General Discussion: 2018 Investor Roundtable

[avoigt]

Worth reading.

“Imminent competition from traditional Original Equipment Manufacturers (OEMs) is often cited as a key threat to Tesla, but this underestimates the full extent of Tesla’s technology advantage, which manifests in the entire electronic architecture design,” said Berenberg Bank analyst Alexander Haissl.

“This is a decisive barrier for legacy carmakers. Tesla’s centralised, integrated, technology-driven architecture enables flexibility and OTA (over-the-air) software-upgradeability across the entire domain. In contrast, traditional architectures implement technology additively to the legacy infrastructure, resulting in decentralised electronic control units (ECUs) systems that creates excess complexity and incompatibility, ”

Tesla's Lead Under-estimated - Berenberg Bank - 1redDrop

 

[anticitizen13.7]

From shareholders meeting ga1 and ga2 are both model 3. (Along with 3 and 4)

Now I am confused.

I recalled from the June 5, 2018 Shareholder Meeting that Tesla had 2 currently working GA lines, with a 3rd under construction.

Zach Shahan’s recollection is the same: 17 More Tesla Shareholder Meeting Highlights | CleanTechnica

He reports that the 3rd line began construction approximately 2 weeks prior to June 5. Today marks about 3.5 weeks after start of construction. That’s consistent with Elon’s tweet today saying that the GA line pictured with 1st completed Dual Motor Model 3 took about 3 weeks to build. I think the tent is the 3rd GA line for Model 3. Is there a reason why my conclusion may be incorrect?

 

[mongo]

3) Elon has begun to give up on super automation. He has said he underestimated what people can do. The guy in Michigan who disassembled an early Model 3 was also an expert in robotics for car manufacturing and he was saying a few weeks before Elon admitted it that some things are good to automate in a factory, but humans can do significantly more than robots can.

If you are referring to Munroe, he is not a robotics expert, rather he is anti-robot. Some task are easier to have humans do, but that does not mean they are not capable of being automated. Seat installation for instance. People can do it, but robots don't get relative stress injuries, and are more consistent time wise.

Elon thought he was harvesting he was harvesting low hanging fruit with Model 3 automation, but found it was a dead end.

Some things were silly to automate, others worked as expected, and some were punted to be automated later. That is hardly a dead end.

 

[Bet TSLA]

Just about every company in the auto business has tried super automation and went back to semi-automation because that's what works. There will be more fat trimming on the Model 3 line in the next year or two, but it will be more fine tuning than revolutionizing.

You are very confused. All Tesla has done is temporarily delayed some of the harder to automate tasks. Super automation is coming, just not as fast as they hoped. They aimed really high and hit just a bit high, but they haven't given up on anything. And whatever they don't get done now will be done later when they build a line for Model Y. The goal remains getting rid of all the people in any position where they can slow things down.

I think they've learned three important things for the next step: 1) complexity is anathema; 2) don't try to do everything at once; 3) integrating improvements into an existing working line is much simpler and effective that doing it all from scratch.

 

[mongo]

Now I am confused.

I recalled from the June 5, 2018 Shareholder Meeting that Tesla had 2 currently working GA lines, with a 3rd under construction.

Zach Shahan’s recollection is the same: 17 More Tesla Shareholder Meeting Highlights | CleanTechnica

He reports that the 3rd line began construction approximately 2 weeks prior to June 5. Today marks about 3.5 weeks after start of construction. That’s consistent with Elon’s tweet today saying that the GA line pictured with 1st completed Dual Motor Model 3 took about 3 weeks to build. I think the tent is the 3rd GA line for Model 3. Is there a reason why my conclusion may be incorrect?

Pure supposition on my part here.

Right, I recall him saying the same thing, in the context of Model 3 production. From your link

There are currently 2 lines for Model 3 general assembly, and Tesla is in the process of constructing a third line for this.

GA1 and GA2 together were possibly going to do 5k, but the addition of GA3 made it more of a sure thing. (They have another shared GA line for S/X)

GA3 construction was started two weeks before the meeting (so ~May 23rd), and already had cars going through it June 6th. The tent was still being constucted May 31st.
Market Action: 2018 Investor Roundtable

So, even with the similar timing, I think the tent is GA4. Otherwise, they would have to set it up inside, then move it to the tent and get it running in less than a week. And get the better numbers for it vs GA1/2. Although that also would have needed to happen if tent is GA4, it does not have the same timing requirements of first car through (today vs over 10 days ago)

GA1 and GA2 operating at the time of shareholder meeting.
GA3 2 weeks old at SH (may 23), but moving cars.
GA4 tent line running June 16.

