2017 Investor Roundtable: TSLA Market Action

[sunhelm]

Meanwhile, in Vin watching world, just looked up the below Vin and looks like a new batch has been issued? I'll keep going to see where this ends but need help ! Maybe I'm not doing this right?

VIN: 5YJ3E1EA6HF002404
Year: 2017 Make: Tesla Model: Model 3 General Production
Number of Open Recalls: 0

Edit Looks like we end at this VIN:
VIN: 5YJ3E1EA0HF002639
Year: 2017 Make: Tesla Model: Model 3 General Production
Number of Open Recalls: 0

 

[ValueAnalyst]

Yes, each motor needs a reduction gear ... BUT the rear and forward motor/reduction gear are very likely different beasts. Both the motor (in terms of power, speed/efficiency) and gear (ratio of gears) are likely different so that the car can maximize efficiency at different speeds.

Are you saying the supplier for the two motor/reduction gears may be different?

 

[Waiting4M3]

Are you saying the supplier for the two motor/reduction gears may be different?

They could dual source it from 2 suppliers to reduce risk of a single point of failure. Also if its like the P*D situation where the front and back are asymmetric, then different motors/gears would have to be expected.

 

[ValueAnalyst]

They could dual source it from 2 suppliers to reduce risk of a single point of failure. Also if its like the P*D situation where the front and back are asymmetric, then different motors/gears would have to be expected.

Yeah... tough to make much of the 10,000 per week supplier comment, but it would make sense if Tesla was shooting for absolutely maximizing production once 200,000th US delivery is made (~Apr 1) to maximize the number of owners eligible for the tax credit.

Hit 200,000 on April 1 and increase production to 10,000 per week ASAP is the optimal course of action. Is it possible... is a different question.

 

[TrendTrader007]

I feel on average this board doesn't have enough experience to deserve TT007. He is really good based on my private conversation with him. He knows what he is doing and posts his thoughts as is. There are a few other great investors/traders on this board too.

Normal investors who don't have the time and experience to research companies, should stay with index. If you know you have the skill and energy to beat the index, you should put about 20% into each holdings. You can allow it to grow into a larger percentage. This small diversification is very important for your account's safety, performance and your sleep quality. If you are not sure about this part, study the views from Peter Lynch, Warren Buffett, and Philip Fisher.

Again for normal investors: Don't use borrowed money. Don't use margin. Don't gamble. If you want to do options, do a small amount only when technical, fundamental, market, and everything else lined up perfectly so you are very sure about the direction and timing. At this moment, I am not sure about the direction nor the timing. For long term I am pretty confident Tesla's market cap will be several fold larger than $54B.

One more word from Warren Buffett: "for those who know what they are doing, diversification doesn't make any sense." I totally agree with him.

I have a learned a lot from you and continue to learn from your huge investing experience and deep insights. I look forward to our next hour long conversation in the near future and over the next several years. I’m looking forward to having a Charlie Munger and Warren Buffet like investment team approach with you. Thank you very much for your kind words

 

[Lessmog]

Yes, each motor needs a reduction gear ... BUT the rear and forward motor/reduction gear are very likely different beasts. Both the motor (in terms of power, speed/efficiency) and gear (ratio of gears) are likely different so that the car can maximize efficiency at different speeds.

Again, as Tesla-Bjorn would say, we don't know yet. (But I doubt the motors are different.)

 

[TrendTrader007]

TT007 made what turned out to be an amazingly accurate call on the stock movement going into Q2 ER. Everyone else was mired in doom and gloom, including me. His was a very welcome perspective. On the other hand, how many dozens of times can someone add the very last shares they are going to add? I have to admit to adding leverage at one point, partly based upon TT007's enthusiasm, when we were up pretty close to an ATH. I ended up regretting it and I'm not as naive now. Ultimately, I enjoy his posts but also take them with a few grains of salt.

Point well made

 

[Waiting4M3]

Yeah... tough to make much of the 10,000 per week supplier comment, but it would make sense if Tesla was shooting for absolutely maximizing production once 200,000th US delivery is made (~Apr 1) to maximize the number of owners eligible for the tax credit.

