Tesla Says Demand Is Causing Model S, X Delay – Tax Credit Instead?

Tesla Superchargers



Tesla Model S and X

Everyone is well aware that the Tesla Model 3 is facing substantial delivery delays, but the automaker is reportedly backlogged with Model S and X orders.

As most of us are aware, Tesla’s production and delivery timelines fluctuate regularly. This can be attributed to multiple factors, including time of year and location. The automaker now has a third vehicle in the mix that’s been experiencing production issues, on top of the fact that it has to juggle U.S. deliveries with international deliveries, and work to meet guidance.

Read Also – Teslanomics Explores When $7,500 Tax Credit Will Vanish For Tesla Model 3 Buyers

Tesla Model 3

Perhaps Musk will make it possible to get a $35,000 Tesla Model 3, along with the full U.S. federal EV tax credit. Only time will tell.

Tesla has streamlined Model S and X production to the point that some buyers could order one of these vehicles in the U.S. and get it in a matter of a month or so. However, just recently, Model X estimations were pushed out to four or five months. Now, the automaker is providing the same timeline for new Model S orders.

So, if you ordered a Model S or X in the U.S. today, you might get it in June, however, more than likely it would come in July. According to Electrek, a spokesperson from the automaker explained that such delays are the result of a huge backlog of orders.

Some speculate that the company is working on refreshed designs, new battery chemistry, or some other “secret” that has yet to be announced. Others believe that this can all be blamed on the Model 3. However, Tesla has shared that orders for the Model S and X in Q4 of 2017 were very high. In fact, they were almost as high as the previous quarter’s record S and X orders. This is not to say that Model 3 production isn’t making an impact, however, it’s additionally challenging with a multitude of S and X orders streaming in.

Is this the whole story?

We think not and we’re not alone.

Interestingly, this delay pushes back deliveries toward July, which marks the beginning of the third quarter. There’s been a ton of talk lately about Tesla’s supposed attempt to manage the impact of the U.S. federal EV tax credit. Hitting the magic number at the beginning of Q3 would be highly advantageous.

Tesla Roadster

Diverting attention to monumental future projects like the Tesla Roadster and Tesla Semi may also play into the automaker’s potential plan.

Musk has said in the past that this is something he would be willing to do to “beget loyalty.” Tesla will be producing many more Model 3s toward the middle and end of 2018 (and perhaps the $35,000 base model), and non-owner orders will begin to be filled. If the 200,000th U.S. vehicle isn’t delivered until July, a much larger number of people will be able to partake in the full $7,500 credit.

Many estimates assume that the threshold will be crossed in June. Having this happen at the end of a quarter makes the worst possible sense since the rebate is set up in 3-month phase out increments. Essentially, if Tesla pushes back the point at which it crosses the line into July, buyers will enjoy an extra three months of full-credit availability.

Pushing back Model S and X deliveries, potentially refreshing the vehicles in the interim, moving up some Canadian Model 3 deliveries, and sending more S and X vehicles overseas are all strategies Tesla could be applying to assure that this potential plan works out. Not to mention continuing a “careful” ramp up in regards to Model 3 production.

RELATED: Tesla Pushes Back Standard Model 3 Deliveries To Late 2018, Early 2019

Why not take it reasonably easy for the next few months and then open the floodgates in July. Although people may be unhappy at the moment, this would surely appease many. Especially those non-owners who reserved a Model 3 and hoped for the base vehicle and the full tax credit.

What do you think?

Keep the conversation going in our Forum. Start a new thread about this article and make your point heard.

Sources: CarsWithCords, Electrek

Categories: Tesla

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63 Comments on "Tesla Says Demand Is Causing Model S, X Delay – Tax Credit Instead?"

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I think the consumer is being mindful of the Tax Credit reduction and may be the main reason for the backlog. Lets order the Model S or X to take advantage of the $7,500 federal tax credit before it goes away. Demand is spiking and Tesla is adjusting delivery estimates accordingly.

Surprising that people buying $100k cars would be so concerned about a $7500 credit. But people are not always rational.

Anyone with enough tax burden would want to save 7500 over 3750. Why wouldn’t they?

I agree it is not likely to be a big concern to the rich, but this policy applies equally to Model 3, and it is these buyers that are much more price sensitive. Reducing S & X sales allows more Model 3 sales to be made while keeping the total under the 200k limit.

