2017 Investor Roundtable:General Discussion

[Lessmog]

They can’t beat this beautiful “reporting” by FT



First, they said the cars were made by hand. Now that the video evidence disprove that FUD, it is actually the robots themselves being operated by hand!! LOL.
How can you even operate a Kilauea robot by hand??? The precision required to align by hand makes it impossible

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Well, there is this approach ...
Don't know if it will embed, but it is apposite.
Apparently not. One-minute video constructing a carton Lego-man, man-powered.

Vlastimil Hovan Retweetade
Fieras de Ingeniería‏ @fierasdelainge 11 okt.




Construyendo un muñeco Lego de tamaño humano con cartón.

1:00 / 1:00
28 svar 1 858 retweets 2 741 gillanden

 

[30seconds]

The thing about Tesla/ Musk that I both admire most and derive the most frustration with is their inability to leave well enough alone.

In the case of the Model 3 we seem to have left the concept of the alien dreadnought for a few quarters, but I am assuming that Tesla is looking to fully automate all sorts of production steps in an integrated fashion that hasn't been done before.

Shooting high, falling down along the way, getting up and trying again.

The process is very very messy (model S roll out, supercharger roll out, GF roll out, model X roll out, power wall, powerpack, autopilot (ongoing) roll out, full self driving (not at all) roll out, solar roof (not yet), model 3 (hardly) roll out, semi (sidelined)) but substantial progress is made.

By the way all of these, more or less, in the last five years.

The setbacks are part of this. The question is - do you believe they can deliver?

Despite the faults, I cant name a company that has transformed a wider swath of the economy since 2012.

 

[Bobfitz1]

I wonder seriously, is there a way to measure objectively if this forum helps investor outcomes? Do we even care?

This is an easy question. After making the 'crazy' purchase of a Roadster I began following TMC and the insights of a number of the leading contributors. When the MS was just being introduced and SP was 37 I sold blocks of my employers stock and bought Tesla shares. Smartest financial move I've ever made and all thanks to the information freely available on TMC.
Thankfully no (or much less) trolls and FUD back then.

 

[mongo]

In the case of the Model 3 we seem to have left the concept of the alien dreadnought for a few quarters, but I am assuming that Tesla is looking to fully automate all sorts of production steps in an integrated fashion that hasn't been done before.

From the recent video, you can see the new level of automation Tesla is using. The seat and instrument panel placement is being done my robot, whereas before it would be humans with a power assist system.

Additionally, if you look really close, you can see that the fixture holding the items also has the bolt drivers to fasten the seats and IP in place. I believe that is a very new technology for manufacturing.

These advances allow for a very repeatable cycle time and quality constrained only by the force limits of the robots.

While not a Ridley Scott/ H. R. Giger interpretation, the welding cell shown is very dreadnoughty (at least to me). It is so dense, the left side welder has to thread its way through the clamps to get in position.

 

[electracity]

The thing about Tesla/ Musk that I both admire most and derive the most frustration with is their inability to leave well enough alone.

I suspect Musk might agree with you, at least at this moment in time.

I suspect Musk's "problems at the gigafactory" is a bit of a diversion from Fremont. Gigafactory high volume pack production is unique and by necessity custom. No company has ever built packs at high volume before. So admitting to problem in a new process is not really admitting to an avoidable problem: It was just harder than they thought

Making a mess out of the main processes at Fremont by being too aggressive with new technology is less excusable. The world knows how to do high volume car production. A prudent approach on Tesla's first high volume line would be to design around state of the art but proven systems. In other words - higher the best vendors and listen to their advice.

We will see how much problemsTesla has ramping production in 2018. If the struggle to ramp well into next years is will be because of the disorganization created by attempting to implement too many "good ideas".

 

[ZeApelido]

The whole "this won't hurt Tesla" argument is so lame. Most people buy what they can afford (or stretch it a bit), even those who buy Model S/X. Once $7500 goes away, these customers are going alter their decisions on the composition on the vehicle they purchase. And unfortunately, my bet is the options that contribute most to profit margin will be cut. Less purchases of autopilot, bigger battery, etc...

Tesla may sell ~ 150,000 cars that should get $7500 credit first 2 quarters of 2018, then a bit more than that during the last half at $ 3750. If I assume half of those car buyers alter their decision and buy a car with reduced options (assume 1/2 of the credit loss, so still paying more than before), Tesla will lose 400 million in PROFIT next year.

