Tesla – Will They Or Won’t They Hit 200k This Month?

JUN 8 2018 BY WADE MALONE 71

Tesla has many options to delay the tax rebate trigger, but that doesn’t necessarily mean they will do so.

As we all know, Elon Musk is a master at creating hype and speculation. Musk and Tesla feed us just enough information to get us all talking, leading to engaging discussions all over the internet. The United State’s Electric Vehicle Tax Credit has definitely become one of the hotter Tesla topics of this summer. But Tesla is keeping quiet on their plans.

When a vehicle manufacturer passes 200,000 eligible units sold in the US, a ramp down begins. Once triggered, the full $7,500 rebate is available to buyers until the end of the current quarter and for the quarter immediately following it. Then a reduced rebate of 50% is available for the next 2 quarters. Finally, the rebate is dropped to 25% for 2 additional quarters before the credit ends completely.

At the end of May, Inside EVs estimates over 194,000 Tesla vehicles have been sold in the US since the Tax rebate took effect. Tesla will absolutely hit the 200,000 limit within the next several weeks.

This means that if Tesla hits 200,000 units in June, the full credit will be available until the end of September 2018. The 50% rebate will be available until the end of March 2019. While the 25% rebate will be available until the end of September 2019. If Tesla chooses to slow deliveries and push the 200,000th sale back to July, then the availability of the tax rebate will shift 3 months. The full rebate would remain until December 2018 with the 25% rebate ending in December 2019.

Tesla can absolutely delay until July if it chooses to. So let’s put aside whether they will or won’t for a moment and just look at how Tesla could delay to July.

How Tesla could delay until July

At this stage, the simplest way is to intentionally limit Model 3 production. They have already done this to some degree with 10 days of shutdowns over Q2. The second 5-day production shutdown occurred in the final week of May. Almost all cars produced in the last 2 weeks of May will be delivered in June. By shutting down production, they’ve taken at least 1,750 units out of the equation. If Tesla is going to narrowly avoid hitting the 200k limit in June, this shut down will be key towards doing so.

Another option is to have cars parked and waiting around in lots across the country. A build-up of more than a few thousand units would create a backlog that would take time to work through. Such a backlog would negate much of the benefit that would come from delaying in the first place. Still, if we hit the last week of the month with 2,000 or fewer sales to go, I could certainly see this as a viable option.

Can Tesla delay deliveries to extend the tax rebate?

Increasing shipments of the Model X and Model S abroad would give them more breathing room as well. However, through April, S + X deliveries have been mostly flat in Canada and Europe. We do not have May or June numbers yet, so if Tesla is taking this course of action we will not know for several weeks.

Ship them up to Canada

The other major delay tactic at their disposal is Canadian Model 3 deliveries. Most Canadian-bound Model 3’s are headed to Ontario due to the potential end of the EV tax rebate. If you are in Canada and expect your Model 3 to be delivered by the end of June, you will most likely have a VIN numbered between 27500 and 30500.

This gives us a best-case scenario of ~3,000 units for May + June Canadian deliveries.  Although actual numbers will probably come in less than that. Deliveries to Canada are moving fairly slowly for many people at the moment. Some buyers are reporting wait times 3-6 hours after their scheduled pickup. Others are having their pickup dates pushed back several days. With only six service centers for Canada, they were simply not equipped to handle such large delivery volumes. So, Tesla recently hired a large number of brand new employees to assist. It will take them time to learn the ropes. Once they do, the delivery process should become more smooth.

The amount of Canadian deliveries going to Ontario is interesting. With the threat of the EV rebate ending in Ontario, Tesla is clearly trying to get as many cars to buyers as it can. Based on this, it would seem logical that Tesla will also push to optimize tax credits in the US.

Why Tesla might hit in June

Of course, the situation here is different. In Ontario, Tesla is encouraged to increase Model 3 sales as much as it can. In the US, Tesla would need to intentionally reduce sales in order to delay. In addition, the American rebate is not a hard stop. Even if Tesla crosses in June, there would be a long tail to the rebates. Model 3 buyers would continue to have access to at least a partial rebate until September 2019.

Another thing worth considering is the 35k model. Price-sensitive buyers (such as myself) are likely to be purchasing the short-range model with limited options. A small number of short-range models might be delivered in 2018, but most will be purchased in 2019. So for those of us looking for a lower end Model 3, the full tax credit is out of the question no matter what Tesla does.

