2017 Investor Roundtable:General Discussion

[Starno]

Design studio Model 3 for non-employees open in 6-8 weeks Elon standard Time... I fear the 5k/week production rate end of 2017 is off the table.

Will see.

He also said after " Bear in mind that the production ramp is an exponential curve. Late Oct is possible, but not certain. Literally every day makes a big difference. ".

If everyday makes a difference, it's possible to be off of 5k a week end of 2017 until November, and suddenly achieving it.

 

[Mike Smith]

Extended warranty "doesn't matter"?

 

[ValueAnalyst]

Will see.

He also said after " Bear in mind that the production ramp is an exponential curve. Late Oct is possible, but not certain. Literally every day makes a big difference. ".

If everyday makes a difference, it's possible to be off of 5k a week end of 2017 until November, and suddenly achieving it.

Sounds to me that it's delayed by about four weeks, so 5k/week end-Jan... could be delayed longer or may resolve issues earlier, but that seems to be the more likely outcome at this point.

Pushed semi event back by two weeks... I think that can be an indication of timeline as well.

 

[JRP3]

I fear the 5k/week production rate end of 2017 is off the table.

I never really thought it was on the table.

I have to admit when I first heard the news that the Semi reveal was delayed I had some negative thoughts but then I read why it was delayed. Well done Elon.

 

[TMSE]

Extended warranty "doesn't matter"?

I guess Elon meant that Extended Warranty doesn't matter as part of configuration. Ofcourse, you have the option to buy it before the sale closes.

 

[ValueAnalyst]

Looks like Elon is prepping the sleeping bag for some quality time on the M3 line.

I hope they are able to work out the kinks quickly. It looks like the reality is that the line won't be running smoothly until December. The question is - once the bottlenecks are resolved, will production jump up to 5k/week in short order? That's what Elon seems to be insinuating.

Again - short-term issue - but will probably impact Q3 earnings and SP for now. Irrationality will probably drive the price down to ~300 before December if I had to guess. I'll be waiting with my wallet.

My 2c: anything below $320 is very unlikely at this point. I have a price in mind for significantly increasing leverage, and it's not too far from that.

 

[jhm]

I think (as strictly an amateur and consumer) that this is the line Sweden has taken, splitting the few big utilities into 1) power generation, 2) power transfer and 3) power selling. There are now many companies and former local utilities competing for customer money, to an extent where it's actually foolish to stay with one supplier after the alluring low price no longer applies (usually one year) and there are businesses (i.a. Elskling) doing nothing else than comparing prices. Of course, this will not last forever, but I know my daughter picks up a new contract periodically, and her prior supplier can't match the low marketing price. Suppliers buy power on the spot market, and the consumer gets two bills, one from the owner of the power lines. And of course it's all taxed, plus sales taxed.

What I am suggesting is a little different. Any consumer can participate in the local market without a rate plan that protects them from price volatility. Rate plan other than market prices is simply a financial product, a derivative. I've you've got smart devices at your home you might not need a financial product to shield you from market rates. For example, you decide that your A/C will only run if the current price is below X, or that your car will only charge at prices below Y. This sort of thing protects you from really high prices, while providing a reduction demand when supply is tight. This is something that is sorely lacking in most residential rate plans, and it actually drives up cost for everyone.

 

[JRP3]

I guess Elon meant that Extended Warranty doesn't matter as part of configuration. Ofcourse, you have the option to buy it before the sale closes.

Or maybe the standard warranty will be so good there won't be a need for extended warranty?

 

[TMSE]

Or maybe the standard warranty will be so good there won't be a need for extended warranty?

standard warranty is listed here: Model 3

You need extended warranty if you want limited vehicle warranty coverage beyond 4 yrs/50K miles.

 

[ValueAnalyst]

I think it's safe to say Tesla won't hit 200,000th U.S. delivery before April 1, so 2Q17 and 3Q17 deliveries should all get the full federal tax credit.

 

[D-egg-O]

Tesla replaces Model 3 headlights, battery, seats, and more while going through ‘production hell’

Sources familiar with those changes confirmed to Electrek that they had to make over a half dozen of them. In most cases, the vehicles are still performing normally, but Tesla wants to replace a now “prototype” part with a production one or it has improved on a production part through the deployment of the Model 3 manufacturing lines.

 

[22522]

Extended warranty "doesn't matter"?

From a technical view, failure rates look like this bathtub curve.

If the floor of the bathtub is not near zero, there is a design or manufacturing defect in a car designed for a million miles.
The normal warranty takes care of infant mortality. A recall should take care of anything after that, which there should not be.

http://www.weibull.com/hotwire/issue21/ht21_1.gif

 

[Alketi]

I suspect the Model 3 delay pushes the smaller battery option to early 2018, which, in the grand scheme of things is a non-issue IMO.

The other items in the Electrek report (seats, headlights, etc) seem mostly benign and solvable.

I'm interested to know what the issue was with the battery pack. We know Elon was just at the Gigafactory the other day, which makes it hard to imagine his presence isn't related. I guess we don't have too much information for informed speculation, but my questions would be -- Was it a production issue? Was it an assembly issue? Was it a component issue?

And, is it solved?

 

[ValueAnalyst]

There average power consumption is 20 TWh/year or 2.3GW. If they were to partition the whole territory into microgrids capable of island mode (ability to distribute power while cut off from transmission lines or central generators). Then they would likely need around 3 GW of power and more than 3 GWh of energy storage capacity. What this battery power provides, beyond an immediate coverage of power when cut off, is the ability to integrate other generation resources within the microgrid. So for example, any local solar can still keep generating power and that power can be distributed across the microgrid. Generators can be brought in and the power is shared too.

