Short-Term TSLA Price Movements - 2016

[McMuggets]

Anyone with some lithium ion battery stocks they recommend ?

Western Lithium or Pure Energy. Pennies that can skyrocket

 

[Julian Cox]

Here's a link to the IRS rules on EV credits and their phase-out

Here's the important text:
Section 2. BACKGROUND

Section 30D provides for a credit for certain new qualified plug-in electric drive motor vehicles. The credit is equal to the sum of: (1) $2,500, plus (2) for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. Under § 30D(b)(3), that portion of the credit determined by battery capacity cannot exceed $5,000. Therefore, the total amount of the credit allowed for a vehicle is limited to $7,500. The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period. After December 31, 2009, a vehicle that qualifies for a credit under § 30 does not qualify for the credit under § 30D.

The way I see it, Tesla can maximize the number of customers receiving the $7500 credit by delivering the 200,000th vehicle intended for use in the U.S. in the beginning of a quarter, and thus gaining 3 months of full credit versus delivering the 200,000th EV towards the end of the quarter. Tesla would not have to stop production of cars, however, they merely have to adjust the number of vehicles going to U.S. customers and deliver cars to non-U.S. customers as the end of the quarter approaches, in order to avoid crossing the 200,000 threshold at the end of a quarter. Once the clock starts, Tesla would then maximize U.S. deliveries as the clock ticked.

Many thanks for that. What I am getting here in a nutshell is that there is a maximum window of 6 months to ship an unlimited quantity of vehicles within the US with a full $7500 credit upon hitting the 200,000 US delivery mark. If that mark falls let's say five days before the end of a quarter then that window would reduce to one quarter and the four remaining days of the previous quarter. Best to deliberately hit the 200,000 mark on day one of a fresh quarter.

On the unveil event Musk stated that deliveries would sweep the US before commencing in Eurole and Asia. That is the stated Model 3 ramp plan.

This information restores comprehensible internal consistency to what Musk has stated. No puzzle to explain, no April fools. No need to speculate further on a significantly earlier than late 2017 M3 ramp in account of a Tweet.

Any balance of 200,000 units left over from Modlel S and X plus up to six months worth of Model S Model X and Model 3 deliveries combined will enjoy the full credit and it is fair and reasonable to call that a very large number of Model 3 reservation holders. Musk is saying that they will make a conscious effort not to good up and turn that into three months even if the way the cookie crumbles is that they may have to stall some US deliveries (or focus MS and MX deliveries on Europe and Asia more realistically) in the preceding quarter to prevent triggering the count-down on a partial quarter to maximise the customer benefit for the subsequent two full quarters.

 

[InTheShadows]

Wonder if this means Q1 was a miss.

 

[ggies07]

Tesla (TSLA) Should Have No Problem Handling High Model 3 Production Demand - Analyst

Tesla's (TSLA) New, Cheaper Model 3 May Be Better than the Model S - Analyst

"How many days will it take for the order book to cross 200k units?"

A good question, let's find out:

 

[Julian Cox]

Wonder if this means Q1 was a miss.

No definitely it does not mean that. Just been discussing exactly what it does mean, please see my previous comment that gets to the bottom of it. (Maximising window of $7500 credit after 200,000 US sales delivered by ensuring the 200,000th unit is delivered on the first day of a new quarter).

Often presumed to drop to 50% immediately ($3750) but instead there is an extra two quarters max of $7500s with no cap on numbers delivered afterwards before it drops to 50% for another max 2 quarters before dropping to 25%

 

[sub]

Wonder if this means Q1 was a miss.

That is a stretch but I see your point, can't rule out the connection 100%.

 

[sub]

max pain for Friday currently stands at 230.

 

[MikeC]

Many thanks for that. What I am getting here in a nutshell is that there is a maximum window of 6 months to ship an unlimited quantity of vehicles within the US with a full $7500 credit upon hitting the 200,000 US delivery mark. If that mark falls let's say five days before the end of a quarter then that window would reduce to one quarter and the four remaining days of the previous quarter. Best to deliberately hit the 200,000 mark on day one of a fresh quarter.

On the unveil event Musk stated that deliveries would sweep the US before commencing in Eurole and Asia. That is the stated Model 3 ramp plan.

This information restores comprehensible internal consistency to what Musk has stated. No puzzle to explain, no April fools. No need to speculate further on a significantly earlier than late 2017 M3 ramp in account of a Tweet.

