However, is the development cost already accounted for in R&D such than the only charge to the balance sheet going forward is the per piece cost? If they used outside resources for the development, the tool cost might be included in those fees and already booked. Masks would be CapEx (I think).
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
However, is the development cost already accounted for in R&D such than the only charge to the balance sheet going forward is the per piece cost? If they used outside resources for the development, the tool cost might be included in those fees and already booked. Masks would be CapEx (I think).
Fact Checking
Well-Known Member
It wasn't ripped up - their update letter and 10-K had the conservative guidance, in the Earnings Call they explained their not so conservative expectations as well. As Elon said they didn't know which one would materialize, and the subtext was clearly the various external factors Tesla was facing:
- whether the U.S. administration continues to burden Tesla's China sales with up to 65% total tariffs,
- whether the U.S. administration continues to crash the Chinese economy as part of a trade war, a major growth market for Tesla,
- whether U.S. monetary policy officials will crash the U.S. economy with high rates, hitting Tesla's home market,
- whether the NASDAQ "tech correction" of 20% would escalate into a full-blown recession or even depression in California - Tesla's most important market.
- whether Brexsh1t would crash the world economy. (Yes, it could have done that in principle: the City of London has the power to do that in terms of tens of trillions of dollars worth of derivatives.)
To quote:
see also In re Nokia Oyj (Nokia Corp.) Sec. Litig., 423 F. Supp. 2d 364, 397 (S.D.N.Y. 2006) (“In reviewing forward-looking statements, courts are instructed to consider the total mix of information and are supposed to bear in mind that disclosure requirements are not intended to attribute to investors a child-like simplicity. Rather, investors are presumed to have the ability to be able to digest varying reports and data.”)
I hope the judge will accept that precedent.
Pras
Member
Carbon emissions from fossil-fuel use hit a record last year after energy demand grew at its fastest pace in a decade, reflecting higher oil consumption in the U.S. and more coal burning in China and India.
Bloomberg - Are you a robot?
Carl Raymond
Active Member
I don’t think the poster is trying to sell cars. I think it’s trying to protect the brand. It’s a “we were here first” statement.
Every brand is suffering. None can claim to have leading edge tech the way they could a year ago. Put that claim next to a tailpipe and EV people rate it ‘funny’, in the cruelest way.
Dan Detweiler
Active Member
Fair enough.I dunno, I think we're more...
Off topic...maybe you're not a BOT after all. lol!
Dan
Fact Checking
Well-Known Member
In fact both BMW and VW have a "home advantage": it's much cheaper to transport cars from Germany to Norway than from California to Norway.
But despite that they probably can't compete, even though their cars are much cheaper. Scary how much of an up-selling effect the Model 3 appears to have.
I'm really curious how regular ICE BMW 3-series and 4-series sales in Germany will evolve in 2019 ...
shlokavica22
Member
The recent DW documentary shows that this "vacuum" is intentionally created by the media.
They try to propagate that TSLA's success is thanks to German talent. Therefore, similar talent employed by the German companies will surely catch up to TSLA fast and overtake it. It's all matter of time before they do so.
In that regard you are correct- it's similar to Nokia approach- arrogance and head in the sand gymnastics. At least that's what they try to propagate to the general public.
TSLA disrupts both the economical and the political life in Germany in a significant way. More than 1 million jobs and ~10% of the German exports are under question.
Fact Checking
Well-Known Member
I think judgement should be held off on that until the Q1 delivery report, and the Q1 financials. Tesla is under a microscope and even routine pricing adjustments get blown out of proportion.
And that's done exactly because Tesla is still also a 'story stock', and to many competitors Tesla is also a 'scary stock'. Which draws all sorts of attention.
Sigh...
you are awesome at what you do. You should consider taking your talents to the marketplace and fighting the FUD outside this super small sandbox. Feel like we aren’t getting the max utility out of your amazing thoughts as it relates to combatting the nonsenseI think judgement should be held off on that until the Q1 delivery report, and the Q1 financials. Tesla is under a microscope and even routine pricing adjustments get blown out of proportion.
And that's done exactly because Tesla is still also a 'story stock', and to many competitors Tesla is also a 'scary stock'. Which draws all sorts of attention.
Carl Raymond
Active Member
I reckon if you (@factchecking) launched a weekly YouTube segment, you would get enough patreons from TMC to get started. Go late in the week. “Now You Know” have Monday and Tuesday entertainment covered.
