2017 Investor Roundtable:General Discussion

[Dagger]

And then, we're also thinking hard about, where do we put Gigafactorys three, four, five and six? We expect to keep the majority of our production in the U.S., but it's, obviously, going to make sense to establish a Gigafactory in China and Europe to serve the markets there, because it's not to build cars (29:23) in California and truck them halfway around the world, particularly when you're trying to make things as affordable as possible – that really hurts.

So we're thinking hard about that. I think we'll have some announcements on at least a few of those locations before the end of the year, but we don't expect to spend significant money on them. It's just identifying the location, doing the long-lead time stuff, the permits, the planning. This doesn't cost a lot of money. It's only when you really start moving dirt and putting up concrete and steel and buying equipment that the big money starts to be required.

 

[JRP3]

"if it is not, at the end of the year, it will be very close," but yes, generally on track.

Some here have pointed out that there will be a delay between the demo ride and release to customers in part due to regulation. Both houses of the Congress will vote on related proposed legislation this later this year, and this is something investors and customers should follow closely.

"It is certainly possible that I will have egg on my face on that front, but if it’s not at the end of the year it will be very close," Musk said.

Elon Musk said Tesla may delay its cross-country road trip in a self-driving car

I'm guessing Elon will need to clean his face if he's already hedging at this point. Something those breathlessly posting about impending autonomy should consider.

 

[ValueAnalyst]

Elon Musk said Tesla may delay its cross-country road trip in a self-driving car

I'm guessing Elon will need to clean his face if he's already hedging at this point. Something those breathlessly posting about impending autonomy should consider.

It ain't over till the fat lady sings.

Having said that, I have already adjusted my Tesla Network assumptions based on feedback from more informed TMC members on the subject.

Due to slower ramp assumptions, Tesla Network revenue/profit do not comprise a meaningful portion of total until 2022/23.

 

[Curt Renz]

Jeez... clickbait much?
View attachment 239437

One must wonder how many of those cancellations were by those intending to buy a Model S or X instead?

 

[MP3Mike]

I just want to point out a little detail regarding the 1800 new reservations per day:

people are making them knowing that they won't get the car until late 2018, and won't qualify for the tax incentive...

I think you are giving people too much credit. Most people have no idea when the full $7,500 credit will expire and probably think they will get it. So there will be more cancellations once they figure that out.

 

[The Blue Owl]

And then, we're also thinking hard about, where do we put Gigafactorys three, four, five and six? We expect to keep the majority of our production in the U.S

I noticed that too, and the most interesting thing to me is that he skipped Gigafactory no 2. Maybe the plans for that one are more advanced than what the market expects.

 

[phigment]

I noticed that too, and the most interesting thing to me is that he skipped Gigafactory no 2. Maybe the plans for that one are more advanced than what the market expects.

GF2 is the Buffalo solar panel plant.

 

[schonelucht]

One must wonder how many of those cancellations were by those intending to buy a Model S or X instead?

Some for sure, but I think the majority would have switched over to a used S/X instead.

 

[The Blue Owl]

GF2 is the Buffalo solar panel plant.

Oh, right. Nevermind then.

 

[aznt1217]

One must wonder how many of those cancellations were by those intending to buy a Model S or X instead?

Probably some, but the reservations were transferable to S/X so I doubt they'd be treated as cancellations as Tesla would have to treat the credit card fees as a sunk cost. I legitimately think the whole trump Elon thing led to a couple cancellations. That and probably people just realizing they needed a car much sooner than was being quoted.

 

[AlMc]

More battery production on the way, but timelines show there will be some time before they are up and running. Thanks FredL

A new massive battery gigafactory is coming to Germany

 

[stealthology]

TSLA at Baird - has $368 tgt

Continue to highlight TSLA as a top pick for 2017. Q2 results were better than we feared when we previewed the quarter. Importantly, cash balance, demand commentary for all vehicles, and Model 3 margin ramp expectations were positive. Although TSLA is now in “production hell,” we recommend investors own shares into the Model 3 ramp, which should be a several-month period and coincide with positive catalysts as cars are delivered and reviewed, and TSLA shows investors it can “make money” on the Model 3

Brinkman TSLA @ JPM

Tesla Inc (TSLA): 2Q Better But 3Q Guided Softer; Expect Positive Reaction But Remain Cautious, Including on Model 3 Ramp / Capex: What we expect investors to focus most on (and to drive a positive reaction in the shares), however, is management’s maintaining their earlier view of Model 3 production launch and guiding 2018 Model 3 gross margin to a strong 25%. We continue to think that execution risk remains elevated relative to the ramp of production.

