2017 Investor Roundtable:General Discussion

[luvb2b]

fidelity allocates offering shares by how much commission dollars you generate. i've been one of their top revenue generators over the last 12-18 months.

i requested 5000 shares in the offering.

fidelity confirms that i got.... 25. as in twenty-five.

wow. i guess there was a lot of demand that went unsatisfied.

 

[Bgarret]

Good article. The obvious conundrum is that the 169 mil price tag is greater than the size of the renewable funding that the SA government has allocated to such projects. Perhaps this is where Mike Cannon-Brookes private funding steps in.

At around 20% IRR, I'm not sure I would want the government financing.

 

[MitchJi]

I'm affraid that skipping beta-testing is again the same hubris we've seen before (e.g. AP2 timeline). After all, traditional car makers know something about mass producing cars...

The reason that traditional car manufacturers produce Betas before release candidates has nothing to do with the ultimate quality of the car. The reason for producing Betas is that it's cheaper if there are any substantial problems. Because when producing release candidates they not only need to fix the problems, but they have to change the production equipment. But if they can produce good release candidates without producing Betas that's clearly much better. Producing release candidates (using production equipment) is faster and cheaper than building Betas by hand. The only increased risk is not related to the quality of the car but to the additional financial costs if potentially redoing the production equipment.

There are two types of problems that could surface when building the Betas. Problems with the car, and problems in the planned production process. It's beneficial to start setting up and using the actual production equipment as soon as possible. That might not sound like it's very important but for the MX the problem was production (Elon sleeping on the production line). So the extra time working with the actual production equipment could pay big dividends.


1. In this case, it appears the rest of the factory and process is simply farther along, allowing for the testing at this point to take place on a more refined article. This would eliminate the variable (or reduce it). This would be a good thing.

2. There also may have been more advanced modeling tools used to get the car to this point more quickly as well (I would not put it past the boys with the Silicon Valley mindset to advance that capability faster then the folks in Detroit).

Overall an excellent explanation. But the reason that they gave for doing it was number 2.

It is great that the production equipment is ready ! It's also good that they can do the same testing on release candidates rather than Betas.

 

[jbcarioca]

To be fair, The F 35 program tried a very similar approach by building the production equipment while flight testing. It was a disaster, even with some of the most advanced computer prototyping on the planet.

Slightly different perhaps because the F35 was still being designed when they were building production equipment. That irresistible habit of building production tooling before the design has been completed seems somehow to have missed a few things. I cannot imagine why? Modern CAD/CAM models CAD, models CAM interactively and only when both work as modeled does production tooling begin and the prototype process begins.

This has not too much relationship with the F 35 and aircraft carrier processes that skipped questions like what will power this bird?, what stealth technology will we use? and what armament will be deployed?

There is a reason why motor vehicles keep getting better and better while not getting much more expensive. Much of that is designing for manufacturing, some of it is using generic rather than custom parts whenever it will not make a difference. Much of it is designing for manufacturing that makes rejects lower, quality higher and quality better. We are just about to discover just how well Tesla has become with those tricks. I think they have already shown us with the clever multi-function robots, among other things. They may have not actually developed new industrial processes but they certainly have been uninhibited with innovation, thus allowing them to optimize rather better than most others.

You might argue I'm drinking the Kool-Aid. We'll know for sure around mid-September or so.

 

[Crowded Mind]

Does anyone know when they started producing release candidate X's?

 

[durkie]

fidelity allocates offering shares by how much commission dollars you generate. i've been one of their top revenue generators over the last 12-18 months.

i requested 5000 shares in the offering.

fidelity confirms that i got.... 25. as in twenty-five.

wow. i guess there was a lot of demand that went unsatisfied.

What's the benefit of getting shares in the offering versus just buying on the open market? I don't understand why there's any demand beyond the usual.

 

[EnzoXYZ]

fidelity allocates offering shares by how much commission dollars you generate. i've been one of their top revenue generators over the last 12-18 months.

i requested 5000 shares in the offering.

fidelity confirms that i got.... 25. as in twenty-five.

wow. i guess there was a lot of demand that went unsatisfied.