Delaying sales, not reducing S and X sales.

Actually – simply holding back USA Deliveries, until the July 1st Date, so that they don’t go over the 200,000 US Completed Sales, before or on the June 30th Calendar Point!

Actually – If they could have a July 4th Celebration for their 200,000th USA Tesla Delivery, it would make Great Sense! Actually Have a Big Fanfare, and hand over the Key (Key Card? Key Fob?), with Press, Investors, and Such Invited!

Then – within another 60 minutes – Hand over another Large Stack of Cars – at Each Dealership —- Oooops – ‘Store’ [:-)], and finish off the month with 25,000+ Tesla Deliveries! Maybe even push some 30,000+ Between the 3, S, & X!

What could be interesting – is a ‘Work Truck’ 2 Seat Version of the Model X – Flat Floor, harder Finishes, easier to add Racks, Shelves, Slider Drawer Sets, Etc., Plus an internal 120V & 240V Outlet Set!

Unveil it at the Handing Over Party – of the 200,000th Tesla!

It’s not how the people with money think. Why would you ever leave money on the table? You don’t get rich that way.

The Model S starts at $75k, so that $7500 represents 10% of that price (assuming that the buyer gets NO packages). Couple with a sales tax holiday and/or other state incentives, that could easily near 20% of the total price. Additionally, some people are almost certainly finding themselves perhaps willing to stretch a little to get into a Tesla in comparison to what they would normally spend on a car. If so, the $7500 isn’t insignificant. And, even if dropping $100k chump change, a lot of the wealthy still like to save every penny that they can.

You get to a position in life of being able to afford a $100k car by ignoring such things as a ‘trifling’ 7.5% discount unless you are a drug dealer or lottery winner – or an estate agent/lawyer)!

“You get to a position in life of being able to afford a $100k car by ignoring such things as a ‘trifling’ 7.5% discount unless you are a drug dealer or lottery winner – or an estate agent/lawyer)!” – Looks like you missed an important word there – ‘Don’t!’ – as in – like this:

‘You “don’t” get to a position in life of being able to afford a $100k car by ignoring such things as a ‘trifling’ 7.5% discount unless you are a drug dealer or lottery winner – or an estate agent/lawyer)!’

I sure hope that was your intended point!

That certainly makes more sense.

I don’t buy the Tax Credit story. There are also delays (S & X) in Europe, and there is no credit game going on in Europe.

Another Euro point of view

Yes but at the same time so far Tesla sold in Europe about 800 less units in January this year as compared to January last year (about 55% decrease) so those cars not sold in Europe could have been allocated to address demand of US market. Then if not a production issue this would mean that the increase of demand on the US market for the Model S & X could indeed be really big. That would not be surprising with Model 3 production delays and the positive “Tesla sent to mars” publicity.

So you’re suggesting that a company that is always strapped for cash and has to consistently borrow some is purposely delaying the sale of their 2 current products that generate a significant amount of cash for them?

I’m gonna have to call BS on that…

My guess is that either the S/X orders have increased and/or the Model 3 production issues are slowing their builds. But that’s admittedly not a sexy story.

(⌐■_■) Trollnonymous

“My guess is that either the S/X orders have increased and/or the Model 3 production issues are slowing their builds. But that’s admittedly not a sexy story.”


“My guess is that either the S/X orders have increased and/or the Model 3 production issues are slowing their builds. But that’s admittedly not a sexy story.”

Agreed. S/X orders are up as people decide the Model 3 trims they want are coming too late or the 3 just isn’t for them. And Tesla has stated that they want to produce at least 2,500/ Model 3s week in the 2nd quarter alone. If they get even close to that number they will hit the 200,000 sales threshold.

Would they really be willing to drastically cut X or S deliveries in favor of the 3?

If they were going to delay for tax purposes why not just announce it? It would calm nerves, make them appear more appreciative of new buyers, and maybe apply pressure on congress to change the law to benefit early EV manufacturers.

Having said that, I want this story to be true… we are counting on at least a 50% credit to get the 3. So I will be watching closely to see what Tesla does in Feb and March. 🙂

Would they really be willing to drastically cut X or S deliveries in favor of the 3?