It also appears that Tesla is not slowing planned Model 3 deliveries this month.  VIN numbers between 23000 and 25500 are scheduled for US delivery in the first half of June. All VINs between 27,500 and 30,500 seem slated for Canada over the course of the month. In the back half of June, there are two sets of VINs scheduled to be delivered to the US: between 25500-27000 and 31000-32500. This is of course not considering Model X or S sales, or any Model 3 deliveries that might be reported later in the month.

Expected June deliveries by state and province

Based on numbers compiled from several different sources this week, roughly 25% of reported June deliveries are heading to Canada. However, the actual percentage will probably be a bit lower than that. Canadians are reporting at a much higher rate than American buyers.

What will they do?

Tesla did not want to be in this situation. If production had gone as planned, they would have likely hit the 200k limit in Q1. Thankfully, the worst of production hell is over and sales numbers are looking bright moving forward. But now the company has a decision to make. Should they go all out to make a huge statement at the end of the quarter? Or should they ease off and slow deliveries to extend the credit availability? Keeping sales this month under 6,000 units would be tough but it is achievable.

My personal hope is that Tesla delays for the benefit of buyers – so long as it will not have a negative impact on Tesla of course.  But I haven’t seen any compelling evidence that they are actively working to push back the rebate trigger either. So it will be an interesting few weeks. We haven’t seen an automaker go through this process yet, so I’m very curious how Tesla will approach the situation.

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71 Comments on "Tesla – Will They Or Won’t They Hit 200k This Month?"

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David Schurig

My US delivery got pushed from June to July, which could just be production and order volume related (as stated in the email pasted below) or it could be part of tax credit engineering.

Tesla
In our last round of invitations to Model 3 reservation holders, we received an unusually high volume of orders. As a result, we now expect your car to be ready in July. In the meantime, we recommend signing into your Tesla account to
complete your delivery profile.

To learn more about Model 3, check out our FAQs or watch our series of Model 3 introduction videos.

Thank you for your continued support of Tesla.

Evan

Thanks for sharing David, I got exactly the same email. My order was pushed back from June to July as well. Then I asked about adding AWD – they said I could get that car in September so I ended up adding the option. I’m keeping my fingers crossed the tax credit gets delayed – but based on our emails I think it will.

xcat

Same boat. But even if it doesn’t get delayed, Sept will be the last month of the full credit.

Lee

No, the first quarter with 200K is the next to last quarter with $7500. So if July then the rest of the year will be $7500. Been discussed forever on TMC and elsewhere.

Viking79

It is possible, I also imagine pushing back deliveries would mean high profits in July and Q3. However, I don’t know that they should, they are only a few thousand away and they could easily have 10,000 Model 3 cars this month as well as nearly that many Model S and X.

Smack_Check

Pushing 200k to july will generate 100s of millions in additional credits. Why would they not do that?

Miggy

Interesting report on Canadian EV sales with Tesla sales look to go high this month, 2000+
http://ev-sales.blogspot.com/2018/06/canada-may-2018.html

Benz

“Increasing shipments of the Model X and Model S abroad would give them more breathing room as well.”

More Model S and Model X shipments to Europe and China particularly (to be delivered there in July or later). And therefore fewer deliveries in the US in June.

No end of quarter delivery push this quarter.

Elon Musk has already discussed this on the last Conference Call in May.

(⌐■_■) Trollnonymous

Not too off topic but where’s GM’s place/position on this.
I’m pretty sure they are close as well.

TJKR

I doubt that they’ll play the tax credit game. GM’s sales is anemic compared to Tesla. In a few months, Tesla will sell 20-30K vehicles a month… compared to 2-3K GM. Once Model 3 is mature, why would anyone buy a Volt or a Bolt?

Adoreizi

Bolt and M3 are roughly comparable vehicles but a Volt is completely different—it’s a PHEV rather than a BEV ad that is a major decision factor consumers consider (including myself).

xcat

Lol. Have you sat in both to compare?

kbm3

Good point. They do both have 4 wheels.

TJKR

They should just send about 10K Model 3’s to Norway. They can really use them up there.

Joao

The Model 3 hasn’t been built and approved for Europe yet. There are some things that change like tail lights, charging port/connector, and some other minor things required by law.

Rob R

Tesla has already got into trouble in Norway for using illegal car transporters to deliver vehicles (having already used up all the legal ones (it’s a small country)). So no.

Daniel S

Very unfair tax rebate system: slow r&d by lazy and enviromentally uninterested OEMs is incentivised. Innovatve brands such as Tesla lose tax rebates and slow developers like fFCA can still profit from rebates later when the tecnology is fully available.