Just my guess... tent might be GA3, but then where is GA4?

 

[neroden]

I thought I read somewhere it was whoever was heading China Service is now Worldwide. Can’t recall where I read that.

If so, awesome.

 

[Boomer19]

thanks,
i found the valueanalyst, mdolson, mongo, and your post to be a very good discussion.

i didn’t interpret them giving up on automation either. punted is probably the best way of putting it. “get it done” was the mantra the last couple months. they’ll figure out what they need to in the future.
i also don’t think they need to make 10s of millions of cars by any point in time, nor do they need to fully dominate auto market.
owning a significant share of auto, solar, battery and adding any other future revenue streams still demonstrates a very bright future.

 

[neroden]

wasn’t there just 06-01-2018 bonds that matured? were they convertibles? did they pay cash/stock?

There were only $17.5 million of them left outstanding. The conversion price was $124.52, so of course they paid off in stock! About 140K shares.

The 2018 SolarCity convertibles will have to be paid off in September, probably in cash (unless the TSLA stock price hits $560.60); that's $230 million which is more significant.

 

[Boomer19]

.

also on that note, and not tesla related (but it may impact tesla somewhat)

is the cruise automation proposed spinoff, and he softbank angle. i didn’t research it yet. so gm invested a billion in 2016 to buy startup cruise. do you think the spinout is forced by the hand of softbank? or is it purely gm trying to capitalize on that investment? the news articles i read spin positive on cruises product and technology. but maybe its not as good as they lead on, and maybe they figure nows the time to make $ off it. unless they will still maintain a stake after the spinout (that’s most likely the case i assume) anyone have thoughts?

 

[neroden]

Looks correct.

From Google Translate version of list:
http://images.mofcom.gov.cn/www/201806/20180616015345014.pdf
Line: 542 87038000 Electric vehicles
Harmonized code maps to
870380 Vehicles; with only electric motor for propulsion

So, there was *already* a 25% import duty. Can anyone clarify whether this means they now have a *50%* import duty?

I'm guessing it won't apply to imports from the Shanghai Free Trade Zone if they build the factory there. But I don't know that either.

 

[mongo]

So, there was *already* a 25% import duty. Can anyone clarify whether this means they now have a *50%* import duty?

I'm guessing it won't apply to imports from the Shanghai Free Trade Zone if they build the factory there. But I don't know that either.

Pure opinion:
China had dropped the EV tarrif (leading to Tesla dropping the vehicle price), so this likely just reverts that.?
@vinvin218 any insights?

 

[neroden]

also on that note, and not tesla related (but it may impact tesla somewhat)

is the cruise automation proposed spinoff, and he softbank angle. i didn’t research it yet. so gm invested a billion in 2016 to buy startup cruise. do you think the spinout is forced by the hand of softbank? or is it purely gm trying to capitalize on that investment? the news articles i read spin positive on cruises product and technology. but maybe its not as good as they lead on, and maybe they figure nows the time to make $ off it. unless they will still maintain a stake after the spinout (that’s most likely the case i assume) anyone have thoughts?

Interesting. This is the first I heard of the proposed Cruise spinoff. Cruise really does seem to have good technology. GM seems to make a lot of questionable and short-term decisions, so it wouldn't surprise me if they spun it out just *before* it boomed. I think it would be good for the world if they spun it off because then Cruise tech could be used by multiple manufacturers.

 

[SPadival]

Full email posted by none other than (short) sell side reporter Lora

Elon Musk e-mails Tesla employees urging 'radical improvements' to hit quarterly targets

From: Elon Musk

To: Everybody

Subj. Only 8 days left to reach 700 cars/day or 5k/week

June 15, 2018

8:27 pm

It's getting very exciting! All parts of the Model 3 production system are now above 500 and some are almost at 700 cars already. Congratulations to all on making so much progress!

That said, radical improvements are still needed in paint shop output, GA3, bringing up the new GA4, End of Line and Module Zone 4 at Giga. We also need to achieve sustained, 700+ per week on the body line.

Wherever you are in the company, if you feel you can help out in any of those areas, please check in with Jat Dhillon on GA3, Jerome Guillen on GA4 and Omead on EoL and JB Straubel or Christ Lister on Module Zone 4.

I will be at our Fremont factory almost 24/7 for the next several days checking in with those groups to make sure they have as many resources as they can handle.

