General Discussion: 2018 Investor Roundtable

[neroden]

So I went to Seeking Alpha to read what the bears had to say about Tesla now (bleh). It was pretty painful to read, but I did come across one legitimate sounding point that is worth doing a little bit of digging about.

We've been assuming a roughly 50% growth rate for revenue for Tesla. The bear point was that with Fremont maxing out at around 600k units a year in capacity in 2019, and Shanghai not coming online until 2021, and Europe Gigafactory beyond 2021, how is Tesla going to maintain its >50% growth rate?

Well, 50% growth is an average. If Tesla doesn't grow at all in 2020, and doubles in 2021, that's 40% average growth for 2020 and 2021.

 

[Krugerrand]

How many cars in Lathrop would make you start to worry?

What am I supposed to be worried about?

 

[Esme Es Mejor]

So how does Tesla maintain a 50% growth rate after mid 2019 when they have achieved 10k/month on Model 3's?

Model Y. Reveal 2019. Begin production 2020. Large volumes 2021.

They haven’t yet announced where it’ll be produced. I assume Sparks, since the drivetrains are already there & I haven’t seen any info about any other location. But wherever it’s built, Model Y production will begin before Shanghai does.

 

[UnknownSoldier]

I have to say, your discussion style is a bit disturbing. It might of course be, that I get your tone wrong.

He randomly attacked me last week apropos of nothing too. I don't know what his deal is but it's not my problem either.

 

[Oil4AsphaultOnly]

The

@Hyperchange, Logical Thought seems to like making bets: Tesla: Firing On All Cylinders Without Cylinders - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha . (it's a link to the comments section on seeking alpha about Tesla's 2015 deliveries).

 

[Krugerrand]

He randomly attacked me last week apropos of nothing too. I don't know what his deal is but it's not my problem either.

Actually, I didn’t. I explained in full detail what I had observed you doing. You may not agree with my observation but it wasn’t an attack of any kind, random or otherwise.

 

[UnknownSoldier]

Actually, I didn’t. I explained in full detail what I had observed you doing. You may not agree with my observation but it wasn’t an attack of any kind, random or otherwise.

I responded to you and you ignored it. And it turned out I was right too because the incident happened before the earnings call and everything I said came to pass and the stock went up. I know you won't respond to this post either so how about we just pretend each other don't exist going forward. You like to attack and then suddenly forget to reply when challenged. I won't play that game with you or anyone here.

 

[Krugerrand]

I responded to you and you ignored it. And it turned out I was right too because the incident happened before the earnings call and everything I said came to pass and the stock went up. I know you won't respond to this post either so how about we just pretend each other don't exist going forward. You like to attack and then suddenly forget to reply when challenged.

1) Don’t recall seeing your response but thanks for giving me the benefit of the doubt on that and for making the effort to PM me to resolve the issue
2) My post had nothing to do with anything related to the ER, stock price et al so I’ve no idea what you’re talking about but again I thank you for reaching out to me privately to resolve your on going issue with me
3) Feel free to pretend I don’t exist, while I extend you the courtesy of accepting that you do exist but simply no longer address you specifically beyond this final push of ‘post reply’

MODERATOR:
This 3rd graders’ set of temper tantrums ends right now; and until ggr is able to port the entire mess over to Snippiness so the rest of the world can laugh at you participants, it stays ended.
===>ANY further posts in this nonsense will cause such poster to be banned for as much time as it takes my leg to heal from the latest grizzly attack.<===

/s Spaghetti-leg

 

[avoigt]

Interview with the Head of R&D from Audis drivetrain. Interesting view in their thought process....

"The claim needs to be at least 500 km "

"There is as of today a high uncertainty with view on possible market share of pure or part electric vehicles"

"The logic that we follow is basically that we intend to reserve the double of the market potential for us" (...) "so if in Europe the market potential is 12 to 18% for electric vehicles than we want to deliver twice of that."

