Short-Term TSLA Price Movements - 2015

[Scott Ales]

Another aspect that seems to weigh heavy on valuation is timing. Of which Tesla and Elon seem to have little regard for. It frankly doesn't bother me in the least. In most great experiences in life, should they have come a little bit or several years later I wouldn't have cared. The fact that they happened is the important part. The constant whining from everyone about having to wait TOO long is an odd concept to me. No matter if it is Wall Street or a MX buyer.

Consider these perspectives with the understanding that I am a self proclaimed contrarian:

* Your mother cooks an amazing Thanksgiving dinner but it is one hour late.
* Your child is born two days after the due date.
* Your fiance is 30 minutes late to your wedding.

Now, if your surgeon or an ambulance is late I get it!

I have always marveled at people who wait for hours in line to see a new movie. I figure, I waited 53 years, what's a few more days? I will admit to experiencing frustration waiting for the Powerwall and Model X reveal close to an hour past the scheduled time. But after watching it and a good night's sleep, I could care less the next day that they were late. We're all subjected to this crazy time worshiping ride that I would like to see tempered a bit. There is a place for punctuality in our lives, it's not relevant when you're providing non-life threatening products or services which can change the history of the world.

I think Elon get's it right to be late for the sake of the product. I'm not going to criticize him or the company for setting unrealized schedules. The loudest critics are the shorts and entrenched interests. What else can they complain about!

 

[Scott Ales]

Found an interesting fact. In researching the used marketplace of 2015 Model S cars I discovered this.

If you search all the major websites for used 2015 Tesla Model S cars you'll only find a handful cars. Now, keep in mind, Tesla is very rigid about their model years. A 2015 is a car delivered after Jan. 1st, 2015. All other manufacturers start delivering the next model year as early as March of the previous calendar year. So you really have a hard time performing a direct comparison. But we know there are thousands (does anyone know exactly how many Model S cars this year were delivered in the US?) of 2015 Model S car on the road here in the US. To have 2-4 as of this morning available in the used market is VERY telling. I also searched the Tesla CPO inventory and there are 3 2015 cars but they are all 60kw. No 90/85/70 versions. Even Vast - Search Millions of Cars, Vacation Rentals & Homes for Sale (one of the best sites to search the entire internet inventory in one place) has only 3 cars advertised as of this morning.

cars.com: 5 available
autotrader.com: 4 available
vast.com: 2 available
ebay.com: 2 available
teslamotors.com: 3 available

There are over 300 used 2015 Mercedes S-Class cars for sale used as a comparison. Understanding that the 2015 would effectively be a full year of deliveries from over a year ago. Even taking 75% of that number the comparison of 2015 Tesla to 2015 Mercedes S-Class cars available used to be purchased is 1%. On autotrader.com there are 77 2014 Mercedes S-Class CPO cars advertised. Tesla has 36 CPO 2014 cars. For general (non-CPO) used 2014 year models it is 277 Mercedes, 73 Tesla.

Does anyone have access to number of US deliveries of the 2015 Mercedes S-Class?

 

[Causalien]

Ok model Y confirmed with falcon door. I will need a transport to tide me over to 2019

 

[30seconds]

Found an interesting fact. In researching the used marketplace of 2015 Model S cars I discovered this.

If you search all the major websites for used 2015 Tesla Model S cars you'll only find a handful cars. Now, keep in mind, Tesla is very rigid about their model years. A 2015 is a car delivered after Jan. 1st, 2015. All other manufacturers start delivering the next model year as early as March of the previous calendar year. So you really have a hard time performing a direct comparison. But we know there are thousands (does anyone know exactly how many Model S cars this year were delivered in the US?) of 2015 Model S car on the road here in the US. To have 2-4 as of this morning available in the used market is VERY telling. I also searched the Tesla CPO inventory and there are 3 2015 cars but they are all 60kw. No 90/85/70 versions. Even Vast - Search Millions of Cars, Vacation Rentals & Homes for Sale (one of the best sites to search the entire internet inventory in one place) has only 3 cars advertised as of this morning.

cars.com: 5 available
autotrader.com: 4 available
vast.com: 2 available
ebay.com: 2 available
teslamotors.com: 3 available

There are over 300 used 2015 Mercedes S-Class cars for sale used as a comparison. Understanding that the 2015 would effectively be a full year of deliveries from over a year ago. Even taking 75% of that number the comparison of 2015 Tesla to 2015 Mercedes S-Class cars available used to be purchased is 1%. On autotrader.com there are 77 2014 Mercedes S-Class CPO cars advertised. Tesla has 36 CPO 2014 cars. For general (non-CPO) used 2014 year models it is 277 Mercedes, 73 Tesla.

