The end of the year was a really hot time for Tesla, which noted a spectacular decrease to its estimated global electric car order backlog.
According to Troy Teslike, an invaluable source for Tesla stats and forecasts, the estimated order backlog as of December 31, 2022 was just 74,000 - down by 116,000 or 61% in just one month from 190,000 as of November 30. The decrease significantly accelerated in the last few weeks as the previous number was 163,000 as of December 8.
For reference, it was at nearly 300,000 at the end of September and through October, nearly 400,000 at the end of August, and close to 500,000 in the period between March and July. In other words, the total value has lowered by roughly 400,000 units or 85 percent since July.
The numbers are based on carefully tracked Tesla-related stats (production volume, average wait times for each model), as shown in the attached tweet.
The number of 74,000 units corresponds to about 23 days of manufacturing capacity, according to the report. Previously, it was estimated at 40 days on December 8, 44 days on November 30, 70 days on October 6 and 78 days on September 21.
This outcome was expected, as Tesla's production output far exceeded new electric car sales in the second half of the year.
It's important to note that the estimated order backlog of 74,000 electric cars is a global average, while in the United States and Canada, it was virtually zero, according to the report. China was very close to zero as well.
- US: 0
- Canada: 0
- Europe: 44,501
- China: 3,086
- other: 26,151
- Total: roughly 74,000
China was the first of the three main markets that dried out. Then we saw a fast decrease also in the US, which in big part was caused by the changes in the federal tax credit incentive (it prompted some of the customers to delay their purchase).
However, the core reason of what we see appears to be the massive expansion of manufacturing capacity (upgrades of the existing plants and ramp-up at new plants), compared to demand.
In 2022, Tesla produced 1,369,611 electric cars (up 47 percent year-over-year), and delivered 1,313,851 (up 40 percent year-over-year).
To address the issue of disproportion between demand and supply, and to continue to grow in the first days of 2023, Tesla applied significant price reductions around the world - including in China, which shocked some customers and reportedly attracted 30,000 orders in just three days.
Prices went down quite noticeably also in the US, where customers can also count on the very important $7,500 federal tax credit incentive, thanks to the Inflation Reduction Act (IRA). Prices were reduced in Europe as well, and in many other markets, which suggests to us that this was a global approach.
Tesla, with its strong positive net margin on electric cars, probably could afford to make such a move. We will see the results in the first quarter and the second quarter of 2023. In the best case scenario, the company will further increase volume in all markets.
The situation is very dynamic and we don't know yet what might happen. Will other electric car manufacturers now be willing to lower their prices as well?