Musk endeavours

[odysseus2000]

If one wants to compare insurance rates it makes sense to compare vehicles of similar performance.

There are several videos showing a model S out performing very high performance ice cars such as Aston Martins.

Indeed when my dentist bought himself an Aston Martin, I noted how the Aston was so 20th century.

Comparing the clunker Frankenstein car of the e-ton & noting it is cheaper to insure than the model S tells me nothing useful.

Regards,

[PeterGray]

The car was slow by modern standards, has limited range and looks and has the feel of the 20th century, a great car for folk who live in the past and think things never change.

I don't know what this means, just about any car produced today is more than fast enough, and I see no sign that roads will be come less crowded, or have higher speed limits. There's a limited market for boys toys aimed at those who feel they have to prove something. If that's what Musk is targeting, which would be little surprise, his target market is certainly not big enough for Tesla to become the king slayer you keep telling us it will be.

[odysseus2000]

The car was slow by modern standards, has limited range and looks and has the feel of the 20th century, a great car for folk who live in the past and think things never change.

I don't know what this means, just about any car produced today is more than fast enough, and I see no sign that roads will be come less crowded, or have higher speed limits. There's a limited market for boys toys aimed at those who feel they have to prove something. If that's what Musk is targeting, which would be little surprise, his target market is certainly not big enough for Tesla to become the king slayer you keep telling us it will be.

It is all marketing and targeting buyers.

The whole auto industry expected electric would be bottom up, i.e. cheap cars to get things going and a very slow decline of ice.

What Tesla did was invert that and go top down, i.e. sell to the most wealthy punters first and then slowly move down to the least expensive.

Obviously the market for super performance cars is limited, but if you can sell some there you make money and then you can move lower having shown punters that you can make a very fast car.

It is the analogue of what Mercedes et al. do in having cars in Formula 1. Virtually no one can buy a Formula 1 car, but it creates brand identity to use a jargon phrase.

Regards,

[BobbyD]

Take your pick:

Tesla ships 63,000 vehicles in Q1, missing expectations

Tesla said on Wednesday that it produced 77,100 vehicles during Q1, consisting of 62,950 Model 3s and 14,150 older models.

It delivered approximately 63,000, including approximately 50,900 Model 3s and 12,100 older cars.

Analysts were expecting it to deliver about 76,000 cars.

- https://www.cnbc.com/2019/04/04/tesla-q ... mbers.html

Tesla Model 3 Deliveries Falter, Deepening Concern About Demand

Vehicle shipments dip to 63,000, including 50,900 Model 3s

- https://www.bloomberg.com/news/articles ... oes-abroad

Tesla releases Q1 2019 numbers: produced 77,100 vehicles and delivered 63,000

Here’s Tesla’s press release in full:

Tesla Q1 2019 Vehicle Production & Deliveries
PALO ALTO, Calif., April 03, 2019 (GLOBE NEWSWIRE) — In the first quarter, we produced approximately 77,100 total vehicles, consisting of 62,950 Model 3 and 14,150 Model S and X.

Deliveries were approximately 63,000 vehicles, which was 110% more than the same quarter last year, but 31% less than last quarter. This included approximately 50,900 Model 3 and 12,100 Model S and X.

Due to a massive increase in deliveries in Europe and China, which at times exceeded 5x that of prior peak delivery levels, and many challenges encountered for the first time, we had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter. This caused a large number of vehicle deliveries to shift to the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.

Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand.

In North America, Model 3 was yet again the best-selling mid-sized premium sedan, selling 60% more units than the runner up. Inventory of Model 3 vehicles in North America remains exceptionally low, reaching about two weeks of supply at the end of Q1, compared to the industry average of 2-3 months.

Despite pull forward of demand from Q1 2019 into Q4 2018 due to the step down in the federal tax credit, US orders for Model 3 vehicles significantly outpaced what we were able to deliver in Q1. We reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019.

Given that Tesla vehicle production currently occurs entirely from one factory in the San Francisco Bay Area, but must be delivered to customers all around the world, production could be significantly higher than deliveries, as it was this quarter, when production exceeded deliveries by 22%.

