Near-future quarterly financial projections

[petit_bateau]

It‘s possible the current IRA subsides in effect are leading to China LFP battery capacity being shipped to Fremont for US Model 3 production in Q1, to maximize output/profits before the battery sourcing requirements come into effect in March April (whenever they are clarified). This would presumably lead to less China output in Q1 (but increased Fremont M3 output), and would make Q1 a perfect time for further China M3 line upgrades.

Any reason why this couldn’t be happening?

- If Fremont 3 is down for a while that may reduce their LFP take in Q1. That is not what Troy is indicating, maybe he has better info.
- If Berlin ramps well, then that may increase their LFP take throughout the year. Again that is not what Troy is indicating, and again he may have better info.
- If any debottlenecking occurs in Shanghai (which to be fair we have no indication that it will) then that would increase their LFP take. Troy thinks not.

 

[heltok]

Troy and other people seem to think that Berlin will not ramp as there is no need. Which kind of implies that Giga Berlin Model Y might have been a bit redundant, that Tesla saturated the demand with their other 3 factories making Model Y. We will see if he is correct or not, but it seems like a big failure for Giga Berlin if this is the case...

 

[EVNow]

Troy and other people seem to think that Berlin will not ramp as there is no need. Which kind of implies that Giga Berlin Model Y might have been a bit redundant, that Tesla saturated the demand with their other 3 factories making Model Y. We will see if he is correct or not, but it seems like a big failure for Giga Berlin if this is the case...

Yes - this is what struck me in Troy's numbers. Very weak ramp up from some 32k to 50k over the year. This also implies, it is cheaper to make in China and ship rather than make in Germany.

I can see this being the case if we see a big recession this year. Otherwise I expect Berlin to ramp up more.

 

[petit_bateau]

Yes - this is what struck me in Troy's numbers. Very weak ramp up from some 32k to 50k over the year. This also implies, it is cheaper to make in China and ship rather than make in Germany.

I can see this being the case if we see a big recession this year. Otherwise I expect Berlin to ramp up more.

Or if there is a constraint of some sort, and the the obvious ones are:

- cell constraint (i.e. Tesla 4680 capacity is not ramping fast enough, and CATL LFP capacity is not in place to substitute for it);
- demand isn't there to absorb the additional capacity in the 3/Y system at the current prices;
- anything else ?

It may be a combination of these, not just one.

 

[EVNow]

Or if there is a constraint of some sort, and the the obvious ones are:

- cell constraint (i.e. Tesla 4680 capacity is not ramping fast enough, and CATL LFP capacity is not in place to substitute for it);
- demand isn't there to absorb the additional capacity in the 3/Y system at the current prices;
- anything else ?

It may be a combination of these, not just one.

I doubt Troy knows about (1), if it is the issue. Didn't they reduce prices in Europe too ... are the prices still too high (say compared to a similar ICE vehicle) in EU ?

 

[Dreadnought]

Giga Berlin was at 3000 cars per week already in late December. They started a 3rd shift in January and should be trending towards 4.500 / wk or approximately 45k in Q1, assuming a linear ramp of the 3rd shift throughout the quarter and 12 weeks of production. There was a report of a one-week production halt due to upgrades in first week of February and there may be more coming up.

There's still a virtually endless list of open positions for Grünheide. Adequate staffing might affect the production ramp.
Battery cells may be a constraint but it wouldn't make sense to add 50% more labor capacity if they know that there won't enough batteries available.

I'd rule out demand as the limiting factor. Tesla has demonstrated that they can and will adjust pricing as needed to balance supply and demand.

 

[EVNow]

I'd rule out demand as the limiting factor. Tesla has demonstrated that they can and will adjust pricing as needed to balance supply and demand.

Yes, I think for now - they have put a 20% GM as the line in the sand - as long as they can maintain that, they will keep increasing production and decreasing prices.

