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

[elasalle]

The gentlemen over at $TSLAQ launched a photo-op to try and document some of the congested Superchargers, so just one more reason to carefully plan one's roadtrips during the holiday season...View attachment 483603

PS. As of now, the request to respond with posts of such photos have lead to no posts...

Upon introspection, it was determined that "No Demand" was false and now I conclude that tesla SC cannot keep up with the demand.
However, if any one post this in our TSLAQ I am gonna BLOCKBUSTER them ...

 

[Lessmog]

Rogue GSV

Read all Iain M Banks' books - if you haven't the you have no clue in to Elon's thought processes...

Google sui vriend? Don't speek pollyglot much.

Ah. Back to futuristic library then.

 

[Green Pete]

Anyone else love driving up to the daly city SC and see the 3 floors of unsold ICE cars just sitting in a parking garage?

 

[Lessmog]

Anyone else love driving up to the daly city SC and see the 3 floors of unsold ICE cars just sitting in a parking garage?

WHAT! Not even charging ??!

 

[ZeApelido]

Anyone else love driving up to the daly city SC and see the 3 floors of unsold ICE cars just sitting in a parking garage?

There are buildings in Daly City? I thought it was nothing but thick fog.

 

[Krugerrand]

Can we temper expectations on some blowout Q4 results/deliveries?

Did that 82 pages ago. 83,000. Final answer. Spread the word. (And hold)

 

[MarcusMaximus]

Uhh, what’s their point supposed to be? The “no demand” narrative would be served by showing empty Superchargers. Crowded Superchargers imply... we need more Superchargers because there are so many Teslas on the road.

I detect a gaping defect in logic.

They’re not trying to make a point to investors, they’re trying to dissuade people from buying cars from Tesla. And, of course, have no issue with making contradictory points for different audiences.

 

[KarenRei]

They’re not trying to make a point to investors, they’re trying to dissuade people from buying cars from Tesla. And, of course, have no issue with making contradictory points for different audiences.

This.

If you ever want to get mad, check out Scot Work's twitter page (@ghost_scot) and see what they do. They search out prospective customers and try to scare them off, and search out any owners with any sort of problems, try to convince them that everyone has their problem and hates Tesla, and to convince them to return their cars, sue Tesla, and/or complain to the media. They of course never bother mentioning that they're short-sellers.

If any of you ever have any spare time, by all means check his page regularly to see who they're targeting and let their victims know what game they're being played with.

 

[kbM3]

Why are you dealing in absolute values when discussing relative price comparisons? $3/kg raw materials costs is indeed many times more expensive than your typical mix of mild, high strength, and ultra-high strength steel structure with alumium body panels. Their average structural raw material cost is probably something like $0,75/kg at present.

And as for money saved on building new lines, remember early this year, Deepak stated that total depreciation on Model 3s was well less than $2k per vehicle. And it would of course be even less now.



Passenger car values don't decline linearly with age; they decline quickly, and then start to level off at a small fraction of their initial value. One may feel that that's not the way it should be, but it's the way it is. Extending the lifespan consequently has a minimal impact on TCO - in particular because those extra years are "way in the future", and thus highly depreciated via time value. You also have to extend the life of every other part of the vehicle to actually get more years, not just the frame.



I think you're dreaming if you expect insurance rates to decline dramatically (let alone halve). The car may not be readily scratched or dinged, but in an accident, it's still going to get damaged, and it's going to have full liability costs for in said accidents - and said liability costs might be even worse due to a less pedestrian-forgiving design.

Things like rust are generally significantly in the future, and thus heavily depreciated.

It's a simple matter of, if the Model 3 SR+ had a range of under 200 miles, and a LR had a range of under 250 miles, and both had correspondingly higher charge costs, and charge times, and shorter pack lives, and on and on... how much would that cost you in sales, vs. "well, it's tough to scratch and won't rust"? For a pickup? Sure, I'd go with the latter - "toughness" is the whole marking basis of pickups. For a sedan? No question, the former.



I compared to the Model 3 because that's the vehicle people have been cyberizing, and the vehicle for which we have an actual drag coefficient. But since Model X's drag coefficient has been alternatively reported at 0,24 and 0,25, relative to the Model S's 0,24, why would you expect a 0,02 gain for the Model Y vs. the Model 3?



