Website wait times for delivery change

[Quant]

Vgrinshpun : 1. Thanks first for all for the great and valuable work you do ! Much appreciated !

2. Even though Elon recently said they had not seen much impact on incremental sales related to the VW mess, that was before Porsche also got embroiled in the emissions fiasco!

So, we cannot discount the possibility that SOME people in Europe ( very recently ) may have cancelled their Porsche orders and switched to Tesla. It would only take about 1000 incremental new orders from all of Europe combined to move delivery estimates in Europe by 2 weeks, right ? Maybe normally they would have received 300 in a few days, but if an additional 700 flowed in new in the past few days, from ex Porsche people, it would be enough to move delivery estimates by 2 weeks, maybe ?

Worth watching.....in the next month or so....

 

[schonelucht]

We've got another update, just two days after the previous change in estimated delivery times. It is pretty clear that Tesla is gearing up for a massive pipeline emptying: the European and Chinese estimated delivery times move out very fast, while the NA delivery times remain the same for more than a month now
(since 9/30//2015). This means that absolute majority of the cars manufactured between now and end of the year are diverted for deliveries in US. The allocation of the production to Europe is minimized, so as orders continue to come, the estimated delivery dates move out much faster than for NA.

This correlates very well with European sales numbers for October which are average at best and don't follow the record quarter Tesla is going to have.

 

[bh1783]

Maybe they are planning a major refresh on the Model S early next year (nose cone delete, ventilated seats, LED headlights, Autopilot 2.0 hardwware) and want to get rid of all the inventory before then.

 

[vgrinshpun]

The estimated delivery time for Australia was updated from January to February. The previous update for all Australian models (except P85D) was changed a month ago - on 10/14/2015.

 

[FredTMC]

We've got another update, just two days after the previous change in estimated delivery times. It is pretty clear that Tesla is gearing up for a massive pipeline emptying: the European and Chinese estimated delivery times move out very fast, while the NA delivery times remain the same for more than a month now
(since 9/30//2015). This means that absolute majority of the cars manufactured between now and end of the year are diverted for deliveries in US. The allocation of the production to Europe is minimized, so as orders continue to come, the estimated delivery dates move out much faster than for NA.

• estimated delivery times for Europe, GB and China moved out by two weeks (in just two days) - from Late January to February

View attachment 100242

thanks for this update. Your observations about pipeline emptying are very insightful.

In the next few weeks, I expect US to change from "December" to "Late December". Rear wheel drive 70 has been "late December" for a long time.

I wonder what the absolute cutoff is for east coast? I'm guessing 2nd week of December since it takes about a week to produce and then a week or more in transit. After Cutoff, I'm sure sales team will promote whatever inventory cars are still available (loaners and showroom cars). I've had some friends buy inventory cars. Good experiences.

 

[vgrinshpun]

I don't have hard data on the cutoff date for the East Coast delivery, but two weeks seems to be a reasonable assumption.

It will be interesting to observe if there is enough demand in NA to sustain this almost two month close to exclusive focus on NA deliveries. In order to facilitate this pipe emptying most of the production output need to be diverted to NA for almost two last month of the year. Based on the Q3 2015 letter Tesla guided a min production rate of 15K cars/quarter (equivalent to 60K per year). Normally only about 55% of this output would be allocated for deliveries in NA, but for the two last months of the year, all this production output needs to find it's way to the customers in NA. This is equivalent to a 60K/year rate of deliveries to NA. This rate, of course can't be sustained longer term, but if Tesla could sustain this for about two months without completely eliminating NA backlog, it will speak volumes about strength of the NA demand.

 

[AlMc]

I don't have hard data on the cutoff date for the East Coast delivery, but two weeks seems to be a reasonable assumption.

It will be interesting to observe if there is enough demand in NA to sustain this almost two month close to exclusive focus on NA deliveries. In order to facilitate this pipe emptying most of the production output need to be diverted to NA for almost two last month of the year. Based on the Q3 2015 letter Tesla guided a min production rate of 15K cars/quarter (equivalent to 60K per year). Normally only about 55% of this output would be allocated for deliveries in NA, but for the two last months of the year, all this production output needs to find it's way to the customers in NA. This is equivalent to a 60K/year rate of deliveries to NA. This rate, of course can't be sustained longer term, but if Tesla could sustain this for about two months without completely eliminating NA backlog, it will speak volumes about strength of the NA demand.

Vlad: Thanks for all the work you do to keep us abreast on Delivery timing. Do you see any problem with Q1 2016 delivery numbers if TM totally empties the pipeline?

 

[FredTMC]

I don't have hard data on the cutoff date for the East Coast delivery, but two weeks seems to be a reasonable assumption.

It will be interesting to observe if there is enough demand in NA to sustain this almost two month close to exclusive focus on NA deliveries. In order to facilitate this pipe emptying most of the production output need to be diverted to NA for almost two last month of the year. Based on the Q3 2015 letter Tesla guided a min production rate of 15K cars/quarter (equivalent to 60K per year). Normally only about 55% of this output would be allocated for deliveries in NA, but for the two last months of the year, all this production output needs to find it's way to the customers in NA. This is equivalent to a 60K/year rate of deliveries to NA. This rate, of course can't be sustained longer term, but if Tesla could sustain this for about two months without completely eliminating NA backlog, it will speak volumes about strength of the NA demand.

