Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Remus]

Stop right there. It wasn't rolled out early. Look to Musk's statement in October 2018 when releasing the MR -- he said Tesla had been planning to just sell the Long Range until they could release the Standard Range, "but we can get it done now instead of February,” and that's a quote. Implying that they were going to release the Standard Range in February. They hit the end of February. On schedule.

(Yes, I edited Tenable's quote for rhetorical purposes -- they wrote "was not rolled out early for altruism", which is technically true since it wasn't rolled out early at all, but clearly wrong in concept.)

I guess Tesla is getting so good with timing even bulls are caught off guard. Ah, who's Elon without Elon time?

 

[humbaba]

My own favorite would be a Clydesdale team's clop-clop; this also is what I would want to be sounding from without for alerting distracted pedestrians - as police cars do in....¿Vienna?

What I want are galloping coconuts

I've heard that there are phone apps to use the accelerometer, but what I want is to have it vary with linear speed (frequency) and power output (volume). Not all the time, but it would be fun for some laughs.

 

[Fact Checking]

I really want to know how it is acceptable from a privacy point of view that IMEI tower connection data is shared with a third party data analyst.

I believe in the U.S. regulations are both pretty lax, and it's anonymized. Alpha Hat is probably not really interested in the identity of specific cars, but their movements at key fixed geographical locations like the Fremont factory.

But yeah, I don't think this would work in the EU without explicit opt-in by Tesla. (Which they wouldn't give. I hope.).

Norway is at 4000 deliveries, and at their current rate, 5000 by the end of quarter seems likely. Norway as roughly 20% of deliveries in the first two months, but it has most certainly ramped up quicker than the other countries. It's for example the only one that bypasses the Zeebrugge choke point and was served by its own RoRo's. So I could see Norway grow to over 30% of European deliveries. End result, being that I expect between 15 000 and 18 000 deliveries in Europe. Plus maybe a few thousand undelivered (already have a few reports of customers with deliveries postponed in to Q2). Not impossible to have 20k cars shipped to Europe alone.

8-8 ships went to Europe and China - do you agree that this probably suggest that the production output was split roughly 50%/50%?

Not that I know off. We only have (near) real time registrations for three countries of which Norway is the most positive while The Netherlands is negative. But the latter is reporting a big wave of delivery invitations for coming week.

This makes sense from an end-of-quarter delivery sorting point of view: most distant countries first, and the closest to port countries last, which would leave Benelux for the final week. Delivery centers will very likely be strained - but fortunately both Benelux and Norway are a big chunk of Tesla's market, probably large enough to a good inventory flush cycle.

I'm also very curious what Tesla plans to avoid these strains on the delivery system in the future. Elon's email clearly suggested that this would be a 'final' such inventory flush:

"This is the biggest wave in Tesla's history, but it is primarily a function of our first delivery of mass manufactured cars on two continents simultaneously, and will not be repeated in subsequent quarters."​

But if first two months of the quarter are for international units then there's always going to be quarterly fluctuations. The working capital expense of having ~30% worth of quarterly production (30k units) would be enormous, at least to financials. So maybe Tesla is trying to build up an inventory more gradually, pushing out the point of U.S.-only production by one week in each quarter and thus basically introducing fully continuous deliveries by the end of 2019?

 

[Lycanthrope]

My friend just ordered a Mercedes. He said it was extra for any color other than black or white. Luckily for your friends, the M3 looks best in black.

Ordered a Mercedes, WTF?

 

[scaesare]

I used to be into muscle cars. I modified my 5.7l V-8 with long tube headers and free flowing exhaust, then quickly realized that I hated it. Not because the sound was too obnoxious, but because it made the car sound like it was trying really hard all the time. Then I started to value acceleration to noise ratio. P100D is the best I’ve found.

And now we have the context for your user name here

 

[Singuy]

I can tell you love your Tesla a lot, and I love mine as well. But, let’s get the facts straight at least when informing others and not be just like Tesla’s critics.

Fact is Tesla charges much more than almost all other (if not all) mainstream car brands. BMW, Audi, Merc charges between $550 and $720 for anything but black and white (see, even simple white is a “discount” that Tesla doesn’t have as an option per your argument). Infiniti and Lexus does not charge anything for different paint colors. And let’s not argue that the no-cost or cheaper cost paint options from the other brands are “built into” their car prices; that’s ridiculous. Metallic paint does not cost $1,500-$2,500 to produce. This is one area Tesla milks money.

Good. Tesla can milk all they want. Maserati also charge people over 2k for multicoats. Lambo and Ferrari charges more.

The fact is, even with the unreasonable prices Tesla charge for paint, Black is one of their least bought colors. The market have spoken and people doesn't car about their color pricing.