We’ve just begun the global expansion of Model 3, and we want to thank our employees for their hard work and our customers for supporting our mission. We are doing everything we can to deliver cars globally as quickly as possible and look forward to continuing to scale deliveries throughout the year.

- https://electrek.co/2019/04/03/tesla-q1 ... y-numbers/

Bloomberg are getting nervous about their previously bullish estimate for Tesla’s production. They are toning down their forecast to “could approach 80,000 cars” this quarter. Over 12 weeks this is something over 6,000 cars a week which is less than the bulls were predicting a few weeks ago.

And they admit that if the average analyst’s estimate of demand of 64,000 sales proves to be true that means that Tesla have increased their stock level by around 15,000 cars. And we know that they ended 2018 with a lot of stock which they have tried to sell even up to last week. So final inventory may be 20k finished cars or more.

A good quarter for the analysts if not for Tesla.

[BobbyD]

If one wants to compare insurance rates it makes sense to compare vehicles of similar performance.

There are several videos showing a model S out performing very high performance ice cars such as Aston Martins.

Indeed when my dentist bought himself an Aston Martin, I noted how the Aston was so 20th century.

Comparing the clunker Frankenstein car of the e-ton & noting it is cheaper to insure than the model S tells me nothing useful.

Regards,

It's a list of electric cars in order of cost of insurance. It's interesting that you are fixating on the one Audi in the list though rather than the four non Audis. The E-Tron vs the Bolt or the Leaf aren't direct comparisons either, since the one costs significantly more than the other two. Yet what we find if you insist on looking at the E-Tron is that Audi have produced a premium BEV SUV, which has garnered great reviews, is outselling both Tesla premium models combined and the i-pace, is well regarded by leasing firms, and can be insured at a very reasonable rate. You're obviously right, this is a complete disaster which heralds the end of times for Audi.

[redsturgeon]

These are horrible numbers for Tesla.

It seems to me that the problems of going from a very good supplier of high cost innovative performance cars to mass market production and distribution have been greater than anticipated. This is where the best legacy auto makers hold the cards, they have very well honed and efficient networks for delivery and after market services, these have taken many years to build up and refine and are a significant cost but also a significant benefit for car buyers that Tesla has attempted to short circuit.

Personally the quality issues with the Tesla 3 and the after sales issues would stop me buying a Tesla at the moment, even if performance was slightly better than the competition. It reminds me of my hi-fi buying days when the were some niche British manufacturers that produced product with a high spec and high price but the Japanese produce cheaper products that sounded good enough to most people and had a reliability the outshone the more expensive British kit. The best British manufactures like Lynn and Mission stayed in business as niche players while the likes of Pioneer, Rotel and Technics stitched up the mass market.

John

[dspp]

Take your pick:

Tesla releases Q1 2019 numbers: produced 77,100 vehicles and delivered 63,000

Here’s Tesla’s press release in full:

Tesla Q1 2019 Vehicle Production & Deliveries
PALO ALTO, Calif., April 03, 2019 (GLOBE NEWSWIRE) — In the first quarter, we produced approximately 77,100 total vehicles, consisting of 62,950 Model 3 and 14,150 Model S and X.

Deliveries were approximately 63,000 vehicles, which was 110% more than the same quarter last year, but 31% less than last quarter. This included approximately 50,900 Model 3 and 12,100 Model S and X.

Due to a massive increase in deliveries in Europe and China, which at times exceeded 5x that of prior peak delivery levels, and many challenges encountered for the first time, we had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter. This caused a large number of vehicle deliveries to shift to the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.

Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand.

In North America, Model 3 was yet again the best-selling mid-sized premium sedan, selling 60% more units than the runner up. Inventory of Model 3 vehicles in North America remains exceptionally low, reaching about two weeks of supply at the end of Q1, compared to the industry average of 2-3 months.

Despite pull forward of demand from Q1 2019 into Q4 2018 due to the step down in the federal tax credit, US orders for Model 3 vehicles significantly outpaced what we were able to deliver in Q1. We reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019.

