Tesla Falls Short Of Q1 Delivery Guidance, Blames “Hubris” With Model X

1 year ago by Jay Cole 96

Tesla Admits To "Hubris" With The Added Gizmos On The Model X, Which Caused A Q1 Delivery Miss

Tesla Admits To “Hubris” With The Added Gizmos On The Model X, Which Caused A Q1 Delivery Miss

After watching Tesla sales throughout the first quarter, especially in the first two months on our monthly US electric vehicle scorecard, we already knew the company might have a problem hitting its Q1 goals, thanks to difficulties with the Model X roll-out being too little, too late:

“… the Model X, which (after just 5+ months of limited production) finally got its act straight and delivered hardcore in the last 3 weeks of the quarter”

And sure enough, Tesla reported today that 14,820 vehicles where delivered in Q1, a  number that represents a 8% shortfall from the 16,000 forecasted from the Q4 report/conference call only 8 weeks ago.

Just Not Enough Of These Went Out Before The End Of Q1

Just Not Enough Of These Went Out Before The End Of Q1

Tesla blamed the shortfall on its own “hubris” when it came to the Model X – too much tech, too fast; but noted that delivery expectations for the full year remain unchanged.

“Q1 deliveries consisted of 12,420 Model S vehicles and 2,400 Model X vehicles. Q1 deliveries were almost 50% more than Q1 last year and Tesla remains on track to deliver 80,000 to 90,000 new vehicles in 2016.”

Getting back to the root of the problem, Tesla made the following statement about the slow launch of the Model X:

“The Q1 delivery count was impacted by severe Model X supplier parts shortages in January and February that lasted much longer than initially expected. Once these issues were resolved, production and delivery rates improved dramatically. By the last full week of March, the build rate rose to 750 Model X vehicles per week, however many of these vehicles were built too late to be delivered to their owners before end of quarter.

The root causes of the parts shortages were: Tesla’s hubris in adding far too much new technology to the Model X in version 1, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house. The parts in question were only half a dozen out of more than 8,000 unique parts, nonetheless missing even one part means a car cannot be delivered. Tesla is addressing all three root causes to ensure that these mistakes are not repeated with the Model 3 launch”

Too Mush Whiz-Bang In The First Iteration Of The Tesla Model X Causes Q1 Shortfall

Too Mush Whiz-Bang In The First Iteration Of The Tesla Model X Causes Q1 Shortfall

Unsatisfied with just that disclosure, Tesla also added some background on the re-affirmed full year guidance, and justification on how they will get there.

“Because production is now on plan and Q1 orders exceeded Q1 deliveries by a wide margin, with Q1 Model S orders being 45% higher than Q1 last year, Tesla reaffirms its full-year delivery guidance.

These additional details are being provided because of the unusual circumstances of this quarter and will not typically be provided in quarterly delivery releases going forward. As always, more detailed information will be contained in Tesla‘s quarterly shareholder letter.”

As always, the specific sales volumes attributed to the quarter at this point in time are subject to some change.  In the past, the +/- adjustment have been small, around a dozen or so units.

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96 responses to "Tesla Falls Short Of Q1 Delivery Guidance, Blames “Hubris” With Model X"

  1. Pushmi-Pullyu says:

    “A man’s reach should exceed his grasp.” I think Tesla has taken that saying rather too much to heart.

    It’s good that Tesla is growing by leaps and bounds every year, but it would be better for Tesla’s public image if the company stopped announcing overly optimistic forecasts. Far better to underestimate, and then proudly proclaim they exceeded expectations!

    1. Driverguy01 says:

      I guess it’s part of their DNA, and i would add : ”to BOLDLY go where no man has gone before” It says ”boldly”, not conservatively. I know it’s not the best for it’s stock tho.

    2. Just_Chris says:

      a nano-second…. that is about the time it will take for global governments to yank every incentive going to EV’s as soon as they become mainstream and profitable. Expect every manufacturer of EV’s to constantly play the new technology card until the money runs out.

      New technology is unpredictable and hard to get right. Tesla will continue to over promise because it is part of their brand at this stage.

      1. TomArt says:

        Tesla Motors has never “overpromised” anything – once they actually start producing their cars, the cars have superior capabilities in every respect compared to the specs they announce at the vehicle’s reveal.

        1. flmark says:

          Elon promised that the second row seats of the X would fold flat. They don’t. While I decided to purchase it anyway, that was a real hard spot for me. I am accepting that other things (like the panoramic glass) will help me to offset the storage issue…but your statement is EASILY disproven.

      2. Speculawyer says:

        Some amount of incentives should continue even if the are profitable. Either that or crank up the taxes on gasoline. We can’t go on spewing toxic pollutants and greenhouse gas emissions.

    3. Bret says:

      “Is it not better to aim your spear at the moon and strike only an eagle than to aim your spear at the eagle and strike only a rock?”

      – The Greatest Salesman in the World, by Og Mandino

  2. Three Electrics says:

    Tesla failed to make their eight week old estimates, and yet full year estimates miraculously remain unchanged, despite a failure to make them two years in a row? It appears hubris remains an issue at Tesla.

    1. Scamwise says:

      The full year estimates already contain at least a couple of hubris worth of leeway at 80,000 to 90,000.

    2. Michael Will says:

      Lol read closely, they had bad production yield dec/jan/feb and excellent weekly yield end of march, that going forward allows them to meet the aggregate year-guidance. But yeah they definitely are in the ‘ambitious goals attract surprising results’ camp, and with the amount of people putting in their $1k reservation for a model 3 they definitely wildly over exceeded any guidance that may have existed… Disclaimer: long TSLA/SCTY 🙂

    3. Tech01x says:

      No miraculous at all.

      Those watching closely know that they stockpiled almost finished X’s during Q1 hoping to get enough parts early enough to deliver them. Clearly they fell behind in terms of finishing up by about 2 weeks.

