RobStark
Well-Known Member
GTAT is a reminder how risky a B2B operation that has basically one product and is betting the farm on one large customer can be.
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GTAT is a reminder how risky a B2B operation that has basically one product and is betting the farm on one large customer can be.
Like when I told you GTAT was a 'sure thing'?
Lump and I are joking a bit....BUT...he is absolutely right. We try to share info and opinions here but you need to be careful with your hard earned money.
If you read something here....research it...do your own DD before investing
It depends on what happens next.
If the 100 kwh pack and/or autopilot 2.0 hardware is announced shortly, then it is not likely at all demand is slowing. If they're transitioning into a higher production run rate, then it's also not likely demand is slowing. A short burst of orders such as this will help ensure that production is filled including cancellations/in-production feature changes.
If neither is announced in the near term, then this could potentially be correct as sluggish sales.
My point is that depreciation (in a general meaning of the word, as a decrease or loss in value, because of age, wear, or market conditions) of the demo cars is part of SG&A. The logical way to account for this when the demo car sold is to record full price of the car (as listed on the ordering page) as revenue, while including depreciation as a selling expense in SG&A. Hence variations in quantity of demo cars sold would cause the corresponding variations in SG&A, but will not cause a change in revenue, nor gross margin.
I disagree with your conclusion as data do not support it.
Q4 2015 shareholder letter: "As expected, Model S average transaction price declined by about 2% due to vehicle and option mix."
Q1 2016 shareholder letter: "Model S average prices improved 1.4% sequentially, as price increases and higher option take rates offset a slight mix shift to less expensive Model S variants."
Based on the above variations in revenue and ASP were driven by vehicle and option mix, not the depreciation on demo cars.
So even if you believe that in Q4 Tesla delivered 3,363 cars more that it produced (17,400 vs 14,037) due to selling out demo cars, it did not affect the revenue, which actually confirms my understanding of how depreciation of demo cars is accounted for. My opinion, which I posted contemporaneously, is that Tesla managed to deliver 3,363 cars more than it produced by emptying the delivery pipeline, batching production in a way to deliver cars that were in transit at the end of Q3, and then delivering virtually all cars that were produced in Q4 during the Q4. This is evidenced by the most lopsided distribution of deliveries between October, November and December.
Well, the context of the discussion @Fallenone commented on was whether the on-line orders alone represent demand for Tesla cars, or demand is represented by the on-line orders AND sales of the demo cars. My point was that sales of demo cars is going on since the time Model S went on sale, and therefore the "hit" is there every quarter, and is part of SG&A. In the past couple of quarters Tesla had pretty good handle on their SG&A, meeting their guidance. That is why I object to the way Fallenone represented sales of demo cars as producing unexpected "hit" on margins.
Aside from the practical discussion above, it is obvious that as far as sensitivity analysis goes, increased expense of the aggregate depreciation of demo cars recorded in a given quarter will lead to the increase of SG&A and decrease of the net profit. The subject of my discussion with Fallenone, however, was not in conducting the sensitivity analysis, but analyzing practical impact of the sales of demo cars on the Q3 financials.
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racer26
Active Member
If you read the SA article, you'd understand that the 85kWh/90kWh batteries in the S/X when you consider them as a whole pack, are already at a voltage which is approximately at the limit of what a supercharger can provide. If you increase the cell-level voltage, thereby increasing the total pack voltage by the difference multiplied by the number of series groups, and don't change the configuration of the pack to have fewer series groups, then the supercharger won't be able to charge it fully.
Since its unlikely they're going to change the architecture of the pack layout from the ones they've already got, due to design limitations, it makes sense to use the 14 module 60/75 pack, but without the dummy cells, as a base for the 100 (based on higher voltage cells), instead of starting from the 16 module 85/90, which is already pushing the limits of what a supercharger can do. That way, the higher voltage is across fewer series groups, and can stay within the limits of the already deployed superchargers.
The alternative, of simply adding more cells in parallel would work, but comes at the cost of longer charge times, which are also undesirable. Its all just design tradeoffs, and I think it unlikely that slower charging or an inability to fully charge via supercharger are things that Elon would choose for the top battery, your analysis may well be different than mine. The alternative is retrofitting the superchargers to be capable of a higher voltage -- seems too early for a revamp like that.
