2017 Investor Roundtable: TSLA Market Action

[jasonb]

Chanos has been spreading essentially this same FUD for years, enticing others to join him in setting up losing short positions in TSLA. As I've said before, he doesn't get it. He's used to evaluating established companies in stable industries on a quarterly basis. Judging the long-term potential of an innovative young company in the process of disrupting long established capital intensive industries is beyond his pay grade. He should stick to buying or shorting the types of companies that might be better suited for the simple valuation model he learned in his college finance class.

oooooo thats a good takedown. should be required reading for seekingalpha contributors.

 

[Tslynk67]

seemed worth sharing in both major threads,

Tesla Taiwanese Supplier HOTA increasing output to 5K weekly

This is the same supplier who announced a reduction in output shipping to Tesla (from 5,000 to 3,000 per week) days before Tesla's last earnings call where the bottleneck/~3 month delay was announced. If you look at the link above, and the article it in turn links to, it looks quite encouraging re the ramp getting back on track now.

Well no doubts the initial story of the output being cut led to a fall in the SP, so it's only fair the converse is true, right?

SteveG3, you wouldn't happen to play guitar by any chance?

 

[jeewee3000]

Extremely low volume pre-market. Do the institutional traders know something we don't or am I being paranoid?

 

[Tslynk67]

And there you go, record quarter for Tesla in Norway, 2365 and still counting (17Q3 was 2359)

Thanks to Tesla Registration Stats

 

[avoigt]

agree, this isn't to say that they are anywhere close to making 5K/week now, but, rather that this looks suggestive that Tesla felt confident enough to lift the slow down of the supply chain that occurred in late October. 5K/week by sometime in March looks more likely.

(and my pleasure sharing here what someone in the Model 3 forum had found)

Elektreks take on that makes sense to me: "If the parts are being produced at 5,000 per week now, it can take up to a month before Tesla can put them in a Model 3, which would mean that the 5,000 per week production level would be achieved in January."

That BTW corresponds well with the new supplier part warehouse they have just (assumed) finished near the production line.

 

[Gerardf]

And there you go, record quarter for Tesla in Norway, 2365 and still counting (17Q3 was 2359)
Thanks to Tesla Registration Stats
View attachment 266540

Yup, great.

Also nice comparison to mention (Source same site) :

Dec 2016 total 690
Dec 2017 total 1085 and counting.

 

[Hogfighter]

Elektreks take on that makes sense to me: "If the parts are being produced at 5,000 per week now, it can take up to a month before Tesla can put them in a Model 3, which would mean that the 5,000 per week production level would be achieved in January."

That BTW corresponds well with the new supplier part warehouse they have just (assumed) finished near the production line.

Because the 3 line is si highly automated, the ramp should be crazy vertical. Burst run, tweak the machine, burst run again until the switch is just left on.

 

[avoigt]

Because the 3 line is si highly automated, the ramp should be crazy vertical. Burst run, tweak the machine, burst run again until the switch is just left on.

True and another quotes "Chairman Shen Guorong even said that they now have to mobilize the whole company and work overtime in order to comply with the change and that they are even shipping parts by airplanes instead of boats." gives me confidence that they are themselves not fully prepared for the fast ramp because shipping by air is expensive and the supplier will likely have to cover it.

 

[SteveG3]

Elektreks take on that makes sense to me: "If the parts are being produced at 5,000 per week now, it can take up to a month before Tesla can put them in a Model 3, which would mean that the 5,000 per week production level would be achieved in January."

That BTW corresponds well with the new supplier part warehouse they have just (assumed) finished near the production line.

Great if they are correct, but, it may not be that quite that straightforward.

The slow down on the supply of parts was to 3K per week, so, it would seem they've been having excess supply building up for some time... in that sense it doesn't seem the ramp is just ready to bump right up to 5K/week as soon as the flow of new parts starts arriving in Fremont at the 5K/week pace. On the other hand, the google translate of the article does make it seem like they are in scramble mode at the supplier (seemed to say working overtime) to get parts to Tesla, but, that's a Google translate of Chinese.

All in all, this does look very encouraging, and hitting 5K/week by end of Q1 looks more likely today.... but, as to trying to tease out of this new bit of info the precise timeline to hit 5K/week production, that seems quite fuzzy.

 

[SteveG3]

Well no doubts the initial story of the output being cut led to a fall in the SP, so it's only fair the converse is true, right?

SteveG3, you wouldn't happen to play guitar by any chance?

only when I'm dreaming : )

 

[mongo]

The slow down on the supply of parts was to 3K per week, so, it would seem they've been having excess supply building up for some time... in that sense it doesn't seem the ramp is just ready to bump right up to 5K/week as soon as the flow of new parts starts arriving in Fremont at the 5K/week pace.

During the bottleneck era, the volume of incoming parts exceeded production leading to increased inventory. Now that suppliers appear to be asked to ramp back up to 5k/ week, the vehicle build rate could be anywhere from "going to run out of parts before new ones get here" to "ramp is increasing and will hit 5k in one/two months". Given the mention of air shipping, I'd lean more toward going to run out.

My guess is that the bottleneck has a high confidence solution with at least one new line in place and remaining equipment in-house. Tesla is going to use up all the parts on hand as soon as possible to achieve the best Q4 numbers (minimal parts on hand, highest M3 production and sales numbers). When they run of of parts, Freemont gets an early holiday/ escape from hell vacation.
Meanwhile, all suppliers ramp back up for 2018 production. It may also be that they are running out of some parts first (or want to prebuild drive unit submodules).