Efficiency is a parameter that buyers hardly value at all. The knock-on impacts of efficiency, however, are highly valued by customers. These dramatic knock-on effects (range, charge times, longevity, operating costs, etc etc) are what has given Tesla their success in the marketplace vs. less efficient vehicles.

And efficiency is a major part of TCO. Efficiency is how much you pay for power at home, how much you pay on the road, and how quickly you rack up cycles on your (very expensive) battery pack, as well as how deep you're cycling said pack to go a given distance.

to add to your point, at Autonomy Investor Day, Tesla stated 4.5 miles/kWh initially and hopefully 5 miles/ kWh so they are definitely targeting efficiency in the dedicated robo-taxi, and one would presume that requires great aero.

 

[ReflexFunds]

Can we temper expectations on some blowout Q4 results/deliveries?

• There is no real reason to believe deliveries will increase much beyond Q3 regardless of team leaves read into ship loading. That may point to increased international deliveries but doesn't mean a proportional increase in US deliveries. I haven't seen anything to indicate some breakthrough in Fremont production this quarter and it doesn't look as if GF3 will contribute to deliveries in any meaningful way, so my guess is 98-102k.
• Profits in Q3 were substantially driven by $30M and $143M regulatory credits, otherwise Tesla lost money. There is no reason to think those will be any less so I do anticipate another profitable quarter, just not a blow out.

I do think Tesla will post record deliveries and a profit in Q4, just not a crazy large one. I think they will make guidance for the year on deliveries (be a big miss if they didn't!) and I do think there are good tailwinds going into Q1 and anticipate a much better Q1 than last year. I just think we should avoid excess exuberance since I don't think there are any big things that will drive things to a huge quarter. I also think they would prefer to push some of that forward into Q1 rather than post, for example, $750M of deferred FSD revenue in Q4.

Long term, still really excited for developments next year.

I don’t think people should count on a blowout quarter and I definitely don’t recommend people betting more than they can lose on short term stock price gains from Q4 deliveries/earnings, however it’s also stupid to ignore that there is at least a possibility of a large increase in production this Q, particularly in light of accumulating evidence. You are never going to make money on the stock market if you discard new evidence just because it doesn't match current consensus - consensus is priced in. You make money when you are right and consensus is wrong.

I’m sticking with a base case deliveries estimate of 110k (hitting minimum FY guidance requires towards 105k), but I think it is possible production could be anywhere from 104k to 120k and deliveries up to 130k given the 15k Model 3 inventory at the end of q3.

We have many data points which alone I would largely ignore, but together are painting a consistent picture: Jerome’s July email, CFTC supplier comments, Q3 “commercial negotiations” COGs reduction, Elon’s Q2 FY guidance, Galliers and Ellinghorst due diligence last year, Panasonic public comments, Carsonight leak, International shipments tracking, US delivery data in Troy’s spreadsheet.


Arguments for a large step up in Model 3 Fremont production:

