Goldman Sachs, Gen III SUV, Model X 2015, from Tesla site

[vgrinshpun]

Or not, and the tour happened after they signed paperwork last Wednesday.

What paperwork are you referring to? Last Wednesday was the day of re-payment of DOE loan, not the day when the details of capital raise were finalized. The tour would make sense before investors would put money on the table, not after.

 

[Krugerrand]

What paperwork are you referring to? Last Wednesday was the day of re-payment of DOE loan, not the day when the details of capital raise were finalized. The tour would make sense before investors would put money on the table, not after.

First, I'm quite sure Goldman Sachs has been through Tesla a time or two before. This wouldn't have been their first time.

The timing of this capital raise was very tight. Just last weekend Tesla realized the possibility per Mr. Musk's comments. Just a few days later it was done. That leaves a window of just a couple days for *this* Goldman Sachs tour to have taken place and therefore wasn't prior to last weekend, so as I said, Or not... The actual 'announcement' that the DOE loan being paid was on Wednesday after the market closed, so yes, the tour could have been on Wednesday. It might have been on Monday or Tuesday. Doesn't matter one day here or there, but it most probably happened in that 3 day window, which again is why I said, Or not...

 

[vgrinshpun]

First, I'm quite sure Goldman Sachs has been through Tesla a time or two before. This wouldn't have been their first time.

The timing of this capital raise was very tight. Just last weekend Tesla realized the possibility per Mr. Musk's comments. Just a few days later it was done. That leaves a window of just a couple days for *this* Goldman Sachs tour to have taken place and therefore wasn't prior to last weekend, so as I said, Or not... The actual 'announcement' that the DOE loan being paid was on Wednesday after the market closed, so yes, the tour could have been on Wednesday. It might have been on Monday or Tuesday. Doesn't matter one day here or there, but it most probably happened in that 3 day window, which again is why I said, Or not...

Your timeline is off. Elon Musk and underwriters started working on public offering during the May 11-12 weekend, not May 18-19 weekend as mentioned in your post. The annoncement about the public offering was made on 05/15 :http://ir.teslamotors.com/releasedetail.cfm?ReleaseID=765206

 

[tander]

Would anyone who actually got the Goldman research note be able to pass it along to me?

All of you folks who are complaining about Goldman having better data are largely wrong. Most of this information was accurately forecast in these forums, and/or discussed in the conference call or SEC filings.

Off hand, the only things that I see that are new are the actual allocation of work hours (which shift is doing what), and the revelation that the Model X will start deliveries in 2015.

Process analysis and anecdotal reports had already shown the reduction in work hours and was widely discussed in these forums pre-conference call, and then was mentioned explicitly in the conference call and letter.

The North American reservation rates conform with our analysis and with anecdotal reports. That said, the quote supplied is meaningless. "Current" reservation rate means anything that Tesla wants it to mean.

Exhibit #1: Reservation rates for Europe that are cited in the story are wrong. We measure those directly and they are probably less than half of what was mentioned. But if Tesla had a good day yesterday then the "current" reservation rate can look quite good. But "current' means whatever Tesla wants it to mean.

The story is also wrong about battery costs, though I am willing to admit that the subject has only been superficially discussed here.

The future estimates for production in the out years are just happy talk, and conform to ranges that have been widely discussed before.

The info on credits was probably news to Goldman, but they were widely discussed and projected by us prior to the conference call, to the point that Tesla's omission of GHG data was noted and quantified in the investors threads before Tesla copped to it in their 8k.

Morgan Stanley got the same tour. Their current report on Tesla is dramatically better than the report they were putting out previously.

Look, all of this is basically in the investors threads, with most of it more or less accurately estimated before Tesla had their conference call. This story wraps it up in a nice bow, and there are maybe a few new tidbits, but if you want to know whats happening in real time the investors threads here are still probably the best source.

- - - Updated - - -

I should also add that we already knew that Tesla was going to speed up production later this year. Simple math requires it.

 

[Krugerrand]

Your timeline is off.

