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

[SteveG3]

Bloomberg article without paywall:

Tesla Tells Employees It’s Preparing to Increase Production

I suspect this simply means building Y at Fremont has been decided. If so, any near term big changes there are probably simply adjustments to S/X production in order to open up some of the space needed for Y production.

Doesn’t necessarily mean timeline for Model Y has been pushed up.

For whatever reason, Bloomberg conflated this new email from Jerome with Tesla’s Q1 shareholder letter where they wrote that 2019 production might be as much as 500k.

That line re 500k is old news, put out while Model Y production guidance was for late 2020. I wouldn’t expect any Model Ys in 2019.

fwiw, I suspect the 500k mention in the newsletter was just to give Elon some cover in the midst of the SEC requesting that he be held in contempt for his earlier 500k tweet.

 

[Sean Wagner]

Nice figures, let's hope it goes on like that in Switzerland. What I am a "little" afraid, is that this is only the "initial" boost as the Model 3 came available in Europe. What we need know is more subsidies and/or prohibitions in cities of Europe for the use of Diesel vehicles. This will come for sure.

I am quite sure in 7 - 14 years, in all major cities in Europe, only electric vehicles will be allowed. All other vehicles cannot drive anymore into city centres.

The sales numbers are significant precisely because they're for two quarters, I think - and the Model 3 is very competitive in Switzerland. Probably one of the reasons no BMWs figure in the top ten anymore [unlike last year].

Agree that EVs will enjoy priority access to European cities in the not too distant future - making them that much nicer to live in.

 

[dc_h]

That line re 500k is old news, put out while Model Y production guidance was for late 2020. I wouldn’t expect any Model Ys in 2019.

fwiw, I suspect the 500k mention in the newsletter was just to give Elon some cover in the midst of the SEC requesting that he be held in contempt for his earlier 500k tweet.

The sentence was very odd and ambiguous. I interpreted as Tesla building cars at 500,000 annual rate in Q4. That is not what it said, but I took it as what they intended to say. That could put 2019 production closer to the high end of 360-400k production.

It will be interesting if they start guiding for 2020 production in this quarters call, or not until Q3 earnings.

 

[lascavarian]

Doesn’t necessarily mean timeline for Model Y has been pushed up.

Likely has to do with an easing of battery constraints.

 

[urarthur]

So... 1000 model 3's / day + 200 S/X a day = 1200 /day run rate.
1200 * 7 * 52 = 437K or 430k counting for holidays.

add 3k/week from Shanghai Giga, and we're already looking at +580k run rate by end of the year.

If they can increase Fremont production rate by another 10-20% in the next 6 months, which is likely now the leaked email was quit positive on this, we'll be entering 2020 with a run rate of 620k-650k. That's huge!

We'll need the M3 SR at 35k to help with those kinds of demand.

 

[Fact Checking]

Bloomberg article without paywall:

Tesla Tells Employees It’s Preparing to Increase Production

Beyond the Fremont mystery that most of the comments are focusing on here, the following update about Shanghai is IMO just as important:

According to Guillen’s email, many parts of the assembly line in China are already in place.

“The Stamping, Body, Paint, and General Assembly lines in China are well underway and hitting records in both line design and fabrication,” the memo said.​

 

[Mike Smith]

I suspect this simply means building Y at Fremont has been decided. If so, any near term big changes there are probably simply adjustments to S/X production in order to open up some of the space needed for Y production.

Doesn’t necessarily mean timeline for Model Y has been pushed up.

For whatever reason, Bloomberg conflated this new email from Jerome with Tesla’s Q1 shareholder letter where they wrote that 2019 production might be as much as 500k.

That line re 500k is old news, put out while Model Y production guidance was for late 2020. I wouldn’t expect any Model Ys in 2019.

fwiw, I suspect the 500k mention in the newsletter was just to give Elon some cover in the midst of the SEC requesting that he be held in contempt for his earlier 500k tweet.

I don't think he's talking about model Y at all. I think he's talking about bringing S/X back up to 25k per quarter. Just yesterday Musk was stoking demand for them by refuting long-standing refresh rumors. I don't think it's a coincidence that he waited until right now to say something.

This is why they're projecting a return to profitability in H2 - because they're bringing S/X back to normal production capacity.

 

[RobStark]

LG Chem To Increase Battery Sales Fivefold By 2024

 

[EinSV]

I suspect this simply means building Y at Fremont has been decided. If so, any near term big changes there are probably simply adjustments to S/X production in order to open up some of the space needed for Y production.

Doesn’t necessarily mean timeline for Model Y has been pushed up.

For whatever reason, Bloomberg conflated this new email from Jerome with Tesla’s Q1 shareholder letter where they wrote that 2019 production might be as much as 500k.

That line re 500k is old news, put out while Model Y production guidance was for late 2020. I wouldn’t expect any Model Ys in 2019.

fwiw, I suspect the 500k mention in the newsletter was just to give Elon some cover in the midst of the SEC requesting that he be held in contempt for his earlier 500k tweet.

I think Tesla was serious about the stretch goal of 500K production by the end of the year or — more realistically — the backup goal of “very likely” 500K production in the 12 mos through 6/30/2020 stated in the Q1 letter:

“If our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000 vehicles globally in 2019. This is an aggressive schedule, but it is what we are targeting. However, based on what we know today, being able to produce over 500,000 vehicles globally in the 12-month period ending June 30, 2020 does appear very likely.”​

I think many dismissed that as pie in the sky, especially in the midst of Q1 doom and gloom, but depending on the speed of GF3 ramp 500K in the next 12 months is a stretch but not impossible.

