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

[Singuy]

They might do the bundling, but cutting price should not be the first consideration. By far they should figure out a way to bring awareness. The Model 3 is an incredible car at attractive price. Most people are not aware of the benefits and they keep buying gasoline cars.

It takes time for people to trust new tech. Reliability and safety is what the mainstream public cares about. Tesla is still too young to talk about reliability and safety wise they are ahead, but offset by the over sensationalized fires.

My friend just asked me the other day if I saw the China fire and asked why I'm not scared that my model 3 will burn my house down. Had to tell him ICE randomly catches on fire all the time, in fact Hyundai had a massive recall due to this issue. He was like "then how come we never hear about it?"..

 

[Beaver]

Tesla 2019 Shareholder Meeting & Live Webcast
Tesla 2019 Shareholder Meeting & Live Webcast : teslamotors

SEC form:
Tesla, Inc. DEF 14A Other definitive proxy statements

 

[FreqFlyer]

I am still trying to figure out what about the S/X refresh required such long lead times or delays? No new battery or interior, and new tires, or motors should not shut down the line for long.

 

[Carl Raymond]

Looking at the chart, looks to me like someone keeps dumping close to 100k shares at a time.

I’ve been wondering about that. When there’s a sawtooth pattern down, it suggests short selling. They sell hard every 20 mins or so hoping to hammer down the price. When it’s a random pattern decline, it’s FUD driven fear.
Of course short selling can also be disguised as the latter, but it’s less effective.

The short selling is less concerning because we know they eventually have to buy the stock back.

Does anyone else feel they can look at a decline and see a pattern of manipulation, or am I looking at stars and seeing constellations?

There’s been some discussion about whether short selling should be delegitimised. If there were a real time chart showing count of additional stock through shorting, I feel that would be a simple solution. Real investors could observe a price decline, observe the simultaneous increase in share count and relax knowing it was “only shorts trying to psych the market” again.

 

[KSilver2000]

7k/w was Fremont only w/o China.
"Model 3 production volumes in Fremont should gradually continue to grow throughout 2019 and reach a sustained rate of 7,000 units per week by the end of the year"

But given the new Q2 estimates of 90-100k total deliveries, assuming 20k S/X(lines still ramping up) that's 70-80k of 3s, plus adding 10-20k to the pipeline, thats 80-100k produced or assuming 12 weeks in a quarter, 6.7k - 8.3k/week.

This does look somewhat... unrealistic. They need sustained 7k/w right now, not at EOY. Maybe that's the case, but I wish he didn't throw these numbers into the letter. Why put pressure on yourself.

You are correct. For some reason, I thought I remembered it as 7k total 3's. That makes his estimate more unlikely as you say.

But, nothing stops Elon from stating those wild projections. It's just who he is, and that's why the SP is now usually numb to any estimates he spits out on the Twittersphere.

 

[EnergyMax]

Fremont has proven they can do 2k S/X per week and >5k 3 per week. So the ability to produce 7k/week is not at all unrealistic.
S/X should not require much of a ramp to bolt in a different drive unit. Even if they run at 1k/week, 3 can likely hit 6k.
Pipeline already had 10k in it, going to 30k (your 20k high end additional pipeline) seems excessive.

We don't know how much automation is required to hit 7000 Model3 per week, and how much automation Tesla has implemented. It could be that 5000/week is the limit with human labor, and automation is needed for further production jumps. We have already seen that automation is very tricky.

 

[Doggydogworld]

Has anyone partitioned out exactly where all the one-time costs break out? Does the majority of that 188M$ hit the S/X because it is the only one with actual resale guarantees right? I'd like to try to figure out the exact ASP/COGS of S/X and 3.. no one around here seems the least bit interested in actual analysis but you need it to figure out what is required for profitability going forward.

Does this mean +121M$ to net gross profit hit should all go to S/X (probably not -- the used/service loaner would also be 3)?

There's also a 44M$ restructucting charge in op.ex. That leaves a 23M$ unexplained delta (188 - 121 - 44). What is that and where does it go?

I add 500.5m to Automotive sales revenue and 408.8m to Automotive sales COGS to adjust for RVG (91.7m gross profit impact). I do this before I attempt to break down S/X vs. Model 3. The 29m inventory write-down is a mix of new loaners which goes into Automotive Sales and used cars which goes into Services, other. I'd put 15m of it into Automotive Sales Revenue, as a guess.

As you note, the 43.5m opex charge leaves 23.5m unexplained. Might be a PP&E writedown or something. I ignore it in terms of auto margins. My estimates are:

S/X
103k ASP
85k COGS

Model 3
57k ASP
46k COGS

The ASPs include the 15m ZEV and 200m of non-ZEV credit revenue. The latter is a mystery. It tends to be ~2k per US delivery, but jumped to ~7k in Q1. I suspect that's a "non-recurring" profit they neglected to mention while talking about their 188m of non-recurring losses.

 

[Do It]

You should be stripped of your driving license for endangering other road users

…thanks for not calling for public flogging

One needs to pay attention to the road, and whether hands are on the wheel is not that important. GM has hands-free, you know…

Tesla’s hands-on-wheel detection is not that consistent and one needs to constantly deal with the nagging. They come at random times, and one has to apply the right amount of tweak to make them go away (but not risk of disengaging AP) - all these are a great deal of distraction detrimental to safety. That say, I know there is no good solution out there so I am perfectly OK with having to deal with that.

