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

[T@oo]

I'm an endless wellspring if you want more info about weird fruit, nuts and legumes I have a massive database I've built up over the years... something like 17k entries, with a couple thousand of them gone into in significant detail (hundreds of columns for each species). Want a fruit that contains a natural explosive? A plant that gives off so much flammable gas that you can ignite the air around it? A fruiting vine that disguises its leaves to match whatever it grows on - even artificial plants? A houseplant that in the right conditions can grow bigger than a house, creates delicious fruit that look like green ears of corn but have to be eaten in a precise manner, and whose flowers are "warm blooded"? You name it, I've got a plant for it Plants are awesome.

Write a book. We will read it.

 

[JohnnyEnglish]

Btw., Tesla is likely not finished sending ships in Q4 yet, there are four more "candidate" ships nearby that might be heading to port to pick up more cars:

• Grand Champion
• Glovis Symphony
• London Highway
• Dalian Highway

Historically Tesla would send another ship to China at around December 4, with about ~1 loading day worth of cars - Glovis Symphony would fit that role.

In Q3 Tesla also sent an east coast ship to Europe, with a December ~9 departure date equivalent, which can be in Zeebrugge in about 10 days - with another ~1 loading day worth of cars.

Also note that one of the Q3 China ships arrived just 6 days before quarter end - many of which cars might have been delivered in Q4.

So Q4 could end up having as much as ~47 loading days worth of international shipments, versus ~30 loading days in Q3.

We'll know more precisely in a week or two, but Q4 is definitely exceptional already.

The largest M3 production increase in both numerical and percentage terms was between Q1 and Q2 (9500). This increase reduced between Q2 and Q3 (7300) and I would expect it to reduce further between Q3 and Q4 if we take only Fremont figures into account as we are approaching the production lines design capacity (around 30k/month). Based on that logic Fremont M3 production seems likely to be 85,500 +/- 2k. GF3 may add a few thousand which will be a nice bonus.

The proportion of production being shipped to Europe does seem to be higher this quarter, presumably to meet the demand in NL. However that does not seem to be evidence that the capacity of the Fremont M3 production lines have been pushed significantly beyond 30k/month. I would be very happy if this is the case but just not seeing anything to indicate that.

 

[Fact Checking]

How should we reconcile Carsonight's information based on his previous information?

Very cautiously!

In early January 2019, carsonight said: (probably about model 3 and not pack production?)

He was substantially wrong about 6k/week in Q1 - in reality they were at 4k/week.

But in January too he was straightforward about how he arrived at 6k/week, which I noted back then was vulnerable to methodological errors: he calculated very round daily cell output numbers into the 6k/week figure.

He didn't give output estimates after that debacle, up until a few days ago when he reported first hand factory floor pack output figures, which, if true, should be a lot more reliable.

But nevertheless he's a single unverified anonymous source, so caveat emptor.

 

[Krugerrand]

OT, but not really.

I just saw the movie Ford vs Ferrari and more than ever I want Tesla to kill Ford. Just sayin’.

 

[StarFoxisDown!]

Very carefully!



He was substantially wrong about 6k/week in Q1 - in reality they were at 4k/week.

But in January too he was straightforward about how he arrived at 6k/week, which I noted back then was vulnerable to methodological errors: he calculated very round daily cell output numbers into the 6k/week figure.

He didn't give output estimates after that debacle, up until now when he reported first hand factory floor pack output figures, which, if true, should be a lot more reliable.

But nevertheless he's a single unverified anonymous source, so caveat emptor.

Yeah the main reason we were all surprised by Q1 numbers/output is that we took Carson's insight as they were to make 6k/week battery packs AND the cells to go with them. In reality, they had demonstrated that they could do up 6k/week packs but the cell supply was not there from Panasonic. We later found out straight from Panasonic and later Elon, that Panasonic dropped the ball in ramping the cell output from Giga 1.

 

[Fact Checking]

The largest M3 production increase in both numerical and percentage terms was between Q1 and Q2 (9500). This increase reduced between Q2 and Q3 (7300) and I would expect it to reduce further between Q3 and Q4 if we take only Fremont figures into account as we are approaching the production lines design capacity (around 30k/month). Based on that logic Fremont M3 production seems likely to be 85,500 +/- 2k. GF3 may add a few thousand which will be a nice bonus.