A good quarter for the analysts if not for Tesla.

My previous pre-quarter-end summation was:

"The total quarterly unit estimate now stands at 60,828, which would be down 33% from Tesla's Q4 2018 unit sales number of 90,966."
https://seekingalpha.com/article/425117 ... nt-q4-2018

Personally I would take the Q4 2018 number of 90,000 and knock off 10,000 for anything in the delivery chain to China + Europe. So for Q1 2019 about 75-85,000 would be steady-as-she-goes territory, and anything above 85,000 would be good, and anything below 75,000 poor.

I realise that a delivery chain of 10,000 could easily be wrong as there are indications they did the shipping mid-quarter so that all in-channel cars would be delivered and out-of-the-channel by end quarter, but I'm a reasonable person and don't like to be too onerous.

Anything vaguely near breakeven on the P&L is fine by me. I'd rather not see too much kitchen sinking. I just want them to keep things moving along through 2019 until the China factory can start to add volumes in about a year, and somewhere to build the Y is available. In the course of the year we should see how well HW3 operates as that is now shipping and ready to be loaded with whatever SW needs the additional capacity.

I nibbled a few more yesterday, masochist that I am .

regards, dspp

Looking quickly at these quarter-end numbers my quickie take is:

1. Good call for analysts.

2. With 63k delivered, but only 31.5k delivered with 10-days to run, and 10k sitting in transit at quarter-end they are clearly going to be learning some very hard lessons about mass-global-logistics. That's the bad news. The good news is that they learn fast, will have ironed a lot of kinks out of the system, and do have 10k sitting in transit so the transit pipeline is essentially stuffed. My guess is that expanding the delivery system in Europe & China to take the 3, combined with trying to juggle those shipments to mid-quarter before switching back to US to game end-quarter numbers, was one 'clever' too many.

3. Good market position for the 3 in NA confirmed, i.e. not just a flash-in-the-pan. Low inventories & high orders in NA typical of an in-demand auto.

4. Q4 production was 61k model 3 (http://ir.tesla.com/news-releases/news- ... ncing-2000) vs Q1 production of 63k model 3 (http://ir.tesla.com/news-releases/news- ... deliveries). So model 3 production appears to have reached plateau unless / until they do further debottlenecking. We don't know what is the constraint, or whether it is multiple ones: batteries, packs, assembly, paint shop are all candidates looking from the outside.

5. Q4 S/X production was 25k versus Q1 production of 14k. It looks as if S/X production is now tapering to meet reduced demand, most likely due to fewer people needing/wanting to do the Tesla stretch now that the 3 is available. That effect will in due course become more pronounced when the Y becomes available (indeed the release of the Y preview may be Osborning the X to an extent). Unless of course there is a battery line changeover about to happen and a mid-life refresh about to happen, both embedded in these numbers. I guess a bit of all of this, but that refresh and switch to the bigger cells in the S/X clearly needs to move up the priority list.

6. Reaffirming 360-400k deliveries in full-year is a good sign for both demand, and production, but is going to take some hard work to achieve. At the moment I would say they are on track for 340-350k.

7. "Q1 net income negatively impacted", no [expletive deleted] sherlock. "Sufficient cash" is kinda important, although t obe honest I don't think Tesla would have a problem raising more capital if needed, or issuing more bonds for that matter. Nonetheless this is not in any way a good outcome for the quarter however you dress it up.

regards, dspp

[BobbyD]

It seems to me that the problems of going from a very good supplier of high cost innovative performance cars to mass market production and distribution have been greater than anticipated. This is where the best legacy auto makers hold the cards, they have very well honed and efficient networks for delivery and after market services, these have taken many years to build up and refine and are a significant cost but also a significant benefit for car buyers that Tesla has attempted to short circuit.

There appears to have been a perverse conclusion reached from the difficulties of various Big Car Co.'s over the years. Rather than seeing this as proof that profitable volume manufacture was actually incredibly difficult the various holes that companies have dug themselves in to seem to have been seen as evidence that it was so easy that Tesla would be able to pick it up overnight and show Big Car how it should be done. This may have been a touch hubristic.

