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

[Oil4AsphaultOnly]

just read the shareholders letter, and haven't gotten past page 447 [Edit: on this thread], but just so happy to say that it beat all of my expectations! Hope the rest of the market agrees tomorrow!

 

[MD70]

They have also explained why they expect a small profit in Q1 ( number of vehicles in transit) so no real worries on that front.
However I would have liked to see more details about the semi roll out.

 

[mikevbf]

"A new manufacturing line made by Tesla Grohmann is further increasing production of Powerwall and Powerpack modules at Gigafactory 1. With a better supply of cells and new manufacturing equipment, we are aiming to more than double energy storage deployments to over 2 GWh in 2019."

Interesting... I hope we hear more about Tesla Grohmann advances in the lines both for energy products as well as vehicle battery packs. Anyone reading this asking questions at the conference call, please ask for a deep dive on this subject.

 

[Hock1]

"This year should be a truly exciting one for Tesla. Model 3 will become a global product, the profitability of our business should become sustainably positive, our new Gigafactory Shanghai should start producing cars, and we will start tooling for Model Y production. Our growth opportunities are massive. Our accomplishments have been possible thanks to the exceptional effort of our employees and the support of our customers, suppliers and investors. We hope you’re as excited as we are about 2019."

At this point, I don't know how anyone can afford not to own TSLA.

Looking to sell 45-65% more vehicles in 2019 with an increase in operating expenses of 10%. They will be printing money after blip in Q1.

 

[reddit_tl]

A strong fight is still going on.

This is probably headlines working their magic. Temporarily.

 

[Fact Checking]

Some tidbits from the update letter:

• Both Q4 operating cash flow and profits are artificially lower by $141m, because the land purchase capex in China apparently had to be accounted as opex, because it's a 50-year lease, not ownership.
• So the real operating cash flow was not $1.23b but $1.37b - this is strong.
• Very nice overall opex drop - didn't expect this.
• Payables expansion was minimal - and there's further growth in receivables, which is the main reason why cash flow wasn't even stronger. This might help Q1 cash flow.
• Almost zero ZEV sales - rainy day fund until the Trump cloud passes?
• European sales appear to be strong, so they'll take the in-transit pill in Q1 to fill the delivery pipeline. This is the reason for the "tiny Q1 profit" guidance.
• They are guiding Q4'19-Q2'20 ramp up to 3k/week of Model 3 production in China - very aggressive.
• They are guiding 7k/week at Fremont by end of 2019.
• Capex guidance is good, they can cover it all with internal cash.

 

[PaulRocket]

"A new manufacturing line made by Tesla Grohmann is further increasing production of Powerwall and Powerpack modules at Gigafactory 1. With a better supply of cells and new manufacturing equipment, we are aiming to more than double energy storage deployments to over 2 GWh in 2019."

Interesting... I hope we more about Tesla Grohmann advances in the lines both for energy products as well as vehicle battery packs. Anyone reading this asking questions at the conference call, please ask for a deep dive on this subject.

That also sounds like they will have some capacity for changing the S and X to 2170s. 2 GWh is nothing for a completely new manufacturing line, weren't their older lines doing something like 5-7 GWh each?

 

[Chocochip]

So 10,000 M3/week is just completely off the table eh?

My guess is they figured out that 7k/week is the sweet spot to balance current demand, and with GF3 in Shanghai becoming operational by the end of the year, and then (presumably) a European GF to follow, they won't need more.

 

[Buckminster]

S&P500 inclusion now likely to be September then...

 

[ZeApelido]

90% chance Model Y initial production starts in Fremint.

Reasons:

1. Previous talk of Fremont being production R&D center, exporting elsewhere later.

2. More experienced production talent in Bay Area than Reno.Growth pains in Reno. Housing issues and difficulty finding talent doesn't seem ideal to begin production of Tesla's highest volume product.

3. Warehouse and reshuffling of Fremont space to allow more production capacity.

Book it

Fail.

 

[Singuy]

My guess is they figured out that 7k/week is the sweet spot to balance current demand, and with GF3 in Shanghai becoming operational by the end of the year, and then (presumably) a European GF to follow, they won't need more.

My guess is that they are switching battery productions beyond the need of 7k model 3s and 2k S/X to build powerpacks. Seems like they received many wins going forward and doubling battery deployment for 2019. This gives them an opportunity to make more money from reduced operational cost of just sustaining model 3s at 7k while making a bunch of $$ selling just batteries to all these countries.

