There is a certain predictive quality in looking at the ships Tesla’s has charted to ferry cars to Europe. In the past two quarters, the Europe/China ratio was 50/50, with the European vessels carrying some more cars than the ships bound for China.
Now, in this third quarter, the Europe/China ratio is 2/1. Of the first 9 ships planned so far, 6 have been destined for Europe. The first shipload has reached the delivery centers, the second is on quay in Zeebrugge. The third is on the Atlantic, the fourth is nearing the Panama Canal, the fifth is at Pier 80 at San Francisco being loaded, and the sixth is due early next week in port.
In the previous quarter, it was 7 ships going to China, 1 ship going to Japan, and 5 going to Europe, with the last ships leaving later in the quarter going to China, a much shorter journey. There is still room for one other ship to Europe that could arrive and deliver its cargo in time for third quarter deliveries, followed by a final ship for fourth quarter order fulfillments.
Most European sales are orders through leasing companies. They like to have the delivery on the prolongation date of the lease contract. That asks for a far more even delivery of cars over the quarter from Tesla. Deliveries too early or too late have financial consequences for the lessee and lessor.*
The production at Tesla’s factory in Fremont, California, has likely increased a bit in Q3 again. Europe is getting a larger part of that increased production. That creates an early, and longer, end-of-quarter rush, and likely a buffer for deliveries on the planned date in early Q4.
It looks now as if deliveries to China will be a bit lower, with fewer ships going that way, keeping orders in portfolio for delivery from GF3 later in the year.
That paints a picture of increases in Europe and the USA and delayed deliveries in China, and the expectation of panicky predictions of building a GF3 for an imploding Chinese market from the usual bearish suspects. Remember, you heard the announcement of those fairytales here first.
*To understand the European auto market for vehicles like the Tesla Model 3, in a lot of countries these cars are personal cars provided as company cars through a full operational lease in a fleet management deal between employer and lease company. Leasing is not a kind of financing option for individual car buyers.
Under these contracts, the employee can order a new car every 3–4 years at a fixed date. This applies to 70–90% of all Model 3s sold in some countries. It creates a completely different car market, with the employer telling the employee months in advance when to order a new car.
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