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

[sundaymorning]

Yes, many people are wondering why the production is low, but I was not surprised. The above assessment is correct. Tesla rightly gauged international transit issues as well as US demand shortfall and reduced production (till intro of SR, SR+) to conserve cash.

They said they have sufficient cash. To me that means somewhere btwn 2 - 2.5B, at least, which sounds about right given 0.9B debt repayment and Q1 cash burn.

They were hit with the debt payment as well as a ballooned “in transit” of another $billion had Tesla decided to produce as much S3X as they could have this quarter. The right decision was to pull back on production and wait for Q2.

 

[Antares Nebula]

"Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand."

Interestingly, they did not say whether there would be a loss or a profit. Can we undoubtedly assume that there will be a net loss? Were they just being coy or playing word games?

 

[Fact Checking]

@Fact Checking what do you think is the cash balance? I'm guessing 2 - 2.5B

Assuming cash generation of only $300m (which is really pessimistic), and -$920m debt payments I don't see how with a starting balance of $3.6b cash would drop below the $2.5b-$3b range.

Their Q4 payables and receivables were a bit conservatively set up, which might help a bit despite the revenue drop.

But this is only a crude guess - @ReflexFunds might have the numbers.

 

[Troy]

Hi, everybody. 76 people participated in my estimates survey in Q1. You can find the results here. The community average was too high this time in all categories.

My own estimates were OK in general. I posted these here on Twitter.

In terms of the regional split of Model 3 deliveries, I estimate it was 20K in EU + 17K in Asia + 14K in North America= 51K in total. In Q2, I would expect EU to drop to 14K, Asia to 10K and North America could increase to 22K= 46K in total. I expect an increase in the US for S/X/3 because people are not going to want to miss out on the $3750 federal tax credits that ends at the end of June. International deliveries of S/X should be the same as Q1.

However, international deliveries of Model 3 are likely to drop because they have already cleared most of the backlog. Since March 2016, many reservation holders in Europe and Asia were waiting for Model 3. Now most of them have already received their car. Yes, RWD LR was not released there yet but RWD is less popular in Europe anyway. Also, of course, there will be lots more SR and SR+ deliveries in Q2 but the demand for these was never as strong as Long-Range versions. People want longer range.

The Autopilot event on 19 April and more Supercharger V3 deployments could increase demand in Q2. In addition, the Shanghai factory seems to be moving quickly and it could change the conversation towards the end of Q2. Also, Model Y was well received and there seems to be more demand for it than Model 3 because it's a hatchback.

Because the production capacity at Fremont is now under-utilized and S/X production lines are not very efficient anyway, this increases the chances of Model Y production at Fremont, hopefully by the end of this year. Recently I calculated how Tesla's production efficiency compares to NUMMI in terms of cars produced per employee per year. I think S/X production is only 28% as efficient as NUMMI (it was 14% in 2013) and Model 3 is at 64%. Therefore Tesla needs to change something about S/X production. Btw, feel free to follow me on Twitter @TroyTeslike. I sometimes post predictions and comments there. Cheers

 

[Artful Dodger]

An extra 10k in transit should consume about 300 to 350 million in cash on top of whatever actually happened

Right, but is that the complete picture though? Doesn't Tesla have 60 day terms with its Suppliers? So outside bills for vehicles built after Jan shouldn't be due yet.

Wonder what proportion of vehicle cost is payable to Suppliers? Certainly labor expense wouldn't be delayed, but I wonder about the hardware/raw materials.

Cheers!

 

[neroden]

Wall Street is run by idiots. I expect Tesla to be cash flat maybe minus 300 mil, then cash up 800 mil in Q2 minus some loan repayments and pipeline filling, then maybe down 300 mil in Q3, then up 400 mil in Q4 after paying off the next bond. More if production can actually get ramped up. So maybe EOY cash same as end of 2018, but with 1.5 billion in loans paid off and a fuller pipeline. Probably profit from more production would go to capex not cash.

 

[Causalien]

Assuming cash generation of only $300m (which is really pessimistic), and -$920m debt payments I don't see how with a starting balance of $3.6b cash would drop below the $2.5b-$3b range.

Their Q4 payables and receivables were a bit conservatively set up, which might help a bit despite the revenue drop.

But this is only a crude guess - @ReflexFunds might have the numbers.

Am I right to assume ReflexFunds is Luvb2b?

 

[anthonyj]

"Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand."

Interestingly, they did not say whether there would be a loss or a profit. Can we undoubtedly assume that there will be a net loss? Were they just being coy or playing word games?

If they post a profit, I will stand in the middle of Times Square half naked holding a self-degrading sign of your choice. I swear. I will YouTube it.

 

[neroden]

Hi, everybody. 76 people participated in my estimates survey in Q1. You can find the results here. The community average was too high this time in all categories.

My own estimates were OK in general. I posted these here on Twitter.

In terms of the regional split of Model 3 deliveries, I estimate it was 20K in EU + 17K in Asia + 14K in North America= 51K in total. In Q2, I would expect EU to drop to 14K, Asia to 10K and North America could increase to 22K= 46K in total. I expect an increase in the US for S/X/3 because people are not going to want to miss out on the $3750 federal tax credits that ends at the end of June. International deliveries of S/X should be the same as Q1.

However, international deliveries of Model 3 are likely to drop because they have already cleared most of the backlog. Since March 2016, many reservation holders in Europe and Asia were waiting for Model 3. Now most of them have already received their car. Yes, RWD LR was not released there yet but RWD is less popular in Europe anyway. Also, of course, there will be lots more SR and SR+ deliveries in Q2 but the demand for these was never as strong as Long-Range versions. People want longer range.