      They exited Q1 with a run rate of 750 Model X… that puts the factory well within the ~1,800 production run rate that was expected. They can theoretically burst to 2,000 a week. They can tweak the production mix from here, with the X sporting higher ASP. Without pushing too hard, that’s 65,000 production for the rest of the year + production overhang from Q1 of say 2,000 + 14,820 delivered to get over 81,000. Push the average to 1,900 and we get 85,000 delivered.

  3. Three Electrics says:

    Interestingly, in Q4, Tesla sold 17,192 copies of the Model S. In Q1, they sold only 12,420. It will be interesting to see if the X can make up for the shortfall in Model S demand.

    1. x says:

      Denmark tax was one of the reasons for that super-high number, probably other tax considerations are attracting customers in US and elsewhere to buy before year’s end.

      so this fud doesn’t “hold much water”, but fud is fud.

      Related to what you were trying to say,
      I’ve heard that Saudi Arabia plans to list their biggest state-owned oil company (~2 trillion) now when the oil price is that low. Why would that be?

    2. Pushmi-Pullyu says:

      It’s entirely normal in the automotive market to have a large seasonal variation in demand, with the first quarter in the year having low sales. Your mention of a “shortfall” in Model S demand is a mischaracterization. And given your history of Tesla bashing, that’s likely intentional on your part.

      1. Anti-Lord Kelvin says:

        And this shortfall demand is against the facts as these facts are:
        Q1 2015 deliveries = 10045 (only Model S)
        Q1 2016 deliveries = 12240 Model S
        So a 24% increase, I would love to have this sort of shortfall in my income!

        1. Anti-Lord Kelvin says:

          Correction, is 12420 Model S deliveries not 12240, so the 24% is correct.

      2. Three Electrics says:

        False.

        If you look at Tesla’s historical numbers, Q1 sales have always been very, very close to the prior year’s Q4 sales. This year is the first substantial shortfall from the prior year’s Q4.

        1. Pushmi-Pullyu says:

          Simply not true. It happened in only 2 out of 3 of the last three years. Only a Tesla basher would try to paint a change in trends as the company grows as a “bad thing”.

          https://g.foolcdn.com/editorial/images/163710/model-s-sales-q1-2015-tesla_large.png

          Pretty desperate, Three Oil Companies Three Electrics. Oh, and if there was any doubt you have a deep financial interest in the company, then you just erased it.

          If you are currently shorting Tesla stocks, then you’ve recently got caught in yet another short squeeze. So then, Tesla thanks you for the money you’ve apparently given them! 😀

          1. Three Electrics says:

            Please point out where on the chart MS sales declined 28% from Q4 to Q1, or even where they declined 10%. They never did.

            I realize that you feel your Tesla rah-rah is a public service. However, there are no shortage of Tom, Dick and Harry’s willing to suspend critical thinking and promulgate the Kool Aid around here. In response, I can only present facts. For that, I am mercilessly bulled by you and others.

            Please stop bullying me.

            I ask again. Please stop bullying me.

            You may feel that I am a traitor to your cause, but that is really a symptom of intolerance and fundamentalism. I will not be dragged in front of the People’s Committtee for the Advancement of the Revolution for speaking truth.

            1. Phr3d says:

              +1 3E. For the compliments you receive from some readers Puthetic (name calling intentional for point), your ‘three oil companies’ bulls**t was immature name-calling months and months ago
              let it go
              (and fans please feel free to bully me, too, because Actual Numbers are of Interest to me, a 3 reservation holder and an accused Tesla fanboi – a moniker I wear with pride as I’m not born-again, just admiring – horrors, I’m a Mary-Volt-Bolt fanboi too).

              you have made and realized several errors that regulars pointed out, but bashed them (back when) for pointing them out, redirecting or reevaluating your stance, and perhaps fueled a few unnecessary fires.

              Your recent prose has been Much kinder and worthy of reading.

              3E is the last on the list, as you seem to have found some peace with sven. so

              please stop, regular readers say thank you in advance.

              1. Phr3d says:

                RE 3 reservation holder was unclear:
                We had a nice early rez for X shortly after offering – we bought it for AWD and intended to buy the small battery, unknown at that time that we Still wouldn’t be eligible for delivery due to being only a 70D and we had budgeted (go ahead, laugh) $50k, 1.5 times what we had Ever paid for a car.

                The ‘D’ was released, so we cancelled the X rez in favor of the 60D, as it fit our needs and was available Now – and the X was a little late.

                The 60D was immediately cancelled (for lack of interest, we were told, lol) as the 70D was the new minimum model, but they were unable to tell me that at the time. We were kinda’ cranky at the news and didn’t re-order when the new 70D (a Better deal) was released months later, to register our displeasure.

                We chanced a sight-unseen model E order, as the money was set aside, so We hope for a 2018 deliver on all options. We’ve had skin in the game since ’14, so we’re some of the few that Just Want our Tesla, lol.

                1. RexxSee says:

                  You’re confusing the early 40kWh with the simple enhancement of the 60kWh -> 70kWh. It’s evolution. Fossil fuels will stay in the fossil ground.

            2. x says:

              I do’t think he’s bullying you.

              We do know that big oil and I would guess big3 and others really, really, Really don’t like tesla.
              Hence the suspicion from the “believers” (i.e. simple people without any vested interest that want better for health, better performance, cheaper to maintain, less polluting , less noisy , far less costly to power etc etc cars).

            3. Pushmi-Pullyu says:

              Three Electrics whined:

              “I can only present facts. For that, I am mercilessly bulled by you and others.”

              If you think that having your mendacity pointed out is “bullying” you, then you only need to stop posting untruthful statements and insinuations to have that “bullying” stop.

              I don’t object to negative statements about Tesla, so long as they’re truthful. Anyone can see that I’ve posted negative things about Tesla myself, in this very comment thread.

              Honestly, it boggles my mind that you serial Tesla bashers are entirely unable to stick to the truth, even when that would serve your cause better. Why can’t you see that? Can’t you understand that when people (definitely not just me!) keep pointing out that nothing, but nothing you post is entirely true, that at best what you post is half-truths, then people will stop believing anything you say? It’s like something is broken in the minds of you serial Tesla bashers.

