- Delivery numbers for May have arrived for Tesla's main markets.
- These numbers continue to tell a story of stagnation.
- Still, with the opening of the U.K. and China markets, Tesla is likely to still be able to meet Q2 deliveries guidance.
- A different story seems to be forming for Q3, Q4, with yearly guidance requiring re-kindled growth in Tesla's main -- and stagnated -- markets.
As is starting to be common with Tesla (NASDAQ:TSLA), the last month of the quarter will be absolutely crucial for it to aspire to even meet its own guidance. The same thing happened in Q1, with massive deliveries to Norway being the only thing that allowed Tesla to meet its numbers.
This time, guidance is for 7,500 deliveries, up from 6,457 delivered in Q1. On Tesla's side, there's the fact that Tesla is now delivering into the U.K. and China. Two new markets with pent-up demand ought to be enough to clear Q2's self-set barrier. Also, it bears reminding that Elon Musk has stated Q2 is already in the bag, with all of Q2's production already sold forward.
In light of the new markets and Q2 production already having been sold, it's hard to be too negative about the numbers Tesla will ultimately report. So why does the quarter still look like it will go down to the wire? This is so because of how existing markets are behaving. We've got some numbers for May, and they again don't look too exciting:
InsideEVs estimates Tesla's May deliveries at 1,000. This is down from 1,100 in April, and also down from 1,700 in May 2013. Furthermore, in the first 2 months of 2014 Tesla supposedly delivered 2,200 to the U.S. market whereas now Q2 is at the 2,100 mark.
Again, it continues to look as if deliveries in the U.S. have long peaked and that stagnation is the most which can be expected at this point. This will make things interesting for Q3, Q4, since to meet its yearly guidance Tesla will need to increase deliveries to existing markets, as it's running out of large new markets to expand into (except for Japan).
Tesla's second largest market after the U.S. is the small country (in terms of population) of Norway. Norway allowed Tesla to meet its Q1 deliveries guidance with a massive month of March. But at this point it, too, is looking peaked.
Tesla delivered 563 Model S in Norway during January and February. Now, in April and May it delivered 545 Model S (374 in May). So again, either there's a massive June coming in Norway or there too, deliveries will have peaked.
Tesla's deliveries guidance for the whole of 2014 amounts to 35,000 cars. If Tesla merely meets the Q2 guidance of 7,500 deliveries, it will have delivered 13,957 Model S in the first half of 2014. This would mean it would need to deliver 21,043 Model S in the second half, an average of more than 10,500 cars per quarter.
This need to increase deliveries significantly from Q3 onwards should become evident when Tesla reports Q2 and guides for Q3 deliveries. Tesla's major markets are showing signs of long-standing stagnation: The U.S. has had its deliveries peak as far back as Q2 2013, and even if we ignore the backlog-induced peak, current U.S. deliveries are running more than 20% below Q3 2013. This means that either Tesla re-kindles growth in these existing, peaked markets, or the 2014 guidance becomes unattainable.
While Tesla is likely to meet its Q2 deliveries guidance by leaning on backlog from China and the U.K., the fact remains that incoming data from its existing markets continues to show stagnated deliveries.
Q3 guidance should be crucial in showing whether Tesla can make its numbers for 2014. It's becoming hard to envision where deliveries will come from to allow for the necessary jump that's baked into the yearly guidance.