Short-Term TSLA Price Movements - 2016

[Green Pete]

No. the 2170 format is not Tesla, but the cell chemistry is Tesla's.

Elon has repeatedly said patents are open for use by competitors in a hope to accelerate EV future. I would assume this applies to the 2170s as well

 

[Krugerrand]

Sorry, can't 'splain how the cow ate the cabbage any more. The Koch brothers have rescinded my stipend. Stay long and strong!

That would be because the cow didn't eat the cabbage, you just want us to think it did.

 

[brian45011]

So after "ongoing discussion" they updated the number in Q3 2016. This would appear consistent with moving Model 3 production forward two years after the reservation numbers were known. Now where does the SEC come into it?

Read the S-4 related correspondence on EDGAR.

 

[30seconds]

Neither of us are privy to Tesla's severance agreements with its departing executives. (dozens have left in the last two years). Both Ahuja and Reichow resigned but agreed to stay on until their replacements were recruited and acclimatized in their prior positions. Neither you nor I know the consideration for those arrangements.

"this is how - literally - every single company operates. " As a lawyer with years of personal experience, you don't eschew absolutes?

Clearly your experience with stock options has bascially no experience with technology companies in SV. Name one significant tech company that doesn't follow policies where options stop vesting after the employee leaves the company

 

[MikeC]

Read the S-4 related correspondence on EDGAR.

I really was hoping you'd be able to support your assertion and not redirect me to somewhere that I have no idea what you're talking about.

I also hope that someone as knowledgeable about the world of finance as you wouldn't be trolling this forum but, then again, we already know that Valuation Matters was a CFO.

 

[GBleck]

Read the S-4 related correspondence on EDGAR.

A rough date range would be useful.

 

[vgrinshpun]

There are reports about Tesla beating their delivery estimates for East Coast by 1-2+ weeks:

Model S Delivery Update

 

[larmor]

I really was hoping you'd be able to support your assertion and not redirect me to somewhere that I have no idea what you're talking about.

I also hope that someone as knowledgeable about the world of finance as you wouldn't be trolling this forum but, then again, we already know that Valuation Matters was a CFO.

This is great: above conversation is basically capitulation, since there is no further stone to overturn on tesla. Just get behind the wheel and drive, soon to be driven. Plug in at night and charge from your own home battery which you charged during the day with the sun... @Papafox thoughts?

 

[Papafox]

This is great: above conversation is basically capitulation, since there is no further stone to overturn on tesla. Just get behind the wheel and drive, soon to be driven. Plug in at night and charge from your own home battery which you charged during the day with the sun... @Papafox thoughts?

Here's a website for accessing EDGAR:
SEC.gov | Company Search Page

 

[esk8mw]

The hit will be legal fees. Insurance companies push to settle, Elon won't. I think this is a principle thing for him and they will signal to other shake downers there is no easy pickens.

Eh, not concerned about legal fees. Also, these are being incurred on an ongoing basis in the background and are not needle moving. A trial would bump up the expense a bit (like, another couple 100k at worst) but I'll be shocked if there's a trial.

The real legal expenses are with deals. I bet they spent 5-7 million on the SCTY deal just to lawyers. M&A is where law firms make all their money.

 

[esk8mw]

Neither of us are privy to Tesla's severance agreements with its departing executives. (dozens have left in the last two years). Both Ahuja and Reichow resigned but agreed to stay on until their replacements were recruited and acclimatized in their prior positions. Neither you nor I know the consideration for those arrangements.

"this is how - literally - every single company operates. " As a lawyer with years of personal experience, you don't eschew absolutes?

I very rarely use absolutes if you follow my posts. The fact that I used one here should tell you something.

Back to equity, you are now changing scenarios. We were first talking about people straight up quitting and cashing out, which doesn't happen. When people quit in the normal course they do not vest in equity and vested options are forfeited after a set period. I'm quite comfortable saying that's the case 99.99% of the time. There are narrow exceptions - (i) executive having a "Good Reason" trigger in the contract and they are "constructively fired" when the Company violates these terms and (ii) following a change in control, some executives' contracts permit them to walk away with equity (these are exceedingly rare nowadays and in any event doesn't apply to Tesla b/c there hasn't been a CIC).

What you are describing is either (i) a situation where an employee puts in his 2 weeks and the Company offers additional consideration to stay on and help the transition (in which case equity vesting or additional compensation is totally appropriate/necessary) or (ii) a termination without Cause (yes, these are often presented as resignations as a term of the deal to let the guy save face). The market data says maybe 30-40% of companies give some additional vesting in a termination without Cause to top executive officers. It's much more rare for employees below this level to receive additional vesting even when fired.

 

[MartinAustin]

Elon has repeatedly said patents are open for use by competitors in a hope to accelerate EV future. I would assume this applies to the 2170s as well

Fair point.

