2017 Investor Roundtable:General Discussion

[sub]

Sure, but given that you're going to want to actually drag the cars in for annual service once a year, and definitely during year 4 for the brake fluid flush, they still need geographic coverage *for service centers*.

I'm not talking rural Alaska here. I'm talking cities of >1 million people which are over 4 hours from the nearest service center.

People in *truly* remote areas are used to having to drive further for service; people living near good-sized cities are not.



Well, I don't know why the coverage rollout has been so slow, but as I say, I figure they need to roughly double the number of centers in the continental US, and if they're appropriately distributed, I think that'll do it: that'll be all they'll ever need for the continental US. Repeat in other countries as needed.

I suppose it makes sense to really optimize the way the service centers operate, and have a really solid set of manuals and training, before doing the big push to build the next 75.

Good thing Tesla has you here to point this out to them, they probably haven't given it a thought.

I also think there are 400k orders by people that mostly knew how far away from a store/service center they are, 2 by me and I'm 2 hours away. I saw one of only two local Teslas on a flat bed Tesla truck this past week.

 

[SteveG3]

Nice results!

Can anyone explain how deliveries (25k) can be less than production (25.4k) and yet cars in transit to customers drops (~6.5k to 4.6k IIRC)?

The only way I can think of it is that non-customer assigned inventory has increased by a few thousand. So there is an extra ~3k in inventory.

Perhaps in Q4 '16 as Tesla saw that they would not be able to hit the low end of the 80-90K 2016 delivery guidance, they decided to sell an extra 1,500-2,000 of their service fleet that had not reached their standard mileage/age threshold for such sales in order to soften the full year volume miss. If so, restocking the service center loaner fleet up to normal levels in Q1 '17 would result in the discrepancy in today's reported counts. There have been past examples of this lever being pulled. Tesla has said they don't want to do this anymore... but, with 80-90K guidance, pushing these cars out to hit 76K rather than 74K may have seemed worth using this lever again (and the frustration of 2,000 cars being held up due to the Chinese port issue may have made it easier to justify overriding the plan not to do this anymore).

 

[dennis]

seriously... IF they pull off the M3... if they pull off the MY... AND if they pull of TE... and then wait another 5 for them to start recording profits... THEN you can start talking about them getting as big as Apple.

Do you know how much money apple makes?... do you realize how far away TSLA is from Apple?... not just in years... measure it in risk... because of the 100s and 1000s declared to be the next Apple... only 6 made it.

And do you realize how far Tesla has come. And that they are the first new US car company in 100 years (yes they will survive). And the unbelievable risks that they have overcome to get here. And how innovative and different they are from the rest of the auto industry in so many ways - all electric, own fueling network, no franchised dealers, service not a profit center, order online, etc. etc.

Oh yeah, there is still plenty of risk. But the risk for you is that by failing to see what they have accomplished thus far and what their potential is you may miss out on the single biggest stock market opportunity of your lifetime (no matter how old you are).

 

[sundaymorning]

$280s in Europe right now.

 

[schonelucht]

The 2,218 cars (not 2300 claimed) were not "pushed" into inventory as you imply that there was not enough customers that ordered cars. These cars went into replenishing marketing/loaners fleet as well as new inventory because similar quantity of cars from this marketing/loaner fleet and new inventory were sold and needed to be replenished to capture about 10% of customers who prefer to buy a car from the lot rather than special order it and wait few weeks. Remember, sold marketing/demo fleet and new inventory cars ARE part of the demand.

No. You have that wrong. These 2000 something cars are additions to the inventory because cars sold from the lot are counted in the deliveries. It is a straight addition to the inventory/loaner fleet, not replenishments.

 

[Yggdrasill]

The drop in vehicles in transit was expected - Tesla quite clearly said that there were a lot of vehicles they had expected to deliver in Q4 that were delayed into Q1. Something also the delivery numbers in January in Norway indicated.

That said, it's quite possible the inventory has increased. Still, with 25k deliveries in Q1 and 4.5k vehicles in transit, Tesla only has to sell another 17.5k vehicles in Q2 to meet guidance, and only 20.5k vehicles to beat guidance. Beating guidance seems very achievable. In Q3 the Model 3 will start to take over the show.

 

[Mario Kadastik]

What is your point exactly? With 2 week shutdown, 25418/11 is 2311 cars produced per week. This has been the ballpark average for a long time. So, no "extra hours" were added for production as mentioned in the PR when the Feb shutdown was acknowledged. Or, model X production is taking longer to slow down the process.
With only 2310 cars produced a week for 11 weeks, Tesla needed to push 2300 cars into the inventory. WITHOUT the 2 weeks shutdown, ~6900 additional cars would have gone into the inventory this quarter.

BTW, production isn't the bottleneck for a while. You may be arguing against the bulls who claimed that as the reason for delivery shortfall in the past. In that case, my apologies.

You assume that if they had been able to produce cars more, then those would have all gone to inventory. Maybe instead they would have been able to deliver to customers? I ordered 2x P100D S and 1x 100D X in December '16. The S P100D both arrived in the final weeks of March, the X was produced in the final weeks of March and is on its way now ETA late April-early May delivery. I think there are others who ordered in Q4, but couldn't get delivery in Q1 just because Tesla couldn't produce fast enough.

 

[WarpedOne]

TLSA around $283 in Frankfurt at the moment.
It started rather indecisive bouncing under 280 and then shoot up for $3 in steady rise over half an hour.