 

[ZenRockGarden]

Giga Berlin was at 3000 cars per week already in late December. They started a 3rd shift in January and should be trending towards 4.500 / wk or approximately 45k in Q1, assuming a linear ramp of the 3rd shift throughout the quarter and 12 weeks of production. There was a report of a one-week production halt due to upgrades in first week of February and there may be more coming up.

There's still a virtually endless list of open positions for Grünheide. Adequate staffing might affect the production ramp.
Battery cells may be a constraint but it wouldn't make sense to add 50% more labor capacity if they know that there won't enough batteries available.

I'd rule out demand as the limiting factor. Tesla has demonstrated that they can and will adjust pricing as needed to balance supply and demand.

I think this is an interesting and accurate perspective.

We're used to thinking of companies facing a fixed demand for their products and attempting to adjust manufacture to "meet" that demand.

Tesla may be somewhat opposite, where they face manufacturing limits but are free to adjust the demand side as desired to match. That's an unusual position to be in, due to their unprecedented efficiency and pricing power, but it's kinda true.

 

[adiggs]

I think this is an interesting and accurate perspective.

We're used to thinking of companies facing a fixed demand for their products and attempting to adjust manufacture to "meet" that demand.

Tesla may be somewhat opposite, where they face manufacturing limits but are free to adjust the demand side as desired to match. That's an unusual position to be in, due to their unprecedented efficiency and pricing power, but it's kinda true.

I believe this is the right way to think about Tesla, and has been for more than a decade.

It also fits with how my own long term investment thesis - that Tesla has so much profitable demand that there is no meaningful constraint on production. "Meaningful" here means profitable demand, and there is a WAY more demand at a bare minimal profitable level than Tesla can satisfy. Thus we get higher margins, partly as an anti-sell, that has the effect of suppressing demand down to the level that Tesla can meet, while growing output with a target of >50% per year. Maybe only hitting 40% per year, but still stupid high.


I think this breaks the brains of a lot of people in finance - there isn't a case study for this scale of demand for a product to be found in MBA school. -Maybe- the Ford Model T, but its so far back in time that apples to apples are hard to come by.

 

[Doggydogworld]

It‘s possible the current IRA subsides in effect are leading to China LFP battery capacity being shipped to Fremont for US Model 3 production in Q1, to maximize output/profits before the battery sourcing requirements come into effect in March April (whenever they are clarified). This would presumably lead to less China output in Q1 (but increased Fremont M3 output), and would make Q1 a perfect time for further China M3 line upgrades.

Any reason why this couldn’t be happening?

I don't think they can just increase Fremont Model 3 production like that. And they claim the late Feb Shanghai shutdown was planned, so they'd already have allocated those batteries.

Troy and other people seem to think that Berlin will not ramp as there is no need. Which kind of implies that Giga Berlin Model Y might have been a bit redundant, that Tesla saturated the demand with their other 3 factories making Model Y. We will see if he is correct or not, but it seems like a big failure for Giga Berlin if this is the case...

I view Europe through a 95g lens. That's what led me to predict years ago they'd slow-roll Berlin.

95g in general makes things tough on Tesla. Especially in 2020 when it kicked in hard. Tesla sales actually fell that year. Things eased up last year as the ramp flattened. They regained some EV share last year and I expect that to repeat this year and push them back above 10%. Then next year 95g starts kicking up again. I don't have a feel for how steep that ramp will be.

 

[heltok]

Yes - this is what struck me in Troy's numbers. Very weak ramp up from some 32k to 50k over the year. This also implies, it is cheaper to make in China and ship rather than make in Germany.

I can see this being the case if we see a big recession this year. Otherwise I expect Berlin to ramp up more.

https://twitter.com/x/status/1630061495504584705

 

[Thekiwi]

https://twitter.com/x/status/1630061495504584705

So already at ~50k per quarter run rate.

