Hogfighter
Professional Lurker
Hog's Negativity Scale just hit 9. I'm backing up the truck.
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Publishes quite a bit of research for someone that is just good at "testing".
here is no reason to believe Tesla's battery effort is superior until they clearly have superior cells.
Dougherty analyst Charles Anderson assumed coverage on Tesla Motors (NASDAQ: TSLA) with a Buy rating and a price target of $500 (unchanged). Anderson said Model 3 demand is a "good problem to have."
"Clearly, the focus coming out of the Q116 report is on management's decision to pull-forward its production goal of 500K vehicles from 2020 to 2018 (Elon Musk foreshadowed this in an Apr. 1 tweet). While this aggressive schedule certainly increases the risk of nearer-term stumbles, it also significantly pulls forward the earnings power. Tesla has set a goal to produce 1MM vehicles by 2020, roughly 2x what most observers previously believed. Our view is that demand is not the question (see Model 3 reservations well above expectations); it is solving the manufacturing challenges deftly as they come. Management's rhetoric is that the Model 3 will be easier to make than the Model S or Model X," said Anderson.
"We note that pulling forward the production plan has everything to do with Model 3 reservation numbers surprising even the highest ranks within Tesla. We believe suppliers were notified only recently and management noted on the call that there is a July 2017 deadline for volume production of the Model 3. Notably, when we raised our PT to $500 in 4/1, this was based on selling 1.5MM vehicles in 2025. We are slightly nudging that up to 1.6MM (representing a 12% CAGR from 1MM in 2020). We are also assuming a $2B capital raise in our PT buildup and the related dilution. Pulling forward production plans necessitates this as management guided to FY16 capex of $2.25B vs. prior expectations of $1.5B," continued the analyst.
Anderson added, "In terms of the ongoing business, management announced plans to produce 20K Model S/X vehicles in Q216 and deliver about 17K of them. Thus in order to hit FY deliveries guidance of 80K - 90K vehicles, a significant 2H ramp is needed. For this reason, we are going to give our near-term model an extra dose of conservatism and model 80K units for the year (vs. 85K previously modeled). Additionally, we are adding $100MM+ in OpEx to our estimates in FY16 to cover the accelerated production plans. These are the primary two changes that drive our updated FY16 estimates lower."
Well, it would be relatively easy to make trucks driving fully autonomous compared to normal cars, as most is highway traffic, and already charted / learned by the current MS fleet. Basically Tesla autopilot is there already. ...The weight of such battery would not be to big an issue, as trucks can drive constant speeds most of the time, no fast acceleration needed. Using regenerative breaking completes the picture in optimizing energy usage combined with offering very powerful brakes. Even the automated charging was already shown in concept (the Snake). Costs saved for the truck driver and the diesel fuel combined with 24/7 driving will pay for a BIG battery quickly....
Hi Papafox, when Jesse and I were speculating what FCF would look like if Model X hit 7k in Q1, there won't be over 3k worth of Model X in inventory. A few hundreds maybe. Tesla rarely produce a lot more than they deliver during a quarter (thus I suspect producing 20k in Q2 and delivering 17k is low balling it). So under the hypothetical scenario of Q1 producing 7k Model X, most of them would be delivered. Granted, there will be inventory left for finished goods that are in transit, but it won't be much more than the ratio they usually carry.I think your methodology is counting costs twice if assuming 7,000 Model X vehicles could have been produced, which is the reason your number is coming out lower than what Tesla would come up with. The costs are counted twice because labor and inventory costs to make this many vehicles are already included in the Q1 numbers, and then you count the costs a second time when you multiply revenue x the GM of 20% and come up with a much lower number than sales revenue.
Do you believe it is possible that Tesla had enough parts and labor available to produce 7,000 Model X vehicles in Q1? If so, the cost for producing those 7,000 vehicles has already been accounted for in the Q1 ER. Consider, for example, if 7,000 Model Xs had been built in Q1 and only 2400 of them were delivered. The other 4600 Model Xs (7,000 - 2400) could have hypothetically been sitting completed but not delivered and the numbers would not have changed in the Q1 ER because the parts and labor costs had already been accounted for. Now, let's say on the last day of the quarter 4600 future owners showed up at the factory and paid for their cars. On that day they would have paid $119,117 x 4600 = $548 million. I believe the $548 million is the difference in Q1 we would have seen if all 7,000 Model X vehicles had been successfully built and delivered that quarter if all parts and labor necessary for producing 7,000 Model X vehicles had been accounted for in the Q1 numbers.
In reality, maybe there weren't 4600 additional windshields sitting in the factory, ready to be installed, and so some of the costs of producing 7,000 Model X vehicles were not accounted for in the Q1 ER. I'd be willing to bet, though, if you looked at labor and materials that were included in the Q1 ER, the majority of the costs to produce 7,000 Model X vehicles were there, and so I think a number closer to $548 million is closer to the potential for the quarter than a mere addition of $183 million, if the other 4600 Model Xs had somehow managed to be completed and delivered.
I'm requoting Gerard's post almost in its entirety because I think it insightful, relevant, timely......and lamentable.
The reason is that especially his Europe but also - although now in far eviscerated a fashion from formerly - we in North America already have 90% of such an infrastructure in place, ready to receive that final capstone of which Gerard writes. It even has its own name:
railroads.
Battery swap, /winkWell, it would be relatively easy to make trucks driving fully autonomous compared to normal cars, as most is highway traffic, and already charted / learned by the current MS fleet. Basically Tesla autopilot is there already. Such much larger battery would allow charging rates of 500 kW to (multiple ?) 1 MW (HyperChargers ??). Such HyperCharger will need to be able to supply high peak load for a relative short time, that will need some energy buffer (PowerPacks). Even if these chargers can only be a few 100 km apart, the charge time is easily compensated for by the 24/7 driving.
The weight of such battery would not be to big an issue, as trucks can drive constant speeds most of the time, no fast acceleration needed. Using regenerative breaking completes the picture in optimizing energy usage combined with offering very powerful brakes. Even the automated charging was already shown in concept (the Snake). Costs saved for the truck driver and the diesel fuel combined with 24/7 driving will pay for a BIG battery quickly.
The 'only' thing missing would be the (automated) production means for a crazy amount of Li-ION cells. Guess who will have these soon.
The stock keeps drifting to lows after EM's earnings call mess. Bashers like UBS and Barclays are winning the battle right now ...
It's crazy that all the "good will" of the Model 3 reveal in less than a month. Right now, we're probably going to be trading on technical indicators until we get any news whether it be Tesla Motors or Tesla Energy fronts.
When capital raise happens it'll be a major SP catalyst. I'm with Jesselivermore...I also think within weeks
When capital raise happens it'll be a major SP catalyst. I'm with Jesselivermore...I also think within weeks
I think this article is close to the truth. But Tesla isn't great at building things. They are great at building the right things and the broad strategy to make those things competitive.