Short-Term TSLA Price Movements - 2016

[dennis]

You must be new around here. You should read the ER CC transcripts say from Q1 2015 to get a better sense of Musk speak.

Maybe read Ashley Vance's book or at least read the excerpt or if not, just this one paragraph as a sample data point:

The proposed timeline for upending the aerospace industry was comically short. One of the earliest SpaceX presentations promised the first complete engine by May 2003, a second engine in June, the body of the rocket in July, and everything assembled by August. A launchpad would be ready by September, and the first launch would take place in November 2003, or about 15 months after the company started. A trip to Mars was naturally slated for somewhere near the end of the decade. “Elon has always been optimistic,” said Kevin Brogan, an early SpaceX recruit. “That’s the nice word. He can be a downright liar about when things need to get done. He will pick the most aggressive time schedule imaginable assuming everything goes right, and then accelerate it by assuming that everyone can work harder.”

That was 13 years ago. You are reasoning by [very weak] analogy.

 

[AlMc]

Did someone really publish an article citing "people familiar with the matter" claiming Samsung has inked a deal to build the chips for some future Tesla vehicles immediately after the close?

Samsung Electronics Co Ltd (SSNLF) Lands Chip Deal With Tesla Motors Inc (TSLA) | InvestorPlace

IIRC the first mention of this was premarket today

 

[tander]

8.1 will bring us highway exits and probably some minor adjustments to the radar.

It was never stopped being offered - AP 2.0 cars didn't have the software ready yet. 1.0 has continued.

Oh thanks, my understanding was the cars with the new hardware sensors etc. had zero autopilot, that makes more sense though.

 

[SBenson]

That was 13 years ago. You are reasoning by [very weak] analogy.

Already responded to that up thread

My quote was a mere data point and I picked that one as it was readily available for copy-paste. What it illustrates is a chronic Musk ailment that any follower would know.

 

[madodel]

I should stay out of the HUD discussion since I have no experience but just saw this which hints at the HUD being a real requirement, since there is no dash instrumentation in the interior photo. New Tesla Model 3 photo still leaves important questions unanswered Or maybe when you buy a future Tesla you get a chip implanted in your head that gives you all that data?

 

[SBenson]

I believe this is part of the point that posters whom are trying to be cautious about timelines are saying.
Sure, EM/TM set and reset the timeline for the X release.
IMO, *IF* EM comes out at the 4rth Q ER/CC and says there will be a delay in release of the '3' the SP of TSLA will suffer.

Of all the big investment banks, MS is the biggest bull even today (all others have lower price targets). If Jonas says there will be no model 3 delivered in 17, it's basically a foregone conclusion by the street. In other words the stock price already reflects that... I don't believe model 3 near term timeline will have any more impact.

 

[dirtyofries]

I should stay out of the HUD discussion since I have no experience but just saw this which hints at the HUD being a real requirement, since there is no dash instrumentation in the interior photo. New Tesla Model 3 photo still leaves important questions unanswered Or maybe when you buy a future Tesla you get a chip implanted in your head that gives you all that data?

To date, the mockups on the central screen included the instrumentation data.

There's no evidence of a HUD at this time - it's merely conjecture.

 

[Turing]

There's no doubt Elon is overly optimistic, but I do have reasons to believe that this time will be different:

- Quote is 13 years old and related to a topic he had no idea on yet (new rocket company). My theory is that Elon's time predictions go off the rails primarily when he's working from little information (i.e., trying to do something brand new, as opposed to giving predictions while actively working on something).
- Tesla projections aren't just interviews or off-the-cuff comments - he's the CEO of a publicly-traded company. He knows he's under massive scrutiny from investors and governmental agencies. There's a SP impact for everything he does or says. This is not the case with SpaceX so he can be as loose as he wants.
- More to my theory above, this isn't Elon trying to predict building his first Roadster. He's got experience under his belt and has built and developed a couple cars now. He knows what it takes and just how hard it is.
- Elon has publicly acknowledged the shortcomings of the X launch and has said many times that the 3 has been developed with ease of manufacturing in mind. No reason to think he's embellishing here.
- M3 is critical - make or break for the company and for the future of electric cars. He could easily take his eye off the ball with the X and not miss a beat because the S was selling more than ever anticipated. He cannot take his eye off the M3 ball under any circumstances and he has said numerous times that it is his top priority. Elon's top priorities get done, period. Maybe several months late, but not several years.
- Suppliers are on notice and Tesla is prepared to insource to whatever extent necessary. Again, experience with past failures should come into play here.