 

[HG Wells]

Looking at the model 3 forum it looks like many (50% or more) SR orders pick a color other than black.
Personally If I was short of funds I would have gone for SR+ and gotten black even though I am not that fond of the color.

 

[Navin]

Facts matter. Pls crowdsource a way to get the facts out beyond TMC. No, Wall Street — Tesla Has No Cash Or Liquidity Problem (And A P.S. For Elon Musk) | CleanTechnica

 

[schonelucht]

8-8 ships went to Europe and China - do you agree that this probably suggest that the production output was split roughly 50%/50%?

Yes, that kind of agrees with my method working back from Norway data.

I'm also very curious what Tesla plans to avoid these strains on the delivery system in the future. Elon's email clearly suggested that this would be a 'final' such inventory flush:

Don't believe the hype. There are no plans in place and those that are will be discarded, changed and mutilated as new circumstances present themselves. This company will never enter a steady state without a change of leadership. Look no further for evidence of this than the number of ships currently on the water. None. Zero. Zilch. Come June it's once more going to be all hands on deck for a mad dash and there will again be some kind of excuse ('we just launched SR for Europe' seems a convenient one), some kind of pat-on-the-back-sorry-you-are-incredible leaked email from Elon and then the next quarter will roll on again.

For those trigger happy to disagree : I am making not a single value statement in this post. It's just factual observation.

 

[smorgasbord]

still...not early.
(Oct 24, 2018) Elon R. Musk...

Are you really arguing that what Elon said in Oct 2018 supersedes what he said in Feb 2019?


Really?

 

[smorgasbord]

To the contrary, we saw both of those repeatedly. Did you go check over in the Model 3 forums? I did.

Now that US production has started up again, the complaints have died down, but try to get a white interior...

What I see is people complaining about SR white availability. I don't see many complaints about people not getting their LR AWD or Performance in the US. If you have links, I'd appreciate them, as a large number of complaints would indeed start to drill holes in my theory that demand for non-SRs in the US has dropped off more than would be expected simply by the tax credit pull-forward.

 

[Causalien]

I guess Tesla is getting so good with timing even bulls are caught off guard. Ah, who's Elon without Elon time?

Yeah. Store told me last September that SR is going to start getting delivered in March. So I booked my flight back for March. Got my car 1 week +1 day later. The forecasting has been spot on for 6 months now.

 

[Compton]

What I see is people complaining about SR white. I don't see many complaints about people not getting their LR AWD or Performance in the US. If you have links, I'd appreciate them, as a large number of complaints would indeed start to drill holes in my theory that demand for non-SRs in the US has dropped off more than would be expected simply by the tax credit pull-forward.

Enjoy.

 

[Fact Checking]

Look no further for evidence of this than the number of ships currently on the water. None. Zero. Zilch.

I think that's primarily because U.S. demand can absorb all their production.

Also, I predicted this inventory cycle and "zero ships on sea at the end of the quarter" outcome months ago:

Tesla can avoid or soften the "Model 3's in transit on the ocean at the end of the quarter" problem in Q1 by ordering their production smartly: by making European/Chinese Model 3's in January and February, and switching back to producing mostly for the American market in March.

This gives ships started in January and February enough time to deliver the cars, as transit time to Europe and China is only 20-25 days.

In April (first month of Q2) they'll switch back to making EU and China versions again. They'll be able to do this as long as the new order queue allows a 2:1 allocation of deliveries - which should be possible in Q1 and maybe Q2 as well.

Tesla could also "ramp up" their in-transit inventory to soften the effect, by slowing EU/China shipments in Q1 but not entirely stopping them. This way they could distribute the transit inventory buildup to over 2-3 quarters.

I.e. Tesla has a number of tools to manage the "vehicles in transit" inventory effect in Q1.

The current VIN allocation patterns support this view: earlier Q1 VIN allocations were mostly international, but the very latest batch was U.S. mostly:

Model 3 VINs​

BTW., let me attempt an early quarter VIN estimate: if we apply the simple "85%" rule to the VINs already allocated in Q1, and assume that the rest of the quarter will allocate new VINs like in Q4, then projected Q1 Model 3 production output is approximately 72k units currently, or an about 15% increase over Q4 levels.

"Carsonight" (reliable source who is regularly talking to Gigafactory workers) also reported that there were no line worker layoffs at the Gigafactory, and that they are making 6k/week Model 3 battery packs sustained, and are hiring. They are also building a new Grohmann battery model assembly line at GF1, which Carsonight guesses might be the assembly line for the new, lighter, cheaper Standard Range battery pack.