              Very sad.

              1. Nix says:

                The sad thing is that the downfall of every green car and green energy website, over and over has been the Concern Troll.

                I’ve been posting for well over a decade, and sadly have lost way too many sites through the same pattern.

                First the Concern Trolls infiltrate the board. At first they are kindly corrected, but absolutely ignore the corrections, and simply re-post the same Concern Trolling comments.

                They rarely post anything positive about anything green, never acknowledge when they’ve been corrected, and repeat the same BS in story after story.

                Then regular contributors get sick of the Concern Trolls, and a few folks who actually care about the board and actually care about green issues attempt to stop the endless Concern Trolling by repeatedly calling them on their BS.

                When the Concern Troll finds the pressure too much, the become really Concerned(!!!) and start trying to play the refs.

                Eventually the regular posters get sick of having to deal with constantly trying to correct Concern Troll’s endless BS, and the regulars find somewhere new to post. All that is left are the Concern Trolls. And since they don’t actually care about green anything, they stop commenting too.

                In the end, the comments section dies, all because the expert Concern Trolls played the system.

                Sad.

    3. Tech01x says:

      Rookie mistake to conflate deliveries with demand in a production constrained environment. They didn’t deliver more because they couldn’t make more, not because there wasn’t demand. The only demand metric we have is their customer deposits number which increased at the end of Q4 even after such a high delivery quarter.

    4. Christopher Crim says:

      I don’t understand why so many people seem to misunderstand this concept: Tesla is still production-constrained. They are unable to produce enough cars each quarter to satisfy all outstanding orders. In other words, what you meant to say is that “in Q1, they *delivered* only 12,420 of Model S.” We don’t know how much of a backlog there still is, but if you order now, it’ll be months before you see your vehicle.

      1. tftf says:

        And yet magically all those Model3 reservation holders will get their cars in late 2017 and 2018 – without flaws and with great operating margins for Tesla.

        Continue to believe.

        1. Pushmi-Pullyu says:

          Notice how quickly Tesla bashers have switched from insinuating that Tesla is inflating its figures for orders and production, claiming that Tesla was producing “inventory cars” to be sold on some mysterious hidden gray market… to now suddenly claiming it’s a bad thing that Tesla has much more demand for the Model ≡ than the company can possibly produce in the next 2-3 years.

          Well at least, the latter has the advantage of actually being true. Or rather, tftf’s post could have been true if he hadn’t framed this inside an insinuation that Tesla denies this reality. This Tesla bashing leopard shows his spots by lying even when the truth would serve him better.

          There is little doubt that Tesla won’t be able to produce enough Model ≡’s to satisfy demand for at least a few years, and likely several. Tesla will “cry all the way to the bank” over having demand exceed supply by such a huge amount!

          Ahem! Hey, tftf! Having demand vastly exceed supply is a good thing for that company. A very good thing. I guess you think we’re all so clueless we don’t realize that, hmmmm?
          😀 😀 😀

          1. sven says:

            Pushmi-Pullyu said:
            “. . . claiming that Tesla was producing “inventory cars” to be sold on some mysterious hidden gray market . . .”

            Tesla clearly and explicitly states in its latest Form 10K Annual Report filed with the SEC that “Finished goods inventory includes . . . new vehicles available for immediate sale at our retail and service center locations . . .” From this inventory, Tesla takes vehicles to serve as demo cars and loaners, which will eventually be sold to customers. But as stated above, you can also buy a new car immediately from this inventory that has not been used as a demo or loaner car, or pre-ordered.

            The link below is to Tesla’s 2015 Annual Report Form 10K, Notes to Financial Statements. Scroll down to the bottom of page 60, and look at Note 4 – Inventory.

            “Note 4 – Inventory”
            . . .
            Finished goods inventory includes vehicles in transit to fulfill customer orders, new vehicles available for immediate sale at our retail and service center locations, and pre-owned Tesla vehicles. The increase in finished goods inventory was primarily due to customer orders that were in transit for delivery at year end.”

            http://ir.teslamotors.com/secfiling.cfm?filingID=1564590-16-13195&CIK=1318605#TSLA-10K_20151231_HTM_NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN

            1. Pushmi-Pullyu says:

              sven said:

              “From this inventory, Tesla takes vehicles to serve as demo cars and loaners, which will eventually be sold to customers. But as stated above, you can also buy a new car immediately from this inventory that has not been used as a demo or loaner car, or pre-ordered.”

              Okay, sven, show me one photo of a Tesla store or showroom anywhere that has this “inventory” in their lot. In fact, show me any photo of a Tesla store or showroom anywhere that actually has what would be described as a “dealer lot”.

              You can’t, because they don’t exist. I know they don’t exist, because this same argument has been running for years over on Seeking Alpha. And after awhile, Tesla supporters got tired of all the B.S., and challenged a few of the loudest Tesla bashers to find any place where there was a lot full of Tesla cars waiting to be sold. One of the bashers admitted she had called around and the most she could find at any one store available for immediate sale, was two cars.

              sven, every single car in the group you described is intended for use as a demo or service center loaner. Every one.

              And yes, I think you’re right about this: every one of those is available for purchase at any time. At least, I did read a post by someone who said that there was one car which was purchased immediately upon delivery to the showroom, so it didn’t wind up being used as a demo at all. I have no reason to doubt that’s true.

              Now, will you please stop trying to use confusion over the word “inventory” to make insinuations about Tesla? Other auto makers make 99% or more of their cars for what they call “inventory”. That is, they produce cars and hope they’ll find a buyer. Contrariwise, Tesla uses the word “inventory” to mean only cars it has produced but are not yet paid for by a buyer; either cars en route to the buyer, or else those relatively few cars sent to showrooms and service centers, per the description you posted.