Fremont Model 3 production line capacity limit is not 7.5k/week, it's potentially as high as 10k/week, with "very little incremental capex", according to an independent audit performed last year:

Here's a CleanTechnica article from last year that sheds some light on this question, reporting about Fremont production capacity constraints, when the factory was inspected by independent car industry experts:

Tesla Model 3 Production Has 25-33% The Number Of Steps "Found In Traditional Auto":​

• "So, what do Galliers and Ellinghorst think about the big question: can Tesla sustain, and hopefully increase, its production rate? “Based off our tour and what we saw, we see no reason why Stamping and General Assembly should not be able to handle [seven to eight thousand cars per week] today, and even potentially 10k units, with very little incremental Capex. We believe the same is also true for the Paint Shop when it comes to reaching 8k units a week, with some incremental capex potentially required to get to 10k units."
• "For Body, our understanding is that incremental capex is required (our impression is in the tens and not hundreds of millions) in order to get to both 8k units and eventually 10k units."

That report was I think forgotten about and maybe even discarded by many investors due to Q1'2019 - but I think the audit by Galliers and Ellinghorst can still be trusted.

I presume their conclusions strongly implies that the press lines already had the capacity back then - and they had more than a year since then, and probably some of the Model Y capacity in shared facilities might already be online:

• stamp lines,
• paint shop expansion (underutilized due to S/X weakness as well),
• seat factory,
• plastics workshop,
• powertrain factory,
• glass factory,
• battery pack factory, etc.

One GF1 leak reported that Tesla planners expressed an "aspirational" goal of GF1 pack production rate of 15k/week - but then settled on "only" 10k/week by the end of next month...

Even with GF3 that's a lot of battery packs, which must be going somewhere?

Model Y production requires a new body line and a new general assembly line - but much of it is in the expansion of the above shared facilities. (Maybe @Krugerrand wants to correct any mistakes in my thinking, or add to this line of thought.)

What better way to stress test much of the Model Y production capacity and ramping up the shared part of the supply chain by actually using it for Model 3 production for a "peak quarter" - and then in Q1 and Q2 gradually shift those supplies to GF3 and Model Y production, without having to do an intrusive, time consuming ramp-up of the supply chain, which process is also stock full of operational risks due to the many moving parts largely out of Tesla's control?

(Obviously take this with a big grain of salt, not advice, your options will most likely expire worthless, etc.)

But yes, a modest increase to a production of +6% to 85k in Q4 is the baseline scenario, or 6.5k/week.

 

[Sudre]

......
What are earth are the bears/shorts going to do when Q1 2019 is no longer in the 1 year window or "2019" window???? ......

The same thing they have been doing for the past 6 to 7 years. Rehash the same old topics with a small new twists and when that doesn't work.....
MOVE THE GOAL POST.

I see in our near future the fear setting in because of bears dire warnings that Tesla is going to raise more funds through stock delusion to pay for bringing the CT time line forward. They will push the narrative that it will be just like the Model 3 except THIS TIME it will actually cause the end of Tesla because no one actually wants a CT.

I can also see the message being pushed for massive losses this quarter because of the record number of cars created (and dumped in the ocean). Just like last year where Tesla had a positive Q3 then Q4 was lacking. This Q4 will be a disaster because of all the money sunk into making cars that are not profitable.... and just wait for all those warranty claims to catch up to them.

If cars do not come out of GF3 within a week or so it will be pushed that either the Government is blocking Tesla from selling them because they do not pass some inspection and/or there is a problem with the line just like there was at Fremont when Model 3 started there and Tesla is going to have huge struggles getting the lines running in China. This will cause huge financial set backs and Tesla will go bankwupt. If they do start selling them then there will be massive amount of warranty claims because of the bad work and panel gaps. All these China set backs while Tesla is scrambling to find money (more debt) to build GF4 which the German Unions will drive up overrun costs.

When that doesn't work they will move the goal posts and say Elon promised 500K cars for 2019 and failed, hence another lie and everything is a lie. 2020 Should be at the promised 1M car for the year and guidance is going to be below that. If guidance is above that it will be stated that it's not enough because guidance was supposed to be 1M Model 3 alone not including Model S, X and Y hence Tesla won't be able to keep up cash flow and they will fail to pay some bond then........ wait for it.... bankwutcy.

and lets just not get started on the lack of demand for Tesla products and the HUGE non-stop inrush of all the massively superior (yet more expensive) other competing EVs that are flooding the market everyday. I mean they cost as much as a Model S and have the same specs as a (2013) Model S (yet smaller). You know, cars like the......(crickets).... Ford MOCK 3!! I mean Moch E. no that's Mach E.. got it. Does anyone know what that ... uh.... thing sticking out of the bottom of the screen does that the scroll wheel on the steering wheel can not do? Well except make me take my hand off the wheel to touch and fondle it while I am driving.

And please don't yell at me. I am just giving you the heads up.
As you can imagine since most of us have been following this for years, I can probably go one for pages worth of "what will they do."

 

[StarFoxisDown!]