Guest commentary from KR please, with (humourous) market tips from AD.
I'm affraid Fact Checking would have to wear a MaSK to avoid being identified as MuSK ...
:]
:]
Do I get to have my commentary read by a robot voice, with an image of a cybernetic brain in a jar?
Pras
Member
A daily vlog of all the news about Tesla and the collective take on it would be great! Like 5-10 min daily clip.Do I get to have my commentary read by a robot voice, with an image of a cybernetic brain in a jar?
If not daily, maybe weekly. One can also invite guest speakers from other sites.
SebastianR
Active Member
Do I get to have my commentary read by a robot voice, with an image of a cybernetic brain in a jar?
I would love that - @neroden, @Fact Checking, @ReflexFunds and you @KarenRei - hosting a YouTube channel with @Papafox, @brian45011 and a few other doing appearances as we need - that would be awesome
Fact Checking
Well-Known Member
Small correction: it was in February 2019 - it was the Q4'2018 earnings conference call. (Not that it matters.)
The exact context was:
"Our next question comes from Emmanuel Rosner with Deutsche Bank."
Emmanuel Rosner:
"First, I wanted to ask you about the short-range Model 3. What are your latest thoughts in terms of timing of introduction? I think at some point, you had in mind to do it in the - maybe the first half of this year. And just to clarify, when you're sort of talking about the outlook for 2019, the number of deliveries up 50% and then the margin target for Model 3 to get to 25%, does that assume that you're introducing a lower range, the short-range Model 3 at some point during the year?"
Elon Musk:
"Well, you could call it the standard range, but it's maybe short by Tesla's standards, but it's long range by other manufacturers' standards. So - but yes, we expect to introduce the standard range Model 3 sometime - probably the middle of this year is a rough, rough guess. And we're working hard to improve our costs of production, our overhead costs, our fixed costs, just costs in general. I think this past year, while extremely difficult, has driven us to a high level of financial discipline. I think we're way smarter about how we spend money, and we're getting better with each passing week. Yes."
Emmanuel Rosner:
"And so to be clear, the - you expect to reach at some point this year - or you're targeting at some point this year 25% gross margins on Model 3, and that's despite introducing the lower-end - or just the standard range Model 3. Is that correct?"
Elon Musk:
"Yes."
Emmanuel Rosner:
"First, I wanted to ask you about the short-range Model 3. What are your latest thoughts in terms of timing of introduction? I think at some point, you had in mind to do it in the - maybe the first half of this year. And just to clarify, when you're sort of talking about the outlook for 2019, the number of deliveries up 50% and then the margin target for Model 3 to get to 25%, does that assume that you're introducing a lower range, the short-range Model 3 at some point during the year?"
Elon Musk:
"Well, you could call it the standard range, but it's maybe short by Tesla's standards, but it's long range by other manufacturers' standards. So - but yes, we expect to introduce the standard range Model 3 sometime - probably the middle of this year is a rough, rough guess. And we're working hard to improve our costs of production, our overhead costs, our fixed costs, just costs in general. I think this past year, while extremely difficult, has driven us to a high level of financial discipline. I think we're way smarter about how we spend money, and we're getting better with each passing week. Yes."
Emmanuel Rosner:
"And so to be clear, the - you expect to reach at some point this year - or you're targeting at some point this year 25% gross margins on Model 3, and that's despite introducing the lower-end - or just the standard range Model 3. Is that correct?"
Elon Musk:
"Yes."
But note that later in the same call Elon said this, when asked about the Standard Range:
Toni Sacconaghi:
"Okay. And as you think about 2019, you talked about sort of scenarios for demand and how you plan to roll out the intermediate range and then ultimately the standard range. What is - if you do have to make a trade-off on volume or profitability during the course of the year, meaning to get the volume you need or you think you can deliver, you have to go to lower margins or vice versa, where's the trade-off? Is - are units produced most important to you? Or is delivering the 25% gross margin more important? So if you have a chance to deliver 450,000 or 500,000 cars but they'll be more standard editions and gross margins will end the year at 20%, is that - are you willing to make that trade-off?"
