Late delivery of base Model 3 (out of Market Action)

[ItsNotAboutTheMoney]

I just feel and see a disconnect from what is going on....the company is now pushing the highest priced M3 to the media instead of the base car. Are they letting the media take spins in the base car? Nope, it's nowhere to be seen. It's like this weird mirage where right now you can see the SR version in pictures, but when you get up close in real life it's nonexistent.

There is _no_ disconnect. Tesla screwed up (again).

In Imaginary Elon Musk World the P3D and 3D ramp would be happening now, but many months after LR and then SR were coming off lines in large numbers.

But, in Real World production was delayed, and in particular the first attempt at the automated failed miserably.

Don't worry about Tesla caring about selling SRs. It _really_, _really_ wants to sell SRs. But it can't do that until Real World catches up with Imaginary Elon Musk World.

We now have a situation where production costs are too high to sell the SR, there's an Alien Tent with a freshly-designed automated line being ramped using production of the P3D(LR) then 3D(LR), while the Terran Doughnuts are producing the only product they can currently make at positive margin, the 3LR.

Once (if) the new line is ramped enough to make Tesla confident that it will be successful, Tesla can duplicate it to the other lines to increase production rate, lower unit production costs, and then, maybe, they can sell the SR, _maybe_ at $35k, or at least at $35k + $5k for the PUP.

I know, it sucks. It sucks because people won't get an SR with a $7.5k credit. It sucks because _I_ won't get an SR with a $7.5k credit. But it sucks more because Tesla is very close to losing the final bet on the company, which would send it into bankruptcy. That would _really_ suck.

 

[jhm]

OMG

Performance + Model 3 + Dual motor + highly Optioned = P3DO

 

[bhzmark]

There is _no_ disconnect. Tesla screwed up (again).

In Imaginary Elon Musk World the P3D and 3D ramp would be happening now, but many months after LR and then SR were coming off lines in large numbers.

But, in Real World production was delayed, and in particular the first attempt at the automated failed miserably.

Don't worry about Tesla caring about selling SRs. It _really_, _really_ wants to sell SRs. But it can't do that until Real World catches up with Imaginary Elon Musk World.

We now have a situation where production costs are too high to sell the SR, there's an Alien Tent with a freshly-designed automated line being ramped using production of the P3D(LR) then 3D(LR), while the Terran Doughnuts are producing the only product they can currently make at positive margin, the 3LR.

Once (if) the new line is ramped enough to make Tesla confident that it will be successful, Tesla can duplicate it to the other lines to increase production rate, lower unit production costs, and then, maybe, they can sell the SR, _maybe_ at $35k, or at least at $35k + $5k for the PUP.

I know, it sucks. It sucks because people won't get an SR with a $7.5k credit. It sucks because _I_ won't get an SR with a $7.5k credit. But it sucks more because Tesla is very close to losing the final bet on the company, which would send it into bankruptcy. That would _really_ suck.

There are a certain number of M3 buyers willing to pay $50k+
There are other M3 buyers who are unwilling to pay $50k+ but will pay ~$35k.

So long as the supply from the production hasn't filled the demand from the first group of $50k+ buyers, Tesla would be stupid to sell to the second group of buyers at a lower margin.

Indeed, if, like with Model S, the demand for the higher priced cars keeps up with supply, they may never get to the $35k car -- they will be too busy selling every higher priced car that they can make. That's capitalism and it will keep Tesla in business.

 

[neroden]

AWD is shipping in two weeks or so, and the white seat bottleneck has been alleviated (though they're still only offering it with AWD, not with RWD -- I hope that will change as the white interior production ramps up further).

The remaining "missing options" are the non-premium interior and the smaller battery pack; that will complete the non-software / non-wheels options. I believe they will get to those fairly soon -- it's only two more things. The smaller battery pack will probably arrive before the non-premium interior, if I were to guess.

It is true that nobody will ever pay $35K for a new Model 3... because I think that $1000 destination & doc fee will still be there, so it'll be $36K.

I do have to say, charging $1500 for the most popular paint color (white) is definitely a little bit price-gougey. As is charging $5000 for premium interior plus $1500 for white premium interior, both necessary to avoid having a black interior. A base model which was white with white interior would cost *$8000* more than an all-black base model. I hope Tesla can bring down some of these option upcharges over time, as they're a little bit ridiculous.

 

[ggies07]

Just so everyone knows, because I don't think I've ever said it, but I was never going to get the all basic 35k option.....I had/have planned on at least adding on a color. If it really does take awhile though, it will push down my trade-in value and I might have to just get black.

 

[elasalle]

Never say Never. I think once we get to 6/7K (and after 2018 is over) week we will start seeing 35K

Also (from a tactical perspective), I think it will be important for 35K base version to be made available prior to Model Y launch & reservations, otherwise reservation holders will not believe that Model Y base version will ever launch, and that will drastically limit the number of pre-orders.

 

[heltok]

Given that delivery centers in US seem to be stretched with current deliveries, it would make sense for Tesla to open up P3D to Europe and Asia. Might even convert some waiting Europeans to upgrade to be first. I would.

 

[tivoboy]

I agree with the kitchen sink quarter, but it sure seems that it’s baked into the SP already. I for one would be surprised if it dips much below where we are now.
That being said, it all depends on how the quarterly report is written. If there’s a lot of predictions on future production rates, as well as wordsmithing such as ‘each part of the line is capable of factory gating x amount of blah blah blah’, then the SP goes lower.