Hit 200,000 on April 1 and increase production to 10,000 per week ASAP is the optimal. Is it possible? is a different question.

ASAP is always optimal. Is it possible? how would anyone here know? Consider that the info came from a supplier, who just had their orders reduced, chances are that they were just saying anything that sound good to their investors, such as getting a much larger order in Q1/Q2. I really wouldn't put too much credence into it. I'll wait to hear from Elon/Tesla on any official announcement regarding any adjusted target.

For now I'm expecting steady state 5K/wk by end of Q1'18, 20%+ GM in Q2'18, beginning of work to ramp to 10K/wk in Q3 (which may negatively impact Q3 financials), and result of the ramp to show in Q4 delivery, likely towards the end.

 

[ZsoZso]

In case you missed this upthread:

2017 Investor Roundtable: TSLA Market Action

The supplier appears to make reduction gears. So probably 1 part per car.

Thats is true for RWD cars, which is the only type of M3 currently produced.
However, at some point next year, they will start producing Dual-motor AWD cars and those will need 2 reduction gear boxes per car. Therefore, the part order increase to 10K/week projected to June/July could simply mean thats the date they are planning to start focusing to make AWD versions and should not be taken as an indicator for 10K car/week production.
Just my opinion / speculation...

 

[3Victoria]

Again, as Tesla-Bjorn would say, we don't know yet. (But I doubt the motors are different.)

The front motor may well be a pure induction motor, which would be more efficient for the highway.

 

[TrendTrader007]

Need a tracker for the number of times you have left TMC & said you were never coming back & yet here your are once again.

Please feel free to ignore me

 

[ValueAnalyst]

ASAP is always optimal. Is it possible? how would anyone here know? Consider that the info came from a supplier, who just had their orders reduced, chances are that they were just saying anything that sound good to their investors, such as getting a much larger order in Q1/Q2. I really wouldn't put too much credence into it. I'll wait to hear from Elon/Tesla on any official announcement regarding any adjusted target.

For now I'm expecting steady state 5K/wk by end of Q1'18, 20%+ GM in Q2'18, beginning of work to ramp to 10K/wk in Q3 (which may negatively impact Q3 financials), and result of the ramp to show in Q4 delivery, likely towards the end.

20%+ M3 GM in 2Q18 would put Tesla to breakeven, but I think that's optimistic. I have 15% in 2Q18 and 20% in 3Q18, and never 25%.

On ramp to 10,000 per week. Why wouldn't Tesla start working on Line 2, which will be a duplicate of some parts of Line 1, until 3Q?

I think trying to pin 5k/week timing is not as useful as 4k/week timing, since the last part is a log increase. If Tesla gets to 4k/week by end-January (2 month delay), and starts working on line 2 by March, then 4k/week on Line 2 could be possible by end 3Q18 (six months) and probable by 4Q18. Agreed?

I think this is why EM was so assertive about 10,000/week in 2018.

 

[Lessmog]

The front motor may well be a pure induction motor, which would be more efficient for the highway.

Point. Still, we don't know.

 

[Waiting4M3]

Thats is true for RWD cars, which is the only type of M3 currently produced.
However, at some point next year, they will start producing Dual-motor AWD cars and those will need 2 reduction gear boxes per car. Therefore, the part order increase to 10K/week projected to June/July could simply mean thats the date they are planning to start focusing to make AWD versions and should not be taken as an indicator for 10K car/week production.
Just my opinion / speculation...

After thinking about it more, I think what you said sounds most likely. The increase to 10K is due to introduction of AWD. But without knowing the exact part, the actual AWD configuration, whether Tesla potentially dual-sources this part from 2 suppliers, there is not much concrete info we can go on. So I'll stop chiming in this topic on the market thread now.

 

[MitchJi]

I do hope you are correct. Unfortunately, I see more Longs getting squeezed out and rotating to FANG stocks. There is little good Tesla news out there right now. Sentiment, and sustained positive movement in the SP of TSLA will only come, IMO, when there is unequivocal evidence that the 3s are being produced in quantity.