(⌐■_■) Trollnonymous

Our typical dumb gooberment……

Nos

Right, it should have been like 1-2 million total, shared between all companies. That would push development so much harder than this. And cheaper for the government at the end of the day.

arne-nl

Otoh, as the market matures, the numbers grow and the 200k limit means less and less. Tesla has enjoyed the tax rebate for almost a decade, but they will sell their next 200k vehicles in the US in a year or so. If the others want to compete with Tesla, they’ll burn though their 200k in the blink of an eye.

ziv
I think that Tesla originally thought that production would ramp faster than it has and that they would hit 200k in late April or May so they have structured their planning on hitting 200k in Q2 of this year. Now the production delays have made delaying the 200k’th delivery until July a possibility, but they haven’t really adjusted to how easily this can be done, and how little it would affect their bottom line. If they had throttled deliveries slightly last month, they probably would have used the line shutdown earlier this month as an explanation for reduced deliveries this month, making it look reasonable for them to hit 200k in the first week of July. Given that they have delivered 9k cars in the US last month, it will be hard for them to deliver less than 6k this month. They could still do it, but I don’t think they are making the effort. Pity. 3 additional months of the full credit would have been a huge benefit for their buyers. It would have helped at least 60,000 people, and probably many more. I think they botched the 200k timing, which is too bad, because they didn’t need to.… Read more »
Scott

Deliveries in Toronto Ontario are at 200 per day according to commenters on Tesla owners forum. That’s just one Canadian location, although it’s the largest. I’m betting Tesla delays until July 1.

God/Bacardi

It’ll be really interesting to see what Tesla actually does with this quarters deliveries…I would also take a Vegas bet that once Tesla delivers the first non-VIP performance Model 3, they will exhaust the entire queue of performance Model 3 deliveries before delivering on other configurations…

Ben

They have said to only have a 1k/week capacity on those I believe. So I doubt all other reservations will have to wait till that’s fulfilled

Nos

It will be in batches, just like they do now (red/upgraded wheels, red/aero, blue/upgraded etc.). Same will go for the P models, they’ve already started taking the orders iirc, and will be grouping them up in batches of similar spec.

agzand

Alternatively, they can hit 200k this month, then there will be a buying frenzy in the next two quarters, they can sell a lot of Model S and X and turn a profit for that quarter, then do their capital raise at a higher stock price. Musk does this kinda thing, you know.

ziv
agzand, that is exactly the reason they should delay 200k until July. They don’t get another 2 quarters of full credits if they sell 200k anytime in June. They would only get 3 months (plus a day) of full credits if they sold 200k’th on June 30th. If they sell #200k just a day later on July 1st, they would have a full 6 months (less a day) of full credits. If Tesla timed it right, a single days delay (From June 30th to July 1st) could net 60,000+ additional Tesla buyers the full credit from October 1st until December 31st of this year. They are so close to delivering a benefit to tens of thousands of their buyers, and they are going to fall short by a tiny, easily avoidable, margin. They really could delay that “buying frenzy” by 3 months, at which point they will be building the 3 much faster than they are now. Remember that there is no limit on the amount of cars that can get the full credit for that 91 to 179 day period. Tesla could legally sell a million cars in that 179 day period, and each of them would get the… Read more »
agzand

I see what you saying, but the catch is that they need to sell Model S and X. Model 3 is currently not profitable. Maybe they channel production to performance version only. Anyway, I think with current production level of Model 3 they can focus on International market and sell only 6k cars in the US, it is definitely possible. But later in the year, the buying frenzy mix will have a lot of Model 3s in it, which reduces profitability.

BenG

With higher-end Model 3s coming online, and volume building, I expect these $49k+Model 3s will be profitable for Tesla, by most definitions, going forward until they release the base Model 3 for $35k, which may be a money-loser for them at first.

TJKR

Wall Street lives and dies by quarterly earnings and all analysts agree Q2 will not be profitable. However, 5K a week for 10-12 weeks, Q3 will be very profitable… the epic short burn that Musk is talking about. The more they push off till Q3 the better.

F150 Brian

They’d have to divert almost all shipments of Model 3s out of the US or to parking lots to not hit 200K in June.

BTW, Model 3 deliveries are confirmed in Ontario and not just in the Toronto area – saw two in Ottawa within 30 mins at lunch today.

Jean-François Morissette

Is the announcement of the Performance and AWD models also a way to delay the delivery a little bit? I mean by that that it could restrain some people to order the 1st production now, knowing that finally other models will be available?

