Confirmed - Production ramp of 5,000/week delayed until late Q1 2018

[TaoJones]

I suppose oddly, I find today's news comforting. Tesla sounds to be on track with production that is only 2-3 months past the most rosy scenario possible. I just hope the stock takes a dive.

Was down 5% after hours last I looked. Figuring that at least one outfit will issue a downgrade, ignoring that revenue was good in the process, the slide will probably continue for a bit.

All the better for those of us who just accumulate more TSLA for the long term. I just can't bring myself to short the stock for mostly philosophical reasons which may be in direct conflict with any short-term financial gain *polite cough*.

 

[Trips]

When 75% of people put their deposits down, 95% of people on here, the goal was 10k cars per week by December 2020. It wasn't until May of last year when they moved that up 2 years. This revised schedule is still 21 months earlier then we expected when we put $1,000 down. I also think 200,000+ extra people will still get some tax credit with production ramp v.3 vs v.1

 

[FlatSix911]

Source: Tesla Responsible For Model 3 "Production Hell" - DailyKanban

The Wall Street Journal has reported that Model 3 body line equipment was still being installed in September and that calibration would likely continue into October. City of Fremont records show new Tesla permit applications for Model 3 BIW and General Assembly equipment being filed, revised and even disapproved through the last full week of October.

Work on the the second Model 3 line, which the tooling supplier had originally planned to build and install in the second half of this year, has not yet begun. The supplier has been told that there is not enough room at the Fremont plant to install the second line, which was supposed to double Tesla’s Model 3 production capacity. It is not clear how or when Tesla will find the room for the second line.

Wards Auto has reported that Tesla needs a second body shop, in order to support the production volumes that CEO Elon Musk has forecast. “I understand they’re talking about a second body shop,” a “source in position to know” told Wards, “but I can’t see them reaching 2,500 to 3,000 weekly until the end of next year.”

 

[JCLeonard]

I was expecting to get a SR in March but might have to get the LR to make sure I do not miss out on the full tax credit. $55,000 LR with $7,500 tax credit is going to be the choice over a $46,000 SR with maybe a $3,750 tax credit. This would only make the LR cost $5,250 extra vs the SR.

I was expecting the same as I just don’t drive enough to need the LR but if it means LR with full credit vs SR with half then I think I’d go LR.

I'm not sure I follow this. You want to pay more, net, for the car just to be able to use the tax credit? Or are you saying that $5,250 would be a more appealing price to pay for an upgrade from SR to LR?

 

[BillO]

I suppose oddly, I find today's news comforting. Tesla sounds to be on track with production that is only 2-3 months past the most rosy scenario possible. I just hope the stock takes a dive so I can buy some cheaply.

My experience with delays is that the first delay is not usually the last delay...

 

[evp]

I suppose oddly, I find today's news comforting. Tesla sounds to be on track with production that is only 2-3 months past the most rosy scenario possible. I just hope the stock takes a dive so I can buy some cheaply.

I know, right? When Elon announced that they'd start shipping in 2017, I naturally assumed that meant they'd deliver 5 cars to members of the board of directors right after Christmas. 260 cars before October would have been crazy talk back then.

 

[stopcrazypp]

The sky is not falling. Before the recent prognostications, the expectation was to produce a Model 3 by end of 2017 and to go to town in 2018. Well, they've produced about as many Model 3s already as Model Ss that were delivered from July 2012 to December 2012.

This is exactly my thought. I totally expected that Tesla will end up following the original goal (which was a trickle of cars in 2017 and then a lot more in 2018). The July launch I viewed as a stretch goal (all stars had to align to make it possible).

 

[xav-]

That's all what we were expecting to begin with. We got excited when Elon did his "production has started" show in the summer. But the whole thing was just a mirage.

I wouldn't be surprised if the whole thing was designed to use an excuse to raise money from the capital markets to fund operations.. I know some will hate me for saying this but solarcity bonds were yielding 20 percent before the bailout, I mean the purchase. Solarcity is a very unprofitable business and I highly doubt that model S and Model X sales are enough to make up for that.

Solarcity was worth at best $0.. but Tesla spent $3 billion if I recollect, then the business is loaded with billions of debt, now on teslas balance sheet

 

[whitex]

I'm not sure I follow this. You want to pay more, net, for the car just to be able to use the tax credit? Or are you saying that $5,250 would be a more appealing price to pay for an upgrade from SR to LR?

I think the argument is that getting a larger rebate yields better value, as the LR option depreciates based on its pre-rebate price. On a 2 year ownership the difference in rebate may be higher than depreciation of the LR option, so you end up driving a better car and come ahead financially (you spend $5K more up front, but your 2 year residual is >$5K higher).