Ah, okay.

 

[pfq1982]

All of you folks who are complaining about Goldman having better data are largely wrong. Most of this information was accurately forecast in these forums, and/or discussed in the conference call or SEC filings.

Off hand, the only things that I see that are new are the actual allocation of work hours (which shift is doing what), and the revelation that the Model X will start deliveries in 2015.

Process analysis and anecdotal reports had already shown the reduction in work hours and was widely discussed in these forums pre-conference call, and then was mentioned explicitly in the conference call and letter.

The North American reservation rates conform with our analysis and with anecdotal reports. That said, the quote supplied is meaningless. "Current" reservation rate means anything that Tesla wants it to mean.

Exhibit #1: Reservation rates for Europe that are cited in the story are wrong. We measure those directly and they are probably less than half of what was mentioned. But if Tesla had a good day yesterday then the "current" reservation rate can look quite good. But "current' means whatever Tesla wants it to mean.

The story is also wrong about battery costs, though I am willing to admit that the subject has only been superficially discussed here.

The future estimates for production in the out years are just happy talk, and conform to ranges that have been widely discussed before.

The info on credits was probably news to Goldman, but they were widely discussed and projected by us prior to the conference call, to the point that Tesla's omission of GHG data was noted and quantified in the investors threads before Tesla copped to it in their 8k.

Morgan Stanley got the same tour. Their current report on Tesla is dramatically better than the report they were putting out previously.

Look, all of this is basically in the investors threads, with most of it more or less accurately estimated before Tesla had their conference call. This story wraps it up in a nice bow, and there are maybe a few new tidbits, but if you want to know whats happening in real time the investors threads here are still probably the best source.

- - - Updated - - -

I should also add that we already knew that Tesla was going to speed up production later this year. Simple math requires it.

CapOpp, what did you mean by "The story is also wrong about battery costs.."? What do you think is the truth?

Having a hard time believing the 200 / d "current" European "orders". Sequences clearly show maybe a dozen per day through May 22nd. This data was consistent over time with little variability even over short periods... So either that quote annualizes a very small window of high reservations, or the definition of an "order" is not simply a reservation... perhaps it's when reservations are finalized and the configuration submitted to the factory for production. but then, that would be very much under the discretion of Tesla to decide how many of its reservation holders it prompts to finalize, thus creating "orders" out of the queue. Similar language was used in the 10-Q about "currently receiving orders > 20k", btw...

Or, maybe there was some miscommunication and he really said "About 100". From my observation, the rate should be a bit under 90 / week, or "about 100"...

 

[CapitalistOppressor]

CapOpp, what did you mean by "The story is also wrong about battery costs.."? What do you think is the truth?

Having a hard time believing the 200 / d "current" European "orders". Sequences clearly show maybe a dozen per day through May 22nd. This data was consistent over time with little variability even over short periods... So either that quote annualizes a very small window of high reservations, or the definition of an "order" is not simply a reservation... perhaps it's when reservations are finalized and the configuration submitted to the factory for production. but then, that would be very much under the discretion of Tesla to decide how many of its reservation holders it prompts to finalize, thus creating "orders" out of the queue. Similar language was used in the 10-Q about "currently receiving orders > 20k", btw...

Or, maybe there was some miscommunication and he really said "About 100". From my observation, the rate should be a bit under 90 / week, or "about 100"...

You are correct, and are looking at the same numbers I do. We measure European reservations directly, so we can be certain that the "Current" reservation rate language means whatever Tesla wants it to mean. They used the same formulation in all of their communications since they stopped tracking reservations, so anything they quote must be taken with a giant grain of salt.

In the case of the U.S. we have numerous lines of evidence that point to current reservation rates being ~20k per year. Frankly, the Consumer Reports story, and the general effervescence building around Tesla as folks realize it is the top selling car in its class (by far) has a decent shot at generating the Cabbage Patch Doll effect for the Model S, so its hard to really work out how demand is shifting around. But everything coming out of Tesla is just fuzzy math and should be regarded as a snapshot, not a projection.