Does anyone have access to number of US deliveries of the 2015 Mercedes S-Class?

Looks like about 14,000 S-Class sales in the US through August. The next closest is the 7-series with just over 6,000 US Sales through August
Large Luxury Car Sales In America - August 2015 YTD - GOOD CAR BAD CAR

 

[MitchJi]

Analysts Eye Production

"We are pleased to see TSLA achieve another milestone, the launch of its highly anticipated utility vehicle, the Model X, after some months of speculation that the vehicle may be further delayed due to various 'design' concerns, including the operation of the falcon-wing rear doors," Albertine said in his Wednesday research note.

He says those concerns, for now at least, "appear overblown, though we remain cautious as it relates to ramping production of the newest TSLA vehicle as roughly 20-25% of the production process remains outsourced."

In July, Jefferies analyst Dan Dolev had said that "Model X deliveries in 3Q could be symbolic, but strong pent-up demand (2-3x Model S pre-launch) and a quick 4Q production ramp-up are far more important for Tesla's future."

He expected that at most 300 units of the new crossover SUV would roll off the assembly line in the third quarter, and looked toward "a rapid production ramp-up to 2,000 cars/week for Models S/X by year-end," leading to 5,000 Model X deliveries this year.

I needEd to lengthen my post, to make the minimum of three characters!

 

[FredTMC]

That's definitely a tall order. Unless MS production is able to ramp up quite a bit, or MX is able to ramp extremely quickly (still no sig deliver date confirmations as far as I know), we'll be at the low end or even missing that 50k for the year.



Perhaps I mis-understood something, but wasn't line 1 completely shut down, and now line 2 is all of production but it's designed to be flexible MS or MX? And that line 2 has already been successfully up and running?[/COLOR]

There are TWO body lines. For now, The original body line 1 will continue producing model S body in white. The new body line 2 will produce the model X Body In White. These two body lines will operate in parallel. They are robotic weld lines.

From here, the body in white goes to the paint shop and the both cars go into the single conveyor based Vehicle Assenbly Line. In other words, the vehicle assembly line produces both cars

 

[eloder]

There are TWO body lines. For now, The original body line 1 will continue producing model S body in white. The new body line 2 will produce the model X Body In White. These two body lines will operate in parallel. They are robotic weld lines.

From here, the body in white goes to the paint shop and the both cars go into the single conveyor based Vehicle Assenbly Line. In other words, the vehicle assembly line produces both cars

Thanks for that clarification.

 

[mdemetri]

3rd quarter deliveries announced: 11580.

A beat, but barely. Does not look good for final year guidance.

Tesla deliveries meet target in third quarter - San Jose Mercury News

 

[jhm]

Does anyone know when Model X marketing cars will arrive in stores for test drives? I think this will be a key moment for the public to get direct contact with the vehicle and be able to compare its handling with the Model S.

Right now I'm not sure I'd want to commit to purchasing a Model S until I get a chance to test drive the Model X. We've heard that Model S orders have gone up since the Model X unveiling. Apparently some fence sitters have seen enough to proceed with confidence, but I'd expect there are many more fence sitters who need to actually test drive the Model X before committing.

The other thing that is hopeful is that Model X will induce a lot of curiosity. So placing test vehicles in stores should increase foot traffic and the number of test drives. This will lead to more orders for both Models S and X. Yes, I thoroughly expect the presence of Model X test vehicles in stores to increase the order rate for Model S. The harder it is for a couple to decide between the X and the S, the more likely they will buy at least one and the more likely they'll order the one that is more immediately available and more affordable. And they may just buy the other on a few years later. So for the next 12 months, I really do expect order rates for Model S to be quite robust.

So I like to see the Model X hit the stores pretty quick.

 

[aznt1217]

3rd quarter deliveries announced: 11580.

A beat, but barely. Does not look good for final year guidance.

