Tesla Only Has Tesla To Blame For Confusion Until It Publishes Data

Illustration for article titled Tesla Only Has Tesla To Blame For Confusion Until It Publishes Data

There's been a collective freak-out about Tesla's sales figures for the year. Specifically, there's a discrepancy between the cars Tesla claims to have delivered and the number of Model S sedans actually registered. Why? Because Tesla refuses to publish sales data like everyone else.


So far this year, Tesla has delivered 21,821 vehicles based on its first, second, and third quarter reports. Depending on the source, the data, and divine interpretation, the difference between deliveries and registrations ranges as low as 3,000 "missing" cars to as high as 12,000.

The reasons those numbers even exist – let alone vary that wildly – is because people are trying to figure out exactly how many vehicles Tesla has sold by using registrations and quarterly sales as an indicator. And since Tesla doesn't report sales on a month-to-month basis, nor does it break out regional deliveries, which it's done in the past, it gives analysts and wannabe pundits a place to speculate.

This is a problem.

During Tesla's third quarter earnings report, Elon Musk was asked by Merrill Lynch analyst John Lovallo why Tesla can't be more transparent about its sales figures. Here's what Musk had to say:

Part of the reason why we don't release the monthly deliveries number is just because it varies quite a lot by region and then the media tends to read all sorts of nonsense into deliveries. We'll have like 1000 cars reach a country one month and none the next month and then people — or like 100 the next month trickle in or something because those were the numbers that were registered in one month versus the next and people say Tesla sales dropped by a factor of 10.

The boat arrived in January and not all the cars got registered in January and some got registered in February, then in March, it's back up again and so people read in all these things which are — they assume deliveries are proxy for demand which is not the case. It is the case for other car companies, but in our case it really needs be parsed into orders and deliveries. Then bear in mind, there are lots of things we can do to amplify orders.

Orders is not a true measure of demand, it is just a measure of that's the amount of stuff we need to do to meet our production and delivery number. So if we released orders, people would try to read the tea leaves and say demand for Tesla is growing or dropping.

But reading the tea leaves is what Lovallo is paid to do, so he did some light digging. What he came up with was Tesla's 10-Q filing with the SEC for the third quarter, which revealed that the automaker had $226 million in finished goods on its books – by his math around 3,000 vehicles.

Lavallo penned a research note to Merrill Lynch clients, saying, "Tesla's finished goods inventory at the end of 3Q appears to tell a different story" and that "approximately 3K vehicles stocked in inventory or in transit".


To Lavallo's mind, that runs counter to what Musk said during the call:

Essentially in the third quarter we sold every car, that was including cars from like showrooms and everything we basically had. There was just nothing left to sell.


The "finished goods" line is key to Lavallo's argument. But Tesla's Q3 10Q filing pretty much negates it with one simple line: Finished goods primarily include Model S vehicles that were in-transit to our foreign locations for customer delivery.

So according to Tesla, those cars are on boats or at the dock waiting to be delivered to owners in countries outside the U.S.


As for the amount of finished goods – the $226 million – it's $24 million less in Q3 than what it was in Q2. That lends credence to Musk's assertion that they sold every Model S that wasn't bolted to the floor. So why is it an issue now? No clue.

But poring over SEC filings and hunting through registration numbers and trying to project and analyze and comb through all this data is useless. It's pundit fodder – a way for analysts to justify their jobs. And it could largely be eliminated if Tesla simply reported monthly sales numbers like the rest of the auto industry. But Tesla thinks it's special. It's not. And the sooner Musk and Co. accept that, the sooner these speculation-fueled estimates will cease to be an issue.


Matt Brown

I would expect more data like regional sales and monthly production numbers to just increase the amount of analyst speculation. It would just give more data for clickbaity bloggers to take out of context and could cause more turbulence in the stock. You'd see stuff like "Tesla sales drop in Finland by half!" simply because the boat showed up on the 1st of the next month instead of the end of the previous month.