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

[Artful Dodger]

Also why the massive VIN registrations? Really curious about that.

Possibly 3 blocks of VINs for each of N.America, EU, and China. They'll likely just keep building cars in Q2 with VINs drawn from this pool. Let's wait and see how much time passes until the next batch of VINs is registered.

VINs don't expire. Even the unused VINs from 2018 (registered on Dec 30) were simply updated to become 2019 Model year VINs.

Tesla is under no obligation to build cars or register VINs in a pattern which is easily decipherable to the geniuses at Bloomberg. That's a fool's errand.

Cheers!

 

[neroden]

I don't find revenue-alone models useful at this time; but if we take bdy's model and assume 20% GM automotive, we get a GAAP profit drop of 480 million from Q4 to Q1 offset by not having 54 million in one time non cash charge, so IIRC 184+54-480=-248, hence a 200 to 300 million GAAP loss guess. Any cost cutting or TE improvements or ZEV sales help, lease accounting weirdness could hurt. Either way, cash flow is running 800 million ahead of GAAP profit just due to stock compensation and depreciation &c hence my op cash flow positive estimates.

This would seem to be a 500 mil + cash flow, but Vehicles in transit increase eats 180 mil or so and unsold US model 3 inventory creation (note there may be 10000 of these... "Two weeks"...) Another 350+ mil... So close to 0 before considering financing.

Bond payoff was roughly half matched by credit line increase. Other half roughly matched with China borrowing, China capex is in line with historical capex (!!!) So don't need to consider in changes. Net cash flow shpuld be roughly breakeven, likely slightly negative but maybe positive depending on accts payable/receivable.

If Tesla decided to take a one time hit to build US inventory pipeline, that might explain not taking the hit to build Euro delivery "steady" pipeline yet. They should be able to take that hit in Q2 unless they need to another tax crdit expiry EOQ rush in the US. Anyone got guesses as to whether they will? Bet they will.

 

[Ratanpara]

I guess we all need to keep faith up, Elon’s optimism hert at delivery number time,longer term can Tesla move 5-7 K weekly word wide around 40 k price, very much possible, can Tesla could have margin of 20% very much possible.

 

[Fact Checking]

I theme I keep coming back to is that Tesla made a lot of changes to S&X price (and even trims & shifts) in Q1. One way to interpret that would be to say they were experimenting to increase sales. That is why I'm bearish on S&X numbers.

I won't be surprised if S&X is between 10 & 15k - with 3 being between 60 to 65k.

Spot on, that was a good call!

 

[JRP3]

I don’t agree with that. You can get 10% by changing the electronics and at least one motor to model 3 level technology. The remaining 10% is certainly possible without enlarging the battery physically or going to 2170’s.

Not sure you can get 10% from motor/electronics.

 

[Antares Nebula]

Tesla Deliveries: Underlying Demand Is All That Matters | Loup Ventures

Tesla Deliveries: Underlying Demand Is All That Matters
Tesla announced first quarter 2019 production and delivery numbers on Wednesday evening. Here are our key takeaways:

• As expected, logistics difficulties in China and Europe caused a miss on deliveries. Tesla delivered 63k total vehicles vs Street expectations of 75k. This included 50,900 Model 3s and 12,100 combined Model Ss and Xs.
• We are focused on underlying demand. In an environment with stable production and logistics, deliveries are a proxy for demand. The company reaffirmed 2019 delivery guidance of 360k-400k total vehicles. This is an aggressive target, given the low end of the range (360k) implies an average of 99k deliveries per quarter compared to this quarter’s 63k and 91k in Dec-18.
• The magnitude of the S and X miss was a surprise. The company delivered 12k vs expectations of 20k. We attribute the shortfall to allocating resources away from S and X toward Model 3 production, and, separately, it may be an indication that the sweet spot of demand is shifting to the lower-priced Model 3.
• The reallocation of S and X production resources to Model 3 appears to have been inefficient. The company produced 11k (44% q/q) fewer S and X vehicles and only produced 1,556 (2.5% q/q) more Model 3s.
• The company reported that is has “sufficient cash on hand.” It’s unlikely that Tesla will have to raise money in the Jun-19 quarter, but we believe raising money would be the right strategic move long-term.
• It appears that the Sep-19 quarter would be most at risk in terms of deliveries, given the federal tax credit will step down from $3,750 to $1,875 at the end of Q2.