              And you’ve had this explained to you before, so don’t pretend you weren’t aware of the true situation.

              BTW — I do appreciate the fact that you’ve stopped your Tesla bashing campaign. But that doesn’t mean you get a pass on your FUD here. And that’s exactly what your post is: FUD.

        2. Tech01x says:

          Who said all? However, the short thesis is getting more difficult to support, even if not all get their Model 3’s in 2017/2018.

        3. TomArt says:

          At this point, you’re a blithering fool. Nobody at Tesla Motors made such promises, and nobody who reserved one has such an expectation.

        4. x says:

          Yes , I will.

          And regardless of 50% yoy deliveries (not just production and then filling the lots of the nice decent dealers) you and many like you (i.e. “independent” unbiased analysts) will continue to spread fud at any given half-occasion.

        5. Get Real says:

          What I will continue to believe is that your wallet is lighter and you are walking funny after the reaming you and your shorter buddies on Seeking Liars took with the M3 pre-order tsunami.

          So by all means, continue to lamely and desperately try to spread your anti-Tesla FUD as you “take one for the team” over there at Seeking Liars because you and they are on the wrong side of history.

  4. Texas FFE says:

    Does Anybody know what the delivery on a Model X purchase is?

    1. Tim F. says:

      New reservations in the U.S. would likely be delivered by the end of June as long as they select 90kWh and 6+ seats.

    2. Tedfredrick says:

      My son got his three weeks after he ordered it

      1. Speculawyer says:

        Really? I’m skeptical. They had thousands of pre-orders. Did he jump in front of them? Did they all cancel? Did he order a tricked out X? Does he live close to the factory?

        1. Pushmi-Pullyu says:

          It’s possible, altho unusual, to have that quick a delivery after order. It happens at the end of the quarter, when Tesla is trying to maximize deliveries by end of quarter, and the buyer lives within a few hundred miles of Tesla’s factory (i.e., quick delivery time).

          It can also happen in rare events when someone cancels his order, and a newer order happens to be a close fit wrt options, paint color, etc. In other words, finding a new buyer for a car already on the production line which has had the order cancelled.

          That applies to Model S’s as well as X’s.

  5. Texas FFE says:

    Anyone that tries to purchase a Model 3 today probably can’t expect delivery for at least three years. It sounds like there will be a market for any Model 3 reservation that doesn’t get turned into a purchase. Does Tesla allow the transfer of a reservation? Is there a market set up yet for selling Model 3 reservations?

    1. Texas FFE says:

      With several hundred thousand pre-orders we have to expect some abuse. It would be a real burn if after production starts you put down your $1,000 expecting to wait a year for your Model 3 then your neighbor buys a pre-order from a scalper and gets his Model 3 in a couple of weeks. I wonder how long it will be before we start hearing of the pre-order abuses.

    2. Tech01x says:

      Nope… unlikely there is any substantial delay. The Model 3 is designed to be easier to build. The Gigafactory cell production is expected this year, not next. This level of pre-orders means they can confidently expand production capacity aggressively.

      The paint shop and stamping has already been upgraded to full Model 3 production levels. The BiW and final assembly lines need to be constructed, but they’ve done two launches of much more complicated vehicles already.

      1. Texas FFE says:

        We’ll see. Thinking Tesla is going to increase production from 50,000 cars a year to 500,000 cars a year in less than two years is extremely optimistic.

        1. Speculawyer says:

          They don’t have to hit 500,000. They only have 300,000 Model 3 orders and they don’t have to deliver them all in 1 year. I’m sure it will take at least 2 if not more to ship them all.

          1. georges says:

            bumps it up only 150k per year.if their at 80 now that doesn’t seem to very hard.

            1. Texas FFE says:

              So you’re saying a person who pre-orders today can’t expect delivery for four years?

              1. TomArt says:

                Well, assuming that at least one Model 3 is delivered to a customer by 12/31/2017, then if they ramp such that they will produce 500,000 in calendar year 2020, then it will easily take all of 2018 production and a significant amount of 2019 production to fill all existing reservations.

                Whatever the numbers of reservations there are by the end of the 1st week since the reveal, which will be announced by Musk via Twitter on Wednesday, will probably take up most, if not all, of Model 3 production through calendar year 2019 to deliver.

    3. philip d says:

      Reservations are non-transferable.

    4. Pushmi-Pullyu says:

      Texas FFE asked:

      “Does Tesla allow the transfer of a reservation?”

      Short answer: No.

      I think their fine print says something like (paraphrasing) ~”Transferring a reservation to another party requires written prior approval of Tesla Motors”~, but in practice, so far as I know, nobody has reported Tesla allowing them to do a transfer of a reservation.

      Sorry, would-be scalpers.

    5. TomArt says:

      The reservations are only transferrable via written consent from Tesla Motors – that is right in the reservation agreement I signed when I put my $1k down.

      However, there is nothing stopping scalpers flipping their Model 3 once it is delivered and title transferred.

    6. Gerhard Hauer says:

      You cannot transfer your reservation. tesla explicitely states that a transfer would need to get ok from tesla.

  6. georges says:

    not sure if this news was out before close but stock is up 3%

  7. tom911 says:

    http://seekingalpha.com/article/3963032-tesla-announces-35000-car-shows-50000-car%5D\\]

    Some valid points in here.

    BTW – Down 4% after hours

    1. Ambulator says:

      Some valid points, but a lot of speculation as well. In particular, I wasn’t expecting Supercharging to be included and Elon wouldn’t have had to say anything to keep me believing that. I interpreted what he said to mean that free Supercharging was included, and if it isn’t I’m going to be quite disappointed in him.

      1. Rich says:

        Elon Musk – “All Model 3s will come with supercharging, standard.
        The reason supercharging is very important, as many of you know, is that it gives you freedom of travel.”

        1. Speculawyer says:

          But above him it said ‘Supercharger Capability’. What he said did make it seem standard but ‘capability’ doesn’t. And if it was free, I would think they would emphasize it more. So I don’t know what to think. And that is maybe the way they want it.

