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General Discussion: 2018 Investor Roundtable

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That would be the kind of low-end projection of weekly rate for the first 2 Quarters. Barely reaching 2500/w by the very end of Q1 and 5000/w by the end of Q2. That's about 56000 Model 3 in H1. Staying at 5000/w for all H2 (minus a couple of weeks) would mean + 130000 produced, for a yearly total of ~186.000. I have yet to see a plan for 10k/w, and based on the last ER call is does not look like a sure thing in 2018.

To me this is the floor and anything less will be disappointing (of course, *sugar* can happen). What may help a bit is that at this rate Q1 will still go over filling the initial production of premium M3 for existing owners, which probably means north of $50k per vehicle.
Remember that Tesla say they "intend to achieve" 5000 per week by the end of Q2. I think that the base case should assume some further delay in this goal, given the track record of optimistic forecasts on this timescale and the simple fact that no one really knows how long something will take until it's done.

So I would say a conservative estimate is to push everything on your chart back by a couple of months. They are not really at 1000 per week now. The last 7 work days were 100 per day. And they will likely slow down slightly in Jan before continuing to ramp. I would personally guess 150000 model 3 produced this year, with possibility of a bit higher or lower. And delivery of 140000? There will also be a bunch of model S and X demand pulled forward as the US tax credits phase out, and possibly convert some more model 3 reservation holders to the more expensive cars. This isn't really a bad thing, but may make model S/X deliveries higher in H1 than H2.

But overall, Tesla will have considerably less cash than I expected this year to fuel further expansion.

On the other hand, because Tesla HAS to ramp to 5000/week (or near that) this year, I am confident that Elon and Co will find a way to make it happen. Tesla (and SpaceX) have weathered far worse and always delivered on the critical things, even if they can't make Elon's crazy aggressive deadlines.
 
Tesla is experiencing another slower-than-promised ramp. News at eleven.
...

What matters for Tesla is *that* they ramp, not *when* they ramp. There's still no serious competition on the near-term horizon, either for vehicles at scale, vehicle feature set, or battery production.

You hit the nail on the head. The only thing we need to worry about is that Tesla doesn't run out of money while it slowly ramps up the Model 3. There is no threat from anyone else.

Plus the following observations are valid -

Model 3 is ramping way faster than the Model X ever did.
Model 3 is seeing much higher "initial quality" than the Roadster, Model S or X. I am not sure I've read a single instance of a recipient having to take the car back in to get something fixed. vs. the Model X with its rubber seals, squeaky doors, sensors etc. etc.
The company has a great deal more employees and capability than it ever did before. They just previewed two prototypes at the same time, while ramping up production of a separate new car. The pieces are in place for a great ascent for TSLA longs, we just need to wait while Tesla figures it out. And at the same time, there isn't any competition. (looking forward to seeing the Jaguar I-Pace though)
 
okay, that was funny.

you're real bubbly today m.u.n.

fwiw,

you still sticking with your claim from last month that by 2020 at least one of the large automakers will sell more 200+ mile EVs than Tesla?

2017 Investor Roundtable:General Discussion

for that matter, are you sticking by your assertion an hour ago (just upthread) that Tesla will never get to volume production on the Model 3 (10K/week)?
thanks for the link... I believe so. I do not think Tesla is going to scale out in any way that resembles what has been envisioned for the next 2 to 4 years... and I believe either VW, GM, Audi or Toyota will pull a rabbit out of their hats.
 
You hit the nail on the head. The only thing we need to worry about is that Tesla doesn't run out of money while it slowly ramps up the Model 3. There is no threat from anyone else.

Plus the following observations are valid -

Model 3 is ramping way faster than the Model X ever did.
Model 3 is seeing much higher "initial quality" than the Roadster, Model S or X. I am not sure I've read a single instance of a recipient having to take the car back in to get something fixed. vs. the Model X with its rubber seals, squeaky doors, sensors etc. etc.
The company has a great deal more employees and capability than it ever did before. They just previewed two prototypes at the same time, while ramping up production of a separate new car. The pieces are in place for a great ascent for TSLA longs, we just need to wait while Tesla figures it out. And at the same time, there isn't any competition. (looking forward to seeing the Jaguar I-Pace though)

Agreed on points even the ipace, looks dope but I want to see the final product. Like the fpace and they are very similar.

A lot is good news but the one albatross is the 5k/w push. There is gold at the end of that rainbow. And the learnings should make model y ramp much smoother than the list of ramps you detailed as well as the model 3. Just need a bit more patience.

