2015 Q2 Discussion thread for Delivery numbers, Earnings Report and Conference Call

[RiverBrick]

...

The only criticism would be that we would expect at least a couple hundred Model X in Q3. Maybe that will be around 2,000??? That would be very nice

Seems optimistic. iirc, in April TM said late Q3 for the X, but at the latest shareholder's meeting in June it was "3-4" months, which I take to mean October (Q4) or later.

 

[Robert.Boston]

I disagree re timing of first delivery. It may be on Sept.30, but I'm highly confident that Elon will strive to get the first 10 Xs delivered in Q3, much as the original Ss came right at the end of Q2'12. OTOH, I will be surprised if as many as 2,000 Xs are delivered in 2015. I know that Elon said that they will ramp faster than the S, but a slower roll-out is sensible so that any issues with the first cars on the road can be addressed prior to production of large numbers.

 

[RobStark]

Seems optimistic. iirc, in April TM said late Q3 for the X, but at the latest shareholder's meeting in June it was "3-4" months, which I take to mean October (Q4) or later.

Tesla PR clarified Elon's comments and reiterated September. Not as late as first week in October.

 

[chickensevil]

I disagree re timing of first delivery. It may be on Sept.30, but I'm highly confident that Elon will strive to get the first 10 Xs delivered in Q3, much as the original Ss came right at the end of Q2'12. OTOH, I will be surprised if as many as 2,000 Xs are delivered in 2015. I know that Elon said that they will ramp faster than the S, but a slower roll-out is sensible so that any issues with the first cars on the road can be addressed prior to production of large numbers.

Given how quickly they want to hit 2000 a week, I would have to disagree. Unless that 2000 a week is off the table and I haven't heard anything from the company to say otherwise. Unless you really see demand right now for the S at nearly 100k a year? 70-80 possibly, for 2016, but even that might be too optimistic at this point. I just want to clear 1 more car a year than the S class globally to be happy.

anyway, point being you won't get a ton of useful information on production problems in the first batch before you need to be at that large volume level. And without giving a specific number the impression given is that the ramp on the X would be the same transition in around 2-3 months what it took them 7-8 months to accomplish on the S. They know how to make their own car now there is only really the doors to be wholly new and potentially problematic. Everything else should be largely from the same supplier/build process if not actually the same exact part.

what were the large common issues with the S? 12 volt bat (they should be using the exact same electrical system in the X they are currently using), fit and finish (referring to the gaps in body panels and such, this was an issue of them largely getting the body shop working better, and the new body shop is the 2.0 version so I don't see major issue there), various motor issues... Which are still not fully resolved (it's going to be the same AWD platform in the X as stated by Elon. Not similar... The same.) there might be slightly different suspension, so maybe we go through tire wear issues again, but that's going to take 10k miles on a car to really have someone notice the issue which is going to take longer than a couple months... What else am I missing? What else is wholly new on the X to be a problem? Seats and doors... Even if there is new electronics in the car there haven't been large issues with that department on the S, so why would you expect it on the X. So for those reasons, I don't see a lot of risk in the execution.

 

[schonelucht]

Seats and doors... Even if there is new electronics in the car there haven't been large issues with that department on the S, so why would you expect it on the X. So for those reasons, I don't see a lot of risk in the execution.

Seats were a big problem with a P85D roll out and caused Tesla to miss guidance last year. Doors are so radically different from what's been done before that previous performance is no guarantee for the future. Anyway, Tesla has no choice : the X is late by several years, the window for a slow roll out closed long ago.

 

[RobStark]

Seats were a big problem with a P85D roll out and caused Tesla to miss guidance last year.

Producing the Next Generation seats in volume was a problem with Recaro.

There was no quality issue.

I suppose there could be an issue with Recaro bumping up production volume again.

 

[Gwgan]

Producing the Next Generation seats in volume was a problem with Recaro.

There was no quality issue.

I suppose there could be an issue with Recaro bumping up production volume again.

