Chickenlittle
Banned
‘Do physical work”. How many pounds do they have to lift? Or do they have to hike several miles? How do they certify the level of work?
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
I have to wonder if part of the decision to introduce autonomous Teslas in UAE is the perception that there the standard for human drivers is so low...
Dan Detweiler
Active Member
Sorry, I'm an idiot. What is "Raven"?Summary:
* Bearish: can't keep selling endless AWD+P in Europe. DangWas hoping they'd only need to drop down to LR RWD this quarter, but oh well. I don't really get why LR RWD is off-menu. Surely their margins are great on it - and people who want efficiency are going to be tempted to downgrade rather than upgrade.
* Bullish: demand secured, low-end margin secured, base SR still "available" but you have to jump through hoops to get it and they can silently kill that off later. Leases look very profitable.
Missing piece of the puzzle is Raven. That'll be demand-and-margin secured for S+X.
Dan
Dan Detweiler
Active Member
Mars ☰mperor
Member
Words of HABIT
Active Member
SpaceX's Falcon Heavy rocket launches first paid mission and lands all three boosters - CNN
"This rocket is by far the most powerful operational launch vehicle in the world. And with a sticker price of $90 million, it is also about a third of the price of its closest competitor, United Launch Alliance's Delta IV Heavy."
Soo...six times more economical than the competition (I've read 10X more economical in other articles). If I was Arabsat, or any other number of billion $ corporations that needed to get my wares in space, do I cough of six times more cost for a competitor with an unproven product or spend 1/6th the cost on a proven technology. Reusable rockets are cheaper than throwing them away. Who would have thought.
Elon is bringing this same methodology to Tesla. 1/3rd the wiring of conventional costs, Eliminating the 12v battery on the MY. Less parts, less cost, less maintenance. It's not rocket science.....well, maybe it is.
SpaceX and Tesla are highly profitable today. If they chose to spend all those profits on Capital Expenditures to accelerate their growth, I'm behind them 100%.
Chickenlittle
Banned
I love the line despite top pay. Who determines top pay? The market does. What market is Panasonic utilizing? Certainly not the local market or they would be able to hire more.
Let’s not forget the unsung heroine of deep learning:
The data that transformed AI research—and possibly the world
Doggydogworld
Active Member
Direct leases were never counted as sale with right of return. That treatment applies to sales with resale value guarantees (either to 3rd party leasing companies or individuals in some countries).
tinm
2020 Model S LR+ Owner
That's interesting. For my upcoming book, I learned that a similar, even worse, situation was going on in New Mexico.
In the early days, back in 2007, of the WhiteStar (Model S) factory planning (didn't know New Mexico was going to be where Model S was going to be built? Now you do), a similar phenomenon was happening in Albuquerque at another new tech company with a factory. For every 100 applicants who were invited in for job interviews, maybe 10-20 would actually show up. This concerned the economic development people in Albuquerque, who feared that Tesla was going to run into the same problem once the WhiteStar factory opened up. . . . not enough qualified people, difficulty attracting people, etc. I guess it's a thing?
One thing I don't understand is it seems the mission statement for the company and autonomous driving are getting in the way of each other. The point is to switch to EVs ASAP, but they are not promoting the cheapest available option and have increased prices again. So will they produce hundreds of thousands, if not millions, of Model 3s with FSD in 3 years for their Tesla Network to off set the actual purchase of an EV? I'm confused on what they are promoting now....I guess FSD is the long game they think they can beat in a short time....
I dont know if this was mentioned, but now with autopilot included, upgrades to FSD should go way up. Im guessing there were many people who wanted FSD, but didnt want to pay for both EAP and FSD.
My views are mixed on Tesla's various lineup/options changes today. Elon continues to experiment and I'm sure this is not the last of the changes.
Removing SR and LR RWD options reduces production line downtime from switching production. It also significantly reduces inventory requirements as less variations are need to be stocked at each local hub.
