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Tesla delivered 14,820 vehicles in Q1; parts shortages dogged Model X; on-track for full-year guidance

Tesla delivered 14,820 units worldwide in Q1 of 2016, comprising 12,420 Model S vehicles (84%) and 2,400 Model X vehicles (16%). Q1 deliveries were almost 50% more than Q1 last year and Tesla said it remains on track to deliver 80,000 to 90,000 new vehicles in 2016. Tesla said that 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 significantly. By the last full week of March, the build rate rose to 750 Model X vehicles per week; many of these vehicles were built too late to be delivered to their owners before end of quarter, however.

Tesla said that the root causes of the parts shortages were its self-described “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.

Tesla said it is addressing all three root causes to ensure that these mistakes are not repeated with the Model 3 launch.

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 reaffirmed its full-year delivery guidance.

There may be small changes to the Q1 delivery count (usually well under 1%), as Tesla only counts a delivery if it is transferred to the end customer and all paperwork is correct.

Comments

CheeseEater88

I see this, coupled with the 200k pre-orders as a problem for the model 3.

It's not that they could help the problem, its just that all the existing OEMs from before Tesla's existence have a long history with suppliers around the world. They can get great results from different plants across the world, Tesla doesn't have that clout yet.

Hopefully the Pre-Orders give more confidence to vendors/Tier 1 suppliers. But if Tesla can't order now what they need for those 200K cars, they'd likely run late on deliveries. Most of everything in production now started over 18months ago... this is why I think Tesla may run into issues.

Nick Lyons

Tesla said that the root causes of the parts shortages were its self-described “hubris” in adding “far too much new technology” to the Model X in version 1...

Amen to that. I hope they are following the KISS principle for the Model 3, although the panoramic glass roof makes me wonder. A simple analog speedometer in front of the driver would be nice, too.

Account Deleted

Nick I agree. Musk has already admitted that being too ambitious with version 1 is a liability and he has learned it the hard way with Model X that has taken longer to launch and ramp up than necessary if they had been less ambitious with version 1. The reveal of Model 3 shows it is not too difficult to make. There is nothing that Tesla has not done before or that is not straightforward to make. The large windshield at the back is new for a back windshield but not more difficult to make than the large front windshield for Model X. They probably use the same supplier. If it is a small manufacturer that can’t ramp up at the speed required for model 3 Tesla has time to make a deal and buy that supplier and provide it with the capital needed for a new factory that can handle Model 3 volume. Tesla did that with their seat manufacturer and their aluminum die supplier. There are no falcon doors for this version. A Model Y (crossover version of model 3) with falcon doors is rumored to be next after model 3. Also I am sure now that model 3 will get a transparent OLED screen in front of the driver’s seat that will replace the traditional instrument cluster that was absent in the Model 3 presentation. However, that is not hard either and LG will make it I think so there will not be any supply issues on that part.

I take note that Model X is now 2400 unit in Q1 up from just 500 in Q4. Also very important that Tesla say they did 750 Model X in the last week of March. That could point to 8000 to 9000 model x deliveries for Q2. They have at least 40k preorder for model x so it is extremely important to get that production up in gear. Model S and Model X will be making most of the money (as gross profits) that are needed to finish production lines for Model 3 which will cost 10 billion at least for an annual capacity of 350k units.

Davemart

If you have a look at the Tesla 10Q they stretch payment dates for their suppliers to the limit, and being months and years late in their estimated mass production date means that many of their suppliers will have tooled up for the anticipated production ages before, which costs money.

What goes around comes around, so they can expect parts problems.

Not that I believe Tesla giving that as the sole cause.

Musk characterised the Model X as the most difficult car there has ever been to build, and they are making a mess of it.

There are plenty of pictures of Model X cars being passed out to customers to make their quarters figures with unpainted panels, panels which have been, of all things, puttied up to make them join, doors which won't open or close, and so on.

No quality department in the world is that bad.
They are clearly under direction to pass out cars to make target no matter their condition, and the service centres are being treated as final assembly.

They are running their business by taking around $300 million in venture capital which they are calling deposits, which are in no way ring fenced and which will vanish if the dodgy financials catch up with Tesla.

Shambolic and their workmanship would disgrace a Lada.

Account Deleted

Davemart it must be such a pity to be you. All that envy.

yoatmon

Henrik, you're so right but you forgot to mention the vitriol.

Account Deleted

Motor trend has a review of Model X. Their biggest complaint is that “that Elon’s ego has cost the world a year and a half of pleasure living with what could possibly be the best people-mover extant”.

And another quote is “No discussion of Tesla’s in-car tech is complete without mentioning Autopilot, which is a full decade ahead of most other semi-autonomous driver’s aids. If not two decades.” That is of cause a metaphoric exaggeration to make the point to other car makers to get their act together and step it up in this field.

