Short-Term TSLA Price Movements - 2016

[Johan]

Google self driving cars are gonna hit the road soon. It would be reasonable to expect a discussion in the upcoming conference call.

Fiat, Google Plan Partnership on Self-Driving Minivans

Disagree. Tesla's conference call is not the place or time to discuss Google cars. If they are asked about it I would expect them to be smart enough to say just that.

 

[CButterK]

I am a skeptic of the "ship internationally for 2 quarters after 199,999 to maximize credits" theory, but a large warehouse space is necessary (but not sufficient) for this theory to play out.

So, a quick math in my head says you can fill up roughly 5000 cars +/- 5% at 80% space efficiency in a 1mm SF open space. That would be the max batch you can do per flush. to move 500K units per year, you would need to batch flush twice a week out of that warehouse. I seriously doubt they can be that disciplined to make it happen this way. I think they will need bigger if they continue direct sales model and batching...

 

[Ulmo]

Unless they were already working on this deal prior to M3 reveal... If so, was it on anticipation of heavy M3 demand or something else?

How about on anticipation of merely moderate demand?

To think Tesla got Livermore warehouse space because they are reacting to excess Model X/S orders and said "gee golly ... Let's get more space!" seems silly*. Tesla has been planning Model 3 all along. At no point after Elon joined did Tesla think "wow, let's try this BMW model 3 market just for kicks!". They have planned to do this.

Having said that, the tipping points for execution might have been triggered by seemingly unrelated lines. But, I think they knew they needed the spacial capability generally, regardless of the day to day needs, because of model 3 (third generation) plans.

* One non-silly side to this is the constant need to adapt to market conditions by right sizing, and nothing I say is meant to construe right sizing as a silly exercise; I'm generalizing about long term plans. It's entirely possible that that space is used for any product line, to their benefit.

 

[CButterK]

How about moderate demand?

Yeah, It's possible they were working on 1 building in anticipation of moderate demand, and decided to take 2 buildings after the M3 reveal. There is still another 300K SF building left that they can take... Perhaps if the M3 reservation goes past 500K in the next month or so, they'll just take that one too?

 

[Fallenone]

The report on model S from Inside EV is pretty interesting. They comment on reasons why April numbers might look a little low but also they determined that there was the highest number of orders for model S that they have ever seen.

Yes, the numbers alone look pretty discouraging. Inside EVs is helping Tesla in explaining the numbers and giving good guidance. Looks like a mini ER LOL.

 

[vgrinshpun]

There are too many creative ways to write up a lease deal, and it's common to negotiate a lot of free rent up front, along with early possession, etc. So this being a new construction, I assume, all the TI(interior customization to suite tenant use) is being handled by the builder, and Tesla just gets handed over the keys when complete. My thought was that it would be really difficult for Tesla to go through sight selection, building review, write up an offer, review, negotiate, finalize offer, and draw up contract, sign contract, all within 4 weeks after the M3 reveal, regardless of lease start date. Unless they were already working on this deal prior to M3 reveal... If so, was it on anticipation of heavy M3 demand or something else?

I think that this new Lease is to address the overall needs associated with maximizing production at the Fremont factory, including Model 3 production, but may be not linked to the unexpectedly (if really) strong reservations for Modle 3.

If my speculation up-thread is true and Tesla indeed is planning to use both BIW lines for MS/MX production, as well as upgrade the overall general assembly line to match the throughput of the BIW line #1 and #2, they need to free the space for M3 production in some other way. Moving out all the warehousing and receiving seems to be the lowest hanging fruit in terms of complexity of moving it out of the Fremont to some adjacent facility. Since the final goal is to use freed space for setting up M3 manufacturing, there could be substantial lead time involved. That includes completing construction of the Leased facilities, moving warehousing and receiving operations to the newly Leased buildings, setting up M3 manufacturing processes/lines, etc.

I think that Tesla is smart to start this process early rather than late.

 

[WarpedOne]

Can you explain how if a 22kwh battery gets 81 then a 50% increase get 150 miles? Certainly less than 120. I've seen statements of 114.

That's easy... I was wrong.

I got that 150 miles from 300 km NEDC swag, which is wrong.
Yes, 114 EPA miles is closer to the truth. So, no 150 mile EV from BMW from a few years at least.

