2014 1 QTR predictions/results

[vgrinshpun]

My understanding of the argument against the 1000/wk number is that it would require a second production line to be up and running. If that were so we would have already heard something about this correct?

There is circumstantial evidencee that the second assembly line is already running, although it does not mean that they are at 1000 cars/week. My hunch is that they are currently running at 800-850 cars/week. See my post linked below on details/reasoning: http://www.teslamotorsclub.com/show...Movements-2014?p=645541&viewfull=1#post645541

I believe we will hear about it during the ER call.

Regarding the cell supply, Panasonic was scheduled to ramp-up in two steps: relaunching idled line at the Suminoe Plant (total capacity of both lines 300M cells/year), and relaunching the idled line at the Kaizuka plant. The first step was scheduled in January, second -by the end of Q2. Note that if step 1 already happend (and all indications are that it did), TM will have more than enough batteries to run at 800-850 cars/week.

 

[uselesslogin]

I agree with this. The ZEV credits are oh **** money and , baring any emergency, bling money to add to revenue when needed. We don't have a source for ZEV credits for this quarter, but we do know that California is almost halving ZEV credits later this year correct?

Q1 seems like the most appropriate quarter to use the credits, offsetting larger expenditures and mediocre deliveries. If we can get a sense of how many credits TM has, it would be a great help to predict how TM will mitigate this quarter.

ZEV credits are cut in half although more states signed on to CARB. Either way Tesla did not sell any credits in Q4 so they have plenty to sell if there are buyers. There is no information on this other than the fact that ZEV credit income is unreliable.

My understanding of the argument against the 1000/wk number is that it would require a second production line to be up and running. If that were so we would have already heard something about this correct?

Not only that but TM would have to double its currently limited battery supply as well. Where is the evidence to support this?

It also goes against our anecdotal evidence of the 600/wk-700/wk datapoints from the mouths of TM themselves. If they were at 1000/wk surely they would tell us.

the 7900 cars delivered is an extraordinary claim, that doesn't match TM's ER history. TM promises a mediocre quarter, but 7900 cars delivered with 6400 guided would be the best ER we've had ever.

Anecdotal evidence points to the second line being open. This is because someone talked to the guy in the London store who said RHD vehicles are being made on the second line. Now, supply from Panasonic is the other wildcard because even if they were at 700 cars/week still they would probably use the second line for RHD vehicles just for simplicity at this point. The other evidence I have quoted, one article that makes a passing reference and an uptick in VIN assignments, points to the possibility of 1,000 car/wk production rate starting about right now. If that is the case then Tesla will most likely tell us about that next week on the earnings call and they certainly wouldn't say anything before then because there seems to be a limit to what they are even allowed to say before the earnings release. 7900 cars delivered would be insane and that is highly unlikely. I expect 6900-7100 but also raised guidance due to battery supply bottlenecks being cleared and the second line opening.

 

[Cwin]

There is circumstantial evidencee that the second assembly line is already running, although it does not mean that they are at 1000 cars/week. My hunch is that they are currently running at 800-850 cars/week. See my post linked below on details/reasoning: http://www.teslamotorsclub.com/show...Movements-2014?p=645541&viewfull=1#post645541

Anecdotal evidence points to the second line being open. This is because someone talked to the guy in the London store who said RHD vehicles are being made on the second line. Now, supply from Panasonic is the other wildcard because even if they were at 700 cars/week still they would probably use the second line for RHD vehicles just for simplicity at this point. The other evidence I have quoted, one article that makes a passing reference and an uptick in VIN assignments, points to the possibility of 1,000 car/wk production rate starting about right now. If that is the case then Tesla will most likely tell us about that next week on the earnings call and they certainly wouldn't say anything before then because there seems to be a limit to what they are even allowed to say before the earnings release. 7900 cars delivered would be insane and that is highly unlikely. I expect 6900-7100 but also raised guidance due to battery supply bottlenecks being cleared and the second line opening.

This evidence contradicts the other evidence we have.