Tesla deliveries meet target in third quarter - San Jose Mercury News

Lol why not? Please explain... They set the guidance for a reason. It seems that their forecasting skills are better

 

[30seconds]

Lol why not? Please explain... They set the guidance for a reason. It seems that their forecasting skills are better

Because they really have to ramp delivers in Q4 to meet the 50-55k guidance. No room for error and as Elon mentioned a few months ago the timing of the X ramp could swing the yearly production by a few thousand units

 

[Cattledog]

Lol why not? Please explain... They set the guidance for a reason. It seems that their forecasting skills are better

Good question. In July they set Q3 guidance and set revamped year-end guidance to 50K-55K. They have been expecting since July to produce approximately 50% more cars in Q4 than Q2/3. That gets us to 50K. Let's hope they do it.

 

[AlMc]

Good question. In July they set Q3 guidance and set revamped year-end guidance to 50K-55K. They have been expecting since July to produce approximately 50% more cars in Q4 than Q2/3. That gets us to 50K. Let's hope they do it.

Remember: Guidance is for deliveries (not production). Not only does production have to ramp but shipping (east coast by train takes 2-3 weeks) and delivery at the SCs also has to ramp. Several moving parts here in the attainment of what...17K+ deliveries in Q4. Fingers crossed.

 

[mdemetri]

Remember: Guidance is for deliveries (not production). Not only does production have to ramp but shipping (east coast by train takes 2-3 weeks) and delivery at the SCs also has to ramp. Several moving parts here in the attainment of what...17K+ deliveries in Q4. Fingers crossed.

Plus given the fact that Elon tweeted that a couple of suppliers for the Model X will determine the speed of the Model X ramp, either these suppliers come through or Model S demand will need to be robust enough to meet ~15-16K deliveries in the quarter. Possible but far from a given.

 

[Krugerrand]

Does anyone know when Model X marketing cars will arrive in stores for test drives? I think this will be a key moment for the public to get direct contact with the vehicle and be able to compare its handling with the Model S.

Others have asked the question and the answer coming out of Tesla seems to consistently be end of this year.

 

[chickensevil]

Good points. So, this new projection for 2016 seems a slight reduction from the 2000/week projected in Q3 of 2014. I think, the current production is about 1000/week (~12,000 guidance for Q3'15). The questions are:
1) Did the shutdown last year increase capacity close to 2000/week? If so, then is there unused capacity right now, so demand and production are in steady state?
2) If the Model X ramp-up is slower, can the unused capacity (of even the reduced guidance of1600-1800/week) be used up by Model S production?

We will know next month, see what the guidance for Q4 will be. The revised guidance from Q2'15 sounds more reasonable. Tesla is managing production rate to match demand rate. I won't call this "production constrained" though

Cheers!

No the shutdown talked about in the Q3-14 ER wasn't to go straight to 2k right away. I think you are forgetting that prior to that major overhaul on the Final Assembly line they were capped at around 800 a week. While that new line allows the final Assembly room to go above 2k the entire factory wasn't ready for that level. Paint needed to play catch up, so they installed this year a paint shop able to go to 500k a year. The last major hurdle which is what has kept them at 1k a week is the Body in White line (Body Shop /BIW). The robots here were limited because they were doing more than one task per robot. While that helped give Tesla flexibility in the early days, now they need volume. Hence the new BIW line has over 600 robots on it up from like 50 I think it was.

So no, they haven't been "holding back production". They have been running as high of a rate that they could manage given the limitations in certain parts of the factory. You are only as fast as your slowest moving part.

The 2k number when it was stated was likely their early estimates on what they thought they could achieve across all the new parts of the factory after being brought online. We don't know which part is currently their bottleneck that has caused them to revise that number back to 1600-1800 but it certainly isnt some artificial " demand" hold back.

If you are going to accuse Tesla of lying, you should probably check your facts first.

 

[mmd]

No the shutdown talked about in the Q3-14 ER wasn't to go straight to 2k right away. I think you are forgetting that prior to that major overhaul on the Final Assembly line they were capped at around 800 a week. While that new line allows the final Assembly room to go above 2k the entire factory wasn't ready for that level. Paint needed to play catch up, so they installed this year a paint shop able to go to 500k a year. The last major hurdle which is what has kept them at 1k a week is the Body in White line (Body Shop /BIW). The robots here were limited because they were doing more than one task per robot. While that helped give Tesla flexibility in the early days, now they need volume. Hence the new BIW line has over 600 robots on it up from like 50 I think it was.