I thought Futuris is making the seats for MX, and that they have a factory near Fremont now, too.
Tesla Model X - Futuris wins next-gen Tesla Model X seat contract | GoAuto
http://www.manufacturing.net/news/2014/09/futuris-opens-manufacturing-facility-in-north-america
They made the next gen rear bench (photo on their web site) which is no longer available, if that means anything.
Would TM really give are Recaro a second chance?

 

[RobStark]

I thought Futuris is making the seats for MX, and that they have a factory near Fremont now, too.
Tesla Model X - Futuris wins next-gen Tesla Model X seat contract | GoAuto
http://www.manufacturing.net/news/2014/09/futuris-opens-manufacturing-facility-in-north-america
They made the next gen rear bench (photo on their web site) which is no longer available, if that means anything.
Would TM really give are aroma second chance?

I am pretty confident Tesla will offer Recaro front captain chairs for the Model X.

There are a large numbers of Model S owners that love the Recaros and hate the Futuris seats.

I think a lot of potential Model X owners are going to have a strong preference for the Recaros.

And they do make the Next Generation front seats for the Model S.

 

[chickensevil]

Seats were a big problem with a P85D roll out and caused Tesla to miss guidance last year. Doors are so radically different from what's been done before that previous performance is no guarantee for the future. Anyway, Tesla has no choice : the X is late by several years, the window for a slow roll out closed long ago.

I am acknowledging that there is certainly execution risk on these two specific parts of the car, but overall these are peanuts compared to the larger issues with the Model S rollout which impacted people in such a way that they couldn't even drive their cars anymore.

If the seats get messed up (I am specifically referring to the second row seats here which are anticipated to spin outboard) they still work as seats (or should) and you can still drive the car unless you are magically driving from the second row? So yeah, you will have to eat the cost of going back and fixing these seats if they break... but based on how little it dampened people's willingness to continue to sing the praises of Tesla when their actual car broke down on the side of the road due to battery and motor issues... this is not likely to be a show stopper on demand.

If the door gets messed up (I'm mostly thinking it won't seal correctly and starts leaking any other issue shouldn't be large numbers if any at all, like the doors are perma-stuck open, or they won't latch... these things are likely not to happen at all... most likely it just won't latch correctly causing it to leak... again, assuming we have a problem, which we might not) then you again, can still drive the car. The front doors are traditional doors. you can leave the broken door/doors alone and at least *use* the vehicle.

So no, I don't see these being big enough execution risks that would cause them to be cautious of a quick ramp. They will just eat the warranty costs and fix the problem on future X's and move on as they have shown the ability to do with the S.

 

[schonelucht]

If the seats get messed up (I am specifically referring to the second row seats here which are anticipated to spin outboard) they still work as seats (or should) and you can still drive the car unless you are magically driving from the second row? So yeah, you will have to eat the cost of going back and fixing these seats if they break... but based on how little it dampened people's willingness to continue to sing the praises of Tesla when their actual car broke down on the side of the road due to battery and motor issues... this is not likely to be a show stopper on demand.

As usual, the Tesla risk is not on the demand side (there is plenty of that) but on the supply side. If they have an issue with the roll-out, that will mean a guaranteed miss on delivery numbers this year in a repeat from last year. Overall it won't matter but short term, the stock will take a hit and possibly even remain with negative sentiment for a few months like they had this year.

If the door gets messed up (I'm mostly thinking it won't seal correctly and starts leaking any other issue shouldn't be large numbers if any at all, like the doors are perma-stuck open, or they won't latch... these things are likely not to happen at all... most likely it just won't latch correctly causing it to leak... again, assuming we have a problem, which we might not) then you again, can still drive the car. The front doors are traditional doors. you can leave the broken door/doors alone and at least *use* the vehicle.

We will have to agree to disagree here. Maybe it's because we see rain on a very frequent basis where I live, but a leaking car is simply not a usable car. Also, Tesla certainly will want to avoid any hint of media reports that due to latching issues the doors may open while the car is travelling. Even if those stories are without merit, like with the fire scare, it will impact perception and stock price.

