Apr 30, 2013
vgrinshpun I don't know if this event was publicized. Last sunday I just happend to fill in a request for test drive on line, thinking that I would get test drive at the NJ Paramus store. I've got call back next day from Tesla employee from the Paramus store, indicating that they are planning test drive event in Philadelphia.
The good news is that according to the King of Prussia store manager with whom I spoke after the test drive, the King of Prussia store is going to open on May 10 - 12.�
Apr 30, 2013
luvb2b a quick comment on semantics. i don't think the reservations model i posted can change. that's because the model i put forth is an accounting fact in the sense that:
prior quarter ending reservations + this quarter's new reservations - this quarter's production - this quarter's cancellations = this quarter's ending reservations
after pondering for some time, i don't believe there is another valid reservations model that doesn't have this equation at its core.
therefore i believe the only differences in opinions can be in the specifics of what is used for new reservations, production, and cancellations.
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i don't believe this is correct. a number of reservations were sitting on the books as deferrals. some percentage of these cancel and some hang on. the 5 month average wait is a global figure, north american times were lower. the wait time you're describing is north america, but you've still got a huge percentage of global reservations on the books that will likely see elevated cancellation rates just as the north american reservations did at the start. understating the cancellation rate will throw everything way off.�
Apr 30, 2013
ModelS8794 Thanks, I am an owner so have an account there. Maybe went to spam mail, or maybe current owners were not included? Seems unlikely, I dunno...�
Apr 30, 2013
vgrinshpun Have to disagree with you. The 5 month wait that EM mentioned during the Q4 2012 CC definetely did not account for the EU reservations as he was speaking about situation in US. NA times were not lower, EM was adressing exactly this question in the CC. According to his explanation the shorter wait time for performance models was not indicative of the total backlog, as one would need to consider wait time for all configurations of MS. Take another listen to the call - as far as I remember this was addressed in the first question to EM.
Note that my calculation is done for US reservations only, and European cancellation rate is irrelevant. As per my previous explanation US cancellations for the period when they were substantial are accounted for.
As a side note, during his introduction remarks at the Geneva Auto Show EM indicated that Tesla plan to deliver "5,000 - 7,000 cars, may be slightly more" to Europe in 2013. He also indicated that if somebody in Europe wants to get the car in 2013 they need to place reservation "fairly soon". During the Q4 2012 call EM (or GB) indicated that out of 15,000 net reservations on the books about 25% are outside Northe America�
Apr 30, 2013
luvb2b hmm, maybe i am wrong i still think there's something wrong with your conclusions. i'm comfortable with what i have so didn't really dig into the details to figure out where we differ. for now we can agree to disagree.�
Apr 30, 2013
vgrinshpun In order to have an alternate reservation rate information, I've gone back to the Reservation Tally threads here and over the Tesla Motors Forum. Based on information included at these threads average rate for the Jan 1 through March 3 was 30 cars per day. This reservation rate yields production rate of 584 cars/week vs. 617 cars/week for the previously used reservation rate of 35 cars/day.
The bottom line is that Tesla most likely increased their production in Q2 to significantly more than 500 cars per week. Note that both results are conservative as the calculation is using flat 30 or 35 cars/week reservation rate, while we know that reservation rate was significantly higher during the warmer weeks of April.
The major takeaway is that this increased production is not a known fact yet, and when it is disclosed during the Q1 CC there is potential for a very strong market reaction.
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We actually do not have competing models at all.
You've gone to a great lengths to produce reasonably accurate information on the backlog of reservations in the absence of comprehensive information required to precisely calculate this backlog.
I am not trying to derive an alternate way to determine the backlog of reservations at all. I am just grabbing a number to show that once information of the backlog of reservations and projected wait time are known, one can calculate the corresponding production rate (to go through known amount of reservation within set period of time).
The surprising result of this exercise is that any reasonable projection on backlog of reservations, when combined with the delivery times shown on Tesla Motors Design page invariably point to the fact that Tesla factory is currently operating at about 600 or more cars per week. Tesla disclosing this along with the corresponding increased projections for Q2 and 2013 production (upwards to 29,500 cars) could be the match that will start wild fire after the Q1 CC.�
May 2, 2013
DonPedro Ultra-fast EU finalization
It is quite striking how quickly Tesla are pushing out finalization buttons in Europe these days. In Norway, all reservations up to at least P2681 have got the button, whereas in the rest of EU we have heard about the button at P23XX. This means that button has gone out to approx:
Sigs: 500?
