2017 Investor Roundtable: TSLA Market Action

[ValueAnalyst]

No, I'm giving them that. That's how I get to 15,000 to 25,000. That's getting to thousands faster than they ever have done... 2 times as fast (thousands in the 3rd month). The first 6 months of production for the S was 860. The X was 754. I'm saying 15,000 to 25,000 3's. Let's say we take out the months of sub 200 production. The first 6 months of the S was then 7,390. The X was 6,940. I think they will do between 2x and 4x better than that.

I just don't think the comparison to model s/x ramp up is applicable at all.

Different senior leadership on manufacturing, much simpler design, multiple years of emphasis from senior leadership on how important manufacturing of model 3 is, concrete actions taken after model x ramp up issues, bringing Grohmann in house and many more reasons, I believe, make the reasoning by comparison misleading in this specific case.

Of course I agree with you that some things will go wrong, but given all the information we have today and the concrete steps taken by the company, I expect less-than-expected hiccups in 2H17 and a higher-than-expected ability on the company's part to deal with these hiccups.

We can only wait and see how it plays out...

 

[Words of HABIT]

I'm taking delivery of my CPO S on Saturday. Let's see if I made a huge mistake or not considering the 3 is probably going to start shipping out to buyers in just a few weeks.

SWEET! I'm waiting for my M3 and solar roof.

 

[techmaven]

We can only wait and see how it plays out...

I think part of this is setting expectations. What is a win? Do we need 70-80k this year to justify the stock price? I think not. Getting to 20k is a big win. It justifies the price as it stands today. Because getting to 20k this year means getting to 4k/week at least at some point this year and the suppliers have ramped. Even at just 4k a week for the next year would be 192,000 in 2018 for 3 alone. An average of 5.5k a week in 2018 would mean 260,000 Model 3's in 2018. That's 350,000+ vehicles overall in 2018. That's way more than most analysts and "expert" commentators expect. That's possibly matching the Nissan Leaf's entire history of production by the end of 2018. The worldwide number of plug-in vehicles sold in 2016 was around 500,000. Tesla would have almost 50% marketshare in 2018. And that's with 20-25k Model 3's sold in 2017.

So whether this year is 15k, 25k, or 50k, what matters most is getting volume ramp done.

 

[Skryll]

I think part of this is setting expectations. What is a win? Do we need 70-80k this year to justify the stock price? I think not. Getting to 20k is a big win. It justifies the price as it stands today. Because getting to 25k this year means getting to 4k/week at least at some point this year and the suppliers have ramped. [...]

So whether this year is 15k, 25k, or 50k, what matters most is getting volume ramp done.

Totally agree, because it means the cars will be on the streets and in the hands of many that will show their family that teslas are now affordable and awesome and that adjusting your lifestyle to electric actually frees up your time contrary to common believe about long charging times. And all those gas cars will be losing little drag races at all stop lights, and its no longer the $100k+ electric car beating the $40k gas car, its now the $25k after incentives electric car beating the $40k gas car. This will become an eye opener for many. And one thanksgiving later, a lot of new orders come in.

 

[madodel]

Is Breana Noble following TMC? Quite a comprehensive list of reasons for TSLA SP run-up this year and into the future. It's as if she read all the posts here. 20 Photos That Show Why Tesla's Stock Has Exploded 78% This Year

 

[ValueAnalyst]

I think part of this is setting expectations. What is a win? Do we need 70-80k this year to justify the stock price? I think not. Getting to 20k is a big win. It justifies the price as it stands today. Because getting to 25k this year means getting to 4k/week at least at some point this year and the suppliers have ramped. Even at just 4k a week for the next year would be 192,000 in 2018 for 3 alone. An average of 5.5k a week in 2018 would mean 260,000 Model 3's in 2018. That's 350,000+ vehicles overall in 2018. That's way more than most analysts and "expert" commentators expect. That's possibly matching the Nissan Leaf's entire history of production by the end of 2018. The worldwide number of plug-in vehicles sold in 2016 was around 500,000. Tesla would have almost 50% marketshare in 2018. And that's with 20-25k Model 3's sold in 2017.

So whether this year is 15k, 25k, or 50k, what matters most is getting volume ramp done.

To clarify my position, I agree with you on this. The stock price currently incorporates no Model 3's in 2017, slow ramp up over the next three years, and only 500k total data in 2020 with minimal value to Tesla Energy.

The way I see it: Tesla already won the fight against skeptics. I'm just discussing where we go from here, the most likely scenario, because I want to be ready when the short squeeze happens.

In other words, with your projection of 15k-25k in 2017, what do you do if the stock surges to $800 this year? I hold.

My point is: excessive conservatism is nearly as harmful to long-term investment returns as excessive optimism.

 

[Words of HABIT]

...and we are back in the green.

 

[dmckinstry]

Is Breana Noble following TMC? Quite a comprehensive list of reasons for TSLA SP run-up this year and into the future. It's as if she read all the posts here. 20 Photos That Show Why Tesla's Stock Has Exploded 78% This Year

Just a nit. Elon has never indicated deliveries of Model 3 on July 1st.