What's Fidelity's commission on the 25 vs 5000 shares? Would it be to Fidelity's benefit if shares were sold to more customers vs less with greater lots?

 

[Svetlin]

Does anyone know when they started producing release candidate X's?

I was thinking the same thing and checked their Q1 2015 letter, in which they mention they are currently building release candidate Model Xs. That was in early May 2015, and the same letter asserted that they are confident Model X will ship in Q3, which it did (6 Model X cars shipped on the last day of Q3).

So even if the Model 3 ramp is as problematic as the Model X ramp, by this time next year Model 3 should be shipping in volume. It doesn't look like the market is expecting any earlier than that anyway.

 

[Waiting4M3]

Oh, Tesla will probably be late. Aren't they always? Bet on 4 weeks. (Still very exciting.)

Now I wonder what SW the M3 RC will come out with. 8.1? or will they do new SW testing with the M3 also?

 

[JRP3]

You only need to read the story about the female engineer who raised issue about the headliner alignment, and was demoted and eventually left/fired to answer that question.

Odd how you left out the other side of the story.

A spokesperson said that Tesla had hired a “neutral third party” last year to investigate her accusations and that an “exhaustive review of the facts” concluded her “claims of gender discrimination, harassment, and retaliation have not been substantiated”.

Vandermeyden recently took out a hefty loan to buy the cheapest version of the Model S Tesla car and has a reservation for the upcoming Model 3. She is hopeful her lawsuit and public comments won’t end her career at a company she loves: “I think they’re a revolutionary and innovative company.”

Sounds as if she still works there.
Female engineer sues Tesla, describing a culture of 'pervasive harassment'

Full statement from Tesla:

Tesla is committed to creating a positive workplace environment that is free of discrimination for all our employees. Ms. Vandermeyden joined Tesla in a sales position in 2013, and since then, despite having no formal engineering degree, she has sought and moved into successive engineering roles, beginning with her work in Tesla’s paint shop and eventually another role in General Assembly. Even after she made her complaints of alleged discrimination, she sought and was advanced into at least one other new role, evidence of the fact that Tesla is committed to rewarding hard work and talent, regardless of background. When Ms. Vandermeyden first brought her concerns to us over a year ago, we immediately retained a neutral third party, Anne Hilbert of EMC2Law, to investigate her claims so that, if warranted, we could take appropriate action to address the issues she raised. After an exhaustive review of the facts, the independent investigator determined that Ms. Vandermeyden’s “claims of gender discrimination, harassment, and retaliation have not been substantiated.” Without this context, the story presented in the original article is misleading.

Tesla responds to harassment lawsuit filed by female engineer in 2016

So not only can you point out issues at Tesla, you can file complaints against the company and still get promoted. This is not to say that I think she made everything up and may not have valid complaints.

 

[Waiting4M3]

There is a reason why motor vehicles keep getting better and better while not getting much more expensive. Much of that is designing for manufacturing, some of it is using generic rather than custom parts whenever it will not make a difference. Much of it is designing for manufacturing that makes rejects lower, quality higher and quality better. We are just about to discover just how well Tesla has become with those tricks. I think they have already shown us with the clever multi-function robots, among other things. They may have not actually developed new industrial processes but they certainly have been uninhibited with innovation, thus allowing them to optimize rather better than most others.

This reminds me a bit of Intel, in their earlier days, where they came up with manufacture process that work with their chip design, and they innovated on better manufacturing quality control, and was able to get more yield and better quality chips than everyone else. Majority the US semiconductor makers closed their factories and now make their chips in Taiwan/Korea, but not Intel. Intel is still a global leader along the manufacturing front even now, just their product line is a little behind the competition like ARM/Nvidia.

 

[Waiting4M3]

I was thinking the same thing and checked their Q1 2015 letter, in which they mention they are currently building release candidate Model Xs. That was in early May 2015, and the same letter asserted that they are confident Model X will ship in Q3, which it did (6 Model X cars shipped on the last day of Q3).