      2. Terawatt says:

        I hope it will not be free. If things go well there’s going to be an awful lot more Teslas on the road a few years from now. And among the buyers will be many more “regular Joes” than is the case today.

        All of which is great. But the number of people who would “abuse” free charging – i.e. charge because it’s free and not because they need to, regardless if they’re holding up people who actually need to charge – would increase very dramatically.

        There is a simple solution: Price supercharging just a little bit above the typical price of electricity at home. That’s enough to kill the opportunistic charging completely, and means the cost of supercharging is basically just the premium over charging at home. So instead of paying $5 for 50 kWh at home, we’ll pay $5.50 for 50 kWh at the supercharger.

        Payment can be done online, and people who charge and then fail to pay can simply lose supercharger access. Such a solution requires very little technically and nothing but software updates to existing superchargers.

        I for one would be very happy to pay a low price to avoid having to wait in line.

        I find it incredibly unreasonable to interpret what was said at the event as “free for life supercharging”. Who in their right mind expects such a thing even though there was NO MENTION of it whatsoever?!? It stands to reason that if it really is to be free, it would make sense to say so. At *best* I think what was said and what wasn’t said might mean that Tesla hasn’t decided yet.

        Even if you argue that it can be free if Tesla just adds enough stations, I think paying a small premium over home charging makes sense. The chargers wouldn’t turn a profit in and by themselves, so their role would be much as it is now, but we could actually get more chargers for the same investment if they were not free. And I think that will be needed even if you make the required move to eliminate abuse.

        1. Trace says:

          “Payment can be done online, and people who charge and then fail to pay can simply lose supercharger access. ”

          Or just equip the car with ApplePay and have the car be the payer.

      3. Pushmi-Pullyu says:

        Correct me if I’m wrong, but Elon tweeted that the Model ≡ will be “Supercharger ready”. That’s the language companies use when they sell you a product having the capability of doing something, but doesn’t have it actually enabled without an additional purchase.

        My interpretation of this is that all Model ≡’s will be built to accept Supercharging, but that the owner will have to pay an up-front lifetime access fee. Tesla used to charge Model S60 buyers a $2000 fee for that, but later made it “standard”… included in the base purchase price.

        Looks like for the Model ≡, Supercharger access will be an option you have to pay for.

        Note this is just my opinion… not fact.

  8. sven says:

    I wonder how much, if at all, the semi-confirmed April price increase for the Model S will affect demand.

    http://electrek.co/2016/03/22/tesla-model-s-us-price-increase-model-3-april/

    http://electrek.co/2016/03/24/tesla-price-changes-model-s-after-model-3/

    1. georges says:

      Thx for the link. A new Model S nose might be interesting! Hard to understand how they can raise the price though after teasing us with M3

      1. Terawatt says:

        That’s the thing with the whole discussion in this thread! NONE of us are well-placed to have any firm opinions about what makes sense, except from a “system point of view”. For instance, I argue that supercharging should not be free, because that would lead to lots of “opportunstic” charging or “abuse” – so that people who need to charge to get to their destination will be held up in line by people who don’t. What I don’t get into is arguments about why Tesla failed to deliver the projected number of cars in Q1. We don’t know. The information given by Tesla is presumably true, but it’s not the full picture. The nay-sayers are right to be sceptical also to the information coming from Tesla – especially if there are serious bad news, they will of course try to spin it the most positive way possible. For example, it is conceivable that the very high delivery rates in the last weeks are due to nearly-ready cars made over months being finished quickly when a batch of parts arrived. If so, perhaps that rate isn’t sustainable at all. Tesla didn’t say – they just said what the rate was.

        Similarly, how can we say much about what the price of Model S ought to be, from Teslas point of view? Just to illustrate how people speculate about *possible* reasons and then go on to write as if their hypothesis was a matter of fact, let’s say it goes like this:

        Tesla is now focused 95% on the Model 3, because it is their make-or-break product. They need to allocate a lot of the available space in their factory for Model 3, and this constrains the number of Model S and X that they can produce. Seeing that they cannot possibly meet demand, they decided to sell what they can produce for more instead, thereby raising more capital to invest in Model 3.

        Of course I haven’t the faintest clue whether this story I just made up is true. It’s one possible explanation. You can be pretty sure that Tesla has its reasons though.

        1. Pushmi-Pullyu says:

          Terawatt said:

          “What I don’t get into is arguments about why Tesla failed to deliver the projected number of cars in Q1. We don’t know. The information given by Tesla is presumably true, but it’s not the full picture.”

          I agree, it’s not the full picture. It’s at least partially spin by Tesla Motors; blaming their suppliers for delays which were at least partially Tesla’s fault.

          Note Jay Cole posted a comment saying Tesla was surprisingly late in asking for suppliers to submit designs for the falcon-wing door actuators. According to Jay (who presumably knows what he’s talking about), Tesla didn’t give suppliers enough lead time to properly develop those actuators. So Tesla has no one but themselves to blame when the first-delivered actuators failed to work reliably, and (if I recall correctly) Tesla had to go to a different supplier for something that worked better.

  9. georges says:

    “The root causes of the parts shortages were: Tesla’s hubris in adding far too much new technology to the Model X in version 1, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house.”

    Tesla will have more clout when they ramp to 500K/year. Then Elon can put the screws to the sub contracters if they miss targets. Just like the big 3.

    1. Al S says:

      I seem to be alone, but I think the entire 3rd paragraph of that release was inserted by a hacker or an insider with a grudge.

  10. Bill Howland says:

    So other than the Gull-wing doors, what precisely is the ‘new tech’ in the X that caused the problem?

    1. Speculawyer says:

      Supposedly the stanchions for the center seats.

      1. Pushmi-Pullyu says:

        Yeah, Elon said the 2nd row seats gave them more production problems than the falcon-wing doors.

    2. Brian Swanson says:

      There’s a few things. In visible sensors, The hepa filtration, Large front windshield, and rear seat mounts are a few new designs that I know about.

