Tesla’s Q3 unit deliveries estimated to be just over 97,000

Whitney Tilson’s email to investors disussing the concept cars gleam, but executive dread clouds the Frankfurt Auto Show; Anton Wahlman on Tesla Inc (NASDAQ:TSLA)’s Q3 unit deliveries.

1) Good background on the auto industry: The Concept Cars Gleam, but Executive Dread Clouds the Frankfurt Auto Show. Excerpt:

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Q2 hedge fund letters, conference, scoops etc

Car executives are paid to be optimists, but behind the pomp and salesmanship at the Frankfurt International Motor Show this week lurked an unmistakable sense of angst.

The talk among industry insiders at the show, one of the auto industry’s biggest events, reflected the existential threats that carmakers face.

The European and global auto markets are in decline. Carmakers are betting their futures on electric vehicles whose marketability is untested. Manufacturers are under intense public and regulatory pressure because of the role that vehicles play in climate change. The global trade war has disrupted supply chains.

2) I read this Twitter thread with interest. It begins:

@jpr007

TESLA STRONG EUROPEAN SALES 2019 Q3 WIP Three “benchmark” countries going strong . . .

Q3 unit deliveries

I asked Anton Wahlman for his take on it, and he replied (shared with permission):

The article quoted in the email thread below is not my most recent article on the subject; it is from August 12, over a month ago.  My most recent article is from September 4 and it estimates Tesla's Q3 unit deliveries to be just over 97,000:

https://seekingalpha.com/article/4289683-august-numbers-tesla-path-disappointing-97000-q3

Since September 4, the only news has been from the three European countries where we get daily sales data.  Among those three countries, compared to my expectations as of the morning of September 4, The Netherlands is tracking above, whereas Norway and Spain are tracking below.  On a net basis *among those 3 countries*, there is a net impact to my full Q3 projection of almost 2,000 units, which means that my current estimate, all other things equal, is closer to 99,000 units.

But here is the other twist:  We kind of know why The Netherlands is tracking so strongly right now.  Their tax incentive is going to be reduced on January 1.  That is why the situation in The Netherlands is essentially unique in Europe right now.  Barring any change in legislation, Tesla's sales in The Netherlands will collapse 95% in January.

So the question we must ask ourselves is: Does the rest of Europe look more like The Netherlands, or more like Norway and Spain?  I would submit that it looks more like Norway and Spain, for the reason mentioned above.

It is of course true that the UK is seeing the initial sell-in of the Model 3, but that was already known in late June.  I had estimated 2,000 Model 2 units for the UK for August.  The actual result turned out to be 2,082.  That's about as close as one could have ever conceived.  I have 3,000 for September, which is basically just a wild guess.

We are of course missing many of the most important numbers in order to get to within a certain 10% guess for the quarter.  In the end, it's just too early to say whether the unit number will be closer to 88,000 or 107,000.  As I said, my estimate had been 97,000 but as of the last couple of days I have been leaning closer to 99,000.  That still leaves plenty of room for Tesla to report something in the 88,000 to 94,000 range.

When in doubt, I have been saying for multiple years now that Tesla will prioritize units over margins.  They will move the units, whatever the discount may be, if at all possible.  Very rarely does the company fail to do so.  Q1 2019 was such a quarter, but Q2 2019 was not.  I don't believe Tesla will fail to do so in Q3 2019 either.  I think the baseline is 95,000 to 97,000 and that will likely be very close to the final result based on what we can see to date.

Having just come back from Europe and met with the various automotive managements, they are slow-walking EV deliveries in 2019 in anticipation of the new European quotas that start on January 1, 2020.  That's when they will crank up the deliveries.  The longer-range Hyundai Ioniq, the new Renault Zoe 2.0, the VW ID.3, and many others, will hit with full force in 2020.  Mercedes EQC deliveries have begun, but will remain very small until January 1.  MINI and BMW iX3 all crank up volumes in 2020, plus Volvo XC40 and Polestar 2, among many others.

Here are the Model 3 numbers for Q3:

Model 3 Jul Aug Sep Q3 2019
Germany 454 405 1000 1859
Norway 308 649 2000 2957
Netherlands 590 1180 5000 6770
France 304 213 900 1417
Switzerland 186 151 600 937
Belgium 112 164 400 676
Austria 111 99 300 510
Italy 132 71 300 503
Finland 54 50 100 204
Spain 87 63 330 480
Portugal 88 52 300 440
Luxembourg 26 15 100 141
Sweden 453 148 600 1201
Denmark 102 96 400 598
UK 440 2082 3000 5522
Other Euro 11 80 100 191
EUROPE 3458 5518 15430 24406
EV Blogspot 3478
TMC Euro 3458 5518
Carsalesbase 3441
USA 13450 13150 20000 46600
Canada 1108 1000 2000 4108
N AMERICA 14558 14150 22000 50708
Australia 0 500 1000 1500
New Zealand 3 57 300 360
China 1182 1400 2800 5382
ASIA 1185 1957 4100 7242
TOTAL 19201 21625 41530 82356
EV Blogspot 19057



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Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver