Tesla's Sudden Chinese Billion, Where Are The Cars Behind It?
A few days ago, Bloomberg sifted through Tesla Motor’s Form 10-K, AKA the annual report filed with the U.S. Securities and Exchange Commission
In search of something good, Bloomberg found that “Tesla Inc.’s revenue from China last year tripled to more than $1 billion.” That headline whirled around the globe, and by now, the world is convinced that Tesla tripled the cars sold in China. Let’s see whether that perception jibes with reality.
How did Tesla make all that money in China? No clue coming from Bloomberg. How many cars did Tesla really sell in China? Officially, nobody knows. Tesla doesn’t supply per-country numbers, saying that journalists are too daft to read them. The vacuum creates stories like this one. Or Bloomberg's. There is no unit sales number in the 10-K that would back-up the astounding Chinese revenues. Actually, I could not find any unit sales number at all in the annual report, and it wasn’t for a lack of trying.
This forces us to use alternate sources.
The usually quite reliable EV-Sales blog (its author, Jose Pontes, has been portrayed here), says that 7,548 Tesla cars were registered in China in 2016. For all of 2015, Tesla China registrations are nowhere to be found. Last data point is November 2015, when EV-Sales said that 4,125 Tesla cars were registered in China. So let’s call the year-end number 4,500 (and that’s without accounting for the Tesla-typical year-end spike, see below.) According to that, Chinese customers would have registered a generous 68% more Tesla cars in 2016 than in the dismal 2015. While a respectable number, it would simply be in-line with the growth of China’s NEV market, which was up 61% in 2016, as EV Volumes says.
However, 68% definitely is not indicative of a near tripling of sales, as the Chinese revenue number would make believe. Electrek, an unabashed Tesla fanzine, helpfully says that the $1 billion in revenues “should represent over 11,000 vehicles delivered.” Indeed it should, but where were they delivered?
I turned to professional car counters. The UK data house Jato Dynamics is considered one of the best in the business. They power marketing departments of automakers around the globe with solid, reliable data. Analysts without access to JATO fly blind.
JATO spokesman Juan Felipe Munoz-Vieira noted that “there was a strong peak in Tesla’s sales in China in December, notably higher than the previous peaks seen during the whole year.” Tesla’s China sales show the same pattern as Tesla sales around the world, they tend to spike in the last month of the quarter. December was much more unusual than the usual last month of the quarter. “In December, the Model S sales totaled 1,210 units, which is definitely higher than the regular average and 38% higher than the peak months,” Munoz-Vieira said. All that in a December 2016 that was “particularly disappointing” for Chinese plug-in sales in general, as EV Volumes noted.
It may reek like front-loading to make the 2016 number, but it still does not explain the huge gap between the 2016 revenue reported by Tesla, and the 2016 retail sales reported by professional, and semi-professional car-counters. The source of Tesla's sudden riches remains a mystery. It is especially mysterious that Elon Musk hasn’t sent many tweets espousing Tesla’s sudden Chinese cash generation.
There is a persistent rumor in China that a big chunk of Tesla cars was sold to wholesalers at a big discount. Grey market sales in China are rampant, and one could buy Teslas from grey importers long before the company entered the market. It also is quite easy to get lost in Chinese statistics. It is a big country, and “China is confusing at the best of times,” told me Matthias Schmidt, who edits the AID Automotive Industry Data newsletter. “I see so much contradictory data from China, I'm always a bit reluctant to go near it.” I have lived there for 8 years, and I agree with Matthias. Treat all numbers from China with caution, including all of the above.
To prove or disprove the Chinese chitchat, I asked Tesla’s global comms director Dave Arnold whether it is “possible that Tesla cars went to resellers in China in Q4 2016?”
No answer was received.
P.S.: Do not attempt any math based on data published by alternate sources. Published U.S. and China Tesla “sales” numbers are, often extremely rough, estimates. EU, Japan are registrations; even those can, and are being manipulated. There can be big time gaps between production, importation, delivery, and registration. “Sales” math could produce errors bigger than total China sales. Without official by-region data from Tesla, everything is a hazardous guess. Bottom line: Tesla has not said it sold 11,000 units in China. The source of the $1bln sales has not been revealed. The wholesaler rumor has neither been confirmed, nor denied, and Tesla was given ample time to do so. That's all we know, and Tesla shareholders deserve to be better informed. If “13,310 units of Tesla were shipped to China, according to the record from China's Customs and Border,” as Forbes economics contributor Junheng Li wrote in the comments, then where are they?
P.P.S: On Sunday, JATO graciously donated its complete 2016 Tesla China dataset to this cause. You would normally pay big $$$ for that.
It shows the "spikyness" mentioned by Munoz-Vieira. The data are completely different from what has been published in EV Sales and other media, and it illustrates the dangers mentioned above. As for the provenance of the data: In the years before, JATO would supply hard registrations. In 2016, it changed its source in China (and won't supply year-on-year comparisons because of this.) Now, JATO's China data "are being logged nearer to the vehicle sale date," Munoz-Vieira said. The wholesaler riddle is still unsolved. And if Junheng Li and JATO are right, then some 3,000 Teslas were in China, and unsold by the end of the year. Tesla's intransigent in-transparency does not prevent confusion. It creates it.
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