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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