Rs: 400?
Ps: 2500?
Subtract some prior cancellations and sig upgrades, and we may be talking around 3000 reservation holders getting the button. The latest have been told to expect the car in Sep/Oct.
The rush has been apparent for those finalizing. According to reports, paperwork takes many days to return, and staff admit things are chaotic.
What could be reasons for pushing the finalizations so fast? Some ideas:
- Plans to announce a solid amount of "firm orders" at Q1 presentation
- Attempts at streamlining production by grouping similar orders
- Greater-than-expected cancellation rates
- Greater-than-revealed production rates
- "We simply want to know where we stand"
Anyone care to speculate?�
May 2, 2013
Citizen-T The more cars they can put on a boat, the cheaper it is to ship each car.�
May 2, 2013
DonPedro All indications are that the cars will be shipped in 4-car containers, in which case there are no significant economies of scale to the sizes of individual shipments.�
May 2, 2013
vgrinshpun
Very interesting data - let�s try to work through the numbers to see if it is consistent with Tesla�s increased production rate that I�ve hypothesized couple of posts above.
During the Geneva Motor Show remarks EM indicated that Tesla will deliver 5,000 to 7,000 or a �bit more� cars to Europe in 2013. Assuming that back when EM was making these remarks the plan was to produce 500 cars/week in July and August and 650 cars/week starting in September, the total production goal was 8 x 500 +18 x 650 = 15,700 cars (Q3 and Q4). Therefore the intent was to send 32% (5,000 / 15,700) to 45% (7,000 / 15,700) of all produced cars to Europe. The average of two numbers works out to approximately 38%.
Based on information in Don Pedro�s post above there is total of about 3000 reservations with the latest expected delivery of 3 months after the start of European deliveries in July. If one assumes that these 3,000 cars to be delivered to Europe correspond to a 38% of cars produced during the same period of time, the total production would be 3000 / 0.38 = 7895 cars, or 7895 / 13 = 607 cars a week.
So this data is consistent with the hypothesis that Tesla already increased or planning to increase production sooner than previously disclosed. By implication this means that Tesla sees improving margins and reservation rates.
The next week Q1 CC should be very interesting indeed.�
May 2, 2013
Benz It will be very interesting indeed.�
May 2, 2013
luvb2b i think i understand what you are saying. the problem is the reservations include deferrals which won't go into the production queue until they firm their orders. so taking your approach would overstate the production rate.
also it seems like you are completely ignoring an elevated cancellation rate, which will make your production figures way too high.�
May 2, 2013
vgrinshpun I disagree with you saying that this approach ignores cancellations. As I explained before, the numbers I am using to estimate backlog prior to Feb 20 are net, so they account for cancellations. The cancellations between Feb 20 and mid-March had minimum cancellations as waiting period shrank, and there should be virtually no cancellation from mid-March, as the order is finalized within two weeks. Note that this calculation was done for NA only, without counting any European reservations.
Ultimately, however, we are in agreement that the reservation numbers that I use are estimates, as no precise information is available. That is why I call these musings a hypothesis.
I think that we both agree that Q1 looks good. If my hypothesis turns out to be correct, the Q1 CC will be stellar. There are only few days left until we know.�
May 3, 2013
luvb2b elon mentioned twice during the call that they are seeing an uptick in demand after the financing announcement. imo that should mean bullish commentary for the next quarter.�
May 3, 2013
DonPedro Good catch. I really respect what they did today - the admitting they made mistakes, the fast turnaround on the new version, and (not least) the constant keeping Tesla in the media. And, of course, I think they've launched a great financing product. I love Elon's vision: Going from top 1% to top 10% in terms of who would get the car.�
May 3, 2013
CapitalistOppressor A couple of weeks ago I started thinking about what it would take to find a nearby property owner who would let us set up a web cam point at NUMMI, lol.