That’s not believable, but what is believable is that Tesla might “drastically” shift deliveries of the MS and MX to markets outside the USA, where sales won’t impact the 200,000 limit for tax credit.

However, according to the post by Hvl above, European deliveries are already experiencing delays.

So, it looks like the only rational conclusion is that demand for the MS and MX are significantly up. This does not at all surprise me, as I’ve been pointing out that it’s possible or even likely that the publicity over the TM3 will increase demand for the MS and MX. Looks like this is now happening.

Maybe that tiny but not so cash poor place – U.A.E. – is where these orders are coming from?

Then – Again – Maybe – China has finally gotten enough Superchargers and Destination Chargers, and the new Dual Port Access Door on their Cars, for China, that they have jumped on them!!?

Or – Australia – with all the Talk there of Tesla Energy – might have gotten a bit more on board, as well! All Places where shipping them takes away from USA Sales!

Maybe Conveniently So!

In their quarterly report they stated directly that production of S and X were limited in 2017Q4 due to reallocating resources from them to the Model 3. My hunch is that, maybe combined with a build change could cause the delay. I don’t think they would delay for taxes more than a few weeks, they need the revenue too much.

Also note that in that same Quarterly report that they expected to be Negative Cash Flow for 1-2 More Quarters, but turn Cash Flow Positive in Q3 – 2018! How would they suddenly do that – without a lot of vehicles ready to go, to just USA Customer Base from the S & X line ALL Through the 3 Months of Q3 and Q4, Plus actually reaching the 5,000 Per week in the Model 33 Line?!?!

Having Less Overseas Shipping for 2 of 3 months in each of the last 2 Quarters of 2018 could also help to cut Costs, and being able to ship ~1,000 Model S’s, and ~1,000 Model X’s directly to USA Customers, PLUS ~5,000+ Models 3’s – Each Week, for the Last 26 Weeks of 2018 – Just to USA Customers, would make it easier to control costs, and increase revenue, I would think!

Oooops – Another NEW Tesla “Model 33 Line”?
Nope – Just a Typo! Should be – Model 3 Line, of course! 🙁

Per: “So you’re suggesting that a company that is always strapped for cash and has to consistently borrow some is purposely delaying the sale of their 2 current products that generate a significant amount of cash for them?” – No, I don’t See it that way – since the USA – is the market in conversation here!

No mention of The Chinese, European, or Middle East Market that recently opened up (and people likely forgot!) not being the ones where the demand is coming from! (And to where the sales will Go! So that won’t be stopping the cash flow, it will only be slowing US Deliveries, in such a case!)

Another Euro point of view

This article is well balanced, nothing like the article on same topic issued today at the Pravda.
Now that may be true for a number of good reasons like indeed people concerned to obtain full tax credit. Now why the hell this company does not act “normal” a bit, I mean like issuing monthly sales figures with regional breakdowns, stopping with this end of quarter sales record fetish thing etc. If they would do that then we would just believe what they declare without a second thought as opposed to present guessing game.

Idiotic, Tesla is of course producing as many and as fast as possible.

So the only reason for them to not produce more is because they can’t.
And any delays are either because of high demand, problems or a combination of both.

Wow, of course they are producing as many as possible. The article is talking about DELAYing the delivery of the vehicles. Amazing so many people miss this point.

That’s simply not a rational suggestion. Not only does Tesla badly need the income, they would also have to pay taxes on inventory cars.

It might make sense for Tesla to shift priority to favor deliveries/sales of the MS and MX outside the USA, to delay the U.S. tax credit limit of 200,000 sales. It certainly does not make sense for Tesla to stockpile MSs and MXs just to delay hitting the 200,000 limit.

Wel…Stockpiling – is not the Term I would use, but rather – Refilling the Inventory they drained out in Q4, 2017, and Along with that – Delaying – JUST the USA Deliveries, by Favoring the NON-USA Customers, to a certain Balance Point, such that they don’t exceed the 200,000 Mark, before Midnight, June 30th, 2018!

Delivering USA Tesla Number 199,950 on June 30th = Great! (Delivering 200,001 on the same date = Not Great, At All! It means 3 months of production in to USA sales would loose the full Tax Credit Portion, 3 months sooner!)

