2017 Investor Roundtable:General Discussion

[neroden]

I do have concern about many of the inventory cars. Most of them are of AP1. I doubt anyone will still want those cars, and TESLA has to cut the price very much to get rid of them.

With >20% gross margins, Tesla can cut the price by 10% and still be making a nice >10% margin on those cars.

 

[JRP3]

Well, we'll agree to disagree. I'm pretty sure they're not. Most of the upgrades in later models have been at pack level, and there's a reason for that.

I'm not following your meaning there.

Why are you so skeptical of the ability to charge Tesla's cells, whose development has been optimized for power, at not-really-very-high rates given sufficient cooling?

In actuality the Tesla cells have been optimized for energy density not power. The packs can put out high power levels because they are so large, and only for limited time, as anyone who has tried to run their S on a track will tell you. The NCA chemistry is a lower C rate chemistry compared to most others. The best cooling in the world can't change that. There are physical limitations within the cell structure that limit ion transfer rates and heat transfer while optimizing energy density, which is the most important metric which allows long range battery packs.

 

[larmor]

Faraday Future "production" prototype unveiling should start soon.

Live stream:

or www.ff.com

Edit: They have a reservation page up with two different reservation options.

Summary:

• "We are not a car company, we are a technology company reformatting the the future of mobility"
• Just like last year, bragging about the number of patents they have filed - 2,000
• Showing video of breaking ground on their factory. It was literally just a bunch of vehicles driving around in the desert, then a CGI of the exterior.
• Really focused on "creating more than a car", showed this concept map:
• 
• Two antennas and multiple modems for fiber like connectivity constantly
• Obviously full autonomous. Has lidar + AI. Facial recognition.

I've reformatted many floppy disks and hard drives in the past at our store, they were basically the same as they started without the fatal errors that brought me to reformat in the first plac e. Just a note for FF people, reformat is not a great choice of words when talking to silicon valley (or maybe i'm outdating the SV crowd now).

 

[Value Ev]

I chose my name as a quip against those who said Tesla would never sell 20,000 vehicles annually. I've been around from the beginning and pay close attention to facts. You should give it a try.


Should I remind you that all of the reasons production delays occurred and things were moved back were due to factors beyond Tesla's control or Tesla going out of its way to continually improve its vehicles?

Want me to remind you that some of the delays were due to suppliers that didn't believe Tesla was serious about its projections?

Perhaps I should remind you that Tesla is having to devote energy to fighting NADA and oil industry backed lawsuits, and is still best in class and was within 1.5% of meeting official guidance?

1.5% is basically a rounding error and doesn't take into production of the Powerwall, the number of 100KWH Model S and Model X sold, or any other factors?

A number of people on here suggested Tesla might have "missed" because people of people being away on vacation. Want to say this is an excuse instead of a valid reason?

I guarantee we'll find it more tomorrow. Go back under your bridge. Your trolling is not beneficial to the conversation.

Point proven.

You only proved that you don't know what the word miss means.
Tesla said they would do 50,000 in the second half, they did not. They were off by about 3k.
Based on that you claimed "truly amazing that anyone can say Tesla missed anything"

Now you are doing some blah blah blah about powerwall, mean old oil industry, lawsuits, which is entirely irrelevant to the your amazement that people are commenting about the FACT that they missed their numbers

Oh, and now you want to blaming vacation as if it is a big surprise that people take vacation in Q4 - do you think Tesla is that lame, that they didn't know that on October 26th?

They missed.
Get over it.

BTW, when someone is off about 3k on a projection of 50,000 where do you get that they are off by 1.5%. I get that you don't like facts, but you should at least learn to do math - it would make you look less silly.

 

[30seconds]

Demand of S+X of 22,000+ per quarter is very good news with regards to cash flow needed to support Model 3 factory tooling and GF. Basically puts the company at cash flow break even while investing in both. For me the next steps are timing powerwall 2.0 rollout and Model 3 rollout.

 

[Curt Renz]

This was actually better deliveries than I was expecting given the hiccups with the AP2 launch. They obviously were not pushing as hard to deliver as last quarter so maybe if we are lucky they will be profitable or break even at this delivery level with improved margins.

Anyway they are primed for Q1 with AP software release plenty of cars in the pipeline. Imagine the the catalyst to the stock if they are profitable Q4 and guide to profitability for Q1 and Q2. The Model 3 will be the driver after Q2.