 

[BioSehnsucht]

Absolutely true.

Either they knew in July that they were not going to ship on time.

Or they were unrealistically optimistic about fixing the problems they must have known they had at that point in time.

Could be the supplier was late but promised it would arrive and be 100% the next month, then it turned out to not be the case (in other words, they might have been hand building packs in July because the automated assembly equipment was late, expecting a minor hit to the ramp in the slowest part of it, and then had to keep doing it because the automated assembly equipment was garbage, causing a much bigger hit to the ramp)

 

[aronth5]

Just checked my delivery window and was surprised it was only pushed out 1 month from Nov-Jan to Dec-February.
But am realistically expecting March-April.

 

[daniel]

Nay-sayers don't own Tesla Stock. So how can they short it?.

Wow. Really??? You don't know this??? Short-selling stock is what you do when you don't own a stock and you want to bet that it will go down. When you short a stock you are borrowing shares and selling them. At some point you have to buy back the shares so you can give back what you borrowed. If you are correct in your bet, that the stock will go down, then you are buying back the shares at a lower price than you got when you sold your borrowed shares. But if you are wrong, and the price goes up, you have to pay more than you got, and you lose money. TSLA has been one of the most shorted issues in the market, as so many people have betted against it.

Note that when you buy a stock the most you can lose is what you paid. If you bought one share of TSLA when it was $35 and the company had gone bust and the stock became worthless, you'd only lose $35. But if you shorted one share when it was $35 and were forced to clear your short when the price was $100 you'd lose $65. There's no limit to how much you can lose.

See this article on Investopedia.

On the Model S delay, I just checked and now they have pushed back my delivery estimate one month from Jan-March to February-April.

 

[internalaudit]

Is it really pushing the curve out a few months or more flattening of the curve with half the ramp up rate?

 

[electracity]

Is it really pushing the curve out a few months or more flattening of the curve with half the ramp up rate?

Tesla doesn't know and neither do we.

It did change from the S Curve to a "stepped exponential".

Musk is probably busily goggling functions to for the next earnings report.

My prediction:

 

[daniel]

Is it really pushing the curve out a few months or more flattening of the curve with half the ramp up rate?

My entirely uneducated guess is that it's pushing the curve out a few months. They seem to have only pushed the estimates out one month, but I'm still expecting more delay. This is Tesla. Great cars, late. My reasoning is that they need to ramp up gradually to assure quality, so a delay in getting started sets everything back. I'd rather wait as long as it takes for a quality car than have them rush an inferior car to market.

 

[SageBrush]

Curve

It has always been a stepped exponential ... from closer up.

Each station has step jumps in productivity, and the final output is the cumulative effect in series where the slowest station sets the overall rate.

 

[ItsNotAboutTheMoney]

Tesla doesn't know and neither do we.

It did change from the S Curve to a "stepped exponential".

Musk is probably busily goggling functions to for the next earnings report.

My prediction:

So _that's_ why Elon Musk's predictions always differ so much from reality. I thought he meant something different when he talked about the complexity of production. But now I understand I realize that when he talks about a rate of 10,000 per week by the end of 2018, he actually means |rate| = 10000.

 

[Garlan Garner]

I hope Tesla won't need any more capital.

The longer they don't produce model 3 at a mass rate.....they are eating up their capital at a tremendous rate.

 

[gregincal]

Could be the supplier was late but promised it would arrive and be 100% the next month, then it turned out to not be the case (in other words, they might have been hand building packs in July because the automated assembly equipment was late, expecting a minor hit to the ramp in the slowest part of it, and then had to keep doing it because the automated assembly equipment was garbage, causing a much bigger hit to the ramp)

Sort of. They said about 5 months ago that they were currently building the Model 3 battery packs by hand, but would be automating the process with a Model 3 specific battery pack line (Tesla Invest $216 Million Into Model 3 Battery Line At Gigafactory). I think the automated battery production line was intended to come online in September and start the ramp, but once installed it didn't work properly. I imagine this is why most car companies don't say they've started production until they have tested all the automation and are actually building cars they way they intend to.

 

[voip-ninja]

I hope Tesla won't need any more capital.

The longer they don't produce model 3 at a mass rate.....they are eating up their capital at a tremendous rate.

That is the #1 concern anyone waiting on a car should have... if they burn through all of their cash with month after month of negative cash flow eventually they are back at the trough begging for more capital or they are going to go belly up.

Borrowing money at very high interest rates is a huge gamble that people around here seem ready to give them a pass on.

I believe for their current debt the interest payments alone are something like $100M a month.