 

[MitchJi]

Tesla Leasing warehouse space in Livermore is getting some press. The article clarifies that the buildings that Tesla signed the Lease for are currently under construction.

Maybe they will be modified, before completion, to be used for something other than warehouses?

Disagree. Tesla's conference call is not the place or time to discuss Google cars. If they are asked about it I would expect them to be smart enough to say just that.

Except that Elon mentioned autonomous buses in Norway

 

[techmaven]

Yes, the numbers alone look pretty discouraging. Inside EVs is helping Tesla in explaining the numbers and giving good guidance. Looks like a mini ER LOL.

Note that their guess has Model X above Model S. The combined output of both S + X is 1,650, which is above the 1,120 for January. Given the 3rd row seat recall, this is actually a really good number for the X and the ASP on the X is far higher. Plus, we don't know the regional allocation. And they provide a lot of reasons to be encouraged by the rest of the quarter.

 

[Johan]

Maybe they will be modified, before completion, to be used for something other than warehouses?


Except that Elon mentioned autonomous buses in Norway

Not Google buses. The point is don't talk about the competition, at least not by name (I guess talking about "the competition" in general is OK) in your own CC.

 

[sub]

That's easy... I was wrong.

I got that 150 miles from 300 km NEDC swag, which is wrong.
Yes, 114 EPA miles is closer to the truth. So, no 150 mile EV from BMW from a few years at least.

Going from 80 miles to 115 miles makes no real world difference either, especially with no fast charging. I have an i3 and this increase still wouldn't allow me to drive outside my county.

 

[MitchJi]

Not Google buses. The point is don't talk about the competition, at least not by name (I guess talking about "the competition" in general is OK) in your own CC.

I was thinking that Jonas might finally get more of a reply than he has in the past.

 

[JRP3]

Except that Elon mentioned autonomous buses in Norway

I thought he said not exactly buses, or something like that. I imagined vans or similar.

 

[CButterK]

Maybe they will be modified, before completion, to be used for something other than warehouses?

That would depend on zoning. Looking at the photo, it looks like residential just west of the buildings. May not be simple to be rezoned for industrial mfg use... but anything is possible I suppose.

 

[Julian Cox]

Google self driving cars are gonna hit the road soon. It would be reasonable to expect a discussion in the upcoming conference call.

Fiat, Google Plan Partnership on Self-Driving Minivans

It's almost irrelevant to make an autonomous ICE vehicle. The real killer app is An autonomous EV.

Why? Exposing transport mileage net of amortization, net of ICE maintenance, net of Gasoline / Diesel costs, Net of manual refuelling. Ridiculously favors an Autonomous EV with a million mile lifetime range and autonomous charging.

Then there are also the legal issues to overcome. It is absolutely impossible for Fiat or Ford etc to compete using an autonomous vehicle in the presence of Frachised Dealer Laws. You get caned on sales and maintenance and you cannot centralize an OTA hailing network that can monitor maintenance status, instead you would have to have cars monitored by dealers who are looking for profit opportunities in finding fault with the fleet ideally under threat of recalling the entire fleet at all times. Totally impossible to align incentives for success.

 

[jesselivenomore]

Yes, the numbers alone look pretty discouraging. Inside EVs is helping Tesla in explaining the numbers and giving good guidance. Looks like a mini ER LOL.

That was my initial reaction to the numbers as well, especially with Q2 guidance being questionable already. But their explanation for why it was low, and especially their commentary on the new orders actually give more confidence to a decent/good Q2 guidance.

Tesla encountered the perfect storm of reasons why to not deliver/produce any Model S cars to Americans this month. A focus on the Model X orders and QC? Sure. The usual “we delayed all the international orders to try to rush out end of Q1 US sales and now we have to kick-start that production to tally those by the end of June for Q2”? Definity. A focus on selling out current “old style” inventory while prepping for US production of the newly refreshed Model S? Why not.

For April, we estimate Tesla sold 800 Model S sedans in the US…and the little voice in the back of our heads is still screaming “your too high!”

But for those concerned about things such as demand, and quarterly sales (/waves to analysts), two events in April lead to an unprecedented amount of Model S orders in April, the like of which we have never seen.