~6k/week battery packs project ~78k Model 3 production in Q1, a +25% increase over Q4.

So I think Q1 and Q2 could easily be new record quarters in every metric (especially considering that Tesla Energy is ramping up again as well), but it's more complex logistically than Q3 or Q4 was, so it's prudent for Elon to be cautious about expectations.

Finally, the removal of the 75 kWh pack and the reduction in Model S/X production is consistent with the introduction of a new 105-115 kWh battery pack: annual 18,650 output is limited to about 8 GWh, which is a reduction from 100k Units to 70k-80k units. If at the same time they increase prices of the new Performance, they'll maintain or maybe even increase S/X cash generation with little effect on revenue.

It cannot be such an unusual inventory cycle if I predicted it as the probable approach back in December and January already, right?

 

[Mader Levap]

The US system is different and has worked and continues to work just fine.

Electing president of minority votes (now 4 times in history, last two in very recent times and in favour of same party) is not "just fine" and your government does not "work and continues to work", unless you count lately routine yearly gov shutdown threat and incerasingly inept congress (less laws, less of them substantial) as "functional".

American pseudo-democracy is joke.

 

[schonelucht]

I think that's primarily because U.S. demand can absorb all their production.

The why is irrelevant, the result is the same. June is going to be a mad dash once more and the promise of Elon that it won't ever happen again is just that : an empty promise.

 

[SW2Fiddler]

Only commenting because the wording has confused others:
A tax liability of 15k (total tax owed for the year), not the amount due in one's April 15th final payment/ refund/ adjustment.

LOL. Sorry for laughing. But I honestly can’t wait for the tax credit to exit stage left already, for Tesla at year end and for LGM a bit later.

15k would provide liability sufficient to allow credit for 4 Tesla’s right now, or 2 Tesla’s and one Bolt right now, or ...even more! from Q3 thru Q4.

Also moving money from an IRA to a Roth IRA can be used to increase tax liability.

Be careful as to year.
I think (DON'T KNOW) that if you moved money today it would be on 2019 tax year.

Be careful on quarter of purchase, too. Credit’s $3750 per Tesla in H1 2019 vs. half that in H2 2019.

the $3750 still valid for this year

LOL sorry again for the chuckle! $3750 is of course valid until end of second quarter. Phases down to $1,875 for the rest of 2019.

Come On 2020!! Confusion reigns in 2019 and must constantly be reined in.

 

[Fact Checking]

The why is irrelevant, the result is the same. June is going to be a mad dash once more and the promise of Elon that it won't ever happen again is just that : an empty promise.

Not necessarily:

• Q2 will have a lot more deliveries in the U.S., induced both by seasonal pattern, by Standard Range availability, by HW3 and by possible refreshes.
  
• Q2 might see a drop-off in European and Chinese orders of the most expensive trims. I'd expect Tesla to keep that open for at least a month beyond the peak. (Or orders might explode in the European spring and summer - a happy problem to have.)
• early Q2 might thus see a slower sending of ships, and more U.S. batches in Fremont - this too spreads the delivery load.

Elon didn't say there will be no delivery rushes - just that this Q1 one will be the strongest one due to one-time factors where basically three big waves are cresting at the same moment in time.

Also, you didn't respond to this argument:

It cannot be such an unusual inventory cycle if I predicted it as the probable approach back in December and January already, right?

This Q1 pattern is basically forced upon Tesla by externalities and business realities, and it doesn't take a rocket scientist to predict their probable Q1 and Q2 inventory cycle.

The Q2 inventory cycle will probably be less sharp than the Q1 one, due to the factors above.

 

[NicoV]

performance Y is 1k higher today, haven't looked around for other changes.
makes this look even better

The Model Y Performance that I ordered last week is now 1K euro more expensive (Belgium)

 

[KSilver2000]

Apple was able to extract obscene amounts of money for computer upgrades such as SSD and RAM. iPhone storage upgrades have also been pretty expensive. This was due to the uniqueness and desirability of their products. Not sure if this is true anymore but as an Apple investor I certainly had no problem with the pricing scheme. Frankly, I didn't give a rat's ass whether a consumer thought that this was "fair" or not as long as they ponied up the money. This approach is profitable as long as the product is unique and desirable enough.

Do you think that Apple's strategy was somehow "wrong" or "stupid"? As an investor would you have preferred them to price the upgrades in direct relation to their true cost?

As an investor (in a relatively large amount; I bet much more than compared to many on these forums) of both TSLA and AAPL myself as well, I like that they’re able to charge premiums for certain things. I think some people misunderstand me. I was just stating a fact from someone’s misquote. But of course people like to hate on the person just trying to state facts that goes against people’s bias towards something.