2017 Investor Roundtable:General Discussion

[Reciprocity]

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

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

Just shy of 2000/W on average. I am sure they at one point had hit 2400 per week, I think it was the end of Q4 last year. I have been using 2400/W to figure out the maximum production, does anyone recollect this or am I just crazy?

 

[schonelucht]

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.

I am not following your argument here? I am probably missing something obvious?

 

[DurandalAI]

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...

Intriguing to me that the 100kWh pack availability was a limiting factor, meaning that customers are opting for the highest-end models when possible? I'm pleased that people are going for the larger pack sizes, but with the base model now being 75kWh, and the price premium for the 100 being so much greater, it is still a surprise that demand would be so strong.

 

[elasalle]

From press releases ...
Q1 production totaled 25,418 vehicles. This was also a new quarterly record for us
Q2 production totaled 25,708 vehicles, bringing first half 2017 production to 51,126.

Looking at the numbers produced, even with the supposed battery delay, seems like output stayed the same and was in fact slightly higher in Q2

 

[Fallenone]

I am not following your argument here? I am probably missing something obvious?

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

Everything else being equal, 100kWh is $23k more expensive. Using $195/kWh cost for Tesla, the larger battery pack alone draws $18k additional gross profit.

If the major reason for falling short of 25k deliveries was production of 100kWh not meeting with demand, and was solved in June, that would mean a much higher uptake rate of 100kWh in Q2 vs Q1.

So the gross margin in Q2 should be significantly higher than Q1, IF production constrain on 100kWh was really the cause.

 

[FredTMC]

Intriguing to me that the 100kWh pack availability was a limiting factor, meaning that customers are opting for the highest-end models when possible? I'm pleased that people are going for the larger pack sizes, but with the base model now being 75kWh, and the price premium for the 100 being so much greater, it is still a surprise that demand would be so strong.

Well.... back in the day, when 60 and 85 were the only choices, I think the 85 far out sold the 60. Today the only two options moving forward are 75 and 100

So, it's likely that 100 gets a fair share of the mix. Exactly how much? I have no idea. Maybe 50%

As for the press release, we don't know what the actual demand for 100 sized battery was. We only know they couldn't produce it in sufficient volume to meet the demand for the big battery.

 

[AlMc]

Everything else being equal, 100kWh is $23k more expensive. Using $195/kWh cost for Tesla, the larger battery pack alone draws $18k additional gross profit.

If the major reason for falling short of 25k deliveries was production of 100kWh not meeting with demand, and was solved in June, that would mean a much higher uptake rate of 100kWh in Q2 vs Q1.

So the gross margin in Q2 should be significantly higher than Q1, IF production constrain on 100kWh was really the cause.

Sorry if I am not getting this with my older brain. Isn't the 100kWh pack cars giving the highest GM? So, any constraint on their sales should be a negative on the potential Q2 financials.

 

[SebastianR]

I'm ok with this. They said 47k to 50k cars and they delivered. Well done.

 

[NannerAirCraft]

Well.... back in the day, when 60 and 85 were the only choices, I think the 85 far out sold the 60. Today the only two options moving forward are 75 and 100

So, it's likely that 100 gets a fair share of the mix. Exactly how much? I have no idea. Maybe 50%

As for the press release, we don't know what the actual demand for 100 sized battery was. We only know they couldn't produce it in sufficient volume to meet the demand for the big battery.

According to InsideEVs estimates in June about 40% of Model S delivered had 100 kWh.

"It was the apparent near absence of 100 kWh production early in the month (as we also saw in April…which at the time we thought was a reflection of getting 60 kWh cars out the door). This lack of production meant very little high-end deliveries in the US for the company in May.

…but they came in June, according to our estimates, about 40%of the Model S sedans delivered in June were of the 100 kWh variety, about as high as we have ever seen."

June 2017 Plug-In Electric Vehicle Sales Report Card

 

[schonelucht]

So, looking the Norway daily deliveries, the 100kWh pack deliveries started to ramp up around the last week of May. From about one 1 in 20 to 1 in 3. Taking into account 3-4 weeks of transit time, a reasonable guess would be that the pack production issues were resolved early May. Looking at the spreadsheet tracker, there does not seem any particular bigger backlog on the 100kWh pack versus the rest. Does anyone have data on X100 backlog estimates?

 

[Fallenone]

Sorry if I am not getting this with my older brain. Isn't the 100kWh pack cars giving the highest GM? So, any constraint on their sales should be a negative on the potential Q2 financials.

The 100kWh indeed has the highest GM. But in the past 2 Qs their demand (initially only available on P100D) and production (late Q1 and first half of Q2, provided that their production rate of 100kWh was always increasing or at least stable) was likely not at the current level (June). So comparing QoQ, we should be seeing the % of 100kWh in the total mix getting higher thus increasing the overall GM.

