2017 Investor Roundtable:General Discussion

[neroden]

I like the way you are thinking, I suspect the problem is that there are some portions of the line they know they will have to duplicate to get to 10,000 per week. There are other portions that are borderline and they are hoping that they can just crank up the speed on the line they already have, and not duplicate it. The problem is if you order the robots now what do you order? If you just order the ones for the part you know will need to be duplicated, and you are unable to crank up the speed on the borderline section, you end up with a bunch of expensive stranded assets you can't use till you duplicate the borderline section. If you order the whole thing, then it turns out you can speed up the borderline section, you have wasted a bunch of money on robots you don't need. It is a hard problem.

It may turn out that they look at the extra cash flow that would come from getting to 10,000 sooner, and say f* it, lets order the whole thing now and who cares if we have a little wasted capacity, we will still come out ahead.

I would at least hope that they are clearing the factory space and doing the "early prep".

 

[dc_h]

I like the way you are thinking, I suspect the problem is that there are some portions of the line they know they will have to duplicate to get to 10,000 per week. There are other portions that are borderline and they are hoping that they can just crank up the speed on the line they already have, and not duplicate it. The problem is if you order the robots now what do you order? If you just order the ones for the part you know will need to be duplicated, and you are unable to crank up the speed on the borderline section, you end up with a bunch of expensive stranded assets you can't use till you duplicate the borderline section. If you order the whole thing, then it turns out you can speed up the borderline section, you have wasted a bunch of money on robots you don't need. It is a hard problem.

It may turn out that they look at the extra cash flow that would come from getting to 10,000 sooner, and say f* it, lets order the whole thing now and who cares if we have a little wasted capacity, we will still come out ahead.

What do you think the lead time is for the robots? I would imagine they would add where gaps are most pronounced and tweak the run rate where possible. This may delay getting to 10,000 a week in March, but preserves capital. If the next GF is going to start by next year, it's going to be about margins and capital preservation. At 350,000 cars they are generating 20 billion in revenue and hopefully at least 2-3 billion in free cash flow. Energy storage may also start creating cash flow, but still unknown. Solar seems on track for a lull this year and return to rapid growth in 2018. Hard to estimate free cash flow from solar. With 3 billion in cash flow, they can probably work on two new GF sites concurrently. A billion a year gets the site and enough space to start local cell production pack assembly and a 250,000 model 3 line. Can they build an integrated site in less than two years? Would they start some production facets early and just do local assembly short term? There must be a lot of options to roll out new sites as fast as possible and start generating some cash from operations quickly.
They also plan on doubling the size of Fremont, which is probably another 3 billion. Pretty amazing for a company assembling Lotus cars in a glorified chop shop a decade ago.

 

[tinm]

I suspect that Tesla won't report Q2 numbers until market close today and that the numbers are bad. I really hope I am wrong.

 

[neroden]

I suspect that Tesla won't report Q2 numbers until market close today and that the numbers are bad. I really hope I am wrong.

I think you're right... or maybe they won't report the numbers at all. They're not obliged to, are they?

 

[EnzoXYZ]

Started to buy more with free cash. Man didn't expect a drop today.

 

[mickificki]

Started to buy more with free cash. Man didn't expect a drop today.

i'm super nervous about the Q2 numbers. Have a tiny bit of scratch that I was going to use to purchase more, but...

 

[geometro]

I think you're right... or maybe they won't report the numbers at all. They're not obliged to, are they?

Not reporting is worse than reporting bad numbers... effectively that's no numbers. Which the street would presume is off the charts bad.

 

[DurandalAI]

If production goes as Musk tweeted last night, the Model 3 should easily outsell the Bolt this year with less than six months of production. It will likely outsell the Bolt's entire 2018 production before mid-February.

I would think that Musk would want the M3 to out-sell the Bolt inside 2017, no doubt. And since we've hit the halfway mark for 2017, I suspect the Bolt will sell 15-16k units in 2017, roughly half of what they said they were going to sell. I want Elon (and myself) to be able to say, "I told you so" when Model 3 is selling hundreds of thousands of units a year, outselling all competitors who said people don't want EVs.. What people want is compelling EVs, not the econobox stylings of GM trying to cripple their own EV efforts with ugly styling.

But why do they do that? Easy, and not necessarily conspiratorial. They assume only eco-heads, environmentalists, etc want hybrids and EVs. So, they do focus groups trying to figure out what these people want the most, and they want to show off how GREEN they are, so they style the car to say, "Hey look, I'm greener than thou!" in the same fashion that BMWs are styled to say, "Hey look, I'm richer/snobbier than thou!" and trucks do whatever nonsense they do... Instead of just making a darn fine looking car that would appeal to anyone who doesn't have some sort of personality they're trying to sell to others. That's what Tesla is doing with the Model 3, it looks good, it looks relatively luxurious from the outside, and it looks like a Tesla. So, it's going to sell like hotcakes.

Anyhow, fanboy ranting on my part, but I think Elon likes to make sure that Tesla vehicles trounce all the rest, just to stir the pot, because saying something can't be done is just another good reason to prove them wrong.

 

[geometro]

Aren't q2 deliveries reported five days after quarter-end (I.e., not today but Wed)?

