General Discussion: 2018 Investor Roundtable

[larmor]

Adam Jonas in mid-December:

"Morgan Stanley is projecting Tesla will deliver 8,000 Model 3s in the first quarter, 24,000 in the second quarter, 32,000 in the third quarter and 46,000 in the fourth quarter of 2018.

Morgan Stanley is predicting Tesla's cash burn will improve significantly in the first quarter of 2018 and the company will report a net positive free cash flow of $600 million in the second quarter."

Also included in the morgan stanley note: 'we have just been able to successfully update our microsoft excel program and can confirm the above after having checked with our in house slide rule as a backup... and that money in fact does not grow on trees...'

 

[ValueAnalyst]

Nope. Remember I kept saying you have to temper Elon’s guidance a lot. But even I can only temper to a certain degree before disappointment sets in...

Ah, ok, got it, so the degree of the tempering is the issue here. If it was one degree higher, you're not disappointed; if it's one degree lower, you are. Just have to get that degree right. Got it. Makes sense.

 

[mongo]

1) "Last 7 Working days" translates to somthing like Dec. 18. to Dec. 30. 793 M3s translates to a weekly rate of about 400!!

The letter also stated:

and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week.

The unknown is what span of time the trial ran for. A half day test only needs to make 100 cars. The average day rate is over 100 cars.

2) "we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week" means that they achieved to run every step of the manufation process to take 10 minutes for one car. It is not running all the time at this rate, not all steps are running the same time at this rate nor the step is able to run constantly at this rate.

Now you are putting on bear colored glasses. To achieve this only on a single process at a time basis, Tesla would need to start with an empty manufacturing line (otherwise there is no space for the completed step to move into). And then only move one vehicle through (otherwise it would be slowing those behind). That is so far from the realm of a real run at rate test.

There might be shared resources (human resources) required to run every single step at this rate and there might be logistical challanges inbetween the setps and supplyer issues. It prooves that they are able to run at 1k/week in theory, nothing else.

Again, anything even remotely close to resembling normal practice would say this is not the situation. What you are describing is a low rate cell level approval test. Not a line rate test. Again, the average numbers are now above a half day production per day. They could have done a full day run of 200 which would balanced out by a line tuning down day.

From the letter:
Last few days: 1,000wk rate
Last 7 working days: 793 (over half the post Dec 9 production)
Since Dec 9 (3 wks), same production as 4 month ending Dec 9. 1,342 per time span, rate doubled near end.
Sounds rampish to me.

 

[theschnell]

Ah, ok, got it, so the degree of the tempering is the issue here. If it was one degree higher, you're not disappointed; if it's one degree lower, you are. Just have to get that degree right. Got it. Makes sense.

There was a time not too many months ago ( I believe it was Oct ) that you were barely tempering at all. Mostly taking guidance at face value.

But yes, we each make a rough stab in the dark of what reality will be and hope it’s not significantly worse than we hope. Guidance is the starting point from which to back down from significantly. How significantly is anyone’s guess.

Edit: They will acheive guidance eventually, but it is almost never on time or even close to on time.

 

[dc_h]

I said a few years ago that the way to do it was to start fresh - as in a new division. Get an empty building, hire mostly all new people and build. Sell those cars to a new dealership network. They’d have seen natural and rapid growth of the EV division and a slow natural shrinkage of the ICE division in the beginning and then the transfer accelerating.

Anyway, they didn’t listen to me and now look at the huge pickle Tesla is getting ready to jam down their throats. And we’ve got a front row seat. This is going to be epic.

They will call it Saturn to catch some nasa magic!

 

[Lessmog]

They will call it Saturn to catch some nasa magic!

By Jupiter, you may be on to something there! From the history of naming a car aimed for Latin America NoVa (NoGo) and many other examples, they may even call it Uranus ...

 

[Hogfighter]

1. Gonna say it....Tesla needs a Gwynne Shotwell. EM admitted to 'missing' the fact that zone 2 was a mess. He's great and all, but only one man.
2. I have no idea why this post is numbered. Must've hit a weird button.

 

[Ulmo]

They will call it Saturn to catch some nasa magic!

Sad thing is, ICE went from old lying playbook, and already used up many lies. Have they already made a Jupiter brand?

 

[elasalle]

I haven't heard one person who has complained about quality or extended times at service centers. I'm sure you can find one at the depths of the Internet, but the vast majority seems to like the car as is, so why slow it down to 1/4th speed of previous rosy projections, and cite quality? It doesn't add up.

two things are being built at the same time. M3's and the MMs(machines that build the machine)
one must ensure higher quality for the latter to improve quality and production rates for the former ..

 

[copyhacker]

They will call it Saturn to catch some nasa magic!

This is exactly what GM should do, IMO. Resurrect the Saturn brand and make it 100% EV.

 

[uselesslogin]

. Heck, not even an update on Boring Company hat sales!!!

