[slg]

This report is bad news for Tesla, but I think it disproves the "demand problem" narrative. Tesla delivered more cars than they could produce this quarter. Both delivery and production numbers were at record highs. The average sale price of the Model 3 remained stable. Meanwhile they are nearing production of the Model Y which is likely depressing demand of both the Model 3 and Model X. Once the Model Y is available, people expect it to have more ongoing demand than any of their current vehicles. Tesla has a lot of problems, but people not wanting their cars doesn't appear to be one of them.

[dyarosla]

Agree with most of the above except for the "Model Y likely depressing demand"- is there any indication that the Model Y is in demand at all?

[slg]

I personally don't have hard data on it, which is why I used qualifiers such as "likely" and "people expected". Tesla has repeatedly said they expect higher demand for the Y and that fits with what usually sells well in the market. Plus it addresses common complaints about the 3 being "too small" and about the X being "too expensive".

[dyarosla]

I’ve seen them say that and in the general it’s true, but Tesla has been hush on revelaing any sort of demand with the Y and it doesn’t seem like the Y is that much bigger than a 3 to entice those people who’re holding out on a low end Tesla due to roomy interiors.

[_ph_]

In most markets, sedans are in decreasing demand and the popularity of SUV/CUV vehicles is increasing. By that, the Y should be in larger demand than the 3.

Also, the Y addresses some of the tradeoffs made for efficiency on the Model 3: the missing hatch and the low second row. The Model Y will have a proper hatch, more cargo space, more vertical space in row 2 and optionally even a 3rd row of seats, increasing the attractivity for families with many children.

Putting that together, there is a lot of reason to assume the demand for the Model Y might eclipse the one for the Model 3.

[hadlock]

People with families strongly prefer crossover models and they've mostly pushed sedans out of the market. It would stand that an electric crossover would outsell a 4 door sedan.

[dyarosla]

Wouldn’t families strongly prefer a larger car period? Is the Y really that much bigger that it’d convert families who are holding out on a 3 due to size? I haven’t seen anything to suggest as much, and both the 3 and Y are def less roomy than other (albeit non electric) cars that families go for.

[new_realist]

ASP on the Model 3 has been falling quarter over quarter, as have margins. S and X demand and prices have dropped significantly.

Model 3 prices dropped yet again less than a week ago.

[slg]

Your comment directly conflicts with what was stated in this letter:

>During the quarter, a majority of orders continued to be for a long-range battery option and the Model 3 average selling price (ASP) was stable at approximately $50,000. At the same time, manufacturing costs continued to decline.

[new_realist]

Yes, the ASP was stable... during the quarter.

In 2018 the Model 3 ASP was above $57K.

[slg]

It is a bit misleading to use an ASP number from 2018 as a measure of demand since they weren't delivering the entire range of vehicles at that tine. Tesla started out focusing on the cars with a high price and margin which artificially increased the ASP over where it would naturally settle. Therefore a decrease from that initial high is not any type of indicator of demand.