Elon Musk:
"My guess is it ends up being sort of about [six of one half dozen of the other] where if there's a given amount of free cash flow, you sort of decide - you decide to achieve that with a smaller production or smaller volume of cars or at a higher margin or large volume cars at a smaller margin. I think we're already towards the second. We're going to make more cars at a lower margin, but I think it's more or less a flat rate."
(Emphasis mine, and note that I slightly edited the transcript, the transcriber didn't understand Elon's mumbled 'half dozen of the other' saying.)"Okay. And as you think about 2019, you talked about sort of scenarios for demand and how you plan to roll out the intermediate range and then ultimately the standard range. What is - if you do have to make a trade-off on volume or profitability during the course of the year, meaning to get the volume you need or you think you can deliver, you have to go to lower margins or vice versa, where's the trade-off? Is - are units produced most important to you? Or is delivering the 25% gross margin more important? So if you have a chance to deliver 450,000 or 500,000 cars but they'll be more standard editions and gross margins will end the year at 20%, is that - are you willing to make that trade-off?"
Elon Musk:
"My guess is it ends up being sort of about [six of one half dozen of the other] where if there's a given amount of free cash flow, you sort of decide - you decide to achieve that with a smaller production or smaller volume of cars or at a higher margin or large volume cars at a smaller margin. I think we're already towards the second. We're going to make more cars at a lower margin, but I think it's more or less a flat rate."
Here Elon already indicated that they are going towards volume in the "volume vs. margin" trade-off. In the context of the Standard Range.
Reading between the lines it was proper for Elon to pin down the SR introduction date too early, due to the Osborning dangers.
That's one possibility, here are some other possibilities:
- Elon promised a Model Y unveil for March 15 - but they realized that to credibly promise the $39k entry price and not be attacked immediately for not even meeting their $35k promise they'd have to unveil the Standard Range first.
- The Grohmann Machine was ramping up better than they expected, and it started spewing out hundreds of SR battery packs - so why no use that production capacity of a new, football field sized assembly line?
- Tesla had the Standard Range plans on hold assuming that Q1 was going to be a bad quarter. Once they saw that both the EU and the China production is going relatively smoothly and ships will probably start arriving they started making thoughts about triggering a really good end of Q1 delivery push, in the hope of a profitable Q1. The key to that is not just U.S. demand, which was understandably weaker after Q4 for various good reasons, they wanted to create a "demand pulse" that can absorb ~1 months of world-wide Model 3 production in the U.S., and in particular on the West Coast ... I.e. they had to generate a pulse of about 200% of the organic sustained demand they'd normally rely on (!).
- Announcing the Standard Range and closely followed by a low-key announcement of the Model Y were all attempts to create that 'demand pulse' to flush 100% of their production in Q1 in just 30-40% of their markets ...
- An additional reason for the 'demand pulse' at the end of Q1 was the introduction of HW3 in April and a possible minor refresh of the Model S/X. Any inventory units not sold in Q1 have a HW3 upgrade cost, probably in the ~$1,500 range: they throw away a board worth ~$500, add in a new board worth ~$500, plus labor and logistics cost.
My guess is that it was a mix of all these factors.
Also, I don't quite get the logic of being concerned about U.S. demand: we all knew Q1 could be bad seasonally and also due to the tax cliff, which is a temporary factor. Tesla doesn't have infinite demand in any of their markets, but Tesla has a large number of demand levers, and demand levers are there to be used. They still haven't pulled some major demand levers.
Anyway, we'll see the delivery numbers in a week.
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The uptick rule was originally instituted, as part of the SEC Act of 1934, in order to prevent what happened in 1929. It was effective for 78 years, until the SEC decided (I'm sure with some "consultation" with GS and others), that, even though it wasn't broken, they were going to fix it by totally removing the uptick rule. This and the implementation of the Madoff Exception, (allowing "market makers" to short stock stock without identifying or borrowing), in the early 2000's, have given the manipulators on Wall Street all they need in order to never lose.
Still it is far from genuine when in total 2018 sales Model 3 clearly beat the Leaf.
At best they can claim it USED to be top selling vehicle. It has clearly been surpassed in popularity, so it is a lie to claim that now in present tense.
RobStark
Well-Known Member
As of March 26,2019 Nissan has sold more LEAFs than Tesla has sold Model 3s. No past tense. Not a lie.
Tesla Model 3 right-hand drive spotted in California
Carl Raymond
Active Member
Yay! (On behalf of Australia).
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