The same thing they have been doing for the past 6 to 7 years. Rehash the same old topics with a small new twists and when that doesn't work.....
MOVE THE GOAL POST.

I see in our near future the fear setting in because of bears dire warnings that Tesla is going to raise more funds through stock delusion to pay for bringing the CT time line forward. They will push the narrative that it will be just like the Model 3 except THIS TIME it will actually cause the end of Tesla because no one actually wants a CT.

I can also see the message being pushed for massive losses this quarter because of the record number of cars created (and dumped in the ocean). Just like last year where Tesla had a positive Q3 then Q4 was lacking. This Q4 will be a disaster because of all the money sunk into making cars that are not profitable.... and just wait for all those warranty claims to catch up to them.

If cars do not come out of GF3 within a week or so it will be pushed that either the Government is blocking Tesla from selling them because they do not pass some inspection and/or there is a problem with the line just like there was at Fremont when Model 3 started there and Tesla is going to have huge struggles getting the lines running in China. This will cause huge financial set backs and Tesla will go bankwupt. If they do start selling them then there will be massive amount of warranty claims because of the bad work and panel gaps. All these China set backs while Tesla is scrambling to find money (more debt) to build GF4 which the German Unions will drive up overrun costs.

When that doesn't work they will move the goal posts and say Elon promised 500K cars for 2019 and failed, hence another lie and everything is a lie. 2020 Should be at the promised 1M car for the year and guidance is going to be below that. If guidance is above that it will be stated that it's not enough because guidance was supposed to be 1M Model 3 alone not including Model S, X and Y hence Tesla won't be able to keep up cash flow and they will fail to pay some bond then........ wait for it.... bankwutcy.

and lets just not get started on the lack of demand for Tesla products and the HUGE non-stop inrush of all the massively superior (yet more expensive) other competing EVs that are flooding the market everyday. I mean they cost as much as a Model S and have the same specs as a (2013) Model S (yet smaller). You know, cars like the......(crickets).... Ford MOCK 3!! I mean Moch E. no that's Mach E.. got it. Does anyone know what that ... uh.... thing sticking out of the bottom of the screen does that the scroll wheel on the steering wheel can not do? Well except make me take my hand off the wheel to touch and fondle it while I am driving.

And please don't yell at me. I am just giving you the heads up.
As you can imagine since most of us have been following this for years, I can probably go one for pages worth of "what will they do."

While I definitely agree that the "conspiracy theory" FUD will always be there, the moment Q1 2020 numbers and earnings come out, it will effectively destroy bears/shorts last barely legit(and I'm using the term legit in a very stretched out way here) talking point. Right now, they can shout points and facts with a distorted and/bias agenda and not be completely lying.

Case in point - the post I singled out from that thread. Sure, if you only include 2019, Tesla is negative cash flow by 7 million. That of course is ridiculous because you wouldn't count trailing net cash flow starting in a random year...….you would use the trailing 4 quarters. She's not lying, but she's distorting the facts to the extreme. After Q12020, there is an insanely small chance of Q1 2019 ever happening again. By then Model Y will be starting it's ramp, Giga 3 will be ramped, etc.. They won't even be able to stretch or distort facts or numbers. It will flat out be....Tesla is cashflow positive.....doesn't matter if you just count the current year or trailing 4 quarters or the previous 3 quarters, or 2 quarters...or however they want to do comparisons.. Likely, the talking point of Tesla isn't profitable will also be completely unraveled by mid or end of 2020.

 

[KarenRei]

Zeebrugge:

Jurjen Kers on Twitter

 

[Fact Checking]

Yeah the main reason we were all surprised by Q1 numbers/output is that we took Carson's insight as they were to make 6k/week battery packs AND the cells to go with them. In reality, they had demonstrated that they could do up 6k/week packs but the cell supply was not there from Panasonic. We later found out straight from Panasonic and later Elon, that Panasonic dropped the ball in ramping the cell output from Giga 1.

Well, in Q1 Tesla also had:

• The big U.S. tax cliff hangover with very low January and February deliveries,
• International Model 3 customers who were far away and were served via logistics pathways used for the first time and partially botched,
• A Polar Vortex, a government shutdown and a NASDAQ crash - which hurt U.S. demand too,
• Very low S/X deliveries which have still not recovered to the 20-25k baseline.

In Q1 they could have done better, but let's not sugarcoat it: demand limits were clearly showing - not just supply limits.

 

[Darkfox021]

Zeebrugge:

Jurjen Kers on Twitter

That is a *ship* load of cars.

 

[Zaxxon]

Alright, fine.

 

[lascavarian]

What on Earth is he doing to his car? Six flat tires in 11 months???

