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

[smalltownguy]

Any insights on the reason for the salary reductions?

 

[Pras]

BTW, tesla should have furloughed sooner. When the government is paying unemployment insurance (aided by 2T aid package), no reason for tesla to pay salary. I know that this sounds sad but as per the HR email, most furloughed employee will get salary equivalent insurance amount.

As for salary reduction, there will be chance to cover for it at a later time.

 

[dw4ngg]

Any insights on the reason for the salary reductions?

“While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans. Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.”

managing costs to achieve long term plans

 

[powertoold]

What I gather is:

• All assembly line factory workers (GF1, Fremont, and GF2) will be furloughed
• Employees who are WFH will continue (supply chain / R&D / FSD / engineering / corporate)
• Employees involved in factory improvement or maintenance will continue on site

 

[Pras]

“While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans. Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.”

managing costs to achieve long term plans

Salaried worker take cut (as did GM) to show solidarity with furloughed workers. Needless to say it also helps with cash.

Also, most employed workers will have lower 2020 compensation directly or indirectly (I am already expecting big cut in my bonus).

 

[Krugerrand]

Any insights on the reason for the salary reductions?

Huh?

 

[EVNow]

Employees who cannot work at home and have not been assigned to critical work onsite will be furloughed.

So, looks like Tesla is implementing furlough now - so in Q1, they paid full salary to everyone. That will affect auto-margin.(I think?)

 

[ZeApelido]

Leaked email: Tesla to furlough workers, cut pay amid coronavirus shutdowns

Looks like they are targeting May 4th as the restart date.

I was going to point out this rumor yesterday but given I am in the doghouse in this thread, I passed

 

[Prunesquallor]

Leaked email: Tesla to furlough workers, cut pay amid coronavirus shutdowns

Looks like they are targeting May 4th as the restart date.

Oooh, oooh. Let me glory in my predictability. No, predictacapacity. No, uh, predictionapathy. No, uh, lucky guessing.

Path forward and possible TSLA implications:
...
~April 22 - Earnings Report
~May 1 - Fremont reopens (based on IHME CA predictions and AEI guidelines)
~May 4 - Giga Nevada reopens (based on IHME NV predictions and AEI guidelines)
...

 

[MC3OZ]

So a full 6 weeks of shutdown, with gradual restart of a few weeks at best... does someone a has model to estimate impact on production for 2020? Looks in the ballpark of -80k...

I see why you say that 10 weeks at 8K per week.....

But offsetting factors are:-

• around 2 weeks of the shutdown occurred in Q1(production was still reasonable)
• improvements made to Fremont during the shutdown
• further ramp of production in Shanghai.

As an optimistic guess:-

• Fremont - 2 weeks at 3K, 6 weeks at 9K = 60K
• Shanghai - 13 weeks at 3K = 39K

So perhaps close to 100K if things go very well from here... of course it could be less.

 

[MC3OZ]

Any insights on the reason for the salary reductions?

Perhaps fewer cars to sell

 

[Singuy]

So, looks like Tesla is implementing furlough now - so in Q1, they paid full salary to everyone. That will affect auto-margin.(I think?)

I am still wondering how accounting works with paid time off since it's salary owed but not yet granted until use. Was it already realized in expenses already from past ER or is it realized when it's used?

 

[Opus BC fan]

OT - RIP John Prine
I like to think you're drinking beers and playing up a storm with Steve Goodman now...

 

[EVNow]

I am still wondering how accounting works with paid time off since it's salary owed but not yet granted until use. Was it already realized in expenses already from past ER or is it realized when it's used?

Wouldn’t paid time off be ... paid now ? So, would go into wages and thus COGS. If the employees were simply asked to take accrued leave, then, depending on if the accrued leave was already accounted for or not, accounting treatment could change.

A simple way to look at it is wages are about 1/13 higher than earlier quarters in Q1, per car. Could be a bigger impact in Q2 - but with lower SGA.

 

[Singuy]

Wouldn’t paid time off be ... paid now ? So, would go into wages and thus COGS. If the employees were simply asked to take accrued leave, then, depending on if the accrued leave was already accounted for or not, accounting treatment could change.