That might be too conservative, it might be that the average purchase across all vehicles loses 1/2 of the rebate, Tesla will lose almost 1 BILLION dollars of profit in 2018. How in the heck will that not matter to their bottom line, need to raise capital, valuation, etc...?

 

[Waiting4M3]

The whole "this won't hurt Tesla" argument is so lame. Most people buy what they can afford (or stretch it a bit), even those who buy Model S/X. Once $7500 goes away, these customers are going alter their decisions on the composition on the vehicle they purchase. And unfortunately, my bet is the options that contribute most to profit margin will be cut. Less purchases of autopilot, bigger battery, etc...

Tesla may sell ~ 150,000 cars that should get $7500 credit first 2 quarters of 2018, then a bit more than that during the last half at $ 3750. If I assume half of those car buyers alter their decision and buy a car with reduced options (assume 1/2 of the credit loss, so still paying more than before), Tesla will lose 400 million in PROFIT next year.

That might be too conservative, it might be that the average purchase across all vehicles loses 1/2 of the rebate, Tesla will lose almost 1 BILLION dollars of profit in 2018. How in the heck will that not matter to their bottom line, need to raise capital, valuation, etc...?

I disagree, I personally think that there are a few factors that you've not considered, and there are enough buyers still that will take all the LR+PuP+EAP M3 that Tesla can build in 2018.

1) If some early reservations downgrade from LR to SR, then Tesla can simply sell LR cars to more people later in line

2) Tesla may end up losing more SR reservations %-wise, since $7500 is a much bigger deal for people buying $35K cars than people buying $55K cars.

3) There are also plenty of anecdotal feedback from people who will now wait for AWD (some maybe P version) since they don't feel pressured into buying the LR RWD for tax incentive. So those people could also end up paying more.

So it's way too early to say that this would reduce the demand, ASP, and profitability of the M3 in 2018. But assuming that customer pool isn't infinite, we can look at Tesla's demand going into 2019 and make a more informed call whether this has any material impact or not. Personally I think the M3 is competitive with the 3-series/A4/C-class even without the incentive, I think Tesla can sustain 5K/wk level demand indefinitely, and with a few more levers to pull down the line, such as EAP (maybe even limited FSD) in 2 years, larger charging infrastructure, more visibility and word of mouth from the M3 on the road, they can easily grow demand to 10K/wk level and keep it there.

 

[elasalle]

Tesla is a great place to work

.. Tesla was named No. 6 on LinkedIn’s 2017 top companies to work for list

 

[ZeApelido]

I disagree, I personally think that there are a few factors that you've not considered, and there are enough buyers still that will take all the LR+PuP+EAP M3 that Tesla can build in 2018.

Really? Then why won't we see an entire year of that package being sold before getting to SR? Why would they start selling SR in early 2018 if they didn't need too?

 

[Thumper]

Elon said that the pack production machinery furnished by a vendor was the cause of pack bottlenecks. Do we have any insight as to whether that was Grohman that screwed up?

 

[Lessmog]

The whole "this won't hurt Tesla" argument is so lame. Most people buy what they can afford (or stretch it a bit), even those who buy Model S/X. Once $7500 goes away, these customers are going alter their decisions on the composition on the vehicle they purchase. And unfortunately, my bet is the options that contribute most to profit margin will be cut. Less purchases of autopilot, bigger battery, etc...

Tesla may sell ~ 150,000 cars that should get $7500 credit first 2 quarters of 2018, then a bit more than that during the last half at $ 3750. If I assume half of those car buyers alter their decision and buy a car with reduced options (assume 1/2 of the credit loss, so still paying more than before), Tesla will lose 400 million in PROFIT next year.

That might be too conservative, it might be that the average purchase across all vehicles loses 1/2 of the rebate, Tesla will lose almost 1 BILLION dollars of profit in 2018. How in the heck will that not matter to their bottom line, need to raise capital, valuation, etc...?

No skin off my nose as a non-Usian - maybe the opposite - but I doubt 100% of US depositors for the entry-level Tesla can even use the tax rebate. First they need to owe more in federal tax, right?

Anyway, my computer is so tired now, Imma put it to sleep. and me too.

