Tesla supplies fall – especially for high-end models S and X

Tesla delivered 63,000 cars to customers in the first quarter of 2019, the company announced Wednesday evening. This is a dramatic 31 per cent decrease from the previous quarter, when Tesla delivered 90 700 cars.

Analysts have expected Tesla to announce quarterly decline in deliveries, but this drop exceeded Wall Street's expectations. Wall Street analysts expect Tesla to deliver around 75,000 cars.

Analysts expect Tesla to have a quarter because the US tax credit to buy a Tesla was scheduled to fall from $ 7,500 to $ 3,750 on January 1[ads1]. So, the Americans are thinking of buying a Tesla late last year for delivery by December 31, which prompted the US to dry up in January.

To compensate, Tesla focused on overseas markets. But that was a problem.

"Due to a massive increase in deliveries in Europe and China, which at times surpassed 5x for earlier delivery levels and many challenges that arose for the first time, we had only delivered half of the whole quarter figures by March 21, ten days before the end of the quarter, Tesla writes. As a result, 10,600 vehicles were in transit to customers at the end of the quarter, and these cars were not counted in Tesla's delivery statistics.

Model S and X-numbers massively underperformed

Delivery challenges to Tesla only produced fewer cars in the first quarter than in the previous quarter Tesla said it delivered 77,100 cars in Q1 2019 compared to 86,555 cars in Q4 2018. Model 3 production actually increased slightly, although Tesla remains slightly below Elon Musk's long-term goal of producing 5,000 model 3 cars per week.

Meanwhile, the production of Tesla's pricy model S and model X cars was doubled from a total of 25,161 units in Q4 2018 to 14,150 units in Q1 2019. The figures for deliveries of model S and model X were even worse. They fell 56 percent, from 27,550 to 12,100.

It is not surprising that model S and X deliveries declined compared to model 3. Tesla attempted to offset lower sales in the US with an increase in European and Chinese sales. Most of this increase came naturally from Model 3, which first became available for sale abroad earlier this year.

However, these figures were a major departure from the guidance provided by Tesla less than three months ago. "We expect our Model S and Model X deliveries in the first quarter of 2019 to be slightly below the first quarter of 2018," Tesla wrote at the end of January. In fact, the last quarter model S and X deliveries were less than half of the 24,728 vehicles delivered by Tesla in the first quarter of 2018.

And it will be bad for Tesla's bottom line – especially when combined with Tesla's latest surcharges.

Tesla quarterly financial results are likely to be gloomy

Tesla began the quarter with a total price cut of $ 2,000 to offset the $ 3,750 fall in federal tax credit. Then, in February, the company announced its elongated $ 35,000 version of model 3. So Tesla not only sold fewer vehicles last year, it sold a smaller percentage of its more expensive models and the average sales price of Model 3 was probably reduced as well.

It suggests that Tesla's first-quarter results, which will be released in the coming weeks, will be bad. In fact, while Tesla did not share any financial figures in Wednesday's press release, it indicated that Wall Street would expect the worst when the numbers come out.

"Due to lower than expected delivery volumes and more price adjustments, we expect the first quarter results to be adversely affected," the company wrote. "Yet we ended the quarter with sufficient cash."

It's not a good sign when you have to assure investors that you haven't run out of money yet.

The big question here is whether this quarterly unfavorable performance reflects a one-time problem due to an outbound US tax credit and the challenges of ramping up overseas freight or whether it is the start of a long-term trend of weakening demand and falling average sales prices.

Tesla says This demand has remained pretty good and wrote that "US Model 3 car orders were significantly better than we could deliver in the first quarter." The company added that "Model 3 vehicle inventory in North America remains exceptionally low, reaching around two weeks supply by the end of the first quarter, compared to the 2-3-month food group."

The company confirmed its forecast that it would deliver between 360,000 to 400,000 cars for the calendar year 2019.