Thanks,
Elon

 

[kbM3]

Last mention from Elon had V3 supercharging not coming until the end of this year.

I stand corrected. Should have not relied on memory.

 

[Boomer19]

Interesting. This is the first I heard of the proposed Cruise spinoff. Cruise really does seem to have good technology. GM seems to make a lot of questionable and short-term decisions, so it wouldn't surprise me if they spun it out just *before* it boomed. I think it would be good for the world if they spun it off because then Cruise tech could be used by multiple manufacturers.

here is one link
GM Is Exploring Listing Shares of Cruise Self-Driving Unit

seems very preliminary. and the last part seems opposite of what i wrote earlier. still interesting to follow what’s going to happen here.

 

[neroden]

here is one link
GM Is Exploring Listing Shares of Cruise Self-Driving Unit

Sounds to me like a partial spinoff is more likely. Sort of like the way Total owns 60% of Sunpower. If GM sells 20% or 40% of Cruise, they retain control, but they get a public valuation for Cruise, and that valuation feeds back into the valuation of GM stock, because GM still owns the majority stake -- probably raises the GM stock price. I've seen this done many times.

 

[sundaymorning]

Pure supposition on my part here.

Right, I recall him saying the same thing, in the context of Model 3 production. From your link
GA1 and GA2 together were possibly going to do 5k, but the addition of GA3 made it more of a sure thing. (They have another shared GA line for S/X)

GA3 construction was started two weeks before the meeting (so ~May 23rd), and already had cars going through it June 6th. The tent was still being constucted May 31st.
Market Action: 2018 Investor Roundtable

So, even with the similar timing, I think the tent is GA4. Otherwise, they would have to set it up inside, then move it to the tent and get it running in less than a week. And get the better numbers for it vs GA1/2. Although that also would have needed to happen if tent is GA4, it does not have the same timing requirements of first car through (today vs over 10 days ago)

GA1 and GA2 operating at the time of shareholder meeting.
GA3 2 weeks old at SH (may 23), but moving cars.
GA4 tent line running June 16.

Just my guess... tent might be GA3, but then where is GA4?

General assembly 4 exists. Confirmed in Elon’s email Friday:

Elon Musk tells Tesla employees that 'radical improvements' are needed to hit quarterly targets

 

[Reciprocity]

Pure supposition on my part here.

Right, I recall him saying the same thing, in the context of Model 3 production. From your link
GA1 and GA2 together were possibly going to do 5k, but the addition of GA3 made it more of a sure thing. (They have another shared GA line for S/X)

GA3 construction was started two weeks before the meeting (so ~May 23rd), and already had cars going through it June 6th. The tent was still being constucted May 31st.
Market Action: 2018 Investor Roundtable

So, even with the similar timing, I think the tent is GA4. Otherwise, they would have to set it up inside, then move it to the tent and get it running in less than a week. And get the better numbers for it vs GA1/2. Although that also would have needed to happen if tent is GA4, it does not have the same timing requirements of first car through (today vs over 10 days ago)

GA1 and GA2 operating at the time of shareholder meeting.
GA3 2 weeks old at SH (may 23), but moving cars.
GA4 tent line running June 16.

Just my guess... tent might be GA3, but then where is GA4?

The tent is probably GA4, best theory I have heard is that they take finished model 3s and upgrade them to performance model 3s in that line. This way, they don't have to change anything to start shipping them. Margins are high enough to warrant it.

Don't know if anyone's noticed but model S/X VINs have been averaging 2500-2700/w for a while now. Maybe a month. Could be interesting if the plan is also to crank S/X beyond recent norms to take maximum advantage of tax credits. An extra 2000 model S/X is equivalent to 6000 model 3s in terms of profits. I know 2000 seems crazy, but what if.

 

[MP3Mike]

The tent is probably GA4, best theory I have heard is that they take finished model 3s and upgrade them to performance model 3s in that line. This way, they don't have to change anything to start shipping them. Margins are high enough to warrant it.

Highly unlikely, that would be a waste of time and parts. Not to mention Elon said that they were making changes to the battery so the RWD/AWD batteries would be different. So you would be changing out the whole skateboard...

 

[wdolson]

And ag states have about 5% of the population and 50% of the senate. If China could target ag and rural alone, I think they’d go that route. It puts the most direct pressure on trump.
California has little to no clout with the administration.

Though California has the highest ag output in the US by a massive margin. The state's economy is so massive that even most Californians don't realize it. It's a smallish part of California's overall economy.