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

[EVNow]

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.

Tesla may have a few days worth of parts - but they have to be assured of continuous supply before they restart. This whole thing is so messy.

 

[dakh]

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.

That is if there are that many buyers out there. I haven't seen anything yet that gives any clues as to what to expect demand-wise. We may hear something during ER or just see if there are price cuts and incentives.

 

[Tim S]

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.

If you read the whole letter, it clearly says U.S. facilities and U.S. employees, not Fremont only...

"...we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes."

That includes Fremont, Nevada and Buffalo.

 

[Tim S]

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

That link says New York will peak today (Wednesday). I hope they're right!

I have been told by a relative who is an MD to expect upstate NY (including Buffalo) to peak a week or two later than the NYC area. We should be considered a separate state in this situation. The population is much more spread out up here, so it's much easier to follow social distancing rules.

 

[deffu]

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.

[...]​

did those auto maker's stock go up after announcing furloughs?

 

[FrankSG]

A new video fresh out of Giga Shanghai!

特拉风T☰SLA mania on Twitter

 

[vickh]

they should be discounting OTA upgrades like AP to up revenue/FCF

 

[Singuy]

did those auto maker's stock go up after announcing furloughs?

I think what will move the stock is the May 4th announcement. I don't know if this is above or below expectations, but at least this gives a little bit of certainty which is always good for stocks atm.

 

[deffu]

I think what will move the stock is the May 4th announcement. I don't know if this is above or below expectations, but at least this gives a little bit of certainty which is always good for stocks atm.

ok, may the forth be with you! I was originally hoping for 4/20

 

[MC3OZ]

That is if there are that many buyers out there. I haven't seen anything yet that gives any clues as to what to expect demand-wise. We may hear something during ER or just see if there are price cuts and incentives.

I expect Fremont changes will allow more Model Y Production.
Chinese demand is hopefully still OK but overseas shutdowns may now slow the Chinese economy with the fewer orders.

Overtime they can maybe pivot as follows to higher demand products.

• Model Y (Q2)
• 35K Model 3 on menu (Q2?)
• Plaid Model S (Q3/Q4?)
• Semi (Q3/Q4?)

I don't think anyone can give a guarantee either way at this stage, you are right we might learn more in earnings.

So far no price cuts and incentives, but Q2 is perhaps likelier than Q1.

I've always thought a cheaper 35K Model 3 is a good option, if the can afford to do it on menu, even if they need to strip out basic autopilot.

 

[Pras]

I think what will move the stock is the May 4th announcement. I don't know if this is above or below expectations, but at least this gives a little bit of certainty which is always good for stocks atm.

If it moves down it will be good time to buy more as this news is not a new risk, rather adds more certainty. I would expect the stock to go down (partly because macro is expected to be under pressure after the recent run up).

SP levels to watch for me will be as follows (not a technical level but my judgment)

• >500 - hold (risk is still that factory remains closed longer)
• 450 - start adding to current
• 400 - add even more
• <350 - time to go all in TSLA

 

[MC3OZ]

Shipping times to Europe:- 2020 Shipping Movements

Anyway calculate on 3 weeks from Pier 80 to Europe.

Say they need to get cars to Europe by June 7-14 to have a chance of delivery... the cut off for production is May 17-24..

Sending 2-3 weeks of production to Europe, perhaps even some Model Ys seems possible..

Opening later than May 4 really makes this difficult.

EDIT: From a quick check, no ships have left for Europe since the Glovis Captain in February 2020. So they didn't make a batch of cars for Europe just before shutdown, because if they did surely they would be shipping them now. The best hope is some cars for Europe almost finished.

 

[wipster]

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

RIP John, In Spite of Ourselves

 

[dakh]

So far no price cuts and incentives, but Q2 is perhaps likelier than Q1.