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Very much, all of this. That is all.
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As with Luvb2b, I don't have the time to really drill down into your model. But I have problems with the bolded comment. I'm pretty sure that the reservation numbers Tesla announced in February were as of Dec 31st and emphatically did NOT account for the large cancellation and deferral numbers that were shaken out of the system in January.
I empathize with your desire to play Kremlinology games with Elon Musk comments, because I've often done the same. But its my experience we need to back out and build off of actual data we know, and often a credible model will show that Musk is being "accurate", but in a way you wouldn't think of if you were using different assumptions when you interpret what he says.
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Same thing they did in January. They are shaking the bush to see which reservations are real sales. Most reservation holders in the U.S. got the finalize button in January, with many still receiving their cars. It has nothing to do with production rates or streamlining, but is intended to reveal cancellations and deferrals, and they are doing it now because they will not have to report the results in the Q1 conference call.�
May 3, 2013
DonPedro Sign me up as footing part of the bill.
I agree. Thanks for your insight.�
May 3, 2013
CapitalistOppressor My current thesis is that they are very close to their planned margins. Reservation rates are decent.
But you need to ratchet back the enthusiasm a bit. Delivery data as of a week and a half ago was looking a bit soft to support a 500/week production rate. I didn't do a full analysis because there isn't enough data, but it was probably somewhere between 400-500 in April. For a variety of reasons, but mainly because of the switchover to Multi-Red, it is hard to model the delivery flows for the few weeks bracketing April 1. They didn't finish backfilling until just recently, and there is a serious lag in the VIN data, both from people posting their deliveries and for my ability to analyze it.
The point is that there is a clear possibility that the announcement will be of current production in the 400/week range, and in a recent interview Elon said Tesla was producing 20k vehicles per year (which is 400/week). That's not the most likely possibility, but it is within the range of the actual data we have.�
May 4, 2013
Dr.Ling All I want to say is: Don't underestimate the sales potential in tiny Norway.
Practically everyone I know of talks about Tesla, and wants one too, and not because of me preaching! The Model S is the bargain of the century over here, and sales of electric cars are soaring. Even without the insanely tempting low-interest financing offered in the US the orders will be pouring in when people can see and feel the Model S for themselves.�
May 4, 2013
luvb2b my norwegian is rusty but according to this tesla almost sold out norway for 2013 already.
http://www.tv2.no/underholdning/broom/tesla-model-s-utsolgt-i-2013-aatte-maaneders-ventetid-4039044.html?utm_source=Broom+Nyhetsbrevliste&utm_campaign=a868c81939-Broom_Nyhetsbrev_4_mai_20135_4_2013&utm_medium=email&utm_term=0_4a512f921e-a868c81939-225950125�
May 5, 2013
DonPedro I would be cautious with trusting that article. The statement about being sold out is not substantiated, explained and no source given. But it is possible - those finalizing now are getting delivery estimates sep/oct.�
May 5, 2013
DonPedro PS: Here is how to think about the potential in Norway. Imagine the US, only the median annual salary is $80,000. Then imagine that all ICE cars are subject to a tax that more than tripples their sales price. Then make the gas price $10 per gallon and let electric cars drive in the carpool lane as well as avoid road tolls (for which most people spend $5-10 per day).
This is the reality over here. Annual new car sales is about 180.000 units. I am convinced that with the right marketing, the potential for the Model S should be 10-20% of that.
Edit: I forgot a few additional things. We have a reliable, clean and not too expensive supply of hydropower. And municipalities are building charging stations at parking spaces reserved for EVs.�
May 5, 2013
adiggs Heck DonPedro - with all that going for them, Tesla just needs a mix of cars for different niches to become the de facto standard car. I can see why Tesla is motivated to start shipping cars yours way.�
May 5, 2013
Nixx I understand that the model s is quite a bit cheaper than the other luxury vehicles, but what percentage of the population is even considering luxury vehicles? It's still only selling to the top 1% of earners, right? Whereas the BMWs are now only selling to the top 0.1%?
So the population of Norway is 5m. A 10% percent penetration to the top 1% is 5000 vehicles sold.
