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

[jerry33]

I have learned that most people (including me) should not be 'all in' on TSLA unless you have the ability to replenish all your risked assets through earnings/inheirtance/bank robbery..j/k) AND you are willing to hold your position for a minimum of five years.

I'm not all in. I have a couple of hundred shares of AARK.

 

[anon]

Q2 S/X production rose by only 354 vehicles relative to Q1.

It's worth noting that there was downtime during the transition to Raven, and likely at least a short period of reduced production during the Raven ramp, even when the line wasn't down completely. So I think production could be meaningfully higher for S/X during Q3. After all, production/week on a single shift was a lot higher than in Q1 - not only do you need to take that downtime into account, but also Q1 had ~3 weeks of double-shift production.

Another thing to consider is that the significant single-shift production rate increase may be related to changes made during the Raven transition. This would make the numbers seem even better, as non-Ravens were still being built during the first ~3 weeks of Q2, possibly at an older slower rate.

Having said all that, I have my doubts about achieving 20k/quarter, but at least 17-18k/quarter S/X production seems reasonable to me on a single shift with no downtime.

 

[JusRelax]

I'm not all in. I have a couple of hundred shares of AARK.

A COUPLE HUNDRED shares of ARKK? I have two because that wasn't enough money to buy another share of TSLA....

 

[Doggydogworld]

Curious if Tesla has published how many model 3’s have been built. Are they over 300k yet?

291.2k as of 6/30/19.

I agree this looks plausible, the only odd things if Tesla did infact get the same deal as Nio is: 1) Why did they have to buy the 50 year land lease? and 2) Why would Tesla be compensated for the remaining value of the land, buildings and fixtures when transferred to the government if they had never owned these in the first place?

1) Land leasing is how provincial governments fund a big chunk of their operations
2) They'll get money back for the land lease. They'll also put some equipment on-site (e.g. the manual battery module lines they apparently sent from GF1). It's also possible Tesla will pay for future expansion.

Building new manufacturing facilities is capital intensive--look at GF-1. The footprint is 30% of the initial projections, and both Tesla and Panasonic have spent more than the initial estimates for the entire facility.

Buildings are cheap, the real money is in the equipment and tooling.

 

[jerry33]

A COUPLE HUNDRED shares of ARKK? I have two because that wasn't enough money to buy another share of TSLA....

Well, I have TSLA too, but I wanted some of the other stocks that ARKK holds that I don't know enough about to pick them individually.

 

[X Fan]

So much press re: Tesla turnover (JB the latest) but AMZN has had their own exodus and outcry is certainly more muted (I believe TSLA will get to that muted point within 18 months).

Top Amazon exec who was large shareholder is leaving after two-year hiatus, adding to exodus

 

[CorneliusXX]

I agree this looks plausible, the only odd things if Tesla did infact get the same deal as Nio is: 1) Why did they have to buy the 50 year land lease? and 2) Why would Tesla be compensated for the remaining value of the land, buildings and fixtures when transferred to the government if they had never owned these in the first place?

The land lease could just be a confirmation if intent from Tesla while giving the Shanghai government wriggle room if there are complaints about subsidising foreigners (or whatever the local political axe grind is). The entire deal seems more political than economic to me.

 

[EVNow]

Total undelivered S/X/3 is 25.5k, of which ~24k are in FGI and ~1.6k in PP&E. That's more than 18 days at Q2 average sales rate, but my guess is they subtracted the 7.4k in transit before doing the calculation. Alternatively, they may have used a higher sales rate based on the back half of the quarter.

Yes, I'd say they probably subtracted 7,400 in transit.

Total inventory (if we ignore any movement from FGI to used car assets) is 25,662. 18 days plus 7.4k gets us 26,230. Close enough.

They have 2 weirdly placed sentences in the letter, that makes it confusing.

Model 3 : All manufacturing equipment in Fremont has demonstrated capability of a 7,000 Model 3 vehicles per week run rate, which we continue to work to increase. We aim to produce 10,000 total vehicles of all models per week by the end of 2019.

Model S&X : As a result, our total new car inventory levels have fallen to just 18 days of sales (including vehicles in transit, on ships and company owned vehicles), compared to the industry’s typical US inventory level of ~70 days of sales.

 

[Stars aligned]

I've seen some odd buy/sell spikes on Yahoo's chart before, but this one is the best to date

View attachment 434464

Yahoo daily chart seems unreliable as I've seen many times.I compared intraday charts from 3 sources, and all are different. The ones which seems qualitatively best is from nasdaq.com / edgar db, the worst Yahoo.

Interestingly though if you look at 5d Yahoo chart, the volume picture is the same as in Nasdaq chart. And this spike isn't there.

 

[Doggydogworld]

"18 days of sales" is listed under the Model S/X section. It would be highly misleading for S/X to be, say, 40 days of sales and Model 3 be 12 days of sales, and then write, under Model S/X, "Our deliveries increased sequentially to 17,722 as we continue to prioritize inventory reduction (working capital management). As a result, our total new car inventory levels have fallen to just 18 days of sales...". I'd say almost criminally misleading. I guess they could get away with it for including the word "total"?