As MX production ramps in Dec to hundreds per week (per Elon), this'll soak up some production capacity. Depending on what you believe, it'll be between zero and 1500 MXs

 

[vgrinshpun]

For the Q4 2015, I personally think that it will be a cliff hanger. Tesla production will need to be working at a steady, all time record levels building MS, while launching/scaling production of MX, while having good luck with all the suppliers, and all the while making the record deliveries... It would be absolutely thrilling if they can pull it off, but in my view it is far from certain...

As for you question (looks like I've read your post a little to fast:smile, I do not think that the pipeline emptying will present a problem for Q1 2016. First, since Tesla guided for about 2K of deliveries coming from the pipeline, it will be only partial emptying (may be 50% or somewhat less), and there will be significant ramp in MX production. So even if about 2K worth of model S production will go to the pipeline filling, there will be still massive increase in the production during the Q4 2015. A expect them to guide for Q1 production of around 19K+, and delivery of 18K+. They will probably fill the pipeline back gradually - over 2-3 quarters

 

[vgrinshpun]

As MX production ramps in Dec to hundreds per week (per Elon), this'll soak up some production capacity. Depending on what you believe, it'll be between zero and 1500 MXs

Yes, agreed. I personally think that they will produce about 1K of MX, so as a minimum the 14K/quarter or 56K/year (rate) of production will need to be supported by NA.

 

[Hogfighter]

For the Q4 2015, I personally think that it will be a cliff hanger. Tesla production will need to be working at a steady, all time record levels building MS, while launching/scaling production of MX, while having good luck with all the suppliers, and all the while making the record deliveries... It would be absolutely thrilling if they can pull it off, but in my view it is far from certain...

As for you question (looks like I've read your post a little to fast:smile, I do not think that the pipeline emptying will present a problem for Q1 2016. First, since Tesla guided for about 2K of deliveries coming from the pipeline, it will be only partial emptying (may be 50% or somewhat less), and there will be significant ramp in MX production. So even if about 2K worth of model S production will go to the pipeline filling, there will be still massive increase in the production during the Q4 2015. A expect them to guide for Q1 production of around 19K+, and delivery of 18K+. They will probably fill the pipeline back gradually - over 2-3 quarters

Are there other possible explanations for the decrease in wait time in NA? Can it be that they have ramped up S production, and that Europe, China and Australia have seen an increase in demand? Elon has stated in a previous CC that they don't want to race to meet expectations at the end of every quarter.

 

[electracity]

...... Elon has stated in a previous CC that they don't want to race to meet expectations at the end of every quarter.

He may not want to race to meet expectations each quarter, but they have to break 50K for the year. At mid year, they probably believed that they would have a couple thousand MX in Q4 numbers. Q3 sales were probably soft with people waiting for the MX release (Q3 is summer orders in the northern hemisphere).

The 2016 Q1 MS queue is probably pretty depleted, which I too think is fine.

All these numbers are important if Elon wants to raise a lot of capital next year. The value of a lot of M3 preorders is diminished if there is doubt that Tesla is ready to build cars on a larger scale.

 

[maoing]

This was what I predicted back to 04/15/2015.

Totally agreed. Sometime this year, either Elon will confess demand constraint or SP will point to the answer. It's not good for a growth company can't beat its guidance year by year. Back to 2014 Q2 ER, it's totally b***s**t to pre-announce 2k/week prodction rate by end of 2015, I don't see any good effect now except temporarily pumping the stock price to ATH.

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Here is a typical answer when I pointed that Tesla will miss 2k/week target and miss 2015 guidance back to April. Time tells the truth.

I have no idea why they decided to pre-announce the 2k/week production rate by end of 2015 but I see no reason why they won't be there. If we were to assume Model S demand is only 800/month then they should still be flexible enough to produce 1,200 Model X which will have a large backlog and no problem filling up capacity.

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I disbelieved the "secrete weapon" to stimulate demand back to April. So far I didn't see it either instead of the referral program in the expense of GM.

I'm not sure how many folks still believe "secret weapon" here. I used to have some hope, but it disapeared when TM released 70D in cost of GM. Usually price cut is the last resort to stimulate demand.

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Sorry Hogfighter. It's amusing to look back.

I'm sorry, Maoing....but ya gotta do better than this. So you REALLY believe that Tesla, rather than advertising and using 'other levers' to increase demand, is secretly slowing the production ramp-up to hide a demand problem?? Like, really?

If you want others on this forum to respect your opinion, it needs to be plausible.

 

[Hogfighter]

Sorry Hogfighter. It's amusing to look back.

Yes, it is. That quote was from April. Since then, we've seen that demand is up by 50% YOY worldwide (per quarterly newsletter), not flat as you stated. No advertising. Production of the S over 30% more than a year ago, not slowing as you inferred in April.

