2017 Investor Roundtable:General Discussion

[austinEV]

On Reddit: Tesla Model 3 Production line • r/teslamotors

15 cars a day right now and climbing (450/month). Seems to be right on time, depending on how fast the production rate is climbing.

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From the post:

I played with a back-of-the-envelope model and was surprised by the results. Stay with me here.

I did a rough model of what the *plan* was based on previous guidance. 100 in Aug and 1500 in Sept was always a plan for crazy exponential growth. So this 15/day made me think we were behind, but maybe just a week or two?

So I made an assumption: that the growth rate would be fixed from week to week in Aug/Sept. That almost certainly isn't right, but it's a useful model. So what rate, kind of gives 100 produced in Aug and 1500 produced in Sept:

I chose a rate (87%) that gives ~1500 in Sept. That is 64 produced in Aug, but correct within an order of magnitude (and entirely correct if you count the 40 from July, but that is cheating).

So a few observations. They basically planned to double every week. That is the *guidance*. And as it happens the second week of Sept gives you a runrate of ~16/day. (I am assuming a 4/4/5 quarter in terms of weeks).

So we could well be on schedule, even if 15/day sounds low at first blush.

 

[SteveG3]

I played with a back-of-the-envelope model and was surprised by the results. Stay with me here.

I did a rough model of what the *plan* was based on previous guidance. 100 in Aug and 1500 in Sept was always a plan for crazy exponential growth. So this 15/day made me think we were behind, but maybe just a week or two?

So I made an assumption: that the growth rate would be fixed from week to week in Aug/Sept. That almost certainly isn't right, but it's a useful model. So what rate, kind of gives 100 produced in Aug and 1500 produced in Sept:

View attachment 247288

I chose a rate (87%) that gives ~1500 in Sept. That is 64 produced in Aug, but correct within an order of magnitude (and entirely correct if you count the 40 from July, but that is cheating).

So a few observations. They basically planned to double every week. That is the *guidance*. And as it happens the second week of Sept gives you a runrate of ~16/day. (I am assuming a 4/4/5 quarter in terms of weeks).

So we could well be on schedule, even if 15/day sounds low at first blush.

nice work Austin. my recollection of the Model S ramp is that the production increases were done by steps of doubling. The slower ramp with the S meant these steps could be two or more weeks apart rather than one week apart. I think you may well have decoded the planned best case schedule.

 

[austinEV]

I played with a back-of-the-envelope model and was surprised by the results. Stay with me here.

I did a rough model of what the *plan* was based on previous guidance. 100 in Aug and 1500 in Sept was always a plan for crazy exponential growth. So this 15/day made me think we were behind, but maybe just a week or two?

So I made an assumption: that the growth rate would be fixed from week to week in Aug/Sept. That almost certainly isn't right, but it's a useful model. So what rate, kind of gives 100 produced in Aug and 1500 produced in Sept:

View attachment 247288

I chose a rate (87%) that gives ~1500 in Sept. That is 64 produced in Aug, but correct within an order of magnitude (and entirely correct if you count the 40 from July, but that is cheating).

So a few observations. They basically planned to double every week. That is the *guidance*. And as it happens the second week of Sept gives you a runrate of ~16/day. (I am assuming a 4/4/5 quarter in terms of weeks).

So we could well be on schedule, even if 15/day sounds low at first blush.

Another important parameter is the starting point. I just grabbed 5/week to be low but here is 10: Note it fits the July output better and fits the 2 points better:

Which is also a more reasonable 68% per week. It also shows that 15/day is marginally behind, but not really since that is like a day +/-.

 

[TMSE]

I played with a back-of-the-envelope model and was surprised by the results. Stay with me here.

I did a rough model of what the *plan* was based on previous guidance. 100 in Aug and 1500 in Sept was always a plan for crazy exponential growth. So this 15/day made me think we were behind, but maybe just a week or two?