 

[SteveG3]

During the bottleneck era, the volume of incoming parts exceeded production leading to increased inventory. Now that suppliers appear to be asked to ramp back up to 5k/ week, the vehicle build rate could be anywhere from "going to run out of parts before new ones get here" to "ramp is increasing and will hit 5k in one/two months". Given the mention of air shipping, I'd lean more toward going to run out.

My guess is that the bottleneck has a high confidence solution with at least one new line in place and remaining equipment in-house. Tesla is going to use up all the parts on hand as soon as possible to achieve the best Q4 numbers (minimal parts on hand, highest M3 production and sales numbers). When they run of of parts, Freemont gets an early holiday/ escape from hell vacation.
Meanwhile, all suppliers ramp back up for 2018 production. It may also be that they are running out of some parts first (or want to prebuild drive unit submodules).

I see what you're saying, some helpful points. I'd guess actually the latter scenario ("will hit 5K in one/two months") combined with Elon with hell ooze all over him gasping some fresh air to belt out, "I'll be damned if I'm going to let a supply shortage drag us back down after all that... you guys (suppliers) need to start moving so fast getting supply flowing up to speed that everyone at your plant becomes invisible without the use of strobe lights!" (i.e., they are not about to run out, but, not about to communicate in a way that gives any daylight to running out in a month or two because suppliers didn't sense enough urgency).

 

[HG Wells]

Last night I had a dream that I fixed my time machine.
I traveled into the future to December 16, 2017.

I was dumpster diving behind a Starbucks in Manhattan.
Found a New York Times with the weekly stock listings.
Looked at a coffee stained listing of Tesla closing at 362 or maybe 367.
The 6 even looked like an 8.

Does the Times still print the stock prices in the Saturday edition ?

 

[bdy0627]

agree, this isn't to say that they are anywhere close to making 5K/week now, but, rather that this looks suggestive that Tesla felt confident enough to lift the slow down of the supply chain that occurred in late October. 5K/week by sometime in March looks more likely.

(and my pleasure sharing here what someone in the Model 3 forum had found)

I think that wording is a little too cautious. I think it is now looking like 5K/week by sometime in March looks almost certain. I would even say that 5K/week by sometime in February looks more likely now.

 

[mongo]

I see what you're saying, some helpful points. I'd guess actually the latter scenario ("will hit 5K in one/two months") combined with Elon with hell ooze all over him gasping some fresh air to belt out, "I'll be damned if I'm going to let a supply shortage drag us back down after all that... you guys (suppliers) need to start moving so fast getting supply flowing up to speed that everyone at your plant becomes invisible without the use of strobe lights!" (i.e., they are not about to run out, but, not about to communicate in a way that gives any daylight to running out in a month or two because suppliers didn't sense enough urgency).

Supplier stress test sounds good. Any glow sticks to go with the strobe lights?

Air shipping reduces logistics risk, at a price. That said, my exposure to air moved parts is a plant that will stop without them. Batching and using cargo freight vs charters would be less cost.

 

[bdy0627]

Because the 3 line is si highly automated, the ramp should be crazy vertical. Burst run, tweak the machine, burst run again until the switch is just left on.

It's hard to imagine that this isn't going to really stress test their delivery system now. Hopefully they've got it figured out. It's a good problem to have anyway.

 

[SteveG3]

I think that wording is a little too cautious. I think it is now looking like 5K/week by sometime in March looks almost certain. I would even say that 5K/week by sometime in February looks more likely now.

my thought is actually Feb/March, so more similar to yours than my phrasing might have implied (my point was mainly that I wasn't ready to start reading this as January as Fred was). that said, I still think there's a reasonable possibility of something(s) else adding some more time to hitting 5K/week, which is not some Tesla failing, but expectable in such a complex automated process with thousands of parts, especially for any company doing this level of automation and volume for the first time. so, 5K/week in Feb/March likely, later possible, but, I won't complain if it turns out to be next month : )

 

[Tslynk67]

Supplier stress test sounds good. Any glow sticks to go with the strobe lights?

Air shipping reduces logistics risk, at a price. That said, my exposure to air moved parts is a plant that will stop without them. Batching and using cargo freight vs charters would be less cost.

Agreed on that, but this sounds like they had no option, which indeed also implies Tesla unblocked their pipes a lot quicker than foreseen.

A bit too late for my 520 option expiring tomorrow, but hey, that was a lottery ticket, really could have gone either way

 

[SteveG3]

Agreed on that, but this sounds like they had no option, which indeed also implies Tesla unblocked their pipes a lot quicker than foreseen.

A bit too late for my 520 option expiring tomorrow, but hey, that was a lottery ticket, really could have gone either way

well, you know, as the financial media is always explaining to us, showman Elon always sandbags his timelines to make Tesla look like some kind of miracle workers when they always "deliver early".

 

[AudubonB]

Can any logistics experts corroborate or negate the line above that it is supplier who pays for the higher cost of air vs ocean freight?

It didn't take me long to come up with a variety of scenarios under which that is a pipe dream.

If not....the last time my Pisten Bully broke a hydraulic pump, in the middle of race track prep, guess who it was who paid to have it air shipped Gold Freight to Fairbanks? It sure wan't Kassböhrer!!!