What Does All This Mean for Tesla?
The Mar-19 delivery and production numbers have little impact on Tesla’s long-term outlook. We have expected 2019 to be a bumpy year for Tesla. This bumpiness includes continuing to work through production and logistics challenges and finding a baseline for demand as the initial rush of Model 3 buyers subsides. While 2019 will be a challenge for the company, we continue to believe long-term investors will be rewarded. This belief is based on Tesla converting its technology lead into capitalizing on the undeniable trends of electric and autonomous vehicles.

 

[MartinAustin]

Well, the problem we pinpointed a few weeks ago is still the main problem. The expectations of analysts, i.e. people who don't work at the company, were simply too high. Thus when the actual facts were released... they appeared to miss expectations. Deliberately too high?

Why doesn't anyone report that "analyst expectations were incorrectly set higher than the reality" ?

Production is the metric I prefer to look at, since every car can eventually be delivered. Production seems to be doing very well. 34,494 in Q1 2018. 77,100 in Q1 2019. That's 224% of last year's number... more than double!!!

Excellent BUYING OPPORTUNITY tomorrow if TSLA falls due to some sort of over-reaction.

 

[EVNow]

Not good but consistent with Carsonight. Tesla seems to both be struggling with factory downtime (hopefully for valuable retooling) and to still have bottlenecks keeping steady state limited to 6k/week. Not really out of production hell yet?

I think considering they were producing international Model 3s, MRs and SR+ for the first time - it went fairly ok. Afterall Q1 production was slightly more than Q4.

Given that they have the lower priced 3s now, and many demand levers unutilized, demand isn't an issue for 3.

OTOH, we don't have a good idea what the steady demand for S&X is now - after tax credit expiration and introduction of 3. This quarter is perhaps the bottom. But a refresh would be useful.

 

[Causalien]

Well, the problem we pinpointed a few weeks ago is still the main problem. The expectations of analysts, i.e. people who don't work at the company, were simply too high. Thus when the actual facts were released... they appeared to miss expectations. Deliberately too high?

Why doesn't anyone report that "analyst expectations were incorrectly set higher than the reality" ?

Production is the metric I prefer to look at, since every car can eventually be delivered. Production seems to be doing very well.

Excellent BUYING OPPORTUNITY tomorrow if TSLA falls due to some sort of over-reaction.

Meh. I thought analyst expectation were low. Tsla missed even low estimates.

 

[Artful Dodger]

I said the most pessimistic sceamrio I could come up with was over 50K model 3. I was right.

You misspelt 'screamairo". (it'll be fine)

 

[ZeApelido]

Everyone has the answers in hindsight

 

[sundaymorning]

It's explained in the report:





If Q2 is profitable and Q1+Q2 income is more than -$400m, which still looks likely, then S&P 500 inclusion in Q2 is still on track.

I just wanted to clarify that Q1&Q2 income needs to be more than negative $400 million (-$400m)?

 

[mongo]

I just wanted to clarify that Q1&Q2 income needs to be more than negative $400 million (-$400m)?

Yep.

 

[kyzhk]

we had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter.

Does anyone have a good explanation why this was the case? Shipping delay? Is this usually the case where end of quarter has way higher average sales / day? ~31500 / 10 = 3150 cars / day

Without any discounts 3150 cars/day can be projected to ~

3150/day*74 days = 233100 /quarter (no discount)
233100*0.5 = 116550 /quarter (50% discount)

(well, clearly they can't even make this many cars yet)

 

[Fact Checking]

Appreciate you weighing in. I’m losing my mind a little over here, which isn’t a common occurrence. Tesla averaging less than 5k m3 a week.. I really didn’t think it was possible.

They were clearly conserving cash in March, as @schonelucht correctly speculated.

They could have made EU and China units and could have kept putting them on ships but didn't: doing so might have increased Model 3 production from 61k to 71k but would have ballooned in-transit from 11k to 21k, which would have consumed up to a billion dollars of cash.

End of Q1 cash levels could still be around Q3 levels, despite the $920m debt repayment. With 20k+ in-transit they'd have risked Q2 levels, with bad bankwuptcy optics.

