Short-Term TSLA Price Movements - 2013

[Joel]

CURRENT Battery Constraint? News to me!

One thing I heard Elon say on CC is that they are CURRENTLY battery supply constrained. He said they could've made more cars in Q3 if they have more batteries supplied in Q3. I was shocked by this. He said he explained this before but I never got that impression. I interpreted the battery constraint to be a future problem not a Q3 problem. I thought there were other production constraints such as productivity and retooling in the factory but battery supply wasn't the bottleneck.

Everyone missed this. And, unlike their other suppliers, Tesla did not bring attention to it until yesterday. It would have been nice if the analysts asked more detailed questions regarding this yesterday. It's not as if Panasonic did not know Tesla was "aggressively" ramping up production on their initial 2011 agreement with Tesla. All signs point to Panasonic either dropping the ball or simply failing to live up to the 2011 contract. First Tesla looks into additional battery suppliers last month (LG, Samsung). Then Tesla and Panasonic enter into a new agreement 2 years before the initial 4 year agreement expires. And yesterday Tesla reveals they need to build a giga-factory? All signs point to the world's largest battery manufacturer's inability to adequately supply Tesla.

The agreement supplies Tesla with Panasonic’s lithium-ion battery cells to build more than 80,000 vehicles over the next four years. It guarantees the availability of enough cells in 2012 to meet Tesla’s aggressive production ramp-up and fulfillment of more than 6,000 existing Model S reservations. This supply agreement helps ensure Tesla will meet its cost and margin targets for Model S.

Panasonic Enters into Supply Agreement with Tesla Motors to Supply Automotive-Grade Battery Cells | Press Releases | Tesla Motors

 

[ckessel]

+ 1000. We are all partially to blame especially on our predictions on higher sales. Lots of analysts think we are right and have been spewing these inflated numbers. We as a group need to cool it on VIN based projections and excessively optimistic numbers. I for one want just DaveT to produce estimates on these types of figures. His numbers are conservative and well thought out.

Well, I wouldn't bag on the VIN projections that badly, though I don't know that I'd want to use them more going forward as their value has dropped significantly.

Tesla said they had a 1000 cars set aside for pipeline stuff. That's quite a bit above a number of the guesses. The cars were produced and VINs assigned. Tesla just didn't sell them.

 

[FredTMC]

Everyone missed this. And, unlike their other suppliers, Tesla did not bring attention to it until yesterday. It would have been nice if the analysts asked more detailed questions regarding this yesterday. It's not as if Panasonic did not know Tesla was "aggressively" ramping up production on their initial 2011 agreement with Tesla. All signs point to Panasonic either dropping the ball or simply failing to live up to the 2011 contract. First Tesla looks into additional battery suppliers last month (LG, Samsung). And yesterday Tesla reveals they need to build a giga-factory? All signs point to the world's largest battery manufacturer's inability to adequately supply Tesla.

The agreement supplies Tesla with Panasonic’s lithium-ion battery cells to build more than 80,000 vehicles over the next four years. It guarantees the availability of enough cells in 2012 to meet Tesla’s aggressive production ramp-up and fulfillment of more than 6,000 existing Model S reservations. This supply agreement helps ensure Tesla will meet its cost and margin targets for Model S.

Panasonic Enters into Supply Agreement with Tesla Motors to Supply Automotive-Grade Battery Cells | Press Releases | Tesla Motors

+1. Thanks for this assessment! I agree with it.

Panasonic must have dropped the ball. If Panasonic wasn't running at max capacity - 3 shifts (24/7) they should've been even if tesla needed to pay more. Cars delivered (top line) was way more important than bottom line (growth stock). Maybe Panasonic was already running at max. Finally, I can certainly understand Elon not wanting to blame Panasonic but was it really worth TSLA getting hammered? I don't think so.

 

[Right_Said_Fred]

Everyone missed this. And, unlike their other suppliers, Tesla did not bring attention to it until yesterday.

Customers in Europe were already being told last month that the availability of batteries was becoming a bottleneck in Q4. It was discussed on the 'Belgium and Netherlands'-forum. Maybe I should have shared it here, but assumed it was already known.

 

[FredTMC]

Customers in Europe were already being told last month that the availability of batteries was becoming a bottleneck in Q4. It was discussed on the 'Belgium and Netherlands'-forum. Maybe I should have shared it here, but assumed it was already known.

Thanks but this discussion wasn't about Q4. It was about the revelation that in Q3 batteries were the actual production constraint "in Q3"

 

[Convert2013]

Well, I wouldn't bag on the VIN projections that badly, though I don't know that I'd want to use them more going forward as their value has dropped significantly.

Tesla said they had a 1000 cars set aside for pipeline stuff. That's quite a bit above a number of the guesses. The cars were produced and VINs assigned. Tesla just didn't sell them.

