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

[Singuy]

So if Tesla closes for 2 weeks, the cash burn is not that bad. Considering that it's PTO which doesn't really change anything since everyone will use them anyways throughout the year. It's much better to burn PTO vs paying massive amount of employees and not produce any cars. Q4 of 2017 was some extreme cash burn. Massive amount of workers producing practically nothing. Did that for a good quarter and Tesla survived just fine.

 

[Artful Dodger]

Elon literally commented on the battery day this week and said it wasnt going to be delayed and that it would be streamed online....as in it will only be streamed online. There will be no audience. I thought that was clear in what I wrote but maybe not. It seemed clear in Elons tweet that if was going streamed online only.

Right, so before the decision was made to shutdown the Freemont factory.

Priorities change. Don't count on April, or May.

 

[StarFoxisDown!]

Right, so before the decision was made to shutdown the Freemont factory.

Priorities change. Don't count on April, or May.

And you think that earlier this week Elon didnt think it was very likely that they'd have to shut down Freemont production when he made the tweet?? Ok

 

[MC3OZ]

Right, so before the decision was made to shutdown the Freemont factory.

Priorities change. Don't count on April, or May.

It it changes it leans the timeline for Plaid Model S and possibly Cybertruck may be pushed back but capex is also delayed.

That is possible, I just think there are likely implications of any delay.

 

[StealthP3D]

Would be nice to see tomorrow morning news of suspended short selling. Wouldn't help much, just make my heart warmer.

I think a lot of people might be surprised what might happen if short-selling was suspended!

Note: That's assuming that it actually stopped short-selling and the creation of fictitious shares to sell.

 

[Buckminster]

LOL we’re due for a girl any day now and I suggested Covidia like 10 minutes before reading your post. Great minds think alike. So do great wives I guess!

How about Jonas?

Biblical Names Meaning:
The name Jonas is a Biblical Names baby name. In Biblical Names the meaning of the name Jonas is: A dove; he that oppresses; destroyer.

You couldn't make this up...

Jonas


——

Mod: and this will be the last post in the ‘what silly name can we come up for our expecting sister’s baby’ competition. Otherwise we will be going at this all day long, since we can’t help ourselves.

 

[skybluecgreen]

Elon literally commented on the battery day this week and said it wasnt going to be delayed and that it would be streamed online....as in it will only be streamed online. There will be no audience. I thought that was clear in what I wrote but maybe not. It seemed clear in Elons tweet that if was going streamed online only.

Do you have a link? What I saw was only that 'yeah' they would strem battery day. Didn't see anything about it not being delayed:

 

[NicoV]

I wouldn’t count on the Tesla factory to be closed for only 2 weeks. Our local virologists are now saying that we shouldn’t count on going on holiday this summer, or even having a barbecue with friends this summer. Imagine what impact this would have on the economic activity, and for Tesla, on the demand for Tesla cars.
We will hopefully (I say hopefully, because there are no signs that Italy (being the first western country impacted) is anywhere near an improvement in situation) get to a situation with a low number of new cases, but that is not enough to stop the economic disaster. We need a way to go on with our lives without too much fear for Corona. I think that’s only possible with a technology that allows very fast testing to quarantine any new cases, like e.g. a breathalizer test.

 

[Open Interest]

Do you have a link? What I saw was only that 'yeah' they would strem battery day. Didn't see anything about it not being delayed:
View attachment 523635

Not sure about the wisdom of this. By April and May, Americans will be watching the death toll rise daily as this disease peaks. We will be hearing about lack of ventilators, sick doctors, and families that aren’t allowed to hold funerals; unemployment will be horrific. There will be suffering ahead.

This event will be lost among bigger news. Will we really care at that point? Maybe it would be best to reschedule for later in the year, assuming a sense of normalcy will return.

I hope I’m wrong and too negative. I hope there will be egg on my face. I hope you all come back and say see, I told you so.

 

[Buckminster]

Elon is gaining Twitter followers at an increasing rate - up to 32.5m now. I would guess almost a million per month.

 

[Fact Checking]

The state order is clearer that it exempts the critical infrastructure which includes vehicle manufacturing. This means Fremont was arm twisting unnecessarily.

“
The California State Public Health Officer and Director of the California Department of Public Health is ordering all individuals living in the State of California to stay home or at their place of residence except as needed to follow the federal critical infrastructure sectors.”

