Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

2017 Investor Roundtable:General Discussion

This site may earn commission on affiliate links.
Status
Not open for further replies.
ever since i heard elon talk about cash flows increasing as model 3 production increases i've had that thought in my head. i've been trying to formalize the idea into a model but haven't yet. my view has gotten stronger since my last model s went into and out of production in about 27 hours, and then was delivered in about 2 weeks.

the basic idea is that if you have a very high materials vs. labor mix of cost in the model 3 and the suppliers are extending terms to allow payment in 60 days vs. 20 or 30, then the speed of production and delivery will be much faster than the payment cycle. tesla will collect gobs and gobs of cash weeks before it has to pay suppliers. that cash balance/operating cash flow will continue to swell until such time that the production rate levels off for 60 days.

anyone else think about this? once it starts it will be a beautiful thing to watch because it should continue for several quarters as production ramps.

This is exactly what I thought after hearing, I think, the Q3 ER. @DaveT and I had this conversation about raw material inventory cash requirements last fall. Certainly, for the Model X, there was a huge ramp of raw materials... and the ongoing delay in building the X caused a slew of problems. Just pushing the net terms past the existing quarter means a big change in the perceived cash flow requirements. So 80-90 day terms can make Tesla's financials look very different.

I think for most people, they expect that history repeats. But it doesn't, as much as it echoes... and smart people would take steps to avoid history from repeating. That doesn't mean that the Model 3 launch will go smoothly, but that if it doesn't, it is likely for reasons that aren't the same as the ones for the X. If you listen to the ER's, Musk, Straubel, and Wheeler all made these points. My biggest fear is that some supplier is still making the assumption that the Model 3 won't ramp aggressively... so they aren't putting in what is necessary to ramp, much like the situation in 2012/2013. Too many people across the industry is poo-pooing Tesla's ability to scale. I think Tesla's discussion around this at ER's and other venues is as much for those vendors as it is for us investors.
 
It is a normal part of any manufacturing process. The cells are aged and cycle tested. At that point, they can allocate them to bins. Clearly, Tesla takes a huge portion of their output. Also, it is possible that the difference between the NCR18650BE and the NCR18650B may have blurred over time... ie. more cells are now basically NCR18650B's coming off the line. Unfortunately, this level of detail is all wrapped under trade secrets.
Can they do cycle testing and age testing sufficient to determine how many cycles the cells will handle? Dahn's breakthrough is the ability to do that, but I don't believe anyone is using that technology for that purpose.
And clearly, with the Gigafactory production for future automotive applications, Tesla/Panasonic can optimize for whatever makes sense given their technologies, so much of this is moot going forward.
If Panasonic is producing cells with that much variability Tesla could have a serious problem.
 
BMW customer went to court in Germany because his i8 only went 18km on electricity and not 37km as advertised.
BMW taking back the old i8 and delivering a new i3 to the customer while paying for the difference in vehicle price.

BMW i8 Tesla killer, not.

(source: yesterday's German newspaper Bild)
But we all know that the i3 is the tesla killer. Still waiting for the drag race b/w i3 and P100DL...
 
So, the evidence seems to suggest 32xxx MX VINs were 4Q16 delivered.

If we deliver 44xxx MX VINs in 1Q17, would suggest around 12k MX, and as noted before the data seems to suggest 12-14k MS (VINs 177xxx to 191xxx ish), plus the ~2750 cars listed in the 4Q16 delivery report as "should have delivered in 4Q16", which were part of the oversized ~6.5k overhang.

12-14k MS
11-12k MX
2750 4Q overhang cars drawn down

= ~27,250 cars, or so.
 
  • Informative
Reactions: Turing
We also probably should consider that pure aluminum all else being equal, is not only subject to less fatigue resistance than is copper, but also subject to corrosion losses. Presumably a state-of-the-art aluminium cable maker is using an alloy of some sort to reduce those two negatives and probably has some quite refined cladding to seal off much of the negative risks. Fasteners must be pretty special too, else those annual connection cleanings that nobody wants to have.
We know that the fasteners are special; the company touted its special aluminum fastener expertise in the press release!
 
  • Funny
Reactions: EinSV
So, the evidence seems to suggest 32xxx MX VINs were 4Q16 delivered.

If we deliver 44xxx MX VINs in 1Q17, would suggest around 12k MX, and as noted before the data seems to suggest 12-14k MS (VINs 177xxx to 191xxx ish), plus the ~2750 cars listed in the 4Q16 delivery report as "should have delivered in 4Q16", which were part of the oversized ~6.5k overhang.

12-14k MS
11-12k MX
2750 4Q overhang cars drawn down

= ~27,250 cars, or so.
There are always going to be some cars within those VIN ranges that are in-transit at the end of quarter.
The take home for me is that MX VIN assignment, at the very least, is the same as last quarter.
MS VINS are down by 2-3000 compared to last quarter. This doesn't seem all that bad to me because if you remember, some people were gushing over the Q42016 VIN numbers.

As you mention, there is also a 2750 pronounced overhang from last quarter.
 
We also probably should consider that pure aluminum all else being equal, is not only subject to less fatigue resistance than is copper, but also subject to corrosion losses. Presumably a state-of-the-art aluminium cable maker is using an alloy of some sort to reduce those two negatives and probably has some quite refined cladding to seal off much of the negative risks. Fasteners must be pretty special too, else those annual connection cleanings that nobody wants to have. Just as body, chassis and engine components have managed to deliver some excellent benefits including corrosion resistance, so the cables are doing it. The increased size really does not mean much when coupling lower weight and lower cost. I'm curious to know how they deal with vibration resistance.
I shall preface that I'm not attempting to be pedantic, but please provide more information on corrosion losses, and how it might apply in an automotive setting? I ask as I don't have any annual cleanings on my power distro at my home, which comes in as aluminum connections, nor a lot of the power transmission lines that I'm aware of. In a salty environment this may be a different case, I admit, but if you can provide further information, it would be handy. Thanks.
 