It's a suspicion of mine that one of the improvements to the 21-70 that Tesla made concern its one and only application... automotive battery packs. I believe the aluminium shell is thinner than that of the 18650, allowing for more battery material.

The 18650 format is a completely general battery product, meant for all applications from laptop battery packs to toys to power tools, flashlights and vaping devices. The aluminium shell protects the innards from the hazards of one-by-one handling by humans - getting dropped on the floor, endless removals and insertions, etc..

Cells going into the battery pack of a Tesla do not need to be armored in this way... they will be packed in there by machine one time, and that'll be the last time they see the light of the factory floor. For this reason I think Tesla will use a slightly thinner aluminium jacket... saving weight and cost, and increasing volumetric density.

 

[everman]

This has been discussed ad nauseum, and proven over and over to be FUD. This is the last straw for me....

(Edit - referring to brian45011's FUD. His quote doesn't show up now that he is on my list, so suddenly my post makes no sense).

Haha I know the feeling. I have a grand total of four people on my list, and almost half the posts per page are replying to posts I can't see, not to mention the original post I can't see either. Amazing that four people can dominate the thread with such FUD.

 

[Turing]

Excerpts in filings about Contractual Obligations: (The exposure to Panasonic grew from $57 million to $1.7 Billion--a factor of almost 30 times in 9 months with no explanation nor filing about details)

“4Q15 $ 549.7 million These totals represent aggregate purchase commitments with all vendors. Some of the commitments included are our agreements with Panasonic Corporation, to the extent quantities and timing of such purchases are fixed. Should we terminate the Panasonic contracts prior to purchasing certain minimum quantities, we would owe an additional $57 million under the terms of the agreement as of December 31, 2015.

1Q16 $??? “We are party to contractual obligations involving commitments to make payments to third parties, including certain debt financing arrangements and leases, primarily for stores, service centers, certain manufacturing and corporate offices. These also include, as part of our normal business practices, contracts with suppliers for purchases of certain raw materials, components, and services to facilitate adequate supply of these materials and services and capacity reservation contracts.
There have been no other material changes during the three months ended March 31, 2016, from the contractual obligations disclosed in Part II, Item 7, Contractual Obligations, of our Annual Report on Form 10-K for the year ended December 31, 2015.

2Q16 $??? [Same 1st two sentences as 1Q16]”There have been no material changes during the six months ended June 30, 2016, from the contractual obligations disclosed in Part II, Item 7, Contractual Obligations, of our Annual Report on Form 10-K for the year ended December 31, 2015.

3Q16 $3,071.5 million “In 2014, Panasonic agreed to partner with us on the Gigafactory with investments in production equipment that it will use to manufacture and supply us with battery cells. The parties had agreed to one such investment to be made by Panasonic, with additional investments to be made from time to time if and as agreed to by the parties. As of September 30, 2016, the quantities, cos t and timing of potential purchases we may make under this arrangement were subject to a number of factors, such as future vehicle demand, that could not be determined with certainty. Additionally, as of September 30, 2016, any obligation to make payments to Panasonic pursuant to this arrangement was subject to the achievement of certain technological and engineering milestones and other contingent events. Based solely on certain preliminary assumptions made at the time the arrangement was entered into in 2 014 for purposes of reference and further ongoing discussion as of September 30, 2016, the potential battery cell purchases that we may have to make from Panasonic pursuant to and during the term of the one investment agreement existing at September 30, 20 16 would equal approximately $1.7 billion in the aggregate.” ​

What exactly is your concern here? That Panasonic has produced a surplus of $1.7 worth of cells that Tesla doesn't need at this point? At Panasonic's most recent earnings report their President Kazuhiro Tsuga said they were speeding up Tesla battery investment to meet strong demand and that:
"Demand would soon exceed our production capacity if Tesla's sales go smoothly," Tsuga said, flagging the likely need for additional investment in the near future.
Panasonic cuts profit view on upfront investment in Tesla battery plant

 

[Gerardf]

One more nice article from Daniel Sparks of the Motley Fool appeared via the Nasdaq TSLA page :

For me the takeaway message is in this sentence :

If Tesla's bet on long-range EVs proves to be well timed, its big, risky investments today could serve as major scale advantages for the manufacturer that could last a decade or more, enabling the company to distance itself from competition as battery suppliers scramble to catch up with Tesla's Gigafactory output as the company takes what it learned from its first Gigafactory and potentially builds more Gigafactories at an even faster pace. After all, Musk has said the Gigafactory has been designed from the ground up to be easily replicated .

Read more: http://www.fool.com/investing/2016/12/07/why-tesla-motors-inc-needs-and-wants-competition.aspx
Let's give him some clicks on fool.com, he deserves them more than the 'fools' writing on S.A. do.

P.S. And as Mark Spiegel so gently showed us all, Tesla already has a good numbers of helpers lined up !