• In July Jerome told employees they were preparing to raise output at Fremont. "The company is “making preparations” to raise output at its auto plant in Fremont, California, Tesla’s automotive president, Jerome Guillen, said in an email to employees on Tuesday. “While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”
• In July CFTC announced doubling of Model 3 components starting in August 2019. 'Precision stamping service provider China FineBlanking Technology (CFTC) will increase monthly shipments of components for relays used in Tesla Model 3 from about 20,000 units currently to 40,000 beginning August 2019, according to industry sources.” Presuming this is for both US and GF3, this could be towards 10k per week Model 3 production capacity.
• During Q3 Tesla achieved a very significant reduction in COGs which they partially attributed to "commercial negotiations with suppliers”. A significant reduction in supplier prices is consistent with a significant ramp in orders which delivers the supplier staff and depreciation cost leverage.
• In the Q2 call Elon said he expected Fremont Model 3 production to get to 8.3-8.6k per week by year end (but of course he may have been misspeaking and thinking about global production). Joseph Osha: And just as a follow-on then, could we see you manage to make 8,000, 7,500, 8,000 Model 3s in Fremont by the end of the year you think? Elon: Yes. I mean I feel confident it's -- let's just say that the trend is very clearly towards being able to get to 10,000 vehicles a week of which that would be -- there is rough numbers like 8,300 to 8,600 Model 3s and the balance in S and X. So, there's sort of 1,600 to 1,800 SX. In round numbers 8,500 3s, 1,500 SX per week, but probably a bit more than that.”
• Last year the Galliers and Ellinghorst report said Fremont could get Model 3 production to 8-10k per week with limited capex. “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.
• Panasonic published a graph showing a predicted 20% QoQ GF1 cell production increase in Q4 in a public presentation last week.
• Carsonight reported 20% QoQ GF1 Pack production increase to 8k per week. Cleantechnica reported 7k packs were sent to China in the 12 weeks to mid October before shipments were finished. If we assume this is true and there has been no further pack stockpile build since, then about 10 out of 12 weeks were produced in Q3 and 2 of 12 in Q4 (so 1.2k packs sent in Q4). This puts Q4 packs going to Fremont at 13*8k -1.2k = 104k -1.2k = 102.8k Model 3s produced at Fremont
• International ship loading days up 60% QoQ QTD and assuming we are now finished for the quarter, will finish up 49% QoQ. This suggests International Shipments of 50-55k Model 3s this quarter. This is real data by the way and not "tea leaves", some people are spending a huge amount of time tracking all the shipments.
• US delivery date entries in Troy's tracker are up 40% in the first 64 days of the quarter (up to December 3rd) vs the first 64 days of Q3. I have seen many people assume Tesla has been producing 100% international cars this quarter, but this doesn't look to be true at all. It seems US production has also increased QoQ so far this quarter. There are 149 delivery date entries in the spreadsheet in this period in Q4 vs 114 in the same period of Q3, 40% QoQ growth. This did include a large acceleration in the last 7 days. If we assume Tesla stopped International production after 57 days this Q we can instead take just the first 57 days of Q4. Here there are 107 entries or +4% growth vs 103 in Q3. InsideEVs estimated 44k US deliveries in Q3 (I don't trust their monthly breakdown) and in Troy's tracker 1/3rd of Q3 US delivery entries were in the first 57 days - suggesting c.15k US deliveries in the first 57 days of Q3. Taking 4% growth suggests 15.5k deliveries in this period of Q4. If we assume half of these were inventory and half new production it suggests Tesla potentially produced 58-63k Model 3s in the first 57 days - which extrapolates to 93k-101.5k total Q4 Model 3 production and largely reconciling with the datapoints we have from GF1.

Arguments against a large step up in Model 3 Fremont production:

• We haven’t heard stories of significant production shut down or new equipment installation at Fremont.
• We haven’t heard any specific leaks that Tesla is aiming for a huge step up in delivery targets this quarter. (But these emails are more common when Tesla is fighting to meet targets and may not be necessary if they are already almost sold out for the Q).
• Why did Tesla not ramp up to this production rate before if they had the capacity with limited capex? (Most likely because they needed to wait for Panasonic cell production rate to catch up and for word of mouth marketing plus new region rollouts to get quarterly demand to the next level.)
• Ramping up Model 3 production in the US shortly before ending exports to China and also shortly before potentially cannibalising demand with Model Y launch could lead to excess production for US and European markets next year. However it’s possible this ramp is only temporary and they will redirect components to GF3 and Model Y next year when the new production lines are ready for them.
• Towards 100k Model 3 production in Q4 just feels too good to be true.

 

[KarenRei]

I don’t think people should count on a blowout quarter and I definitely don’t recommend people betting more than they can lose on short term stock price gains from Q4 deliveries/earnings, however it’s also stupid to ignore that there is at least a possibility of a large increase in production this Q, particularly in light of accumulating evidence. You are never going to make money on the stock market if you discard new evidence just because it doesn't match current consensus - consensus is priced in. You make money when you are right and consensus is wrong.

I’m sticking with a base case deliveries estimate of 110k (hitting minimum FY guidance requires towards 105k), but I think it is possible production could be anywhere from 104k to 120k and deliveries up to 130k given the 15k Model 3 inventory at the end of q3.