    3. Terawatt says:

      As people have pointed out, there were several other innovations. But I’ll take your bait: They’re not gull-wing doors.

      Gull-wing doors are hinged at the roof and bent but not hinged anywhere else. They open like regular doors differently orientated. Tesla calls their doors “falcon wing” doors in order to make it more obvious that they aren’t the same, plus falcons are cool I guess. They are hinged at the roof, but aditionally the door itself is two parts joined by a hinge. This allows the lower part of the door to remain nearly vertical as the door starts to open, allowing the doors to open and close in a much tighter space. But it also means you need motors (or some other form of actuators, one of the problems they ran into) to modify the angle, and sensors and software to control it all. So the doors are much more complicated but also much more practical than gull-wing doors.

      The seats and windsheild are also innovative – and caused many problems. I’ve understood that the window seals were a huge pain. And according to the Q1 statements, where of course it’d be illegal to lie (as opposed to creating a false impression by saying technically true things a clever way), a big reason the production ramp-up didn’t go to plan was that they didn’t get their externally sourced parts as promised.

  11. agzand says:

    And how much of those excellent Model S orders are due to Model X cancellations? As insideevs noted Model S cars went from order to delivery in 2 weeks. So the order backlog cannot be that large. Then there is the Osborne effect. If you are in the line for a Model 3, why pull the trigger on a $80k car when you can get similar car for $42k in less than 2 years? They will miss badly in 2016.

    1. Pushmi-Pullyu says:

      agzand said:

      “As insideevs noted Model S cars went from order to delivery in 2 weeks. So the order backlog cannot be that large.”

      This is an example of the fallacy of generalizing from anecdotal evidence.

      The time between order to delivery depends on several factors. It depends on when during the quarter you order, where you live (that is, how many days or weeks it takes for delivery), and the vagaries of the batch processing Tesla uses.

      If you happen to live within a few hundred miles of Tesla’s Fremont factory, and you order your car, let’s say, 2-3 weeks from the end of a financial quarter, then yeah you may get it within two weeks. But if you order it just at the beginning of the quarter, even if you live in the U.S., you can expect to wait several weeks. Again, it’s possible to get lucky; perhaps someone else cancels his order and your order happens to include the same options. In that rare event, you might get your car in only two weeks even if it’s near the beginning of a quarter.

      But if you count on getting a Tesla car within two weeks of ordering it, chances are you’ll be disappointed.

      1. Phr3d says:

        well stated, Thanks!
        9the headlines and naysayers doth not equate to the reality)

    2. TomArt says:

      You also need to realize that these quarterly sales are global deliveries – Tesla will make vehicles in batches for different countries, and while they are on the boat, they are “inventory” not “sales”.

  12. tom911 says:

    I don’t think access to superchargers will be free although it seems the hardware will be installed in all cars.

    The reality of supercharging a smaller battery with less range may surprise a few folks on the time that it takes.

    I have no personal experience but a comment from a Model S user states this..
    “You’d better hope there aren’t a ton out there hiding that will eventually start using superchargers. Why? It takes 57% longer to charge an S60 to 140 miles than an 85D. For 200 miles, it’s 84% longer. ”

    What that means in actual charge times remains to be seen but charging a Model 3 back to a reasonable range when low on a road trip might mean 45+ min charging after driving 2.5 hours. Not sure how that will go over with many folks.

    1. Pushmi-Pullyu says:

      tom911 said:

      “I don’t think access to superchargers will be free although it seems the hardware will be installed in all cars.”

      Elon has tweeted:

      1. Access to Superchargers by Model ≡ drivers will be “free, forever”, just like Model S and X drivers.

      2. The Model ≡ will be Supercharger “enabled”.

      Now, the term “enabled” suggests that the hardware will be installed, but not necessarily activated in any given car.

      I think the only logical interpretation, taking both statements into account, is that Tesla will charge a lifetime, up-front Supercharger access fee for Model ≡ owners, just as Tesla at one time charged a $2000 Supercharger access fee for Model S60 owners.

      Now, that’s not a fact, it’s a logical conclusion. But I’ll be surprised if it turns out to be wrong.

      1. TomArt says:

        That’s my assumption, as well. 1st, because they choose their words carefully, and if SCs were free for Model 3, they would have said so.

        2nd, because it does not appear that they can build out the SCs fast enough to cover future demand of three models. If there are those who do not activate/unlock the SC feature on their Model 3, then that is one less potential SC customer. There is no disadvantage to resale value, since a subsequent owner can simply pay the one-time fee to Tesla Motors to unlock the feature.

      2. Terawatt says:

        I haven’t seen that first tweet. Do you have a link? I can’t seem to find it in his (voluminous) feed.

        I’ve got to say I really HOPE this is just a misunderstanding. Supercharging shouldn’t be free, and it shouldn’t be a one-time fee. They may get more revenue from a one-time fee, at least in the shorter term and maybe in sum, but it will lead to a much worse experience.

        Nearly everyone will benefit a lot from being able to supercharge and nearly noone will need to do it often. A low price to charge, just enough to prevent freeriders (so any rate at or above the home electricity price will do the job) will give everyone who actually need the charger to get to their destination a much better experience where they aren’t held up by people who don’t need it, but charge anyway since unlike at home it’s free.

        It’s economics 101 really. Anything that is free to the consumer tends to be wasted. So the one-time fee is a terrible model.

        From Teslas point of view it is however $2000 extra per car, with ZERO cost increase at the time of purchase, so I can see why such a dick move might be tempting.

        Free forever was an acceptable gimmick for a low-volume car. It makes no sense for a mainstream one.

        1. Lindsay Patten says:

          If people that don’t have a home charger available buy Teslas then having a charge slightly higher than home charging won’t solve the issue.

          There seems to be an unspoken assumption that, even if the Model 3 has the same up front super charging fee built in that the Model S has, that Tesla won’t build out the supercharger network to maintain the same charger to cars on the road ratio.

