[UK] Model S/X LHD Discussion

[WannabeOwner]

It cant be more than 10% of the car surely?

I'm thinking they need to place contracts with supplier for the "RHD specific" bits. And maybe there is some change-over on the assembly line?

When it comes to wanting to do RHD, initially, there will no doubt be some shall-we/shan't-we discussion about size of market / timing to then place forward-orders / parts-contracts and so on.

Also possible that a revamp is on the cards, and they don't want RHD customers/sales just before the revamp

But personally I'm fearing the worst, as I was looking forward to having one.

 

[WannabeOwner]

I've now read the article. So that just refers to Asia-Pacific region ... here's a straw-clutch then: Tesla are going to build MS/MX in China, and service that market from there ... but not just yet.

 

[Lets go Plaid]

I've now read the article. So that just refers to Asia-Pacific region ... here's a straw-clutch then: Tesla are going to build MS/MX in China, and service that market from there ... but not just yet.

I doubt this. Why have 2 factories building right hand drive X and S cars. Such a small percentage of their total output. The cost of setting up an additional line would be prohibitive for such low volume.

 

[Medved_77]

I read that Shanghai could soon be supplying cars to Canada.
Good rebates in Canada for buying EVs with no stipulation that they must be manufactured in a certain country.
Would free up Freemont to produce 3/Y just for the US, which also has good rebates but does stipulate they must be produced in the US.

Shifting X/S Production away from Freemont to Shanghai where they are used to producing left and right hand drive cars could be the plan.

 

[WannabeOwner]

Shifting X/S Production away from Freemont to Shanghai where they are used to producing left and right hand drive cars could be the plan.

Only negative, for me, with that thought is why not suspend deliveries in all RHD countries - i.e. including UK?

 

[Overworked]

...

Shifting X/S Production away from Freemont to Shanghai where they are used to producing left and right hand drive cars could be the plan.

When I bought my M3 in late 2021 I was concerned at the fit and finish problems reported online but it seemed in the UK this related to M3P which came from Fremont. It soon became clear that Shanghai quality was superior, and when my M3 arrived it was perfect.

If the S now came from Shanghai I would have no concerns.

 

[Tonybvi]

Here’s a thought. If they do actually cease to supply MS and MX to the RHD market over here will those of us who have been hanging on to our legacy vehicles waiting for the new ones to arrive actually have an appreciating asset / future collectors piece on our hands. The MX was only sold here for 4 or 5 years so would be relatively rare. (Just clutching at straws here!)

 

[FastLaneJB]

I read that Shanghai could soon be supplying cars to Canada.
Good rebates in Canada for buying EVs with no stipulation that they must be manufactured in a certain country.
Would free up Freemont to produce 3/Y just for the US, which also has good rebates but does stipulate they must be produced in the US.

Shifting X/S Production away from Freemont to Shanghai where they are used to producing left and right hand drive cars could be the plan.

Seems like a lot of hassle for 2 cars they seem to be struggling to sell. And not sure they need to increase 3 and Y lines either, they've still got factories to ramp up in the US also and 3 and Y demand is also weak.

 

[ariharry]

When I bought my M3 in late 2021 I was concerned at the fit and finish problems reported online but it seemed in the UK this related to M3P which came from Fremont. It soon became clear that Shanghai quality was superior, and when my M3 arrived it was perfect.

If the S now came from Shanghai I would have no concerns.

I don’t understand why Freemont built vehicles are so random in terms of build quality, especially given that the S/X are meant to be their premium offering. Poorly paid and treated workers may have something to do with it.

I agree we’d benefit from Chinese built S/X but shifting production must be a significant undertaking / cost, though I expect many components for the S/X are built in China already.

We’ll see how things unfold for the UK over the next week. If they stop taking orders here also, I’d expect some form of announcement (well, normal companies would).

 

[Medved_77]

Seems like a lot of hassle for 2 cars they seem to be struggling to sell. And not sure they need to increase 3 and Y lines either, they've still got factories to ramp up in the US also and 3 and Y demand is also weak.

I'm not sure which figures you're referencing but looking at the 10-Q for Q1 this year their automotive revenues were up 22% compared to the same period the previous year. Not sure how increased revenues at the same time as reducing prices indicates weak demand?

If you're looking at inventory levels then consider those as a percentage of cars produced.
If you're looking at order backlogs then consider if you'd prefer the cash for the order realised or pending.

Gross margin took a hit this quarter, compared to this time last year, reducing from 29% > 19% no doubt due to the price cuts. So why not move more production to China, where cogs are lower?

 

[Jonnymack74]

Here’s a thought. If they do actually cease to supply MS and MX to the RHD market over here will those of us who have been hanging on to our legacy vehicles waiting for the new ones to arrive actually have an appreciating asset / future collectors piece on our hands. The MX was only sold here for 4 or 5 years so would be relatively rare. (Just clutching at straws here!)

This would be the only good thing for me and my model S. Bad for tesla as I'd only be interested in and X or S for my next EV. I'd probably move to Audi if this happened. Not interested in the 3 or Y

 

[GeorgeSymonds]

I'm not sure which figures you're referencing but looking at the 10-Q for Q1 this year their automotive revenues were up 22% compared to the same period the previous year. Not sure how increased revenues at the same time as reducing prices indicates weak demand?

If you're looking at inventory levels then consider those as a percentage of cars produced.
If you're looking at order backlogs then consider if you'd prefer the cash for the order realised or pending.

Gross margin took a hit this quarter, compared to this time last year, reducing from 29% > 19% no doubt due to the price cuts. So why not move more production to China, where cogs are lower?