 

[ev-enthusiast]

I have to admit that I still do not get the panic about the falcon wing doors.
To my opinion they are just not that much more complex than some functionality already in place in an ordinary vehicle.
- Yes, structural issues arise for the body of the car (roof), but hey, not as much as for a convertible, or am I wrong?!
- And yes, the doors open up and do not swing open, but hey, doesn't a traditional trunk lid open up?!
Biggest issues during development of a new vehicle generation normally arise during first integration and testing of the components from different suppliers.
After that is successfully accomplished, I can imagine a good ramp up of production of Model X.

 

[chickensevil]

As usual, the Tesla risk is not on the demand side (there is plenty of that) but on the supply side. If they have an issue with the roll-out, that will mean a guaranteed miss on delivery numbers this year in a repeat from last year. Overall it won't matter but short term, the stock will take a hit and possibly even remain with negative sentiment for a few months like they had this year.

We will have to agree to disagree here. Maybe it's because we see rain on a very frequent basis where I live, but a leaking car is simply not a usable car. Also, Tesla certainly will want to avoid any hint of media reports that due to latching issues the doors may open while the car is travelling. Even if those stories are without merit, like with the fire scare, it will impact perception and stock price.

I would agree that there isn't likely to be a real risk to demand, I was just acknowledging that way off on the off chance there is a major issue with the Model X it would be limited very likely to one of the two scenarios mentioned and essentially neither of them are likely to be so dramatic as to totally scare people away from the car. If, as you say, there is an issue with the supply, at most they make a couple hundred extra model X that they shouldn't have made and need to sit on them until they get the seats they need, divert the rest to the Model S, once the supply issue is resolved go back to finishing the Model X orders and resume normal operations. We saw this with the D units and the next gen seats. They shelved the P85D's until they got the issue resolved but they didn't shut down the entire factory over the issue. The line is designed specifically with flexibility in mind. So switch full speed back to the S and therefore the total numbers would be down by a small amount... but nothing too dramatic. And if it is caught at the beginning (like say, early Q4) they will likely get those seats in in time to make the deliveries anyway so all will be fine. The big reason for the 1200 cars stuck in the pipe at the end of Q4 was more likely to do with the shipping issues/strike vice the seatgate issue. Unless we have another port strike, this is a non-issue.

And about rain, I would point out that presently 50% of the sales are going to NA, and 50% of those are going to CA (where it almost never rains... hence why they are in a like 4 year drought right now). Most of the early Model X are likely to be primarily delivered in CA. Therefore any door related issues are statistically less likely to cause the car to become undrivable. (This is if we even have a door issue... which I am not convinced that the doors are going to be a problem at all. I am simply trying my best to point out what I see as the largest risk... which isn't really something to be worried about at this point). But yes, generally you can't drive a leaky car in the rain as that can be problematic. So England and whereever else it tends to rain almost all the time this would be a bigger issue. But I don't see a large volume of cars going over there at first. So the risk of doing a slow rollout vice the risk of there being major problems? I would lean toward weighing heavily on a fast roll out.

 

[Benz]

Tesla Announces Release Date for Second Quarter 2015 Financial Results

PALO ALTO, CA -- (Marketwired) -- 07/22/15 -- Tesla (NASDAQ: TSLA) announces that it will post its financial results for the second quarter ended June 30, 2015, after market close on Wednesday, August 5, 2015. At that time, Tesla will issue a brief advisory release containing a link to the Q2 2015 Shareholder Letter, available on the company website. Tesla management will hold a live question & answer webcast at 2:30pm Pacific Time (5:30pm Eastern Time) to discuss the Company's financial and business results and outlook.

What: Tesla Q2 2015 Financial Results and Q&A Webcast
When: Wednesday, August 5, 2015
Time: 2:30pm Pacific Time / 5:30pm Eastern Time

Shareholder Letter: http://ir.teslamotors.com
Webcast: http://ir.teslamotors.com (live and replay)

Approximately two hours after the Q&A session, an archived version of the webcast will be available on the Company's website.

For additional information, please visit ir.teslamotors.com.

Source: Tesla Motors, Inc.