Any balance of 200,000 units left over from Modlel S and X plus up to six months worth of Model 3 production will enjoy the full credit and it is fair and reasonable to call that a very large number of Model 3 reservation holders. Musk is saying that they will make a conscious effort not to good up and turn that into three months even if the way the cookie crumbles is that they may have to stall some US deliveries (or focus MS and MX deliveries on Europe and Asia more realistically) in the preceding quarter to prevent triggering the count-down on a partial quarter to maximise the customer benefit for the subsequent two full quarters.

I think it was reasonable to expect they would do this to use the credit most efficiently - the bigger question to me is will they be stockpiling cars and withholding them from the pre-expiration quarter in order to unleash a flood of deliveries for the post-200,000 quarter to further maximize the credit.

 

[hockeythug]

I'm sure this week will produce tons of "Will Model 3 cannibalize S and X sales?" articles.

 

[Julian Cox]

That is a stretch but I see your point, can't rule out the connection 100%.

You can definitely rule out the connection. This is discussing optimising tax credit taper after delivering 200,000 units to the USA, see above.

 

[flankspeed8]

I'm sure this week will produce tons of "Will Model 3 cannibalize S and X sales?" articles.

Is this question not fair game? I am certainly concerned about the potential because the Model 3 is so nice.

 

[sub]

You can definitely rule out the connection. This is discussing optimising tax credit taper after delivering 200,000 units to the USA, see above.

Yes I agree, I've been following the conversation. My point was you couldn't completely rule it out (I'm not a mind reader), I can only be 99.9999% sure

 

[dc_h]

Long term bull, but this is toughest quarter all year.

 

[Drumheller]

Is this question not fair game? I am certainly concerned about the potential because the Model 3 is so nice.

The Model S is going to see improvements, as well. I don't know that it was official, but many people said their service advisers did state that Model S pricing would increase in April.

 

[maoing]

No, it's nonrelevant. But MISS could be a problem because TM fails to show steak again. Hope it won't happen.

Wonder if this means Q1 was a miss.

 

[hockeythug]

Is this question not fair game? I am certainly concerned about the potential because the Model 3 is so nice.

Without knowing the complete price breakdown, features, options,etc, I don't think it's fair at the moment. Cash price for a 70D is still $75k before potential tax credits and "estimated cost savings". Musk tweeted that they are estimating average selling price to be in the $42.5K range for the Model 3. Also keep in mind the X is backordered pretty much through the entire year. I also assume there will be a Model S refresh soon as well given evidence provided on here.

Edit: Also, I think the Q1 guidance of 16k will easily be beat.

 

[Papafox]

Is this question not fair game? I am certainly concerned about the potential because the Model 3 is so nice.

I truly think you are going to see a very futuristic Model 3 with side-stick controller instead of steering wheel and heads-up display instead of an instrument cluster. This design is optimized for autonomous driving and will appeal to young people. As a general rule, the people whom Model 3 appeals to the most cannot afford an S or X. Some older people won't like it and they'll stick with Model S and Model X. Some people need the extra space of S or X. Some like the styling of S or X. Then there's the migration from Model 3 long wait to near deliveries for S and semi-near for X. Of course there will be some canibalization, but many of us think the flow in the opposite direction will be even stronger.

Why is Model S slated for a cost increase soon? Answer: there's a redesign with new equipment coming, plus there's a 100kwh battery soon to become an option.

 

[EnergyMax]

I truly think you are going to see a very futuristic Model 3 with side-stick controller instead of steering wheel...

Will never happen. Never. A joy stick is horrible for quick steering correction. There is no force feedback, and it is way too easy to over correct and end up in a ditch or in head on traffic. There is a reason no race car has a joy stick. It will never work for on the ground cars.

 

[AlMc]

Wonder if this means Q1 was a miss.

That is a stretch but I see your point, can't rule out the connection 100%.

Given that we will have close to 300K reservations for the '3', I don't think Wall Street will care if the Q1 deliveries are 15-17K. If we get a dip tomorrow because it is a miss...I'm buying stock, June calls and LEAPS.

 

[Papafox]

Will never happen. Never. A joy stick is horrible for quick steering correction. There is no force feedback, and it is way too easy to over correct and end up in a ditch or in head on traffic. There is a reason no race car has a joy stick. It will never work for on the ground cars.

Certainly a computer-type joystick with limited potentiometer would be problematic, but side-stick controllers are used by the U.S. Air Force Thunderbirds for precision formation flying in F-16s, and they do quite well. I think the practicality of a side-stick controller for an automobile depends upon the quality of that controller.