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