Critical Manufacturing Sector | CISA

I believe the California state order that declares Tesla and other vehicle manufacturing activities within the state as "critical" (in line with federal law) suggests the following:

• Tesla shut down Fremont voluntarily in a time period (last week of Q1) where they were primarily making Q2 vehicles for Europe and China already. They did this probably to reduce local criticism in the Bay Area where most big companies are shutting down and are switching to work from home.
• They'll start a comprehensive worker health protection program in Fremont like in Shanghai, with masks, gloves, goggles, temperature monitoring, IR camera screening at the gates and periodic disinfection within the factory, no shuttle buses, etc. See the protection methods in China.
• They'll start ventilator production.
• In 2-4 weeks they'll restart vehicle production with lower staffing initially, and they'll make high margin vehicles like the Model Y and AWD/P models. They'll restock near zero or critically low inventory levels in various markets like the UK - which also helps their legal standing to restart.
• They have the authority under the California state directive and federal law, the Alameda county directives will either have to be modified, or can be ignored. If Alameda county still disagrees at that point, they can sue and they'll lose in court.
• Because the US economy is tanking and unemployment is soaring (expect U.S. unemployment to soar in next week's report by 1 million or more), while the virus and lockdowns are spreading, it's unrealistic to expect new car sales to be unaffected. This is why the other big OEMs shut down their factories. Q2 sales will drop across the industry while consumer fear and physical lockdowns run their course.
• They'll keep the parts of Fremont running that supply parts to GF3, such as the seat factory, with reduced staffing. GF1 won't have to shut down and will supply battery packs and power trains. GF3 will ramp up to 250,000/year faster than originally planned. Chinese economic activity is already in a post-pandemic rebound.

I.e. I believe Tesla did the pragmatic thing given local pressure and economic uncertainty, while making it easier to supply GF3 and to restart the factory while the lockdown is in place.

Edit, now that I caught up with the thread, the news that GF3 is switching to two shifts is additional confirmation IMO:

Kelvin Yang on Twitter

"GF3 2 shifts next week enabling 3k/week run rate"​

If GF3 receives enough batteries from the U.S. they might even switch to three shift production, with a 4k/week runrate or more.

Tesla isn't a single factory company anymore, and their primary limit is battery output.

​

 

[Singuy]

Not sure about the wisdom of this. By April and May, Americans will be watching the death toll rise daily as this disease peaks. We will be hearing about lack of ventilators, sick doctors, and families that aren’t allowed to hold funerals; unemployment will be horrific. There will be suffering ahead.

This event will be lost among bigger news. Will we really care at that point? Maybe it would be best to reschedule for later in the year, assuming a sense of normalcy will return.

I hope I’m wrong and too negative. I hope there will be egg on my face. I hope you all come back and say see, I told you so.

You are wrong just from a mathematical standpoint. Americans aren't allowed to hold funerals? You know there are 7708 people die a day in the U.S right? Most of them are old with underlining diseases (heart disease/cancer taking the largest cake). Currently the U.S is adding like 30-40 additional deaths per day from this virus. Not even sure if it's additional consider most deaths are 85+ anyways.

I will be shocked that when this is over, the virus will have killed one day worth of total deaths.

 

[MC3OZ]

Not sure about the wisdom of this. By April and May, Americans will be watching the death toll rise daily as this disease peaks. We will be hearing about lack of ventilators, sick doctors, and families that aren’t allowed to hold funerals; unemployment will be horrific. There will be suffering ahead.

This event will be lost among bigger news. Will we really care at that point? Maybe it would be best to reschedule for later in the year, assuming a sense of normalcy will return.

I hope I’m wrong and too negative. I hope there will be egg on my face. I hope you all come back and say see, I told you so.

I think people are too negative, not because there is no reason for concern, but simply because just repeating how bad it is doesn't make it better.

It is more constructive to focus n positive things we can do about the virus and other issues and generally get on with life. That doesn't mean take additional risks.

But watching a video stream even in the privacy of your home is no additional risk.

IMO the purpose of the event is to inform investors what Tesla will be doing before they do it, they may not change the timeline because that may delay other priorities that they don't want to delay.

In fact Elon is providing a good example here, being concerned about the virus, trying to help, but keeping it in perspective, outside of that getting on with life.

People here are also focused on trying to time the market, that could end anywhere on the spectrum from extremely well, to average IMO. But sometimes stepping back and taking a wider perspective may help.

 

[Quesder]

You are wrong just from a mathematical standpoint. Americans aren't allowed to hold funerals? You know there are 7708 people die a day in the U.S right? Most of them are old with underlining diseases (heart disease/cancer taking the largest cake). Currently the U.S is adding like 30-40 additional deaths per day from this virus. Not even sure if it's additional consider most deaths are 85+ anyways.

I will be shocked that when this is over, the virus will have killed one day worth of total deaths.

I think you missed the point

Not allowed to attend funerals because
1. The body could be contagious
2. Group of more than 10 people may not be allowed

 

[CorneliusXX]

Looks like gf3 really is intending to pick up Fremont's slack:
View attachment 523622

That's the benefit of Tesla's massive growth. Even with their core production facility shut down, they will still be producing M3 at 45% of the rate of Q4 19. Obviously this wouldn't have a linear impact on financials but it is great to see. There is real cashflow coming in regardless of what happens to Fremont over the short term.

 

[heltok]

Trading at €408=$439 in Frankfurt.