Then on July 1st, to maybe the 4th – they could deliver another 49, and then on the 4th of July – have a Big Tesla Bash – Celebrate the 200,000th Delivery in the States, and then go nuts, delivering to Customers Car, after Car, after Car, for the rest of the day, and the rest of the Month, for the whole of July, August, September, etc., right to year end!

I’m not sure I buy this tax credit argument either. As pointed out elsewhere in this comment thread, there are delays for shipping to EU as well. Not only EU, but also Canada; all configs of S and X are showing June delivery. Why wouldn’t they ship them to easiest destination, Canada, if trying to defer when the tax credit kicks in?

Not sure what the real reason is of course, but I bet either:
1) Resources from S/X line (people and/or machines) are being used to ramp up the 3
2) They are redesigning components of the vehicles that are causing the delay

I don’t think it is super high demand… we are in the historically low sales months for EVs (Q1).

I guess we’ll see though!

I forgot to add, there are many nice used CPO cars on ev-cpo.com right now (at least in Canada), so if demand is “really high”, I would expect the used ones to be flying off the shelves…

Another Euro point of view

Likely and Q1 start in Europe is also very slow now I can’t imagine Tesla taking the credibility risk to declare high demand if that would prove untrue in a near future. Are we at least certain the source (Electrek aka “the Pravda”) of this info is 100% reliable ? They seem to be in a bit of frenzy lately about Tesla (more than usual I mean).

When is there ever not a frenzy about Tesla.
It’s actually very characteristic that one day people wake up and say I want a Tesla, and that’s it they are done.

I don’t think they are fudging demand numbers, as you suggest, in that, the word is finally getting out, seeping into the normally vapid spaces of human awareness, that there is something much much better, and you too can get one.
But you’d better hurry cause they’re going fast.

Hey I want a Tesla too, in fact I’d have a Model X in my driveway right now if I could reasonably justify the expense to myself. I’m not sure how salaries are in the US as compared to Canada, but in Canada, I have a very good salary, and the MX is still a whole year’s pre-tax salary. No one makes a decision like that lightly.


K-EV-F: ‘Salary’ is the key word! Instead of ‘Business Income’! Meaning – you can’t ‘Write off’ Big chunks of Vehicle Cost – into your Business Expense, ‘Prior’ to Paying your Taxes on your Business Earnings!

And – I just watched another video telling why the Model X could be a better Deal than the Model 3! Most important point seemed to be – how much MORE Tax Credits your Business would get if you bought the Model X instead of the Model 3!

However – I am pretty sure it was USA Based Tax Match – not Canadian, so – might not help in your case – either! 🙁

It will be interesting to see if overseas deliveries increase as US sales are limited. If so it will prove the US delivery curtailment is a deliberate move to delay the 200k sale into Q3.

seems more than likely.

Demand outstripping supply, is a good problem for Tesla to have, especially when there is very little in the the way of real competition, in the 200+ mi. Range “Premium” EV segment.

I hope Tesla doesn’t get complacent in this “production hell”, slow to ramp up production strategy. 2020 will come, and I am guessing the contenders (not pretenders), will start to emerge, and show their “hand”!

I just placed my order for the Model 3 in large part due to the tax credit. For me it is very important. I would have preferred different options but the tax credit won out. I also think Tesla will try to time US deliveries so they cross the 200,000 limit at the start of a quarter to maximize the number of people who can qualify for the credit. So if production is strong they will likely divert sales to Canada and export to time crossing the barrier in early July.

If you “just” placed your order, there is no way that you’ll get any tax credit, half or otherwise. There are about half a million people ahead of you in the queue. You might want to think of a realistic option that fits your budget better.

You are stating opinion as fact, and I’d say not well-informed opinion at that.

I’d say that the chances are pretty good that if he wants a well-optioned Model 3, he’ll quite likely be able to get at least partial tax credit. It looks to me like it’s the people waiting for low-optioned TM3s who might miss out on getting any tax credit at all.

Here’s a relevant quote:

“At the time of the 200,000th sales, and so as not to disrupt/confuse those buying the EVs, that full $7,500 credit continues through the end of the current quarter and to the completion of the next quarter. After this period ends the ‘phase-out’ begins, meaning the credit is reduced to $3,750 for the next 6 months, then to $1,875 for the next 6 months before expiring completely.”