 

[EVNow]

• The magnitude of the S and X miss was a surprise. The company delivered 12k vs expectations of 20k. We attribute the shortfall to allocating resources away from S and X toward Model 3 production, and, separately, it may be an indication that the sweet spot of demand is shifting to the lower-priced Model 3.

• The reallocation of S and X production resources to Model 3 appears to have been inefficient. The company produced 11k (44% q/q) fewer S and X vehicles and only produced 1,556 (2.5% q/q) more Model 3s.

These don't make sense. As we noted so many times, 20k was too high an expectation for S&X.

The production of S&X wasn't low because of "reallocation" of resources to Model 3 - it was because I think Tesla saw a reduction in S&X orders following Q4 tax credit cliff & start of 3 deliveries abroad.

So many have commented how people were spending way higher than they normally spend to buy S&X. Why are they surprised that the S&X deliveries are now down - since lower priced Teslas are available ? With 3s becoming quite common, I expect people to start buying S&X again - esp. repeat buyers. This is where a refresh will come in handy.

 

[Fact Checking]

Does anyone have a good explanation why this was the case? Shipping delay?

Yes, see for example the China shipping delay calculations here:

Well, if we take the China arrival times from @elasalle's ship tracking spreadsheet:

Tesla Carriers​

Here's the arrival date in quarter day (last day of the quarter is day 90):

Glovis Symphony  2019/02/11  42
Morning Cindy    2019/02/22  53
Emerald Ace      2019/02/24  55
Golden Ray       2019/03/01  60
Violet Ace       2019/03/16  75
Glovis Countess  2019/03/23  82
Tosca            2019/03/23  82
Asian King       2019/03/25  84

The first 4 ships to China had 48, 37, 35 and 30 days left from the quarter to deliver their cars.

The final 4 ships were super dicey: 15, 8, 8 and 6 days only from arrival to delivery!!

Hats off to the Tesla China team if they managed to deliver most of those cars.

If the final 4 ships were the 'second half of March' deliveries, and that was 10k cars, and the first ship had only a half load, then that's 2.5k cars per full ship and 1.75k cars for the first ship, i.e. ~19k total cars were sent to China - and that's assuming that only the final 4 ships were left for the last 2 weeks.

If it was the final 5 ships that contained 10k cars then it's 2k per ship and 1k for the first ship, a total of 15k cars were sent to China.

I suspect the Q1 China delivery numbers will be in the 15k-19k range - and those probably include S/X numbers as well.

Once GF3 starts ramping up it will eliminate/reduce the longest shipping delay (China).

 

[MXWing]

Am I missing something?

I am under the belief that Tesla continues to make cars, sell cars and advance cars.

They did yesterday, today and will tomorrow as well?

GF3 cancelled, people decided to buy Bolts overnight?

This stock was less than half the price of AMD at some point?

 

[neroden]

Everyone has the answers in hindsight

You can go look in the other thrrad for my most pessimistic scenario of 50k. Foresight.

The "hangover" model is foresight but I do not remember whether I publishef projections.

FYI the model is for every 5% price discount from an expiring tax credit or increasing tarriff or whatever -- (calculated as (projected post expiration price - pre expiration price) / projected post expiration price)1.8 months demand is pulled forward.... very roughly (1 digit of accuracy, not 2)

Q3 in the US should look awful as I expect 2 months of pullforward on SR and SR+. July should be extra awful due to pullforward on S/X/LR. Send nearly all production overseas in early Q3.

Did not see the downtime or continued low "when operating" production rate.

PS math corrected

 

[Singer3000]

They were clearly conserving cash in March, as @schonelucht correctly speculated.

They could have made EU and China units and could have kept putting them on ships but didn't: doing so might have increased Model 3 production from 61k to 71k but would have ballooned in-transit from 11k to 21k, which would have consumed up to a billion dollars of cash.

End of Q1 cash levels could still be around Q3 levels, despite the $920m debt repayment. With 20k+ in-transit they'd have risked Q2 levels, with bad bankwuptcy optics.

On many occasions you have quite passionately defended Tesla's decision not to raise cash. And yet you are now saying that they are constraining their production because they are worried about working capital cash consumption.