I'd expect only the higher power cabling to be aluminum. Smaller diameter 12V wiring in aluminum might be subjected to more vibrational stress fatigue and not worth the hassle of extra support and termination methods. Copper is easy.
Agreed. Aluminum "work hardens" and can crack easier than copper, especially if in single strand solid wire. I believe that's why it's discouraged in house wiring. It breaks more easily at junctions. With larger diameter it's easier to keep the wire stationary and if the junctions are designed well, there is far less likelihood of breakage.
 
I shall preface that I'm not attempting to be pedantic, but please provide more information on corrosion losses, and how it might apply in an automotive setting? I ask as I don't have any annual cleanings on my power distro at my home, which comes in as aluminum connections, nor a lot of the power transmission lines that I'm aware of. In a salty environment this may be a different case, I admit, but if you can provide further information, it would be handy. Thanks.
Sure. Aluminum connections have been used in a fair variety of PV installations for decades, including one I made in 1989 in the Bahamas. Admittedly it was on a small, 145 acre island with salt water all around. I had to make an annual reconnection to clean developing corrosion in posts and connectors themselves. In numerous gut rehabilitations I have done (around 20 or so) I have encountered aluminum wiring several times. Usually that wiring lasts a decade or so vs 25 years or so for copper. I have owned and operated roughly 40 aircraft of different types. Most had extensive aluminum use. In overhauls and periodic inspections aluminum components have failed to most frequently. Aluminum corrodes more deeply than does copper which tends to form a protective coat, and as it ages it becomes more susceptible to damage from vibration.

As you imply, aircraft stores near say, Tucson Arizona, tend to have very little corrosion.

I do not mean to suggest that aluminum is a bad idea, only that issues related to it's use are different than are those of copper. Frankly, I suspect that the dual savings in weight and cost are influencing factors, and I mentioned above that technical advances in alloys, fasteners, enclosures all can greatly reduce some of those disadvantages. One common technique also is to establish a periodic replacement cycle, similar to that now used for some famous airbags. The airbag case is instructive too. The Takata airbags were not 'defective' but they did require periodic replacement of inflators, which they were criminally tardy in doing. Might something similar happen here. Maybe.

The lighter the vehicle needs to be the more probable it will be taht some parts will be life-limited, as is common practice for aircraft and even some cars. It seems to me the ability to shave one kg grows in importance with BEV's. Careful application of carbon fiber, aluminum and some other materials can save enough weight to require less robust wheels, brakes, suspension and so on, creating a virtuous cycle. I do not know how far Tesla will go along this road, but I do know longer range and reduced energy consumption are critical goals.

I hope taht helps without dragging out my metallurgy reference books. I'll wager some mechanical engineers among is can provide a much more compelling explanation than can I.
 
There are always going to be some cars within those VIN ranges that are in-transit at the end of quarter.
The take home for me is that MX VIN assignment, at the very least, is the same as last quarter.
MS VINS are down by 2-3000 compared to last quarter. This doesn't seem all that bad to me because if you remember, some people were gushing over the Q42016 VIN numbers.

As you mention, there is also a 2750 pronounced overhang from last quarter.

VIN tracking is an imperfect science, and there will always be outliers. We know that the factory does assign VINs sequentially, but does not produce them sequentially. This means that some VINs much lower can end up later in production (usually if the buyer wants it delayed for some reason).

When making these estimates, I try to look at the date that vehicles entered production, and they do tend to roughly follow a band of VINs within a given quarter. I try to estimate the ends so that the outliers blending with the preceding and following quarters roughly balance out.

4Q16, we thought there were around 27k vehicles produced based on VIN tracking, and the actual was more like 25k, but only 22k delivered, mostly due to that overhang issue on EU deliveries.
 
Yes! They've been suffering recently as their demand and attention shifted smaller while key rivals invested in the big vehicles. The Bentley Bentayga, Maybach MB G-class monstrosityhttp://www.caranddriver.com/reviews/2018-mercedes-maybach-g650-landaulet-first-ride-review and other show just how much of the high end luxo-barges without BMW watching. Oddly MB and BMW are doing taht without spending much money either, just picking from existing parts bins. BMW really needs to support all their on again/off again/on again i program with some luxo barges of their own. Sadly they've a smaller store of wild excess in their existing parts bins because they've been a bit 'sensible' lately, and a bit generic.

The next five years will be really fascinating for the car business in Europe, especially, won't it? How will Tesla fare?
 
Sure. Aluminum connections have been used in a fair variety of PV installations for decades, including one I made in 1989 in the Bahamas. Admittedly it was on a small, 145 acre island with salt water all around. I had to make an annual reconnection to clean developing corrosion in posts and connectors themselves. In numerous gut rehabilitations I have done (around 20 or so) I have encountered aluminum wiring several times. Usually that wiring lasts a decade or so vs 25 years or so for copper.
Thanks; that's highly informative.

I hate to say it, but do you think Tesla may be applying a certain amount of planned obsolescence: not engineering the car to last too much longer than its expected lifetime? My Model S will probably last forever, but that's not actually so great for the car company. If they designed the cars to start failing after 12 years, by which time most people replace their cars anyway, it would probably make for more sustainable sales....
 
  • Like
Reactions: jbcarioca
Status
Not open for further replies.