TSLA @ MSCO

TSLA (+6.45%): Auto gross margin (ex ZEVs) was 120bps higher than our estimate and cash burn (while $1.2bn) was more moderate. Early Model 3 launch milestones look strong, but the $2bn of 2H capex will make your eyes water. Time will tell if they are tears of joy.

TSLA at UBS

Q2 EPS beat due to ZEV credits (see FR). The stock is up
premarket as TSLA said it had very high confidence in reaching its 20k/week
target in 2018 and hitting 25% Model 3 margin targets. However, TSLA's H2
capex guide of $2bn implies more cash burn, & H2 margins guidance was
worse than our est. While TSLA has targeted 30% S/X margins, margins are
now expected to be <25% in Q3 due to weak S/X mix. If the higher-priced
S/X margins are <25%, reaching 25% Model 3 margins seems even more
challenging.

TSLA at Bofa

TSLA reported 2Q17 adjusted EPS loss of $(1.33), above our estimate of $(1.50) and the Bloomberg consensus of $(1.87). Key takeaways were as follows: (1) Revenue of $2.89bn was above our $2.39bn estimate, driven by higher-than-expected ZEV (zero-emission vehicle) credit revenue and a greater percentage of TSLA�s vehicles being purchased (immediate revenue recognition) rather than leased; (2) gross profit was a bit better than expected (23.9% margin vs. BofAMLe 21.9%), again aided by $100mm in ZEV revenue (that rolls on at 100% margin); (3) op expenses (SG&A, R&D) of $901mm were below our $953mm forecast, with SG&A much lower than expected and R&D a bit higher. Following the 2Q results, we are slightly lowering our forward estimates, and our PO to $155 from $165 - TSLA at Bofa

TSLA at Piper

We are increasing our price target to $386 following Q2 results. It's true that the Model 3 production ramp is daunting, but there's seemingly a worldwide commitment to helping TSLA achieve its targets (from suppliers, consumers, and investors alike). Cash flow is set to improve, and July was the best-ever month for orders. There's too much momentum to bail now

TSLA at DBAB

Tesla’s Q2 results ($2.3 bn Auto Revenue; 25% Auto gross margin in Auto; $264 MM EBITDA; $1 bn cash burn; $1.16 bn cash burn ex collateralized lease borrowing) were generally in-line with our expectations (we est’d a $1.36 bn cash burn for Q2; the difference was largely capex being pushed into 2H). But there were broader, largely positive takeaways from Tesla’s Q2 call -

 

[Krugerrand]

Is anyone a Morgan Stanley client? I heard Adam Jonas updated his notes. Would be interesting to see what he said.

It would? Okay, maybe mildly interesting to see if he still believes Tesla will produce and deliver 0 Model 3's in 2017.

 

[The Blue Owl]

The giants are awakening! (Or dying; it's not clear just yet.)

From the Financial Times:

Germany’s carmakers feel the Tesla shock

Diesel is dying and the only question is how long it will take

There is plenty of demand for the new Tesla 3; the question is whether Elon Musk can produce them all. BMW and Daimler have the converse problem: they are good at making diesel cars but who wants one?

After decades of success, dominating the global luxury market with impeccably designed engineering marvels, Germany’s carmakers face their iPhone moment. Like BlackBerry and Nokia before, they are confronted with a US company selling an elegant device based on superior technology.

BMW, Daimler and Volkswagen executives will gather in Berlin on Wednesday with ministers at a “diesel summit” to discuss how to mitigate the technology disaster that the industry has brought on itself. They might as well not bother: diesel is dying and the only question is how long it will take.

The $35,000 Tesla 3 is seizing the halo from Germany’s iconic industry. The US industry never offered any real competition for its luxury driving machines: a Cadillac is no Mercedes. But Mr Musk has eagerly taken on the challenge that Detroit long ducked: he has more than 400,000 pre-orders for his creation, which went into production last month across the bay from Silicon Valley.