Well it appears they produced around 6500 cars in Q3, had they only said it in so many words......

 

[maekuz]

Thanks but this discussion wasn't about Q4. It was about the revelation that in Q3 batteries were the actual production constraint "in Q3"

I think thats why the guidance for 2014 is missing - they dont know how fast Panasonic can ramp up their production of cells.

 

[Norbert]

He said he explained this before but I never got that impression.

I'm not complete sure when and where he said so, but it was mentioned several times, including, I think, in Q2's CC.

 

[ZenMan]

Could any of our great chartists please post a short term chart showing current trendline and support levels? I'm trying to buy some leaps but want to wait until the Short Sale restriction is lifted as I think we'll test the 140s and high 130s after some of them jump into a damaged story.

Thanks.

 

[MartinAustin]

I think that's why the guidance for 2014 is missing - they don't know how fast Panasonic can ramp up their production of cells.

Exactly. It is "external factors" that are controlling Tesla's fortunes at present. They can make a lot more than 5500 cars a quarter, they just can't get the batteries to run them, and they don't have a firm grasp on that roadmap (due to whatever is going on at Panasonic). That explains the recent rumours about deals with Samsung and LG, explains Elon's comments about production constraint, explains his enthusiasm for his own battery factory, and explains his knowledge of how much lithium, nickel, aluminum and so on is out there (he said "there is no shortage of the elements we need") - Tesla are looking into doing it themselves One can imagine that he has been complaining to Panasonic to get their asses in gear and produce more batteries, to no avail.

Elon said they are basically finished with the Model X design. IMO they could put it into production immediately if they wanted to. However... he said "there will be a trickle at EOY 2014 and decent production in Q2 2015" - could they be shackled from moving earlier simply due to lack of batteries?

Panasonic isn't the most stable partner - they are transitioning out of some other money-losing businesses like plasma TVs and into OLED panels which have so far been nothing except a ton of investment without a dollar of revenue yet. It is possible they held back from allocating the appropriate amount of capital into growing their battery production capacity. It's obvious that even though the agreement called for 80,000 battery packs over 4 years, Tesla's business is taking off and they want more - but Panasonic hasn't been able to deliver them.

Not providing guidance for 2014 is uncomfortable for Tesla and for investors, but is absolutely the best strategy for Tesla.

And hey, look! The stock is now into the $152's. I bet whoever bought it at $146 is happy! (and in the minority, lol)

 

[Joel]

+1. Thanks for this assessment! I agree with it.

Panasonic must have dropped the ball. If Panasonic wasn't running at max capacity - 3 shifts (24/7) they should've been even if tesla needed to pay more. Cars delivered (top line) was way more important than bottom line (growth stock). Maybe Panasonic was already running at max. Finally, I can certainly understand Elon not wanting to blame Panasonic but was it really worth TSLA getting hammered? I don't think so.

Tesla is getting hammered only in the short run (days, weeks, months?). For anyone concerned or fearful, I share this:

1) Be greedy when others are fearful and fearful when others are greedy - Warren Buffett

2) Is 500 to 1,500 cars delivered in Q3 really the difference in $6 Billion value to TSLA? In other words, if Tesla announced they delivered 7,000 cars yesterday, everyone will agree that the stock would have went 15% in the other direction, increasing Tesla Market cap by $3 Billion rather than erasing it approximately the same amount. This NON-story reminds me of two Tesla events that bummed (depressed) TSLA shareholders in the short run, but are now long forgotten.
1. - On January 13, 2012 - Peter Rawlinson and Nick Sampson leave Tesla Motors. The next day TSLA drops 20.00% due to "uncertainty whether Tesla will deliver their Model S on time." Tesla Falls After Executives Leave Before Electric Model S Debut - Bloomberg
2. - On September 25, 2012, Elon Musk revised Q4 2012 sales to 2,500 to 3,000 (from 5,000). Tesla quietly says it Tech News and Analysis This was less of a story because Tesla announced their Super Charger roll out the same day. Tesla quietly says it Tech News and Analysis

I raise those two stories to highlight that the market is irrational. I honestly do not see anything that has fundamentally changed with Tesla. Like everyone else, I would have loved to see 6,500 cars delivered in Q3 and more detail into 2014. (Unfortunately) I will add today's trading activity to this list above to demonstrate whatever irrational, non-story will send TSLA down in 2014.

 

[v12 to 12v]

CURRENT Battery Constraint? News to me!

One thing I heard Elon say on CC is that they are CURRENTLY battery supply constrained. He said they could've made more cars in Q3 if they have more batteries supplied in Q3. I was shocked by this. He said he explained this before but I never got that impression. I interpreted the battery constraint to be a future problem not a Q3 problem. I thought there were other production constraints such as productivity and retooling in the factory but battery supply wasn't the bottleneck.