The Autopilot event on 19 April and more deployments of Supercharger V3 could increase demand in Q2. In addition, the Shanghai factory seems to be moving quickly and it could change the conversation towards the end of Q2. Also, Model Y was well received and there seems to be more demand for it than Model 3 because it's a hatchback.

Because the production capacity at Fremont is now under-utilized and S/X production lines are not very efficient anyway, this increases the chances of Model Y production at Fremont, hopefully by the end of this year. Recently I calculated how Tesla's production efficiency compares to NUMMI in terms of cars produced per employee per year. I think S/X production is only 28% as efficient as NUMMI (it was 14% in 2013) and Model 3 is at 64%. Therefore Tesla needs to change something about S/X production. Btw, feel free to follow me on Twitter @TroyTeslike. I sometimes post predictions and comments there. Cheers

My numbers suggest that the Europe/Asia backlog was at least 80,000, of which less than 40,000 have been delivered. Even if it was only 60K I do not see where you get the idea that the backlog is cleared. Where is your source? Other than that, great work.

 

[kyzhk]

If they post a profit, I will stand in the middle of Times Square half naked holding a self-degrading sign of your choice. I swear. I will YouTube it.

Which half? Better to cover your upper half so no one can recognize you.

 

[Antares Nebula]

281 in Germany right now.

Tesla Inc. Aktie | Aktienkurs | Chart | A1CX3T | US88160R1014

 

[Artful Dodger]

@Troy did pretty well with his estimates:

View attachment 393540

Haha yeah the 'total error' of his Production estimate is not 1.7%.

It's |-6.3|+|18.7|= 25.0%

Errors do not cancel out. They pile up. <smdh>

Reminds me of the Economist who once said 'my feet are freezing, and I have a fever. So on average I'm fine'.

 

[Doggydogworld]

These are 100% margin options, so should improve margins across all configurations.

They haven't recognized any FSD revenue so far, so it has contributed zero to margins.

They will probably recognize a fraction of "new" FSD revenue going forward, so it will help margins a little. I don't see them recognizing any "old" FSD revenue yet. Maybe in Q2, but probably later.

 

[Troy]

My numbers suggest that the Europe/Asia backlog was at least 80,000, of which less than 40,000 have been delivered. Even if it was only 60K I do not see where you get the idea that the backlog is cleared. Where is your source? Other than that, great work.

In his video here, Bjorn says he took delivery of Model 3 in Norway only 10 days after ordering. He mentions others receiving it after 8 days. Also, there is a crowdsourced project that estimates 27K Model 3 orders in Europe and they have already delivered 20K. See the article here.

 

[gringotuanis]

If they post a profit, I will stand in the middle of Times Square half naked holding a self-degrading sign of your choice. I swear. I will YouTube it.

Is this a die hard movie?

 

[Carl Raymond]

The FUD is working on people that dont follow Telsa. Most of my family is in the midwest USA and buying a Tesla is not an option to them. The FUD has worked on them, despite me owning a Model S for years that several of them have driven.

I have read that “fashion” and “being part of the crowd” are important to some people, especially outside of cities where individuality is more often seen. This makes it harder to sell Teslas in areas where Teslas are not selling well... sounds daft, but it’s more than a truism.

I expect the markets to grow regionally in expanding circles, like bacteria on a Petrie dish. It’s the ‘sales are inversely proportional to average belt buckle size’ rule.

 

[Troy]

Haha yeah the 'total error' of his Production estimate is not 1.7%.
It's |-6.3|+|18.7|= 25.0%
Errors do not cancel out. They pile up. <smdh>
Reminds me of the Economist who once said 'my feet are freezing, and I have a fever. So on average I'm fine'.

My estimate for total production was 75,800. See my tweet here on 31st March. The actual number was 77,100. I was 1,300 units off. In other words, I was 1300/77100= 1.7% off from the actual number.

 

[Artful Dodger]

I dont know if the answer is advertising, but somehow Tesla needs to be actively putting facts PICKUP TRUCKS out to a larger audience to refute FUD. Too many people still believe the mainstream media.

FTFY

 

[gringotuanis]

I'm not sure about that. The letter reaffirmed yearly guidance of 360k to 400k model 3s (if I read that correctly)

There is also the tax credit drop off again on July 1st. So I think those two things will keep expectations higher for Q2


My question is: is there a production or a demand problem? I disagree with the sentiment of this thread in some ways. The FUD is working on people that dont follow Telsa. Most of my family is in the midwest USA and buying a Tesla is not an option to them. The FUD has worked on them, despite me owning a Model S for years that several of them have driven.

I dont know if the answer is advertising, but somehow Tesla needs to be actively putting facts out to a larger audience to refute FUD. Too many people still believe the mainstream media.

I live in the midwest and I am starting to see model 3s. Granted I am in a fairly large city. However we have high need for large vehicles like pick up trucks for much of the work, so we really need very capable 4x4s with good tow capacity over many miles of range. Part of it's FUD, but part of it is just practicality. I could not run my business using a Tesla at this time. Maybe I could buy one for wife who commutes to a corporate office though.

 

[⚡️ELECTROMAN⚡️]

281 in Germany right now.

Tesla Inc. Aktie | Aktienkurs | Chart | A1CX3T | US88160R1014

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