Unlike other CEOs who provide the easily beatable targets preferred by financial analysts, Elon sets almost unreachable goals designed to inspire company executives and employees. Actualizing the long term plan matters far more to him than satisfying Wall Street with quarterly beats. Everyone should be used to this by now. As you suggest, the price of Tesla shares is far more a reflection of the potential for future models and the energy business, than current deliveries of Models S & X.

 

[dc_h]

I think the Q4 numbers are fine. Rolling out AP 2 gets Tesla a huge lead in automated driving. They took a big chance dropping the partnership with Mobileye, but it is paying off already. No one else would have had the courage to make this decision and go it alone. They sacrificed about 1 week of deliveries in Q4 to get a 2 year lead in AP, and have a chance to extend that lead as they add the miles to the database. They probably gave up 2% in gross margins this quarter, but will almost certainly have record gross margins in Q1 and I think will get close to or pass 30,000 deliveries. Recognizing AP revenue in Q1 will boost profit by over 125 million and 7000 extra cars is over 500 million more. Add in some TE revenue and they start closing in on 3 billion in a quarter, or about 70% of 2015 revenue. Any drop tomorrow is, in my opinion, an opportunity.

 

[Green Pete]

Im very happy theres another company like Tesla, but this Faraday Future presentation seems like they are behind the game and dont really have much to show. Maybe Im wrong but everything they are showing seems like old tesla with the exception of the big battery, but thats just because its a bigger car.

The eclipse mode is cool. But I kinda figure Teslas on the verge of that.

 

[KLC13]

Just reserved a FF 91. Paid a grand total of $0 for the standard reservation!

Edit 1: Btw, watching their reveal, I can definitely say the FF folks have better reveal music than Tesla's reveal events. Time to poach the audio guy from FF

Edit 2: A self park in garage demo just failed. That too in front of the CEO of LeEco

 

[LargeHamCollider]

Why do you believe this? Your *own* information said otherwise. You outright stated that you were working with cells which could be discharged continuously at very high rates (20C) if they had sufficient cooling, on batteries which the manufacturer said were good for 4C.

Why are you so skeptical of the ability to charge Tesla's cells, whose development has been optimized for power, at not-really-very-high rates given sufficient cooling? The improvement in charging rate needed to get to a 5-minute fill (12C!) may be unreasonable, but to 15 minutes (4C)? It doesn't seem much higher than what we already know is possible.

It's just not that simple, the cells I'm working with have less than half the energy density of Tesla's cells (so of you stick them in a Tesla it would get less than half the range of a normal Tesla), this sacrifice had to be made in order to get the high continuous discharge rate.
Designing a battery is often compared to balancing the rocket equation, increasing one parameter requires a sacrifice in another. The highest charge rate I've seen demonstrated for Tesla cells is 1.7C, 350kW is ~3.5C even for a 100kWh pack. That kind of increase in charge rate usually takes a decade or more to achieve if all other parameters are held constant.
Now undoubtedly Tesla *could* charge existing cells at 3.5C, or at 10C, but it would have an unacceptable impact on cycle life (and sustained 10C would probably cause thermal runaway fairly quickly).
All these parameters; energy density, power density, cycle life, safety, cell size... they are all related, and they are all affected by temperature, SOC, C-Rate, pressure, existing cycles performed and other factors.
I'll be the first to tell you that Tesla's batteries are the best and Tesla's battery strategy going forward is the best for cars in the 35-150k price range. But looking at the charge curve from recorded supercharging sessions makes it clear that the cells themselves are the limiting factor a majority of the time.

Edit: This is all a bit OT and I'm happy to continue the discussion via PM or in a dedicated thread. Also I just saw JRP3s response which is spot on.

 

[SBenson]

You only proved that you don't know what the word miss means.
Tesla said they would do 50,000 in the second half, they did not. They were off by about 3k.
Based on that you claimed "truly amazing that anyone can say Tesla missed anything"

Now you are doing some blah blah blah about powerwall, mean old oil industry, lawsuits, which is entirely irrelevant to the your amazement that people are commenting about the FACT that they missed their numbers

Oh, and now you want to blaming vacation as if it is a big surprise that people take vacation in Q4 - do you think Tesla is that lame, that they didn't know that on October 26th?

They missed.
Get over it.

BTW, when someone is off about 3k on a projection of 50,000 where do you get that they are off by 1.5%. I get that you don't like facts, but you should at least learn to do math - it would make you look less silly.

This entire conversation is so hilarious. Bear troll trying to make a point to a bull troll. lol

Drinkerofkoolaid is such an extraordinary bull troll I had him on ignore for a while now. Value Ev has been on my ignore on and off.

