Featured Dashboard Summary January 2018

My point was that Toyota pushed for credits on the products they wanted to sell. The original draft for plug in credits would have cut out the PiP because its battery was too small. Toyota lobbied to get the 5kWh minimum lowered to what they wanted to put into the PiP. The Prius may not have happened without subsidies from the Japanese government.

When it comes to getting benefits from governments for the products they want to sell, Toyota is no different than GM or any other corporation.

They also got the federal tax credit for FCEVs reinstated.

A product can be before its time. The iPhone and Kindle weren't the first of their segments, just the first successful ones.

That could be the case of the Volt in Europe; it arrived too early. Diesel was the technology of choice for fuel efficiency and reducing carbon emissions by governments and individuals there. Hybrids had a tiny market share. That is what the Volt arrived in. On top of that and the import tariffs, GM was mishandling their European brands. They were also selling the Ampera, an Opel badged Volt, sometimes in the same markets.

The cars did poorly there, and GM opted to not introduce the gen2 Volt there. They were the PHEV forerunner there. If Toyota offered the PiP in Europe at all, it was in fewer markets than the Volt/Ampera.

With diesel gate and horrible smog in some major cities, Europe has turned to hybrids and plug ins. The hybrid segment is growing fastest there, and it might be bigger than North America at this point. With its lower price, the gen2 Volt might have done well there now, but GM is pulling out of Europe. They have already sold Opel and Vauxhall to PSA.

They are introducing a Buick Volt to China, and local sentiment alone could be enough for it to outsell the Prime there.

Precisely.

 

Tesla's quarterly report was last night, which gives us a better idea of the model Y and model 3 timeline, as well as model S and X sales.

First the good news, tesla model 3 production has not slipped since the slip they reported in December. The battery production is mainly automated and they are at a run rate of 1000/week since the end of december, with some human work or rework needed on the battery line. This is still projected to increase to 2500/week by the end of March and 5000/week by the end of June. Model 3 reservations have been increasing which means more reservations are being made than cancelled. Model S and X sold 101,000 world wide, and they expect it not to be cannibalized by the model 3, and sell 100,000 this year. My note is I would expect the X/S mix to be a little more X and foreign and less US sales than last year, as US customers get the 3.

Next the bad news, tesla still does not have a good grip on model 3 production. With that uncertainty still in manufacturing, tesla can't commit to those production figures. That 5000/week figure got sped up to december 2017, but no one believed it until last July. Since then it has slipped 6 months to June and can easily slip again. That means if there are any more manufacturing problems the model 3 likely doesn't add many sales to the first 6 month of the year, as it is slow rolled to have tesla not exceed the US sales of 200,000 cars until July to keep the tax credit for the full year. That scenario has tesla delivering about 35,000 bevs to US customers in February through June. After that tesla will produce as fast as they can, but we have no idea what that production number will be. Optimistically it could be over 120,000 model 3s for the second half of the year, and maybe another 15,000 model S and X, in the US. If manufacturing though does keep its time line tesla will have full tax credit only through september then half credit. That may mean the 3rd quarter production hell sales exceed 4th quarter. More bad news for reservation holders was that with manufacturing problems, there were negative gross margins on the model 3. That shouldn't be much of a surprise, and tesla says when it gets the kinks worked out it will be as profitable as the S, but .... that is assuming premium package and long range battery. With all the reservations they don't expect to deliver any 220 mile range batteries until the end of the year or possibly sometime in 2019. That makes sense because if tesla can't make money with the long range battery, it will lose a lot if it delivers the $9000 less expensive short range. But as a reservation holder I don't like this news at all. In order to get the $7500 tax credit I'll be forced to buy a $9000 option that I don't need. The other bad news was the autonomous driving demonstration was again delayed. Wosniak who loves his tesla, doesn't believe tesla is nearly as far along in autopilot as they claim.

The model Y production date seems dependant on getting the model 3 manufacturing problems fixed. They seem far along with the design, and Musk thinks he will be able to sell 2x the number of model Ys as model 3s. Mechanically they already have P and D versions of the 3 running around in test, and there are no finicky trick doors that will cause manufacturing problems. Cash burn has been lower than expected, probably because throwing more money and people at the 3s manufacturing problems won't fix them any faster. If model 3 is chugging along in 6 months tesla would do another capital raise for the model Y and the Truck production. That would get the model Y out in 2019 or more likely 2020. We should know a lot more answers in April with the next quarterly report.

 

^^^I am thinking in California the new HOV regs may retire a lot of plug-ins and there will be demand for new plug-ins because they qualify for the free HOV past 2019.

 

Sure, and even without the federal tax credits, there will be plenty of demand in California and other places for the model 3 and model Y, but in most of the US, when chevy and tesla lose credits, it will give advantage to the leaf, prime, clarity phev, bmw 330e, etc. My guess is Tesla will have manufacturing problems, and thus the model 3 will have at least a $3,750 federal tax credit through june of 2019, chevy through September of 2019. After that there may be short term problems for these vehicles in the US. Both GM and Tesla may do well in china, and Tesla in Europe after this.

 

This is one of the few major reasons we did not jump on the pre-order list.

We continue to be interested in the $35k+ MSRP SR version. But Tesla's predictable history of production delays and shrewd business decisions in serving the highest optioned/healthiest profit margin trims first and for as long as possible, made it exceedingly unlikely that the $7500 tax credit would be there for us and most else. The $7500 tax credit would have made it much more competitive with other BEV offerings. The fortunate earliest reservation holders will still likely get some of the 1/4-1/2 federal credits.

I'm not a fan of the only color choice black at $35k MSRP, but would take one right now if such were available to me.

With so much demand, Tesla is in the enviable position to play this advantage for many months. Other manufactures could only dream of such a problem. My biggest regret is not buying any Tesla stock years ago.

 

+1

This response is only about me, not the general market. Yes I'm disapointed about all the new deposits, delaying my ability to get a standard battery pack.

I waited in line and put down 2 x $1000 deposits on the model 3, that I figured at the time worst case was a no interest loan for a company whose stock I owned ;-) 1 for me, and 1 for my brother who I thought would want one if they produced it as well as the model S. IMHO they did a much better job at a lower price than I expected. I got out of the stock a little lower than it is today, but much higher than when I made my deposit. The company owes me nothing. I like black cars, and don't think the up charge for paint is a big deal.

I would wait for the standard battery and take the smaller tax credit if I thought it really was to my advantage. I am going to wait until June to decide. I am leaning towards getting the long range pack simply because with with the difference in tax credit and likely resale value, I'd lose money not getting the more expensive car early. Difference in price after the tax credit difference will likely be $5250, which I'll likely get most of it back if I sell it within 7 years versus the standard pack.

At current battery costs, tesla probably makes more than a $3000 profit on long range battery versus standard. When gigafactory manufacturing issues are worked out this will be even greater. It looks like tesla was losing around $5000 on the rest of the car, but this will turn to profit when volume goes up. They really can't afford to sell any standard battery units until these costs go down, and that looks like July at the earliest, but they will push it further to have higher profits.

 

Bloomberg
did a nice graph depicting increased production/forcast;

not too shaby for a startup.
.

 

Pretty good call for February with 2485 estimated from InsideEVs. Beat my guess.

I have been thinking more and more that Telsa is diverting deliveries abroad and will do more of this in the coming months so they can sell the 200,000th Tesla on July 1, 2018 to maximize the $7,500 federal credits available.

 

Yep, I agree that this is pretty likely as well. Great for their customers!