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Published on May 1, 2019 |
by Zachary Shahan
May 1, 2019 by Zachary Shahan
Tesla last week published its shareholder letter for the first quarter of 2019. You can read it in full here. We have also posted here a special livestream and a liveblog of the Tesla teleconference. Below are some of the highlights that I think have been mostly ignored or skimmed by the press (including the press specializing in electric vehicles).
I am focusing my attention on the question of consumer demand for model 3. I think for months (or even quarters) that demand is indeed the big question for Tesla in the short and medium term. (In the long run, my opinion is that Tesla's application will be crazy, because the mass market will eventually find out that you simply can not beat a Tesla.) It's clear that many Wall Street analysts have the same question. head, and they seem to want simple answers that perfectly predict the future. Ah, if life and business were so easy!
Nevertheless, Tesla has provided a number of statements on the subject, some clues and a broader context that should help address the issue. So to the universe.
The first highlight is that Tesla produced 63,000 models 3 in the first quarter of 2019, up 3% from the previous quarter. The fourth quarter was seen in many ways as a high-volume eruption quarter, with some hype that Tesla could not continue in this direction. The first quarter of 2019 showed that Tesla could continue at this rate and was able to slightly increase its production.
The most impressive point is that the Model 3 was again the best-selling premium car in the US in the first quarter, and was twice as much sold at 60%! This is impressive for several reasons.
- First of all, the first quarter was to be a major sales craze for Model 3 in the United States. The US federal tax credit had been halved, from $ 7,500 to $ 3,750, and Tesla was focused on shipping models 3 overseas. Nevertheless, Model 3 dominated its market segment.
- Aside from the above, Tesla has not yet provided the Model 3 or Model 3 Standard Range Plus base. These are significantly cheaper than previously available versions. In addition, I'm not sure that this is the case with Tesla because of its unique circumstances, but generally, when you reduce the cost curve, auto sales increase exponentially. A $ 35,000 car is not only more popular than a $ 50,000 car; it is much more popular than a $ 50,000 car. It is more popular than a $ 65,000 car.
- Connected to this, but I will make a third point, most people who know Tesla think that his cars are very expensive. Word of mouth takes time, but model 3 of $ 35,000 is finally available. The message should therefore spread now that an "affordable" Tesla is finally on the market.
- A final point is that the Model 3 is not only competitive compared to its high-end competitors. It offers both a lower price and many more premium features. In other words, in many ways it's a premium car at a lower price. It always puzzles me to find that so many people are still buying BMWs, Audis and Mercedes (Mercedes? Mercedi?), But people will learn that buying one of these is essentially silly – sooner or later . Here too are many buyers who already get it.
Perhaps the most important note I prefer is Tesla's, just explaining why there is so much global potential for Model 3 sales. The explanation here is:
Yes, there is a your more The potential of the premium mid-size sedan elsewhere than in the United States, and if Model 3 was represented abroad as it is at home in the United States, it would have a demand enormously bigger. We have not yet seen the actual demand for Model 3 globally, but it has hit market lows in the Netherlands, Norway, Germany, Switzerland and other initial foreign markets. Over time, especially as the cheaper versions of the car become available, we'll see how things work out.
But everything is not only for the Benjamins and BMWs. Another highlight that hints at the potential demand for Model 3 over the coming months, quarters, and years is that Tesla still does not stop most of its premium-class market buyers. "Since the introduction of the standard range 3 and standard plus range, 69% of the exchanges were made with non-premium vehicles, which indicates that the model 3 is attractive beyond the premium segment", note You're here.
We were quite happy to show Tesla's cost competitiveness with the Honda Accord, Toyota Camry, Nissan Altima and other top-selling cars, because it's amazing. But I guess it's something that the mass market has not learned yet.
Another clue that demand for Tesla Model 3 looks promising: "Although we are aiming for more ambitious internal targets, we are reaffirming our previous forecasts of 360,000 to 400,000 vehicle deliveries in 2019, which represents an increase in 39, about 45% to 65% compared to 2018 ".
In fact, Tesla pointed out that it could produce a lot more cars in 2019 than expected. "If our Gigafactory Shanghai manages to achieve volume production at the beginning of the fourth quarter of this year, we could produce up to 500,000 vehicles worldwide in 2019. It's an ambitious schedule, but that's only a matter of time. That's what we are aiming for. However, based on our current knowledge, it seems very likely that we will be able to produce more than 500,000 vehicles worldwide in the 12 months ending June 30, 2020. "Why would Tesla target this production as much as it would felt uncomfortable with the demand for so many vehicles?
Right after this quote, we quoted: "We continue to target a non-GAAP gross margin of 25% on the S, X and 3 models, based on the variety of variations and take-up rates. options as our product offering evolves ". have a 25% gross margin on a product if the demand does not match the offer. Most of the auto market has much lower gross margins. (Of course, they do not sell their cars to customers themselves because they have to go through dealerships, but the point remains the same.)
Elon Musk said during the teleconference that in the first quarter, US demand had declined less than expected, that there was a huge demand for the Model 3 Standard Range Plus and that they did not really fear demand.
Ok, it's Elon, he's optimistic. But if we're going to say that he's optimistic and that he's saying that they've been positively surprised by the first-quarter demand in the US, that's a good sign that the demand has survived and word of mouth is already circulating enough to make many older buyers of BMW 3 Series, Honda Accord, Toyota Prius, Nissan Altima and Toyota Tacoma.
Other important issues could result in much more demand for the vehicle in the coming months, such as the leasing, which has just been available on Model 3, and Tesla's activation of the "Full" feature. Self driving ยป. In addition, from a financial point of view, the Full Self Driving option may be something that most Model 3 owners did not buy at first, but they will buy as soon as they see some interesting features enabled. . (It's an easy income increase that costs almost nothing to Tesla.)
I mentioned "the universe" at the top of the page. As I reported last night, both Tesla search traffic and Tesla.com traffic ranking have increased in 2019. This is a sign of stronger demand, and not a lower demand.
Tesla.com ranking compared to other sites.
I'm going to finish on a subject that is not about consumer demand in the short or medium term, but it's something that I find amazing, extremely relevant to the future of Tesla and that could potentially influence long-term demand . Again, a Tesla chart of his shareholder's letter best sums up the point:
To summarize what the table best summarizes, capex costs for Model 3 production in China will be considerably lower than capex costs for California Model 3 production (per unit of production capacity). In addition, the investment costs for the production of the Y model in the USA will also be significantly lower than capex costs for Model 3 production in California.
This means one of the following three things: 1) Tesla could sell these vehicles at a lower price and earn the same price on each one of them (selling them at a lower price would mean, of course, a claim / larger sales, which would represent more revenue and profits), 2) Tesla could sell at the same price and make more money on each of them, 3) a combination of these two options.
The future is promising.
About the author
Zachary Shahan Zach tries to help the society to help herself (and other species). He spends most of his time here CleanTechnica as director and editor. He is also the president of Important media and the director / founder of Obsession EV and Solar love. Zach is recognized worldwide as an expert in electric vehicles, solar energy and energy storage. He has lectured on clean technologies at conferences in India, the United Arab Emirates, Ukraine, Poland, Germany, the Netherlands, the United States and Canada.
Zach has long-term investments in TSLA, FSLR, SPWR, SEDG and ABB. After years devoted to sun protection and electric vehicles, he simply has confidence in these companies and has the impression that they are good clean tech companies in which to invest. But it does not offer any professional investment advice and can not be held responsible for your loss of money, so do not rush.
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