The first demand event was the launch of the Tesla Model 3 (details), the company gained a lot of national focus…and from what we can surmise from our data, an unprecedented amount of Model S orders in April. Perhaps not surprisingly (given the attention to Tesla’s upcoming 215 mile car), the highest level of 70 kWh orders since that trim levels release.

The second demand event was the aforementioned Model S refresh from the second week of April. A significant portion of the “premium” Model S owner base are, well…raging ego maniacs; and they just have to have the latest and greatest. Drive around in a Model S with the “old” nosecone, telling their neighbors and co-workers they aren’t driving the pinnacle of EV technology? But rather an “old” model? No way Jose! New orders are now in – look for an explosion of used Tesla’s hitting the market heading into Q3.

How much more demand in total? We can’t say for sure – and while we have an idea, we don’t want to guess – especially as Tesla will surely boast of it when they release earnings after the bell on Wednesday (May 4th). But it was a lot. We will update this thread when they do.

As for all those new US orders, Tesla has just started digging into producing them, and we will start to see some volume deliveries happening in the second half of May, but June’s production schedule looks so full that Tesla may actually not be able to work through them all for quarter’s end for the first time ever.

Combine this with news of the jobs fair this weekend - for manufacturing workers and some being temporary.

Tesla will be hosting a “massive” job fair to hire “hundreds” of new production workers this weekend

It paints the picture of a massive push in late May-June to fill the spike in Model S orders due to Model 3 launch enthusiasm + refresh. This would obviously be positive for Q2 guidance.

Edit:

Temporary being emphasized because it fits with the spike in orders. Less are needed for steady state.

 

[MitchJi]

The combination of big Chinese demand and local production should be significant.

A ‘flood’ of Tesla Model 3 pre-orders from China makes it the second biggest market for Tesla

While talking with the South China Morning Post, Tesla’s Vice President of Asia-Pacific Ren Yuxiang confirmed that China was the second biggest market for Model 3 reservations since its unveiling last month.
<snip>
If Tesla handles the production ramp up and market availability of the Model 3 in a similar way as it did for the Model S and X, Chinese reservation holders shouldn’t expect the vehicle until late 2018 or early 2019.

Local production could help accelerate the timeline.

Tesla President Jon McNeill was in China last week and he said that Tesla’s next vehicle factory could “very well” end up in the country. Recent reports suggest that Tesla executives visited locations in the Suzhou region and talked to potential manufacturing partners. Earlier this year, Tesla CEO Elon Musk confirmed that the automaker plans on securing a location and a local partner for a manufacturing facility in China by the middle of the 2016. An announcement should be expected relatively soon.

 

[Ulmo]

Looks like SP trying to work in optimism for the ER.

I agree with sunhelm below: there's a lot of (future earnings) good news. Just not much of the past earnings kind. The call will release both again.

 

[Fallenone]

Note that their guess has Model X above Model S. The combined output of both S + X is 1,650, which is above the 1,120 for January. Given the 3rd row seat recall, this is actually a really good number for the X and the ASP on the X is far higher. Plus, we don't know the regional allocation. And they provide a lot of reasons to be encouraged by the rest of the quarter.

Yes given the regional allocation, backseat recall, increased QC level, etc. The numbers are not that shabby. Maybe that's the reason market didn't punish SP that much when their estimates came out this morning.

But on the X, I agree ASP is far higher, but I still doubt the April ones have high gross margins. Margins can only pick up when QC is consistently good.

 

[sunhelm]

Meanwhile, on Short term TSLA Price movements, price is moving, and down! There's been a lot of good news popping on the tech journals/tweets/blogs lately in advance of tomorrow's Q1 ER call:

• possible 75D on Model S
• ongoing personal QC review by no other than EM himself
• new warehouse lease
• a job fair
• a demo on the unique advantage of the bio weapon defense mode
• lower battery pack cost of $190/kwh confirmation by Tesla exec
• increased base pricing of Powerpack
• good reviews on the X

All the above I think is meant to sustain TSLA SP level prior to ER but unfortunately, Macro decides to rear its ugly head so all that got drowned out. And now as I'm writing this, amid lighter volume, it is slowly creeping back to 240 level.