We know U.K. Q1 2023 was lower then Q1 2022, so in our context it’s falling

If we look at the brand globally, they’ve 2 factories (Berlin and Texas) they’re ramping up, but the ramp up has been faster than the demand. So they have sold more, but they’ve made even more. Demand globally isn’t dropping, its demand relative to production that’s the concern.

We’ll know pundits on Twitter are now saying China production has been halted for a while to try and correct this but that’s not really a long term solution. Tesla also seem to be taking action exactly where you’re suggesting they should be moving production. Maybe they can’t import China cars to the US and keep the credits.

I agree inventory levels will increase as they expand, but Q4 saw more inventory than we’ve seen before, Q1 figures even more, and at this point in Q2 we’re nearly double the Q1 levels. They’ve not doubled production in a quarter to justify doubling of inventory

On the one hand it’s not that important to us locally as consumers, it might be good news if we’re looking to buy, but for Tesla as a company, the sky high share price was predicated on a number of elements, production doubling every couple of years being one. We’re seeing very clear market signs that this may not pan out, at least not on the current plans.

Back on topic, when looking at MS and MX production , they struggled to sell 60% of what they made in Q1. If demand is that weak, keeping that production line in operation at all doesn’t make a lot of sense. RHD markets aren’t going to fill the gap for more than maybe a few weeks. So they could be thinking about closing it altogether.

 

[Overworked]

...

Back on topic, when looking at MS and MX production , they struggled to sell 60% of what they made in Q1. If demand is that weak, keeping that production line in operation at all doesn’t make a lot of sense. RHD markets aren’t going to fill the gap for more than maybe a few weeks. So they could be thinking about closing it altogether.

I don't agree with the bolded part. Effectively they made 20k S&X and delivered 10k of them in the quarter. But just before the end of the final month end they announced that they were now selling them in new markets and it seems that a boat load was heading to Asia. That 10k shortfall will be sold in Q2.

I think they consider their selling horizon in a much longer term than the Wall Street quarter to quarter.

The major recent changes that I see in Tesla marketing is the effect of the IRA tax incentives to production in the USA. As the S and X will never benefit from the incentive it makes little difference to Tesla where it is built, but it requires a build and constructed in the USA to get all the tax benefits for the consumer and the battery and pack benefits for the manufacturer. That is why the RWD M3 now only gets half the tax benefit. That might give them an incentive to consider a rejig of their production lines - and move product to where it can be produced for their own best financial benefit.

 

[GeorgeSymonds]

Globally they’re now at 3500 MS and MX on inventory and it’s not even mid quarter and much higher than they closed Q1. They don’t seem to be selling that quickly. In Europe they’re offering discounts on some of these cars too

I’d agree it might be a more complex picture, but for different reasons. HW4 cars started to appear in the US before ships full of HW3 cars started to arrive in Europe, knowing there was this later spec including high def radar, etc, I suspect many opted to wait. US had similar issues with HW3 inventory stock which were very heavily discounted in the end.

But that’s kind of the problem across the board, some are holding out for HW4, or the updated M3, the MY has had suspension updates plus will it get its own Highland makeover, USS was a major case of shooting yourself in the foot, so lots of reasons why people might put off the purchase even if they’re committed to buying one eventually.

 

[FastLaneJB]

They'd not be dropping prices and their margins if they couldn't shift the cars. Yes it does help them sell more but they are also upping their production. If they keep going I suspect they might hit the issue of too much production and no more room to drop their prices. Just because you can make tons of cars doesn't mean you'll sell them all.

I mean frankly just 2 models in the UK doesn't really give much choice either.

 

[sam481]

Globally they’re now at 3500 MS and MX on inventory and it’s not even mid quarter and much higher than they closed Q1. They don’t seem to be selling that quickly. In Europe they’re offering discounts on some of these cars too

I’d agree it might be a more complex picture, but for different reasons. HW4 cars started to appear in the US before ships full of HW3 cars started to arrive in Europe, knowing there was this later spec including high def radar, etc, I suspect many opted to wait. US had similar issues with HW3 inventory stock which were very heavily discounted in the end.

But that’s kind of the problem across the board, some are holding out for HW4, or the updated M3, the MY has had suspension updates plus will it get its own Highland makeover, USS was a major case of shooting yourself in the foot, so lots of reasons why people might put off the purchase even if they’re committed to buying one eventually.

Getting rid of USS was an appalling misstep. Run vision in the background while vision gets up to speed but to get rid of it when vision is simply not fit for purpose ( likely to save a few quid) was laughable. I have wanted an X for a few years but I think I’m increasingly unlikely (even if they make RHD models) to go ahead with it. I like the look of the A6 etron - if they deliver on range and price I’m in.

 

[Pink Duck]

Getting rid of indicator/drive stalks similarly before a viable software solution in place.

 

[FastLaneJB]

Getting rid of indicator/drive stalks similarly before a viable software solution in place.

Yes you do have to wonder also if they had to backtrack from the yoke because it was putting people off buying the car.

I think I’d still get one but I’m pretty sure the turn signals would be a constant frustration. Good job as an ex-BMW driver I can manage without.

 

[Pink Duck]

BMW/Audi don’t come with blinker fluid reservoir, thankfully Teslas make use of their battery juice.

 

[FastLaneJB]

BMW/Audi don’t come with blinker fluid reservoirs, but Teslas run on battery juice.

I’m not sure Tesla stuffing the buttons on a moving object is going to help with roundabouts at all. They’ve clearly designed this for the US where it will be less hassle.

Frankly joke is on Tesla here. BMW/Audi is just bad drivers but Tesla is bad design. Good drivers who do indicate might well miss it or indicate in the wrong direction due to this stupid change.