Tesla Temporarily Suspends Model 3 Production (Legit?)

[voip-ninja]

in those 20 pages, is there any word on whether existing cars are "heating ready," meaning that the column is wired for heat for a future wheel? Cause I would consider paying for that upgrade, whether OEM or 3rd party.

Maybe you should respond to that thread instead of starting a sub-thread within this one that tries to derail it?

 

[nvx1977]

RE : Lack of demand. That is why the auto industry sucks. Has such awful ROE numbers. Capital intensive, highly cyclical. Even with great earnings over the past few years, you haven't seen great multiple growth.

That is why I fully support Tesla. They chose a really painful industry to be in. Their aim was never to make a ton of money; it was to force innovation in a stagnant industry. And to do that, they had to become a viable business with an extremely desirable product. At this point, it is still questionable whether they have a viable business; they certainly seem to be making lots of rookie mistakes. But if they can hang on, they've got the desirable product to force the industry to improve. And the move to sustainable energy is a move in the correct direction, regardless of your political affiliation. Dino juice will run out, and no one likes breathing dirty air.

 

[drawfour]

What’s the source for 3k/w?

They barely broke 2k/w for their huge push at the end of March.

He probably read this article:
Tesla Model 3 production nearing 3,000 per week, according to online tracker

Yes, I'm talking about the Bloomberg Model 3 tracker: We Set Out to Crack Tesla's Biggest Mystery: How Many Model 3s It's Making. Last week shows ~2400/wk, and it earlier, it was showing over 3k/wk for this week, although obviously it's halted now, and they revised the numbers down. It's based on VIN registations, so they may still be registering VINs from cars that have already come off the line, and so Bloomberg is still getting some data. I'm excited to see what happens next week when the production line comes back. If we find out in a couple weeks that Bloomberg tracker is showing 3500+, then we'll know that they significantly reduced a bottleneck.

 

[bro1999]

Let's assume the shutdown is for 5 days and Tesla was somehow building 400 Model 3's a day. With a $50k sticker price (using $50k to keep things simple), that is $100 million in revenue lost for this 5 day shutdown. Not chump change for a company that is bleeding hundreds of millions of dollars a quarter these days. I guess it's possible that this temporary shutdown will lead to increased output that negates the lost week of production, but as Elon said he's decided to replace robots with more humans, I don't see how that will lead to an increase in output to the 5k/week rate he's said they will achieve by the end of June.

 

[mongo]

Let's assume the shutdown is for 5 days and Tesla was somehow building 400 Model 3's a day. With a $50k sticker price (using $50k to keep things simple), that is $100 million in revenue lost for this 5 day shutdown.

OK lets, say that. And let's say they shutdown speeds the line up 20% (80 cars per day). That gives an ROI of 25 days (same total volume of production), at which point they start being ahead in revenue compared to not shutting it down...

 

[Bad Horse]

This is always a good thing. Retooling, working out bottlenecks, increased production, and hopefully improved quality are to bed had with this. No one is going to realistically see this as a negative. It happens all over this industry and others all the time.

 

[voip-ninja]

Let's assume the shutdown is for 5 days and Tesla was somehow building 400 Model 3's a day. With a $50k sticker price (using $50k to keep things simple), that is $100 million in revenue lost for this 5 day shutdown. Not chump change for a company that is bleeding hundreds of millions of dollars a quarter these days. I guess it's possible that this temporary shutdown will lead to increased output that negates the lost week of production, but as Elon said he's decided to replace robots with more humans, I don't see how that will lead to an increase in output to the 5k/week rate he's said they will achieve by the end of June.

Some shutdowns are unavoidable... every manufacturer does them although manufacturers with more experience than Tesla usually have them scheduled at specific times of year and often to coincide with holidays that nobody wants to work anyways.

Tesla appears to be figuring this out as they go along. We also have no idea why they are doing the shutdown, this is all speculation. It could be they are introducing something to speed production rates up, it could be parts shortage, it could be anything really.

 

[voip-ninja]

It is now being circulated that Tesla have officially commented that the shutdown is in an effort to further increase production speeds so I guess there's no cause to speculate on why it shutdown if the company's PR statements are to be believed;

Tesla temporarily halts Model 3 output, again

 

[GWord]

This is always a good thing. Retooling, working out bottlenecks, increased production, and hopefully improved quality are to bed had with this. No one is going to realistically see this as a negative. It happens all over this industry and others all the time.

I think the reason this is newsworthy is that it is being reported that it does not happen by others all the time. I personally have no insight into the matter, but several news reports have said that other manufacturers deal with these issues in real time and keep the line moving.

 

[drawfour]

I guess it's possible that this temporary shutdown will lead to increased output that negates the lost week of production, but as Elon said he's decided to replace robots with more humans, I don't see how that will lead to an increase in output to the 5k/week rate he's said they will achieve by the end of June.

If Elon sees that some robots are the bottleneck, and using humans in place of those robots will reduce the bottleneck, then it will increase production. It depends on how bad the bottleneck is and how much it can be alleviated.