They're not making cars so no point in price cuts yet. There are many ways to slice it, 35K M3 or discount autopilot or.. but bottom line is reduced margins, just the question of what kind of incentive will yield better demand at a lower margin cost. I personally sold about 30% of my holdings before the virus drop and got in a little bit back at $400 levels. I am entirely Ok getting back in at levels around when I got out ($700+), and I'm thinking that is the best we can do in the next quarter -- if demand is still strong, they're selling everything they make and they make a lot. Worst case is demand craters, which will kill margins due to both having to offer some discounts and not running production lines at full capacity. At that point the question is going to be how long is the slump going to last. Being conservative I'm holding dry powder for the not so good scenario, but hoping that I'm just going to break even here.

 

[Buckminster]

Nobody is more bullish than me on S&P500 inclusion. Two weeks ago, I gave the following odds:

I would now go with the following:
Q1 - 10%
Q2 - 30%

My Q2 odds of inclusion has gone from 90% to 80% to 30% to 5% (following the May 4th date).

Inclusion by November - 60%?

Company day at Buffalo - June is my guess (following Q1 ER showing small profit)
Battery day - August is my guess (following Q2 ER showing losses)

Despite my temporary loss of stupid bullishness, I remain 90% in long term (mostly June 21) calls . FOMO beats logic.

 

[Johann Koeber]

I am expecting no MY shipments to Europe, not this quarter, nor any time in 2020. Perhaps ever, if they can ramp Berlin GF as planned, thus not having to make European spec MYs in Fremont.

M3 new orders show June delivery here in Germany, I fully expect that to slip a couple months. We still have inventory in Europe, so limited sales are possible.

 

[EVMeister]

M3 new orders show June delivery here in Germany, I fully expect that to slip a couple months. We still have inventory in Europe, so limited sales are possible.

Same here in the UK. June showing for new orders, seems very unlikely.

 

[FrankSG]

A new video fresh out of Giga Shanghai!

特拉风T☰SLA mania on Twitter

It's now been uploaded to YouTube by Jason Yang:

 

[MC3OZ]

I am expecting no MY shipments to Europe, not this quarter, nor any time in 2020. Perhaps ever, if they can ramp Berlin GF as planned, thus not having to make European spec MYs in Fremont.

M3 new orders show June delivery here in Germany, I fully expect that to slip a couple months. We still have inventory in Europe, so limited sales are possible.

Originally I was expecting all European MYs to come from GF Berlin.

Shipping MYs to Europe Q2 was a possible solution if short term demand problems arise, on reflection Q3 is a much better chance.

I'm not sure if Tesla will have any demand problems, we don't actually know that.

One brilliant solution that solves all of their problems is release a very good upgrade to FSD in Q2, that would do the following:-

• Sell more cars
• Sell more FSD upgrades
• Allow them to recognise a lot of revenue..

In fact it is close the to the ideal time for that, and one time when they really need it.

It needs to be based on the rewrite, use the power of HW3 and be a lot better than the current version.. and it probably needs to be shipping around the start of June.

My odds on that, 50% chance.... it doesn't need to be the final fully baked version, just good enough for the difference to be apparent.

Perhaps if it can't be done, and demand is a problem, MYs to Europe Q3 may happen...

 

[junas]

Shipping few MYs to Europe can actually worsen the overall demand problem (should demand problem even arise). Many customers are buying M3s because it's the only option in Europe. Shipping a limited number of MYs to Europe right now would have very little effect on overall sales numbers. It could even be negative since more people probably decide to wait their MY for few months rather than buy M3 from inventory. Of course, in the long term it's better to sell a car with higher margin if MY availability is unlimited. That's not the case yet.

M3 inventory levels are still high in Europe according to tesla.com website. I browsed 10 random countries and Norway was the only one without any M3 inventory. Most countries have plenty of different trims/colors/etc to choose from. They are currently moving slowly, but I suppose European demand is quickly back if economy reboots.

Let's assume Fremont can operate 2-3 weeks of production for Europe this quarter (~50% of normal levels). It's more than enough given the current inventory levels and market situation in Europe. It's very unlikely they can sell much more than that. On the other hand, if none are shipped during Q2 then July & August will have more demand than supply. It would be optimal to have 2-3 ships to Europe this quarter, but more than that will likely end up in inventory.