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I think the gas price story is the same across most of Europe, if I'm not mistaken. This is probably why tesla has anticipated a significant portion of their sales will come from over seas, not North America.�
May 5, 2013
DonPedro I think you did not register an important piece of information. The median annual salary is $80k. Despite the ICE taxes I mentioned, BMW and Mercedes Benz each have market shares of around 5% of all new car sales. Even the cheapest models from those brands start higher than the Model S. People who now reserving the Model S who would never consider getting a BMW or an MB (I fall into that category myself). So I am serious when I say that the Model S should have the potential to sweep the top 20% market segment.
Yes, the European countries tend to have carbon taxes that drive up the price of gas significantly in comparison with the US.
On the Norwegian forum I have posted a spreadsheet that shows that with a 5 year horizon and reasonable assumptions, the total cost of ownership of an 85kWh TMS is comparable to an entry-level VW Golf. It has received quite a bit of interest, and nobody has pointed out any flaws in the math.�
May 5, 2013
kenliles @DonPedro
Given the high operational cost difference as depicted in your 5 comparative, Does the new lease program play a part in your thoughts of market potential?
edit:
estimations>>thoughts per DP request�
May 5, 2013
DonPedro Please don't call them estimations - I am shooting from the hip here and not taking into account such future occurrences as for instance real competition in the EV segment, changes in taxation etc.
Leasing is discouraged by the tax system. But I think that Tesla should come out with a Norwegian financing package as a very, very high priority. And a credible TCO calculator (hyperbole goes down very poorly in Norwegian culture).�
May 5, 2013
CapitalistOppressor I think it's already been established that Norway is the largest non-California market. Even the really terrible pocket EV's that are being developed seem to be getting a hard look by Norwegians. The government has enacted financial disincentives to purchase ICE that would be shocking to Americans.
Anyways, I've been curious for awhile now whether that is more from environmental concern on the part of Norwegians, or an economic desire to enhance the size of the oil trust fund by encouraging more exports? I'd imagine both, but what do Norwegians think?
�
May 5, 2013
Johan For first time buyers of EVs in Norway I'm quite sure it's the economic benefits coupled with driving in the bus lane and avoiding tolls that is important to 80%, while 20% do it for the environment. For second time buyers (like myself) it's simply that fact that once you have owned an EV, even if it's just the "terrible pocket EV" i-MiEV, you never want to get an ICE again. Simple as that. And there are starting to be quite some second time buyers now. And when not one but two or three of your neighbors are driving an EV people will start to think "maybe it's for me too?" and then what have you: critical mass. Norway will be the first country in the world to reach critical mass when it comes to EV adoption, as long as there are suitable vehicles in different price ranges supplied by the industry. Once that critical mass is reached attitudes will change very quickly and from one year to the next people won't be asking themselves: "why should I do something new and get an EV, this new and scary thing?" but instead they will be saying to themselves: "are there any reasons anymore to get one of those old ICEs?". And for the majority of buyers the answer will be no. There will still be new ICEs sold, but it will be a niche thing.�
May 5, 2013
DonPedro The ICE taxes were in place long before any other propulsion systems were around. They are a mix of environmental tax and pure revenue generation. It became clear to everyone a long time ago that if you want to have a good, environmental tax system wrt. cars, you tax the usage not the ownership (and so these taxes should be removed). However, by that time the revenue generated by the import tax on cars was such that no politician wants to touch it. There are far more unpopular taxes to campaign against for budget slashing politicians, and all taxes are welcome for those who want to sustain or increase gov't spending.
Norway exports such obscene amounts of oil and gas per capita that domestic consumption doesn't make much of a difference. Besides, the revenue to the sovereign fund is not affected by whether the hydrocarbons are consumed domestically or abroad - the oil companies that are being taxed to fill the coffers (78% special tax rate) make similar profits no matter whom they sell the stuff to.�
May 5, 2013
kenliles Been hearing that more and more. Johan, how would best describe the reason for that? For recent S owners they talk about the performance they would lose going back to ICE. I imagine its something else from a 'pocket-EV' owner. Whatever the reason, would you think it would translate innately or more uniquely served by the Norway financial incentives / infrastructure ?�
May 5, 2013
vfx DP, go back and look at at the calculator. They "fixed" it per Elons' last Call.
