Tesla records lowest order backlog in 12 months

The order backlog for Tesla vehicles is dropping and not by small margins - compared to October when there were estimated 285,000 orders in the pipeline, November was the lowest month in over a year with just 190,000 orders left unfulfilled. Is that good news or bad?

Tesla’s order backlog reached its peak in July of this year with an estimated 476,000 vehicles stuck in order books. While it is never a good idea to have the customers waiting for cars for months on end, it's good news for investors and for the company to have secured sales for its production for the near future.

Since July, Tesla’s backlog has been shrinking and in November it reached the lowest point in the last 12 months - just 190,000 customers were patiently waiting for their cars. A Twitter user Troy Teslike has been tracking Tesla’s performance and has become a respected source of information. The 190,000 orders backlog represents only 44 days of production thanks to Tesla’s recent ramp up.

Hi everybody. Based on my calculation, Tesla's global order backlog was 190K units on 30 Nov, down from 285K on 31 Oct.

The drop happened mostly in the US where some buyers are deferring until Jan to get the $7,500 tax credit.

Part 1/3

15 Dec update: https://t.co/XQVY4mQL2v pic.twitter.com/SGxS0l8eve

— Troy Teslike (@TroyTeslike) December 16, 2022

There are obviously few things happening here at once - first is Tesla's unstoppable push to increase the production across all of its factories. Giga Texas has just celebrated achieving 3,000 Model Ys produced in a week which brings the factory to a level of 150,000 vehicles a year. Giga Berlin is not that far behind with 2,000 vehicles a week.

That is just a start - company wants Giga Texas to churn out 75,000 vehicles in the first 3 months of next year - that’s 300,000 cars a year or double its current production level. The final target capacity is half a million cars leaving Texas every year, including the long awaited Cybertruck.

Giga Berlin was planned to follow Texas with 500,000 vehicles a year, then the company wanted to expand it even further to achieve 1 million cars capacity but now everything seems to be up in the air with plans being changed. Even if the Berlin factory sticks to its original plan of half a million cars a year by 2025, it’ll be a lot for Tesla to sell.

Here is a chart that shows how the backlog has changed in Europe, China, and the US.

I have just posted a new calculation here: https://t.co/XQVY4n8lU3 It will be on Twitter in two weeks.

Part 2/3 pic.twitter.com/b1WwgXrQrY

— Troy Teslike (@TroyTeslike) December 16, 2022

The production from those two factories pales in comparison to Giga Shanghai - with 22,000 cars a week that factory alone is already looking at over 1 million vehicles manufactured next year. We have seen the results of the production ramp up already - waiting times have been dropping from months down to weeks and customers are celebrating their early deliveries.

The other side of this situation is reduced demand for Tesla’s cars. There is no question that the company seems to have lost a bit of a shine and its cars are suffering from increased competition. While Tesla was a lone player for a while, the other manufacturers are catching up quickly. Tesla cars may be better in many ways but customers like choice and not everyone is interested in performance.

The company has been offering incentives to its Chinese customers for a while now, the UK customers are being enticed with 6,000 miles worth of free charging if the place orders before the end of this year. The market is simply catching up with the company and the reality bites - Tesla is not immune to customers changing demand.

In the US many customers are putting their purchase on hold until next year when some of Tesla models will qualify for the $7,500 EV credit tax. The results of the increased production and lower demand means that some of the Model 3 and Model Y have no order backlog at all and are available for immediate delivery - that has never happened before.

Here is a detailed table. The calculation is based on the production rate of each model and the wait times for new orders shown on Tesla's website

If you look at the backlog in the US, you can see that 3 out of 5 Model 3/Y trim levels had no backlog.

Part 3/3 pic.twitter.com/INiwQ764sg

— Troy Teslike (@TroyTeslike) December 16, 2022

What’s next? In theory - if the demand doesn’t increase significantly - Tesla will be manufacturing more cars than it can sell if it ramps up production as it plans to. Although it is a highly unlikely scenario, if it did happen the company would be in a precarious situation - a victim of its own success.

We should expect a strong sales push from the company, maybe we’ll see the first marketing campaign? Price reductions would be a welcome move for Tesla’s customers and the company has plenty of room to wiggle with the prices but it will take a drastic market change for Tesla to consider price cuts - never say never.

Next year looks to bring a bumpy ride along for Tesla and with its CEO distracted by his many ambitious projects, the company may need a new captain to appease the investors who are increasingly getting vocal. Tesla’s shares have been sliding steadily and haven’t been this low since 2020 - two years of progress have been wiped out in just the last few months. With more investors abandoning the ship, the call for change at the top is getting louder every day.

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