 

[heltok]

Troy saying
Giga Texas = 1.65 * Giga Berlin in Q1
is making less and less sense given that Berlin started with a higher production rate and now 2 months in is still at a higher production rate. I guess his theory is that 30k of those Berlin production vehicles will be undelivered as there is no demand for them. Time will tell, but soon we should be seeing parking lots filling up right?

 

[heltok]

So Tom was lying when he said demand was not a problem in China:

https://twitter.com/x/status/1631603058210746369

 

[EVNow]

So Tom was lying when he said demand was not a problem in China:

I doubt Tom would say there is a demand problem... even if there was one, contradicting what Elon was saying.

Remember Elon talks about absolute demand - not demand at current price. For Elon problem is always affordability, not demand.

Not saying Troy is right or wrong... Just that Tom's statement doesn't prove one way or other.

 

[UltradoomY]

So Tom was lying when he said demand was not a problem in China:

https://twitter.com/x/status/1631603058210746369

Don't forget that the Model 3 line was down for most of the month for "upgrades" after the Chinese New Year - So this number 30%+ over last February is pretty bang on in my opinion.

From the data we can extrapolate that they entered March - fully running - with a monthly exit rate above 92k vehicles - I doubt these will go unsold....
Good luck with the bear thesis of they don't have the demand in Europe - since the cars that left GS in January and February should start showing up in the next 2 weeks in EU..

 

[DarkandStormy]

Don't forget that the Model 3 line was down for most of the month for "upgrades" after the Chinese New Year - So this number 30%+ over last February is pretty bang on in my opinion.

From the data we can extrapolate that they entered March - fully running - with a monthly exit rate above 92k vehicles - I doubt these will go unsold....
Good luck with the bear thesis of they don't have the demand in Europe - since the cars that left GS in January and February should start showing up in the next 2 weeks in EU..

February EU numbers are down QoQ (compared to Nov '22). Thought Giga Berlin was supposed to be ramping? And record number of ships from Shanghai?

March will be great, I'm sure. Just super bizarre Tesla keeps pushing this "smoothing the delivery wave" narrative but it keeps not happening. 9k in January in EU, 23k in Feb.

 

[petit_bateau]

February EU numbers are down QoQ (compared to Nov '22). Thought Giga Berlin was supposed to be ramping? And record number of ships from Shanghai?

March will be great, I'm sure. Just super bizarre Tesla keeps pushing this "smoothing the delivery wave" narrative but it keeps not happening. 9k in January in EU, 23k in Feb.

A real shame these don't split between 3 and Y. Has anyone seen that split ?

Re the EU point it is possible that shipping is also serving other destinations in Feb. But yes, ending the wave has been said very many times.

 

[Doggydogworld]

Don't forget that the Model 3 line was down for most of the month for "upgrades" after the Chinese New Year - So this number 30%+ over last February is pretty bang on in my opinion.

Lunar New Year was in January last year vs. February this year, distorting Y/Y for the individual months. Jan+Feb wholesale was +20%. Jan+Feb production was probably flat to +5%.

Tesla insurance registrations rebounded strongly last week to 10k+. It had drifted below 6k/week. Looks like February retail will come in a bit over 32k vs. the 27-28k range it was trending toward. If that 10k+/week holds up in March sales for the full Q1 should be close to last year's 108k. Flat sales Y/Y is not wonderful, especially after a big price cut, but things looked worse just a week ago.

From the data we can extrapolate that they entered March - fully running - with a monthly exit rate above 92k vehicles - I doubt these will go unsold....

I'd be shocked by 92k. Why slow production for three consecutive months then suddenly go gangbusters?

Good luck with the bear thesis of they don't have the demand in Europe - since the cars that left GS in January and February should start showing up in the next 2 weeks in EU..

Tesla should gain share again this year in Europe thanks to flat 95g quotas. The next ramp should start next year, making things tough again.

 

[heltok]

So inventory in Europe is gonna go up a lot in Q1:

https://twitter.com/x/status/1632036662380249090