The main part of my interest in that article is really in the evidence that suggests they're already shipping cells with a new technology, given the minimal difference in curb weight between 75kWh and older non-upgradable 60kWh models. If the gains were made by simply adding more cells of the older tech, then it should be accordingly heavier. If they were from chemistry, then it would be about the same weight since electrolytes will all have approximately similar mass, and if it has similar cost, would explain why they were able to reintroduce the 60kWh as a software limited thing without really demolishing the margin. (because the 60 would still have the same margin it always did, and its actually that the 75 ends up being good for margin to the tune of 9k.)
dennis
Model S Plaid
Can the question of battery architecture for the 60/75 be resolved by someone who has access to the diagnostic screens? Or does it require a teardown of those batteries?
The article is based on faulty premises. One is that Tesla would limit the capacity of the 90 kWh pack based on the max voltage of the superchargers. Tesla would just limit the charging level to 80% at superchargers, while letting people charge to 100% at home. Everyone would be very happy to have 105 kWh available, for the same price.
The charging to 0-80% (0-85 kWh) would also go very fast, as you wouldn't be getting very high in SOC where the taper is very significant. (Of course, this isn't observed on the 90 kWh packs, as there is no hidden capacity.)
Adding more cells in parallell would also help charging time. That pack would accept higher currents for a longer time.
The expected difference in weight is around 80 lb. With a year or more seperating the different versions, there's no telling what weight savings have been implemented by Tesla. The difference in expected weight isn't big enough to detemine that cells haven't been added. I would be *extremely* surprised if the jump from 60 to 70 isn't due to an increased number of cells. The margin hit is minimal because Tesla has a fairly low cost per kWh.
This author seems to ignore a major premise of the merger, that being acquired by tesla will allow solarcity to better transition to a lower cost model of customer acquisition (tesla stores) and of installs (helping customers self finance) and then benefits on consumer side by integrating the whole experience and making it simple and easy for the customer.
Seems like they're really pulling out all the stops for quarter end. Doc fee waiver, 2 year option, 60kwh version, website including demo vehicles available now.
I can't think of many other ST leavers they can pull before QE to increase demand. Advertising etc. would have too long a lead time. Hopefully they want to blitz this quarter and exceed guidance rather than just scrape over the line.
ev-enthusiast
Active Member
Looks like Model X was not delivered in the European markets in substantial numbers till end of July. European Model X deliveries from the European waiting list will soon add to global deliveries.
The software limited 60kWh option was released last quarter, so IMO it does not qualify as "pulling out all stops for quarter end", unless you did not mean this quarter end.
Hogfighter
Professional Lurker
Seeing how SCTY has fallen to about 15% discount to the TSLA offer, the market believes that there's a good possibility that the deal won't go through. My personal belief is that it will, or SCTY wouldn't have made the personnel changes that they've done.
I also think it's highly likely that the SCTY deal will go through. Both companies seem very committed and big institutional shareholders have sent positive signs. But I think that it is not the share price, but the share conversion ratio of 0.11 TSLA shares per SCTY share that was decided in the pending deal. So the current discount is quite a bit lower 15%. Dividing the current SCTY share price of $23 by 0.11 I get an equivalent TSLA price of $209, which is a more modest discount of 6.2% from the current TSLA price. Still could be worth selling a fraction of your TSLA shares and buying SCTY, though, if you are highly confident the deal will go through as agreed. I'd be really interested to hear people's thought on this.
andrerodpt
Member
Interesting
July Data Suggests Increasing Demand for Electric Vehicles in the US - Market Realist
I'm wondering the spin this will get from the FUD industries.
July Data Suggests Increasing Demand for Electric Vehicles in the US - Market Realist
I'm wondering the spin this will get from the FUD industries.
JRP3
Hyperactive Member
Indeed, and you've covered most of them. I'd add that I'm also not sure that the current superchargers are voltage limited the way Randy assumes. I'm sure the components have more headroom for higher voltage and I'd guess Tesla could raise the max charge voltage through software to some degree if needed.
ev-enthusiast
Active Member
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