Tesla Transparency On Orders, Sales, Production Fades: Do Owners, Investors Care?

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Tesla Motors CEO Elon Musk at Motor Trend 'Car of the Year' ceremony in New York City, Nov 2012

Tesla Motors CEO Elon Musk at Motor Trend 'Car of the Year' ceremony in New York City, Nov 2012

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On February 11, electric-car maker Tesla Motors will release its 2014 earnings and hold a conference call for financial analysts to discuss them.

If recent patterns hold, the company won't disclose a number of the important operating metrics that reveal how well it's doing.

In fact, over the last two years, Tesla has quietly stopped providing several pieces of data it routinely reported when it launched the Model S electric luxury sedan.

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An article two weeks ago on the investing site SeekingAlpha notes that "Tesla is disclosing less and less information about its operations."

The article, titled "The Incredible Shrinking Tesla Disclosure," also points out that the company recently stopped providing Model S production data, a crucial indicator of its current level of operations.

2014 Tesla Model S P85D, road test, Dec 2014 [photo: David Noland]

2014 Tesla Model S P85D, road test, Dec 2014 [photo: David Noland]

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Tesla is hardly alone in highlighting only information that reflects best on its operations, especially if those operations may not be going according to previously announced plans.

But at some point, investors and analysts may start to ask why the company won't say how many cars it sold in each country, how many orders it's received for its cars--or even how many cars it's built.

Lack of transparency could be a cause for nervousness, among not only those in the finance industry but among Model S owners and Tesla advocates alike.

"Every time Tesla stops disclosing a piece of information," the article concludes, "it happens because disclosing that piece of information could lead to negative interpretations of the data."

ALSO SEE: How Many Tesla Model S Electric Cars Have Been Built So Far?

And that appears to be at the crux of the matter.

CEO Elon Musk doesn't trust anyone--financial analysts, journalists, or the company's legions of supporters--to understand the context and background behind Tesla's operating metrics.

Tesla Motors CEO Elon Musk at Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Motors CEO Elon Musk at Tesla Store opening in Westfield Mall, London, Oct 2013

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So the company simply won't quantify what it's done, settling mostly for sweeping generalizations and a focus on its future plans.

Its financial reports provide the data in dollars on its operations, of course, as legally required by the Securities and Exchange Commission.

But the high-level summaries--how many cars were built, or sold--have lately gone missing.

Those monthly sales

It all started in mid-2012, after Tesla began delivering Model S production cars, including the first 1,000 known as the "Signature Series," to its very earliest deposit holders.

First production 2012 Tesla Model S [detail from photo by evancharlesmoore on instagram]

First production 2012 Tesla Model S [detail from photo by evancharlesmoore on instagram]

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The first Model S went to Silicon Valley venture capitalist and board chair Steve Jurvetson--and within months, a Tesla Model S was the hot new car to have in Silicon Valley.

Tesla declined to give its monthly sales that year, a not altogether unreasonable decision as production slowly increased and the company faced parts shortages from suppliers who had tooled up for only a fraction of the necessary production.

MORE: Why Is Tesla Scared To Release Its Electric-Car Sales Data? (Jun 2012)

Two and a half years later, Tesla still declines to provide monthly sales--in the U.S. or any other market--as every other automaker does, including low-volume specialty makers with only a fraction of Tesla's volume.

(Think Ferrari, for instance, which limits itself to producing 7,000 cars each year.)

2012 Tesla Model S display screen [Photo: Flickr user jurvetson]

2012 Tesla Model S display screen [Photo: Flickr user jurvetson]

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Reservations long gone

Meanwhile, the company's practice of revealing reservations--which it had done in quarterly reports from the time of its initial public offering in June 2010 through the end of 2012--ended with first-quarter results in 2013.

The company said in its report only that "quarter-end reservation data is no longer a meaningful metric, nor is it comparable to prior quarters," due to a change in the reservation process.

So an indicator of demand was no longer being discussed.

Instead, Musk habitually reiterates during many of the quarterly analyst calls that Tesla is constrained not by demand, but by its production capacity.

That assertion, however, can no longer be backed up by publicly available data.

1,000th body for 2012 Tesla Model S on display at Tesla Motors factory, Fremont, CA, Oct 28, 2012

1,000th body for 2012 Tesla Model S on display at Tesla Motors factory, Fremont, CA, Oct 28, 2012

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Sales could still be approximated by the company's quarterly reports of U.S. deliveries, which it reported for the U.S. during and then for Europe as that market came online in 2013.

But any breakout of deliveries by market vanished after its fourth-quarter report for 2013. Only the total global delivery number was provided.

Model S production numbers

Still, if delivery and reservation data are diffuse, at least Tesla reported each quarter how many cars it had actually built during that three-month period.

As the SeekingAlpha article documents, that practice too ended with its third-quarter 2014 results.

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

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Rather than providing the number of cars it built during the third quarter (8,763 for the second quarter), the company said only that production had been affected by a factory shutdown for retooling that had taken longer than expected. No data.

Tesla also declined to project the next quarter's production, as it had previously done.

Based on observed serial numbers, Green Car Reports estimated earlier this month that total Model S production had crossed 70,000 cars.

A cogent analysis by owner Ben Reser suggests the total is lower than that, because not all serial numbers are assigned to cars produced sequentially.

All in all, the SeekingAlpha article concludes:

There is a pattern emerging regarding Tesla's disclosure of information. In this pattern, every time a piece of information that's being disclosed turns negative, Tesla immediately ceases disclosing it.

It happened with orders/reservations/cancellations, then with the geographic breakdown of deliveries and now with production data.

It remains to be seen what Tesla will choose to disclose in its fourth-quarter and 2014 year-end financial results.


 
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