According to Tesla's (NASDAQ:TSLA) last quarterly report, the company's balance sheet shows $140.27 million in customer deposit liabilities. Since Tesla stopped telling investors about its backlog information, it is somewhat difficult to estimate the true demand for Model S and Model X. It is difficult to estimate the exact size of the backlog because different items have different deposit prices. This article will try to make an attempt at predicting the size of Tesla's backlog.
First, let's take a look at customer deposits. In the US, a customer wanting to buy a Model S has to pay $2,500 in deposits. For Model X, the deposit amount is $5,000 and for the signature version of Model X, the deposit amount goes as high as $40,000. In Canada, the number amounts required for the deposits are the same; however, the currency is the Canadian dollar rather than the US dollar. Basically, Canadians will be paying roughly $2,350 for a Model S reservation. In Australia, it costs about $5,430 to reserve a Model S or a Model X while it costs $36,200 to reserve a signature version of Model X. In Norway, where Tesla cars are most popular outside of the US, it costs $2,430 to reserve a Model S, roughly $5,000 to reserve a Model X and $37,000 to reserve a signature version of Model X. In Great Britain, it will cost $3,300 to reserve a Model S, $6,600 to reserve a Model X and $49,000 to reserve a signature version of Model X. Finally, in countries like Germany and France where Euro currency is used, it costs about $2,730 to reserve a Model S, $5,460 to reserve a Model X and $41,000 to reserve a signature version of Model X.
In Hong Kong and Japan, cost of reserving a Model S is roughly twice as much as it is in the US, but the cost of reserving a Model X is the same as the US.
This information alone is not enough to see the size of Tesla's backlog but this can tell us that the calculation can be quite complicated since there are too many variables in play. In order to solve the puzzle, we will have to take a look at another figure: waiting times. According to Tesla's ordering page, it will take you about one month to receive the P85 version of Model S and it will take between 2 to 3 months for the other versions in the US and in Canada. Obviously Model X is not being delivered at the moment. Next, we check the waiting times in other countries where Model S is currently being delivered. In most of Europe including Norway, Netherlands, Germany and Denmark, it will take about 4 to 5 months to receive the P85 version and 5 to 6 months to receive the other versions. In Asia and Australia, the deliveries won't start until next year.
Since we know that Tesla produces about 550 cars per week, we can calculate some of the backlog information based on three different scenarios.
Scenario 1: 25% of cars are delivered in the US
The first scenario calls that 25% of the Model S cars currently being produced are delivered in the US and the rest of the vehicles are being delivered outside of the US. This means that out of the 2,200 cars being produced, 550 will end up in the US and 1,650 will head to Europe. Since the average delivery time in the US is 2 months and the average delivery time in Europe is 5 months, this gives us a backlog of 1,100 Model S vehicles in the US and 8,250 Model S vehicles in Europe. This number excludes the backlog in parts of the world where deliveries haven't yet started as well as any Model X numbers. A backlog of 1,100 vehicles in the US and 8,250 vehicles in Europe would give us total deposits of $23.38 million. Since there are only about 1,000 spots for signature version of Model X, this will be another $40 million. If we subtract these two values from the 140 million in Tesla's balance sheet, we get $76.63 million for the Model S deposits in Asia, Australia as the Model X deposits. Since each of these deposits cost roughly $5,000, we are looking at another 15,325 vehicles.
Basically, if 25% of the cars are delivered in the US, Tesla's backlog should have about 25,675 vehicles, a sign of strong demand in the short term.
Scenario 2: 50% of cars are delivered in the US
In this scenario, 1,100 cars are delivered in the US and 1,100 cars are being shipped to Europe per month. Since the average waiting time in the US is 2 months and the average waiting time in Europe is 5 months, this gives us an American backlog of 2,200 vehicles and European backlog of 5,500 vehicles. These two regions sum up to 7,700 Model S vehicles. This accounts for $19.25 million in Tesla's balance sheet and another $40 million goes to the signature version of Model X. This tells us that the size of the backlog pertaining to Asia, Australia and Model X will be $70.75 million, translating into 14,150 vehicles. This gives us a total backlog of 22,850 vehicles, which is still strong.
Scenario 3: 75% of the cars are delivered in the US
Using the same formula, in this scenario, 1,650 cars are delivered to US and 550 cars are delivered to Europe per month. This gives us a backlog size of 3,300 vehicles in the US and 1,100 vehicles in Europe. This accounts for $11 million dollars and we add $40 million for the 1,000 Model X signature vehicles. Subtracting these figures from the $140 million in Tesla's balance sheet gives us a remainder of $89 million. This means there are 17,800 active reservations for Model S in Asia and Australia as well as Model X everywhere in the world. This gives us a total backlog size of 23,200. Again, Tesla's backlog looks pretty strong.
I looked at three different scenarios using the limited information we have. This will not give us an exact figure but this will give us a ballpark of estimation. In the short term, Tesla's backlog looks rather strong. Given the company's current production rate, it has enough demand for nearly an entire year.
Additional disclosure: I am long Tesla's calls and puts simultaneously.