Regarding the 1000 parts/week number by suppliers, this very dubious. This could mean that Tesla has an order for 1000 parts/week to be fulfilled in the 2nd half of the year. Suppliers could have been referring to that. The article was not specific saying that suppliers were already shipping 1000 parts/week to Tesla.

On April 10, 2014, Tesla IR confirmed with me the following:
"If one tours our factory - production boards indicate a production level approaching 700/wk"

Note, this is close to mid-April when they confirmed that production level is "approaching 700/wk".

This is the best data point we have regarding current production.

What this is saying to me is that the second line is being tested and slowly scaled up. We might expect a higher guidance than usual for Q2, although I think the real suprises will come in 2H as stated, but nothing to say we are anywhere over 800/wk max in Q1.

 

[vgrinshpun]

I think TM will use up their ZEV credits to offset the 'Battery shield' and make up for some of the change from 'all cars produced delivered' to 'cars in the pipeline' quarter to quarter philosophy. Also, while the weather may have delayed some SC openings, I believe TM may have slowed them purposely to save $ for the change in production/delivered philosophy having less impact on the 'bottom line' in Q1. The weather, and increased delivery numbers in Q2 should see a big increase in their numbers.

There is another possible way for TM to offset the titanim shield expenses. The developmental services had a negative margin in both Q3 and Q4. TM explained in Q3 that this is due to the fact that services were performed, but the payment was tied to a later dead-lines, so it was not credited at the time when the expenses were incurred. Since historically development services margin was at least 30%, we can calculate these deferred payments from Q3 and Q4. I believe that these development services are mostly for the Mercedes Class B electric drive. Since it is currently in production, it is reasonable to conclude that these deferred payments were made in Q1.

The numbers:

Q3 Q4 Total
Development Services $1,150K $4,368K $5,518K
Cost of Dev. Services $5,051K $3,595K $8,646K

So with the total cost of $8,646 and 30% margin one would expect $12,351K in payments for the development services. The actual Q3/Q4 payments, however, were $5,518K, so we can reasonable expect the ballance - $6,833K to be paind in Q1. This amount could easily offset titanium shield expences with TM characterised as being "few" millions.

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This evidence contradicts the other evidence we have.



What this is saying to me is that the second line is being tested and slowly scaled up. We might expect a higher guidance than usual for Q2, although I think the real suprises will come in 2H as stated, but nothing to say we are anywhere over 800/wk max in Q1.

No contradiction here. The line was launched this week. The fact that TM is not at 1000 cars/week does not say anything regarding the second line being operational. The reason for launching it is to achieve the best production efficiency possible. Making RHD cars on a separate line alows TM to avoid batching required when only one line is used. I was told in London (without specifically asking this question) that when RHD production is started, there will be NO allocation from the currently produced 700 cars/week. I was specifically told that RHD will be ADDED to the 700 cars/week. That is why I believe that current production rate is 800-850 cars/week. We will read/hear about this in the shareholder letter/ER call.

 

[Chickenlittle]

There is another possible way for TM to offset the titanim shield expenses. The developmental services had a negative margin in both Q3 and Q4. TM explained in Q3 that this is due to the fact that services were performed, but the payment was tied to a later dead-lines, so it was not credited at the time when the expenses were incurred. Since historically development services margin was at least 30%, we can calculate these deferred payments from Q3 and Q4. I believe that these development services are mostly for the Mercedes Class B electric drive. Since it is currently in production, it is reasonable to conclude that these deferred payments were made in Q1.

The numbers:

Q3 Q4 Total
Development Services $1,150K $4,368K $5,518K
Cost of Dev. Services $5,051K $3,595K $8,646K

So with the total cost of $8,646 and 30% margin one would expect $12,351K in payments for the development services. The actual Q3/Q4 payments, however, were $5,518K, so we can reasonable expect the ballance - $6,833K to be paind in Q1. This amount could easily offset titanium shield expences with TM characterised as being "few" millions.

