2014 Q4 Earnings Report and Conference Call

[Drax7]

Introducing the model d , coupled with a new assembly line , all in a few months threw them off.
Production was off, orders and deliveries were rearranged and the quarter printed
awful relative to expectations.
But fundamentally nothing has changed. The production issue is behind them
And so are the The Chinese scalpers . Hong Kong doing well , means China will follow.

The massive capital investment has a great ROI and is essential to increasing production and expanding the business.
No surprise given continued investment in production, service centers, super chargers, and stores in 4 continents.

 

[techmaven]

Introducing the model d , coupled with a new assembly line , all in a few months threw them off.
Production was off, orders and deliveries were rearranged and the quarter printed
awful relative to expectations.
But fundamentally nothing has changed. The production issue is behind them
And so are the The Chinese scalpers . Hong Kong doing well , means China will follow.

The massive capital investment has a great ROI and is essential to increasing production and expanding the business.
No surprise given continued investment in production, service centers, super chargers, and stores in 4 continents.

Yeah, pretty much.

Factor in the 1400 cars and the extra expenses in shipping and overtime and they would have been pretty much on track.

 

[FANGO]

I predict Audi or BMW will commit to a Gigafactory build by 2018, finish it by 2020, and begin shipping Tesla competition by 2022 at the earliest. And that's being generous.

Audi will spend the next 6 years putting out press releases about the electric models they're never going to release. Then they'll spend the next 10 years putting out press releases about factories they're never going to build. Then they'll target shipping their Tesla-killer for 2030. Then they'll never ship it.

The point of my post is that Audi needs to put up or shut up. They are perhaps the least likely company to act on EVs given their past behavior. They're all talk.

Your assuming there will be the demand for that many EV's

 

[30seconds]

Audi will spend the next 6 years putting out press releases about the electric models they're never going to release. Then they'll spend the next 10 years putting out press releases about factories they're never going to build. Then they'll target shipping their Tesla-killer for 2030. Then they'll never ship it.

The point of my post is that Audi needs to put up or shut up. They are perhaps the least likely company to act on EVs given their past behavior. They're all talk.

Well they do have the e-Golf

 

[FANGO]

Well they do have the e-Golf

Was referring to Audi specifically. Besides I'm pretty sure the e-Golf is a reaction to losing top sales spot in Norway to the Model S (formerly occupied by the ICE Golf). VW has seemed one of the more hostile manufacturers to EVs to me. And Audi's EV press releases over the course of the last 7 years or so with nothing to show for them are pretty laughable.

 

[Saghost]

How long will it take each of them to build a Gigafactory competitor? To design a model that works as seamlessly as a Tesla with realtime software updates? To build a supercharger network? They are 4 years behind minimum. I predict Audi or BMW will commit to a Gigafactory build by 2018, finish it by 2020, and begin shipping Tesla competition by 2022 at the earliest. And that's being generous.

I'm not sure I agree with you, but you do understand that if this happens Tesla will have achieved their goals, right? They want to put EVs in every garage, and aren't terribly concerned about who built them.

The battery factory isn't Tesla's only big competitive edge, either. The Supercharger network is a huge enabler that will require a lot of time and money to duplicate (unless the competition buys in to Tesla's network, which would probably be the best outcome for everyone, especially EV drivers.)

Even with both of those factors out of the picture, Tesla's demonstrated history of bringing new and useful features to existing cars by OTA firmware updates is a draw for customers. Until others in the industry match Tesla's service model, DCFC network, *and* battery production capacity, Tesla has a clear competitive edge if they deliver otherwise identical products at the same price.
Walter

 

[uselesslogin]

OK, after digesting a few days the number one thing that bothers me about this report is that operating expenses increased 15% when they guided for 10% Now they are guiding for 12-15% growth still. Why? Or, more importantly, what happened to guidance from Q3? The second thing is I realize some losses aren't a huge deal because frankly they are spending way more on capex anyway. That is why the cash burn shouldn't be too concerning. On an operating basis Elon is right they have been profitable for 2 years now and not BS profitable. They can stop capex spending if they were in danger of running out of cash but if the Model X is in full swing by Q1 they will have more than enough cash. If their operations were burning the cash that would be a whole different thing.

 

[aznt1217]

OK, after digesting a few days the number one thing that bothers me about this report is that operating expenses increased 15% when they guided for 10% Now they are guiding for 12-15% growth still. Why? Or, more importantly, what happened to guidance from Q3? The second thing is I realize some losses aren't a huge deal because frankly they are spending way more on capex anyway. That is why the cash burn shouldn't be too concerning. On an operating basis Elon is right they have been profitable for 2 years now and not BS profitable. They can stop capex spending if they were in danger of running out of cash but if the Model X is in full swing by Q1 they will have more than enough cash. If their operations were burning the cash that would be a whole different thing.

The operating expenses increase was a one time deal due to the late quarter push and derivative of the D delays. They stated this on the call but it was probably overlooked. People were working massive overtime (production all the way to delivery/ownership specialists). In addition, they also had to pay for extra shipping costs.