EDIT:
€420=$453

 

[MaChiMiB]

I think people are too negative, not because there is no reason for concern, but simply because just repeating how bad it is doesn't make it better.

It is more constructive to focus n positive things we can do about the virus and other issues and generally get on with life. That doesn't mean take additional risks.

But watching a video stream even in the privacy of your home is no additional risk.

IMO the purpose of the event is to inform investors what Tesla will be doing before they do it, they may not change the timeline because that may delay other priorities that they don't want to delay.

In fact Elon is providing a good example here, being concerned about the virus, trying to help, but keeping it in perspective, outside of that getting on with life.

People here are also focused on trying to time the market, that could end anywhere on the spectrum from extremely well, to average IMO. But sometimes stepping back and taking a wider perspective may help.

I believe this suggests the following:

• Tesla shut down Fremont voluntarily in a time period (last week of Q1) where they were primarily making Q2 vehicles for Europe and China already. They did this probably to reduce local criticism in the Bay Area where most big companies are shutting down and switching to work from home.
• They'll start a comprehensive worker health protection program in Fremont like in Shanghai, with masks, gloves, goggles, temperature monitoring, IR camera screening at the gates and periodic disinfection within the factory, no shuttle buses, etc. See the protection methods in China.
• They'll start ventilator production.
• In 2-4 weeks they'll restart vehicle production with lower staffing initially, and they'll make high margin vehicles like the Model Y and AWD/P models. They'll restock near zero or critically low inventory levels in various markets like the UK - which also helps their legal standing to restart.
• They have the authority under the California state directive and federal law, the Alameda county directives will either have to be modified, or can be ignored. If Alameda county disagrees, they can sue and they'll lose in court.
• Because the US economy is tanking and unemployment is soaring (expect U.S. unemployment to soar in next week's report by 1 million or more), while the virus and lockdowns are spreading, it's unrealistic to expect new cat sales to be unaffected. This is why the other big OEMs shut down their factories.
• They'll keep the parts of Fremont running that supply parts to GF3, such as the seat factory, with reduced staffing. GF1 won't have to shut down and will supply battery packs and power trains. GF3 will ramp up to 250,000/year faster than originally planned. Chinese economic activity is already in a post-pandemic rebound.

I.e. I believe Tesla did the pragmatic thing given local pressure, while making it easier to restart the factory while the lockdown is in place.

How's your opinion on suppliers?
One missing part is enough to hold the entire line. Bosch, Conti, Schaeffler are partially shutting down in Europe, due to supply problems (and concern for their employees). Model 3 and Y production is reliant on suppliers (less than S and X though).
Tesla was on path to 100% local sourcing for GF3 by the end of the year. Could be accelerated, but I doubt that can happen by May/June.

I'm pretty sure that Tesla will adjust to this situation like no other traditional OEM, but it could be very bumpy for a few weeks.
I doubt that shutdowns will last over months. People will learn to live with it, and once again Tesla will likely adjust very quickly.

 

[samppa]

I thinl they'll make spare parts. A 99% complete "spare-part" model Y.

Hey, oh, you blew a tire? Yeah bring it here, we'll change the whole car to a spare part.

 

[Fact Checking]

How's your opinion on suppliers?
One missing part is enough to hold the entire line. Bosch, Conti, Schaeffler are partially shutting down in Europe, due to supply problems (and concern for their employees). Model 3 and Y production is reliant on suppliers (less than S and X though).

With all the other OEMs shutting down I believe residual inventory ought to be enough for a while, if they are up to spec.

There was a recent leak/report from China, suggesting that Tesla's electronics suppliers and auto suppliers in Shanghai are 99%+ back up running:

Tesla Gigafactory Shanghai Production Capacity Has Exceeded Pre C19 Breakout, 91% Recovery Rate

"At present, Shanghai's automobile industry, integrated circuits and smart manufacturing and other traditional and key industries have basically resumed work. The latest data shows that a total of 8 OEMs and more than 600 parts and components companies in Shanghai have resumed their normal productions. The rate of return to work for major integrated circuit manufacturers has exceeded 99%."​

But yes, suppliers are always a concern during disruption. I expect GF3 to localize the supply chain aggressively. Disrupted suppliers can be substituted, and this was the plan already for margin improvement reasons - Tesla is one of the most agile manufacturers in this regard.

By the end of this year they planned Model Y manufacturing in Shanghai, at 250k/year capacity, which shifted to January 2021 - this might be accelerated instead, if Chinese demand rebounds. There's some question marks there, as China would obviously not be unaffected by a global recession.

There's are important suppliers in South Korea and Taiwan, both of which countries are handling the coronavirus outbreak well so far.

Tesla might even start sending Ro-Ro ships from Shanghai to the rest of the world - but APAC definitely.

 

[Ellec]

The California state wide stay at home order suggests Fremont will have to stop production today and rather than a few weeks it's open ended.

I think we are looking at 2-3 months of no production.