Yeah, I'm pretty sure "total new car inventory" means exactly what it says. Don't get too carried away with it being in the "Model S/X section" -- they aren't that finicky about keeping things in sections. Just above in the Model 3 section they say:

We aim to produce 10,000 total vehicles of all models per week by the end of 2019.​

Is there perhaps some confusion between new and used inventory here?

From what estimate are you getting all this? I write "estimate" because I can't imagine that you have any more detailed hard data about Q2 than what's been put out in the ER - e.g. no 10-Q that might have provided more colour. Or is this just some accumulation of past reports, incl. accumulating any errors?

It's all new cars, from adding up past reports. They didn't report production and deliveries in the same place each quarter during the early days, so you have to look in different reports and sometimes do some subtraction. It's not perfect, but if you cross-check undelivered cars against Finished Goods Inventory over time it tracks very well.

The TSLAQ cult spun theories for years about Tesla systematically overstating production (and thus FGI) to defraud the Credit Agreement lenders who lend against inventory value and to defraud investors by understating COGS and thus overstating gross margins and net income. Inventory fraud is one of the oldest tricks in the book, though, every entry level auditor knows to check inventory. And checking is trivially easy when every car in inventory has a unique VIN.

So you're thinking that you're going to take two lines, merge them into one (e.g. one line gone), and get more throughput than when you had two? And that you're going to do said merger in a small fraction of a single quarter? Or do you think that they've already done said merger? I've talked with people who've done tours since the Q2 shutdown - both lines are still there, there's been no merger. The changes were exactly what was said on the earnings call: they were freeing up parts warehousing space for the Y line.

Well, it's @neroden 's theory, I hadn't heard about recent tours, so thanks for the update. I still see them running a single shift, with OT for a seasonal boost. They really downplayed S/X during the call. They'd have a much different tone if returning to a 25k+ per quarter rate along with the associated 300m+ boost to gross profits.​

 

[mrmage]

What does CS stand for? Concern-trolling Service?

It is obvious to anyone that he mentioned only areas where he helped out.

Tbh, I read JB’s quote and was wondering the same. Did a founder think that CS was an issue? I know everyone is tired of anecdotal support stories, so here’s something quantitative.

On the last investor’s call, customer support priority was the 3rd highest question as ranked by share ownership. 38% of the shares voted on this.

The question of exceptionally difficult communications was backed by nearly 20% of the shares.

Some shareholders don’t need customer support. Others don’t own Tesla cars. So 38% and 20% concern may be on the low side, and likely motivated by personal experiences from Tesla’s most ardent supporters.

 

[jerry33]

They really downplayed S/X during the call.

Not really. They just said that as volume grows, S/X will be a smaller share of the total. That's different than downplaying them. Regardless of who the manufacture is, there's only so much potential for the most expensive cars compared to the lower priced cars.

 

[anthonyj]

S/X is being cannibalized by 3 for sure. As electric vehicle market grows, S/X will make a comeback. 3 is providing a lot of exposure for S/X and electric vehicles in general. New interior would help too. Simply no point in me upgrading my P85D for a P100D unless I wanted a faster screen or faster car. I’m thinking of selling my car to get a Model 3 Performance though

 

[Freder Reeve]

youtube and netflix while in park should be yet another really powerful sell-point. I'd love it if we could ever play youtube while driving w/ audio-only, that would open up some of my favorite music playlists.
-edit oh and he says "maybe" 2-3 months for truck reveal

 

[AlMc]

I'm not all in. I have a couple of hundred shares of AARK.

You are correct Jerry...But I am disappointed...thought you were an Uber Bull. (j/k..weekend)

 

[EVNow]

In all reasonableness, 18-20k in Q3 in a single shift is not happening. They might (might) see some improvement in S/X line productivity, but Q3 isn't going to see anything close to 18-20k in a single shift, unless Tesla pulls off a minor miracle. Q2 S/X production rose by only 354 vehicles relative to Q1.

The significance of talking about days inventory in s&x section to me is that they are prioritizing inventory control more than production volumes when it comes to s&x. They currently have 55 days of s&x inventory and 17 days of 3 inventory. I think they want to bring s&x inventory to ~20 days. This means about 4k s&x inventory or selling ~7k cars more than they make. Until that happens they will not be in any hurry to increase s&x production.

In contrast, they write about volumes of production under Model 3 section i.e. as for as Model 3 is concerned they are prioritizing volume production.

 

[heltok]

Geohotz seems to be very bullish on Tesla:

Around 14min and forward for juicy stuff

 

[Bobfitz1]

Pretty sure that Panasonic owns those ovens. The writedown would be on them.

Hmmm, perhaps this portends a Panasonic Bread Gigafactory?

 

[LN1_Casey]

I have learned that most people (including me) should not be 'all in' on TSLA unless you have the ability to replenish all your risked assets through earnings/inheirtance/bank robbery..j/k) AND you are willing to hold your position for a minimum of five years.

Petty cash for my petty stock pile.

 

[jerry33]

You are correct Jerry...But I am disappointed...thought you were an Uber Bull. (j/k..weekend)

Not uber, but what I meant was I have AARK in addition to TSLA, so I'm not all in.