OTOH, if they say we’re at a sustained 3 production rate of 5,000/week RIGHT NOW, and fcf positive RIGHT NOW and will be for the foreseeable future, then watch out....it’ll take off.

fcf notwithstanding, there is a lot of debt that is coming due between Aug-Nov. Nearly 350M. They are never going to hit the share price covenants on it, so it's going to have to be re-financed or paid.

if capex is more than 200M above expectations that's a problem. Granted, we don't know how much 'cash' they managed to get with the 2500$ deposit trickery but the debt will be perceived as at risk.

Everyone KNOWS they are going to sell a ton of cars in the next 1-18 months. It COULD work, but in the near term I think the computers and short sellers are going to have three legs to stand on until we get much more clarity into debt structure. And NEXT year it's over 1B but with a solidly reachable 357$ conversion price.

 

[EnzoXYZ]

Dual motor now cost 5K on Model 3.

Someone at Tesla FINALLY figured out that
Demand for AWD and 1 second 0-60 reduction is completely demand inelastic at 4K?

Liking this gross margin addicted Tesla..

My opinion is Tesla shouldn’t even make RWD now that AWD is being made. Charge up and check all the options. Demand is out of control.

 

[MXWing]

My opinion is Tesla shouldn’t even make RWD now that AWD is being made. Charge up and check all the options. Demand is out of control.

Their timeline estimate for the SR Model should read

“As soon as OJ finds the real killers.”

 

[Tslynk67]

My opinion is Tesla shouldn’t even make RWD now that AWD is being made. Charge up and check all the options. Demand is out of control.

I think this is a good idea, although it might be an issue for the base version.

 

[HG Wells]

I think they should dedicate 5% of production to the base car. You might have to wait 5 to 7 years but you would get it.

 

[elasalle]

If you looked a bit into my post history you would quickly find out im the VP of common sense in the 3 forums.

I am completely against the base Model 3 for the foreseeable future.

Introduce a new battery line
Introduce a new body
Introduce a new interior
Reduce uptake on high margin features
Introduce more service issues from an untested demographic
An entire world who would gladly buy maxed out P’s

Why would they deal with the SR at all for less money?

Tesla isn’t making the SR.. not until OJ finds the real killers.

Sky isn’t falling.

Adolescent morons typically don’t buy Tesla’s.

SR is important for Model Y reservations. Don't keep the SR M3 promise and the number of people reserving the MY will be small.

 

[MXWing]

SR is important for Model Y reservations. Don't keep the SR M3 promise and the number of people reserving the MY will be small.

Agree, but I do not believe the Model Y needs kickstarter funding the same way the 3 did. The Y can come right out of the gate at 40-45K base and no one will blink.

I am not saying screw the SR reservation holders but you have to find some way to service them and not inflict self harm at the same time.

Tesla is following the only strategy they can at the moment. Keep kicking can down the road and hope the SR holders can be upsold to LR+ while full tax credit is in effect.

 

[dc_h]

SR is important for Model Y reservations. Don't keep the SR M3 promise and the number of people reserving the MY will be small.

I think the SR will be important long term, but not in 2018. When the credit runs out and production is over 8000 a week a 40,000sh car will be an important part of the channel. The ASP may still be over 50k, but they’ll need a bigger spectrum of offerings.
My opinion at this point, sales data will tell the story in the next year. It is possible international demand will keep them cranking out LR and performance until June 2019 or longer. An extra 10k per car at a rate of 8000 a week is crazy good for TSLA. If that worked out, Tesla self for being and debt pay down will be pretty simple, even with two new plants to build.

 

[AlMc]

You don’t honestly believe that, do you?! That number of MY reservations is tied to the base SR M3? The S40 wasn’t tied to the M3. Do you think those wanting the base M3 are also looking at a base MY?

If they introduce the 'Y' before we ever see the SR '3'....we won't see a SR 3 until the China GF is fully operational. (3-4 years).

BTW: Found another avatar for you.

 

[elasalle]

You don’t honestly believe that, do you?! That number of MY reservations is tied to the base SR M3? The S40 wasn’t tied to the M3. Do you think those wanting the base M3 are also looking at a base MY?

I really do believe it to be the case.

Reputation is everything in business (there is a nice quote from WB on this) and I do hope Tesla/EM keep their promises to the masses. MY reservation holders will be taking queues from what Tesla did with M3 reservations to decide if they want to do reservations.

Also do note that once we reach 6-7K/week or 10K/week volume , the volume will make up for lower cost SR.

 

[defc0n]

I agree. Without a sound business strategy they is no Model anything.

I certainly understand people wanting the base model ...and I hope they understand the reason they can't get it yet.

As a hopeful future model Y buyer I couldn’t give a damn about when they release SR model 3. The biggest risk Tesla has to getting model Y revenue from me is how long it takes for the model Y to become available.

 

[MXWing]

I really do believe it to be the case.

Reputation is everything in business (there is a nice quote from WB on this) and I do hope Tesla/EM keep their promises to the masses. MY reservation holders will be taking queues from what Tesla did with M3 reservations to decide if they want to do reservations.

Also do note that once we reach 6-7K/week or 10K/week volume , the volume will make up for lower cost SR.

Model Y does not need to follow the same path as the 3.

They can take 20% upfront payments or more for founder editions.
Pricing can in the high 40s immediately.
With so many lines they don’t even need to talk about the Model Y. The just build it and sell it.

Keeping your word is important but it does no one any good if you don’t survive to the long term anyway.

What “caring” bears call broken promises, I call tactical retreat.

The ones complaining about Tesla not releasing the SR are the ones wanting Tesla to die.

Think about it...

 

[ModelX]

I think the SR is important, but just not yet. I agree they must get to a 35K base-as they said they would.