As to the battery price issue, that statement was "wrong" in a couple of ways that to me say that Tesla is sandbagging Goldman Sachs (and the rest of the world). First, (and this might just be the reporter doing bad maths) the reporter reports that Elon claims that batteries will cost less than $100/kWh in under a decade, which is "75% less" than what it currently costs.

Doing basic math we know the reporter thinks that Tesla's current battery costs are $400/kWh. And we probably know how he is deriving that. An 85kWh battery is $10k more than a 60kWh pack. The 25kWh difference between the two means we know Tesla is charging customers $400/kWh.

But of course, that's just what Tesla is charging customers, not the cost of the pack. So that's the first way its wrong.

The second way that the statement is wrong is more basic, and I am working hard right now to really nail it down. Tesla (in ~2011) was claiming that they could deliver their pack at under $200/kWh. The research I am doing right now indicates it is probably already a lot less. I haven't finished nailing the specifics down yet, but I don't see how its possibly more.

So the second way that I consider the statement "wrong" is that I think its possible that Tesla might be delivering battery packs for under $100kWh very, very soon. The "under a decade" bit is pure sandbagging.

 

[CapitalistOppressor]

CapOpp - am responding to this primarily because your post immediately followed mine, so I want to ensure that - this time - I did not mean to imply that GS was acting improperly. By a similar token, irrespective of your statement, a prudent investor might consider discounting the information forecast in these forums far more strongly than that forecast by a strong Wall St. presence. For example, which of the forecasts presented in this forum were correct, or close to correct? All of them? 90%? 50%? The truth is that, in an open discussion such as occurs here, we get the gamut of reasonably possible to pie-in-the-sky la-la-land. About the only predictions one doesn't hear much here are bearish ones.

Back to the linked article, the pertinent eye-opener for me was the line that bringing production to 50K/yr will "take only $25-50mm add'l capex". Using the conservative end - $50mm - I am wonderfully impressed. That pencils out to very significant bulwarking of margins, and is well within the balance sheet now. Very, very nice.

Sorry. I should clarify that most of what is in this article is not new to me, and I discuss my own analysis in the threads here, and I see a lot of other information and analysis posted here that is far better than even the most recent reports from Goldman or Morgan Stanley. I must admit I skim past many posts that I already know are not credible because I've already done the math.

The best way to build your own filter is to jack into the delivery threads and track VIN numbers (remember to look at average VIN's and trend lines, not highest VIN so you can understand delivery pipeline delays). VIN's don't lie. The Model S and Model X Tally threads (which track reservations) don't lie. Luvb2b's future demand thread is a great resource to sample different ways to model future demand generation. Read the blog I posted in March, my Q1 production report and the thread I posted on regulatory credits to get an idea of how to use this data. Once you get rooted in the data, a lot of the misinformation floating around out there is immediately obvious, as are the credible posts.

As to the rest of your post, I didn't think you meant GS was acting inappropriately. Regardless, Morgan Stanley got essentially the same tour a couple of weeks ago, and I don't think a lot of folks realized that.

In terms of the additional requirements to increase production past ~40k, the factory is capable of producing ~20k/shift (with 3 shifts possible) but it has been reported that there is a bottleneck in battery production (anecdotally, and not 100% confirmed). Under that scenario, much of the additional CapEx is required to beef up battery production, but some large portion is also required to get the tooling and processes in place for the Model X (regardless of whether they go beyond 40k).

In both cases, the numbers involved are in the range reported, and neither is obviously much of a barrier for Tesla. But the existing production line is fundamentally capable of ~60k+ units/year with just minor tweaks.

 

[brianstorms]

Agree with CapOpp. Factory has the capacity for pumping out many more Model S's per year.

However, seems to me Tesla also needs to get a dozen? two dozen? more SuperChargers up and running and highly visible at strategic spots across the country before the company can flood the US with 20k (let alone 40k) more cars on top of the 15-20k that they've already let on they're pumping out this year.