Thanks for your clear explanation of why Norway will be Teslacentral of EU. If I were another manufacture of a high end luxury car I would trot out a shell of a prototype car, claim it had all sorts of range, features and impressive speeds to rival Tesla just to slow sales of the MS for a few years.
Wait, they all already have!�
May 8, 2013
mountaineer Thanks a lot. Norway is highly promising!
By the way, any other promising countries for model S in Europe?�
May 8, 2013
erha I don't think any countries even come close to Norway when it comes to incentives, but Germany for example has about 20 times the population of Norway. Sales compared to population will be much lower, but I still think Europe will contribute quite a bit to model s sales�
May 8, 2013
Citizen-T Germany has a lot of solar too. Only problem there is that there are a lot of luxury German automakers that would have home field advantage.�
May 8, 2013
Cobos Not to mention the roads are important too. Except som small stretches around the capitol which has our best highways with speed limits at 100km/h most long-distance roads in Norway are very curvy and has as posted speed limit at 80km/h. Like everywhere else most people drive slightly faster so add +10km/h on a day with good weather. Contrast this with germany and most parts of western Europea which is connected with excellent highways with posted speed limits at 120-130+km/h, that makes a huge difference in range.
About the car taxes, after the second world war due to most of our poor nations income was used in rebuilding the north and generally building up, you needed a stated reason for a car to be able to get a car-buying license. My step-granddad had one as he was a shopowner and needed it for getting supplies to his store. So after 1 oct 1960 carsales were "free", you no longer needed a license to buy a car, just the money. Around that time a car was still seen as a luxury good, and was taxed appropiately. Probably since it was a luxury good at the time and because Norway wanted to limit our imports. Since then due to oil our nation is now very rich but we've never really changed the amount of taxation on cars and just changed the name from luxury tax to enviromental tax
Cobos�
May 8, 2013
DonPedro Maybe you meant "accordingly"? ;-)�
May 8, 2013
mountaineer very interesting story. thanks!
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ok, let me rephrase my question: any other countries in Europe have enough incentive to make owning a 60kwh Model S economically more favorable than owning a Mercedes E-series or BMW 5-series?�
May 9, 2013
CapitalistOppressor They all have $8 gas prices. But I expect Germany will be relatively weak regardless of the economics. Better to focus on the periphery.
The Tesla brand also looks really weak in the U.K. That Top Gear thing really did a number on them.�
May 9, 2013
FVO After Norway comes the Netherlands and Belgium regarding the sales numbers.
Concerning the tax incentives it's the same order (mainly for company cars). However, in Belgium the government cancelled the tax incentive (wich was +/-12,000$) for private purchase, because of our country's budget.
You also have to know that the standard 60kWh-model costs about 72,600� -> x 1,316= 95,500$
But don't worry, Putin and the other OPEC-countries will give in the future more and more people a reason the drive electric. (including the Germans):wink:�
May 9, 2013
DonPedro Denmark also has a huge ICE disincentive. Actually, the Denmark case is pretty much equal to Norway, with the crucial difference that Denmark does not exempt EVs from 25% VAT. Being exempted from 185% import tax still lowers their relative price point by 60% or so, which is huge of course. Unfortunately, Denmark is no bigger than Norway (5 million inhabitants). But demand from these countries will be important for Tesla.�
May 10, 2013
DonPedro Having digested the Q1 announcements and today's SEC filing, I believe that Tesla will intentionally stay demand constrained for the coming quarters. In the SEC filing, they emphasize the importance of now stabilizing on a production rate of 400/week, and perfecting that to increase margins.
This makes sense to me. It is hard to achieve high efficiency if your production rate keeps fluctuating. You want there to be a routine every week - the same number of components coming from the various suppliers, the same number of people showing up to work regular hours, the same cadence of vehicles moving through the various stations, the same number of vehicles going through various stages of delivery. This is the only way to achieve 25% margins in Q4.
