2017 Investor Roundtable: TSLA Market Action

[Snapdragon III]

Agreed. The conversation on that topic indicated that doubling from 5K to 10k would NOT cause a doubling of Capex to get there.

I agree. My memory of it was that they said that it would cost a lot, but much less than the initial spend to get to 5000K. JB jumped in and added that for lots of parts of the manufacturing they had already built the capacity, such as the gigafactory part of it. My impression of it was that they knew they were going to have to duplicate certain sections of the production line at Fremont, but had not figured exactly how much of it, at that time.

 

[Waiting4M3]

A vehicle can have multiple sets of something. For example, brake pads are sold in sets for front or rear wheels. Some brakes have multiple pads - one for each rotor - and a set consists of just one wheel. I'm just pointing out that it's ambiguous, not trying to rain on anyone's parade.

A key takeway from the supplier news for me was that Tesla was expecting to double production between late Q4 and early Q2. That's obviously been pushed back a little bit but it gives us a sense of what the pace of the ramp should be as they start pumping out cars.

I'll also be honest and say that production of 5,000 Model 3s a week by year-end was never my expectation. For Tesla to have done that would have been absolutely phenomenal. Heck, for them to be at a 5k/week pace by July next year would be extremely impressive. Volume manufacturing is hard. Put another way, this stock is materially higher if they're profitably turning out 5,000 Model 3s per week next summer.

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.

 

[Waiting4M3]

So, I know I'm getting over leveraged in TSLA when it is going down day after day and I no longer want to look at my account balances. I'm still game for buying further dips but I just don't want to see what that balance is down to these days. Anyone else there these days???

I only have shares in my taxable account which I may need to draw from to buy my M3. I've been buying shares since 2014. I'm never good at timing so I won't boast about my entry points. Still, these dips do not make me rush to check my account balance.

I have J19s in my 401K/IRA, which I can not touch for years anyway, so I don't really look at the balance often either. I started this when I noticed that my 401K account is doing a lot better than my taxable account, after I forgot the password to the 401K account for a few years. Since it's J19s I can't leave it completely unattended indefinitely, but I definitely don't care about daily/weekly or even monthly fluctuations.

 

[Waiting4M3]

I only criticize him because he uses choice words like “nervous nellies” etc to criticize rational posts here. He wants everyone to sing his hyper bullish go-go bubble song. As he didn’t find enough of resonance he moved on collectively branding TMC bulls as “losers”.

In a nut shell he was hoping to create a hype bubble, basically same thing that JC tried to do, as it didn’t work he moved on.

Maybe he is not a troll in a literal sense. Maybe we should come up with a better term. How about “bubble blower”?

I don't think TT is trolling. I won't rule out that there are posters here with ulterior motives, but often people on internet want bragging rights. I think it's inevitable that when SP is high, bulls pump their chests, and when the SP is low, bears come out. If one listens to the "winning" side during these short term fluctuations, one would end up buying based on bulls when the SP is high, and selling based on bears when the SP is low. So in that sense hyper bulls share guilt with shorts in creating that kind of environment.

I won't lie, I got caught up in the excitement in Sep and bought some in $360s. But I'm not going to blame it on "trolls". Have some discipline and we'll all be fine. I caught myself after the $360s buy and remembered not to sell the dip. You only lose money when you make both mistakes, buying high AND selling low. As long as you don't sell low, you always have a chance to make up for the earlier mistake of buying high.

 

[MitchJi]

Tesla cuts Model 3 part orders to Taiwan supplier Hota: repo

TAIPEI (Reuters) - Luxury electric carmaker Tesla (TSLA.O) plans to slash by 40 percent its orders for parts for the new Model 3 mass-market sedan from Taiwanese auto component maker Hota Industrial Mfg. Co (1536.TW) from December, according to a media report.

Shares of the parts maker dropped nearly 9 percent after the Economic Daily News reported, citing Hota Chairman Shen Kuo-jung, that Tesla had told the firm orders would be cut to 3,000 sets per week from 5,000 sets starting December, due to a “bottleneck” in the production of Model 3.

Tesla may delay scheduled weekly shipments of 10,000 parts in March by a few weeks until May or June, the report added."

TL;DR
Bad news: TSLA cut orders to facilitate 3000 units/week by december.
Good news: TSLA cut orders to facilitate 3000 units/week by december.

Spent our last dry powder on a November 17 $325 call based the theories that:
1. Most of the drop today was based on their on it's like the temporary dip due to the numbers. Not good news but in the big picture it's not that bad.

