2014 Q3 Earnings Report and Conference call discussion thread

[Johan]

Another point I would like someone to ask is this: What is taking so much to increase freaking production? Before, it was a battery availability issue. Now what? They need to somehow resolve these issues quickly.

I think you underestimate how difficult the art of manufacturing is. They are steadily increasing production while at the same time adding the feature of dual motors, sensors and during 2015 adding in Model X. That is difficult! They still expect to exit 2015 with a 2000/week run rate. That is nothing short of amazing.

Elon said in his MIT interview recently: "I wish more bright people got in to manufacturing. Building one of something is easy. Building hundreds is maybe 10 times more difficult when you want to maintain quality. If you think building the machine is important than how important isn't building the machine that's building the machine?"

 

[Todd Burch]

Now, I cannot take them by word on timing.

Now?!? Tesla is late for almost everything. We should all be used to that by now. Being late would be a very bad thing were it not for the fact that their products end up kicking a** when they do eventually come out.

 

[SBenson]

"This also is a legitimate criticism of Tesla – we prefer to forgo revenue, rather than bring a product to market that does not delight customers. Doing so negatively affects the short term, but positively affects the long term. There are many other companies that do not follow this philosophy that may be a more attractive home for investor capital. Tesla is not going to change."

Bravo!

 

[Words of HABIT]

Sometimes in thinking short term it's best to take a long term approach. This is one of those times. 50% production increase yoy for the foreseeable future of a $100,000/unit product. Wow!

 

[Citizen-T]

I read Model X delay as, "Holy hell, a LOT of people want dual motor Model S."

 

[pGo]

The market so far seems to like the numbers, in after hours trading, but it sounds like you want to talk down the numbers. Hope you didn't take an (opportunistic) short position.

I am long Tesla but being long, I also have hyper expectations. I would like Elon to talk less and deliver more. Than, I will be happy.

- - - Updated - - -

Another thing to point here, Elon is preparing the market for 2015 expectations. A few months back, this board was talking in the tunes of 75K. Now, it looks like somewhere around 48K (50% more model S) + ~10K (model X being delayed till Q3 2015) = 58K. I like 2000/week numbers, but the math does not add up unless they quickly raise Model X production. But that's been difficult so far.

 

[Derek Vinyard]

Go TSLA !
guys, time to go to sleep for me. It's 11.10pm over here. Hope Elon will show up some "hidden cards" at the CC !

 

[32no]

The order page for the Model S isn't working at the moment. Something to do with wait times maybe?

 

[SteveG3]

The order page for the Model S isn't working at the moment. Something to do with wait times maybe?

or Model X reservationists throwing in the towel and ordering AWD S in hordes (joking re order page going down, but there actually will be some of this happening increasing S orders for some time)

 

[Perfectlogic]

Another thing to point here, Elon is preparing the market for 2015 expectations. A few months back, this board was talking in the tunes of 75K. Now, it looks like somewhere around 48K (50% more model S) + ~10K (model X being delayed till Q3 2015) = 58K. I like 2000/week numbers, but the math does not add up unless they quickly raise Model X production. But that's been difficult so far.

They wrote more than 50%, and it was production they were talking about, they might very well produce 35k this year, and they did talk about a fast ramp of X production, I think they can hit 70k deliveries in 2015.

 

[clmason]

Bottom Line (My take):

I don't care about the narrow beats and small numbers.

With each passing quarter, the Model III doubt becomes less and less. It was vaporware and still is to some degree. However, as Tesla matures, it looks more probable that Model III will happen and sell 500,000 units+ per year. The fluctuation in # of deliveries Q to Q or Model X 90-day delay is immaterial. The whole point is Model III, that's what I am buying when I bought the stock. The rich market cap is all about delivering on the Model III.

I think when the Model III is certain, we should see a $45-Billion market cap. Then the Team will start on making millions of cars per year, new auto-platforms, actual selling of commercial battery storage, etc. Then TSLA jogs towards another doubling in Market Cap.