The alternative would be to try to vary production to match demand, i.e. using temps and overtime, and asking suppliers to ramp up. However, this would lead to higher unit costs both within Tesla and at suppliers. Getting lower prices from suppliers' efficiency improvements is a key part of getting to 25% margins.
I am sure that they are in parallell planning for a step-change in production rates. What I guess they will want to wait until they have "probed the depths of the demand" (or whatever the Elon quote is). Once they have good certainty that the demand is there, they will step up to e.g. 600/week. In the meantime, there will still be a waiting list to get the car.
In terms of demand generation, the important thing is to deliver the first cars to as many of the targeted geographies as possible, so you get the "customer sells cars" effect going in each. That is why deliveries to various EU and Asian markets are important.�
May 10, 2013
Right_Said_Fred The Netherlands also has fiscal circumstances favouring the Model S. It's the second European market behind Norway, even though it only has 17 million inhabitants (Germany 80 million, UK, France and Italy 60 million). Half of the new cars sold here every year (total on average 500,000) is a company car. They are being paid for by employers for their employees or by business owners for themselves. The Model S has several advantages (and others EV's as well)
As a company car:
- The drivers of company cars are being taxed on the basis of the value of the car. For instance: for a big engine BMW this is 25%, for a small engine BMW 20% and for a Prius 14%. This means you have to add, every year (!) again, 25, 20 or 14% of the value of the car (MRSP!) to your income and pay taxes on that amount, usually 40 to 52%. So for a BMW 5-series costing �80,000-90,000 you will have to pay about �10,000 extra, every year. For EV's like a Volt, Leaf or Model S you can add 0% of the value! Next year this will become 7%, but it's still much better than an ICE.
- The business buying the EV gets an extra 36% business tax deduction on the investment.
As a company car or private car:
- The owner of an EV pays no road taxes until January 1, 2014 (saving approx. �800-1000 per year). After January 1, 2014 the road tax system will likely become CO2-related (at the moment it is weight related).
- For most cars with petrol and diesel engines you have to pay a CO2-tax on purchase, which can range from just a few hundred euros for small cars to tens of thousands (!) of euros for big gas guzzlers. For EV's there is no CO2-tax in purchase! This is comparable to the Norwegian system, but less extreme.�
May 10, 2013
lolachampcar Wow, I had no idea of the dynamics in Europe.
I love posts like this.�
May 11, 2013
mountaineer Thanks a lot for you guys' perspective from Europe! Very Helpful indeed.
I think Tesla should be able to sell close to 40K model S next year. I know one person who has ordered two in Hongkong and plan to buy a few more pretty soon.�
May 11, 2013
Johan I'm very excited to see what demand will look like from Asia in the coming years, especially interesting to me is China with it's properties: an extremely large population, rapidly growing economy with a rapidly growing middle- and upper middel class and a situation where I would think quite a lot of people will be faced with the decision to buy their first ever automobile in an era where EVs (with Tesla in a superior lead) are really giving the traditional ICE's a run for their money. Also, it's in Chinas interest to go through the fossil fuel phase of their economic growth as quickly as possible (there is not cheap and abundant oil and coal nowadays as there was before, China understands that they are in a position where they can tip the scales the wrong way on the global eco system and if they do they're going down with the rest of us). The infrastructure is not there for large parts of the country, niether for fossil fules nor electric infrastructure but in the coming 5-10 years I would not be surprised if there is an official push towards electric transport in China.�
May 11, 2013
aronth5 This is another great post on why things look so bright for Tesla in Europe. Especially Norway.
�
May 22, 2013
DonPedro Finalize in Norway seems to be trackable by the invoice number that is generated once you click "Finalize" here. The highest number reported so far is 1004, which means that we have passed 1000 Norwegian orders finalized.
Finalize came to Norway 6-7 weeks ago, and was rolled out slowly in the beginning. As far as I know, most people who have put down a deposit have received the button. However, many are still in the 30 days' period. This gives reason to believe that the number will keep growing at a good pace the next couple of weeks.�
May 22, 2013
marvinat0rz Norwegian here. I think the biggest risk in Norway is how the car handles the cold and wet climate, both short-term and long-term. This is one of the harshest car environments in the world. But with regards to demand, the tax incentives makes it a very lucrative car. As one of our financial papers said, "An executive-class electric car" which costs the same to the company as a Toyota Auris. I think a lot of people are going to want these.