I would also add that Tesla was pretty close to guidance in 2015 (hit revised) and on track to hit lower end of guidance in 2016. And this is with going through "production hell" on the model X in first part of 2016. So at least in the last two years, it seems like Elon has given reasonable guidance and followed through.

 

[Fallenone]

On the topic of Model 3 being on time or not (by "on time" I am thinking about mass production AND delivery of more than 100k total in 2017, missing the first few in July is totally fine if tens of thousands are delivered in September), I would give more credit to the company and EM's words if we can see some mules on the street. IIRC, Model X was spotted in spring 2015 at earliest, and took more than a year to reach mass production. Tooling underwent an unexpected major change (400+ M in one single quarter) to achieve this as well. Yes I know Model 3's interior/exterior/drivetrain are all much simpler than Model X, but as @SBenson puts, where are the machines to mass produce these? In the latest letter last month, they said

"For Model 3, we have completed production line layouts and will soon begin installation of new body welding and final assembly lines. We have established a world class team of suppliers for Model 3 production equipment and components and critical long lead time equipment and components have been sourced. We are now testing vehicle systems such as chassis, the high voltage drive system, and low voltage subsystems such as vehicle controllers, HVAC, infotainment and lighting."

This basically means they don't have the critical long lead time equipment and components yet and the vehicle is not ready for test production as of a month ago. Testing the newly sourced equipment takes time. Test production takes time. Road test takes time. Refining and tweaking in all the above processes take time. In addition, there's delivery and service and other supporting functions.

For the available information we have now, I am doubtful on Model 3 can ship out more than 100k in 2017. I believe they can do 50k in 2017 but without the economy of scale, those Model 3 are not likely to make a lot if any money even with the support of cheap battery from GF, depreciation of huge equipment spread over small size of production is just too taxing (think about the negative gross margin on Model X for the first two quarters and the around 0% gross margin of TE now).

 

[dc_h]

Many people outside of USA are being priced out of market for Tesla, due to strong dolar.
Wife just said 'are you insane?' when I showed her lowest priced spec-ed S60 I was considering at $98.6CAD (glass roof, metalic colour, next gen seats, cold package S60, that's all)

If ya'll would just join our grand experiment you wouldn't have to worry about exchange rates.

 

[Krugerrand]

Many people outside of USA are being priced out of market for Tesla, due to strong dolar.
Wife just said 'are you insane?' when I showed her lowest priced spec-ed S60 I was considering at $98.6CAD (glass roof, metalic colour, next gen seats, cold package S60, that's all)

Just wait for the Gigafactory to be producing the battery packs and then you won't have to pay import duty tax on the vehicle because it will then have a high enough USA parts content. That'll save a bundle. Perhaps by then your dollar will find some strength.

 

[erthquake]

For the available information we have now, I don't believe they can achieve the 500k build plan next year they stated early this year and doubtful Model 3 can ship out more than 100k in 2017. I believe they can do 50k in 2017 but without the economy of scale, those Model 3 are not likely to make a lot if any money even with the support of cheap battery from GF, depreciation of huge equipment spread over small size of production is just too taxing (think about the negative gross margin on Model X for the first two quarters and the around 0% gross margin of TE now).

Musk said they wanted to achieve a rate of 500,000 cars per year in 2018. As long as they're producing 10,500 cars per week by the last week of December 2018, Tesla will have met their target.

 

[Fallenone]

Musk said they wanted to achieve a rate of 500,000 cars per year in 2018. As long as they're producing 10,500 cars per week by the last week of December 2018, Tesla will have met their target.