SR off menu
Obviously Tesla was always trying to anti-sell SR in favour of SR+ with the longer wait times and this likely played some part in the 6x higher popularity of SR+, but overall I think Tesla has got enough information to know it is most efficient to take SR off menu and streamline production by making it a software limited SR+. It's a shame to lose the $35k base price from the configurator, but it is still available off menu and it was always an arbitrary target in any case. Overall I think this is a sensible move.
LR RWD
Removing LR RWD is less sensible I think. There is a big gap now between SR+ and LR AWD and LR RWD is a very different product. In particular I think it would have received many European orders, almost certainly at a higher margin than SR+, if it had been introduced to the menu there.
AP bundling
Bundling Autopilot has positives and negatives. It has no benefit to production downtime or inventory as it is simply a software update. Presumably take rate was running below 66% to justify the price reduction from $3k to $2k. But Tesla is also at risk of losing some sales from customers who cannot afford the extra $2k and just don't want AP. I think that means take rate must have been 50-60% for this move to make sense. As some have noted above, this bundling is likely to get some extra customers hooked on AP and convince them to upgrade to FSD over time. On the other hand, the base price for all models looks higher and makes Model 3 look more expensive relative to the base price of competitors. Overall I would prefer AP to remain optional.
SR+ in Europe
Adding leasing and SR+ availability to Europe and Asia is clearly another demand lever, but is partially offset by Tesla removing a demand driver with its higher base pricing in the US. Either MR or SR+ had to come in RoW this Q, so this isn't a great surprise after MR was removed from the US configurator.
Leasing
Leasing looks like an in-house program to me, so this will impact profitability in the short term as margin will now be spread over 3 years (but at a higher profit per car overall). Tesla defined free cash flow will also be negatively impacted in the short term, but overall cash flow in Q2 post warehouse line drawings will see less of a negative impact. Tesla has around $1bn of warehouse line availability currently and I expect it will increase this line significantly in the coming months. I think drawings on the warehouse line are likely to broadly cover production costs, but not ASP, so I expect incremental Model 3 lease sales will be roughly cash flow neutral (but free cash flow negative) in the quarter of sale, but will generate less cash than a cash sale.
Removing SR and LR RWD options reduces production line downtime from switching production. It also significantly reduces inventory requirements as less variations are need to be stocked at each local hub.
SR off menu
Obviously Tesla was always trying to anti-sell SR in favour of SR+ with the longer wait times and this likely played some part in the 6x higher popularity of SR+, but overall I think Tesla has got enough information to know it is most efficient to take SR off menu and streamline production by making it a software limited SR+. It's a shame to lose the $35k base price from the configurator, but it is still available off menu and it was always an arbitrary target in any case. Overall I think this is a sensible move.
LR RWD
Removing LR RWD is less sensible I think. There is a big gap now between SR+ and LR AWD and LR RWD is a very different product. In particular I think it would have received many European orders, almost certainly at a higher margin than SR+, if it had been introduced to the menu there.
AP bundling
Bundling Autopilot has positives and negatives. It has no benefit to production downtime or inventory as it is simply a software update. Presumably take rate was running below 66% to justify the price reduction from $3k to $2k. But Tesla is also at risk of losing some sales from customers who cannot afford the extra $2k and just don't want AP. I think that means take rate must have been 50-60% for this move to make sense. As some have noted above, this bundling is likely to get some extra customers hooked on AP and convince them to upgrade to FSD over time. On the other hand, the base price for all models looks higher and makes Model 3 look more expensive relative to the base price of competitors. Overall I would prefer AP to remain optional.
SR+ in Europe
Adding leasing and SR+ availability to Europe and Asia is clearly another demand lever, but is partially offset by Tesla removing a demand driver with its higher base pricing in the US. Either MR or SR+ had to come in RoW this Q, so this isn't a great surprise after MR was removed from the US configurator.