I also see Nissan LEAFs whereever I go in town (I live in Bergen), so I think this will be a very good market for Tesla. Even without the huge range and excellent engineering of the Model S, Norway is a very good place to be selling electric cars.�
May 22, 2013
lolachampcar and one very forward thinking country setting a good example for us all.�
May 22, 2013
Convert2013 When a transportation product is designed (airplane or car) all extreme environments are considered.. for temperature, salt, salt-fog, dust, vibration, humidity, UV, pressure environment, etc. Operational ambient temp range for designs is typically -20 to 120 degrees for cars. I would not doubt the low temperature extremes have been met for the batteries in analysis and test, continuous for at a period of time/cycles. This would be a HUGE technical risk going forward without that confidence just in so many parts of the US market, let alone Europe, etc.�
May 22, 2013
DonPedro Unfortunately, in the history of climate change, Norway will not be remembered for this. We will be remembered as a country that - at a time when it was clear that 70% of identified fossil reserves need to stay in the ground - were drilling and pumping oil and gas as quickly as humanly possible. :-(�
May 23, 2013
marvinat0rz I have to pragmatically agree with DonPedro here. We tax cars heavily (partly because of the environment, but mostly because taxes are high in general here), but we also try to get the oil and gas out of the North Sea seafloor as quickly as possible. Any real environmental advantage from taxation and incentives is killed many times over by the petroleum industry (which I'm currently trying to get into, by the way�
May 28, 2013
DonPedro A piece of the puzzle in terms of figuring out the total demand picture: Based on sequential invoice numbers, we know that by the end of last week there were at least 1,128 finalized and signed orders in Norway.
Based on this, I would guess that Norway will account for around 2,000 orders this year, or ~10% of the total. This is based on the Norwegian orders being approx. 30% of total EU, which indicates a run rate of new orders of around 3 per day. Then I assumed that this figure will double in September, when the first cars have been on the streets here for a month or two.
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By the way, Elon Musk's demand figure of 5,000 in Europe for 2013 sounds conservative, doesn't it? At present, there should be around 4,800 reservations here already (3,900 regular, 500 sigs and 400 roadster-owners). Assuming reservation rates do not decline but remain at ~10 per day, that means we could have almost 7,000 reservations by year-end. But maybe they expect to deliver 5,000 and enter 2014 with a EU backlog of 2,000?�
May 28, 2013
CapitalistOppressor What is interesting about this, is that Norway is the most important market for the Model S outside of California. Tesla will have a huge incentive to re-engineer the car for cold weather driving. As it is, hundreds of Model S's had an acid test in the Northern U.S. and Canada, so you will already be the beneficiary of lessons learned, and Tesla will be able to continue to build off of that as they get more cold weather experience.
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Tesla will have to hustle to get 5,000 European sales this year. My projections show them making it, but an important factor to consider is cancellations. Europe doesn't have large numbers of multi-year reservations waiting to be canceled like the U.S. did, but there should still be a fair number of them going forward.
The main issue that I see, is that the underlying reservation rate is just so/so. Over the weekend I did research on the European stores and I came away somewhat unimpressed in comparison to how the operation in the U.S. is going. Several are just a contact number where you can arrange a test drive. None appear to be in areas where you should expect foot traffic compared to the mall locations they have in the U.S.
My first pass takeaway is that Tesla must be more hopeful than confident when it comes to European sales in 2014. Just because the Model S is poised to be a huge success in the U.S. doesn't mean it will immediately translate to success in other markets. If Tesla can't find a way to get millions of people into their showrooms as they have in the U.S. then they need a different strategy, or else they need to hope that U.S. attitudes influence consumers in the rest of the world. Otherwise it looks like they are in a for a slow grind in the E.U. where they rely almost exclusively on favorable press and word of mouth from owners.�
May 28, 2013
Johan I think you are mainly right about this. The Tesla store in Oslo has no chance of drop-in foot traffic, it's some hundred metres off from a large mall, but it's neighbor is a show room for kitchen furniture. Anyone who comes there has looked up the adress before hand and goes there with an intention. I think Tesla just had to scramble a bit and establish a presence. However, come the start of EU deliveries and real cars on the streets especially in Norway, the Netherlands and Benelux, I think we will see Tesla occupying first grade real-estate in high traffic malls and high streets etc. already in 2014.�
Jun 3, 2013
DonPedro EU reservation number 4,147 was just reported in Norway. This means 644 reservations since the last report on 4/22, i.e. 15.0 per day. This is approx. 50% higher than the Q1 run rate, and translates into a demand run-rate of close to 5,500/year in Europe.