As a premium manufacturer Audi expects to have better chances in the EV market. "... also in terms of cost structure and price reachability"

Because its unclear how high the demand will be in the next decade they have developed a plan B. "And the plan B is PlugIn Hybrids we are pushing. We produce there a larger offering to secure us in terms of CO2"

" On top of that we will electrify the entire ICE models successively with 48Volt so called mild Hybrids"

Audi-Elektroauto: Der Anspruch muss "mindestens 500 Kilometer" sein - ecoment.de

I would call this a strategy to mitigate emission risk by pushing compliance models out but not an attempt to own the EV market or a defined plan how to be the leader in EVs for the future.

 

[Oil4AsphaultOnly]

So I went to Seeking Alpha to read what the bears had to say about Tesla now (bleh). It was pretty painful to read, but I did come across one legitimate sounding point that is worth doing a little bit of digging about.

We've been assuming a roughly 50% growth rate for revenue for Tesla. The bear point was that with Fremont maxing out at around 600k units a year in capacity in 2019, and Shanghai not coming online until 2021, and Europe Gigafactory beyond 2021, how is Tesla going to maintain its >50% growth rate? If it can't, the stock price is going to drop dramatically from slow growth.

So how does Tesla maintain a 50% growth rate after mid 2019 when they have achieved 10k/month on Model 3's?

My first thought goes to Tesla Energy catching up, but Tesla is rather battery cell supply chain limited, so I'm not sure how that can help the growth rate.

Then my thought turns to the Roadster and Semi. But if Tesla is battery cell limited, then in order to maximize revenue, it needs to optimize the maximization of "revenue/battery capacity" ratio. The Roadster is not much higher than the Model S/X/3, and the Semi is actually much worse in that regard due to the huge battery.

Thoughts?

First off, it's 10k/week of model 3's, which translate's to 500k per year.

As for the room for growth, Gigafactory 1 isn't finished yet, so there's still 67% of the factory to build up still, which provides both space to build out semi and roadster as well as increases the cell supply thus invalidating "But if Tesla is battery cell limited". The Panasonic cell production limit was self-imposed. Panasonic is bringing up 50% additional supply to keep up with Tesla's model 3 production ramp. It isn't unreasonable to expect that Panasonic brings additional cell production lines as Tesla's cell needs increases.

 

[BrianZ]

First off, it's 10k/week of model 3's, which translate's to 500k per year.

As for the room for growth, Gigafactory 1 isn't finished yet, so there's still 67% of the factory to build up still, which provides both space to build out semi and roadster as well as increases the cell supply thus invalidating "But if Tesla is battery cell limited". The Panasonic cell production limit was self-imposed. Panasonic is bringing up 50% additional supply to keep up with Tesla's model 3 production ramp. It isn't unreasonable to expect that Panasonic brings additional cell production lines as Tesla's cell needs increases.

Oops, my bad on 10k/month. I can't edit my post anymore though.

But I do have to correct you on cell supply. According to Musk in the Q2 earnings call, Tesla is cell supply chain limited. It's not a matter of production capacity in the Gigafactory. It's that they may not be able to get enough raw materials to build the battery, which may very well be the case given the staggering amount of lithium that is required to maintain Tesla's growth rate.

It seems like 2020 is going to be a year of temporary growth stall, but it'll jump right back to crazy growth once China GF3 and Europe GF4 comes online starting in 2021. I'm hoping Elon Musk is actually starting to be conservative and plans to beat that timeline. Elon seemed to have slipped up when claiming 750k vehicles is possible in 2020 because Shanghai will help out.

 

[Mader Levap]

PS. To those who have criticized this use of a historical film regarding Nazi Germany, I would say that the parody does not glorify or excuse anything related to Nazism, and that the parody can contribute to drawing attention to a totalitarian regime so horrifying that one really has to remind oneself that the horrors really did take place and that this regime actually rose from a reasonably democratic society.