If I read this right, then Tesla car buyers will continue to get at least partial tax credit for almost a year and a half after the 200,000 threshold is crossed.

David, if you don’t mind, please Clarify: Placed a Confirmed Order – OR – Placed a $1,000.00 ‘Reservation’ for a Model 3?

The Difference – will likely be quite immense in terms of delivery Time, unless you only want the Most Loaded Cars you can Get, as Soon as you can Get it! Even then – just Reserving now – may well be a challenge, if you want the full $7,500 Tex Credit!

(Best Case Situation that most see – Tesla has until the end of 2018 to get that full credit for Customers, if they Deliver the 200,000 USA Tesla – on or After July 1st, 2018!)

It makes sense that they would be able to, in the first week of quarter 3 to hit the number.
In the meantime work on the refresh for S & X.

The speculation that we will see a rendition of the 35k Model 3 in production this year.
You can toss that out with yesterdays newspaper, cause it ain’t gonna happen.
I’m thinking August 2019.

“Is This Car Really in Space?…

“A series of images that seemed too fantastical to be real started making their way around the internet shortly after Elon Musk and his company SpaceX launched the Falcon Heavy rocket into space from Cape Canaveral, Florida”:

source: https://www.snopes.com/tesla-car-really-space/

Elon’s red Tesla Roadster being shot into space on the SpaceX Heavy test flight for sure accounts for some of the sudden recent Model S & Model X sales uptick resulting in higher demand than projected.

Project Starman was a brilliant Telsa marketing event that literally elevated Tesla to a higher orbit cool-factor wise and general consumer awareness wise.

What Tesla did there with that single outlandish Tesla marketing stunt was so over-the-top and untraditional that it may be a while before traditional analysts and marketing wonks can wrap their brain around what Elon Musk pulled off there and how much it benefited Tesla sales… and I hear rumors there may yet be another surprise “Easter Egg” bonus part to the Starman stunt as Starman nears Mars.

Nice phraseology “elevated Tesla into a higher orbit.” Perfectly reasonable conjecture. I concur. I certainly didn’t hurt.

“With a $0 Ad Budget, Tesla Just Pulled Off One of the Greatest Marketing Stunts Ever… With a famously nonexistent ad budget, Tesla just secured a place in auto marketing history“:

sourec: http://www.adweek.com/brand-marketing/with-a-0-ad-budget-tesla-just-pulled-off-one-of-the-greatest-marketing-stunts-ever/

Good Looking and Smart

What he has accomplished is the single greatest car advertisement of all time.

It’s a stunt that likely won’t have an equal in this century.

“Project Starman was a brilliant Telsa marketing event that literally elevated Tesla to a higher orbit cool-factor wise and general consumer awareness wise.”

You’re dead on target there with that missive. 🙂

I was surprised to see so much mainstream news coverage of the “SpaceX Tesla Roadster to Mars” launch. This has certainly rocketed Tesla’s public profile to new heights, and it’s absolutely not surprising that reservations/orders for the MS and MX have been boosted by this launch.

Elon could have done one better – by putting Wings on the Car – Solar Panel Wings, to keep the Batteries Charged, and send back images & Video to earth, each 3 months or so!!

The numbers below are all from the InsideEVs.com monthly sales scorecard, with the exception of the 1st QTR 2018 with are my guesstimates. Even if its off a few thousand units, I think Tesla will hit the 200,000 mark in April 2018 – thoughts?

2011 1,900
2012 2,650
2013 17,650
2014 16,689
2015 25,416
2016 47,119

2017 Model S 27,060
2017 Model X 21,315
2017 Model 3 1,772

2018 1st QTR Model S 6,500
2018 1st QTR Model X 6,500

Model 3 – Jan 2018 1,875
Model 3 – Feb 2018 4,000
Model 3 – Mar 2018 8,000

TOTAL by 03/31/2018: 188,446

I agree – I always thought they would hit 200k in the US sometime in April/May. If they are really pumping out over 2500 / week of the Model 3 by the end of March – there is NO WAY they are going to hold back 30-40k Model 3 deliveries…..I do think your Feb/March estimates for the Model 3 are high….My guess would be 3k in Feb and 6k in March – still that would put them at 185+ sold……no way they only move 15k in the US in 2Q — their stock would get crushed!