Demand seems strong for model S/X and with each passing year, you start to see return customers. CPO demand is also high based on how they blew out everything into year end.

I still do not see Tesla needing more cash as cap ex for 3 is all but baked into the cake after this current quarter. The quality seems good and early reviews are glowing, but they need to build more, faster. It's a very complex thing so it's hard to even guess would could be slowing things down. 1000/w is about how many S or X are produced each week (not both combined but individually). That is still very impressive and as noted, faster then model X ramped with higher initial quality.
 
like I said over the summer... eventually this will start trading differently because there's no escaping this situation... granted, my claim was that would start happening in Aug/Sept... but it took all this time to get here.

the M3 changes everything. this is what the story was about. there is NO recovery if they do not succeed... and succeeding at this valuation means 5k to 10k per wk in very short timespan to providing funding for all the incredible growth required to expand even more to fit the valuation.

how the hell are they going to raise capital under these conditions?... the SP must fall. it's actually in their interest at this point.

Gap up, green close tomorrow. Book it. Not an advice, not even close.
 
So, great delivery numbers overall, lower production numbers (means less cash for CoGS) and almost all of the Model 3 CapEx was spent by Q3. Not only do I think that they don't need to raise more cash, I think it's possible that they will show positive cash flow for Q4. I wish someone would work out the numbers on that...

edit: oh, and deposits...

I believe all this to be true. Any additional capex would be for expansion beyond model 3s current ramp. 1-1.4B required for ramp from 5K-10K, but that is after 5k is achieved and most payments but sure until certain goals met, so much quicker going from 5-10 then 1-5.
 
With inventory pretty much depleted, I'm seriously expecting some news of an interior and exterior refresh sometime this month... This will differentiate the MS/MX further

The new interior will be available only 3-4 months after factory reach 5,000 units/week of model 3. It will be a big refresh and they cannot suffer sales losses of Model S and X until Model 3 line is not free of trouble. Realistically It will not happen before October.
 
A bear and a bull argument, pretty much what we should have all expected. The S/X deliveries were rip your face off beat the market great. That said, without Model 3 production to back it up, no one cares. What does this mean going forward is the important question, not what is today's market response, or who can spit out the nastier response. Today's numbers were almost exactly what I though 2-3 weeks ago and I thought that would support a bullish story for the year. I also thought 2500 end of Q1 was more realistic, based on the ramping challenges to date. I still thought that was ok, since combined with 25k+ Model S\X and some slowly increasing TE sales and deposit money, they can be pretty close to or at cash flow parity.

Getting into the details for the year you can target 100,000 S\X for 9 billion in revenue. Q1 might be below 25,000, since they need to build stock and possibly divert production and sales resources. Delivering 100's of cars a day at Marina Del Rey appears to be very organized, but something not built to scale nationally yet. Model 3 production seems to be on track, but low enough for some to tell us the sky is falling. Assuming they are on track to produce this new lower number, they are probably entering the first week of January below 1000 a week. The mad rush over the holiday was likely herculean, but it does not seem like the Model X, where you had substantial issues that took another 6 months to work out. So, assuming production this week is about 750 and the last week of the quarter is 2500 that produces about 21,000 cars. Assume that leaves 4000 enroute, that is 17,000 Model 3's delivered and perhaps only 22,000 S/X delivered. That is not a great number, but reasonable numbers based on Tesla's statement and normal channel filling requirements. At this rate, Q1 is not awesome, but hopefully a burn of less than 300 million, not counting Roadster and other deposits. Based on Q4 deposits, I don't think cash flow is nearly as bad as many bears would say.Total revenue would be about 2b plus 1b, plus 500m for TE, or 3.5 billion for Q1 and about 300 million cash burn.

Going into Q2, S/X stock should be restored and staffing to increase production should be normalized, so production should be over 25,000 and deliveries should be at least 25,000. If production is on target and ends Q2 at 5000 Model 3's per week, production should be about 48,500 and deliveries about 44,000. At that rate cash flow is 2.2 billion (SX) and 2.6 billion, plus TE, so between 5 and 6 billion.
Going into Q3 and assuming capacity continues to grow, ending about 6300, production scales to 70,000 and deliveries about 62 to 65,000. S/X sales stay at 25,000. Perhaps Tesla could sell more S/X, but resources to increase production are probably still limited. At that rate, sales are again 2.2 billion for S/X and about 3.8 billion for the 3, or 6 billion plus TE, or approaching 7 billion Q3 revenue.
For Q4, assume no 10k per week, but more conservative 7500, that is about 90,000 3s for the quarter and again I stay with 25,000 for S/X. Again with 2.2 billion S/X rev and now 4.5+ billion for the 3, or 6.7billion plus TE, which should total close to 8 billion.