We have many data points which alone I would largely ignore, but together are painting a consistent picture: Jerome’s July email, CFTC supplier comments, Q3 “commercial negotiations” COGs reduction, Elon’s Q2 FY guidance, Galliers and Ellinghorst due diligence last year, Panasonic public comments, Carsonight leak, International shipments tracking, US delivery data in Troy’s spreadsheet.


Arguments for a large step up in Model 3 Fremont production:

• In July Jerome told employees they were preparing to raise output at Fremont. "The company is “making preparations” to raise output at its auto plant in Fremont, California, Tesla’s automotive president, Jerome Guillen, said in an email to employees on Tuesday. “While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”
• In July CFTC announced doubling of Model 3 components starting in August 2019. 'Precision stamping service provider China FineBlanking Technology (CFTC) will increase monthly shipments of components for relays used in Tesla Model 3 from about 20,000 units currently to 40,000 beginning August 2019, according to industry sources.” Presuming this is for both US and GF3, this could be towards 10k per week Model 3 production capacity.
• During Q3 Tesla achieved a very significant reduction in COGs which they partially attributed to "commercial negotiations with suppliers”. A significant reduction in supplier prices is consistent with a significant ramp in orders which delivers the supplier staff and depreciation cost leverage.
• In the Q2 call Elon said he expected Fremont Model 3 production to get to 8.3-8.6k per week by year end (but of course he may have been misspeaking and thinking about global production). Joseph Osha: And just as a follow-on then, could we see you manage to make 8,000, 7,500, 8,000 Model 3s in Fremont by the end of the year you think? Elon: Yes. I mean I feel confident it's -- let's just say that the trend is very clearly towards being able to get to 10,000 vehicles a week of which that would be -- there is rough numbers like 8,300 to 8,600 Model 3s and the balance in S and X. So, there's sort of 1,600 to 1,800 SX. In round numbers 8,500 3s, 1,500 SX per week, but probably a bit more than that.”
• Last year the Galliers and Ellinghorst report said Fremont could get Model 3 production to 8-10k per week with limited capex. “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.
• Panasonic published a graph showing a predicted 20% QoQ GF1 cell production increase in Q4 in a public presentation last week.
• Carsonight reported 20% QoQ GF1 Pack production increase to 8k per week. Cleantechnica reported 7k packs were sent to China in the 12 weeks to mid October before shipments were finished. If we assume this is true and there has been no further pack stockpile build since, then about 10 out of 12 weeks were produced in Q3 and 2 of 12 in Q4 (so 1.2k packs sent in Q4). This puts Q4 packs going to Fremont at 13*8k -1.2k = 104k -1.2k = 102.8k Model 3s produced at Fremont
• International ship loading days up 60% QoQ QTD and assuming we are now finished for the quarter, will finish up 49% QoQ. This suggests International Shipments of 50-55k Model 3s this quarter.
• US delivery date entries in Troy's tracker are up 40% in the first 64 days of the quarter (up to December 3rd) vs the first 64 days of Q3. I have seen many people assume Tesla has been producing 100% international cars this quarter, but this doesn't look to be true at all. It seems US production has also increased QoQ so far this quarter. There are 149 delivery date entries in the spreadsheet in this period in Q4 vs 114 in the same period of Q3, 40% QoQ growth. This did include a large acceleration in the last 7 days. If we assume Tesla stopped International production after 57 days this Q we can instead take just the first 57 days of Q4. Here there are 107 entries or +4% growth vs 103 in Q3. InsideEVs estimated 44k US deliveries in Q3 (I don't trust their monthly breakdown) and in Troy's tracker 1/3rd of Q3 US delivery entries were in the first 57 days - suggesting c.15k US deliveries in the first 57 days of Q3. Taking 4% growth suggests 15.5k deliveries in this period of Q4. If we assume half of these were inventory and half new production it suggests Tesla potentially produced 58-63k Model 3s in the first 57 days - which extrapolates to 93k-101.5k total Q4 Model 3 production and largely reconciling with the datapoints we have from GF1.