 

[Yggdrasill]

You assume that if they had been able to produce cars more, then those would have all gone to inventory. Maybe instead they would have been able to deliver to customers? I ordered 2x P100D S and 1x 100D X in December '16. The S P100D both arrived in the final weeks of March, the X was produced in the final weeks of March and is on its way now ETA late April-early May delivery. I think there are others who ordered in Q4, but couldn't get delivery in Q1 just because Tesla couldn't produce fast enough.

Yeah, Tesla likely has a backlog of orders for the 100Ds. As far as I can tell from the registration statistics, not a single 100D has been delivered in Norway. Going for the 100D over the 90D has been a no brainer here, as it's been priced quite attractively. The only downside has been delivery time.

 

[schonelucht]

Anybody have a cashflow model they've plugged the 25k numbers into yet? I have to imagine with record numbers plus backlogged cash from EAP recognition, plus big TE installs, we should be in good shape for the ER. The wildcard is model 3 capex.

Cashflow no. And TE I dare not touch, it's too complicated. But I started a thread with my profit/loss model for the automotive side here : 2017Q1 results I would invite everyone to discuss numbers over there. Especially those who have more insight into Tesla Energy accounting and market evolution since I am drawing blank .

 

[150 kWh]

Daimler Steps Back From Fuel-Cell Car Development
Zetsche said declining battery costs have made fuel cell vehicles uncompetitive with electric cars

This probably means game over for hydrogen powered cars. If you are a car manufacturer spending money on fuel cells R&D after this it will be really hard for you to explain to your shareholders what you see in fuel cells that Mercedes didn't.

 

[vgrinshpun]

No. You have that wrong. These 2000 something cars are additions to the inventory because cars sold from the lot are counted in the deliveries. It is a straight addition to the inventory/loaner fleet, not replenishments.

Not sure what you mean by "straight addition to the inventory/loaner fleet".

What I meant by replenishment is that 2,218 cars added to marketing/loaners/new inventory in Q4 came as replacement to the cars that were sold out of this fleet during Q4. Actually, in your post you acknowledge this by saying "These 2000 something cars are additions to the inventory because cars sold from the lot are counted in the deliveries." I agree that these cars, of course, were counted in Q4 deliveries.

 

[vgrinshpun]

The drop in vehicles in transit was expected - Tesla quite clearly said that there were a lot of vehicles they had expected to deliver in Q4 that were delayed into Q1. Something also the delivery numbers in January in Norway indicated.

That said, it's quite possible the inventory has increased. Still, with 25k deliveries in Q1 and 4.5k vehicles in transit, Tesla only has to sell another 17.5k vehicles in Q2 to meet guidance, and only 20.5k vehicles to beat guidance. Beating guidance seems very achievable. In Q3 the Model 3 will start to take over the show.

It is unlikely that inventory has increased. What would be the reason for Tesla to do so when backlog of customer orders increased?

 

[schonelucht]

It is unlikely that inventory has increased. What would be the reason for Tesla to do so when backlog of customer orders increased?

Why not? Having a larger inventory may entice more buyers who are ready to compromise (a little) on their exact build in return for receiving the car 'today'. As long as this group is larger than the group that would wait 2 months but not 3 months for their exact build, Tesla wins when it grows the average wait time to build some inventory.

And then there is the other question : if they didn't go to inventory, where else did they go?

 

[SwTslaGrl]

 

[austinEV]

Inventory is not a dirty word people. I know the Bears are screaming "INVENTORY" like its a death knell or something. They are really grasping at straws when their best argument is omg they are attempting to have cars ready to go for buyers who don't want to wait.

 

[vgrinshpun]

Why not? Having a larger inventory may entice more buyers who are ready to compromise (a little) on their exact build in return for receiving the car 'today'. As long as this group is larger than the group that would wait 2 months but not 3 months for their exact build, Tesla wins when it grows the average wait time to build some inventory.

Because increasing quantity of cars in inventory beyond certain level (level of being "well stocked") does not do anything to increase sales.

And then there is the other question : if they didn't go to inventory, where else did they go?

I am puzzled at your question. Of course they go to marketing/loaners/new inventory to replace cars that were sold out of this pool. Why are you asking this question? I never suggested otherwise.

 

[jhm]

Tesla on track for $11B revenue in 2018.

 

[schonelucht]

Not sure what you mean by "straight addition to the inventory/loaner fleet".

What I meant by replenishment is that 2,218 cars added to marketing/loaners/new inventory in Q4 came as replacement to the cars that were sold out of this fleet during Q4. Actually, in your post you acknowledge this by saying "These 2000 something cars are additions to the inventory because cars sold from the lot are counted in the deliveries." I agree that these cars, of course, were counted in Q4 deliveries.

No they are not only a replacement. The inventory grew. Some were replaced for sure but many were pure additions.

At the end of 2016Q4 Tesla had reported total lifetime production of 196154 and total lifetime deliveries of 183301 and 6500 cars on route to customers. This leaves 6353 for validation/marketing/loaner/inventory.

At the end of 2017Q1 Tesla had reported total lifetime production of 221572 and total lifetime deliveries of 208301 and 4650 cars on route to customers. This leaves 8621 for validation/marketing/loaner/inventory.

I can accept Tesla had to submit a few dozen 100D for validation purposes in 2017Q1 but even then, the group marketing/loaner/inventory grew by at least 2000. Even if the new sales/service centers opened in Q1 soaked up another 500 cars (that's quite generous) we still have a like-for-like growth of that group of over 1500 cars.

 

[WarpedOne]

Hehe, +$10, +3,8% premarket...