Tesla’s U.S. Sales Plunge – Tesla Motors (NASDAQ:TSLA)

While shares of Tesla (NASDAQ:TSLA) are hitting new all-time highs on Monday morning, there are certainly reasons to be skeptical. As I detailed on Sunday, the company seems to be producing well short of its capabilities, meaning demand of current models is not very strong. On Monday, we got estimates on US sales, and the data is very ugly for Tesla’s largest market.

As expected, March was Tesla’s best month for Q1 unit sales in the United States, as the company seems to make a large share of deliveries in the final month of each quarter. Tesla came in at 6,200 vehicles according to Inside EVs, which investors might find strong given the company’s record quarterly figure. However, the table below shows this is not the case at all.

(Source: Inside EVs monthly report)

Not only was this the weakest quarter for the US since earlier in 2016, but the Model S was actually down more than 500 units over March 2016 according to Inside EVs. While the Model X did show growth over last March, the prior year period for that vehicle was heavily impacted by production problems that lasted quite a while.

In both cases, US Model S and X sales have taken a step down from Q3 2016 to Q4 2016 to Q1 2017. So how did Tesla have such a great quarter in terms of deliveries? Well, there was a price raise in the UK that consumers in that country were trying to get ahead of, and some Asian markets like Hong Kong were just getting their first deliveries of the Model X. Now that Tesla has likely gone through its initial X backlog, things are likely to fall off, especially as tax breaks in certain countries continue to expire.

Interestingly enough, Tesla’s website still shows May delivery estimates for the East Coast of the United States. It has shown that month for at least 2-3 months now, which would further lend credence to those who believe Tesla has a demand problem in the US. In fact, there are certain inventory units on Tesla’s site, ones that have the typical 50 miles for new Teslas, whose prices are below what a custom Tesla with the same exact configuration should cost. Tesla is also eliminating the 60 kWh battery option for the Model S this month, so the effective price raise means the Model S has a smaller available market.

With Tesla’s US sales plunging over the past two quarters, it’s going to be very interesting to see how the company gets to its first half delivery guidance. With management not updating its forecast, a flat to down quarter of 22,000 to 25,000 units is the current situation, but will Tesla need to do any promotions or have any levers to pull to get to that? Should US sales fall further in Q2, Tesla will need tremendous international sales to hit its marks. With shares at new highs as seen in the chart below, those wanting to buy the stock might want to wait for a pullback.

(Source: Yahoo! Finance)

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Imagination Technologies’ shares plunge 70 percent after Apple ditches firm | Reuters

LONDON Imagination Technologies (IMG.L) has been told by Apple (AAPL.O), its biggest customer, that the maker of iPhones, iPads and Apple Watches is to stop using its graphics technology in its new products, sending shares in the company crashing by more than 70 percent on Monday.

Imagination said Apple, which accounts for about half its revenue, had notified the British firm it was developing its own graphics chips and would no longer use Imagination’s processing designs in 15 months to two years time.

“The biggest risk to Imagination’s business model was realized this morning,” analysts at Investec said. “The loss of this revenue stream will have a material impact on the financials of the company.”

The technology company, which was founded in 1985 and listed in 1994, has licensed its processing designs to Apple from the time of the first iPod and receives a small royalty on every device using its graphics.

Imagination said it doubted Apple could go it alone without violating Imagination’s patents, and analysts said legal battles could lie ahead.

“It would be extremely challenging for Apple to design a brand new GPU (graphics processor unit) architecture from basics, that is, without infringing our IP rights and also infringing our confidential information,” Chief Executive Andrew Heath said.

“As such we do not accept their assertion that they no longer require our technology.”

The company said it had asked Apple for evidence that it could dispense with all of Imagination’s technology, “but Apple has declined to provide it”.

Apple declined to comment.

Shares in Imagination, in which Apple holds an 8 percent stake, plunged to 76 pence, their lowest level since 2009 and about a 10th of their record of 734 pence hit in 2012.

