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Tesla production, supplies, distribution … What was the question?



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Published on April 27, 2019 |
by Maarten Vinkhuyzen

27. April 2019 by Maarten Vinkhuyzen


It's not often the case that Wall Street analysts prove wrong within days

The current stock price decline is partly due to doubts about the demand for that Tesla Model 3 due. As proof of this lower demand, the daily delivery figures from Norway and the Netherlands are used.

Anyone who follows this knows that these two countries are on the other side of the Atlantic. The better informed know that the cars for Europe will be sent by ship from the Fremont, California, through the Panama Canal. Analysts following Tesla should even know that these ships had sailed in the first half of last quarter and that production was destined for the domestic market in the second half of the quarter.

When These Ships Arrived Few weeks before the end of the quarter, shipments started to deliver as many cars as possible before the books closed for the quarter. But not all cars were delivered on time. We saw how the last cars of these ships were delivered in the first week of April.

"In order to quickly meet international demand, models of the Type 3 were manufactured in the first half of the quarter in Europe and China second half," explains Tesla's Letter to Shareholders, and during the quarterly conference call a few days ago it was stated that this was the Numbers enormously distorted. It distorted the numbers to the extent that half of the quarterly deliveries took place in the last 10 days of the quarter.

Okay, back to dwindling demand monitoring. Did half the demand in the last quarter occur in the last 10 days?

Any analyst who would say so would be laughed at. Why are they now taking their claims about demand in Norway and the Netherlands seriously? 6 weeks ago there was no production for Europe. 4 weeks ago no ships were traveling to Europe. Two weeks ago no cars had arrived in Europe. There are essentially no deliveries in Europe today. In Europe, there is no relationship between current demand and deliveries.

And why does Musk prove the law? There was this question and answer at the conference call:

Philippe Houchois, Jefferies, Analyst : "And can I ask you a question about how Adam was told about the drama that is unfortunately surrounding your stock? Why not reduce some of it by exposing your deliveries on a monthly basis and possibly also exposing your greenhouse revenues early rather than just using reserves. This gives us an instant overview of some of the details that move the stock.

Elon R. Musk, Tesla, Chief Executive Officer : "I think that would actually be counterproductive because people read too much about what happened in a month. I mean, even on a quarterly basis, things can be lumpy. The granularity provided, for example, on a monthly basis, would lead to all sorts of conclusions that make no sense. It is quite literally that sales to a particular country are affected, for example, when the ship arrives. So when the ship arrives on the 31st of the month or the first of the next month, it feels like dramatic. But actually the ship was only one day late. So people read – that would increase the drama, not reduce it. "Zachary Kirkhorn – CFO: 19459009" And we're filling the ship 100% … "Elon R. Musk – Chief Executive Officer: " Fill the ship up 100% so it just gets lumpy … if you can GDP of a country calculated – say, the US – Sunday's GDP is extremely low, but the Monday's GDP is extremely high … nothing has really changed. "

The consideration of the delivery figures leads to false conclusions. [19659008

Data and Information

Data and information are not the same. Information is generated by giving data meaning. This is done by accountants, statisticians, IT experts, data scientists and sometimes Wall Street analysts.

This process begins with the question, what do you want to know?

At the end of the quarter we receive production and deliveries as prelude to the financial report. Production volume is an indicator of costs and deliveries, where the average selling price is an indicator of sales. No more and no less. They are indicators for the upcoming quarterly financial report. That's the question of the financial analyst who gets answered with these numbers.

If you are interested in demand, you will need different numbers. To know what numbers you need, you need to know the market and how the product you are interested in is manufactured, distributed and sold.

Take strawberries, for example. They are mostly sold in the summer. Do people like strawberries in the fall, winter or spring? Or does the offer have something to do with it? And is the price possibly influenced by the offer? Most people know this about strawberries. Strawberry jam is sold in all seasons, fresh fruit only in season.

Beer is widely available throughout the year. Sales successes at sporting events such as the Super Bowl, Olympic Games or on hot summer days. There is a connection between demand and these events. Many in marketing even believe that there is a causal relationship between them.

If market analysts have no problem with strawberries and beer, how can they be so wrong with Tesla cars?

The answer is simple – what they are used to for traditional US automakers, they do for other automakers worldwide, unaware that the North American car market is quite peculiar.

In North America cars are sold off the shelf. It is not normal in most parts of the world to sell large capital goods from stock. New planes, yachts, cars, machines or houses are ordered first, then built and delivered. For most of these goods, even Wall Street analysts know that they need to consider order intake as the most important indicator of market and economic trends.

Philippe Houchois should have requested monthly order intake and order book numbers Boeing and Airbus. These are the important numbers. More important than production and far more important than deliveries.

I do not think Tesla will release her, but at least he shows that he understands what he's talking about.

We were basically deadlocked Tesla reiterates why it is irresponsible to publish monthly shipments. Two days later, Wall Street creates a panic of daily delivery numbers unrelated to the FUD story Wall Street sells.

Okay, dear reader, when will this current FUD attack be over? And how are we going to raise these Wall Street rivets?


Tags: EV Sale, Netherlands, Norway, Tesla, Tesla Finance, Tesla Model 3, Tesla Model 3 Supplies, Tesla Model 3 Demand, Tesla Model 3 Production, Tesla Model 3 Sales, Tesla Sale, Tesla warehouse [19659035] About the author

Maarten Vinkhuyzen Grumpy old man. The best thing I did in my life was raising two kids. Only elementary school completed, but if you do not go to school, you have plenty of time to read. I switched from accounting to software development and finished my career as a systems integrator and architect. My 2007 boss had two electric Lotus Elise cars to show decision-makers the future direction of energy and traffic. And since then I'm looking for my diesel cars to replace with electric cars.




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