This...a thousand times this!! No one is an expert on many areas at once. We defer to the experts exactly because we do not have the time to devote to much beyond our narrow area of expertise.
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This...a thousand times this!! No one is an expert on many areas at once. We defer to the experts exactly because we do not have the time to devote to much beyond our narrow area of expertise.
I went on a factory tour Wednesday - it was my fourth tour, but the first one in three years. Some observations:
The factory is three-dimensionally more dense than before, by a significant margin. There really weren't any vacant areas whereas before there we some (2013, 2015) or many (2012). The Model 3 assembly area looked (from a distance) more dense with robots and more three-dimensionally packed.
We were on the 4 o'clock tour so it was shift switch time, so activity was down a little bit. It sort of feels like the Model S and X assembly wraps the Model 3 assembly, but that is an impression and not a statement. In response to my question, our tour guide said he did not know how many robots were in the factory, but guessed at over 1,000 for Model S and X - I recall about 500 for the Model S production in 2012. My guess is there are now several thousand at least.
There were a lot of Model S and X cars in assembly headed for China - they were identifiable by the different charge port, a larger 'door' cut into the left rear quarter panel near the reflector charge port. Felt like at least 1/3 - 1/2 of the cars, but I didn't count. Also saw some RHD in production for S and X.
I could never read any of the TV displays around the factory, always a little too far away for my old eyes. Was looking for production numbers. So no need to violate the NDA!
No sign of Elon on our tour, our guide said it was rumored he was sleeping in the Model 3 assembly area - guess the CBS interview confirmed that. I tweeted at him asking if we could come by and say thank you, no response!
The workers seemed more cheery than past tours, many of them waving or giving us a thumbs up - pretty cool. Lots of Model 3s in the parking lot, I assume they were employee cars. We did not drive around and look for the full lots waiting to be shipped. But employees seemed to be looking for parking as we left (lot full) and there were busloads of workers being offloaded. The valet said they were bused in from the Valley.
The first tour (2012) is still my favorite as we stopped and got out several times, especially enjoyed the bridge overlook of robots and welding on that one. But this one shows a growing and maturing car company.
Looking forward to a real Gigafactory tour soon (the one at the party was interesting but sort of staged).
The factory is three-dimensionally more dense than before, by a significant margin. There really weren't any vacant areas whereas before there we some (2013, 2015) or many (2012). The Model 3 assembly area looked (from a distance) more dense with robots and more three-dimensionally packed.
We were on the 4 o'clock tour so it was shift switch time, so activity was down a little bit. It sort of feels like the Model S and X assembly wraps the Model 3 assembly, but that is an impression and not a statement. In response to my question, our tour guide said he did not know how many robots were in the factory, but guessed at over 1,000 for Model S and X - I recall about 500 for the Model S production in 2012. My guess is there are now several thousand at least.
There were a lot of Model S and X cars in assembly headed for China - they were identifiable by the different charge port, a larger 'door' cut into the left rear quarter panel near the reflector charge port. Felt like at least 1/3 - 1/2 of the cars, but I didn't count. Also saw some RHD in production for S and X.
I could never read any of the TV displays around the factory, always a little too far away for my old eyes. Was looking for production numbers. So no need to violate the NDA!
No sign of Elon on our tour, our guide said it was rumored he was sleeping in the Model 3 assembly area - guess the CBS interview confirmed that. I tweeted at him asking if we could come by and say thank you, no response!
The workers seemed more cheery than past tours, many of them waving or giving us a thumbs up - pretty cool. Lots of Model 3s in the parking lot, I assume they were employee cars. We did not drive around and look for the full lots waiting to be shipped. But employees seemed to be looking for parking as we left (lot full) and there were busloads of workers being offloaded. The valet said they were bused in from the Valley.
The first tour (2012) is still my favorite as we stopped and got out several times, especially enjoyed the bridge overlook of robots and welding on that one. But this one shows a growing and maturing car company.
Looking forward to a real Gigafactory tour soon (the one at the party was interesting but sort of staged).
Love the additional footage. Main takeaway from me is how sincere and driven Elon is .... that's a huge plus in my book.