2. I had the epiphany today that I think that Tesla is about to update the MS-MX, probably early next week. I loved the M3 video and I believe that the reason that Tesla hasn't wanted information about the M3 to get out is very because they were worried about canabalizing the MS-MX. They've removed the $1k referral at the end of the month. The only explanation I can think of is that they are introducing MS-MX upgrades at the beginning of November. I think that the interior wil get a huge upgrade designed by the Volvo interior hire. Possibly a HUD also.

 

[D-egg-O]

I only criticize him because he uses choice words like “nervous nellies” etc to criticize rational posts here. He wants everyone to sing his hyper bullish go-go bubble song. As he didn’t find enough of resonance he moved on collectively branding TMC bulls as “losers”.

In a nut shell he was hoping to create a hype bubble, basically same thing that JC tried to do, as it didn’t work he moved on.

Maybe he is not a troll in a literal sense. Maybe we should come up with a better term. How about “bubble blower”?

So why do we give so much sh- to shorts here? We can all think critically right. Let the shorts talk all FUD all the want?

See, the problem is that bubble blowers cause as much damage to our wealth as FUDsters do - I know this from practical experience from losing a ton of money in SCTY, falling for bubble masters like foghat.

TT007 came at it from an entertainer point of view. Not many folks have signed up to be interviewed by DaveT. And now our beloved entertainer is gone, and we are stuck with all the negative Nancys.

 

[Waiting4M3]

Spent our last dry powder on a November 17 $325 call based the theories that:
1. Most of the drop today was based on their on it's like the temporary dip due to the numbers. Not good news but in the big picture it's not that bad.

2. I had the epiphany today that I think that Tesla is about to update the MS-MX, probably early next week. I loved the M3 video and I believe that the reason that Tesla hasn't wanted information about the M3 to get out is very because they were worried about canabalizing the MS-MX. They've removed the $1k referral at the end of the month. The only explanation I can think of is that they are introducing MS-MX upgrades at the beginning of November. I think that the interior wil get a huge upgrade designed by the Volvo interior hire. Possibly a HUD also.

Yes the MS/X update seems pretty certain. OTOH given all the signs pointing at GGF/Panasonic as a factor in M3 delay, any battery-related updates seem unlikely, including MS/X moving to 2170 cell format, or pack size/rang bump, or supercharging speed bump. It's possible they also switch the MS/X motors to PM to increase efficiency and range, since the M3 LR EPA range is so high.

 

[GoTslaGo]

Spent our last dry powder on a November 17 $325 call based the theories that:
1. Most of the drop today was based on their on it's like the temporary dip due to the numbers. Not good news but in the big picture it's not that bad.

2. I had the epiphany today that I think that Tesla is about to update the MS-MX, probably early next week. I loved the M3 video and I believe that the reason that Tesla hasn't wanted information about the M3 to get out is very because they were worried about canabalizing the MS-MX. They've removed the $1k referral at the end of the month. The only explanation I can think of is that they are introducing MS-MX upgrades at the beginning of November. I think that the interior wil get a huge upgrade designed by the Volvo interior hire. Possibly a HUD also.

Was the epiphany yours or your wife’s? I’m more inclined to believe the latter! /jk

I do agree though. A refreshed interior would make a lot of sense.

 

[zdriver]

Shameless plug for my long post in the general thread, I found some Panasonic production line estimate numbers from a guy who claims to have friends/family working for Panasonic. Appears to support the previous Panasonic battery line issues we've heard.

2017 Investor Roundtable:General Discussion

 

[brian45011]

They've emphasized that they negotiated 60-day payment terms and hope to produce/sell M3 quicker than 60 days to bank the cash temporarily on each car. So it would make sense that they will use parts as soon as they can.

In addition to changes to the cash balances, buy side analysts will also likely look closely at changes to Customer Deposits and all categories of Inventory (the latter only disclosed in the 10Q.)

 

[brian45011]

Elon made it clear that going from 5k to 10k per week would be a step change. So they are going to go from 5k a week, and then if history is a guide, which so far in this ramp it has been, they will close down the factory for a few weeks when implementing the step change from 5k to 10k per week. And the step change will likely happen later than they hope. All that being said, I will be very, very happy if they are doing 10k per week by December 2018 as Elon promised.

Earliest indication that Tesla has embarked on the "step change" may be in the "Contractual Obligations" paragraph of the MD&A section of the quarterly 10Qs/10Ks.

 

[neroden]

Well, the easiest way to do a step change from 5k/week to 10k/week is to just duplicate the line. Costs money, but should be quick and easy.