I find Value Ev to be semi reasonable, but drinker dude is just so incredibly outlandish. Quite honestly outright dangerous, if "investing" info is what one comes here for. He reminds me of foghat from the SCTY thread.

Don't get religious. For the love of money, this is investing sub-forum.

 

[mhan00]

So when will the FF91 be available, and how much will it be?

Estimated 2018.

 

[mhan00]

I'm very curious if the FF91 can deliver all of the features they're promising. They're the kind of stuff that sounds cool and might look manageable but can be insanely difficult to execute reliably. I hope they succeed. More cool electric cars on the road is a plus for all.

 

[dennis]

I'm been reflecting on how my analysis of all of the good data crowd sourced here failed to forecast this delivery miss. What I realized is that we have some good indicators of demand, and of demand relative to production, but not of the production rate, with one exception. Going through the metrics:

- VIN counting - a good indicator of absolute demand. VINs are issued for customer orders and for inventory cars that Tesla expects to sell or which will replace existing demos that will in turn be sold. But that rate that VINs are issued does not tell us the rate at which they will be produced

- Tesla website wait times - a good indicator of demand relative to production. Wait times can increase because demand picks up or because production slows down and there is no way to tell which it is.

- ev-cpo historical data - shows how many inventory cars are being sold relative to prior quarters, but does not capture all of the sales. Also there is no way of knowing what Tesla's planned mix is between inventory sales and custom orders.

- Factory tour observations - anecdotal evidence of the assembly line not operating during tours or the parking lot being relatively empty can tell us if the factory is running. However when it is running we have no way of knowing how many cars are being produced per day/week/month.

- Delivery spreadsheets - I was looking at these to see whether Tesla was pressing to deliver December orders before quarter end. When they did not I assumed it meant they had the quarter made. Come to find out it was because they didn't have enough production to fill those orders. However @bonaire pointed out today that the relative number of spreadsheet entries between Q3 and Q4 correlated highly to the absolute delivery numbers in those quarters. This will definitely be one to watch.

- InsideEVs monthly reports. Looks like these are pretty accurate. I thought they were missing the extreme geographical batching and the shift toward more inventory cars being sold. I guess not.

My other observation is that every time Tesla does a hardware transition they miss their forecast delivery number. This happened in 4Q14 when the D and AP1 hardware was introduced, in 2Q16 with the exterior refresh, and again this quarter with the AP2 upgrade. It just takes longer than Tesla believes to "slipstream" these hardware changes into the manufacturing process.

Contrast this with traditional auto makers who shut down the factories for weeks once per year for the model year changeover. My experience has been that if you try to order a new model year BMW in July in the US you are lucky to get it by Thanksgiving. The assembly line is shut down at least for August, starts producing the new model in September, and of course there is the shipping delay. Tesla believes they can do these kind of changes in 10-14 days and it just hasn't happened that way. Tesla, please do not refresh the interior until you figure this out.

 

[dennis]

From @dennis's account, it doesn't look like they were pulling production levers at all. I mean, the sales guy wasn't pushing to 'produce' the extra car to sell to Dennis. According to Tesla factory report(s), they ended at the same 2k/week production rate.

Hard to pull production levers when production is moving slower than planned because of a hardware change. Once they got past whatever was slowing them down after the switch over to AP2 they went on a forced march to meet the production (but not delivery) number. At least no cars are reported as starting or completing production on Christmas Day.

 

[racer26]

Depends on how much you believe they are demand constrained vs. production constrained.
If you believe they are more production constrained, then you need to think about what they need to do to reduce that constraint while setting up to do several times more in volume for the M3.

Raise the price of MS and MX, which they did. Once there is a product below them in Model 3, there is room for S and X to move further up market and become higher margin.

My take is that the numbers are below par just when the whole world is watching them and they may come back to ask for more money anytime this year. Looks like building investor confidence will take ages.

The stock is not doing worst in after hours because of immediate release of GF update in the next 12 hours. If that disappoints, IMO, we'll see sub 200s. GF will most likely bring sizzle.

They won't be looking for more money before 3Q17 unless SP > 250. They have enough to make Model 3 happen on hand.

I doubt we see sizzle @ GF tomorrow. Sizzle @ GF was back in July. Surely in 6.5 months they've cooked up some steak there to show us.