In my view, Moody's is as valuable as the analyst (David Tamberrino) from Goldman Sachs, I suspect they play the market the same way as GS. Some other countries are starting their own rating agencies because they don't trust those big three rating agencies. They artificially increase other nation's risk profile, those nations have to pay a lot more for loans.
I also know this from my past experience. In 2007, when AIG was loaded with extreme high risk, ready to go into serious trouble any moment, Moody's gave them triple A rating, also triple A to those big banks that were very risky at the time. I remember in later 2007, Sears Chairman Eddie Lampert was buying Citibank stock in the billions. I told a friend this guy doesn't know what he is doing, Citibank will bankrupt. If a normal person like me knew it, why Moody's didn't know?
On the other hand, Berkshire Hathaway takes a very conservative approach, always keeps a minimum of $20B cash, on top of that, they have layers of additional cash at the sub-unit level. Buffett himself personally check every contract from the reinsurance business to make sure the risk is limited. Moody's downgraded BRK anyway, after the 2009 recession was over. Buffett tried to explain to them, didn't help.
In Tesla's case, we on this board had extensive discussion why Tesla has zero chance to bankrupt. But it seems Moody's doesn't understand it. Maybe Moody's listens to the shorts too?
Tesla is not in trouble. Shorts are in trouble.
ValueAnalyst
Closed
GM cutting 1,500 jobs at Ohio plant amid falling demand for small cars
GM keeps shrinking, but not quickly enough. April 26 will be an interesting day.
Tesla could buy one of these struggling ICE plants and simply put in new tooling and equipment for Model Y production.
GM keeps shrinking, but not quickly enough. April 26 will be an interesting day.
Tesla could buy one of these struggling ICE plants and simply put in new tooling and equipment for Model Y production.
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I don’t trust anyone! By that I mean, I’m always skeptical on why Moody chose to downgrade and why they would do it before Wlon released M3 numbers. From what I gathered Moody thought Tesla was only producing around 1k M3 at end of Q1 and that why they downgraded. Maybe Missy has some underlying position w/ the shorts. Like I said, I do t trust anyone and would rather come up with my on conclusion based of my own studying of someone’s financials, rather than relying on another persons opinion. That being said, I always weigh all news/downgrades on how it effects any patient ulnar stock before investing.
The conspiracy about the downgrade is non sensical. Moody’s was very clear on the factors that would trigger the downgrade when they evaluated the debt at issue. In fact, Moody’s was way too late executing the downgrade because Tesla already missed the ramp up a full quarter earlier.
Why 5? (It's GAAP Net Income not Revenue)
"The sum of the most recent four consecutive quarters’ Generally Accepted Accounting Principles (GAAP) earnings (net income excluding discontinued operations) should be positive as should the most recent quarter."
https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf?force_download=true
A simple interpretation would be that the 4th quarter in a consecutive series of four can not be a Net Loss.
The Index Committee has some discretion, and much would depend on the circumstances of how the sum of four quarters' profitability was achieved. For instance the Index Committee might want to wait a quarter or two if the profitable sum was achieved by three quarters of losses, followed by a fourth profitable quarter surpassing those losses but caused by an anomaly such as a one-time realization of regulatory credit income or liquidation of inventory.
bdy0627
Active Member
This makes perfect business sense. Elon's statement about being a technologist and not a businessman are quite accurate. His brain tends not to find this kind of simple and reasonable approach compelling. He's ALWAYS shooting for pushing the envelope with technology and doesn't approach things this way. There needs to be a balance for Tesla to thrive and dominate. Too little technology evolution and there is more risk they become more like the conventional car companies and lose their competitive edge. Too little focus on keeping it simple for the financial picture and they potentially risk financial crisis as well as lost time in becoming a company producing millions of cars per year.
The focus with Model 3 was on easy manufacturing and a simple yet stunning design. This time it seems, the focus on pushing the envelope with technology was with the manufacturing process. Elon made it clear that he feels that the ramp has gone very badly, much worse than he expected. He mentioned that Tesla would have been better served keeping the manufacturing process more conventional; less robots and more people. They were perhaps too ambitious in terms of their target for automated manufacturing of the 3. That has come at a cost of much less progress at manufacturing the 3 over the past 9 months. The expectation is that it will pay off in the coming years. If so, then this troubled ramp was worth it. But it sounds like in hindsight, at least to this point, Elon would have done things a little bit differently, simplifying the manufacturing process. The Y provides the opportunity to get all of this right but they will almost certainly continue aggressively pushing the manufacturing envelope.