So no, they haven't been "holding back production". They have been running as high of a rate that they could manage given the limitations in certain parts of the factory. You are only as fast as your slowest moving part.

The 2k number when it was stated was likely their early estimates on what they thought they could achieve across all the new parts of the factory after being brought online. We don't know which part is currently their bottleneck that has caused them to revise that number back to 1600-1800 but it certainly isnt some artificial " demand" hold back.

If you are going to accuse Tesla of lying, you should probably check your facts first.

I would appreciate very much if you keep your words in check, so I am not tempted to return the favor
Now, without going into the unnecessary details of this line and that paint shop, let's just look at these two statements from Q3'14 and Q2'15 shareholder letters for a moment:

Q3 2014: "we are investing to increase production to more than 2,000 vehicles per week by the end of 2015."
Q2 2015: "Looking ahead to next year, we are highly confident of a steady state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X."

So, what happened during these 3 quarters that Tesla changed its plans? Why instead of targeting 2000/week at the beginning of 2016, new target is 1600-1800 average during 2016? Did something unforeseen happen between Q3 2014 and Q2 2015, that was not in control of the management, that now we have a reduced plan from the company? From Q3'14 statement, it seems Tesla could increase production to 2000/week if it wanted. I noticed that you provided some excuses, probably your own imagination. I don't think Tesla mentioned anything like that in Q2 2015 letter.

Yes, I didn't put it correctly. The 2000/week wasn't expected at end of Q3 of 2014. But it should be expected by end of 2015, if since Q3 2014, the company has been investing for that production target. There is no guesswork here. These are simply from the shareholder letters

BTW, every company does production management. Both under and over production are bad, IMHO. Inability to increase production as planned is a weakness too, not a strength. And the Q2'15 statement says that steady state production and demand, both, are expected at 1600-1800/week average during 2016. And that is combined S & X. So what would be the reason to increase production to 2000/week?

Now, let's say for whatever reason, the current production capacity is only at 1000/week, what Tesla produced in Q3'15. If Tesla is really going to produce 2000/week by end of 2016, will it need another shutdown during this critical Q4 period? That could be worse, IMO. Or will it stick to 1000/week?

 

[dakh]

It's pretty simple and AFAIR was explicitly mentioned in the last earnings call. Max production capacity is 2K but any snags or delays mean they're making less than that. And so they guided for what they will realistically achieve, vs. the "spec" they were telling about before.

 

[sundaymorning]

I would appreciate very much if you keep your words in check, so I am not tempted to return the favor
Now, without going into the unnecessary details of this line and that paint shop, let's just look at these two statements from Q3'14 and Q2'15 shareholder letters for a moment:

Q3 2014: "we are investing to increase production to more than 2,000 vehicles per week by the end of 2015."
Q2 2015: "Looking ahead to next year, we are highly confident of a steady state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X."

So, what happened during these 3 quarters that Tesla changed its plans? Why instead of targeting 2000/week at the beginning of 2016, new target is 1600-1800 average during 2016? Did something unforeseen happen between Q3 2014 and Q2 2015, that was not in control of the management, that now we have a reduced plan from the company? From Q3'14 statement, it seems Tesla could increase production to 2000/week if it wanted. I noticed that you provided some excuses, probably your own imagination. I don't think Tesla mentioned anything like that in Q2 2015 letter.

Yes, I didn't put it correctly. The 2000/week wasn't expected at end of Q3 of 2014. But it should be expected by end of 2016, if since Q3 2014, the company has been investing for that production target. There is no guesswork here. These are simply from the shareholder letters

BTW, every company does production management. Both under and over production are bad, IMHO. Inability to increase production as planned is a weakness too, not a strength. And the Q2'15 statement says that steady state production and demand, both, are expected at 1600-1800/week average during 2016. And that is combined S & X. So what would be the reason to increase production to 2000/week?

Now, let's say for whatever reason, the current production capacity is only at 1000/week, what Tesla produced in Q3'15. If Tesla is really going to produce 2000/week by end of 2016, will it need another shutdown during this critical Q4 period? That could be worse, IMO. Or will it stick to 1000/week?