Well,

Hat

 

[dc_h]

This is exactly what GM should do, IMO. Resurrect the Saturn brand and make it 100% EV.

It's so hard to be sarcastic sometimes.

 

[mongo]

I really don't like the blind bullish eyes here.

1) "Last 7 Working days" translates to somthing like Dec. 18. to Dec. 30. 793 M3s translates to a weekly rate of about 400!!

2) "we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week" means that they achieved to run every step of the manufation process to take 10 minutes for one car. It is not running all the time at this rate, not all steps are running the same time at this rate nor the step is able to run constantly at this rate. There might be shared resources (human resources) required to run every single step at this rate and there might be logistical challanges inbetween the setps and supplyer issues. It prooves that they are able to run at 1k/week in theory, nothing else.

I'm fine with it and I'm very long in TSLA, but I don't like to BS written here...

I see you disagree, and raise you this statement from the Q3 letter :

Several manufacturing lines, such as drive unit, seat assembly, paint shop and stamping, have demonstrated a manufacturing ability in excess of 1,000 units per week during burst builds of short duration . Other lines, such as battery pack assembly, body shop welding and final vehicle assembly, have demonstrated burst builds of about 500 units per week and are ramping up quickly. Likewise,cell production at Gigafactory 1 continues to ramp, and current cell production makes it one of the largest battery cell manufacturing facilities in the world

Fast, medium and slow lines existed 3 months ago. Is it so unreasonable to think the slow line is now where the fast line was?

Also, do we have any insight into the shift staffing of the 3 line? For all we know they could run one manufacturing shift with the top day people, and do the line updates on 2nd shift with the people from Germany.
(although it's also likely they are running, fixing, running two shifts a day for max volume)

 

[mongo]

This is exactly what GM should do, IMO. Resurrect the Saturn brand and make it 100% EV.

So much internal conflict, I really liked my Saturn... ( can you tell panel gaps don't bother me?)

 

[ValueAnalyst]

two things are being built at the same time. M3's and the MMs(machines that build the machine)
one must ensure higher quality for the latter to improve quality and production rates for the former ..

Then why put this out? Was it necessary?

 

[elasalle]

Then why put this out? Was it necessary?

Absolutely not. But this isn't the 1st time ... aspirations, assumptions (Ass of U and Me) ...

Looking at S and X timelines, I thought we would be two quarters late from the get go(hence sold many Dec/Jan calls) for that I have been right. But now even i suffer on my May/Jun calls(time will tell)

 

[EnzoXYZ]

Earlier today I posted my first negative comments about the poor way the M3 ramp was communicated.

But just now I received my configuration invitation, so all is forgiven!

Chicago MS owner, so the ramp is definitely underway.

You are ok with RWD in Chicago?

 

[Krugerrand]

Had you bothered to read the paragraph you snipped, you would have seen their arguments : the language in the press release is crafted to make it look like they are at 1000/week (and many here are preaching the gospel), but it doesn't actually say so. I think there is no denying of this and there is no denying that such communication style breeds distrust. And yes, you should care about what someone feels. At least in so far that you'd like to do your stock well. Share price is a function of sell and buy actions of every single actor in the market.

My personal opinion is that this quarter was very two faced. On the one hand there is a clear showing of sustained high demand for the S/X. Anyone who claims otherwise is ignoring the facts. But there is also clear and continued walking back on production milestones wrt the Model 3. I like the former, I dislike the latter.

Good grief. There’s only distrust when you want to see it in the same way that people get offended when they are looking to be offended. And two-faced doesn’t mean what you think it means.

The wording is pretty clear when taken at face value. This is what we made and this is what was happening as we exited the year. Simple. The ramp is progressing. Not as fast as most of us (and Tesla too I imagine) want, but there it is. Next.

It should be recommended (perhaps even required) reading to go back into the forum archives and read what people were saying about the Model S launch and ramp, and then about the Model X launch and ramp. Then people could just copy and paste, change the S and X to a 3 and save a ton of time typing. Or better yet simply post ‘What I/he/she said in 2012, 13, 14, 15, 16...’

I’m waiting for some originality about how awful the whole situation is, although you came close with two-faced.

 

[Krugerrand]

I haven't heard one person who has complained about quality or extended times at service centers. I'm sure you can find one at the depths of the Internet, but the vast majority seems to like the car as is, so why slow it down to 1/4th speed of previous rosy projections, and cite quality? It doesn't add up.

Rock meet hard place.

 

[Gerardf]

On the question to the 7 cent / kWh being realistic for the Semi :

EGEB: Solar doesnt need a breakthrough, $7.5B solar equipment ordered in 2017, more

Bids on Solar+storage at 3.6¢/kWh. These are US bids !
And of course these are todays prices versus 2019/2020, with the trend to lower costs.

Tesla then sells at 7 cent, that is already promissing a 50% margin (even if Tesla would outsource, but on top of that Tesla produces the solar and storage at GF1 and GF2).

It will probably not be same costs in more Northern states, but enough margin left.