I honestly don't understand people like that. This kind of fate - becoming world's laughingstock - must be worst thing that can happen to any dictator as far as historical memory is concerned.

 

[mongo]

But I do have to correct you on cell supply. According to Musk in the Q2 earnings call, Tesla is cell supply chain limited. It's not a matter of production capacity in the Gigafactory. It's that they may not be able to get enough raw materials to build the battery, which may very well be the case given the staggering amount of lithium that is required to maintain Tesla's growth rate.

Panasonic is in the supply chain for cells, in contrast to the earlier Tesla side module/ pack assembly problems.

Panasonic had to switch some of the Energy lines over to make Model 3 cells. They also have 3 more cell lines on order to be installed this year. That indicates a production constraint, not a raw material one.
From :‘Production at Tesla is gaining momentum’ says Panasonic as it increases battery cell production at Gigafactory 1

Panasonic’s battery cell production was never thought to be a bottleneck in Tesla’s Model 3 production until last month when CEO Yoshio Ito said that the recent Tesla Model 3’s production ramp is creating ‘occasional battery cell shortages’.

 

[Reciprocity]

Here's something a bit random but fun:

According to @luvb2b's latest (preliminary) estimates, if Tesla ramps up to 60,000 Model 3 deliveries in Q4 (less than 5K/week), revenues will grow a totally absurd 79% in just two quarters -- from $4B in Q2 2018 to $7.16B in Q4 2018 ($16B to $28.6B annualized).

That is more growth in six months than Amazon achieved in two years when it was roughly the same size -- $14.84B to $24.51B or 65% from 2007-2009.

Granted in 2019 growth will likely slow down before ramping up again in 2020-2021 with Model Y, Semi, China, pickup, etc.. But Tesla is growing at a staggering pace, as it has since the IPO and as it appears on track to continue for the foreseeable future.

q2-q4 2018 financial projections
Amazon: annual revenue 2017 | Statista

Don't be to quick to rain on 2019. US is only 18% of world wide auto sales and probably 40% of Tesla's WW sales with the model 3s price and size opening up more of the total addressable world wide market, I expect the model 3 to be closer to 30% US vs 70% for the rest of the world. Also since Tesla will focus on US deliveries for S/X through the end of the year due to tax credit phase outs, there should be a lot of pent up demand in the rest of the world in 2019 and beyond for those vehicles.

 

[BrianZ]

Panasonic is in the supply chain for cells, in contrast to the earlier Tesla side module/ pack assembly problems.

Panasonic had to switch some of the Energy lines over to make Model 3 cells. They also have 3 more cell lines on order to be installed this year. That indicates a production constraint, not a raw material one.
From :‘Production at Tesla is gaining momentum’ says Panasonic as it increases battery cell production at Gigafactory 1

I agree that they're currently production limited. However, I'm talking about 3-5 years out. This is the same problem as the lack of electricians problem to install their energy products. This kind of fundamental stuff takes a longer time to scale up. Therefore, I'm hoping Tesla has some sort of plan to dramatically increase the supply chain side of batteries, as I have no doubt Tesla will be able to scale up the production side of their batteries and vehicles to whatever supply there are within a few years.

 

[RobStark]

Don't be to quick to rain on 2019. US is only 18% of world wide auto sales and probably 40% of Tesla's WW sales with the model 3s price and size opening up more of the total addressable world wide market, I expect the model 3 to be closer to 30% US vs 70% for the rest of the world. Also since Tesla will focus on US deliveries for S/X through the end of the year due to tax credit phase outs, there should be a lot of pent up demand in the rest of the world in 2019 and beyond for those vehicles.

No informed bull thinks demand is the problem. It is production.

~600k seems to be the limit for M3 at Fremont.

And Panasonic can only supply enough 18650 cells for 100k Gen II vehicles. Tesla could institute a third shift but there are probably not enough cells. Unless Panasonic can procure enough raw materials and produce enough cells in China. And the rest of the supply chain can materially ramp up.

