2017 Investor Roundtable:General Discussion

[Kenriko]

Well they pulled many demand triggers so I hope it was "particularly strong." AP2.0, end of free Super Charging, cost increase in the U.K. etc. They are going to run out of magic demand bullets except for price decreases in the near future IMO.

They could always try a price decrease.

 

[Value Ev]

6,450 vehicles in transit is really good though.
Q1 should be nice.

With about 5,000 in transit last quarter, that is what people thought about Q4.
It is unclear what the correlation between in transit and a strong quarter actually is.

 

[Drax7]

Demand is there, production is there, though deliveries missed,
No big deal, just some friction .

 

[SebastianR]

At least we now understand the 2 weeks extension on super charger / UK price increase: if Tesla can't deliver the car, they shouldn't punish the customer. So allowing the customer 2 extra weeks as well is indeed a good and logical gesture.

 

[JRP3]

 

[Yuri_G]

That is only 3,770 off of their low-end estimate of 80-90k, so the stock should sky rocket tomorrow.

Still grew 50% year over year. Funny how you reappear with the negative news.

 

[austinEV]

6,450 vehicles in transit is really good though.
Q1 should be nice.

Well, this is said every single time. This "in transit" number will always be there, the only question is whether it goes down (pushing extra deliveries into Q1, thus potentially upsiding the results) or up since their ever expanding business and global footprint predicts that this number should naturally grow at about the same rate as deliveries overall. So I don't think it's right to look at that as positive or negative. It's just a number that will always be there, growing a bit every time.

 

[RationalOptimist]

As actual business performance, it's pretty remarkable. An auto company growing at >60%. Occasionally, Elon's optimism is his own worst enemy. If the story is missed target rather than surging growth, it's an awful shame. I'll be curious to see what guidance they put out on the earnings report. Perhaps the v impressive Jason Wheeler will encourage him to build in a more realistic buffer. I hope so.

Meanwhile, we shouldn't get too carried away on the demand story. I suspect that % increase is based on $$ of the goods being ordered, not raw vehicle numbers, and probably a lot of those $$ driven by pricing on the new P100D models. On the other hand, the margin associated with them is really good.

 

[flankspeed8]

so what does a delivery miss bode for the quarter EPS?

 

[hockeythug]

My complaints only relate to Model 3 production execution. SpaceX had this problem of constantly changing the rocket and finally had to stop. I hope this AP hardware switchover is the last major one for a while.

 

[Value Ev]

Still grew 50% year over year. Funny how you reappear with the negative news.

What negative news? This is great news.
Don't be such a FUD spreader and doom and gloomer.
Tesla sets very aggressive plans so only missing by 3700 or so is a WIN!

 

[uselesslogin]

To me it seems like InsideEVs and the European delivery thread give the best reading on where the numbers might end up.

 

[Value Ev]

At least we now understand the 2 weeks extension on super charger / UK price increase: if Tesla can't deliver the car, they shouldn't punish the customer. So allowing the customer 2 extra weeks as well is indeed a good and logical gesture.

I thought the super charger was based on when the car was ordered, not when it got delivered.
Is it based on delivery?

 

[mrdoubleb]

So 2015 saw 50,580 deliveries and 2016 is 76,230. That's a 50% increase, which is definitely not bad.

PS: I know, i know, they promised more than that.

 

[Ovulation]

My complaints only relate to Model 3 production execution. SpaceX had this problem of constantly changing the rocket and finally had to stop. I hope this AP hardware switchover is the last major one for a while.

HUD ?

When is the earnings call ... It's always fun

 

[Hogfighter]

There's over 2,000 cars missing.

5,500 were in transit at the end of last quarter.

There were 2,600 more built than delivered this quarter.

There were only 6,450 in transit at the end of this quarter.....there should have been over 8,000. Must have that many more inventory cars?

 

[Mike Smith]

With strong demand confirmed, the production number is the one that counts. 50,000 cars produced in the second half = 100,000 car per year run rate. 84,000 cars produced total is much better than analysts thought was going to happen at the beginning of the year. I doubt Tesla will fall much below 210 tomorrow and will end above it.

