Published on January 1st, 2020 | by Maarten Vinkhuyzen
January 1st, 2020 by Maarten Vinkhuyzen
First: Happy New Year To All People!
Every quarter, there are a couple of days of suspense waiting for the Tesla production and delivery numbers. They have in most quarters no importance whatsoever. Not reaching the guidance by even 0.1% is considered a deadly sin on Wall Street, though. Missing the expectations of ill-informed Wall Street talking heads is considered a massive failure. Not a massive failure by the ill-informed talking heads, but by the company that did not perform according to the Wild Ass Guesses of those talking heads.
The importance of these numbers is to give those talking heads some scandalous topic to fill their time on the screen with, and for us, the writing commentary, to produce some clickbait articles. The important numbers today are Tesla’s guidance of 360,000–400,000 deliveries in 2019.
First, let’s look at production in Q4 2019, the last quarter of the first decade of Tesla production. (Okay, there was some negligible Roadster production before 2010).
Tesla Model S and X production capacity is 22,500 per quarter according to the Q3 update letter, page 7.
There is a tiny end-of-incentive stimulus for these models in the USA and the Netherlands, and the organic demand is slowly recovering. The previous three quarters were 14,163, 14,517, and 16,318. I’ll guess production was 18,000 in Q4.
Tesla Model 3 production capacity appears to be 87,500 nominal. But you have maintenance, holidays, and accidents. Even with the pressure to reach guidance this quarter, I’ll be conservative and use 85,000. That means production of 103,000 for Q4.
According to the Tesla Q3 2019 update letter, there were 255,561 deliveries in 2019 prior to Q4. To pass the lower bound of the guidance, Tesla needed to deliver 104,440 vehicles. That is 1,440 more than it appears Tesla produced.
Luckily, there’s some inventory. It’s 17 days of average deliveries in the 4 quarters trailing the Q3 report. A quick back-of-the envelope calculation points to an inventory of ~22,500 vehicles. That’s the total number of vehicles in transit, in stock, as show models on showroom floors, available for test drives, and in the loaner fleet. Those are not all really available for sale, but many are moved out at the end of the quarter.
Europe outside the Netherlands has been complaining about lack of supply. It’s been sold out, including many showroom and test drive vehicles.
The Netherlands was ground zero for deliveries in Q4. Not only for Tesla, but for most EV brands, which have been racing to deliver as many electric vehicles as possible before midnight at the end of December 31, 2019. The last two days, deliveries exploded, but Tesla deliveries in the Netherlands were slinking. They likely ran out of cars.
A ship reached the UK after Christmas that could account for 1,000 vehicles on the quay that did not reach customers. It’s speculation of the “better safe than sorry” type.
In the USA, the first mentions of empty showrooms in Florida were from mid-December. Later, there were more stories of empty Tesla showrooms on the East Coast, and inventory searches returning “no results” emerged. It is anecdotal, but it seems the last delivery center that had a decent number of cars on 12/31/2019 was Fremont, California, with even Elon Musk on hand to help deliver cars that were made that day.
Before someone enthusiastically calculates a zero inventory, I have to warn — inventory is never zero. There are always a few items with just the wrong color, options, trim level, and location for which no buyer is found. Even the best logistics system will have some vehicles in transit that “should have been delivered.”
Again, I will try to be conservative, so will keep 10,000 in inventory. That brings deliveries to over 118,000 vehicles, beating guidance by about 14,000 vehicles and ending the year at around 374,000, according to my calculations.
This number with 3 significant digits suggests an accuracy that is not warranted. The correct way to state this is: “2019 Tesla deliveries are likely between 370,000 and 380,000.”
Is this a cop-out? No, this is mathematics — don’t suggest that you know more than you can know, even in guesses.
And back to the original question, did Tesla reach its guidance? Yes, that is highly likely. But we’ll find out soon enough.
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