In July, I wrote an article predicting Tesla Motors Inc (NASDAQ:TSLA)’s deliveries for the second quarter. On August 7th, Tesla presented its earnings and exceeded every expectation by delivering a total of 5,150 units. As a result, the stock price soared above $150 a share. In my article previous to Tesla’s earnings, I estimated the deliveries to be between 5,000 units and 5,500 units.
To predict these figures, I track the Vehicle Identification Numbers (VIN) that new Model S owners release on forums. A VIN is a unique code including a serial number, used by the automotive industry to identify individual motor vehicles. A VIN is assigned once the car enters production or when the order is confirmed.
The last sequence of numbers in a VIN is a simple sequential number, indicating the amount of vehicles manufactured up to the individual car. Therefore, it can be used to track the number of units being produced. Since Tesla does not release monthly sales or deliveries statistics like most of its competitors, this number can be quite useful.
Tesla is ramping up production
If we take a look at this chart from Tesla enthusiast and forum contributor Craig Froehle, we can clearly see that the rate of VIN assignment is increasing considerably:
The red line represents the rate of VIN assignment when I wrote the first article a month ago, and the blue line represents the current rate. It shows a solid improvement in a very short period of time. As of Aug. 19, Tesla was issuing VINs at a rate of 569 a week; annualized, that adds up to 29,600.
The increase coincides with the first cars being delivered in Europe. With more than a dozen locations in the EU already, I think Tesla has high hopes for this particular market. In the last earnings conference call, Elon Musk estimated the demand for the Model S at 40,000 units in 2014, half of which should come from Europe. He also insisted that the difficulties Tesla is currently facing have more to do with production than with demand.
At this rate, it looks like Tesla is going to reach 700 units a week before the end of the year, and then the 800-unit mark sometime next year, for a total of 40,000 units in 2014. This is great news for the shareholders — but bearish analysts following Tesla still think that the company is not growing fast enough to justify its enormous $18 billion market cap.