Tesla delivery waves and why they are important to understand the figures

Tesla production facility
Photo by Martin Geiger on Unsplash

If you are a Tesla follower or investor who keeps an eye on the latest news, there is a leitmotiv that has been spreading within the media for the past two years: “Competition is coming”.

Tesla has been enjoying a high market share in the EV industry for the last few years but this is about to change, not because Tesla should fear competition but because of maths.

As more and more companies are selling EVs, the market share is going to split between them, that’s common sense. The figure we have to look at is global vehicles sales.

During 2021 some media have been focusing on biased figures like monthly sales and local sales. Not that some Tesla superfans have also taken advantage of Tesla’s supply and export routines to remark higher sales in specific regions and periods, but we have to be careful when we look at these data.

How Tesla manages their production and sales schedule

Today, Tesla has 2 vehicle production facilities: one is located in Fremont, California, and the other in Shanghai, China. Due to their very limited production compared to demand, Tesla cars are not sold all over the world, but only in specific regions and countries. These regions and countries are North America (the USA, Canada, and Mexico), Europe (most EU countries Switzerland, Norway, and the UK), China, Japan, and Australia. Also, there are stores in Dubai (UAE) and Tel Aviv (Israel).

With only two factories in two continents, Tesla has to plan very carefully their export plans so their inventory doesn’t build up too much and affect quarterly results. In the last years, Tesla’s valuation has grown significantly and vehicle sales are very important to be accounted for within each quarter.

Until mid-2021, the main export hub was the Fremont factory, as Shanghai was still ramping up, so what the company would do is, at the beginning of each quarter, the production would get ready for export, the cars would be built and shipped mainly to Europe for sales within the quarter. Once exports were covered, they would start production for the US market.

This is why we saw that sales are so condensed in certain periods, and mainly at the end of quarters when exports arrive at their destinations and local production that starts at mid-quarter go on deliveries.

If a medium wants to remark how low Tesla’s sales have been, they just have to point out the figures for the first months of each quarter when most of the production is loaded into ships and freighted abroad.

If another medium wants to praise Tesla, they just can report the excellent last months of every quarter when local production turns into sales and overseas deliveries get to their destinations.

Since mid-2021, Tesla’s export hub has moved to Shanghai as production has been ramping and today similar patterns can be seen for sales in China. Low figures the first two months of every quarter and strong figures the last month. At the same time, although we don’t have official data, sales in the US are getting even along months.

But now, 2021 is over and we have full-year data

Tesla doesn’t break down sales per region, but in certain countries, public administrations gather and publish sales data with specific brands and models.

In China, December 2021 was the strongest month ever for Tesla. According to China Passenger Car Association (CPCA), 70.847 China-made Teslas were sold. This is 3 times more than the same month last year and a 26% increase over September figures (September is the right month to compare to as we discussed).

In Europe, although all Teslas have to be imported yet, Tesla has shown massive strength against European brands mainly in the UK, Norway, Germany, and France. This is before Giga Berlin starts production so all European Teslas sold are made in China. This also explains why sales figures start slow at the beginning of every quarter and finish strong once the ships arrive in Europe.

In the past, EV sales were never compared to ICE vehicles sales due to the huge difference in volumes but we are at the sweet spot where EVs are starting to stand up in total vehicles sales.

For example, in China, the Model Y has been the best-selling luxury SUV surpassing the BMW X3 and in the UK the Model 3 was the second best-selling car in December only after the Corsa which has a price tag 3 times lower.

What to expect in 2022

This year will be massive for Tesla. With Shanghai still ramping at an annualized production rate of more than 800.000 units, Fremont ramping Model S & X and Berlin and Austin opening this quarter (maybe this month), Tesla will be closer to its bigger markets and as Berlin ramps up production, Shanghai can export to the Middle East and Australia alone and concentrate their efforts in the biggest car market which is China.

Austin will start production of Model Y to beat Model 3 sales in the US rapidly and Berlin will also flood the European market with this SUV.

I bet Model Y will be the best-selling SUV in Europe by the end of 2022 or the beginning of 2023. Massive figures from all factories will bring hundreds of thousands of them.

Also, once Berlin steadies production, we might see these waves soften and it will be easier to follow the trends.

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