Changes to Tesla's estimated global electric car order backlog provide us with interesting data to better understand what is happening on the market.
According to Troy Teslike, who provides very interesting Tesla stats and forecasts, the estimated order backlog peaked in July at close to 500,000 units and has been falling since then. The latest publicly available update from October 21 indicates that the order backlog dropped below 300,000 (as of October 6) for the very first time this year.
The numbers are based on carefully tracked Tesla-related stats (production volume, average wait times), as shown in the attached tweet.
The number of 293,000 units corresponds to about 70 days of manufacturing capacity. Previously it was estimated at 78 days on September 21.
The most interesting thing is however the new chart, which perfectly illustrates how quickly Tesla's order backlog in China dried out (less than 11,000 units vs 170,000-180,000 in March-July).
We know that the company increased production at the Giga Shanghai plant, which allowed it to achieve new record output. In effect, the estimated delivery time for basically all Made-in-China (MIC) models in China dropped to just several weeks (1-10 weeks depending on the version).
On top of that, most recently, Tesla cut prices of all Model 3 and Model Y versions in China by 5-9%.
If we connect the dots, it will become pretty obvious that Tesla is now in a phase of searching for a new balance point between supply and demand. At noticeably lower prices, demand is expected to increase, which probably will stabilize the estimated order backlog at a reasonable level. At least, that's the theory.
Because the Tesla Giga Shanghai plant is an export hub, any surplus in production might also increase the supply of cars for Europe and other markets. Europe has also a new source for the Model Y - the Giga Berlin plant, which means that this is the market to watch closely next.
It's difficult to say what will happen in the US. Consumers would like to see price cuts and shorter delivery times. The new plant in Texas should support this direction.
However, the biggest thing will be probably the renewed eligibility for the $7,500 federal tax credit for Tesla cars in the US. This will lower the effective cost quite substantially, which will increase demand.