 

[Matias]

Why Tesla again does this pipeline emptying if Elon doesn't care about the stock price?

 

[uselesslogin]

Why Tesla again does this pipeline emptying if Elon doesn't care about the stock price?

Well, my first question is why does the market buy the pipeline emptying? I can see it now. No one believes that they can deliver 17,000-19,000 vehicles and/or they aren't paying attention right now. January 3rd rolls around and this actually happens and the stock shoots up. Now everyone is excited about Tesla again and the Model 3 unveil happens. Then, they report the number of reservations for the Model 3 a few days later and/or use a sequential reservation number like they did with the S and X. Finally, if things go as I am sure they hoping, they come out with a cash-flow-positive Q1 report in May. Then they wait a little bit and announce a massive capital raise for Model 3 capex needed to "meet" the "unanticipated" demand.

So if this scenario plays out I can tell you one thing. I will be reducing my position the day they announce this capital raise. But I would bet the market will not as they even bought with the capital raise in the fall. I'm not sure Tesla even expected that. I could be wrong and I have been wrong since I didn't expect the price of TSLA to stagnate for 2 years like this but they emptied the pipeline in Q4 2013 and look what happened after the Q4 call then.

 

[chickensevil]

On the "when will be the cutoff?" question: You should be aware that currently when you order there is no way to jump ahead with confirmation immediately. This means when you order you are forced into a 1 week wait so you can make any changes before your configuration is locked in. It takes about 4 days from start to finish to build the car (last I heard anyway). I would give another week or so for delivery. This comes out to around 3 weeks. That said, there is also likely to be holdups as they plan around the holidays which caused issues for them in years past, both in terms of production and in terms of shipping/delivery scheduling. So I would say that they will likely fall back to January/February within the first week of December speaking strictly on terms of pushing out final orders. This is also assuming that they can go that long before they just can't fit in any more due to demand being higher than production (assuming it still is even with this large jump in production).

So if we see the dates fall back to Jan or later *before* the end of November, I would take that as a good sign that even with their massive increase in production that the demand for NA is still quite strong. At least strong enough to sustain the considerably higher production rate. They may need to do some thing starting in Q1 to get demand up a bit further as Q1 is historically a slow quarter all around in the car business, but all the same, I would be happy to see the dates move back within the next two weeks. Even if they don't it isn't a guarantee that there is starting to be a peaking off of demand, it is just a more sure thing the sooner we see the NA dates go back.

@maoing: You didn't predict anything. They have long clarified their stated reasons for dropping away from the 2k production rates they mentioned previously and I don't think it was trying to mislead investors when they stated it originally. Much of that production rate is dependent of many moving parts, half of that being the production of the Model X by itself. They have shown that they can sustain at least 1k a week demand on the MS, so if there was nothing holding them back they could easily do the 2k as advertised which was what everyone telling you you were wrong was saying (in various ways). This hasn't changed. At a minimum they could support 2k a week right now simply by doing 1k a week Model S and 1k MX.

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Why Tesla again does this pipeline emptying if Elon doesn't care about the stock price?

I'm not sure it is entirely about caring about the stock price (although as Uselesslogin suspects, I too have been thinking they will do a capital raise next year when the price goes up, it just makes sense to do things this way) I think it is more that they don't want to show that their supplier issues have caused such an issue as to keep them from hitting their already guided downward 50k mark. Not caring about stock price is one thing, scaring all your investors because two years in a row you completely bombed delivery guidance is another.

 

[vgrinshpun]

So if we see the dates fall back to Jan or later *before* the end of November, I would take that as a good sign that even with their massive increase in production that the demand for NA is still quite strong. At least strong enough to sustain the considerably higher production rate..

So far, so good - all variants now have estimated NA delivery time of Late December (i.e. moving beyond Dec 15 as of today). This means that Tesla might be on track to fill-in all of their projected delivery spots for this year (NA) by the end of November.

 

[FredTMC]

Excellent development. Thx for posting!

 

[vgrinshpun]

Apparently Chinese orders continue to roll in line with Tesla expectation - the estimated delivery time changed from February to Late February (15 days after the previous change from Late January to February on 11/05/2015).

It is interesting to note that allocation of the production to a particular country by Tesla is most likely the first step in the process of assigning the estimated delivery time to a particular region of the world. It is probably done based on Tesla projection of the relative share of the incoming orders from a particular geographic area of the market, so that in steady state the delivery time estimate is more or less uniform across the geographic markets.

Under the assumption that above accurately describes the order management process, if the delivery time estimate for a particular geographic area is ahead (sooner) of other areas, it is reasonable to assume that incoming orders from this area are lower than expected by Tesla. The opposite, i.e. if estimated delivery time for an area is behind (later) of other areas, would mean that incoming orders from this area is stronger than anticipated by Tesla.

Keeping above in mind, delivery estimates for China were running ahead (sooner) the European deliveries since August, and this is first time when delivery estimates for China are running behind (later) that European delivery estimates. This seem to be consistent with Tesla statements that incoming Chinese orders are steadily improving.