I heard about the battery supplier constraint issues several times. It almost sounded like they were making an appeal to the battery industry in the Q2 conference call. Maybe the mainstream press chose to not pick up that news. The Panasonic agreement was a big deal. That news was a bit drowned out by debt ceiling bluster and other noise.

 

[Cameron]

Exactly. It is "external factors" that are controlling Tesla's fortunes at present. They can make a lot more than 5500 cars a quarter, they just can't get the batteries to run them, and they don't have a firm grasp on that roadmap (due to whatever is going on at Panasonic). That explains Elon's comments about production constraint, explains his enthusiasm for his own battery factory, and explains his knowledge of how much lithium, nickel, aluminum and so on is out there (he said "there is no shortage of the elements we need") - Tesla are looking into doing it themselves One can imagine that he has been complaining to Panasonic to get their asses in gear and produce more batteries, to no avail.

Panasonic isn't the most stable partner - they are transitioning out of some other money-losing businesses like plasma TVs and into OLED panels which have so far been nothing except a ton of investment without a dollar of revenue yet. It is possible they held back from allocating the appropriate amount of capital into growing their battery production capacity. It's obvious that even though the agreement called for 80,000 battery packs over 4 years, Tesla's business is taking off and they want more - but Panasonic hasn't been able to deliver them.

Not providing guidance for 2014 is uncomfortable for Tesla and for investors, but is absolutely the best strategy for Tesla.

And hey, look! The stock is now into the $152's. I bet whoever bought it at $146 is happy! (and in the minority, lol)

Bingo! Its a shame Tesla has to suffer because other companies can't execute.

 

[FANGO]

Confidence drops, and people stop buying cars. "I've heard they catch fire..." becomes "I've heard they are tanking on the stock market", and finally "are they a real car company? or just some startup with a crazy idea that has no chance of making it? Why should I buy their cars if they are failing?".

None of this will happen.

 

[SFOTurtle]

Well, I wouldn't bag on the VIN projections that badly, though I don't know that I'd want to use them more going forward as their value has dropped significantly.

Tesla said they had a 1000 cars set aside for pipeline stuff. That's quite a bit above a number of the guesses. The cars were produced and VINs assigned. Tesla just didn't sell them.

On the 1,000 cars, is it that Tesla didn't "sell" them or just didn't deliver them to customers, i.e., they were in transit at quarter-end?

 

[FANGO]

explains his knowledge of how much lithium, nickel, aluminum and so on is out there (he said "there is no shortage of the elements we need")

This is common knowledge. I would be quite disappointed if Elon didn't know this.

All this stuff about Panasonic dropping the ball seems silly to me. Signing a new agreement to increase supply of batteries before the old one runs out is a sign of CONFIDENCE in the supplier, not the other way around. If they didn't have confidence, they would go to another supplier.

The comments about building a new battery factory with a partner (hmm, I wonder if they have a partner for cells they've been using reliably for years? Oh wait, they do), for Gen 3 production because they will then hit the total worldwide supply of batteries themselves are simply recognitions of reality, not some slight against Panasonic.

Everyone here is looking too deep for a reason because they just lost a lot of money and they want someone to blame. The reason is because the robots scanned the first line of the report, saw that deliveries only beat guidance by 10% instead of 40% like their crazy programmers heard somewhere on the internet, and then the robots sold and everyone else followed suit because the robots started it. No reason to think it won't recover once people realize the story is even better than it was yesterday, and that everything mentioned in the report was a beat. I mean, read articles about it and analyst comments. Nobody is lowering their price targets (except Wedbush...to 205), everyone is raising them. Even the people who don't get it are raising their price targets! All the lowball analysts have raised theirs today by a few dollars.

That goes for everyone saying it's Panasonic's "fault," everyone saying Elon wasn't lively enough during the presentation, etc. etc. Your reactions are all colored by the pit in your stomach from having lost so much money. Relax, have faith, and buy on the dips.

And yes, I'm saying this having "lost" approximately ~$80k today. Leaving me only ~300-400% up on the year. Boo hoo. I'll go take a drive in my awesome electric sportscar which I never ever thought I would actually have a chance to own, which beats the snot out of everything else on the road and everyone who rides in it is blown away by how incredible it is, which was paid for by profits in Tesla, to console me. You do the same, and come back tomorrow with cash and we'll get this party started again.