If Tesla can approximate these numbers, that is 23 billion in revenue for 2018. Cash flow in Q1 is probably marginally negative, Q2 is about even and the second half should be generate close to 3 billion in cash flow. I'm assuming normal Tesla investments in charging and distribution centers, etc. Based on Model 3, I would not expect any new Semi line install to start before Q1 or Q2 of 2019 and with 90 days payment schedule, they won't be paying for those systems until Q3 or 4 2019. By then, the Semi will be generating some cash flow and the Model 3+SX will be generating almost 3 billion free cash flow per quarter. This implies cash available for the Semi, and an as yet unidentifid plant that might build Model 3 and Model Y cars with an integrated battery factory. This will be a much bigger investment than needed for the Semi or Roadster, so is not likely before the end of 2019. I'd love for that to be sooner, but don't really see that this can be moved up much. I think the Roadster was a smart way to create Model Y like revenue, without nearly as much up front investment, making the eventual Model 3 plant much more affordable without a new round of financing.

The bottom line there is much for the bears to beat their chests over for now, but I think the long term story remains the same. I do think delays do affect future production numbers, so MU and other naysayers have a point, no denying. Long term there is still no strong attack against Tesla's home turf, so Tesla continues to compete against the 100 million car market, but only a small percent of the 100 million car market competes against Tesla. Perhaps a 100 PowerPoints are aimed at the heart of Tesla and a pack of Bolts,i3's, Porsche's and Jag's will attack like wolves to kill the leader of the pack, but I think the market to date only highlights Tesla's technical and design advantages and begins to educate a bigger market about the long term direction of the auto market towards EV, which is to Tesla's advantage.

We can all have this discussion next new years and I'm sure the lines will still be drawn about the same. Stupid Tesla and crooked Elon can't build over 500k cars, Elon is a liar and fraud and so on and on. Personally I'm not familiar with any historical frauds and cheats that slept on their factory floor or ever gambled their own money before their investors. He does at times resemble Howard Hughes with great gambles and a willingness to give all of himself to win the bet, and that certainly attracted detractors for HH. So, while I wish the numbers were better, I don't think anyone should have expected more for Q4. Q1 is lower than many here hoped, but seemingly on track with a more controlled rollout.
Longer term, I'd like to see Peter Hochholdinger perhaps step up and take a bigger lead role on the manufacturing side. I'm sure he is more conservative about timelines than Elon. Going forward as Tesla grows into 2018's 20+ billion industrial adolescent, I think Elon needs to let go of more day to day operations and only dive in for emergencies. Finding time to focus on visionary engineering, as well as the more mundane international purchasing agreements (lithium in Chile) or plants in China will require more and more time. I'm looking forward to looking back on 2018 as Tesla's first year as a near adult in the auto market. Still growing like a teenager, but getting more stable, stronger and faster going into 2019.
 
The new interior will be available only 3-4 months after factory reach 5,000 units/week of model 3. It will be a big refresh and they cannot suffer sales losses of Model S and X until Model 3 line is not free of trouble. Realistically It will not happen before October.

When I said Model S and X sales losses, it is because the new interior will slow the production line until people and processes are 100% efficient, in other words at least 4 weeks of slow moving production line . They cannot face this now.
 
A bear and a bull argument, pretty much what we should have all expected. The S/X deliveries were rip your face off beat the market great. That said, without Model 3 production to back it up, no one cares. What does this mean going forward is the important question, not what is today's market response, or who can spit out the nastier response. Today's numbers were almost exactly what I though 2-3 weeks ago and I thought that would support a bullish story for the year. I also thought 2500 end of Q1 was more realistic, based on the ramping challenges to date. I still thought that was ok, since combined with 25k+ Model S\X and some slowly increasing TE sales and deposit money, they can be pretty close to or at cash flow parity.

Getting into the details for the year you can target 100,000 S\X for 9 billion in revenue. Q1 might be below 25,000, since they need to build stock and possibly divert production and sales resources. Delivering 100's of cars a day at Marina Del Rey appears to be very organized, but something not built to scale nationally yet. Model 3 production seems to be on track, but low enough for some to tell us the sky is falling. Assuming they are on track to produce this new lower number, they are probably entering the first week of January below 1000 a week. The mad rush over the holiday was likely herculean, but it does not seem like the Model X, where you had substantial issues that took another 6 months to work out. So, assuming production this week is about 750 and the last week of the quarter is 2500 that produces about 21,000 cars. Assume that leaves 4000 enroute, that is 17,000 Model 3's delivered and perhaps only 22,000 S/X delivered. That is not a great number, but reasonable numbers based on Tesla's statement and normal channel filling requirements. At this rate, Q1 is not awesome, but hopefully a burn of less than 300 million, not counting Roadster and other deposits. Based on Q4 deposits, I don't think cash flow is nearly as bad as many bears would say.Total revenue would be about 2b plus 1b, plus 500m for TE, or 3.5 billion for Q1 and about 300 million cash burn.