 

[schonelucht]

Has anyone already done the calculation on how much revenue we expect? I suppose it's not as straightforward as it used to be with a new ASP due to model 70 being a larger part of the mix?

 

[anticitizen13.7]

I have to admit that I still do not get the panic about the falcon wing doors.
To my opinion they are just not that much more complex than some functionality already in place in an ordinary vehicle.

People will assume that something different and/or new will have problems.

I'm not worried about the doors. I'm far more concerned with the production timeline and ramp up speed. Mass production is difficult, and there's always the chance for any number of things to go wrong. On the plus side, Elon wrote in his latest blog post on the Tesla website (July 17, 2015) that Model X is on track for delivery in 2 months. That would put Founders Series vehicles on the road by mid to late September. Hopefully Tesla will be able to deliver.

As far as the conference call and shareholder letter, I'll be looking for specific info on the Model X schedule. This will impact Tesla's ability to meet guidance of 55k vehicles delivered in 2015. If the Model X website studio isn't up by the time of the earnings release, I'll be looking for info on that as well.

 

[Blvr888]

There should be two positive effects on the earnings coming from the start of P85D/85D deliveries (with presumably higher margins) outside of the US and after price increases in Euro at the end of last years with cars delivered in 2Q.

 

[hobbes]

From Short-Term thread:

http://www.zacks.com/stock/news/182842/3-reasons-to-buy-tesla-motors

2.) Generating More Revenue Each Quarter

Regarding the revenue, Tesla’s 2015 first quarter was promising. Adjusted revenues jumped 55% to $1.1 billion in the reported quarter, surpassing the Zacks Consensus Estimate of $1.04 billion. On reported basis, revenues increased 51.5% to $940 million.

Furthermore, it has been reported that the upcoming second quarter revenue is expected to be the highest on record, at $1.16 billion, from 2014’s second quarter total of $857.5 million.

Don´t know what the original source is though.

 

[Bgarret]

From Short-Term thread:



Don´t know what the original source is though.

Someone likely took Q1 earnings of $1.1 Billion, added $150 million (1500 more Model S at $100k ASP) and shaved off a bit to be conservative. Likely $1.2 -1.25 Billion in adjusted Revenue for Q2.

 

[BoerumHill]

From Short-Term thread:



Don´t know what the original source is though.

I presume one of the Zacks or their lackeys came up with the estimate. It's what they do.

ETA:

Nope!

Click through the Zachs writeup and you'll see that its from an earlier report.

Analysts polled by Thomson Reuters expect Tesla to report a loss of $130 million, or 97 cents per share, compared to $61.9 million, or 50 cents per share, in the same quarter last year. But revenue is expected to be the highest on record, at $1.16 billion, from $857.5 million in the year-ago quarter.

 

[neroden]

I have to admit that I still do not get the panic about the falcon wing doors.

Me neither. They seem like the pop-out door handles. Which did have some problems, but seem to have paid off massively in marketing value.

- - - Updated - - -

People will assume that something different and/or new will have problems.

I'm not worried about the doors. I'm far more concerned with the production timeline and ramp up speed. Mass production is difficult, and there's always the chance for any number of things to go wrong.

I'm not very worried about this, myself. The production timeline hasn't slipped for quite a while, which is a very good sign. The enormous number of shared design features with the Model S makes this a much simpler project than the Model S. (They also don't have to set up a brand new factory from scratch.)

I'm also not worried about the Gigafactory given that it appears to be ahead of schedule. The Supercharger deployment seems to have finally gotten up to speed (apparently because Tesla hired a single national subcontractor to permit & build all of 'em, and they're good).

I remain worried about the Model 3 production schedule, but I am most worried about the Service Center deployment, which seems to be way behind schedule -- and frankly rather disorganized, given that several service centers have had to close and relocate. And I'm worried that at some point Tesla will saturate the Model S market. And I'm worried that the communication problems and internal disorganization is not getting resolved. So there's my main worries list as an investor.

Given that I'm a pessimist, if I'm not worried about Model X delivery schedule, you probably sohudln't be either.