So about 3 GW would be great to have on hand in preparation for a massive storm. In the aftermath of Maria, they are going to need to prioritize where limited battery resources can be deployed. I doubt that Tesla has a spare 3 GW just sitting at the Gigafactory. So Tesla should be able to help with a couple of small microgrids.

But the longer term opportunity to is to sell something on order of 3 GW and 12 GWh, plus a bunch solar. As they did on Kauai, they could build out integrated solar and battery systems for overnight power at price now likely below 12c/kWh. This is much cheaper than running diesel gensets overnight and it adds to overall resiliency. Such a solar+storage facility could anchor a microgrid while providing cheap power to the macrogrid. Even industrial power is over 18c/kWh, so solar+storage is a good deal for industrial and commercial customers.

Tesla Energy has a pretty substantial long-term opportunity to bring lower cost and more resilient power to this territory. So doing a great job with the near term recovery will serve them well to win a long-term project stream.

I'm still thinking about the numbers you laid out and having difficulty wrapping my head around the scale of this project.

How quickly can Tesla even produce 3+ GWh of storage? Surely not in 1H18 if Model 3 is to ramp up to 5,000 cars per week by January and 10,000 per week some time in 2018. Model 3 alone can eat up nearly 25 GWh in 2018.

Tesla will have to bring in a partner again.

 

[D-egg-O]

I suspect the Model 3 delay pushes the smaller battery option to early 2018, which, in the grand scheme of things is a non-issue IMO.

The other items in the Electrek report (seats, headlights, etc) seem mostly benign and solvable.

I'm interested to know what the issue was with the battery pack. We know Elon was just at the Gigafactory the other day, which makes it hard to imagine his presence isn't related. I guess we don't have too much information for informed speculation, but my questions would be -- Was it a production issue? Was it an assembly issue? Was it a component issue?

And, is it solved?

If I had to guess, it would be assembly process related. Replaced battery packs were built with non-production assembly tools/processes (i.e. by hand or/or non standard process). New packs may be validated to finalized production control plans (PCP) using intended tooling.

Then again, it could be someone found out tool 45Y in station 17 that assembles the high voltage connections wasn't properly calibrated, so they proactively replaced the battery packs.

TLDR; it's anyone's guess really.

 

[22522]

I suspect the Model 3 delay pushes the smaller battery option to early 2018, which, in the grand scheme of things is a non-issue IMO.

The other items in the Electrek report (seats, headlights, etc) seem mostly benign and solvable.

I'm interested to know what the issue was with the battery pack. We know Elon was just at the Gigafactory the other day, which makes it hard to imagine his presence isn't related. I guess we don't have too much information for informed speculation, but my questions would be -- Was it a production issue? Was it an assembly issue? Was it a component issue?

And, is it solved?

Don't know if you saw the labor content in the battery packs prior to automation. The information was public for just a few hours last May?

The requisition to purchase the automated pack equipment was approved at that time. So I think that equipment is just now coming on line, ....

 

[jhm]

I'm still thinking about the numbers you laid out and having difficulty wrapping my head around the scale of this project.

How quickly can Tesla even produce 3+ GWh of storage? Surely not in 1H18 if Model 3 is to ramp up to 5,000 cars per week by January and 10,000 per week some time in 2018. Model 3 alone can eat up nearly 25 GWh in 2018.

Tesla will have to bring in a partner again.

You're right. The scale of Model 3 is substantial, maybe 7 GWh over the next 6 months. So maybe doing 3 GWh for PR in that time frame is not such a stretch.

I guess it is such a big jump from what we've seen in SA and CA, it seems beyond reach to me. But I'm sure Musk has a much view of what capacity Tesla has, so I'll leave that for him to figure out.

I'm reading that PR may be looking at network with 70% renewables. So with that in mind, we could be looking at a base system with 3 GW / 12 GWh. The price tag on this would be $3 billion or more. Here I'm thinking of the $250/kWh pricing that Musk had tossed out early on in the SA negotiation. SA was more interested in 100MW than something like 25MW/100MWh. So the final bid was much higher than $250/kWh likely because need for lots of inverters. But if PR really needs substantial energy storage and not just a short burst of power, then we may be looking at 4 GWh per GW at a cost of $1/W. So yeah, a $3B deal could be on the table.

I do think a 12GWh project would take a year or more to complete, but damn what a grand scale that would be.


Rosselló comienza conversaciones con Tesla

 

[EinSV]

This is going to happen fast. Very fast. Be interesting to see how quickly Tesla can ramp TE.

 

[Mike Smith]

https://jalopnik.com/tesla-model-3-production-is-jammed-up-because-parts-are-1819197180

Update, 6:30 p.m.: A Tesla spokesperson sent along a statement to Jalopnik that reiterates some of the earlier points in the company’s comment to the WSJ.

'This reporting is fundamentally wrong and misleading. We are still in the beginning of our production ramp, but every Model 3 is being built on the Model 3 production line, which is fully installed, powered on, producing vehicles, and increasing in automation every day. However, every vehicle manufacturing line in the world has both manual and automated processes, including the Model S and Model X line today. Contrary to the Journal’s reporting, this is not some revelation. As we’ve always acknowledged, it will take time to fine-tune the line for higher volumes, but as we have also said, there are no fundamental issues with Model 3 production or its supply chain, and we are confident in addressing the manufacturing bottleneck issues in the near-term. We are simply working through the S-curve of production that we drew out for the world to see at our launch event in July. There’s a reason it’s called production hell.'

 

[BioSehnsucht]

"increasing in automation every day" sounds like while maybe the line is fully installed, not everything that is intended to be handled by robots is working and some steps are being done by hand that were intended for robots (i.e. not by robots, I don't mean they're building the individual assemblies but rather installing assemblies by hand)