 

[Carl Raymond]

one has to apply the right amount of tweak to make them go away (but not risk of disengaging AP)

Very sensible of the system to train users in exactly how much force is required to resume manual control. Instils confidence.

 

[jerry33]

It takes time for people to trust new tech. Reliability and safety is what the mainstream public cares about. Tesla is still too young to talk about reliability and safety wise they are ahead, but offset by the over sensationalized fires.

My friend just asked me the other day if I saw the China fire and asked why I'm not scared that my model 3 will burn my house down. Had to tell him ICE randomly catches on fire all the time, in fact Hyundai had a massive recall due to this issue. He was like "then how come we never hear about it?"..

Because with one gas car fire every three minutes in the U.S., it's not news. Tesla fires are there to get clicks.

 

[jerry33]

I am still trying to figure out what about the S/X refresh required such long lead times or delays? No new battery or interior, and new tires, or motors should not shut down the line for long.

There is a new motor.

 

[jerry33]

I’ve been wondering about that. When there’s a sawtooth pattern down, it suggests short selling. They sell hard every 20 mins or so hoping to hammer down the price. When it’s a random pattern decline, it’s FUD driven fear.
Of course short selling can also be disguised as the latter, but it’s less effective.

The short selling is less concerning because we know they eventually have to buy the stock back.

Does anyone else feel they can look at a decline and see a pattern of manipulation, or am I looking at stars and seeing constellations?

There’s been some discussion about whether short selling should be delegitimised. If there were a real time chart showing count of additional stock through shorting, I feel that would be a simple solution. Real investors could observe a price decline, observe the simultaneous increase in share count and relax knowing it was “only shorts trying to psych the market” again.

The issue is not short selling, it's naked short selling where you don't need to cover for thirteen days (or three days in some cases, I'm not real clear on the difference). A naked short seller can keep this up indefinitely until the stock climbs and stays up. Only brokers are allowed to naked short sell, and they use this power to manipulate the market.

 

[Krugerrand]

@Krugerrand that is the best cat avatar ever. It fits your TMC persona perfectly

So...um...my persona comes across as a bald, grumpy old man waiting for the fisticuffs to commence, huh?

Okay, I can live with that.

 

[Alphacrux]

7k/w was Fremont only w/o China.
"Model 3 production volumes in Fremont should gradually continue to grow throughout 2019 and reach a sustained rate of 7,000 units per week by the end of the year"

But given the new Q2 estimates of 90-100k total deliveries, assuming 20k S/X(lines still ramping up) that's 70-80k of 3s, plus adding 10-20k to the pipeline, thats 80-100k produced or assuming 12 weeks in a quarter, 6.7k - 8.3k/week.

This does look somewhat... unrealistic. They need sustained 7k/w right now, not at EOY. Maybe that's the case, but I wish he didn't throw these numbers into the letter. Why put pressure on yourself.


I assume whatever 3 inventory is left is all U.S.-spec-ed, so international pipeline is empty.
They need to build new cars to fill that pipeline. Guessing between 10-20k cars if some are left for Q3. Not sure if reducing U.S. inventory to help pay for this is in the cards or not.

You can confirm one S order out of your 20K S/X estimate for Q2. Just put in my order for a P100D w/free Ludicrous upgrade to replace my (old) 2015 S.

 

[Johnny Ma]

You can confirm one S order out of your 20K S/X estimate for Q2. Just put in my order for a P100D w/free Ludicrous upgrade to replace my (old) 2015 S.

2015 is ancient. About time you got a new one.

You did the right thing.

 

[Mike Smith]

Every quarter analysts completely strip out EV credit sales as non-recurring, even though they happen almost every quarter. On the other hand there were large (actual) one-time expenses in Q1 and the same analysts don't exclude them.

 

[dmckinstry]

I'm only one week in the hospital, there are over 4300 new messages and the stock price has gone to pot. What have you people done? No way I'll read all that. I guess I'll just read the Q1 update letter and see what was so devastating about Q1 results.

 

[anon]

I am still trying to figure out what about the S/X refresh required such long lead times or delays? No new battery or interior, and new tires, or motors should not shut down the line for long.

There is new suspension too.

It was suggested by Neroden earlier that maybe ramping up the new model took longer than expected, during which time they had already stopped production for parts specific to the 75 and they didn't want to start up again. Alternatively, perhaps they had reduced orders on long-lead parts for the older S/X design in general (not just for the 75) and didn't have enough time to order more after learning of delays to the new design. There are lots of possibilities. It certainly could just be a distraction from low demand specifically for the 75 model, but there is likely some element of production delay too, as Zach stated this clearly on the conference call and mentioned that it would take until Q3 to get back to full production rate, which suggests that there are still some production issues now.

 

[Intl Professor]

Ellipses added for @Intl Professor...

Merrci biene, monsour, und zo witer. Believe me, my pronunciation is trop zolie, even worse than spelling....

 

[BornToFly]

Shareholder meeting is June 11. I looked back at the SP every year for the last 5 years. It has always had a strong climb in June, except for 2016. Do most people/institutions who are loaning their shares to short sellers have to recall them for the voting in June?