          It seems to me that Tesla has several technical options to prevent excessive local charging if they include restrictions on local charging in a new terms of use that put in place before taking Model 3 orders.

          It doesn’t have to be free unlimited local charging or fee for use, it can be free long distance charging with possibly additional fees for local charging.

        2. Pushmi-Pullyu says:

          Terawatt said:

          “I haven’t seen that first tweet. Do you have a link? I can’t seem to find it in his (voluminous) feed.”

          Hmmm, you were right to question that. Actually, what Elon said during the Reveal (but I guess never tweeted) was “All Model 3’s will come with supercharging, standard”… which of course isn’t the same thing as promising it will be free.

          As far as I can see, Terawatt, all the claims on the Internet that Model ≡ Supercharger access will be “free” (presumably that means free only after paying a lifetime access fee) can be traced back to a single source, and here it is:

          “The key piece of information came from Musk when he mentioned that supercharging will remain free for Gen 3 vehicle owners as well. This is the first time, that we are aware of, for Musk to mention free supercharging when talking specifically about the next generation vehicle.”

          source:
          http://thecontrarianinvestor.com/index.php/news/85-elon-musk-confirms-free-supercharging-for-tesla-gen-3-vehicle-owners

          Note that’s a paraphrase, not a direct quote, which makes it questionable that this is exactly what Elon said. It was also something from two years ago, and it’s possible what Elon said back then isn’t applicable now.

          In fact, the Gas 2.org website has an article just today questioning that very thing:

          “Model 3 May Not Come With Supercharger Privileges Standard”

          http://gas2.org/2016/04/05/model-3-may-not-come-with-supercharger-privileges-standard/

          * * * * *

          Terawatt said:

          “Supercharging shouldn’t be free, and it shouldn’t be a one-time fee. They may get more revenue from a one-time fee, at least in the shorter term and maybe in sum, but it will lead to a much worse experience.”

          Many people, including myself, agree with this completely. It will be best for Tesla drivers if Supercharger access will be on a fee per use basis, because that would restrict usage to only those who actually need it.

          But we have to think about what’s best from Tesla Motor’s viewpoint, and that is this: The Supercharger network is a selling point that attracts more buyers. Promising “free”, unlimited use, is a powerful draw. Making Model ≡ drivers pay for every use would make it a much less attractive offer.

          Unfortunately, Tesla is likely to do what they think is best for the company… not necessarily what’s best for customers.

  13. Paul says:

    It’s funny. This is the first “negative” Tesla story in some time – thanks to the amazing Model 3 act – and suddenly you see the negative commenters come back.

    And I bet the financial papers turn negative again too, because the stock nears the 250 and it shouldn’t break through that level. Half truths will be written, some lies, just like when the stock sank through 200 and the shorting hedge funds wrote themslves rich publishing expert opinions.

    Whatever happens, the stock should not break 250. Because if it would, the shorts … well, the shorts would loose their trousers.

    Let us watch. Can it be that a small bunch of engineers with a creative drive win the game? Or the much larger group that not only cannot imagine another future then the past, but needs to critisize and if possible destroy that future out of fear the past could be left behind.

    1. Pushmi-Pullyu says:

      I admit I can’t understand why any moderately intelligent (or smarter) “short” investor would be trying to drive down Tesla stock prices at the current time. It seemed pretty obvious that the Model ≡ Reveal would drive stock prices up, so any “short” investor should have gotten out before the Reveal. In fact, should have exited at least a few days before the Reveal, since the excitement leading up to the Reveal would surely drive up stock prices — and it did. The unexpectedly high Model ≡ reservations are driving Tesla’s stock up even farther. In fact, the only surprise I have is that the stock didn’t immediately spike way, way up the day after the Reveal. It’s been rising with only moderate speed. (I don’t usually watch Tesla’s stock price, but I have been checking it the last several days because I wanted to see what effect the Reveal would have.)

      In fact, you’d think a smart short investor would be currently engaged in pumping up the stock, trying to inflate the price to a new high to create a new opportunity for shorting the stock.

      I confess it mystifies me that Tesla bashers like “tftf” and Three Electrics are currently engaged in Tesla bashing. But I’m not an investor; clearly there are strategies and subtleties used by Tesla investors (both “long” and “short”) attempting to to manipulate stock prices which I simply don’t understand.

      Maybe it’s a reverse psychology thing. Maybe they think if they post FUD which is so blatantly obvious and ridiculous, it will cause a backlash and actually inspire people to buy more Tesla stock. 😉

      1. Three Electrics says:

        You think I’m a Tesla basher, and yet my Tesla arrives in a week. I have a deposit on the 3. I expressed amazement and joy at the M3 reservation count. In your world, however, anyone with a different opinion is a monster. Any independent, critical thinking should be censored with name calling and intimidation. You are a bully, and why? Simply because you cannot tolerate differing viewpoints. They subject you to a strong cognitive dissonance which resolves to a demonization of the dissenter.

        1. Phr3d says:

          “You think I’m a Tesla basher, and yet my Tesla arrives in a week. I have a deposit on the 3.”

          says it all 3E, appreciate your efforts, as I and others have written before.

        2. PVH says:

          “You think I’m a Tesla basher, and yet my Tesla arrives in a week. I have a deposit on the 3”.

          This says it all of a normal person having a normal appreciative but yet critical (when needed) opinion about Tesla. I will allways be amazed how “abnormal” & totalitarian some Tesla enthusiast are. Are their faith so weak it can’t sustain even mild critic ? I should get used to it after so much time but am still flabbergasted.

        3. Pushmi-Pullyu says:

          Three Electrics claimed:

          “…my Tesla arrives in a week. I have a deposit on the 3.”

          Given your persistent mendacity about all things related to Tesla, I can’t imagine why any reasonable person would believe that’s true.