 

[Reciprocity]

Elon said that the pack production machinery furnished by a vendor was the cause of pack bottlenecks. Do we have any insight as to whether that was Grohman that screwed up?

Ghromann is not a vendor, they are Tesla, so I would assume no. I am shocked that you buy Ghromann and they are not the folks you use for exactly that task.

 

[Snapdragon III]

Elon said that the pack production machinery furnished by a vendor was the cause of pack bottlenecks. Do we have any insight as to whether that was Grohman that screwed up?

I don't think so. Grohman is Tesla, not a Vendor. And they said that teams from Grohman were brought in along with Tesla's engineers to address the problem.

 

[Waiting4M3]

Ghromann is not a vendor, they are Tesla, so I would assume no. I am shocked that you buy Ghromann and they are not the folks you use for exactly that task.

They brought Grohmann in to fix the battery module line issue, they said so in the conf call.

 

[mongo]

Elon said that the pack production machinery furnished by a vendor was the cause of pack bottlenecks. Do we have any insight as to whether that was Grohman that screwed up?

third! EDIT: fourth! But with the quote!


Grohman in on site fixing the issues: from the conference call:
"
So this has now been typified Tesla’s internal automation group in the U.S. and -- Tesla automation in the U.S. and Tesla Grohmann from Germany. We have a large team on -- from the -- from Tesla Grohmann also working the issue and making very rapid progress.
"

 

[Snapdragon III]

Ghromann is not a vendor, they are Tesla, so I would assume no. I am shocked that you buy Ghromann and they are not the folks you use for exactly that task.

I would assume that Ghromann's teams were maxed out on their capacity working on other parts of the line. Hopefully the part they built works, so they can now work on fixing bottlenecks.

 

[avoigt]

The market for M3 is way larger than most people anticipate. Lets for a second understand that a car with 0$ advertising is attracting orders of 1800 a day still counting and accelerating. Thats somewhere between at least 6 - 700 k p.a. to date and most people have not even seen it in person.

There is no auto in the market that compares and no one is somewhere near in engineering and can compete in the various aspects e.g. range, price, maintenance costs, AP, expected live time, to name just a few. Once the car is out in the field and people see it we will experience a very new group of yet untouched buyers. I expect at that stage in 2-5years the annual demand to go to at least 1-2 m p.a..

Real disruption is always going much faster and more profound than people can imagine. Thats why EM is always repeating the song of exponential versus linear development but people seem not to comprehend. Exponential is simply not a part of the human DNA and therefore so hard for all of us to imagine.

 

[Waiting4M3]

I would assume that Ghromann's teams were maxed out on their capacity working on other parts of the line. Hopefully the part they built works, so they can now work on fixing bottlenecks.

Maybe "maxed-out" can change quickly when you get a 30% raise.

 

[jackdillio]

The market for M3 is way larger than most people anticipate. Lets for a second understand that a car with 0$ advertising is attracting orders of 1800 a day still counting and accelerating. Thats somewhere between at least 6 - 700 k p.a. to date and most people have not even seen it in person.

There is no auto in the market that compares and no one is somewhere near in engineering and can compete in the various aspects e.g. range, price, maintenance costs, AP, expected live time, to name just a few. Once the car is out in the field and people see it we will experience a very new group of yet untouched buyers. I expect at that stage in 2-5years the annual demand to go to at least 1-2 m p.a..

Real disruption is always going much faster and more profound than people can imagine. Thats why EM is always repeating the song of exponential versus linear development but people seem not to comprehend. Exponential is simply not a part of the human DNA and therefore so hard for all of us to imagine.

reservation might go down after that M3 production plight. at this point, we don't even friggin know when EM/Tesla will fix and get the assembly line running.

 

[Waiting4M3]

Really? Then why won't we see an entire year of that package being sold before getting to SR? Why would they start selling SR in early 2018 if they didn't need too?

Because that wouldn't be fair to people who can only afford the SR. Tesla could easily sell the M3 at $40K or more given how Bolt, i3, Leaf are priced, but Tesla is not just about making $. Having lower priced M3 creates additional demand, even they don't make as much selling a SR, the presence of the SR will drive demand for EV infrastructure, drive battery supply-chain economy of scale, and amplify the virtuous cycle toward wider EV acceptance. Tesla is selling a mixture of LR and SR to maintain enough profitability, while maximizing the customer base at the same time.