On a similar note

Comparing the clunker Frankenstein car of the e-ton...

Frankenstein: Taking tried and tested parts from tried and tested suppliers and ordering them in greater quantities to provide both reliability and cost efficient procurement. You know like taking 78% of a model 3 and using it as the basis for the model y...

[odysseus2000]

Quite difficult to know what this quarter tells investors.

Sales were below expectations, but they have potentially learned many things about the logistics of exporting a lot of cars & can improve things such that q2 will become a tell as to how well they can improve on this performance.

There are also the issue of production quality & software with a YouTube industry focused on finding everything wrong with both.

If they are going to be a British Leyland outfit of declining quality, ignoring their customers & producing stuff folk won't buy they are in trouble & the spot light of YouTube will cause them to whither quickly. The ball is in their court, their stuff is selling, such that if they address these issues they can expect rewards.

Legacy auto still looks the most vulnerable to all of this as they transition from ice with very significant writeoffs to electric.

Q2 should give us more idea about how Tesla are doing, trying to read disaster from q1 looks too premature to me.

Meanwhile we have the interest of the court case of the SEC v Musk later today.

Regards,

[tjh290633]

I'm beginning to see a parallel with Delorean. Particularly on the quality issues.

TJH

[Howard]

So as we cynics predicted, the "Invasion of Europe" didn't go quite according to the Tesla fans' script.

Let's hope Tesla have learned some lessons about how to ramp up international sales.

The key issues for Tesla now are:

- Cash Flow (any company which announces this isn't a problem probably does have a problem!)

- Dealing with a massive inventory of finished cars which are (according to many reports) getting older and dustier in car parks across the USA.

- Providing after-sales service to European and Chinese customers to ensure their reputation for bad service doesn't spread further.

- Keeping cash-hungry initiatives under control. Do they need a production plant in China if sales are going to be much lower?

- Their share price. Down 7% and falling before markets open.

And a few others we don't know about yet!

regards

Howard

[BobbyD]

I must admit the figure I'd really like to see to complete the picture is orders, especially given the Q1 sale.

Saw this whilst quadruple checking the story about AP being tricked in to the wrong lane on April 1st, and then lost it in the pack of open windows.

Elon Musk
‏
Verified account

@elonmusk
Follow Follow @elonmusk
More
We’ve been so mired in production & logistics for past 18 months. Really looking fwd to getting Semi into production.

- https://twitter.com/elonmusk/status/1112123741574586368

Tesla will never fail because they don't try to do enough...

7 Tesla percent though, that's like 0.75 normal company percent.

[odysseus2000]

I'm beginning to see a parallel with Delorean. Particularly on the quality issues.

TJH

Tesla has very few parallels with Delorean.

Less than 9000 Delorean were made, they were slow for the price and had a raw stainless steel body that was hard to repair without leaving evidence of the repair. One commonality with the X is the gull wing doors, but there are few others and with Tesla making similar numbers to Delorean in a month many more Tesla are already in existence.

The wiki article is quite good and despite being a commercial failure the cars have a cult status with estimates suggesting there are around 1/3 still in existence:

https://en.wikipedia.org/wiki/DMC_DeLorean

Regards,

[odysseus2000]

Judge in SEC court case seems to be about getting the parties to sort things out between themselves:

https://seekingalpha.com/news/3448555-j ... sec-ruling

Regards,

[BobbyD]

Judge in SEC court case seems to be about getting the parties to sort things out between themselves:

https://seekingalpha.com/news/3448555-j ... sec-ruling

Regards,

So not laughed out of court all charges dismissed then?

[odysseus2000]

Judge in SEC court case seems to be about getting the parties to sort things out between themselves:

https://seekingalpha.com/news/3448555-j ... sec-ruling

Regards,

So not laughed out of court all charges dismissed then?

Not too far different so far.

Regards,

[BobbyD]

Judge in SEC court case seems to be about getting the parties to sort things out between themselves:

https://seekingalpha.com/news/3448555-j ... sec-ruling

Regards,

So not laughed out of court all charges dismissed then?