 

[Lump]

They admitted to being surprised by the demand for the "D", they were too optimistic with delivery dates & when they ran into problems with seats, EPA rating confusion due to unfinished firmware some orders were canceled & other owners wanted the car for X-Mas & for the 2014 tax credit, the "D" some have called a distraction, I call it a temporary disruption that they should have prepared for better. Delivering a "new car" 6 weeks after introduction was way too optimistic causing them to scramble once again.

 

[sandpiper]

Audi will spend the next 6 years putting out press releases about the electric models they're never going to release. Then they'll spend the next 10 years putting out press releases about factories they're never going to build. Then they'll target shipping their Tesla-killer for 2030. Then they'll never ship it.

The point of my post is that Audi needs to put up or shut up. They are perhaps the least likely company to act on EVs given their past behavior. They're all talk.




View attachment 72080

Cumulative charts are really deceptive. If you look at the slope of the chart, it looks like demand is pretty much constant for the last 18-24 months.

 

[Robert.Boston]

Cumulative charts are really deceptive. If you look at the slope of the chart, it looks like demand is pretty much constant for the last 18-24 months.

But because cars are a durable good, there is information in this chart: in 2010, there were basically no EVs or PHEVs on the road, while now there are over a quarter million households with an EV. When people know someone with an EV, they are more likely to consider an EV when they are next in the market.

 

[CHGolferJim]

And untapped demand is massive with such limited product offerings in both categories re features and price points.

 

[FANGO]

Cumulative charts are really deceptive. If you look at the slope of the chart, it looks like demand is pretty much constant for the last 18-24 months.

And if you look at the slope of the PHEV portion, you will see dropping hybrid sales and increasing EV sales. So demand for EVs is rising quite a lot as it has been for years.

 

[deckofficer]

I totally agree about keeping the model 3 simple, but I think it will be made of aluminum. Don't worry, the industry will move toward aluminum and it won't represent a risk when the time comes.

I think Ford has already made the switch to aluminum for the most popular truck in the US, the F150.

 

[JST]

I think Ford has already made the switch to aluminum for the most popular truck in the US, the F150.

Not just the most popular truck--the most popular vehicle, period, by a fairly substantial margin.

And while the F-150 only uses aluminum for the body (and not the frame), I agree--it heralds a shift that will see aluminum becoming very mainstream over the next few years. I don't see any barrier to using it in the Model 3.

The real question is when/whether Tesla is going to move to more exotic materials, like carbon fiber.

 

[Cosmacelf]

Also, with regard to Model 3 demand, I seem to remember Elon mentioning offhand that for Model 3, they may have to finally resort to advertising. My point is that there are some huge demand generators that Tesla hasn't used to date.

 

[CHGolferJim]

Roughly how much heavier would the MS be if made with steel, and how much range loss?

 

[Saghost]

Roughly how much heavier would the MS be if made with steel, and how much range loss?

I don't think anyone has a real answer outside of Tesla, but I might be able to give a general impression.

For the 2002 generation A8, Audi went to Aluminum construction - and VW developed the Phaeton shortly thereafter on basically the same platform but with a steel body. For some reason I'm only seeing specs for the 2004 A8L online, with a three inch longer wheelbase than the Phaeton, which should give a slight advantage to the Phaeton, although their overall lengths are basically the same. Lots of minor variations in equipment, but it is probably the closest comparison you're going to find.

With the same 4.2L V8 and AWD powertrain, Edmunds says the 2004 A8L weighs 4399 lbs, and the 2004 Phaeton weighs 5194 lbs. So with cars that had somewhat lower crash requirements but were a little bit larger, the aluminum structure appears to have saved ~800 lbs.

I don't have an easy answer on range, but if I remember right, GM gave a number when they were talking about how the weight was a relatively small impact - I think it was 200 pounds extra would reduce the AER by one mile (of 35, presumably - so a ~5% increase in weight they expected to have a ~3% effect on electric range.)

800 pounds on a 4600 pound Model S would be a 17% increase in weight, so if my recollection of GM's statement on their modelling is applicable to the Model S and the loss stays reasonably linear, you'd expect to see a ~9-10% decrease in EPA rated range - maybe 25 miles.
Walter

 

[CHGolferJim]

800 pounds on a 4600 pound Model S would be a 17% increase in weight, so if my recollection of GM's statement on their modelling is applicable to the Model S and the loss stays reasonably linear, you'd expect to see a ~9-10% decrease in EPA rated range - maybe 25 miles.
Walter

Appreciate your effort there. EVTripPlanner shows no difference in rated miles or energy usage between Burlington NC and Plymouth NC with all conditions being the same at 200 vs. 1000 lbs.

 

[Saghost]

Appreciate your effort there. EVTripPlanner shows no difference in rated miles or energy usage between Burlington NC and Plymouth NC with all conditions being the same at 200 vs. 1000 lbs.

I have no idea how EVTripPlanner built their range model. I suspect they may be using the weight only in the calculation of potential energy costs (extra power to climb hills, extra regen to descend,) rather than including a change in the flat ground costs due to rolling resistance.

The reason I referenced the GM quote is I haven't seen a comprehensive study of the impact of additional weight on range in EVs, so it wouldn't be surprised if EVTripPlanner didn't have the data available to model it correctly.
Walter