So I made an assumption: that the growth rate would be fixed from week to week in Aug/Sept. That almost certainly isn't right, but it's a useful model. So what rate, kind of gives 100 produced in Aug and 1500 produced in Sept:

View attachment 247288

I chose a rate (87%) that gives ~1500 in Sept. That is 64 produced in Aug, but correct within an order of magnitude (and entirely correct if you count the 40 from July, but that is cheating).

So a few observations. They basically planned to double every week. That is the *guidance*. And as it happens the second week of Sept gives you a runrate of ~16/day. (I am assuming a 4/4/5 quarter in terms of weeks).

So we could well be on schedule, even if 15/day sounds low at first blush.

Nice model. As per ther plan, Tesla should sell about 1600 M3s for Q3. Market is very likely expecting much less, may be around 500 M3s for Q3. Anything above this should be a positive surprise

 

[Zaxxon]

Thanks for the model. Small nit to pick: either there are four weeks in Sept, or we are in week 3 of Sept, not week 2.

 

[austinEV]

Thanks for the model. Small nit to pick: either there are four weeks in Sept, or we are in week 3 of Sept, not week 2.

I was assuming the info was a week old. I guess I was thinking the spy was on paulrockets tour. But you are right that could be wrong.

 

[Zaxxon]

I was assuming the info was a week old. I guess I was thinking the spy was on paulrockets tour. But you are right that could be wrong.

That could also be the case.

 

[Krugerrand]

Oh course no one was forced to buy it. But if you didn't know Elon's propensity to..... stretch.....timelines, a newcomer to Tesla would have been fooled.

Don't change the context. The discussion is present not past (feel free to reread what you wrote that I quoted). Currently it's quite clearly stated on the website there is no date specified and that regulatory approval is also required.

 

[geneclean55]

I was assuming the info was a week old. I guess I was thinking the spy was on paulrockets tour. But you are right that could be wrong.

The 15 per day came from Trevor from Model 3 owners club. His tipster was also not the original source of info so there may well have been a delay in relayed information.
He followed it up with this comment.

 

[RobStark]

(2) Chinese manufacturers. Yes, there will consumer skepticism initially but that can change quickly. Japanese cars were barely a blip on the screen in the U.S. in the early 70s.

Toyota Motor Sales USA incorporated in 1957.

By 1972 it had a small but loyal fanbase based on reliability and fuel economy.

It had brand advocates. It was ready to take off by the time of the Arab Oil Embargo. Honda and to a lesser extent Nissan/Datsun were in a similar position.

Brands almost never get built quickly. Tesla is a big exception.

 

[22522]

Looks like people sorting things out to me. How could one expect anything different at this point?

 

[UrsS]

Seen on FOX "News" today (on the ticker tape at the bottom of the screen): something to the effect that Solar City and Tesla are laying off 200 employees in Roseville (Sacramento).
Has anybody seen or heard anything about this?
Coming from FOX this is certainly an attempt to smear/bash Tesla; but there must be a smitten of truth in that statement. Anybody any clues?

 

[larmor]

The 15 per day came from Trevor from Model 3 owners club. His tipster was also not the original source of info so there may well have been a delay in relayed information.
He followed it up with this comment.

View attachment 247292

Not news. Tesla is making a car for production now. Not 2025--bmw, 2021--random automaker. The car was designed to be mass produced. When they start coming off the assembly line it will be obvious.

 

[jhm]

that begs the question, what's your case for EV sales doubling every 2 years as an input? I hope your case speaks to the fact that if Tesla's sales are removed from the current total, there would currently be roughly 12,000 long range EV sales, ever, from all manufacturers on the planet combined. fwiw, as to the below long range EVs, their sales growth rate has been anemic compared to 50%, and possibly negative in some recent years.

This is based on history. Note that 134k plug-in passenger vehicles in 2012 grew to 774k in 2016. That is annualized growth of 55%/y. Also in that time penetration grow from 0.17% to 0.86%.