Pushmi-Pullyu

As the article explains, Tesla certainly has an incentive to deliver as many cars in Ontario this month as possible, and indeed there are various reports of 30 Model 3’s as well as “hundreds” in one large parking lot in Toronto which is clearly being used for a staging depot for Ontario deliveries.

But those who say Tesla is gonna deliver as many as 200 per day in Ontario, or even all of Canada… ain’t gonna happen. The “Model 3 Canada – Confirmed Orders Only thread” at the Tesla Motors Club forum isn’t showing an unusual amount of activity lately, which it certainly would if Tesla was actually gonna divert thousands of U.S. deliveries to Canada!

People see what they want to see. What they want to see is evidence that Tesla will delay crossing the 200,000 mark until July. Altho it’s not mathematically impossible, the available evidence points quite strongly to Tesla crossing that mark this month, in June.

“It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts. — Sherlock Holmes, “A Scandal in Bohemia”

Pushmi-Pullyu

Hmmm, I missed that part of the article that says there is a range of 3000 VINs assigned for delivery to Canada this month. I find that surprising, given the lack of any surge of activity in the “Model 3 Canada – Confirmed Orders Only thread”.

https://teslamotorsclub.com/tmc/threads/model-3-canada-confirmed-orders-only-thread.112348/page-98

But even if that range of 3000 VINs really does represent ~3000 deliveries in Canada alone this month, that still won’t be sufficient to delay crossing the 200,000 mark until July.

ziv

If they delivered 3,000 Teslas, or any number close to that, to Canada this month it would make the amount of Teslas they would have to park temporarily a lot smaller. I can’t remember how many 3’s were parked temporarily earlier this year when Tesla had that parts shortage, but it must have been in the thousands. They had them all over California, usually in parking garages but also in regular parking lots.
I don’t think Tesla is going to delay 200k, but I really wish they would. The production and selling frenzy in Q4 would be a thing to behold! 🙂

Pushmi-Pullyu

I think every real EV supporter wishes Tesla would delay crossing the 200,000 mark to Q3. That’s not the question. The question is whether or not they are going to delay it.

It’s not that I want Tesla to pass the mark in June rather than July, and that’s not why I’m arguing that position.

I’m arguing that position because that’s where I perceive the preponderance of evidence pointing. There are things Tesla could have done to delay it until July, and other than shipping a large number of TM3’s to Ontario, Tesla has not done those things.

Ziv

I wish I could point out a fallacy in the statements you made in the Para above, but I can’t.

BenG

They have done a number of things, though: i.e. stop the Model 3 line for upgrades, increase sales to Canada, send email delaying delivery for some customers from May or June to July.

I’m not sure either way, but I think they’ll aim to engineer delaying #200k sold in the US until July. It’s a relatively low cost way to juice demand for an extra 2.5 months compared to passing it in June. Seems like a no-brainer to me.

Cecil T

It’s really a lose-lose situation for Tesla. Either they don’t hit their production targets or they “screw” a bunch of customers out of a tax rebate.

The stockpiling option seems to be the best compromise, if at all possible.

Jean-François Morissette

There is a subforum Canada also in there: https://teslamotorsclub.com/tmc/forums/canada.95/

And a Facebook group is pretty active here: https://m.facebook.com/groups/551802988331482

Dave

My guess is they will go past the 200K this month. Just a guess at this point anything is possible…

leafowner

they are too close….they will delay. There are many on the message boards who configured in April and they are being told their delivery has been delayed to early July…

No long 4th holiday for Tesla store workers!!!

Brad

I live in the SF Bay Area, so my delivery location is Fremont. I ordered April 24. I was given the standard 3-6 week delivery timeframe. On May 20 I got the email saying my car would be ready in July. That was midway through the first week of my 3 week delivery window. My only conclusion, since I have no transportation delay, and since I was already close to delivery, that for my car to be delayed another 1+ month could only mean Tesla is trying to help everyone get the tax benefit by waiting for July for US car #200,000

BenG

Yep, stories like this bolster my belief that the delay of #200k to July is happening. It’s the smart long-term play, significantly cutting the price to the consumer and boosting demand for all Teslas for an additional 2.8 months over the alternative of passing the threshold late this month.

James

Let’s not forget that they are also shipping 3s to most stores in the US this month. Presumably a couple per store, 1 for the show room and 1+ for the test drive. This might account for a couple of thousand? The timing of this also makes sense with the 200k looming.