The X and 3 delays are quite different in cause, IMO but they are both *misses* on EM guidance. The X was due to complexity of design while the 3 is due to the A team at A suppliers not coming through or bottlenecks by Tesla manufactured parts (battery pack assembly at the GF and validation of stamping equipment at Fremont....my speculation on the latter)

Having been in TSLA for years I have come to expect EM guidance is aspirational not real. It does not make it any easier as an investor to have us all sit through 'stockholder hell'.

I am not selling a single share or any of the J19s but it does not mean one can't question management on failure to deliver. The shorts have a good narrative right now. It won't last forever.

But Tesla hasn't missed M3 guidance!

They are exactly where Elon said they would be!
This time they are on time:
Now, will we actually be able to achieve volume production on July 1 next year? Of course not.
The reason is that even if 99% of the internally produced items and supplier items are available on July 1, we still cannot produce the car because you cannot produce a car that is missing 1% of its components.

Nonetheless, we need to, both internally and with suppliers, take that date seriously, and there need to be some penalties for anyone, internally or externally, who does not meet that timeframe. This has to be the case because there's just no way that you have several thousand components, all of whom make it on a particular date.

The reality is that the volume production will then be some number of months later, as we solve the supply chain and internal production issues.

 

[MitchJi]

If the gear box qty will increase to 10K by 2H18, if it's the same gearbox (instead of 2 different models), that would mean that the AWD should use the same gear box, which likely means it will use the same rear motor.

That's not going to happen. If nothing else the ratios will be different.

 

[TrendTrader007]

Could TSLA go down to $300.81 or $264.80 or $254.12 technically on a wild impulse move to downside?
Absolutely! Crazier things happen in the stock market all the time
Is it likely.?
Not really
I bet on probabilities
And the probability of this being closer to the bottom is very high for several technical reasons
I’ll explain with charts later this weekend but all I can do is read the charts and place my bets
If I’m wrong I lose
If I’m right I win
Either ways it’s only money
It’s not the freaking end of the world
I’m already down $3.5 from the last high and I couldn’t care less
If and when I get a margin call I’ll sell enough to meet the call and carry the rest of my position for long term
It’s all just a game a few millions here a few millions there you can’t take the game too seriously
If you do you’re history
Gone for good
Nobody said becoming a billionaire was a easy
Otherwise every other idiot would be one

 

[MitchJi]

If you look back at parts orders for the beginning of the Model 3 ramp you can see that Tesla will place orders to do its best to try to ensure that parts supplies will not be a roadblock in production. But inevitably some suppliers will fall short in terms of volume or quality and the ramp can only progress as fast as the worst performing supplier. (Elon has explained this in the past but I don’t have time to look it up.) And that assumes no problems ramping the production line.

So I would view 10K/wk by mid-2018 as much more optimistic than even the “impossible” July 2017 date for the start of Model 3 production.

More broadly, getting out ahead of Tesla’s own (usually optimistic) projections on this is very likely to prove wrong. Tesla has said 10K/week production some time in 2018. Until I hear otherwise I am assuming December 2018, and in my mind that would be a massive home run.

I think that it's a mistake to think that the ramp from 5k-10k would be subject to the same types of part production issues as the ramp from 0-5k. It's going to be much easier for Tesla and everyone else to double the production of existing parts than to get the initial production from zero to 5k.

In terms of the SP getting to 5k M3's produced per week by mid 2018 will probably be a massive home run.

 

[Waiting4M3]

I think that it's a mistake to think that the ramp from 5k-10k would be subject to the same types of part production issues as the ramp from 0-5k. It's going to be much easier for Tesla and everyone else to double the production of existing parts than to get the initial production from zero to 5k.

In terms of the SP getting to 5k by mid 2018 will probably be a massive home run.

SP 5K by mid 2018? I'd settle for SP500.

 

[MitchJi]

EDIT: I may move my target to $306....

My biggest decision is whether to sit on TSLA intended cash till the J20s come out instead of J19s if we hit my PT.

If the SP gets to $310 I'd buy J19's at a lower strike price, something like $350's instead of $400's. Then wait to make a big profit on the J19's then roll them to J20's.

It's very kind of the shorts to continue to help us to get these incredible buying opportunities. Take advantage when you can.