 

[D-egg-O]

This may be a bit aggressive. Elon stated 5,000 week by end of '17 and 10,000 week in '18. The graph would not be an S curve for each year, but an overall S curve for the multi-year duration of buildout. Therefore I see a straight line for each year, compounding to achieve the S curve.

'17 - half year (using 25 wks) increment of 200 M3 first week and increasing by 200/wk to achieve run rate of 5,000/wk by end of '17 = 60,400 M3 + 100,000 (MS+MX)= 160,400 Total.

'18 - full year (using 50 wks) increment of 5100 M3 first week and increasing by 100/wk (hence the S curve) to achieve run rate of 10,000/wk by end of '18 = 377,500 M3 + 123,500 (MS+MX at 23.5% YOY growth) = 500,000

I've got my money on this. When the final '17 and '18 numbers come out from Tesla, I'm going to compare and will send notice here on TMC how well, or poorly, I did. See you then.

Let me clarify I don't agree with the estimate in the video. It's just different scenarios based on the delivery of supplier parts per Elon's comments in the Q4 or Q1 conference call. I found it interesting InsideEVs decided to pick in up and publish it, hence why I thought the stock would gap up today.

 

[dmckinstry]

...and we are back in the green.

You jinxed it.

 

[MitchJi]

No, I'm giving them that. That's how I get to 15,000 to 25,000. That's getting to thousands faster than they ever have done... 2 times as fast (thousands in the 3rd month). The first 6 months of production for the S was 860. The X was 754. I'm saying 15,000 to 25,000 3's. Let's say we take out the months of sub 200 production. The first 6 months of the S was then 7,390. The X was 6,940. I think they will do between 2x and 4x better than that.

I don't think that you are giving Tesla enough credit and not giving enough credit for the Tier 1 suppliers. It's also much easier to produce a thousand cars per month on a line designed for for 5k per week, than a line designed for 20k per year.

I think part of this is setting expectations. What is a win? Do we need 70-80k this year to justify the stock price? I think not. Getting to 20k is a big win. It justifies the price as it stands today. Because getting to 25k this year means getting to 4k/week at least at some point this year and the suppliers have ramped. Even at just 4k a week for the next year would be 192,000 in 2018 for 3 alone. An average of 5.5k a week in 2018 would mean 260,000 Model 3's in 2018. That's 350,000+ vehicles overall in 2018. That's way more than most analysts and "expert" commentators expect. That's possibly matching the Nissan Leaf's entire history of production by the end of 2018. The worldwide number of plug-in vehicles sold in 2016 was around 500,000. Tesla would have almost 50% marketshare in 2018. And that's with 20-25k Model 3's sold in 2017.

So whether this year is 15k, 25k, or 50k, what matters most is getting volume ramp done.

What's important isn't our expectations, but the markets expectations. I believe that the market is so pessimistic that your lowest numbers will be a big win.

I think that your numbers are probably low, but I'm considering similar numbers to your worst case for my worst case. But I thinking that something higher than your best case is most likely. I'm currently planning to buy some short term options before every ER until about Q2 2018. I'm figuring on low numbers that I believe are unlikely for my worst case scenario. I believe if that happens I'll make good profits, and if the more likely IMO better numbers happen I'll be making even more.

 

[ValueAnalyst]

Is Breana Noble following TMC? Quite a comprehensive list of reasons for TSLA SP run-up this year and into the future. It's as if she read all the posts here. 20 Photos That Show Why Tesla's Stock Has Exploded 78% This Year

Any analyst who's not reading every single post here needs to reconsider their approach.

 

[erthquake]

Because something will go wrong. With the dual drive Model S introduction, the rear seats were a big problem. It delayed production so late in Q4 that deliveries to customers ran into holiday travel plans and fell short. The X, we know suffered from a myriad of issues and they diligently fixed them, but that vehicle suffered from many different production problems. Hence Musk talks about hubris. It was not just the falcon wing doors, it was the seats, it was the panoramic windshield, it was the front doors, it was the door seals, it was the overall labor to make the vehicle in general assembly, and so forth.

They order parts from the suppliers. The supplier that screws up the most is the one that limits production. Let say they get 0 usable parts from that supplier in July. I assume they deliver some number of Model 3's based on prototype parts ... parts that are otherwise identical to the production parts (or maybe even better) but made with prototyping tools. That's maybe 5 or 20 or maybe even 50 vehicles. Then, Tesla gets to see exactly what is wrong. Maybe the supplier is a total screw up and they have to switch suppliers. That could be 3 months. Tesla makes some more vehicles with prototype parts in August. Maybe another 5.

Maybe it isn't so bad... the unluckiest supplier makes 0 usable parts, but the parts can easily be sourced elsewhere. Maybe it's 5 unluckiest suppliers, and some of those parts come in at volumes that are terrible.

Clearly though, the real volume ramp is expected for September and even then, might be numbered in the hundreds a week as the plant struggles to get to volume production.

