- Tesla would report second-quarter vehicle deliveries this week on July 1.
- Tesla lost expectations for the first quarter, but the company has steered for a decline in the second quarter.
- A fixation on Tesla supplies is meaningless. More deliveries should go back to Tesla's decision to focus on premium versus mass market sales.
- Visit the Business Insider website for more stories.
Tesla will report second-quarter vehicle deliveries next week, and a significant amount of talk has broken beyond what the number could be.
In the first quarter, Tesla delivered 63,000 cars, a drop of over 30% from the end of 201
It may not come there. The ultimate sum can be between 80-90,000. At this level, Tesla would need a large semi-final to deliver over 400,000 vehicles in 2019 (it moved around 250,000 in 2018).
Tesla observers are concerned about the Q2 figures because the Tesla share has traveled 20% over the past month and is ready for a breakout whose deliveries come in at the top of the series or perhaps beat the 90,000 figure.
Read more: The big question about Tesla demand makes no sense. The company has created demand where there was no one before.
Of course, it's a stock history. If Tesla's business needs a 90,000-hour drive or can do well at 80,000, it's a more useful question, and it gets lost in the noise. A fast automotive lesson: Most car manufacturers are very good at building cars, worrying more about producing too many, not too few. If they exaggerate, they encourage ineffective excess capacity and stop filling the dealer a lot with vehicles that they have to discount.
Another quick lesson: Tesla would be better off selling 80,000 cars if the mix of sales is highly priced; 90,000 in sales, if one bit is cheaper cars, can damage the bottom line.
Why do Tesla ignore supplies?
Anyway, the argument that you ignore Tesla's Q2 deliveries should lead to a more critical question: What is Tesla's current logical level of production and sales? (Incidentally, no matter where Tesla lands in the second quarter, the figure must be a large increase during Q2 2018 – Tesla is the only car manufacturer to see such a large loss of demand in a US market that has run at the top for yesterday at five year).
In 2018, BMW sold about 311,000 cars in the United States. They did this with a series of about 18 cars and trucks (I avoid something special). Tesla sold something like 200,000 cars in the US – but with a series of only three models. In fact, that comparison is not one; Tesla serves up electricity demand, more than organic premium demand, demand.
But takeaway is remarkable: Tesla is approaching BMW sales in the US with six times fewer cars available.
Before you conclude that I'm about to insist that BMW is in trouble, don't. BMW is not in trouble. But BMW serves as a useful guide to what type of car manufacturer Tesla should be. And in my opinion, it is a premium company, not a mass market producer.
No pressure for more deliveries
And in this context, Tesla should not push, push, push to sell more vehicles every quarter. It should adjust its US production capacity – perhaps 400,000 to 500,000 cars annually – with a demand for cars that can make a serious profit.
If Tesla sells another 100,000 cars a year that it barely adds a margin, then what is the point? I prefer to see 300,000 every year, with a 10% margin (maybe higher).
The stock market won't have this right now. The stock market wants more deliveries. But I think the market can live with lower deliveries, as long as the deliveries are consistent, quarter-quarter and year-to-year, and as long as Tesla turns into serial quarterly profits – just like any other automaker does business these days.
So there you have it – all eyes are on the Tesla supplies for the second quarter, but all eyes should be on something else.