 

[22522]

I must say, that as of today I no longer have made enough on Tesla stock to purchase the Model 3. But suspecting that I may be a mere rabbit in a land of hawks, I will hold until payment is due. I expect this to work. Just a status update.

 

[larmor]

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.

Certainly better results than competitor Tesla Killers whose cars have a paper battery coming from a paper (napkin) battery factory...

 

[ggr]

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.

I disagree. With only one factory producing cars for the entire world, they have no smoothing function. Deliveries will necessarily be lumpy. The requirement to report quarterly has driven a lot of companies to be ridiculously short-term focused, and I think Elon is resisting this as hard as he can, and I'm with him...

 

[jhm]

I disagree. With only one factory producing cars for the entire world, they have no smoothing function. Deliveries will necessarily be lumpy. The requirement to report quarterly has driven a lot of companies to be ridiculously short-term focused, and I think Elon is resisting this as hard as he can, and I'm with him...

Of course, they will be lumpy. Why does Musk want to BS the world with smooth numbers? If he is past playing games with operations to deliver smooth quarterly numbers, then he may as well be honest about monthly numbers. The whole argument before was that the shorts would have a field day if we gave them too much data. Are we supposed to continue to fear the scrutiny of shorts? I sure hope Tesla has grown past that.

 

[Intl Professor]

Apology if this was already posted. Second SpaceX launch attempt is now scheduled. Cf:

Intelsat 35e Mission | SpaceX

 

[everman]

As much as it will produce 100k to 200k in 2017, the publicly stated goal last year. This goal was more serious than a tweet.
Also, production != deliveries, and the goal is also a soft statement saying "we can reach 20000 a month", not that "we will reach 20000 a month in Dec".
Tesla sets July 1, 2017 production date for Model 3, but there's a catch

Model X exponential ramp should also be looked at to know what Tesla means by exponential ramps. At these low numbers, whether something is exponential or linear or sub linear is really immaterial. Exponential matters most when numbers are big, not near the origin.

Last year, the goal for start of "mass production" was set to July 1, 2017. So completing SN1 on Friday and receiving regulatory approval for that as "ahead of schedule" makes me wonder what schedule Elon is referring to.

GM released the Bolt to reporters and car competitions ahead of customer deliveries. Hopefully Tesla will release the M3 to reporters for reviews so buyers will know what to expect before finalizing their orders.
GM was also confident enough to deliver the first production cars to common people. not just to friends and families of the CEO and board members.

RATE! RATE! 100,000-200,000 RATE per year! This particular bear move bugs me more than most. They take the 100,000 number, mentioned as an annual rate that will be achieved at the end of a particular calendar year and say that Elon promised to DELIVER that many IN THAT YEAR! 20,000 a month RATE in December is a 240,000 per year RATE, by the way.

Sheesh. MMD usually just annoys me, but he struck a nerve when he trotted out that BS. Sorry all.

 

[Reciprocity]

From press releases ...
Q1 production totaled 25,418 vehicles. This was also a new quarterly record for us
Q2 production totaled 25,708 vehicles, bringing first half 2017 production to 51,126.

Looking at the numbers produced, even with the supposed battery delay, seems like output stayed the same and was in fact slightly higher in Q2

The issue seems to be the timing with problems resolved at the end of the quarter. My assumption is that those additionally produced cars are in route now. Should contribute greatly to Q3 along with a couple thousand 3s. The way I look at the 3s in Q3 is like 2 x 3s = 1 x S. Post Q3, I'll think of them more on there own.

 

[Navin]

Today didn't make much sense so I just took advantage of the market and increased my position by 20%. Sell short term puts and covered calls but all buys today were LEAPS and shares. Bring it on!!

 

[Dagger]

RATE! RATE! 100,000-200,000 RATE per year! This particular bear move bugs me more than most. They take the 100,000 number, mentioned as an annual rate that will be achieved at the end of a particular calendar year and say that Elon promised to DELIVER that many IN THAT YEAR! 20,000 a month RATE in December is a 240,000 per year RATE, by the way.

Sheesh. MMD usually just annoys me, but he struck a nerve when he trotted out that BS. Sorry all.

Not a bear, but this is from the earning call transcript for Q1 2016:

So as a rough guess, I would say we would aim to produce 100,000 to 200,000 Model 3s in the second half of next year. That's my expectation right now. Yeah, so that's the thing.

Link: Tesla Motors (TSLA) Elon Reeve Musk on Q1 2016 Results - Earnings Call Transcript | Seeking Alpha