Tesla built more cars than it could sell in Q1 2023

Sales grew 36% YoY, but much more is needed to reach 1.8 million cars in 2023.

Credit: Smith Collection/Gado/Getty Images

Sales of new Tesla electric vehicles rose for the first quarter of 2023, according to sales and production figures released by the EV maker on Sunday. For the three months between the start of the year and the end of March, Tesla delivered 422,875 EVs; in 2022, they managed 310,048 deliveries during Q1.

That represents a 36 percent increase year on year for the EV company and a 4 percent increase from Q4 2022.

As expected, the vast majority of its sales were split between the Models 3 and Y—Tesla does not break out details any further, nor does it report by regions. In Q1 2023, it delivered 412,180 Models 3 and Y, 5 percent of which were leased.

The recent price cuts may have helped shift some metal—despite some yo-yoing up and down, a Model Y is $11,000 cheaper today than at the start of the year.

A counterpoint to that argument can be found by looking at how the aging Models S and X are doing. The answer? Not great. Substantial price cuts in January and March do not appear to have moved the needle (at least not in the right direction), and Tesla delivered almost 50 percent fewer of these EVs—just 10,695—for the first quarter of this year than the first three months of last year.

In fact, Tesla was left with almost as many Models S and X on hand as it could sell, building 19,437 for Q1 2023. A similar number of Models 3 and Y were built but left unsold as well. This is becoming a growing problem for Tesla. In Q1 2022, it sold 5,000 more EVs than it built. In Q1 2023, it built 18,000 more EVs than it could sell, which we can add to the 56,000 unsold EVs it reported at the end of 2022.

In presenting its 2022 financial results, Tesla said it expects to grow sales by 50 percent and will sell 1.8 million cars this year, although CEO Elon Musk has been more ambitious. But to achieve those goals, the company will need to ramp sales much higher for the rest of the year if it doesn’t want to disappoint investors again.

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Bongle

Oh, that's easy. Traditional OEMs don't sell cars to the customers. They have their contractors which are obliged to buy the cars. So every car procuded by a traditional is sold according to their own books. Whether the cars rot at the contractors isn't a concern to them.

It still is a problem for them: Dealers will start demanding price cuts, rebates, marketing, or more desirable vehicles to sell. If GM produces a million duds that nobody wants to buy, sure they'll foist them on dealers, and dealers do provide a traditional manufacturer with a buffer. But the dealers won't continue buying shitty unsellable vehicles forever.

Back in the early ages of recorded history, ok the late 90s and early 2000s, cisco was regularly meeting their sales expectations by a few bucks. Of course, they were also growing rapidly so what they were really doing was managing shipments so they could meet rather than exceed Wall Street expectations. The first day of the next quarter they shipped a bunch of backlog and went on about their business.
I’m beginning to believe Tesla is doing the same thing.

This would be an OK theory, except Tesla's stated growth goal is 50% YoY, and 36% is significantly less than that. Tesla's insane share valuation needs them to hit those growth targets or else they're just a regular small car company valued based on profits now, which would result in a ~80% share value cut. The current share price assumes they're going to be producing ~double that of Toyota within a couple years.

April 3, 2023 at 2:03 pm