          It’s notable that over on Seeking Alpha, some of the serial bashers have a habit of posting “Well, I was gonna order a Tesla car, but then they did this…”

          And they post that bull pucky repeatedly. Obviously they’re just lying. Why should we believe you’re not?

      2. Phr3d says:

        Your views on TSLA stock and its lovers and haters are Legion now, PP, and as importantly what a piece of shyt Seeking Alpha is, as well as all the Morons that hang out there are.

        Tesla’s Accounting numbers are simply bothersome. to a novice 10k reader. Stating as much does Not define Tesla bashing or short pumping. IF you had a few CPAs/CFOs to chat with, you would see that the books tell the story, and there is reason to be concerned.

        While You and -I- find the 2008 minutes-from-bankruptcy story to be uplifting and a hero’s tale due to how it turned out, an experienced CFO is literally trembling at the Thought of things getting that close – he has to talk to other qualified accountants and definitely would never Want to in that scenario. Many of the what-ifs posited on SA are not “I’m Bored, let’s crash the stock”, they are simply the same what-the-hell-is-up-wif-da-books QA and discussion held about..
        Every Damn Stock discussed
        it’s arguably the TSLA proponents jumping in with sometimes ridiculous claims-on-nothing that has made it such a free-for-all (and tempting clik-bait subject – you listening Santos?)

        auto-disregard does not serve you, or your fans well. jus’ sayin’

        1. PVH says:

          To me the 10K form is like made on purpose to be as unclear as it possibly can. For example for 3 years of reading Seeking Aplha articles about Tsla the big war between shorts and long are ofetn the large “Capex” investments which Tesla makes and their impact on result. It should be solved in a matter of minutes should this 10K form be somewhat readable for a normal person. You would have like a proper profit and loss report where a line named “amortizations” or “depreciations” would report exactly the impact of those capex in Tesla’s figures. This depreciation figure would typically be in page two of our European financial statements as filed yearly, page one being the balance sheet and page three the cash flow statement, rest being the footnotes. In that mess of a document called a 10K this info is burried deep into it (in page 10 ?). Then of course you have longs and shorts arguing for years when their only problem is opacity of figures published by US corporations. Forms should be clearer and stricter in their required form otherwise it is just a blessing for development pf speculative bubbles. Yet maybe 10K form is so unclear exactly for that reason. There is a lot of money to be made on speculative bubbles so a clear 10K form would kill on the spot this “poule aux oeufs d’or”.

        2. Pushmi-Pullyu says:

          Phr3D said:

          “While You and -I- find the 2008 minutes-from-bankruptcy story to be uplifting and a hero’s tale due to how it turned out…”

          Speak for yourself, Phr3d. Don’t speak for me on that subject. Personally, I think it sounds like myth-building, and it reads rather like a tale that was “improved” in the retelling. Perhaps “improved” quite a bit.

          I certainly do admire Elon for his vision, his dedication to his work, and his willingness to put his considerable money where his mouth is. But he doesn’t get a pass from me on his “revisionist history”… such as claiming he is “the founder” of Tesla Motors, when he’s not even one of the multiple founders.

  14. alex says:

    Excellent words Paul. I wonder why so much fuss about a company being couple of weeks late on their hyper aggressive schedule, when they are two decades ahead of everybody else.

    1. TomArt says:

      Ha! Good point.

  15. Alaa says:

    And if it rains in London the UBS man will down grade the stock!

  16. Motarra says:

    I obviously don’t have all the detail on this, but in the humble opinion of a former public co C-level exec I think Tesla should have warned investors about this miss last week when it was entirely obvious that they would not make the quarterly delivery number. They threw a huge coming out party for the Model 3 and whipped consumers, investors and the media into a frenzy / love fest and then on Monday “oh by the way we missed unit guidance by double digit percentages because of hubris”. Many of us including me will give Elon & Co a pass because he’s making our little world here on Earth a better place. And he/they are doing it in the face of challenges from a myriad of forces seemingly hell bent on destroying our ecosphere because they cannot see beyond their own greed.

    Elon gets a pass, but wow this is just not the right way to communicate. Last week they should have delivered the bad news with all the good news. Obviously there were a legion of SEC lawyers involved in making decisions regarding timing of this bombshell. Yes they can “hang their hat” on the excuse that we can only report unit delivery results when the quarter ends. But sorry that’s BS and its disappointingly disingenuous. Again I don’t have all the facts nor the time to go searching for them. Just my gut reaction.

    Now when am I getting that Model 3 I ordered…hopefully I don’t get blackballed and prioritized after Iceland deliveries. ?

    1. Phr3d says:

      as if anyone desires – let’s play other side of that coin:

      on the Friday before a rather run-o-the-mill quarter – a yawn of a Q1, you also have the (possibly) single most important release news of the corporation, by most pundits if not officially by EM himself.

      question, do ya bash your pre-order momentum (rumored expectations to be 1/10th of what actually occurred) with honesty, after the street has been historically Kind to You and Other’s Honesty..

      or do you let the unpleasant (not BAD, just not impressive) news ride until Monday.

      I know my answer, but after 50 years of reading ‘street judgement’ I give a rat’s patootie what the named-pundits say about anything.. I’d wait ’til Monday as I can’t think of One Single Writer with the intestinal fortitude to actually write:

      “it took brass balls to be forthcoming about less than stellar Q1 earnings at Model E’s release”

      Instead you’d get a self-entitled, two-win so I am unstoppable media giant laffing at him for being Honest and hurting his poor shareholders.
      YMMV

  17. PVH says:

    8% difference with guidance is not that much. Tesla is doing not bad in Europe, it looks that Norway is now somewnat saturated as figures are not even half of March 2015 sales but it is balanced by other markets like Austria where sales figures are much better than for 2015. It seems Tesla sales in Europe are a bit moving like a fashion wave, wave was in Norway then it left Norway to Switzerland then now fashion wave is in Austria but did not yet leave Switzerland altogether yet. I guess there is a limit of capacity for $100K cars that a small country has which is very quickly reached. Model 3 should make sales figures much more even.