Tesla’s strategy of being more integrated than other carmakers has echoes of Apple, which makes its own mobile chips and designs its own software

Tesla’s founder is a showman who often over-promises, but the fates are with him. He could not have picked a better moment to start selling his first volume car. Not only is VW still embroiled in a scandal over its illegal use of software to disguise vehicle diesel emissions, but the top five German carmakers are under investigation by antitrust authorities over whether they formed a buying cartel.​

 

[schonelucht]

More battery production on the way, but timelines show there will be some time before they are up and running. Thanks FredL

A new massive battery gigafactory is coming to Germany

Unless we are willing to put trade barriers on the Chinese, all this is too little too late. China today has a yearly manufacturing capacity of 100GWh EV batteries. Granted 2/3rd of that is still LFP but they are transitioning rapidly. Government mandate of 260kW/kg on the pack level requires a minimum of NMC by 2020. Most capacity added next year (projected to be around 40GWh on year basis) will be NMC/NMA. No one but Tesla is playing in that league and 34GWh by 2028 is certainly not it.

 

[TrendTrader007]

Bought 2000 at $345.60

 

[Reciprocity]

One point I don't think anyone here has commented on yet: at the very end, Elon indicated that the cross-country autopilot demo is still on track for the end of the year. There has been a lot of scepticism about this, given the slow AP2 roll-out, but it seems that their internal software must be in good shape.

The problem is that people still conflate AP2 with FSD. AP2 was an inconvenient band aid forced on the company by the bad break up with Mobileye. In a prefect world, they would have leverage AP1 while building out EAP features on the FSD system and eventually full FSD. From a technology stand point, they are very different solutions with very little overlap. I have my doubts about Tesla having complete high def 3d maps by the time they do the demo, but as long as they do a planned route, this would be simple. Elon made it seem at the Ted talk is that the route would not be pre-planned, so we will see. What they finally decide to do will be very telling. To me it will mean FSD is farther away if the route is pre-planned. I would like to see the end point be changeable by us voting on twitter in the middle of the trip.

AP2 has only two main features; Its basically TACC + Lane keeping. The lane keeping part is something that would be shared with FSD, but only as a backup to High Def 3D maps, which will have paths for each lane built in. The maps should tell the car the exact path to take and be accurate down to 5-10cm, the AP2 like features would help the car not run into things using TACC. To complete a road trip like this, a complete or nearly complete 3d map of the route would be required. The car would need to be able to read signs and lights around the begging of the trip and the end. Again, this can be trained fairly easily if the path is known, much harder if the destination city can change randomly. The difference is between training the system to recognize the exact signs and lights it will see vs any random sign or light.

As far as FSD features in current cars. The ability to recognize stop signs and stop lights would be an enormous first step and would have incredible safety implications. To accomplish this you would need very good 3D maps and a large amount of training on what signs and lights look like from every angle and in every lighting/weather situation. I can just see Tesla showing videos to congress of FSD interdicting and stopping someone from running a red light where a car was crossing. This is what makes me thing the regulatory hurdles will be cleared away very quickly once the car can be shown to be just 10x safer then a human.

 

[Krugerrand]

But don't think every single thing they do/say are ideal, especially for trading purposes.

A long, long time ago, in a far, far away galaxy, Elon specifically said he doesn't care about the stock price. It should therefore not come as a surprise that he'll say stuff that isn't 'ideal, especially for trading purposes'.

 

[The Blue Owl]

More battery production on the way, but timelines show there will be some time before they are up and running. Thanks FredL

A new massive battery gigafactory is coming to Germany

The article specifies that it's primarily targeted for stationary storage (non-automotive).

Edit: Another article on the same subject:

Germany to Take on Tesla With Gigafactory Rival

Terra E will focus its batteries on stationary units, Gritzka said. The project aims to tap an emerging market for mobile and non-automotive power and storage, said Gritzka. The bet rests on projected faster demand for lithium storage in the next decade.​

 

[Krugerrand]

Well, I wouldn't say that's the full transcript. Perhaps Krugerrand could fill in the 10 missing minutes?

I'm keeping that to myself - for personal profit reasons.