So even if the Model 3 ramp is as problematic as the Model X ramp, by this time next year Model 3 should be shipping in volume. It doesn't look like the market is expecting any earlier than that anyway.

Also remember Tesla did a factory shutdown for 2 weeks in Jul/Aug 2014 for MX tooling upgrade, 9 months before the RC build in May 2015. Maybe the M3 production line is separate from MS/X and that's the reason it's brought up so much more quickly.

 

[anticitizen13.7]

A Fair Future At Tesla

I've worked at everything from established tech giants to startups with fewer than 10 people. This seems about right to me.

As a general rule of thumb, conflicts and favoritism in any large organization are inevitable. Maybe it's not fair. But the world isn't a fair place.

 

[uselesslogin]

Does anyone know when they started producing release candidate X's?

December 2015? (couldn't resist...)

 

[Waiting4M3]

December 2015? (couldn't resist...)

My understanding is that the slow ramp in MX production from Dec 2015 till mid 2016 had a lot to do with the production quality control (besides parts availability in Jan-Feb), so I'm glad they're running the M3 production line now in March. By Sep when the real volume is supposed to hit, the production line should be running smoothly, even if it follows the MX pace.

 

[EnzoXYZ]

I've worked at everything from established tech giants to startups with fewer than 10 people. This seems about right to me.

As a general rule of thumb, conflicts and favoritism in any large organization are inevitable. Maybe it's not fair. But the world isn't a fair place.

Exactly!

Maybe @mmd can point to me a company without HR issues that isn't one employee company. Even at a two employee company you will have HR problems. Reread and Think about that again.

 

[vgrinshpun]

Best analysis I've seen yet about the potential S.Australia storage projects, by Bloomberg New Energy Finance.

Tesla’s $169 Million Battery Play Is Just the Beginning

The author actually got it wrong:

There’s no formal proposal yet, but what’s being discussed in Australia would cost significantly more than many circulating estimates, some as low as $25 million. Here’s what we know so far: Mike Cannon-Brookes, co-founder of Sydney-based software company Atlassian Corp., initially approached Musk about providing 100 MW of power, roughly the size of an electricity shortfall suffered by South Australia in a February blackout. 1 The blackout was caused by bad weather and poor planning for demand, a major gas generator being unavailable, and the limited ability of traditional power sources to ramp up in time.

Megawatts measure the amount of power a battery can provide at any given time. Tesla’s battery projects typically supply a four-hour duration for each megawatt, 2 Shorter durations are common in the lithium-ion storage business, but as prices have dropped and as the size of projects increases, longer durations have become more common. Tesla prefers longer-duration projects and provides only Powerpack options for durations of two hours or more on its website. so it’s reasonable to assume that South Australia’s 100 MW project would entail a 400-megawatt-hour (MWh) battery installation. That would make it Australia’s biggest battery-capacity project, and one of the biggest on Earth.

The reason that 100MWh size was offered as a minimum is because SA blackouts were less than an hour (40-50 mins) and the power deficiency was identified as 100kW. A 100KWh battery bank discharging at a rate of 100kW will last one hour. The upper limit of the offered range - 300MWh could facilitate the same discharge rate for three hours, providing significant margin as compared to last year blackouts in Australia.

The "typical" 1 to 4 power to energy ratio referred to in an article id driven by application, and is not in any way specific to Tesla. From the point of sizing of the system for solar applications or for stand-alone BES system that is designed to store solar energy, the numbers work out in such a way that optimal sizing of the battery yield 4 to 1 ratio between the kW rating of Solar and kWh rating of the battery.

 

[Jonathan Hewitt]

 

[dirtyofries]

Someone just posted on reddit, new account, anonymous - that 60 and 60D are going away 4/16.

Model S 60 and 60D discontinued. • r/teslamotors

I'm dubious, but wouldn't be surprised either.

Edit: Confirmation in Norwegian.

 

[racer26]

Reddit reporting S 60/60D being discontinued.

Imgur: The most awesome images on the Internet

We all sort of expected it with Model 3 coming to eat S 60's value proposition.