 

[AudubonB]

I like this a lot:

• In Q4, we recognized less than $1 million in ZEV credit sales compared to $52 million in Q3.
  
  I'm not going to name a poster as I may misremember who suggested it, but there was discussion here that Tesla has the ability to use or not use ZEV credit sales to massage any particular quarter. It looks to me as though they're saving dry powder for...the lean 1Q19 that they've been forewarning us, perhaps?
  
  
  On the other hand, would someone like to try a hand at the following? Is this "credit revenue that isn't ZEV", or is it "revenue that isn't ZEV credit"? And if the latter, does it mean that the overall sales mix was less juicy than in the prior quarter? Or something else?
  
  
  
  
• Non-GAAP Automotive gross margin decreased to 24.7% in Q4 from 25.5% in the prior quarter due to a $43 million decline in non-ZEV credit revenue and negative impact from Chinese import duties.

on edit: similar material pointed out by other posters while I was writing. No surprise.

 

[Joe F]

CNBC will shortly present Tesla bull-bear debate.

Yeah, I've seen Gabe Hoffman on CNBC before. More BS than bull.

He reminds me of someone who spent a lot of time in his high school locker with his shorts pulled up over his head.

His citing "Tesla cars in parking lots all over" reminds me of someone here...

 

[FirebirdAlpha]

Bear highlights:

• Declining profit despite growing revenues
• Still no China funding: "We expect to arrange financing through local banks in China to fund most of the capex for Gigafactory Shanghai."
• What's happening with Accounts Receivable?
• Why is interest income not keeping up with cash? Especially when interest rates went way up towards the end up Q3?
• No mention of plans for Semi
• No mention of 35k Model 3
• No mention of full self-driving
• Model Y won't be in 2019
• No mention of Roadster
• Installed fewer Solar Panels in Q4 than any other quarter in 2018
• Edit, one more: CapEx spending was below depreciation.

Remind me of how they're going to get to 1M cars per year in 2020?

 

[Fact Checking]

S&P500 inclusion now likely to be September then...

Well:

• Q2'18: -$717m
• Q3'18: +$311m
• Q4'18: +$140m

So the threshold for Q1'19 is +$260m - within possibilities.

There's a few potential tailwinds for Q1, but most should help cash flow, not GAAP profits.

 

[Starno]

My guess is they figured out that 7k/week is the sweet spot to balance current demand, and with GF3 in Shanghai becoming operational by the end of the year, and then (presumably) a European GF to follow, they won't need more.

"Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020. "

http://ir.tesla.com/static-files/c5722c36-29db-4e33-a9a7-c33f254aff04

10k is still the goal, but not this year.

 

[ZachF]

Some tidbits from the update letter:

• Almost zero ZEV sales - rainy day fund until the Trump cloud passes?

I've said this for a while now, but I think they are saving them up to help pay off bonds in Q1.

 

[KarenRei]

Reading over this, my tentative take is...

Assuming the earnings call is reasonable but not spectacular, I'm thinking this will most likely be a big fight over the SP with no clear winner tomorrow, followed by a slow drift up.

I might be surprised, though - for bad or for good...

BTW: Don't forget that InsideEVs should be releasing January US sales figures soon. Lots of people will be watching that. Bulls will counter any weak figure with "Yeah, well they're shipping them to Europe and China". But if they're surprisingly not as hurt by the tax credits as expected, that would be interesting...

 

[MarcusMaximus]

Bear highlights:

• Declining profit despite growing revenues
• Still no China funding: "We expect to arrange financing through local banks in China to fund most of the capex for Gigafactory Shanghai."
• What's happening with Accounts Receivable?
• Why is interest income not keeping up with cash? Especially when interest rates went way up towards the end up Q3?
• No mention of plans for Semi
• No mention of 35k Model 3
• No mention of full self-driving
• Model Y won't be in 2019
• No mention of Roadster
• Installed fewer Solar Panels in Q4 than any other quarter in 2018

Remind me of how they're going to get to 1M cars per year in 2020?

They mention beginning production on Model Y and Semi this year.

And decline in profit is covered by reduction in sales of ZEV/regulatory credits.

 

[Starno]

So 10,000 M3/week is just completely off the table eh?

"Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020."

http://ir.tesla.com/static-files/c5722c36-29db-4e33-a9a7-c33f254aff04