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No contradiction here. The line was launched this week. The fact that TM is not at 1000 cars/week does not say anything regarding the second line being operational. The reason for launching it is to achieve the best production efficiency possible. Making RHD cars on a separate line alows TM to avoid batching required when only one line is used. I was told in London (without specifically asking this question) that when RHD production is started, there will be NO allocation from the currently produced 700 cars/week. I was specifically told that RHD will be ADDED to the 700 cars/week. That is why I believe that current production rate is 800-850 cars/week. We will read/hear about this in the shareholder letter/ER call.

Shielding expense should be in 2nd qtr when work is done

 

[AlMc]

There is another possible way for TM to offset the titanim shield expenses. The developmental services had a negative margin in both Q3 and Q4. TM explain in Q3 that this is due to the fact that services were performed, but the payment was tied to a later dead-lines, so it was not credited at the time when the expenses were incurred. Since historically development services margin was at least 30%, we can calculate these deferred payments from Q3 and Q4. I believe that these development services are mostly for the Mercedes Class B electric drive. Since it is currently in production, it is reasonable to conclude that these deferred payments were made in Q1.

The numbers:

Q3 Q4 Total
Development Services $1,150K $4,368K $5,518K
Cost of Dev. Services $5,051K $3,595K $8,646K

So with the total cost of $8,646 and 30% margin one would expect $12,351K in payments for the development services. The actual Q3/Q4 payments, however, were $5,518K, so we can reasonable expect the ballance - $6,833K to be paind in Q1. This amount could easily offset titanium shield expences with TM characterised as being "few" millions.

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No contradiction here. The line was lanched this week. The fact that TM is not at 1000 cars/week does not say anything regarding the second line being operational. The reason for launching it is to achieve the best production efficiency possible. Making RHD cars on a separate line alows TN to avoid batching required when only one line is used. I was told in London (without specifically asking this question) that when RHD production is started, there will be NO allocation from the currently produced 700 cars/week. I was specifically told that RHD will be ADDED to the 700 cars/week. That is why I believe that current production rate is 800-850 cars/week. We read/hear about this in shareholder letter/ER call.

Regarding the ZEV credits. In any modeling you are doing for Q1ER, do you think it wise that TM would use ZEV credits they have to offset what they have guided for as what I will call a 'less robust' delivery number due to cars in the pipeline and/or to offset the shield cost?

 

[Cwin]

No contradiction here. The line was launched this week. The fact that TM is not at 1000 cars/week does not say anything regarding the second line being operational. The reason for launching it is to achieve the best production efficiency possible. Making RHD cars on a separate line alows TM to avoid batching required when only one line is used. I was told in London (without specifically asking this question) that when RHD production is started, there will be NO allocation from the currently produced 700 cars/week. I was specifically told that RHD will be ADDED to the 700 cars/week. That is why I believe that current production rate is 800-850 cars/week. We will read/hear about this in the shareholder letter/ER call.

Well, why are we debating current production rather than Q1 production? Although a jump from ≤700 in mid april to 800-850 may 1 is a nice bump, and will offer a higher than expected guidance for Q2, possibly 1000/wk. The second line, if launched this week will have little effect come 5/8/2014.

 

[vgrinshpun]

Regarding the ZEV credits. In any modeling you are doing for Q1ER, do you think it wise that TM would use ZEV credits they have to offset what they have guided for as what I will call a 'less robust' delivery number due to cars in the pipeline and/or to offset the shield cost?

I do. My concern, however, that their willingness to sell ZEVs does not mean that there will be buyers. I believe that delayed payments for development services should come in Q1. It would be fantastic if they can sell ZEVs as well!

 

[Chickenlittle]

Well, why are we debating current production rather than Q1 production? Although a jump from ≤700 in mid april to 800-850 may 1 is a nice bump, and will offer a higher than expected guidance for Q2, possibly 1000/wk. The second line, if launched this week will have little effect come 5/8/2014.

Correct except when guidance is given for 2 nd qtr

 

[vgrinshpun]

Well, why are we debating current production rather than Q1 production? Although a jump from ≤700 in mid april to 800-850 may 1 is a nice bump, and will offer a higher than expected guidance for Q2, possibly 1000/wk. The second line, if launched this week will have little effect come 5/8/2014.