Arguments against a large step up in Model 3 Fremont production:

• We haven’t heard stories of significant production shut down or new equipment installation at Fremont.
• We haven’t heard any specific leaks that Tesla is aiming for a huge step up in delivery targets this quarter. (But these emails are more common when Tesla is fighting to meet targets and may not be necessary if they are already almost sold out for the Q).
• Why did Tesla not ramp up to this production rate before if they had the capacity with limited capex? (Most likely because they needed to wait for Panasonic cell production rate to catch up and for word of mouth marketing plus new region rollouts to get quarterly demand to the next level.)
• Ramping up Model 3 production in the US shortly before ending exports to China and also shortly before potentially cannibalising demand with Model Y launch could lead to excess production for US and European markets next year. However it’s possible this ramp is only temporary and they will redirect components to GF3 and Model Y next year when the new production lines are ready for them.
• Towards 100k Q4 Model 3 production in Q4 just feels too good to be true.

Agreed. As weird as it sounds, your last bullet point - "just feels too good to be true" - is the one that makes it hardest for me to accept. It's "what we'd love to hear", which automatically makes it suspect. Even though there's quite a good bit of evidence pointing at it.

 

[Words of HABIT]

This image comparing size of M3 to CT speaks volumes. Surely CT will sell like hotcakes, however it does not suit big City driving, even if it does know how to park itself. It is a work vehicle, likely to become the best mass market work vehicle ever built. Still, looking forward to the MY with seven seats with third row.

Many on this forum and outside have commented on small modifications to the CT in hopes to improve the looks, however I've yet to see any modification by others to Franz's design that made the Cybrtruck look better.

 

[winfield100]

Sorry, in the dark here. Could you elaborate please?

Sorry, it’s an allusion to the Culture Ship “Sleeper Service” from the novel “Excession” that has probably spent at least the last 40+ years building FTL engines and can out accelerate probably all the GCU’s to at least 233,500x the speed of light.
If you haven’t read any Iain M Banks science fiction,
I suggest you start with “Consider Phlebas” then the other ~9 more.
Read Next “Player of games” where the drone ships got their names
Elon seems to have read some of these for ideas.
(I really need a neurallace like yesterday)
“Of course I still love you” is the name of a ship, as is “just read the instructions”



Culture series - Wikipedia
(There is also a reference to Elon essentially saving humanity in the novel “7 Eves” by pushing an iceberg across the solar system with a fusion powered hijacked space ship so the ISS can use the mass to boost to a higher orbit after the moon breaks up and bombards the surface in a hellacious meteor shower of really big rocks and he dies of rad poisoning but leaves clues how to get in like names of Culture Ships)
Ok?

 

[Prunesquallor]

(There is also a reference to Elon essentially saving humanity in the novel “7 Eves” by pushing an iceberg across the solar system with a fusion powered hijacked space ship so the ISS can use the mass to boost to a higher orbit after the moon breaks up and bombards the surface in a hellacious meteor shower of really big rocks and he dies of rad poisoning but leaves clues how to get in like names of Culture Ships)
Ok?

OT
I really liked Seveneves and also wondered about the Elon-esque character. Interestingly, Neal Stephenson collaborated with Jeff Bezos during the Blue Origin startup years.

 

[Words of HABIT]

I don’t think people should count on a blowout quarter and I definitely don’t recommend people betting more than they can lose on short term stock price gains from Q4 deliveries/earnings, however it’s also stupid to ignore that there is at least a possibility of a large increase in production this Q, particularly in light of accumulating evidence. You are never going to make money on the stock market if you discard new evidence just because it doesn't match current consensus - consensus is priced in. You make money when you are right and consensus is wrong.

I’m sticking with a base case deliveries estimate of 110k (hitting minimum FY guidance requires towards 105k), but I think it is possible production could be anywhere from 104k to 120k and deliveries up to 130k given the 15k Model 3 inventory at the end of q3.

We have many data points which alone I would largely ignore, but together are painting a consistent picture: Jerome’s July email, CFTC supplier comments, Q3 “commercial negotiations” COGs reduction, Elon’s Q2 FY guidance, Galliers and Ellinghorst due diligence last year, Panasonic public comments, Carsonight leak, International shipments tracking, US delivery data in Troy’s spreadsheet.