For example, let's say that there are frequently issues that come up with installing the doors on the frame. Something further upstream is putting together something that is technically within the tolerances of the spec but not perfect, but a robot downstream that is putting the doors on can't deal with a percentage of the items that are on the fringe of what the spec says the tolerances are. Those errors are being handled manually, and the line significantly slows down whenever one of these issues crops up. What do you do?

1. Retool the robot upstream to force it to have tighter restrictions on the output.
2. Retool the robot to compensate better for the differences from the desires and the actual result.
3. Remove the machine that is hitting the problem from the line, replace with human workers who can make adjustments on the fly.

#1 may be impossible, depending on just what that machine is or how much the tolerances are off.
#2 may be impossible, depending on just what is wrong. It's possible that updating that robot
#3 is likely the right thing to do. The humans can easily make judgement calls to determine if the tolerances are actually off by too much, or if they can compensate in some other way. This will be the human's only job, so they won't have to wait for proper safety shutdown of the robots before they can jump in to manually assess the situation and make corrections, then restart the line. Additionally, perhaps if this robot is removed from the line, the cars can be removed from the line and moved to another location nearby, where there are parallel teams working on the cars as they come in. One robot within normal tolerances may have been able to output 10 cars per hour, and it will take a group of techs 25 minutes per car. But you take each car as it comes down the line off, wheel it somewhere else, have as many crews as you need to output at the original rate, and someone else to wheel them back to the line to push them back in. Parallelize the manual process. You can't parallelize with the robots unless you have multiple robots set up at that part in the line, and buying a new robot and installing it is probably not going to work because the rest of the line might need to be moved.

 

[kengchang]

Doubt they will remove any machines by this point of production, Tesla is already doing 2K/week and machine speeds needs to be speed up.

 

[Rockster]

Let's assume the shutdown is for 5 days and Tesla was somehow building 400 Model 3's a day. With a $50k sticker price (using $50k to keep things simple), that is $100 million in revenue lost for this 5 day shutdown. Not chump change for a company that is bleeding hundreds of millions of dollars a quarter these days. I guess it's possible that this temporary shutdown will lead to increased output that negates the lost week of production, but as Elon said he's decided to replace robots with more humans, I don't see how that will lead to an increase in output to the 5k/week rate he's said they will achieve by the end of June.

Not revenue lost, just revenue displaced by a few days. It's not like the cars that would have been built these few days are going to be canceled or discarded...

 

[dsvick]

I guess it's possible that this temporary shutdown will lead to increased output that negates the lost week of production, but as Elon said he's decided to replace robots with more humans, I don't see how that will lead to an increase in output to the 5k/week rate he's said they will achieve by the end of June.

You seem to be speculating that there is no good reason for this and that it will actually decrease production....
I'm sure there are plenty of smart people there that have looked at and decided that it would help rather than hurt.

Also, just because Elon said that, doesn't mean that that is what they are doing during this shutdown.

 

[dsvick]

But you will also notice that Tesla shut down their high margin cars at the end of last quarter. Their positive margin vehicles deliveries (S & X) are down 20%

Wait, you're saying they stopped producing Model S and X at the end of March and are now down 20% from last year?
You'll need to provide a source for both of those statements.

 

[mongo]

Wait, you're saying they stopped producing Model S and X at the end of March and are now down 20% from last year?
You'll need to provide a source for both of those statements.

It is misleading, but accurate.
They stopped for a day (or two) at the end of Q1.
Deliveries in Q1 were down due to a huge push in Q4 that drained inventory (average of Q1 and Q4 lines up with Q3). (21,800 in Q1, 28,320 in Q4, 25,930 in Q3)

Q1 S/X production was 24,728 vs 22,140 for Q4 '17 or 25,418 Q1 '17.
ir.tesla.com has all the reports...

 

[C141medic]

That’s what I’m talking about:

https://techcrunch.com/2018/04/17/leaked-tesla-email-says-model-3-will-go-to-24-7-production/amp

 

[182RG]

Their aim was never to make a ton of money;

Unfortunately, the aim of a publicly traded is exactly that. Maximizing investors returns.

If their aim was never to make a ton of money, they should have stayed private.

 

[nvx1977]

Unfortunately, the aim of a publicly traded is exactly that. Maximizing investors returns.

If their aim was never to make a ton of money, they should have stayed private.

As an investor, you need to understand that Musk is not motivated by capitalism. Look at the company's mission statement. People who fail to understand this are the ones crying in disbelief that Tesla isn't bankrupt already and calling Musk a con man. Because all they can imagine are companies whose first priority is making investors rich.

Tesla may still do that, but it is a secondary objective. And that is a breath of fresh air.

 

[voip-ninja]

As an investor, you need to understand that Musk is not motivated by capitalism. Look at the company's mission statement. People who fail to understand this are the ones crying in disbelief that Tesla isn't bankrupt already and calling Musk a con man. Because all they can imagine are companies whose first priority is making investors rich.

Tesla may still do that, but it is a secondary objective. And that is a breath of fresh air.

If investors really believed that Tesla was more concerned with saving the planet than turning a profile while building EVs then they would already be bankrupt.

 

[SageBrush]

Unfortunately, the aim of a publicly traded is exactly that. Maximizing investors returns.
.

I am an investor and you most certainly do not represent my motivations accurately.