Because TM aslways addressed current production in ER calls and shareholder's letters, as it factors into the next quarter outlook. If they ran at 700 cars/week for the first three weeks and at 850 cars/week for the rest Q2, they can have Q2 deliveries in excess of 9,000. This is not expected untill Q3 and if disclosed will move the stock.

 

[LakeForest]

Just to chime in on the line opening, Tesla is holding a big job fair this weekend. They could just be looking for more employees/resumes as a regular replacement etc or they may be hiring for so egging specific.

 

[uselesslogin]

On April 10, 2014, Tesla IR confirmed with me the following:"If one tours our factory - production boards indicate a production level approaching 700/wk"

You know I have to comment that I find that a strange way of answering the question. They did not actually say production is approaching 700/wk. They said that is what the boards are saying. Now, they obviously put the correct number on the board but also the tour would only cover one of the two production lines, right? Which goes ever further to say it could have been 800-850 cars in Feb/Mar because maybe they had overtime shifts on Saturday. Maybe production in March was actually 850/week because they were doing Saturday shifts.

Of course that is all wild speculation. With the opening of a second line and a fresh supply of batteries they could ramp up production to 1,000 cars a week or more likely 850 in very little time and the last data point was April 10th. So things may have changed since then and we'll find out next week.

 

[Cwin]

Because TM aslways addressed current production in ER calls and shareholder's letters, as it factors into the next quarter outlook. If they ran at 700 cars/week for the first three weeks and at 850 cars/week for the rest Q2, they can have Q2 deliveries in excess of 9,000. This is not expected untill Q3 and if disclosed will move the stock.

Deliveries or produced? TM has a history of lowballing deliveries. 9000 guided deliveries would be spectacular to hear in the Q1 report. 9000 guided to produce would be expected.

You know I have to comment that I find that a strange way of answering the question. They did not actually say production is approaching 700/wk. They said that is what the boards are saying. Now, they obviously put the correct number on the board but also the tour would only cover one of the two production lines, right? Which goes ever further to say it could have been 800-850 cars in Feb/Mar because maybe they had overtime shifts on Saturday. Maybe production in March was actually 850/week because they were doing Saturday shifts.

Of course that is all wild speculation. With the opening of a second line and a fresh supply of batteries they could ramp up production to 1,000 cars a week or more likely 850 in very little time and the last data point was April 10th. So things may have changed since then and we'll find out next week.

I'd rather be safe if money is on the line. Unless otherwise specified I'll assume that the 700/wk number was for both lines at the time.

 

[uselesslogin]

Deliveries or produced? TM has a history of lowballing deliveries. 9000 guided deliveries would be spectacular to hear in the Q1 report.

Although I think conservative guidance of 8,500 deliveries could still move the stock at this point.

 

[vgrinshpun]

You know I have to comment that I find that a strange way of answering the question. They did not actually say production is approaching 700/wk. They said that is what the boards are saying. Now, they obviously put the correct number on the board but also the tour would only cover one of the two production lines, right? Which goes ever further to say it could have been 800-850 cars in Feb/Mar because maybe they had overtime shifts on Saturday. Maybe production in March was actually 850/week because they were doing Saturday shifts.

Of course that is all wild speculation. With the opening of a second line and a fresh supply of batteries they could ramp up production to 1,000 cars a week or more likely 850 in very little time and the last data point was April 10th. So things may have changed since then and we'll find out next week.

That is a very good point. I do not know if production lines are in close proximity, but it would be reasonable to conclude that if the purpose of the boards to focus employees on the goal at hand, two production lines would NOT be covered on one board: there would be a separate board for each line.

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Deliveries or produced? TM has a history of lowballing deliveries. 9000 guided deliveries would be spectacular to hear in the Q1 report. 9000 guided to produce would be expected.



The scenario I outlined will result in 9750 cars produced, 9000 delivered in Q2. These numbers could still be low ball estimate, as TM probably planning further ramp-up. It would be reasonable to expect TM to try matching their production to the rate of incoming reservations. If we (conservatively) assume that incoming reservations are split between NA / Europe / Asia as 300 / 200 / 400 cars/week, the TM should produce 900 cars/week just to keep up.