I am with Chicken on this one, check your facts. The production curve isn't linear but an "S" curve... In regards to guiding down from 2,000, a good start would be dig deeper into Q3 CC where Elon speaks about the difficulty of X being the worlds most complicated SUV to produce. Otherwise, we're just cherry picking data and blowing up smoke.

 

[chickensevil]

I would appreciate very much if you keep your words in check, so I am not tempted to return the favor
Now, without going into the unnecessary details of this line and that paint shop, let's just look at these two statements from Q3'14 and Q2'15 shareholder letters for a moment:

Q3 2014: "we are investing to increase production to more than 2,000 vehicles per week by the end of 2015."
Q2 2015: "Looking ahead to next year, we are highly confident of a steady state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X."

So, what happened during these 3 quarters that Tesla changed its plans? Why instead of targeting 2000/week at the beginning of 2016, new target is 1600-1800 average during 2016? Did something unforeseen happen between Q3 2014 and Q2 2015, that was not in control of the management, that now we have a reduced plan from the company? From Q3'14 statement, it seems Tesla could increase production to 2000/week if it wanted. I noticed that you provided some excuses, probably your own imagination. I don't think Tesla mentioned anything like that in Q2 2015 letter.

Yes, I didn't put it correctly. The 2000/week wasn't expected at end of Q3 of 2014. But it should be expected by end of 2015, if since Q3 2014, the company has been investing for that production target. There is no guesswork here. These are simply from the shareholder letters

BTW, every company does production management. Both under and over production are bad, IMHO. Inability to increase production as planned is a weakness too, not a strength. And the Q2'15 statement says that steady state production and demand, both, are expected at 1600-1800/week average during 2016. And that is combined S & X. So what would be the reason to increase production to 2000/week?

Now, let's say for whatever reason, the current production capacity is only at 1000/week, what Tesla produced in Q3'15. If Tesla is really going to produce 2000/week by end of 2016, will it need another shutdown during this critical Q4 period? That could be worse, IMO. Or will it stick to 1000/week?

To add to what the others have stated, your initial comments were directly alleging that Tesla has been purposefully low balling production since Q4-14. That was primarily what I was complaining about in my post and you ceded that stance in your response, so thank you.

To deal with your new statements, first, no they explicitly stated they would not need an extended shutdown this time around. The one week in Q3, which is likely their normal maintenance week, is all we should see until the end of the year. (On second thought this might have been due to the power outage that happened I guess I didn't expect it to be a week long) It has been stated recently in this thread as a reminder that the old BIW line would not be taken offline until line 2 was fully able to support both X and S production thereby keeping them from needing another shutdown. And the paint shop was also brought up in a way that was non impacting to the flow of the factory.

I think the other responses from sundaymorning and dakh corrected the reasons for the lower guidance of 1600-1800 average. I'm sure their goal is to handle 2k but as we have found out recently, the suppliers haven't been as cooperative with respect to providing the needed parts. That combined with the unknown of what 2016 will bring us by means of other snags it was a safe low estimate. It sounds like they are capable right now to make as many cars as possible if not for supply issues with the seats and windshield. And while I'm sure it would be nice to say, just make more Model S I don't believe that to be fully feasible given they operate under JIT supply and jumping their Model S parts from 1k to 2k without notice isnt likely to go over well. Suppliers might be able to accommodate some variance in production but it would be terrible for them to have a capacity for 2k and only making 1k on average. So Tesla can't just say, give me 2000 windshields this week without making proper arrangements.

Finally regarding the overall lack of ability in the company to properly raise production quickly to meet this very unexpected demand (I'll remind you way back in the day they had only expected about 20k Model S per year globally at full saturation with a factory capacity to do 40k cars a year and the MX was to fill about 10-15k and an unreleased only concept through drawings coupe was planned to fill the remaining capacity... The MS demand by itself is already well over 50k a year)... Where was I? Yes, the ability to increase production was stated by Elon as fair criticism of the company which was said during a conference call in which he was also very adamant about demand being no issue whatsoever. So yes, if they can't hit 2k or more, and the demand is there to keep going then go ahead, complain that they are only doing 1600-1800. For shame on Tesla that they more than DOUBLED their original projections on demand because they made an awesome product(S). To me, that is a great problem to have.