They said "build plan" and never explained what they mean exactly with that. I think it was put that way purposefully to give the ambiguity. Still, 10.5k/ week is about 5 times what they are now. No evidence supporting that run rate in a year so far.

 

[TMSE]

For the available information we have now, I don't believe they can achieve the 500k build plan next year they stated early this year and doubtful Model 3 can ship out more than 100k in 2017. I believe they can do 50k in 2017 but without the economy of scale, those Model 3 are not likely to make a lot if any money even with the support of cheap battery from GF, depreciation of huge equipment spread over small size of production is just too taxing (think about the negative gross margin on Model X for the first two quarters and the around 0% gross margin of TE now).

500k build plan is for 2018, not 2017.

For 2017, Elon's stretch goal for M3 is 100k to 150k units delivered. If Tesla manages to deliver even 30k units of M3 in 2017, expect massive upwards movement in SP.

 

[schonelucht]

I love that @Fallenone is explicit in saying what he considers on time. Delivering a few hunderd model 3's in the second half of 2017 is technically still 'on time' but that is simply not enough. My personal threshold for on time : more Model 3 deliveries than Model S or X in Q4.

Here is also the timeline I am watching for in 2017.
* December 2016 : full details on the new supercharging pricing structure for Model 3 (and new S/X as well if different)
* Last day of 2016 : AP2.0 activates and is at parity with AP1.0, minor regressions
* January 2017 : explicit confirmation that Gigafactory is producing new cells at substantial levels (run rate >1GWh per jaar)
* February 2017 : FY2016 report showing Q4 capex on factory build out as guided in their last quarterly report
* Q1 2017 : occasional sightings of a Model 3 driving in regular traffic
* March 2017 : full reveal event for the Model 3. Showing cars that are exactly what production is going to be, of course fully driveable
* Last day of Q1 2017 : AP2.0 is now at full parity with AP1.0, no regressions at all
* April 2017 : first products ship to customers with gigafactory produced cells
* Q2 2017 : frequent sightings of a Model 3 driving in regular traffic/supercharging
* Last day of Q2 2017 : AP2.0 is now substantially better than AP1.0
* June 2017 : Model 3 configurator open for first group (employees&Model S/X owners) includes pricing etc
* August 2017 : first deliveries to employees
* October 2017 : first deliveries to non-employees
* December 2017 : A Model X drives itself over a substantial distance in real traffic with a driver only present because of regulation. Drive event is live streamed to show it isn't scripted (ok that is a dream, I'll accept a sped up video with honky tonk music after the fact)
* Q4 2017 : > 30k deliveries of Model 3

If they hit that last goal, they are on time. Otherwise they are not. The points before I think are reasonable checkpoints they can't afford to miss by too much without making the end goal impossible.

 

[Krugerrand]

But nothing about "the machine that makes the machine" is simple.

I don't think you're in a position to comment about that since you've no idea what Elon has in mind for it. Or do you?

 

[erthquake]

They said "build plan" and never explained what they mean exactly with that. I think it was put that way purposefully to give the ambiguity. Still, 10.5k/ week is about 5 times what they are now. No evidence supporting that run rate in a year so far.

They have two years to achieve that run rate, not one (2018).

 

[Fallenone]

500k build plan is for 2018, not 2017.

For 2017, Elon's stretch goal for M3 is 100k to 150k units delivered. If Tesla manages to deliver even 30k units of M3 in 2017, expect massive upwards movement in SP.

Ah yes my mistake. Still, the bar for me is 100k in 2017. I'm not sure 30k units of Model 3 in 2017 would be enough. As I mentioned, with the big depreciation shared by small amount of units, these 30k Model 3 is not going to show satisfactory gross margins to support a massive upwards movement.

 

[Fallenone]

They have two years to achieve that run rate, not one (2018).

Thank you for pointing it out. I edited my original post.

 

[Oil4AsphaultOnly]

Edit: removed posting, since others have covered it already.