Moody’s is a very conservative institution. They have to incorporate risks in their valuations. Risks still exists for Tesla in ramping up their model 3 deliveries. Risks exist in possible early recalls for model 3. These levels of risk don’t exist for many other industries as they do for automobile production.
Agree with it or not, Tesla is a high risk company, in particular due to it being financially aggressive utilizing debt now to achieve hyper growth. It’s fun to rag on Moody’s, but they don’t assume that Tesla will meet its stated objectives without unforeseen setbacks.
As investors, we are certainly free to disagree and believe Tesla will not run into cash crunch issues by meeting or coming close to their deliveries and profit margins for model 3. And like investors, Moody’s doesn’t always get it right, no one does.
@Curt Renz
Did anybody catch him say "three to four fold increase" of model 3 production in 2nd quarter? Presumably over the current 2,000ish a week production? Or was that edited weirdly so it's out of context? I wonder if that is the shoot for the moon fall among the starts goal he has set internally or if he actually is planning/expecting 6-8000 a week in June.
Edit: Okay I had to rewatch the video, 2,071 was the 7 day production count, then he says it's sustainable, then he talks about 3-4 fold output increase for model 3 in 2nd quarter. Maybe he is comparing q1 to q2, 8,000 a week seems more like a sun shot than a moonshot right now.
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They are Butchers on Wall Street to help Slaughter the Pigs
That could be 3 months if they have a 3-4 fold increase like he says in the video. *not sure the context is all there but that's what it sounds like to me
stef
Member
I am quite sure the context was relative to Q1 output —> I read that as production in the range of 30k-40k during Q2, and very indicative.
Happy to be proven wrong, but even this is a very decent step (as long as they can exit near 5000/wk as guided).
bdy0627
Active Member
Moodys definitely seems fishy. I have far less trouble with the downgrade on much lower production than expected than I do on the timing. It simply doesn't look good for them to downgrade 1 week before the production/delivery numbers for Q1 were made known. They already knew the production numbers for Q417 2 months earlier and chose not to downgrade based upon that. What data was Moodys using to downgrade at the time they did? VIN data? Should they really be using VIN data to determine a company's credit rating? I honestly can't come up with 1 good reason why they wouldn't have waited 1 more week for the ACTUAL production numbers to determine whether or not to lower Tesla's credit rating. Perhaps it was just random timing, but the downgrade was announced during a sudden increase in shares shorted amidst a flood of FUD against Tesla from the media that all contributed to a huge dip. Just the day before the downgrade, the stock found strong support at the $291 level, rallying all the way back up to $304. It looked like the dip had bottomed, and then Moody's made their announcement. Sure seemed fishy to me.
You're probably right, it's hard to really judge especially with the video editing.
bdy0627
Active Member
Please happen. The irony would be fabulous.
bdy0627
Active Member
and therein lies the rub. Why wait nearly 3 months after learning of the production/delivery numbers from Q417 but 1 week before learning of the Q2 numbers to see the progress? The implication is that they decided not to downgrade based on the numbers from Q417 and instead wait and see how Q2 progressed. Yet, they decided not to wait the extra week to actually learn the Q1 numbers. Were they using VIN data as a substantial factor in the downgrade timing? I can't come up with 1 good reason why they would decide not to issue the downgrade based upon the actual Q417 numbers but then decide to do the downgrade based upon speculation of how the ramp was progressing in Q2 just 1 week before learning of the Q2 numbers. Can you?
It is possible that Tesla would buy a mothballed auto plant although they may prefer to start from scratch. In any case, given how malicious the UAW has been toward Tesla it seems highly unlikely Tesla would buy one in UAW country.
IMO, it would be in the long-term interests of the UAW and its members for it to play nice with Tesla but the UAW doesn't seem to have learned that lesson yet.
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