Arguments for a large step up in Model 3 Fremont production:

• In July Jerome told employees they were preparing to raise output at Fremont. "The company is “making preparations” to raise output at its auto plant in Fremont, California, Tesla’s automotive president, Jerome Guillen, said in an email to employees on Tuesday. “While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”
• In July CFTC announced doubling of Model 3 components starting in August 2019. 'Precision stamping service provider China FineBlanking Technology (CFTC) will increase monthly shipments of components for relays used in Tesla Model 3 from about 20,000 units currently to 40,000 beginning August 2019, according to industry sources.” Presuming this is for both US and GF3, this could be towards 10k per week Model 3 production capacity.
• During Q3 Tesla achieved a very significant reduction in COGs which they partially attributed to "commercial negotiations with suppliers”. A significant reduction in supplier prices is consistent with a significant ramp in orders which delivers the supplier staff and depreciation cost leverage.
• In the Q2 call Elon said he expected Fremont Model 3 production to get to 8.3-8.6k per week by year end (but of course he may have been misspeaking and thinking about global production). Joseph Osha: And just as a follow-on then, could we see you manage to make 8,000, 7,500, 8,000 Model 3s in Fremont by the end of the year you think? Elon: Yes. I mean I feel confident it's -- let's just say that the trend is very clearly towards being able to get to 10,000 vehicles a week of which that would be -- there is rough numbers like 8,300 to 8,600 Model 3s and the balance in S and X. So, there's sort of 1,600 to 1,800 SX. In round numbers 8,500 3s, 1,500 SX per week, but probably a bit more than that.”
• Last year the Galliers and Ellinghorst report said Fremont could get Model 3 production to 8-10k per week with limited capex. “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.
• Panasonic published a graph showing a predicted 20% QoQ GF1 cell production increase in Q4 in a public presentation last week.
• Carsonight reported 20% QoQ GF1 Pack production increase to 8k per week. Cleantechnica reported 7k packs were sent to China in the 12 weeks to mid October before shipments were finished. If we assume this is true and there has been no further pack stockpile build since, then about 10 out of 12 weeks were produced in Q3 and 2 of 12 in Q4 (so 1.2k packs sent in Q4). This puts Q4 packs going to Fremont at 13*8k -1.2k = 104k -1.2k = 102.8k Model 3s produced at Fremont
• International ship loading days up 60% QoQ QTD and assuming we are now finished for the quarter, will finish up 49% QoQ. This suggests International Shipments of 50-55k Model 3s this quarter. This is real data by the way and not "tea leaves", some people are spending a huge amount of time tracking all the shipments.
• US delivery date entries in Troy's tracker are up 40% in the first 64 days of the quarter (up to December 3rd) vs the first 64 days of Q3. I have seen many people assume Tesla has been producing 100% international cars this quarter, but this doesn't look to be true at all. It seems US production has also increased QoQ so far this quarter. There are 149 delivery date entries in the spreadsheet in this period in Q4 vs 114 in the same period of Q3, 40% QoQ growth. This did include a large acceleration in the last 7 days. If we assume Tesla stopped International production after 57 days this Q we can instead take just the first 57 days of Q4. Here there are 107 entries or +4% growth vs 103 in Q3. InsideEVs estimated 44k US deliveries in Q3 (I don't trust their monthly breakdown) and in Troy's tracker 1/3rd of Q3 US delivery entries were in the first 57 days - suggesting c.15k US deliveries in the first 57 days of Q3. Taking 4% growth suggests 15.5k deliveries in this period of Q4. If we assume half of these were inventory and half new production it suggests Tesla potentially produced 58-63k Model 3s in the first 57 days - which extrapolates to 93k-101.5k total Q4 Model 3 production and largely reconciling with the datapoints we have from GF1.

Arguments against a large step up in Model 3 Fremont production:

• We haven’t heard stories of significant production shut down or new equipment installation at Fremont.
• We haven’t heard any specific leaks that Tesla is aiming for a huge step up in delivery targets this quarter. (But these emails are more common when Tesla is fighting to meet targets and may not be necessary if they are already almost sold out for the Q).
• Why did Tesla not ramp up to this production rate before if they had the capacity with limited capex? (Most likely because they needed to wait for Panasonic cell production rate to catch up and for word of mouth marketing plus new region rollouts to get quarterly demand to the next level.)
• Ramping up Model 3 production in the US shortly before ending exports to China and also shortly before potentially cannibalising demand with Model Y launch could lead to excess production for US and European markets next year. However it’s possible this ramp is only temporary and they will redirect components to GF3 and Model Y next year when the new production lines are ready for them.
• Towards 100k Model 3 production in Q4 just feels too good to be true.