Leasing
Leasing looks like an in-house program to me, so this will impact profitability in the short term as margin will now be spread over 3 years (but at a higher profit per car overall). Tesla defined free cash flow will also be negatively impacted in the short term, but overall cash flow in Q2 post warehouse line drawings will see less of a negative impact. Tesla has around $1bn of warehouse line availability currently and I expect it will increase this line significantly in the coming months. I think drawings on the warehouse line are likely to broadly cover production costs, but not ASP, so I expect incremental Model 3 lease sales will be roughly cash flow neutral (but free cash flow negative) in the quarter of sale, but will generate less cash than a cash sale.
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This is my main thesis onto why S&X is going to 2170. Where else would the extra 10+ Gwh be going?
That or Panasonic is not telling the truth
Great analysis!OK, so finally, now that I've caught up, my take on this.
(1) This confirms my suspicion of production bottlenecks. Specifically, production delays due to downtime from switching between variants. They seem to have very serious problems with production delays due to switching between variants, and are taking drastic measures to reduce them by eliminating options.
The total elimination of two major hardware variants (LR RWD and SR-) is clearly for the purpose for removing downtime due to variant switching. They clearly have not figured out how to switch variants without delays in production. Although you can "call and order", I suspect they're not maknig any more LR RWDs. Expect some people with LR RWD orders (specifically white interior) to never get their car; they'll have to change their configuration.
SR in particular would have been a *substantial* production line change due to major changes to interior materials. For only 1/7 of the SR/SR+ orders (and probably less than 10% of total orders), it's not worth it.
Therefore, I predict three things:
(A) Expect them to drop a paint color. It would make tons of sense to drop the slow multi-coat colors and switch to flat white and flat red. Yeah, I know some people really like those colors, but are those people really paying enough to compensate Tesla for the slowdowns? If not that, they might drop "midnight silver metallic", which is the most redundant. I think they need black, white, red, and blue.
(B) Expect them to attempt to remove differences between Euro, China, and US spec cars. The charge port differences may be forever, but don't be surprised if we start getting Euro-spec taillights in the US, just to minimize downtime on production line switches.
(C) They may end up specializing each general assembly line. There are currently basically 3 hardware trims x 2 interiors x 5 paint colors x 4 regions (basically, North America, Europe LHD, China, and RHD). If each factory has one line for white interior and one for black interior, and there's a factory in the US, one in Europe, and one in China, this minimizes switching.
It does make me think they should have gone with a middle-of-the-road grey interior so that people who insist on light-colored interiors and those who insist on dark-colored interiors would both have been satisfied with one interior.
Other observations:
(2) They are still way too optimistic about autonomy.
(3) They seem comfortable enough with demand to actually *raise* prices. Demand is not an issue. Supply is an issue.
(4) But they're not totally comfortable with demand because they opened leasing. The leasing will not look great on the accounting books. Dunno whether they'll be able to offload the financing to bank partners given that they're gonna keep the cars at the end of the leases. Clearly cash flow is not a primary worry here, or they wouldn't have started leasing like this.
But the leasing price is super expensive, unattractive at all.
Doggydogworld
Active Member
Where did Panasonic say this? I keep asking, but nobody ever provides a direct quote.
Panasonic did say in their fiscal Q2 presentation on 10/18/18 that they planned to be at 35 GWh/year in Nevada by 3/31/19. But in the FQ3 presentation they said that was delayed.
EDIT: Someone posted this Reuters story:
Tesla, Panasonic to seek productivity gains before new battery investments
"Panasonic established a battery production capacity of 35 GWh in Tesla's Gigafactory 1 by the end of March 2019 in line with growing demand," Japan-based Panasonic said in an email.
This contradicts Carson's statements and Tesla's claim that they are still limited by cell production. Perhaps Panasonic's "capacity" means they have the ability to upgrade existing lines from 300k to 400k cells/day to match the output of the new lines. Or it may mean they moved S/X cell production over as they once indicated.
One thing Tesla cannot afford right now is take or pay on 35 GWh for Model 3 and energy storage only.
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Krugerrand
Meow
No worries. I also don’t hold grudges. My parents don’t get credit for that one, though.
Words of HABIT
Active Member
Comes from an emailed statement to Reuters : Tesla, Panasonic to seek productivity gains before new battery investments
Maybe Reuters is lying.
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