Tesla should make a change to prove itself to Wall Street
- Tesla currently reports US sales on a quarterly basis.
- No other major automaker does this, following instead a monthly reporting protocol.
- Tesla should switch to monthly reporting - a signal that it will be selling many more vehicles in the future.
Tesla has never done things the way that other car companies do - and it probably never will.
But every so often it acts like a "normal" automaker. A while back, largely because everyone was spending a lot of time trying to figure out how many vehicles it was delivering, the company committed to releasing the numbers on a quarterly basis.
This still contrasts with how the rest of the industry handles US sales, reporting sales on a monthly basis - all usually on the same day.
"Sales day" is typically a pretty closely watched measure of how the overall US economy and the auto sector in particular is doing.
Tesla can skip this for now because the number is so low. A Tesla quarter might see 25,000 vehicles sold, which for Tesla means a customer takes delivery (major automaker all sell their vehicles in the dealer channel and can count that as a sale).
By contrast, Ford might sell that many F-150 pickup trucks in a week. But it won't be long before people start to care about how many cars Tesla is selling month to month - once it is cranking out half a million Model 3 sedans each year. It would be helpful if Tesla finally bit the bullet and started to report monthly numbers alongside all the other carmakers selling vehicles in the US. For several reasons.
Confidence in the future
The biggest is that monthly reporting would signal a high level of confidence among CEO Elon Musk and his management team that currently anemic Model 3 production - just 260 vehicles in the entire third quarter, versus 1,500 projected for just September - will give way to a more substantial roll-out from the company's Northern California assembly line.
If 2018 or 2019 is a going to be a 500,000-vehicle year for Tesla, and a million is just around the corner in 2020, then dropping a big quarterly number won't make sense. Far better would be a monthly number that allows Tesla to crow about being the EV leader while everybody else is still dealing almost entirely with gas vehicles. Sure, the company could wait until more production materializes - or it could get ahead of the game and report monthly deliveries sooner than expected.
Also important is the value of clarifying the pace of sales and providing some transparency on which models are moving. In the short term, Model S and Model X will deliver in much higher numbers than Model 3, and reminding Wall Street of that every month could help to refocus Tesla's story on what it's now doing well - selling $100,000 luxury electric vehicles and comparably lots of them - and push investors away from getting hung up on the awkward new-growth business, the Model 3.
No illusions
The flipside of the case for more disclosure is the damage that uneven sales reports could do. Tesla doesn't have the same kind of routine order flow than other carmakers, manufacturing vastly more vehicle, do.
I'm also under no illusions that Tesla might willing behave like a normal car automaker. The company's entire DNA, for better (often) and for worse (periodically) is set against it.
But this really wouldn't be much of a change. Despite the prospects for unevenness, it would represent what a lot of us do now anyway: take the quarterly number and divide by three after parsing out the European and Chinese data. The benefit would be that instead of waiting three months between this process, we could do it alongside the rest of the industry at the beginning of each new month, analyzing Tesla deliveries 12 times a year instead of four.
Tesla will someday have to report monthly whether it likes it or not. If it does sell a million vehicles in 2020, quarterly data will simply be too loose and baggy for anyone to make sense of. And I haven't even delved into what happens if Tesla is selling a big rig, a pickup or two, new versions of the Model 3, and perhaps a new sports car by then.
The company has a chance to lead the markets with information rather than speculation and become proactive rather than reactive. It should take the plunge now.