I actually like to use a logistic model, and here the logit score 0.4070 on base of -4.75 =log (.0086/(1-.0086)). This get us to 50% penetration in 11.67 =4.75/0.407 years past 2016, which is by 2028.

So why do I trust simple models like this? Well, at a fundamental level we have learning curve gains driving prices down. Pack cost have been falling reliably about 19.5%/year over this time. This puts pack prices below $100/kWh within reach of the whole industry by 2021, while Tesla may get there is few years earlier. These batteries will be flowing into all sorts of vehicle markets. Actually I think that commercial vehicles are much faster growing, at 200%/y over the last couple of years in China. Batteries are flowing into that segment because the economics are right to do so. Battery demand from heavy EVs may actually be holding back passenger EVs where the economics are not quite as favorable. But this is not a big problem because this enormous demand is driving the learning curve. So while passenger EVs grew by 42%, that ignores that BEV buses grew 9-fold over the last two years. But this is just the market for automotive batteries finding the lowest hang fruit. Once batteries hit saturation limits in various commercial markets they will flow with a vengeance into passenger vehicle markets. Even so, the slowest growth rate we've seen in passenger EVs is 42%. I see no compelling reason for this to slow down until we hit limits of saturation in that market, which is why I use the logistic model.

So when I speak of EVs doubling every two years, I view that as a conservative assumption. Once Chinese battery makers can realize a pack cost below $100/kWh, why would they slow the pace of expansion? I would expect just the opposite. So it's just a question of what segments will snap up those packs faster.

The blackest swan for the oil industry is that heavy EVs will ramp up faster than light EVs. This could cause demand for diesel to peak about five years earlier than gasoline peaks. That is, I see diesel peaking by 2020. So commercial EVs are where the action is for the next few years. But the attention of most is fixed on passenger EVs instead. Indeed it is hard to find data sources that are properly tracking the commercial EV space. This is why just about everyone is underestimating EVs.

 

[SwTslaGrl]

I'm collecting some data,

 

[mmd]

Seen on FOX "News" today (on the ticker tape at the bottom of the screen): something to the effect that Solar City and Tesla are laying off 200 employees in Roseville (Sacramento).
Has anybody seen or heard anything about this?
Coming from FOX this is certainly an attempt to smear/bash Tesla; but there must be a smitten of truth in that statement. Anybody any clues?

News is "not positive for Tesla" and comes from FOX news => Faux news! Smear/bash FOX
Tesla, SolarCity planning more than 200 layoffs in Roseville this fall
https://www.bizjournals.com/sacrame...o-lay-off-63-in-roseville-in-addition-to.html

 

[Papafox]

Here's an interesting tweet. I see lots of robots.

 

[larmor]

News is "not positive for Tesla" and comes from FOX news => Faux news! Smear/bash FOX
Tesla, SolarCity planning more than 200 layoffs in Roseville this fall
https://www.bizjournals.com/sacrame...o-lay-off-63-in-roseville-in-addition-to.html

Sometimes the market reacts positively to layoffs, since it can mean the company is more efficient and cutting costs. The market's reaction is terrible for people's livelihoods and can be contrarian indicator...

 

[PaulRocket]

I was assuming the info was a week old. I guess I was thinking the spy was on paulrockets tour. But you are right that could be wrong.

To quote Shaggy: "It wasn't me!"

 

[ValueAnalyst]

Seen on FOX "News" today (on the ticker tape at the bottom of the screen): something to the effect that Solar City and Tesla are laying off 200 employees in Roseville (Sacramento).
Has anybody seen or heard anything about this?
Coming from FOX this is certainly an attempt to smear/bash Tesla; but there must be a smitten of truth in that statement. Anybody any clues?

Why would this be a smear/bash? Tesla is likely continuing to cut down on SolarCity sales people and SG&A, as expected.