P.P.S. @ Brian : allocating $1.7B to secure both a 10 year lead in more than one Trillion-$ industry also securing high-volume low-price availability of a scarce resource (high energy dense Li-Ion cells) that your competition will have to fight for to get 'some'. Seems like a very smart move to me. If anything it proves how determined and convinced Tesla is that Model-3 will be on-time and a big success.

 

[Turing]

Fair point.

It's a suspicion of mine that one of the improvements to the 21-70 that Tesla made concern its one and only application... automotive battery packs. I believe the aluminium shell is thinner than that of the 18650, allowing for more battery material.

The 18650 format is a completely general battery product, meant for all applications from laptop battery packs to toys to power tools, flashlights and vaping devices. The aluminium shell protects the innards from the hazards of one-by-one handling by humans - getting dropped on the floor, endless removals and insertions, etc..

Cells going into the battery pack of a Tesla do not need to be armored in this way... they will be packed in there by machine one time, and that'll be the last time they see the light of the factory floor. For this reason I think Tesla will use a slightly thinner aluminium jacket... saving weight and cost, and increasing volumetric density.

Seems like Tesla buys enough 18650s to request similar optimized reductions in shell thickness.

 

[JBRR]

Excerpts in filings about Contractual Obligations: (The exposure to Panasonic grew from $57 million to $1.7 Billion--a factor of almost 30 times in 9 months with no explanation nor filing about details)

“4Q15 $ 549.7 million These totals represent aggregate purchase commitments with all vendors. Some of the commitments included are our agreements with Panasonic Corporation, to the extent quantities and timing of such purchases are fixed. Should we terminate the Panasonic contracts prior to purchasing certain minimum quantities, we would owe an additional $57 million under the terms of the agreement as of December 31, 2015.

1Q16 $??? “We are party to contractual obligations involving commitments to make payments to third parties, including certain debt financing arrangements and leases, primarily for stores, service centers, certain manufacturing and corporate offices. These also include, as part of our normal business practices, contracts with suppliers for purchases of certain raw materials, components, and services to facilitate adequate supply of these materials and services and capacity reservation contracts.
There have been no other material changes during the three months ended March 31, 2016, from the contractual obligations disclosed in Part II, Item 7, Contractual Obligations, of our Annual Report on Form 10-K for the year ended December 31, 2015.

2Q16 $??? [Same 1st two sentences as 1Q16]”There have been no material changes during the six months ended June 30, 2016, from the contractual obligations disclosed in Part II, Item 7, Contractual Obligations, of our Annual Report on Form 10-K for the year ended December 31, 2015.

3Q16 $3,071.5 million “In 2014, Panasonic agreed to partner with us on the Gigafactory with investments in production equipment that it will use to manufacture and supply us with battery cells. The parties had agreed to one such investment to be made by Panasonic, with additional investments to be made from time to time if and as agreed to by the parties. As of September 30, 2016, the quantities, cos t and timing of potential purchases we may make under this arrangement were subject to a number of factors, such as future vehicle demand, that could not be determined with certainty. Additionally, as of September 30, 2016, any obligation to make payments to Panasonic pursuant to this arrangement was subject to the achievement of certain technological and engineering milestones and other contingent events. Based solely on certain preliminary assumptions made at the time the arrangement was entered into in 2 014 for purposes of reference and further ongoing discussion as of September 30, 2016, the potential battery cell purchases that we may have to make from Panasonic pursuant to and during the term of the one investment agreement existing at September 30, 20 16 would equal approximately $1.7 billion in the aggregate.” ​

Any idea what caused this?

 

[-=buzz=-]

Any idea what caused this?

Could be an extension to the agreement to include Gigafactory output?

But while 1.7B$ seems big, assuming 100$/KWh and 75-100KWh/car this results in cells for 170k - 226k cars. (At GMs 145$/KWh this would be down to 117k - 156k cars.)
So just about 2 years of Model S/X production. Doesn't look like an unreasonable supply contract to me. And this is without any Model 3 capacity requirements.

 

[vgrinshpun]

Could be an extension to the agreement to include Gigafactory output?

But while 1.7B$ seems big, assuming 100$/KWh and 75-100KWh/car this results in cells for 170k - 226k cars. (At GMs 145$/KWh this would be down to 117k - 156k cars.)
So just about 2 years of Model S/X production. Doesn't look like an unreasonable supply contract to me. And this is without any Model 3 capacity requirements.

The whole ominous angle on this agreement pushed by some is quite amusing. Securing battery supply in not insignificant quantities is paramount for Tesla existence as we know it. I would be worried if there would be no such agreement and no commitment from Panasonic on the GF. Just to highlight how bizarre the whole angle is, in some not very distant past no other than esteemed lawyer and accountant John Petersen argued that Tesla is toast because it will not be able to source enough batteries for their cars.

 

[CALGARYARSENAL]

We are within striking distance of a major reversal in the chart. If you have held this long, don't do the bears a favor and sell shares. Long and strong.