Combined with Elon's info about North American demand, this means that current orders are coming in at an annual rate of 25.5k. Excluding Asia.
I think this is above expectations. I am wondering how they are going to handle this. My $0.02 is that they will let the backlog build up again. The plan is clear: They want the first shift to build the cars at maximum efficiency (i.e. 25% gross margin, all stations using only one shift) before adding the second shift. This is also a practical issue: If some stations are currently working two shifts to supply 400/year, it is not possible to double the production (no such thing as four shifts).
The current backlog in Europe is approx. 5,000 reservations (less cancellations maybe 4,200 cars.) If reservations continue at 15/day, that means 7,345 EU orders by end of year. June-December production of 200/week can deliver 6,000 cars, so expect EU backlog to be around 1,500 at the end of the year. This, of course, assumes that EU deliveries do not generate a demand increase.
In the US, reservations may keep coming in at ~386/week, whereas production rates may be around ~417. When 200/week start going to Europe, this means that the backlog will build by around ~170 per week. So the potential end-of-year backlog in the US is around 5,000 orders.
They have also mentioned 1k Asian deliveries this year. Will that just be an end-of-year 1k backlog?
Clearly if this is correct, they would of course want to increase production ASAP. But as explained above, they really want to nail the one-shift production before going beyond that. Maybe the one shift can go beyond the 21k/year volume?�
Jun 3, 2013
pfq1982 Hi Don,
Re: Europe, looking back a month doesn't tell the whole story. The rates are quite bifurcated intra May. From 04/22 - 05/22, reservations ran 12.5 / day. Then they started spiking from 05/22 - 05/31 to 22/day. The average over your period may be 15, but it begs the question of whether 12.5 / day or 22 / day is representative of run-rate orders. Tesla did some advertising about tax savings for 2013 deliveries to pull forward orders, so it will be interesting to see if the rates observed later in May persist or drop.
Re: US, curious how you come up with 386/week figure since sequences numbers were stopped a while ago?�
Jun 4, 2013
DonPedro Good points, and I agree. We do not know what the long term EU reservation rate is, so all of this is quite speculative. However, there are reasons why it should soon be growing rapidly even beyond 15 or 22 or whatever the rate per day is now: (1) Opening of many new stores, (2) increasing press coverage and (3) first deliveries to an area tend to generate much additional demand.
US: Elon Musk said they are receiving orders at 20k/year run rate. 20,000/52 = 385 per week. (I don't know how that became 386 ;-))�
Jun 4, 2013
adiggs You were channeling your inner-Intel :tongue:�
Jun 5, 2013
Sverre Ard� I think Tesla is going to sell very well in Europe in regards to the Norwegian taxfree incentives.
Right now half of all Leaf sales are happening in Norway. I expect that Tesla sales to be similar, with Norway having a fairly big chunk of the Euro sales.
From my following on Norwegian reservations the discussion goes on about whether to go for the Performance package or the Non Performance package with all the optional extras included. As long as the Norwegians can buy all the extra options tax free people will try to get their cars delivered with extra set of tyres, foliation of the car ect. In addition Tesla launched a set of net options that Tesla will make more money out of each vehicle buying sold.
So for Q2 and Q3 expect revenue per veichle to go up quite a lot due to these circumstances.
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I was a bit inaccurate, Right now half of all Leaf sales are happening in Norway - half of Euro sales.�
Jun 5, 2013
marvinat0rz Second Sverre Ard� - The Model S would sell very well in Norway even without tax incentives. Lots of oil money going around. With the tax incentives, things are looking even better.�
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