I would be happy with hundreds of Model 3's in Q3 if they are well on their way to scale up. And further, whatever parts of the factory aren't in place in Q2 pushes the capex spend to Q3, which is actually due in Q4. Hopefully Tesla is in volume production by the time the big capex numbers hit.

My expectations are 15,000 to 25,000 Model 3's in 2017. I hope for far more, and I think 40,000 is a very optimistic figure. I hope that is the case. Even if that is the case, it may look like this:

Jul: 20, Aug: 10, Sept: 2,000, Oct: 5,000, Nov: 14,000: Dec: 19,000.

Back in the fall, they ordered enough parts to make 300 cars. They've been testing release candidates for almost three months. Shouldn't they already have a pretty good handle whether all the parts are usable?

 

[D-egg-O]

...and we are back in the green.

Stop jinxing it.

 

[Crowded Mind]

Back in the fall, they ordered enough parts to make 300 cars. They've been testing release candidates for almost three months. Shouldn't they already have a pretty good handle whether all the parts are usable?

Right. I feel like if we compare the 3 to the X, Tesla was already trying to deliver cars to customers at this point in the process to hit the (already delayed) deadlines they committed to. We've seen tons of release candidates and for the most part, they appear to be of better build quality than the initial X deliveries. There is likely no reason Tesla couldn't have delivered some of those in May and managed to deliver a couple hundred more before mid-July. If they had chosen to do that, maybe a few thousand in August or September would have made the ramp look similar to S/X.

 

[MitchJi]

To clarify my position, I agree with you on this. The stock price currently incorporates no Model 3's in 2017, slow ramp up over the next three years, and only 500k total data in 2020 with minimal value to Tesla Energy. The way I see it: Tesla already won the fight against skeptics. I'm just discussing where we go from here, the most likely scenario, because I want to be ready when the short squeeze happens.


In other words, with your projection of 15k-25k in 2017, what do you do if the stock surges to $800 this year? I hold.

That sounds like excessive conservatism to me!

If I can either see it coming with extremely high confidence, or know it has actually started to happen the first thing I'm hoping to do is to roll some of our J19 $380's to something like J19 $700's (the highest strike available). They are the perfect strategic choice when you are very confident that the SP is going parabolic. For about ten-fifteen of our $380's we could get over 100 $700's! When I had that epiphany about a week ago I thought about buying some at that time. But I'm reading the book about Jesse Livermore and he believes it's better to wait for a movement to start rather than to try to capture the first eighth.

I think that the most likely timing for that is about the most time of the Q4 ER.

Edit Addition:
Our $380's are current at about $70, and the $680's are $9.75, which means 15 $380's would get us about 105 of the $680's. That's options on 10.5k shares. If the SP increases by only $50-$100 we'll be .

 

[techmaven]

Back in the fall, they ordered enough parts to make 300 cars. They've been testing release candidates for almost three months. Shouldn't they already have a pretty good handle whether all the parts are usable?

Ideally, yes. But the RC's are built with prototype parts. The parts arriving in July should be made with production processes. Otherwise, the expense would be very high. The X was built with prototype parts and temporary dies for quite a while... hence the very low production numbers and terrible initial gross margins. Even then, they had to change out the door seals. Matter of fact, they built quite a few X's with the older door seals and then had them replaced by service techs at the service centers. Some suppliers may have difficulties in producing the parts with volume production processes.

 

[ruralectric]

Any analyst who's not reading every single post here needs to reconsider their approach.

Wait what? That's just messed up. I think there's a pretty good case to be made for this post right here to be enough cause for anyone, analyst or no to want to give this forum a rest for a while. Thanks for pushing me over the edge.

 

[austinEV]

Wait what? That's just messed up. I think there's a pretty good case to be made for this post right here to be enough cause for anyone, analyst or no to want to give this forum a rest for a while. Thanks for pushing me over the edge.

Wait what yourself. This forum, for all it's flaws is an invaluable resource and the best collection of Tesla investing experts you could dream up. To call yourself an expert, you should be reading here.

 

[ValueAnalyst]

Right. I feel like if we compare the 3 to the X, Tesla was already trying to deliver cars to customers at this point in the process to hit the (already delayed) deadlines they committed to. We've seen tons of release candidates and for the most part, they appear to be of better build quality than the initial X deliveries. There is likely no reason Tesla couldn't have delivered some of those in May and managed to deliver a couple hundred more before mid-July. If they had chosen to do that, maybe a few thousand in August or September would have made the ramp look similar to S/X.

Exactly.

An the other thing that baffles me about Model 3 projections:

Elon's Q3 parts order numbers increase by 100% each month. Why do people assume this growth rate will significantly slow down in Q4? Why do people assume 5,000 per week will only be reached by the end of December?

This is certainly "one of possible outcomes" but every initial prediction Elon has so far made on model 3 (500k units by 2020, model 3 deliveries by end17 and July production start impossible, much longer waiting list than expected) are on track to be exceeded.

The trend here is important.