They do say this about Model x’s looks “Speaking of style, there’s little nice to say about the way the Model X looks. Its details are inoffensive—the headlights and taillights, for example—but it has the proportions of a pregnant hippo. This electric vehicle is certainly a slave to aerodynamics, and its drag coefficient is, Tesla claims, just 0.24, which is 20 percent better than the next-best SUV.” That Cd is the same as the new Prius which is offensively ugly. I agree the Volvo 90X is a much better looking SUV but I will take that pregnant hippo at any time to get all the other stuff that Model X offers in excess of 90X. After all looks matters so little for a healthy long-term relationship.

http://www.motortrend.com/news/2016-tesla-model-x-p90d-ludicrous-first-test-review/


Yoatmon Yes I forgot that. Sorry ;-)

Davemart

yoatman:

If you want pure vitriol, try reading your and Hendrik's posts on hydrogen and fuel cells.

I dislike show-boating promoters, not BEV cars.

You and Hendrik think that you know enough to rule out whole areas of technology.

In dislike the way a particular company is run.

CheeseEater88

Musk should have broken the model 3 up in to different groups of preorders. 2,500 for a 2018/19 model, and 100,000 for a 2020, then so on after that. So people had a real idea of what might be expected. Though I understand the launching in waves/markets idea. I just hope people don't loose interest.

Teslas best bet to make some stable money is to sell their extra battery making capacity to other oems. Odds are battery production will ramp up faster than will suppliers for the model three.

My biggest hope of all is that all of the model three is in preproduction at the suppliers, that the molds and processes are finalized, and each part is as it will be on the final car. I mean technically they could build 3/4 of a car and finalize it in Q3 and rush a huge volume out the door when the launch happens even if they cannot sustain the numbers for long.

CheeseEater88

The model 3 could crush Tesla if this demand is not met with satisfactory results. Tesla is tied up with loans and investments, and investors.

Demand is good, but in a world where people may not want to wait in line a few years for a car... Tesla needs to meet demand with almost no problems.

The model three should be a huge success but time and time again there has been short comings with hitting deadlines and doing it without a hitch.

All new models have launch issues. Whether the customer is aware is another issue. I think because of the nature of the industry Tesla shouldn't over sell it's production capability.

And if ECI or anyone else knows, I'd like to know the status of the pre-order numbers for the three. Have we hit 500k yet?

Account Deleted

CE88 preorders for model s is zero was done years ago. Preorders for model x is 40k to 50k and for model 3 most likely 300k by now. Musk with tweet an updated number on Wednesday. Tesla is a build to order company. They don’t produce any cars that has not already been configured and paid for using the Tesla webconfigurator. Musks plan has always been to reach 500k units delivered for 2020 across all models. Expect at least 300k of the model 3 for that year. That will still not be enough to meet all the preorders especially if they reach a million after the final reveal hopefully by late 2017. The think is that Tesla with model 3 has made a car that millions of people can afford and they also want it because it is the best car in the market in that price segment of that category. Of cause if you want an SUV or a truck and you can spend no more than 35k USD it is not going to be that Model 3.

The more preorders Tesla get the easier it is to get the money they need to build the necessary factories.

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Davemart I have nothing against hydrogen, fuel cells or electrolysers. I think they might have an important role to play as a future aviation and shipping fuel and for storing the intermittent energy of wind and solar. However, I see no future for that stuff in land transportation and I simply don’t get why others can’t see it is hopeless in the light of the much better alternative which is self-driving BEVs of all sorts. The progress that Tesla has demonstrated by Model 3 in terms of price possible for BEVs just proves the point. Hydrogen is already obsolete for vehicle use and it will become clearer for each new car that Tesla makes or improves.

CheeseEater88

Henrik, you cannot build to order in that capacity, the suppliers would cut you off. Cars with 2018/2019 releases are already finalized, preproduction units are rolling around with finished everything... Yes little tweeks can be done for fit and function, but nothing is likely to change until 5years later if they can help it.

It's a hassle. What's even worse is their capacity is determined long before preproduction. So scheduling and molds and trials all have to be done long before the preproduction phase.

Account Deleted

But they do build to order. The suppliers love Tesla because they grow at over 50% per year and its is prestigious to be a Tesla supplier. It spurs orders from other customers. Tesla can also keep some stock of suppliers parts but it ain't much. Tesla make 20 changes to their cars per week so they do not want to keep much stock of anything. Model 3 is not finished. They lack lots of stuff that will be finished in the last months before launch. Usually Tesla only give its suppliers a lead time of 3 months to ramp up. That was apparently not enough for some of Model X's suppliers 6 out of 8000 items has been in short supply and delayed ramp up of model X.

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