I noticed something I'm not sure if any of you caught while watching the FF unveil:

There were at least three different FF91's they showed us. The first one I saw, used in the performance contests, had text reading "BETA | 02PERF" emblazoned on the trailing edge of the rocker panels. When they showed the Formula E driver inside it, you could see behind him that it did not appear to have any interior, apart from some racing-style seats for driver and passenger. Earlier in the cast, a different car has "BETA | 01ADAS" in the same place. The one YT drove out later, and failed to autonomously park, had an interior.

A stripped FF91 sans-interior (allegedly) beats a showroom stock MS P100DL 0-60 on stage by 0.01s. Whoopee.

They conveniently neglected to mention that the construction contractors are refusing to continue work on the factory that will allegedly build these things for non-payment, too.

They said they're going to auction the first one off in March. Must be going to auction a hand-built prototype since the factory doesn't exist. That car may end up being the only one that ever gets sold to the public.

They also didn't tell us what the price is. I would be very wary to put $5,000 down, since I think there is an exceptionally high risk that FF goes bankrupt before this car gets to market, but I did sign up for a regular free reservation.

 

[DriverOne]

May 5th: We are re-affirming our 80-90k forecast Oops, missed even the low end.
Oct. 26th, We are going to do 50k in the second half - Oops, we missed that by almost 3k units.

If that isn't missing, I don't know what your definition of "missed" is.

Sure, they missed the delivery number. However I wouldn't get to bearish given context. Production numbers were actually in the forecast range (84K)—they made that number—but deliveries were off. Tesla has explained that Q4 production was shifted towards the end, which had the knock-on effect of less time to make deliveries. Makes sense. Those manufactured vehicles will get delivered. Demand and production are both growing very well, so I remain bullish.

I am concerned about the results this Q. Perhaps someone can help reassure me. Thousands of vehicles were manufactured (and presumably parts & labor were paid for), yet without a delivery there's no income. That's quite a financial hole for this Q, which of course should be rectified by extra deliveries next Q. Won't it make this Q's numbers look bad?

 

[EinSV]

I see you have raised your forecast from what you tweeted to Mark Spiegel a month ago.

And his final forecast for this quarter was raised by about 6000 vehicles from his forecast in early October (after the Q3 delivery report report) of "low 70,xxx total deliveries in 2016, or about 16,500 in Q4.

<snip>
I still think we are shooting to see a low 70xxx total figure end of year. I don't mind keeping 69500 as total target even though it seems low. Model X 5-seat and coils don't look like probable delivery by year end and that is a reasonable sized set. <snip>

. <snip>.Tesla delivered 14810 and 14402 vehicles in Q1 and Q2 according to the ERs. The preliminary number for Q3 is a "conservative" 24500.

You are now predicting a "low 70,xxx" for the year. So that means your prediction for Q4 deliveries is about 16500, or about 5000 less than you predicted in your tweet in late August?

 

[racer26]

I made that same point elsewhere. But it's all a matter of perspective, number of people in AH disagree with you.

I'm very pleased with overal progress Tesla made from 2015, but very displeased with consistent failure to communicate 'safe goals', as other companies do.

It's going against the grain for no particular reason, and by missing self-imposed goals, it's creating noise that masks otherwise amazing progress.

I am expecting drop tomorrow, and then to reverse and continue (slow) march upwards, as smarter heads prevail...

There is a very particular reason. Tesla is not about making money, except insofar as money is required to achieve its goals. Elon does not care in the slightest about pumping the SP. Elon cares about changing the world, and leaving his legacy as the man that got humanity to take sustainable energy in all its forms seriously and stop killing ourselves with our addiction to fossil fuels.

Without ambitious-bordering-on-impossible goals, the employees won't work as hard and won't achieve nearly as much. In the early days of the company, playing it safe would have all but guaranteed the same fate as all the other automotive startups that have tried and failed to crack the car market. Its impossible to build a small number of cars profitably. Eventually, Tesla will slow down and produce reliable guidance, but by the time that happens, they will have already changed the world.

If they guide for 5-10% growth, and achieve 15%, is that better or worse than guiding for 60% growth and achieving 52%?

The culture of the company is full of employees driven by striving to achieve the impossible. It couldn't achieve the amazing things it does without impossible goals.

 

[Fallenone]

I am concerned about the results this Q. Perhaps someone can help reassure me. Thousands of vehicles were manufactured (and presumably parts & labor were paid for), yet without a delivery there's no income. That's quite a financial hole for this Q, which of course should be rectified by extra deliveries next Q. Won't it make this Q's numbers look bad?

Chalk them up as account payable like Q3.