I don’t know, they are pushing a lot of metal up North to Canada. They got quarter push-up for deliveries of Model 3 as U.S. buyers got pushed back.
That speaks to me of an effort to deflect completion of 200k vehicles sold in the U.S.

Ontario’s large incentive could disappear or change against Tesla after the June election. So, it makes sense for Tesla to divert and get as many sales as possible now. It might be that diversion plus some delay could allow them to stretch into Q3, but it’d be a big ask.

Another Euro point of view

You have about 14K M3 delivered in Q1, I am rather inclined to think Q1 M3 deliveries will be around 11K. But it’s anyway not really a material difference as far as date 200K limit is reached.

“I think Tesla will hit the 200,000 mark in April 2018 – thoughts?”

It may or may not be April exactly, but over on the InsideEVs Forum, WadeTyhon posted what appears to be a thoroughly researched and detailed analysis of Tesla production which concludes that Tesla will cross the 200,000 threshold sometime in the 2nd quarter.

Barring a major disaster, it’s hard to see how he could be wrong.

Before reading his analysis, I thought Tesla might be able to delay it to the 3rd quarter, but in light of his essay, I don’t see that happening.


I don’t understand when they hit 200,000 cars in the US the tax credit goes from $7,500 to $3,750 does it make any difference if it’s May 3, June 8, or July or August. When they reach 200,000 the credit is cut in half. Am I wrong

It stays $7,500 for the current quarter and an additional quarter. So, if they hit it at the beginning of Q3, the full credit is good for Q3 and Q4. Then in 2019, the first quarter would be $3,750, and so on and so on.

Hitting it at the end of a quarter shaves off that whole quarter’s worth of credit. Hitting it in Q2 would mean that at the end of 2018 (Q4) it would be halved when Model 3 production is peaking and perhaps the base Model 3 appears (although we highly doubt that).

I guess if I was Musk could sell more Model S and X overseas, that’s what I would do.

Think – U.A.E.! Think – CHINA! Think Australia! All of which are not USA, or Europe, and All could well be high Demant Points following – The Roadster Riding Starman, Tesla Energy in Australia, and More!

If Tesla can control TMS and TMX sales to allow for maximizing the fed tax credit,that would be most welcomed for those of us waiting for a TM3 and counting on the incentive to buy.

Tesla told us outright that they were pulling people off the Model S/X assembly line and temporarily putting them on the Model 3 assembly line. They told us that this would cut Model S/X production numbers. This began in Q4 2017.

I don’t know why anybody would go to far-fetched conspiracy theories when Tesla publicly announced exactly what they were doing.

Looks like I am going rogue on my viewpoint and guess: Panasonic is not hitting their battery delivery numbers on the 18650 cells. They can’t keep up with demand growth there.

I therefore expect that the Model S and Model X will see another refresh this year that not only changes the look again, but also switches over to their own 2170 battery packs. It is to their advantage. I remember they said they would not, but that was a while ago and it makes sense that they will have to at some point.

Well, if Tesla Can Switch their Process to start building some limited Model S/X Battery Packs with the 2170 Cells, and they work out in those cars such that the performance aspects of Acceleration – are not LESS, then – I would think they could consider it!

If – they gain Acceleration Performance, AND Range – I think they would definitely put it on their list of things to consider a Cut In Point! Even if only in Limited Supply Models for 6 months!

Such could also take some of the Heat off the Panasonic 18650 Production Lines in Japan, too!

This is absolutely what is going on. I think if you asked Tesla several months ago, they would have had every intention of hitting 200k in early April, but production issues for model 3 have significantly delayed this target. If they threw caution to the wind and ignored the tax credit cap, they’re probably on pace for hitting it in late May/early June. As the article says though, this makes no sense whatsoever, so they are pivoting strategy. The backlog of S/X is just to create a buffer and an understanding that you won’t get your car soon. They don’t want these customers upset, but they need to manage expectations. They also are going to prioritize overseas where it doesn’t hit the cap and so they can keep the cash flowing. This also holds true for Canadian Model 3 orders, which are easier to deliver, but don’t hit the numbers. This also explains them bumping up AWD deliveries for Canada to the point that they are earlier than the US. These are high demand there and they want to be able to keep the money flowing and the Model 3 lines humming away in May/June if they need to delay… Read more »