 

[RobStark]

Car of the Year type awards matter. The X was too late for 2016 consideration; the M3 appears to be in production in sufficient time for evaluation.

When General Motors is bankrupt in 2030 will it matter that the 2011 Chevy Volt and 2017 Chevy Bolt was Motor Trend Car of the Year? Plus the many numerous times GM has won numerous Car of the Year Awards. Does it matter to GM Europe that the Opel Ampera won Car of the Year in Europe?

 

[ggr]

Aren't q2 deliveries reported five days after quarter-end (I.e., not today but Wed)?

Wheeler, when he was CFO, said that they'd report deliveries within 3 business days of end of quarter. Sometimes it's been quicker. If Ahuja has changed the policy back to what it used to be, I haven't heard anything about it. I expected today though.

 

[geometro]

Wheeler, when he was CFO, said that they'd report deliveries within 3 business days of end of quarter. Sometimes it's been quicker. If Ahuja has changed the policy back to what it used to be, I haven't heard anything about it. I expected today though.

Thanks-- could be my bad memory

 

[Intl Professor]

There's a lot of static in the press concerning the upcoming meeting of heads of state. Adding to this is a little publicized leak from the private neural-lace network used by a well-known AI team. Apparently there is a tweet on the upcoming first meeting of a recognized world leader and his best campaign volunteer. “Mouse brains meets octopus mind. There will be macro-consequences.”

 

[ggr]

Hmmm... I usually read here to get the up-to-the-minute gossip...

Tesla Q2 2017 Vehicle Production and Deliveries (NASDAQ:TSLA)

PALO ALTO, Calif., July 03, 2017 (GLOBE NEWSWIRE) -- Tesla (Nasdaq:TSLA) delivered just over 22,000 vehicles in Q2, of which just over 12,000 were Model S and just over 10,000 were Model X. This represents a 53% increase over Q2 2016. Total vehicle deliveries in the first half of 2017 were approximately 47,100.

The major factor affecting Tesla's Q2 deliveries was a severe production shortfall of 100 kWh battery packs, which are made using new technologies on new production lines. The technology challenge grows exponentially with energy density. Until early June, production averaged about 40% below demand. Once this was resolved, June orders and deliveries were strong, ranking as one of the best in Tesla history.

Provided global economic conditions do not worsen considerably, we are confident that combined deliveries of Model S and Model X in the second half of 2017 will likely exceed deliveries in the first half of 2017.

There's more...

 

[erthquake]

Hmmm... I usually read here to get the up-to-the-minute gossip...

Tesla Q2 2017 Vehicle Production and Deliveries (NASDAQ:TSLA)


There's more...

So, production constrain, not demand, and still met guidance (barely). Bodes well for next quarter and second half overall.

 

[jhm]

I think it is about time for Tesla to start doing monthly reports on deliveries. It's time to act like a big player. They've got too much product to move to mess around with trying to game quarterly numbers.

To grow from 20k Model 3 in Dec 2017 to 400k for all of 2018, they need to increase monthly deliveries of Model 3 7.7% every month arriving at 48k/month by Dec 2018. (Or maybe they ramp up more quick early in the year.)

So very quickly we are arriving at pretty significant monthly numbers. I think the market will want to know that they really are hitting monthly numbers.

 

[Fallenone]

So, production constrain, not demand, and still met guidance (barely). Bodes well for next quarter and second half overall.

If "The major factor affecting Tesla's Q2 deliveries was a severe production shortfall of 100 kWh battery packs" is true, we shall see significant higher gross margins for Q2, especially with a not-so-strong USD performance during the same time period.

 

[Reciprocity]

Man, twitter f'n hates Tesla..haha. I guess I would to if I lost 5B+ YTD shorting $TSLA. You would think the stock went up $100 today based on the tweets from the haters. Anyway.. stock prices go up and down, its what they do. There isnt always a good reason. When I look at the markets, Tesla has been locked onto the Nasdaq recently, though bigger swings up and down. I dont expect that to change until things settle in the market, then the stock should digest what has been going on lately. I think the news is generally outstanding. Every time Elon or Tesla mentions the model 3, its always on time. This means they should be able to get through the end of 2017 with a reasonable GM, even though the initial production volumes are fairly low. I could see a total of 130,000 cars for 2017, which would be nearly 70% jump from 2016. That would be roughly 11B and 2.5B in GM, which should be enough to start showing some profits.

GTLA, Long and Strong! Embrace the suck (FUD) its your friend!

 

[EinSV]

If "The major factor affecting Tesla's Q2 deliveries was a severe production shortfall of 100 kWh battery packs" is true, we shall see significant higher gross margins for Q2, especially with a not-so-strong USD performance during the same time period.

Would you mind elaborating on your thinking? I'm not following ....

 

[stef]

So, production constrain, not demand, and still met guidance (barely). Bodes well for next quarter and second half overall.[/QU

So, production constrain, not demand, and still met guidance (barely). Bodes well for next quarter and second half overall.

Q2 production totaled 25,708 vehicles, bringing first half 2017 production to 51,126.

So record production, while installing Model 3 equipment. Remarkable.