 

[winfield100]

Here is another napkin math model based on 2023 (5-year) estimates, roughly based on Tesla long-term guidance where available:

700K Model 3 @$45K $31.5B
1M Model Y @$47K $47B
200K pickup @$50K $10B
100K S/X @$100K $10B
100K Semi @$165K $16.5B
200K solar roof @$40K $8B
5K Roadster at $225K $1.1B
48GWh Storage @$250/kWh $12B
Total: $136B revenue

My internet is bouncing up and down, my laptop is flaky, so apologies if this is a repost BUT
To be clear, it looks like you are saying
700k M3 = ~49 gigawatt hours
1 million MY =~ 75 gigawatt hours
200k pickups =~ 20 gigawatt hours
100k SX =~ 10 gigawatt hours
100k semis =~ 40 gigawatt hours (400kWh Bart)
For ~194 gigawatt hours Plus around 48 more gigawatt hours from Tesla Energy for close to 1/4 terawatt hour storage in 5 years
Am I reading it correctly
(Its like I'm back in the 1970's with a 300 baud acoustic coupled modem my connection is so bad)(beats phone phreaking tho)

 

[mongo]

I agree that they're currently production limited. However, I'm talking about 3-5 years out. This is the same problem as the lack of electricians problem to install their energy products. This kind of fundamental stuff takes a longer time to scale up. Therefore, I'm hoping Tesla has some sort of plan to dramatically increase the supply chain side of batteries, as I have no doubt Tesla will be able to scale up the production side of their batteries and vehicles to whatever supply there are within a few years.

Ah!
Have you seen these articles regarding future lithium sources?
9 year (3 plus two 3 three options)
Tesla secures deal to get lithium from Australia
Lithium mine near Tesla Gigafactory plans to break ground as global shortage rears head

 

[EinSV]

Don't be to quick to rain on 2019. US is only 18% of world wide auto sales and probably 40% of Tesla's WW sales with the model 3s price and size opening up more of the total addressable world wide market, I expect the model 3 to be closer to 30% US vs 70% for the rest of the world. Also since Tesla will focus on US deliveries for S/X through the end of the year due to tax credit phase outs, there should be a lot of pent up demand in the rest of the world in 2019 and beyond for those vehicles.

You are absolutely right -- 2019 should still have at least insane growth after ludicrous growth in 2018.

While waiting for Model Y and Semi production to get underway, there will be plenty of growth of the current product lines. In addition to the things you mention:

• Model 3 deliveries could easily double from Q4 2018 to Q4 2019.
  • The model I cited upthread estimated 60,000 Model 3s delivered in Q4 2018, which could easily turn into 120,000 by Q4 2019.
• Tesla has estimated that storage will triple from 2018 to 2019 so ~1GWh estimated for this year ramps to ~3GWh.
• Solar roof ramp should start getting serious in 2019 (a friend was recently contacted to get his installed).
• More people will order AP and FSD as more features roll out and Tesla's new self-driving chip is available.

 

[Oil4AsphaultOnly]

Oops, my bad on 10k/month. I can't edit my post anymore though.

But I do have to correct you on cell supply. According to Musk in the Q2 earnings call, Tesla is cell supply chain limited. It's not a matter of production capacity in the Gigafactory. It's that they may not be able to get enough raw materials to build the battery, which may very well be the case given the staggering amount of lithium that is required to maintain Tesla's growth rate.

It seems like 2020 is going to be a year of temporary growth stall, but it'll jump right back to crazy growth once China GF3 and Europe GF4 comes online starting in 2021. I'm hoping Elon Musk is actually starting to be conservative and plans to beat that timeline. Elon seemed to have slipped up when claiming 750k vehicles is possible in 2020 because Shanghai will help out.

If you believe there isn't enough raw materials (lithium, cobalt, etc), then you have both changed the scope of your initial question AND failed to do enough research. That or you're really a care-bear trying to revisit long debunked "issues".

So which is it?