Bul_gar

Of course Tesla will not pass 200k in May.
That rebate is important for the demand specially when EVs are not cheap.
July will be interesting with the holded cars from June.
I expect over 25k sales in July from Tesla

Albertson

I think you should read the Federal tax credit document carefully. When I read it two years ago, it stated the trigger is 200,000 vehicles “delivered”. Not sales, nor production. Tesla can build and store as many as they want (or ship to other countries). As long as the customer has not yet received the car, it does not count as delivered. They could build & hold for the last part of June.

Sales and deliveries are synonymous in our terms. Not deposits or pre-sales, but actually sold and delivered vehicles. Of course not production either. They can build as many as they want, but once they’re sold to a customer (delivered) they count towards the 200k.

Science Rulez

There’s two factors not mentioned in the article (though some comments mention the first one).

First, Tesla has no real reason to inflate Q2 deliveries to appease investors. All they need is 5k/week production rate. On the other hand, they have a good reason to inflate Q3 sales because they have essentially promised profits in Q3. Pushing deliveries from June to July is a good way to achieve that.

Second, China’s import tariff cut takes effect July 1. I would not be surprised if a lot of Model S/X production in June is heading to China for arrival in early july.

Doggydogworld

Good points about China and investors only caring about Model 3 production vs. deliveries.

Delaying Model 3 deliveries into July won’t help Q3 profits, though. Those cars will carry roughly zero gross margin per Tesla guidance.

Dan F.

Tesla will NOT hit 200k before 7/1/18. If they somehow do, they are collectively dumber than a rock.

DEE

If you just look at the numbers for June of 2017 and then add possible sales of Model3 inline with last few months then there is no way they can avoid hitting 200K before the next quarter starts. In the end 3 additional months of 25% incentive ending at the end of December 2019 if they manage to delay over it ending at the end of September 2019 makes little difference. I don’t see how Tesla can deliver less then 6K units in the states in the month of June.

Jabeer

I really don’t see why they can’t do it. They probably produced about 9000 model 3s in May, maybe less. The first 3000 of those were probably delivered in May. They can probably send 3000 to Canada, who knows maybe more. My guess, is that anything produced in June will not be delivered until July. Shifting model s and x delivery patterns and sending a large portion of them to Europe, limiting sales to maybe 1500 s/x in the US. I certainly could see a path to do it.

O@Z

They are going to it 200K in the 4 of july whit a big delivery party 😉

fasterthanonecanimagine

Were there any Tesla sales before January 1, 2010? Those would not count for the 200’000 limit.

BTW, there is a list with the numbers countes as provided by IRS (for the tax credit, only vehicles sold are counted, NOT vehicles produced for the American market) – but strangely only for Mercedes, Ford, and BMW. And they stop by tte end of 2017. Can anybody find the IRS numbers for Tesla by December 2017 and possibly for the 1st quarter 2018 as well?
Here the link I used:
https://www.irs.gov/businesses/irc-30d-plug-in-electric-drive-motor-vehicle-credit-quarterly-sales
and https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

BTW also interesting: https://www.energy.gov/eere/electricvehicles/electric-vehicles-tax-credits-and-other-incentives

The Tesla roadsters sold before that time are not counted. Production is not counted either.

ziv

I think there were about 1000 Roadsters sold after January 1st of 2010. I could say that I researched this at length, but in reality, I looked at Wikipedia and then read the same thing on a chart here on IEVs.

Stretch2727

I think the statements that they plan to profitable in Q3 and Q4 make this a done deal. Moving other international until early 2019. With the Canada deliveries they will just need to hold a few thousand cars back. Q3 and Q4 going to be the turning point when everyone is going to wake up and realize Tesla is for real.

leafowner

No…they have already announced to many that their deliveries have been delayed to July….why do you think???

I’m just glad I already got mine!!! Still grinning!!

leafowner

Also….my bet is they send a huge number of invitations out this coming week….all needing a $2500 non refundable payment. That will be a nice cashflow bump for Tesla!!!

arne-nl

Those fearing that Tesla will deliver as many vehicles as they can, ignoring the 200k limit and focusing on Q2 results for fear of a Wall Street backlash…..

I think most investors know pretty darn well what’s going on and are expecting low US delivery figures. They might even ‘punish’ Tesla for NOT delaying deliveries into Q3.

So my best guess is that Tesla will not cross the 200k in Q2, it makes no sense at all.

David

My model x was scheduled to be delivered today. received an email last night telling me the car is still in CA. I know for a fact the car is at the service center. direct lie, postponed for a few weeks now since it has to be shipped to the East Coast. Tesla obviously doesn’t hold ethics in high regards. It would appear they are delaying deliveries.