 

[bonaire]

At least we now understand the 2 weeks extension on super charger / UK price increase: if Tesla can't deliver the car, they shouldn't punish the customer. So allowing the customer 2 extra weeks as well is indeed a good and logical gesture.

This doesn't make sense. Do you mean - if a customer buys an inventory car off t

What is the basis of your current obsession with the number of cars that Tesla has in inventory? Do you know what the "right" number should be? How does it compare with the inventory carried by other manufacturers and their dealer network compared to the volume that they sell quarterly? Even specialty manufacturers like McLaren (<4000/year) who primarily build to order have inventory cars at the dealers to capture the buyer who is unwilling to wait.

I'm not concerned that Tesla is stacking up inventory cars because they don't have enough demand to match the capability of the factory to produce. Multiple reasons why:

1) CFO Jason Wheeler is focused on cash and has been since he got to Tesla. He's not going to allow extra cash to be tied up in excess inventory.
2) Tesla chose to not build any US custom orders from December for Q4 delivery, planning to deliver them in Q1 instead. They have plenty of demand.
3) Lead times for custom orders in Q4 and now Q1 are back to historic highs. No reason to build inventory cars that aren't going to be sold when customers are having to wait 3 months for delivery. They have plenty of demand.

What I think happened, partly due to the AP1 to AP2 switchover and partly based on success with inventory sales in Q3 is that Tesla ran several sales "experiments" in Q4. One was to build inventory cars early in the quarter and have them available for customers to purchase late in the quarter when the lead times for custom orders stretched out. The other was to build high margin P100D's for inventory and attempt to capture the 4th quarter bonus crowd rewarding themselves with a $150K holiday present. We don't know yet how these programs worked out, but there are a couple of hints from reading the tea leaves:

- Sales of delivery-only miles inventory cars was very successful in Q4, in all geographies, with a multi-fold increase over prior quarters, including Q3
- Sales of discounted AP1 inventory cars was successful in the US (only 10 left in ev-cpo) but not so much in Europe, with around 300 still available in ev-cpo

I assume that Tesla has reviewed the results of these Q4 programs and factored them into its Q1 production plan. We can now crowd source info from the VIN watching, ev-cpo analyzing and delivery spreadsheet divining members here (including you and me) over the next 90 days and speculate on what that plan might be. I believe that whatever plan Tesla comes up with it will result in a sequential increase in deliveries from Q4 to Q1.

Building the most-expensive cars near the end of a quarter (ie. P90DL in end of Q2, P100D end of Q4) can be used to borrow for a period of time against the ABL. A built expensive car is worth more than the sum of its parts. Then they can be sold in the following quarter at discountable prices after miles are drawn against the car and written down in terms of mileage allowances by the IRS. Let's see how the ABL looks at the end of Q4 on the Earnings Report. It can be paid back in January - but is a tactical CFO maneuver to build inventory for a short period and make the customers who are paying full price wait a little longer (ie. cars "in transit").

 

[Quesder]

To me the number was not too bad, I was afraid of being 18000 because of the earlier InsideEvs numbers. I thought it would be 21,000 at best.
However, what I feel doesn't matter. The AH is down 4.88 now.

 

[esk8mw]

This is basically Q2 all over again, on a smaller scale. We will be fine.

There was a minor production issue (AP2 hardware) that threw everything off timing-wise, much like X issues in Q2 did. This is the problem associated with regional quarterly batching - small issues are magnified.

All the major stuff is fine. Production issues solved, demand stronger than ever before, margins improving, 3 on track, SCTY generating cash, solar roof progressing, GGF on time, TE primed to take off, etc. The fact that thousands of cars - once again - will get delivered 2 weeks late should not have a lasting impact on the stock price.

I'm glad I wasn't confident enough to place short-term bets this time around. The AP2 and RHD delay chatter was enough to keep me on the sidelines (well, held all shares and short puts, but those aren't going anywhere).