 

[FluxCap]

Tesla is getting hammered only in the short run (days, weeks, months?). For anyone concerned or fearful, I share this:

1) Be greedy when others are fearful and fearful when others are greedy - Warren Buffett

2) Is 500 to 1,500 cars delivered in Q3 really the difference in $6 Billion value to TSLA? In other words, if Tesla announced they delivered 7,000 cars yesterday, everyone will agree that the stock would have went 15% in the other direction, increasing Tesla Market cap by $3 Billion rather than erasing it approximately the same amount. This NON-story reminds me of two Tesla events that bummed (depressed) TSLA shareholders in the short run, but are now long forgotten.
1. - On January 13, 2012 - Peter Rawlinson and Nick Sampson leave Tesla Motors. The next day TSLA drops 20.00% due to "uncertainty whether Tesla will deliver their Model S on time." Tesla Falls After Executives Leave Before Electric Model S Debut - Bloomberg
2. - On September 25, 2012, Elon Musk revised Q4 2012 sales to 2,500 to 3,000 (from 5,000). Tesla quietly says it Tech News and Analysis This was less of a story because Tesla announced their Super Charger roll out the same day. Tesla quietly says it Tech News and Analysis

I raise those two stories to highlight that the market is irrational. I honestly do not see anything that has fundamentally changed with Tesla. Like everyone else, I would have loved to see 6,500 cars delivered in Q3 and more detail into 2014. (Unfortunately) I will add today's trading activity to this list above to demonstrate whatever irrational, non-story will send TSLA down in 2014.

Thanks for this. Good info and nice perspective (and I would tend to agree).

 

[Julian Cox]

All profoundly silly. This company just reported that its business model: Expanding exponentially on internally generated revenues in the auto industry has been validated.

EU + Asia expansion, demand expansion everywhere AND $49 million more in the bank than before.

Anecdotally as an entrepreneur and investee - shareholders were forever excited for growth tempered with impatience if that growth burned cash and heaven forfend if growth challenged cash flow and required more investment to sustain it. A business that grows on its own profits = investment nirvana.

It is unacceptable to allow the bears to blithely quote a GAAP loss. It is the worst most bogus rubbish to record a "loss" for cash in the bank that cannot and will not represent a liability of any description until 2016 (3 years from the first lease accounting sale in 2013). In 2016 all of the lease accounting sales from 2013 combined can represent a maximumum of 3.2% of revenues if Tesla only sell 100,000 MS+MX - a figure more likely to be surpassed in 2015 - and only then if all of the 2013 cars are repurchased and crushed instead of sold.

 

[brianstorms]

Is Tesla providing the battery pack for the Mercedes B Class, or just motor/drivetrain?

If the battery pack is part of the deal, then:

a. how many packs has Mercedes ordered (or: how many and when does Tesla have to deliver 'em), and
b. how many cells in one of these B Class packs (recognizing we're talking about prolly smaller packs), and
c. are those cells being supplied by Panasonic, and
d. could this be squeezing Tesla's supply for its Model S in a way we've not seen before?

I know, a long shot, but I was curious.

 

[chicagotsla]

This is common knowledge. I would be quite disappointed if Elon didn't know this.

All this stuff about Panasonic dropping the ball seems silly to me. Signing a new agreement to increase supply of batteries before the old one runs out is a sign of CONFIDENCE in the supplier, not the other way around. If they didn't have confidence, they would go to another supplier.

The comments about building a new battery factory with a partner (hmm, I wonder if they have a partner for cells they've been using reliably for years? Oh wait, they do), for Gen 3 production because they will then hit the total worldwide supply of batteries themselves are simply recognitions of reality, not some slight against Panasonic.

Everyone here is looking too deep for a reason because they just lost a lot of money and they want someone to blame. The reason is because the robots scanned the first line of the report, saw that deliveries only beat guidance by 10% instead of 40% like their crazy programmers heard somewhere on the internet, and then the robots sold and everyone else followed suit because the robots started it. No reason to think it won't recover once people realize the story is even better than it was yesterday, and that everything mentioned in the report was a beat. I mean, read articles about it and analyst comments. Nobody is lowering their price targets (except Wedbush...to 205), everyone is raising them. Even the people who don't get it are raising their price targets! All the lowball analysts have raised theirs today by a few dollars.

That goes for everyone saying it's Panasonic's "fault," everyone saying Elon wasn't lively enough during the presentation, etc. etc. Your reactions are all colored by the pit in your stomach from having lost so much money. Relax, have faith, and buy on the dips.

And yes, I'm saying this having "lost" approximately ~$80k today. Leaving me only ~300-400% up on the year. Boo hoo. I'll go take a drive in my awesome electric sportscar which I never ever thought I would actually have a chance to own, which beats the snot out of everything else on the road and everyone who rides in it is blown away by how incredible it is, which was paid for by profits in Tesla, to console me. You do the same, and come back tomorrow with cash and we'll get this party started again.

Nicely put.

I lost over $100k today, but glad to be driving this car, and I see nothing but great things ahead.

"It's only money"

#FirstWorldProblems