Thread by @JCOviedo6

As we enter September (the 3rd month of Q3), $TSLA is in need of another "miracle" in order to hit its delivery guidance.

In its Q2 investor letter, Tesla wrote "We are working to increase our deliveries sequentially and annually, with some expected fluctuations from seasonality. This is consistent with our previous guidance of 360,000 to 400,000 vehicle deliveries this year."

Q2 deliveries were 95,356. Guidance therefore implies Q3 deliveries of >95,356. Sell side estimates are currently for deliveries of around 96k in Q3.

YTD Tesla has delivered 158,375 vehicles. To hit the low end of its annual guidance Tesla needs to deliver 201,625 vehicles in H2

So how is Q3 looking?

Starting with the S/X. Tesla delivered 12,091 S/X in Q1 and 17,722 in Q2. In Q2 Tesla ran large discounts to sell inventory vehicles with deliveries outpacing production by 3,205.

Without this inventory liquidation, Q3 is likely to be below Q2 levels

Tesla produced 14,163 S/X in Q1 and 14,517 in Q2. Q3 production is likely to be similar to these levels. If we assume that Q3 deliveries are roughly in line with production, Tesla is unlikely to deliver more than 15k S/X in Q3 and potentially could deliver closer to Q1 levels.

Moving onto the Model 3. Starting in China, Tesla delivered ~1,800 Model 3s in July. Given the decline in Chinese EV subsidies at the end of June, there is little reason for sales to rebound over the remainder of Q3.

According to @Paul91701736, Tesla has shipped ~6k Model 3s to China. This likely represents the upper bound on potential Q3 China Model 3 deliveries for Tesla

https://twitter.com/Paul91701736/status/1167603419076382720

In Q3, Tesla began to deliver meaningful volumes of the Model 3 to the U.K. Tesla has shipped roughly 8k right hand drive Model 3s to Europe likely representing an upper bound on potential U.K. deliveries in Q3.

In Europe outside of the U.K. on first glance in the daily reporting markets Tesla Model 3 registrations appear to be running slightly ahead of their Q2 pace.

However, the improvement in these markets is entirely due to a 101% increase Q3 QTD vs. Q2 QTD in Netherlands Model 3 registrations.

Despite the SR+ being delivered in Norway for the first time, Norway Model 3 registrations are down 37% QTD from Q2 QTD levels!

So what is going on in the Netherlands?

Tesla breaks out revenue from the Netherlands in its 10-Q filings. If you divide the reported revenue by total registrations it implies a 73% increase in revenue per vehicle.

Mix and price didn't change clearly somethings up

Most likely Tesla "sold" more cars in the Netherlands than were registered. We know Tesla did some fleet sales in Q2 in the Netherlands but how much?

Tesla cars sold but not registered in Q2 will be a headwind to Q3 reported deliveries.

subtwt.com/?p=837

If we assume the revenue per registered vehicle in Q2 should have been equal to Q1, it would imply vehicle "sales" in Q2 were more like 6,000, i.e. Tesla sold roughly 2,500 cars to 3rd party fleet companies (most likely leasing companies) to be registered later.

Channel stuffed

Other European markets are reporting sizable declines in Model 3 registrations consistent with the 40% drop in Norway. We will know more in the next few days as August numbers from Germany, Switzerland and other major markets are reported.

Tesla has shipped ~9k-10k Model 3s to European markets outside of the U.K. here in Q3. The drop in shipments to these markets is roughly consistent with the ~40% drop in registrations in these markets.

Given the reported registration data, it would seem likely that 10k Model 3s is near the upper bound for Model 3 deliveries in Europe outside the U.K.

In Canada, Tesla sales are likely to decline materially from Q2 levels after the British Columbia government reduced its EV subsidy from C$5,000 to C$3,000 in late June.

A reasonable estimate for Q3 Model 3 deliveries in Canada is 5,000

vancouversun.com/news/local-new…

Tesla has some nominal deliveries of the Model 3 to other markets like Australia, Mexico, New Zealand, Macau, and Hong Kong in Q3. In total these markets are unlikely to be above 2,000 Model 3s.

Putting this all together total Tesla deliveries outside of the U.S. Model 3 are likely to be no more than 46,000.

Assuming Tesla is able to deliver 46,000 non-U.S. Model 3 vehicles, Tesla would need to deliver 50,000 Model 3s in the U.S. in Q3 in order to meet its Q3 guidance and sell side estimates.

Here is a list of the required U.S. Model 3 deliveries to hit various total delivery #s

So what's a reasonable estimate for QTD U.S. Model 3 sales.

U.S. Website traffic to tesla.com has been down materially in Q3 2019 vs. Q2 2019 levels and has been more consistent with Q1 2019 levels.

Similarly, Google searches for "Tesla + Model S + Model X + Model 3" have fallen to levels materially below Q2 2019 levels and only slightly above Q1 2019 levels

U.S. QTD Model 3 sales are likely less than QTD sales in Q2 2019 (24k InsideEVs est.) and higher than QTD sales in Q1 2019 (12,250 est.)

Based on the weaker web traffic and search interest, Q3 QTD sales are likely around 21k. IEV July 2019 Model 3 sales estimate of 13,450

If we assume Tesla has delivered 21k Model 3s in the U.S. QTD, the implied deliveries in September to reach different total delivery numbers are as follows

Historically, the 3rd month of a Q has varied between 38% and 47% of Model 3 sales in the U.S. according to data from InsideEVs.

Absent a new round of massive price cuts, there is no reason to believe there is magically going to be a material acceleration in September Model 3 sales. Assuming 21k QTD sales, the number of Tesla deliveries by the % of Q3 deliveries in September is as follows

At a super high 47% of Q3 delivered in September, Tesla would only deliver ~39,600 Model 3s in the U.S. and 85,600 total vehicle deliveries. This would be a major miss versus expectations.

In conclusion, Tesla needs a miracle in the U.S. in September to hit its Q3 and 2019 guidance. Elon will have to launch massive price cuts this week if he wants any chance of coming anywhere close to guidance.