A simple way to look at it is wages are about 1/13 higher than earlier quarters in Q1, per car. Could be a bigger impact in Q2 - but with lower SGA.

It's paid now, but that doesn't mean it's realized now as an expense. For instance, my hospital encourages people to take paid time off right now to save the hospital money. How would taking paid time off today saves our hospital money unless our paid time off was realized as expense already? My hospital assign a dollar value to every hour of PTO we get, and I have a feeling their expense report has this value as expense already. We as employees have the option to cash this paid time off anytime(so it's almost like we get paid say 5k + 500 dollars worth of pto per paycheck. So the expense would say 5500 paid to employee, but I only get 5000 on my paycheck with 500 dollars worth of pto which can be either used or be cashed out.

It's like FSD revenue but backwards.

 

[XHabjab]

Technically they are making <7.5k a week. So 6 week is only 45k. Ramp up slowness can be covered over time, given they will add some efficiency. Yes Q2 can be slow, I guess 70-90k deliveries (from the inventory 20k, and new production from China GF3 20-30k, and Fremont 45k).

I think we're looking at various startup models that are too simplistic. I see several things that complicate forecasts and restart timing:

• Since pretty much the Model S days at least, the manufacturing process has been battery constrained.
• The letter that was leaked to us seems to have gone to Fremont employees. It is not clear what may or may not have gone to GF Nevada or GF New York. NY doesn't have much impact on Fremont but Nevada does.
  
• Most cars made in Fremont have 2170 (21700) batteries that are made, assembled to packs and modules in Nevada. We don't have a good picture of what has happened there recently. Panasonic shut down mid-March. Are Tesla employees manufacturing Model 3 batteries? If so, what kind and what chemistry/chemistries?
  
• The 18650 batteries for Model S/Model X come from Asia, and are likely arriving on ships that are either on time or inhibited less than the Nevada stock.
• "Battery Day" is supposed to be this month. The presentation details have changed, but it still seems to be on time. There are likely to be more than a few surprises.
• There are likely other supply chain issues unrelated to batteries. The strength of a chain is the strength of the weakest link.

If Fremont is back up to speed on May 4, then the suppliers and GF Nevada will need to be in operation before that date.

 

[mblakele]

For context:

Honda, Nissan announce furloughs, layoffs | NHK WORLD-JAPAN News

[...]

Honda says it will furlough about 18,000 workers at plants in the US. The carmaker has been drawing down operations at its eight factories in the country since late March. The company says they will remain offline until May 1st.

Honda will cover worker salaries until the middle of April. The automaker says after that, employees should seek government subsidies.

Nissan has also announced it will temporarily lay off about 3,000 workers, including those at its plant in Barcelona, Spain.

[...]​

 

[EVNow]

It's paid now, but that doesn't mean it's realized now as an expense. For instance, my hospital encourages people to take paid time off right now to save the hospital money. How would taking paid time off today saves our hospital money unless our paid time off was realized as expense already? My hospital assign a dollar value to every hour of PTO we get, and I have a feeling their expense report has this value as expense already. We as employees have the option to cash this paid time off anytime(so it's almost like we get paid say 5k + 500 dollars worth of pto per paycheck. So the expense would say 5500 paid to employee, but I only get 5000 on my paycheck with 500 dollars worth of pto which can be either used or be cashed out.

It's like FSD revenue but backwards.

Yes, that’s the part where I was talking about accrued expense of PTO. Not sure how Tesla treats it / what GAAP demands.

 

[Prunesquallor]

Leaked email: Tesla to furlough workers, cut pay amid coronavirus shutdowns

Looks like they are targeting May 4th as the restart date.

I assume Tesla has pre-coordinated with state and county officials. Folks on the [shudder] CV thread are saying the CA Gov is still predicting CA peak deaths mid-May. IHME predicts 17 April.

IHME | COVID-19 Projections

 

[Singuy]

Yes, that’s the part where I was talking about accrued expense of PTO. Not sure how Tesla treats it / what GAAP demands.

What happened to The Accountant? Did he leave too?