Going into Q2, S/X stock should be restored and staffing to increase production should be normalized, so production should be over 25,000 and deliveries should be at least 25,000. If production is on target and ends Q2 at 5000 Model 3's per week, production should be about 48,500 and deliveries about 44,000. At that rate cash flow is 2.2 billion (SX) and 2.6 billion, plus TE, so between 5 and 6 billion.
Going into Q3 and assuming capacity continues to grow, ending about 6300, production scales to 70,000 and deliveries about 62 to 65,000. S/X sales stay at 25,000. Perhaps Tesla could sell more S/X, but resources to increase production are probably still limited. At that rate, sales are again 2.2 billion for S/X and about 3.8 billion for the 3, or 6 billion plus TE, or approaching 7 billion Q3 revenue.
For Q4, assume no 10k per week, but more conservative 7500, that is about 90,000 3s for the quarter and again I stay with 25,000 for S/X. Again with 2.2 billion S/X rev and now 4.5+ billion for the 3, or 6.7billion plus TE, which should total close to 8 billion.

If Tesla can approximate these numbers, that is 23 billion in revenue for 2018. Cash flow in Q1 is probably marginally negative, Q2 is about even and the second half should be generate close to 3 billion in cash flow. I'm assuming normal Tesla investments in charging and distribution centers, etc. Based on Model 3, I would not expect any new Semi line install to start before Q1 or Q2 of 2019 and with 90 days payment schedule, they won't be paying for those systems until Q3 or 4 2019. By then, the Semi will be generating some cash flow and the Model 3+SX will be generating almost 3 billion free cash flow per quarter. This implies cash available for the Semi, and an as yet unidentifid plant that might build Model 3 and Model Y cars with an integrated battery factory. This will be a much bigger investment than needed for the Semi or Roadster, so is not likely before the end of 2019. I'd love for that to be sooner, but don't really see that this can be moved up much. I think the Roadster was a smart way to create Model Y like revenue, without nearly as much up front investment, making the eventual Model 3 plant much more affordable without a new round of financing.

The bottom line there is much for the bears to beat their chests over for now, but I think the long term story remains the same. I do think delays do affect future production numbers, so MU and other naysayers have a point, no denying. Long term there is still no strong attack against Tesla's home turf, so Tesla continues to compete against the 100 million car market, but only a small percent of the 100 million car market competes against Tesla. Perhaps a 100 PowerPoints are aimed at the heart of Tesla and a pack of Bolts,i3's, Porsche's and Jag's will attack like wolves to kill the leader of the pack, but I think the market to date only highlights Tesla's technical and design advantages and begins to educate a bigger market about the long term direction of the auto market towards EV, which is to Tesla's advantage.

We can all have this discussion next new years and I'm sure the lines will still be drawn about the same. Stupid Tesla and crooked Elon can't build over 500k cars, Elon is a liar and fraud and so on and on. Personally I'm not familiar with any historical frauds and cheats that slept on their factory floor or ever gambled their own money before their investors. He does at times resemble Howard Hughes with great gambles and a willingness to give all of himself to win the bet, and that certainly attracted detractors for HH. So, while I wish the numbers were better, I don't think anyone should have expected more for Q4. Q1 is lower than many here hoped, but seemingly on track with a more controlled rollout.
Longer term, I'd like to see Peter Hochholdinger perhaps step up and take a bigger lead role on the manufacturing side. I'm sure he is more conservative about timelines than Elon. Going forward as Tesla grows into 2018's 20+ billion industrial adolescent, I think Elon needs to let go of more day to day operations and only dive in for emergencies. Finding time to focus on visionary engineering, as well as the more mundane international purchasing agreements (lithium in Chile) or plants in China will require more and more time. I'm looking forward to looking back on 2018 as Tesla's first year as a near adult in the auto market. Still growing like a teenager, but getting more stable, stronger and faster going into 2019.

That's a crazy long post, from a guy who makes crazy long posts.. Congrats.