What on earth indeed. I did challenge him a bit on that but he said he had damaged a rim badly enough to need replacement which I would associate with a high speed hit of a pothole perhaps and that he seems to be a magnet for nails. Maybe the 19" rims will help a bit but it is hard to know.

 

[RFernatt]

OT, but not really.

I just saw the movie Ford vs Ferrari and more than ever I want Tesla to kill Ford. Just sayin’.

I agree with the sentiment! If accurate, that Ford EVP needed to be drawn and quartered and the remaining parts roasted on a hot exhaust manifold. Spineless and typical CEO, Henry Ford II, wasn't much better off. Only Iacocca came off decent on the Ford side.

But, it was an excellent movie about that event. Totally enjoyed it! I've read bits and pieces, but great car movie.

American ingenuity and force of will overcoming everything from corporate bureaucracy to foreign competitors. Kind of reminds me of something...

 

[jerry33]

Well, in Q1 Tesla also had:

• The big U.S. tax cliff hangover with very low January and February deliveries,
• International Model 3 customers who were far away and were served via logistics pathways used for the first time and partially botched,
• A Polar Vortex, a government shutdown and a NASDAQ crash - which hurt U.S. demand too,
• Very low S/X deliveries which have still not recovered to the 20-25k baseline.

In Q1 they could have done better, but let's not sugarcoat it: demand limits were clearly showing - not just supply limits.

The rumors of S/X upgrade caused many to wait on ordering. Also the removal of the 75 kWh, which was the biggest seller. (Not that they weren't right to stop the 75 kWh since with the 3 it was no longer needed).

 

[Papafox]

Zeebrugge:

Jurjen Kers on Twitter

OMG, we're doomed. There's so little demand for Model 3 they're just piling up at the dock!

 

[pz1975]

OMG, we're doomed. There's so little demand for Model 3 they're just piling up at the dock!

And that dock slopes towards the ocean so we know what happens in the night when no one is watching...

 

[lascavarian]

So, sounds like he's not done it for the future if he hates the company.
He is an early adopter though, did you ask if he expected that to translate into more issues/time?

I am drifting a bit into pop psychology here a bit, but he is instructive.

He explored Tesla after being REALLY pissed off with BMW (I think) who would not let him roll his lease into a different vehicle due to high mileage and high fuel costs. He bought the Model 3 and let the other lease car sit for the last 6 months of the lease.

He liked the model 3 performance and bought it quickly then it arrived sooner than expected (delivered with half a charge) and he had no home charger yet resulting in extreme range anxiety the second day he had it (funny after the fact but not at the time). He got it for the low cost in use due to the miles he drives. He is not a mechanical type and expects his cars to do their job with no drama. He does like the car.

There are a lot of similar customers out there and he probably needed more hand holding at delivery (hindsight, of course). He just learned there is a rear trunk latch release button for example. I have no idea why "Track Mode" has not appeared for him.

I think his beef with Tesla is that he just wants to call the local delivery center and get similar results as when he called his local Bimmer dealer. He wants the superior vehicle without any change to the dealership experience if I am reading him correctly.

So he was willing to spend more for state of the art technology but not willing to spend any extra time if I am reading him correctly.

 

[ZsoZso]

Zeebrugge:

Jurjen Kers on Twitter

TSLAQ headline: look at all those Teslas rotting on the parking lot => NO DEMAND!
Dump trucks are already circling them, they will all be dumped into the sea!

ps: oops, Papafox beat me to it!

 

[MarcusMaximus]

I am drifting a bit into pop psychology here a bit, but he is instructive.

He explored Tesla after being REALLY pissed off with BMW (I think) who would not let him roll his lease into a different vehicle due to high mileage and high fuel costs. He bought the Model 3 and let the other lease car sit for the last 6 months of the lease.

He liked the model 3 performance and bought it quickly then it arrived sooner than expected (delivered with half a charge) and he had no home charger yet resulting in extreme range anxiety the second day he had it (funny after the fact but not at the time). He got it for the low cost in use due to the miles he drives. He is not a mechanical type and expects his cars to do their job with no drama. He does like the car.

There are a lot of similar customers out there and he probably needed more hand holding at delivery (hindsight, of course). He just learned there is a rear trunk latch release button for example. I have no idea why "Track Mode" has not appeared for him.

I think his beef with Tesla is that he just wants to call the local delivery center and get similar results as when he called his local Bimmer dealer. He wants the superior vehicle without any change to the dealership experience if I am reading him correctly.

So he was willing to spend more for state of the art technology but not willing to spend any extra time if I am reading him correctly.

Ya, that story doesn’t surprise me. Everything about being a Tesla customer is great... unless you need to get a hold of a person there for something(well, sometimes that works out ok. Other times, not so much).

Aaaand I should probably stop talking about this, lest I end up like he-who-shall-not-be-named