Not too far different so far.

Regards,

Except for the fact that the judge neither laughed nor threw the case out as predicted...

[dspp]

A couple of decent articles on Tesla Q1:

.... especially this one which looks more data driven than most, and tries to understand demand rather than supply
https://seekingalpha.com/article/425288 ... -explained

... and this looks at supply/demand balance and unsold inventory
https://seekingalpha.com/article/425282 ... 9-units-q1

Both are bearish and written by shorters, but nonetheless data-driven. Price is $267 and the new tax year is almost here. Add risk and nibble ?

regards, dspp

[Howard]

Tesla is creating an interesting business case study for future generations.

They are adopting a product-led strategy and are mistaken in believing they are creating vehicles which will be successful in a similar way to Apple, Google and Amazon’s products. Despite all the discussions here about their technology and software, a typical mass market car purchaser is just buying a vehicle for getting from A to B reliably and Tesla’s product isn’t that much different from other cars.

Customer-driven businesses take market share from other companies supplying an existing market and this is what Ody says Tesla are trying to do. To do this successfully Tesla’s quality, service and delivery must be far superior to their competitors to justify a price premium.

For a product-led strategy to succeed a company must offer a new wealth-creating product which is radically different from what has gone before. The average car buyer doesn’t see Tesla products that way.

Yes, Tesla have been successful selling to a rich Californian fanbase who have huge disposable incomes (or are mad enough to borrow to keep up with the latest tech trends). I’d guess a large proportion of their existing customers own two, three or more cars. And they have now sold a few thousand cars to very wealthy Europeans and Chinese.

There is undoubtedly a growing demand for more environmentally friendly cars. To successfully address this mass market the most successful manufacturers will concentrate on how their products achieve “clean” motoring and low running costs whilst minimising the disadvantages of EVs compared with ICE cars.

Ludicrous acceleration, potentially dangerous beta tested Autopilot complications, distracting touchscreens and gimmicks are product-led features which won’t help Tesla succeed when a customer-driven approach is required to beat existing competition.

And to be successful in increasing sales to bigger market segments it is a basic marketing principle that you don’t shoot yourself in the foot by cannibalising your most profitable product's market share by offering a cheaper product with virtually the same features. Tesla’s success in destroying the profitability of their S and X higher margin products in 2019 by creating a competitor in the M3 may go down in the annals as an example of how not to promote cars. Their competitors must be delighted!

Tesla start Q2 with an inventory of around 20,000 finished cars. As this stock get older these will require charging, cleaning and selling. Customers will increasingly wonder about the battery condition of cars kept for months in parking lots across the USA. The costs of selling these cars, probably at a discount, will be added to the financing costs of a billion dollars of inventory.

Tesla could prove the above criticisms wrong by showing that demand for their products outstrips their production. To do this they have to profitably sell 400,000 cars or more in 2019. And starting with sales of 63,000 for the whole of Q1 isn’t a very promising start!

regards

Howard

[odysseus2000]

Imho, most of the analysis I am seeing for Tesla would be appropriate for a business that has been around for a few years as a profitable corporation, but for a business that has only had a little bit of profit and is still in its hyper growth phase it seems wrong.

Extrapolating from the launch of a new car and assuming that it must go down hill from here flies in the face of most product cycles I have seen. Usually a manufactured product takes months before one knows if it will do well or crater. Often cars for example don't have their best quarter when they are launched, usually it is later.

The model 3 has not been long in Europe, it is still without sister model y and the older S & X will be coming to the point where many owners will want a new car. If they have liked their Tesla they may well buy another.

Meanwhile we have the semi rumbling forwards, the pickup being designed, the new roadster coming on, an analysts meeting coming shortly on the Tesla self driving tech along with power wall and solar roof tiles that have been in the background.

Trying as many are doing to evaluate Tesla on this last quarter and trying to imply it was a disaster, may turn out to be right, but if so it will be by luck. There are far too many variables and uncertainties for anyone to be sure about Tesla.

Personally I still think it has substantial potential upside.

Regards,