of NA deliveries over the past year for instance, the difference between the 1st month and the last month of a quarter can approach 2:1.

Imagine if Tesla had released monthly information while the plant was shut down for 3 weeks. The overreaction to both the lows and the highs would be far higher than it is today.

Other car manufacturers have significant amounts of inventory sitting on lots to buffer production variances. Tesla does not. For example, Cadillac churned out a couple thousand ELR's pretty quickly and then that plant switched back to making other cars. That inventory now sits on dealer lots and it might take a year or more to sell through that inventory. Other car manufacturers are able to produce a car model in volumes exceeding demand and then switch to another car model. They have other plants to produce vehicles when one plant is idled for upgrades, maintenance, or whatever. They have inventory sitting at dealer lots. All of that buffers the variance and therefore the monthly sales figures are usually not in a demand constrained environment and reflect actual demand. Tesla's build to order model of a single car combined with production constraints means that the delivery variance reflects a single plant's production and delivery delays that would need smoothing in order to make sense of it.

The biggest problem is that people are still equating deliveries to demand which is not true for Tesla, at least not yet. The only reason to have more granular data is to have more insight into Tesla's business, specifically customer demand. However, none of the delivery information will give you a true view of customer demand since Tesla is clearly still production constrained.

Tesla can just report daily global orders (deposit received). Quarterly delivery reports are ok.

 

[jhm]

Any trader who sells on the plant being down for 3 weeks for an upgrade is offering a discount to longterm investors who value growing capacity.
Any trader who sells because 2 weeks of production is being loaded up and shipped to China is offering a discount to longterm investors who value international growth.
Any trader who buys because 1 week of sales is twice the weekly number produced is paying a stupidity premium.
I could go on...

 

[chickensevil]

Because none of this data is a true reflection of total market demand I am sorta opposed to seeing either the order counts or the delivery counts. The only thing that I might be in favor of is a global counter that shows how many Tesla's have been delivered, since this would also line up with a picture of the state of the global switch to electric vehicles.

The reason I don't really want more granularity on regional deliveries or the orders is as follows:

regional deliveries would not reflect true demand since they shift cars whereever they feel like it needs to go at the time. As has been stated this causes some countries to go from 0 deliveries to 500 deliveries and back again. So the only way you get useful data potentially out of this would be to zoom way out to like a year or six months and average the numbers to see sorta what the demand *might* look like.

On the ordering front this isn't a true picture either since Tesla doesn't have 100% market penetration. There are states here in the US that still don't even have one single store/gallery or even a service center! How much worse are the other countries on market penetration if Tesla's home country isn't even at 100% penetration yet. Cars are an interesting thing compared to most other consumer goods. Cars tend to come on upgrade cycles. Depending on the person you hold the car for 3, 5, 10, or even longer. But let's just assume that the average for someone who can afford a 106k ASP car is 3 years. This means that if today Tesla could build as many cars as it wanted AND everyone capable of making that purchase knew enough details about the car to make an informed decision... it would still take 3 years for everyone who *would* buy a Tesla Model S to actually sort through those purchases. If the average replacement time is higher then that spreads the numbers out even farther. So a *true* picture of demand assuming the whole world knows everything there is to know about Tesla would not be captured until you examine that 3 year (or whatever the timeframe) picture.

Now, since we don't even have 100% awareness about the brand's existence (there are people who still ask me what is "Tesla" or "you can buy that outside of California?") the "order rate" is in no way going to give you a good picture of this. Nevermind all the people who don't have a clear picture of the Model S to judge the product "fairly" or whatever. So I would totally buy Elon's comment about driving up demand "at-will" which is why it makes a ton of sense why they don't tell us the order backlog... because that doesn't tell you anything about the demand.

 

[dalalsid]

Because none of this data is a true reflection of total market demand I am sorta opposed to seeing either the order counts or the delivery counts. The only thing that I might be in favor of is a global counter that shows how many Tesla's have been delivered, since this would also line up with a picture of the state of the global switch to electric vehicles.

The reason I don't really want more granularity on regional deliveries or the orders is as follows:

regional deliveries would not reflect true demand since they shift cars whereever they feel like it needs to go at the time. As has been stated this causes some countries to go from 0 deliveries to 500 deliveries and back again. So the only way you get useful data potentially out of this would be to zoom way out to like a year or six months and average the numbers to see sorta what the demand *might* look like.

On the ordering front this isn't a true picture either since Tesla doesn't have 100% market penetration. There are states here in the US that still don't even have one single store/gallery or even a service center! How much worse are the other countries on market penetration if Tesla's home country isn't even at 100% penetration yet. Cars are an interesting thing compared to most other consumer goods. Cars tend to come on upgrade cycles. Depending on the person you hold the car for 3, 5, 10, or even longer. But let's just assume that the average for someone who can afford a 106k ASP car is 3 years. This means that if today Tesla could build as many cars as it wanted AND everyone capable of making that purchase knew enough details about the car to make an informed decision... it would still take 3 years for everyone who *would* buy a Tesla Model S to actually sort through those purchases. If the average replacement time is higher then that spreads the numbers out even farther. So a *true* picture of demand assuming the whole world knows everything there is to know about Tesla would not be captured until you examine that 3 year (or whatever the timeframe) picture.

Now, since we don't even have 100% awareness about the brand's existence (there are people who still ask me what is "Tesla" or "you can buy that outside of California?") the "order rate" is in no way going to give you a good picture of this. Nevermind all the people who don't have a clear picture of the Model S to judge the product "fairly" or whatever. So I would totally buy Elon's comment about driving up demand "at-will" which is why it makes a ton of sense why they don't tell us the order backlog... because that doesn't tell you anything about the demand.

They don't need to be that granular or regional. Global or per continent (NA, Asia, Europe) is ok. Global daily order count, quarterly delivery count.