 

[Cwin]

Although I think conservative guidance of 8,500 deliveries could still move the stock at this point.

2013 Q1 produced 5000, guided 4500, sold 4900
2013 Q2 produced 5500, guided 4500, sold 5150
2013 Q3 produced 6500, guided 5000, sold 5500
2013 Q4 produced 6587, guided 6000, sold 6892

I'm slightly skeptical that 8500 can be considered conservative. Certainly possible, even likely, if the second line is operational now. However, it's not in line with TM's with regarding lowballing expectations.

Although they certainly have motive to announce a better than expected guidance earlier rather than later.

That is a very good point. I do not know if production lines are in close proximity, but it would be reasonable to conclude that if the purpose of the boards to focus employees on the goal at hand, two production lines would NOT be covered on one board: there would be a separate board for each line.

I don't know enough about factory floor life to debate this. I'm still skeptical.

So I think I can add guidance to my worst, conservative, best case estimates.

Worst
7500 produced, ~7000 guided to deliver.
This falls in line with TM's history, still disappointing though. And its not outlandish to think

Conservative
8500 produced, ~8000 guided to deliver.
This would be pretty good in my opinion. I'd be pretty happy if this was the number given.

Best
9750 produced, ~9000 guided to deliver.
Blown away.

 

[AlMc]

2013 Q1 produced 5000, guided 4500, sold 4900
2013 Q2 produced 5500, guided 4500, sold 5150
2013 Q3 produced 6500, guided 5000, sold 5500
2013 Q4 produced 6587, guided 6000, sold 6892

I'm slightly skeptical that 8500 can be considered conservative. Certainly possible, even likely, if the second line is operational now. However, it's not in line with TM's with regarding lowballing expectations.

Although they certainly have motive to announce a better than expected guidance earlier rather than later.



I don't know enough about factory floor life to debate this. I'm still skeptical.

So I think I can add guidance to my worst, conservative, best case estimates.

Worst
7500 produced, ~7000 guided to deliver.
This falls in line with TM's history, still disappointing though. And its not outlandish to think

Conservative
8500 produced, ~8000 guided to deliver.
This would be pretty good in my opinion. I'd be pretty happy if this was the number given.

Best
9750 produced, ~9000 guided to deliver.
Blown away.

Well, your worse case produces a 5-10% TSLA price increase: Conservative 15-20%; Best: tsunami short squeeze

disclaimer: all three would need good to excellent guidance

 

[Cwin]

Well, your worse case produces a 5-10% TSLA price increase: Conservative 15-20%; Best: tsunami short squeeze

disclaimer: all three would need good to excellent guidance

I don't think these are outlandish guesses. The evidence that the second line has started up in Q2 is alright, if circumstantial still. Assuming that, we should see an abnormal increase in guidance numbers if TM is willing to give us a bone. Which they should be more inclined to do, as the other numbers for this quarter, and progress with the Gigafactory, Model X, unknown ZEV status, and Titanium refits might need to be mitigated.

If all goes well, I actually think they might lowball us anyways, just to push things back further to Q3,Q4.

And I wouldn't say short squeeze. Even with a nice report we will still just be regaining ground. There is still a good chance that this floor we are at now gets pulled out from under us with a mediocre report.

 

[Robert.Boston]

I agree with this. The ZEV credits are oh **** money and , baring any emergency, bling money to add to revenue when needed. We don't have a source for ZEV credits for this quarter, but we do know that California is almost halving ZEV credits later this year correct?

While Tesla's allocations of ZEVs will be reduced, I'm not sure how much that matters. Tesla controls nearly all of the "float" in ZEVs, so reducing the supply also increases their value.

 

[uselesslogin]

I'm slightly skeptical that 8500 can be considered conservative. Certainly possible, even likely, if the second line is operational now. However, it's not in line with TM's with regarding lowballing expectations.

Actually what I meant to say is that if they guided for 8500 deliveries the market would know that is a conservative lowball since it comes from Tesla/Elon. Therefore since that implies a goal of around 9,000 or more deliveries guidance of 8,500 would move the stock.