ReflexFunds, excellent helpful post.

I as well caution investors to temper expectations regarding Q4. If the last two quarters are any indication, Mr. Market is very short cited and only cares about profit. After all, Tesla is no longer a start up after 16 years.
- In Q2, cars produced > cars delivered (which proved disastrous for TSLA)
- In Q3, cars produced = cars delivered (which bode well for the recovery of TSLA)

If I may cherry pick your numbers, using your high case production of 120k and base case deliveries of 110k (difference between production and deliveries due to cars in transit), longer term would be very bullish. However, short term Q4 would have approx. $350M in reduction of profit due to manufacturing costs of 10,000 cars that have yet to be delivered and paid for. CapEx for MY, Semi, G3 is a wild card, however any CapEx amount would be amortized over 10 years.

Looking forward to G3 Shanghai helping to smooth out deliveries starting in 2020. Also looking forward to other Tesla products (solar and power wall, and MY) to contribute to profits in 2020. Onward and upward. Enjoy the ride. The future is here.

 

[Prunesquallor]

ReflexFunds, excellent helpful post.

I as well caution investors to temper expectations regarding Q4. If the last two quarters are any indication, Mr. Market is very short cited and only cares about profit. After all, Tesla is no longer a start up after 16 years.
- In Q2, cars produced > cars delivered (which proved disastrous for TSLA)
- In Q3, cars produced = cars delivered (which bode well for the recovery of TSLA)

If I may cherry pick your numbers, using your high case production of 120k and base case deliveries of 110k (difference between production and deliveries due to cars in transit), longer term would be very bullish. However, short term Q4 would have approx. $350M in reduction of profit due to manufacturing costs of 10,000 cars that have yet to be delivered and paid for. CapEx for MY, Semi, G3 is a wild card, however any CapEx amount would be amortized over 10 years.

Looking forward to G3 Shanghai helping to smooth out deliveries starting in 2020. Also looking forward to other Tesla products (solar and power wall, and MY) to contribute to profits in 2020. Onward and upward. Enjoy the ride. The future is here.

Being unknowledgeable in corporate finance, are there mechanisms for Tesla to defer some Q4 profits to Q1 to enable both quarters profitable?

 

[Green Pete]

Being unknowledgeable in corporate finance, are there mechanisms for Tesla to defer some Q4 profits to Q1 to enable both quarters profitable?

Rolling out FC FSD on first day of January instead of last day of December would give Q1 quite a boost in revenue

 

[The Accountant]

Being unknowledgeable in corporate finance, are there mechanisms for Tesla to defer some Q4 profits to Q1 to enable both quarters profitable?

In the example used by @Words of HABIT in their post above, the cars of 10,000 produced and not sold do not impact the Q4 profit. Those costs go to the balance sheet as Inventory. It moves from Inventory to Cost of Goods Sold (impacting profit) once the vehicles are sold (delivered) in Q1 2020.
So producing more cars than delivered does not hurt profits (only cash flow).

Edit: The 10,000 over-production is only an example. I don't believe that production will exceed deliveries in Q4 by any material quantity. It may be the reverse: deliveries may exceed production with a slight draw-down of inventories.

 

[hacer]

Since the Cybertruck lacks paint, the reliability score on Consumer Reports would be through the roof! At least 110/100

(remember CR last year on Model3 how paint issues affect reliability of the vehicle? I remember!!)

Actually CR would give it 0/100 because of inadequate paint coverage, and this will factor in the reliability metric forever too. It's how they roll.

 

[The Accountant]

Being unknowledgeable in corporate finance, are there mechanisms for Tesla to defer some Q4 profits to Q1 to enable both quarters profitable?

As soon as Q4 goals are achieved in December, Tesla can direct remaining produced vehicles to Europe and Asia. Getting cars onto ships in the last 2 weeks of December will result in Sales for Q1 2020 as the deliveries would not occur until then.

Edit: But there is the US tax credit to contend with. So I am not sure how feasible directing vehicles abroad would be.