If they're doing well in some places, it'll turn out that (for example) the body line is good for 10k, but they need to duplicate (for example) the battery pack line and the final assembly line. That should still be quick and easy, and cost slightly less money. However, you don't want to duplicate a line until it's been debugged.

 

[dennis]

1) It was during Q2 conference call. Whether he used the words "step change" or whether that was my interpretation of what he was saying I don't know. But that's where I recall hearing it. I don't have time to look up now, but if it's not there I made it up.

2) Supplier comments are very weak places to place much importance. But I would love to be wrong and they do 10k per week in July. That would be great. I just find it unlikely looking at the current success of the 0 - 5k ramp that all us bulls were saying "this time is different". And I think it will be different in that they will hit 5k per week at some point, but obviously not as soon as we all hoped unless they somehow shockingly pull it off by December.

3) Basic math would suggest and support that conclusion, yes.

I heard something in the Q2 call that made me think the jump from 5k to 10k was a step change requiring a new production line or significant reworking of current line. If I am not making that up, then by definition the jump from 5k to 10k will not be linear. If not linear, then the timing of that jump will differentiate who is right in this question. He guaranteed 100% they would be there by December of 2018. I wonder how many were cringing as much as I was when he guaranteed 100%. I mean that's crazy talk. What if there is an earthquake in Fremont that damages the plant? Does he still guarantee 100% that they will produce 10k model 3 a week by December 2018? That's an extreme example but there are hundreds if not thousands of variables that could make that goal impossible. So anyway, Elon almost always overpromises and under delivers on timing. Not on products. Those are great, but on timing. Call me jaded. I've been burned too many times. Still hold huge position percentage wise but not sure it does anyone any favors to generate unrealistic expectations.

I interpreted the 10K/week by Dec 18 as Elon moving away from his prediction of 5K/week in Dec 17. 0-10K in 16 months is much more plausible than 0-5K in 4 months.

 

[dennis]

Thanks for posting that. I was laying in bed and I realized I made an incredible bonehead math mistake. I thought 5k per week was 200k annual, but in reality it's a bit over 250k. So I would like to increase my 2018 model 3 estimate to 230k. Making ridiculously low estimates is not helpful to anyone either, so I apologize for the 180k due to simple math issues.

Regarding the quoted section, I think that is likely what I was thinking of as well, and they definitely did not use the term step change but my thought was if they are investing more capex to speed up the line than historically that has meant stopping the line to upgrade and then it runs at less than 10k per week even once they turn it on because it takes a while to work the kinks out. So I think that is where my thought was likely generated that increasing line speed would not be linear, but clearly there is some speculation and reasoning by analogy involved there.

I'm skeptical that Tesla will make changes to the final assembly line "in flight " while it is producing 5K/week. Especially while they are pushing to maximize the M3's eligible for the $7500 tax credit at exactly the same time.

However final assembly is just one step in the production. There are also battery cells, battery modules and packs, motors, stamping, body in white and the paint shop. If a number of these processes can have throughput doubled without fully duplicating them we could arrive st Elon's 70% WAG on capex.

 

[pGo]

WRT 10k production, what made you all to change the view that Elon timeline, albeit aggressive, will be even more aggressive (from dec 18 to June 18). And you are buying into it based on a report from a Chinese company? I thought most here were already complaining about the aggressive 5k timeline. Wow!

I’d say you are reading too much into it.

 

[Chickenlittle]

Not always, IMO.

However, let us say your opinion on EM's tweets/etc. are 100% correct. How do you read this latest Instagram? Positive/Negative and based on that what will the SP be within that 30 day window?

Almost out of hell with one more level to go

 

[AlMc]

Almost out of hell with one more level to go

Almost out: Prediction on how much longer in 'production hell'

Based on your 30 day transfer of this info on the effect on SP...What will the SP be in 30 days? <300; 300-320, 320-340, >340?

Thanks

 

[TrendTrader007]

Will post my technical thoughts on SP sometime over the weekend
I still hold all my position with no intent to sell
20% SP correction is pretty routine for TSLA
I mean seriously SP fell to $303 on July 2017
No big deal
If you can’t handle the heat get the hell out of kitchen

 

[Starno]

Almost out: Prediction on how much longer in 'production hell'

Based on your 30 day transfer of this info on the effect on SP...What will the SP be in 30 days? <300; 300-320, 320-340, >340?

Thanks

What would also be interesting to know is whether they need to solve all the bottlenecks to speed up the production and as long as there is an existing bottleneck the production can't go faster, or each bottlenecks solved means faster production ?

 

[TrendTrader007]

Nobody likes a cry baby
Wall Street 2