They were down 64 percent at 97 pence by 1350 GMT, giving the company a market value of 275 million pounds ($372 million), or 479 million pounds less than it was worth on Friday.

Analysts at Morgan Stanley said it was not the first time Apple had cut off a supplier – Portal Player, Sigmatel, CSR and Wolfson were all abruptedly dropped.

“There is a difference here though”, they said. “Imagination holds significant patents around graphics cores, in particular those which allow lower power use, and is considering discussing different commercial arrangements with Apple.”

Imagination’s shares rose sharply between 2009 and 2012 as sales of smartphones boomed and Apple and Intel (INTC.O) bought stakes. The company was valued at more than 2 billion pounds ($2.5 billion) in April 2012.

It struggled, however, to reduce its reliance on Apple, and has faced increased competition from the likes of chipmaker Qualcomm (QCOM.O) and British rival ARM, which developed its own graphics to complement its core processor blueprints.

Imagination says it has just over 50 percent of the high-end smartphone market – nearly all of which stems from Apple, although MediaTek (2454.TW) also selected its graphics for its new chipset last month.

But Imagination only has 7 percent of the market for mid-tier devices, where it has been trying to gain share, including in phones made by Chinese manufacturers.

Imagination said it would talk with Apple about alternative commercial arrangements.

Analysts said there could be room for compromise, and it could even be a bargaining move by Apple to reduce royalties.

Apple paid Imagination license fees and royalties totaling 60.7 million pounds for the year to end-April 2016, half of its total revenue, and is expected to pay about 65 million pounds for this year, Imagination said.

Most of its costs are incurred in developing technologies years ahead of when they are deployed in products, and it said there were minimal direct costs associated with Apple’s revenue.

Around half of its non-Apple revenue comes from the MIPS processing platform it bought in 2012 in an attempt to extend its product line-up beyond graphics.

Customers for the MIPS technology include Israeli automated vehicle driving systems specialist Mobileye (MBLY.N) and Chinese chipmaker Spreadtrum Communications, according to analysts.

(Editing by David Clarke, Greg Mahlich)

Imagination Tech Shares Plunge as Apple Ends Deal With British Firm

Shares in Imagination Technologies plunged by nearly 70 percent on Monday, after Apple informed the British firm that it plans to stop using its graphics technology in Apple consumer devices in up to two years’ time.

Imagination said Apple had made the decision because the tech giant was developing its own independent graphics processing chips, which would reduce its reliance on the company.


The news delivers a major blow to Imagination Technologies, which traditionally provides the PowerVR graphics architecture found in Apple’s full range of iOS devices and receives a small royalty on every sale, which amounts to up to half of the British firm’s revenue.

In a press release posted on the company’s website, Imagination said it doubted that Apple could go it alone without violating Imagination’ patents, intellectual property and confidential information.

Apple has used Imagination’s technology and intellectual property for many years. It has formed the basis of Graphics Processor Units (“GPUs”) in Apple’s phones, tablets, iPods, TVs and watches. Apple has asserted that it has been working on a separate, independent graphics design in order to control its products and will be reducing its future reliance on Imagination’s technology.

Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it.

The firm said that Apple’s notification had triggered talks on alternative commercial arrangements for the current license and royalty agreement.

Apple has been a licensee and stakeholder in the company since at least 2008, and became a key investor in mid-2009 after raising its stake in the firm to 10 percent. Apple paid Imagination license fees and royalties totaling 60.7 million pounds for the year to end-April 2016 and is expected to pay about 65 million pounds for this year, Imagination said.

Late last year it was reported Apple was in “advanced talks” to acquire Imagination Tech after the British chip maker announced job cuts. Despite confirming the talks, Apple subsequently decided not to make a buyout offer, but several Imagination employees were recruited by Apple as part of its efforts to build an in-house graphics team.

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