 

[pGo]

They wrote more than 50%, and it was production they were talking about, they might very well produce 35k this year, and they did talk about a fast ramp of X production, I think they can hit 70k deliveries in 2015.

This is what the note says:

Model S orders and deliveries alone expected to increase by 50% in 2015

 

[SteveG3]

Bottom Line (My take):

I don't care about the narrow beats and small numbers.

With each passing quarter, the Model III doubt becomes less and less. It was vaporware and still is to some degree. However, as Tesla matures, it looks more probable that Model III will happen and sell 500,000 units+ per year. The fluctuation in # of deliveries Q to Q or Model X 90-day delay is immaterial. The whole point is Model III, that's what I am buying when I bought the stock. The rich market cap is all about delivering on the Model III.

I think when the Model III is certain, we should see a $45-Billion market cap. Then the Team will start on making millions of cars per year, new auto-platforms, actual selling of commercial battery storage, etc. Then TSLA jogs towards another doubling in Market Cap.

I very much agree with your main point... 33K or 35K deliveries because of production ramp mean so little compared to Gen 3 becoming a reality.

Unfortunately, I suspect the next bear broken record might be, "if they keep delaying Model X, how many years late will Gen 3 be." I'm not worried about this in terms of Tesla's execution, just annoying to hear the bears bs.

 

[JRod0802]

Web link to the webcast (Wednesday, November 05, 2014, 5:30 pm EST = 2.30 pm PT)

Does anyone have audio yet?

 

[BlueTan85]

I very much agree with your main point... 33K or 35K deliveries because of production ramp mean so little compared to Gen 3 becoming a reality.

Unfortunately, I suspect the next bear broken record might be, "if they keep delaying Model X, how many years late will Gen 3 be." I'm not worried about this in terms of Tesla's execution, just annoying to hear the bears bs.

Hey I'm a long (I'll exit after $1000/share thank you very much), and I'm already playing that broken record..

 

[32no]

The Good:

• "Together with Panasonic we are making good progress toward first cell production in 2016, slightly earlier than originally scheduled. Starting operations earlier will reduce ramp-up risks for Model 3 and provide some potential expansion capacity for Model S and Model X."

• $0.02 earnings per share, $31 million in power-train sales, $93 million in regulatory credit sales

• $0.30-$0.35 earnings per share guidance for Q4

• "Future capacity investments extend to the Gigafactory where we have already started to pour concrete for the foundation. A modular build strategy is enabling us to scale construction, capital requirements and capacity commensurate with growing demand."

• Reaffirmed 2000 vehicle run rate for the end of 2015

• Tesla is confident in a 50% increase of net orders in 2015 alone due to leases and AWD models. Also, Tesla expects annual production to increase by more than 50% in 2014, 2015, and several years to follow.

• Gross margin will be >28% in Q4

The Bad:

• Guidance for deliveries went down to 33,000, while maintaining guidance of 35,000 produced.

• Model X deliveries in Q3 of 2015, a few months later than expected

• One time costs meant a 23% gross margin

• Total diluted share count is rising fast: ~141 Million in Q2, 142.7 million in Q3, and guidance of 143-145 million in Q4.

• Cash position went down by $304 million

In Other News

• The Model S order page is currently down. Perhaps there are wait time changes...

• The stock has recovered its 2 day losses in after hours trading with a 5% increase in value.

 

[Perfectlogic]

Model S orders and deliveries alone expected to increase by 50% in 2015

Under Increasing capacity to meet demand they wrote that they expect production to increase by more than 50%.

 

[Benz]

"we expect ourannual production will increase by over 50% in 2014, again in 2015 and probably for several years to follow"

 

[hockeythug]

Call audio quailty is way better than in the past.

 

[Johan]

"We don't pay anyone to endorse our car or to say they like it. If you see our car in a movie we haven't paid for it - it's just there"