 

[anon]

Electrek's article on this has some added info: other sources at Tesla claim that 1k/day Model 3 production was achieved on a few days before the end of Q2.

 

[Mike Smith]

LG Chem To Increase Battery Sales Fivefold By 2024

That's not nearly enough. The major auto makers are going to have a serious battery problem. By 2025 absolutely everyone will want EVs. It's going to be a huge problem for everyone except Tesla.

 

[SteveG3]

I don't think he's talking about model Y at all. I think he's talking about bringing S/X back up to 25k per quarter. Just yesterday Musk was stoking demand for them by refuting long-standing refresh rumors. I don't think it's a coincidence that he waited until right now to say something.

This is why they're projecting a return to profitability in H2 - because they're bringing S/X back to normal production capacity.

Could be. To me the “you will be delighted” bit seems likely to mean something more than going back to previous S/X production levels. What’s more, if it were bringing S/X back up to full production, would there be reason not to just say it? Model Y plans, and care in just when they are announced strike me as more consistent with “we can’t be too specific.”. Just my take, who knows.

“While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”

 

[RobStark]

That's not nearly enough. The major auto makers are going to have a serious battery problem. By 2025 absolutely everyone will want EVs. It's going to be a huge problem for everyone except Tesla.

1)Tesla is going to be cell constrained through 2025. Demand for Model Y,Semi, and eventually a sensible pickup will be greater than the cells they can make and processed minerals they can acquire.

2) LG isn't the only supplier to non-Tesla EV makers. CATL, North Volt, Samsung SDI, SK Innovation.

3) Everybody is going to be to cell constrained.

 

[SteveG3]

I think Tesla was serious about the stretch goal of 500K production by the end of the year or — more realistically — the backup goal of “very likely” 500K production in the 12 mos through 6/30/2020 stated in the Q1 letter:

“If our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000 vehicles globally in 2019. This is an aggressive schedule, but it is what we are targeting. However, based on what we know today, being able to produce over 500,000 vehicles globally in the 12-month period ending June 30, 2020 does appear very likely.”​

I think many dismissed that as pie in the sky, especially in the midst of Q1 doom and gloom, but depending on the speed of GF3 ramp 500K in the next 12 months is a stretch but not impossible.

fwiw, some of the language in that letter about 500k was not ambiguous to me,

“we may be able to produce as many as 500,000 vehicles globally in 2019”

I take as a statement re vehicles produced during 2019, not a run rate. This was a shareholder letter, not a tweet. I think it was cover for Elon’s tweet, but not an aspiration that had any real prospect of happening when this was written in late April or early May (fwiw, not saying it was reasonable for SEC to have gone into action over the tweet to begin with).

 

[Mike Smith]

Could be. To me the “you will be delighted” bit seems likely to mean something more than going back to previous S/X production levels. What’s more, if it were bringing S/X back up to full production, would there be reason not to just say it? Model Y plans, and care in just when they are announced strike me as more consistent with “we can’t be too specific.”. Just my take, who knows.

“While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”

'making preparations to raise output'

This sounds too immediate to be referring to the Model Y, and also sounds like it's referring to an existing product. Between this and what he said about already installing the production line at Shanghai I guess we end $15 higher today. This is a really positive signal on top of the Q2 delivery numbers.

 

[SteveG3]

'making preparations to raise output'

This sounds too immediate to be referring to the Model Y, and also sounds like it's referring to an existing product. Between this and what he said about already installing the production line at Shanghai I guess we end $15 higher today. This is a really positive signal on top of the Q2 delivery numbers.

I take the preparations as transforming Fremont from ~500k max annual output capacity to ~800k-1,000k. Tremendous amount of work would be needed just making the space available. I could see that taking several months, meaning for Model Y to start production second half of ‘20, its about time for step 1, opening up the space for it.

I hope you’re correct and I’m not... if Tesla knows they’ve got demand for 100k S and X : )

 

[Mike Smith]

3) Everybody is going to be to cell constrained.

Let's wait until the battery event. If Musk is talking about getting into the mining business they must have machines in the works that can produce very high quantities of cells.

 

[Mike Smith]

I take the preparations as transforming Fremont from ~500k max annual output capacity to ~800k-1,000k. Tremendous amount of work would be needed just making the space available. I could see that taking several months, meaning for Model Y to start production second half of ‘20, its about time for step 1, opening up the space for it.

I hope you’re correct and I’m not... if Tesla knows they’ve got demand for 100k S and X : )

Musk did say there was absolutely no demand problem. That doesn't sound like it only applies to model 3, and they have a supply chain set up to produce 100k S/X. I don't see why they wouldn't want to maintain that level even if it meant advertising - they're very high margin vehicles.

 

[EinSV]

'making preparations to raise output'

This sounds too immediate to be referring to the Model Y, and also sounds like it's referring to an existing product. Between this and what he said about already installing the production line at Shanghai I guess we end $15 higher today. This is a really positive signal on top of the Q2 delivery numbers.

Whatever the specifics, Tesla's preparations to increase output fly in the face of the latest WS storyline that Q2 was all about sales being pulled forward from Q3 and that Q3 numbers will therefore drop, best represented by Adam Jonas underestimating Q2 deliveries by 13,622 units but instead of increasing his annual forecast reducing his 2H estimate by 13,700 units.

 

[mongo]

OT

Things may be changing on the import to Canada front:
Elon on Twitter:

Twitter

Absolutely agree, you should be allowed to move your Tesla anywhere in the world, unless it’s prevented by government rules. Thanks for letting me know.

Good to see (potential) progress on this after issues with Tesla families relocating and having to sell them.
Appropriate thread:
New policy on moving your Tesla to Canada?