All I'll add is AJ of MS game was right I choke on those words. His Target for 2nd quarter is like 24,000 M3. So there's that. The greater market shouldn't have expected much more then what was delivered and has very low expectations going forward. Having said that, AJ estimated positive fcf by Q2 based on those weak arse numbers. I agree btw. Remember one thing when people say the term cash burn.. you only pay for kuka robots once each, even in shortsville.
 
thanks for the link... I believe so. I do not think Tesla is going to scale out in any way that resembles what has been envisioned for the next 2 to 4 years... and I believe either VW, GM, Audi or Toyota will pull a rabbit out of their hats.

Awesome, then for their next trick they can pull a Gigafactory out of their $sses.

Solid investment thesis myusername! The rabbit out of the hat is bound to work! You're bringing back memories of November 2016 when you said sell at 180!

There is no evidence to suggest any of these companies can make a car by 2020 than could compete with the model S from 2012. And the fact that they are not investing heavily and building a battery facility now means they will not be able to scale. Their best bet is to try to tear Tesla down with misinformation which is where I guess you come in.
 
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Remember that Tesla say they "intend to achieve" 5000 per week by the end of Q2. I think that the base case should assume some further delay in this goal, given the track record of optimistic forecasts on this timescale and the simple fact that no one really knows how long something will take until it's done.

So I would say a conservative estimate is to push everything on your chart back by a couple of months. They are not really at 1000 per week now. The last 7 work days were 100 per day. And they will likely slow down slightly in Jan before continuing to ramp. I would personally guess 150000 model 3 produced this year, with possibility of a bit higher or lower. And delivery of 140000? There will also be a bunch of model S and X demand pulled forward as the US tax credits phase out, and possibly convert some more model 3 reservation holders to the more expensive cars. This isn't really a bad thing, but may make model S/X deliveries higher in H1 than H2.

But overall, Tesla will have considerably less cash than I expected this year to fuel further expansion.

On the other hand, because Tesla HAS to ramp to 5000/week (or near that) this year, I am confident that Elon and Co will find a way to make it happen. Tesla (and SpaceX) have weathered far worse and always delivered on the critical things, even if they can't make Elon's crazy aggressive deadlines.

m3revised.png


Indeed that may be more orange than blue (reaching close to guidance for a short burst), but to your point the total would not be very different, in the ballpark of 140.000 to 150.000 total year assuming close to 4500/w in H2. Likely insufficient to finance needed expansion on its own.
 
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thanks for the link... I believe so. I do not think Tesla is going to scale out in any way that resembles what has been envisioned for the next 2 to 4 years... and I believe either VW, GM, Audi or Toyota will pull a rabbit out of their hats.

What vehicles have those companies made in the last decade gives you that impression. From my limited point of view, those cars have gotten worse over the the last decade, not better. Certainly a 3 series today is a better car then 10 years ago, but only marginally and compared to the increase in cost.. it's a joke. If Tesla could make more cars, no one would buy that crap.
 
Longer term, I'd like to see Peter Hochholdinger perhaps step up and take a bigger lead role on the manufacturing side. I'm sure he is more conservative about timelines than Elon. Going forward as Tesla grows into 2018's 20+ billion industrial adolescent, I think Elon needs to let go of more day to day operations and only dive in for emergencies. Finding time to focus on visionary engineering, as well as the more mundane international purchasing agreements (lithium in Chile) or plants in China will require more and more time. I'm looking forward to looking back on 2018 as Tesla's first year as a near adult in the auto market. Still growing like a teenager, but getting more stable, stronger and faster going into 2019.


I'm pretty sure Elon doesn't do as much day to day operations as a normal automaker CEO and he already dives in only for emergencies.

One must not forget Elon is also the CEO of a 20 billion dollars company, dividing his time 50/50 between SpaceX and Tesla.

AND, he started 2 other ventures. Though they probably take way less time for now.


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People have the impression he's doing everything because he's basically very transparent as a CEO, and under heavy scrutinization.
 
" As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1 "

If they want they can make the ramp faster, they decided it to ramp slower.
That statement worried me that they are seeing quality issues now.

I need cheering up!
 
I'm pretty sure Elon doesn't do as much day to day operations as a normal automaker CEO and he already dives in only for emergencies.

One must not forget Elon is also the CEO of a 20 billion dollars company, dividing his time 50/50 between SpaceX and Tesla.

AND, he started 2 other ventures. Though they probably take way less time for now.


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People have the impression he's doing everything because he's basically very transparent as a CEO, and under heavy scrutinization.

Maybe he could use a COO. he has one at SpaceX
 
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