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

[bhtooefr]

The order explicitly calls out those working in the 16 Federal critical infrastructure sectors as being exceptions, and vehicle manufacturing is part of one of those sectors.

(I suspect the critical infrastructure sectors are being misapplied to this - vehicle manufacturing can reasonably be delayed for a while with no lasting harm. (There's a far more egregious example, though - GameStop appears to be using the commercial facilities sector classification that all retail businesses are under, to stay open against local law enforcement orders, and nobody needs GameStop to stay open.))

 

[FrankSG]

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.

The CA state wide order specifically excluded vehicle manufacturing and therefore Tesla.

 

[MC3OZ]

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.

Tesla makes a lot of their own parts and will try to find Chinese suppliers for most of these parts, that can possibly be accelerated within limits.

But we can't rule out some parts problems.. that would not be at all surprising...

But we may also expect a bit lower demand Q2/Q3 so some production holds ups may be able to be overcome by going a bit faster later and maybe production isn't the primary constraint on deliveries.

However any problems they encounter are temporary problems.

 

[Tslynk67]

Surprised to see concern here. Any multi-month disruption to the automotive sector will come with a massive bailout for the already failing ICE manufacturers. Tesla will also get a chunk it doesn't really need.

If Tesla has a massive competitive advantage over the competition and limitless demand, how is a 1-2 month(US only) shutdown a problem?

Hoping we can still swing Battery Day in mid-May!

TBH I don't think Tesla needs any bailout, I don't think Elon would accept it and I don't want it to happen.

It would be that $450m loan story all over again, yes, the one that was repaid early, the same one that some other manufacturers didn't yet pay back, what 12 years later, and yet it gets dished-up as FUD against Tesla even today.

What would be far better would be for Tesla to negotiate some other kind of assistance, other than cash. What that might be, I don't know, but I'm sure there are plenty of possibilities for bright and inquiring minds to come up with.

 

[FrankSG]

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.

China and Korea proved it doesn't necessarily have to play out that way, so I think it's to early to draw conclusions about this. It's good to keep this in mind as a possible scenario, but Tesla could just as easily re-start production in the first half of April.

 

[Fact Checking]

Just saying, Frankfurt trading up to €420, which with EUR/USD at 1.075 is $451.

 

[Tslynk67]

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.

​

I could also imagine that the skeleton staff at Fremont could be tasked with ensuring the US components for GF3 keep flowing.

 

[Tslynk67]

Just saying, Frankfurt trading up to €420, which with EUR/USD at 1.075 is $451.

As I said yesterday, I thought Fremont was already shut-down for full car production, and I think that was priced-in, in fact I think yesterday's rally was partly due to this, i.e. certainly of a "bad" situation rather than fear of the unknown (markets are weird).

Yesterday's AH trading was not indicative of sentiment, IMO, just more manipulation.

Furthermore, Asian markets are green overnight, plus US futures a up bigly:

 

[Fact Checking]

I could also imagine that the skeleton staff at Fremont could be tasked with ensuring the US components for GF3 keep flowing.

Yes, I believe this was specifically mentioned in the 8-K:

"Our factory in New York will temporarily suspend production as well, except for those parts and supplies necessary for service, infrastructure and critical supply chains. Operations of our others facilities will continue, including Nevada and our service and Supercharging network."​

You bet part production for GF3 is a "critical supply chain".

 

[Fact Checking]

$456 peak in the Nasdaq premarket.

 

[KarenRei]

Interesting question as to whether Tesla will start exporting for broader APAC markets in Q2 from GF3 rather than Fremont. I could imagine, say, sending out customers an email along the lines of, "Due government-mandated shutdowns in our plant in California due to the COVID-19 outbreak, US production has been curtailed this quarter, limiting our ability to export to Asian markets. To make up for this, we are offering our customers the choice between receiving a vehicle this quarter manufactured in our new state of the art factory in Shanghai, or delaying their order until Q3 when we expect our US supply issues to be fully ironed out..."

It'd actually be a convenient excuse for Tesla, to export from a location that by Q2 will likely have lower production costs and higher margins...

 

[avoigt]

3rd row reports the shutdown just until April 6th. We don't know the source but we know they have good sources.

2 weeks is likely the as of now planned shut down and evaluation if they need to extend.

If its just 2 weeks you have to add the time for ramping until they are on a decent output rate again but the overall impact of vehicles delivered would be reasonable low. Since government support is going to happen to the cash burn rate will be mitigated too.

If its only 2 weeks that would be very positive

Also China is reported to be at a higher output now versus the time before they had to stop production. IOW, they are back to normal.

Here in Germany deliveries are ongoing and from what I hear in most European countries but I did not validate everywhere. Inventory will be still higher as many registration offices are closed and have no online services which makes it partly a challenge for people to get the official documents for the pick up and even if they pay this vehicles will not be counted as delivered. Also, I have seen people cancelling their orders because of the uncertainty but that won't be a large amount IMO and even if demand will be healthy enough to absorb those cars but of course with a time lag.

The hands of delivery process is quite impressive and I put a report from an owner in my last video. The communication goes just over the phone and party through a window but there is no physical presence even in the same room. Tesla knows very well what they are doing.

I expect all other automaker/ dealers to have stopped delivery since it involved some sort of direct contact.

 

[Fact Checking]

Nasdaq futures have just hit the limit-up circuit breaker, for a change.

 

[MC3OZ]

Interesting question as to whether Tesla will start exporting for broader APAC markets in Q2 from GF3 rather than Fremont. I could imagine, say, sending out customers an email along the lines of, "Due government-mandated shutdowns in our plant in California due to the COVID-19 outbreak, US production has been curtailed this quarter, limiting our ability to export to Asian markets. To make up for this, we are offering our customers the choice between receiving a vehicle this quarter manufactured in our new state of the art factory in Shanghai, or delaying their order until Q3 when we expect our US supply issues to be fully ironed out..."

It'd actually be a convenient excuse for Tesla, to export from a location that by Q2 will likely have lower production costs and higher margins...

Shave a few thousand off the price for a similar Model 3, most Australians and NZ'ers will not care, price and availability are the main things holding back orders.

 

[Grey Badger]

Positive story involving a Model X, involving Richard Hammond and his wife Mindy:

Notable as the popularity of the ex Top Gear trio is still very high here in the UK. Hammond is clearly fond of the Model X, and seems intent on buying. This would make him the second of the three* to purchase a Tesla. My hope is that this is yet another step towards Tesla becoming mainstream here.

I certainly do seem to be seeing more Tesla vehicles on the main roads, and even more encouragingly, not just on the M40 corridor but pretty much everywhere. (The M40 is a large motorway that serves as the primary link between London, Oxford and the Midlands. It tends to be a happy hunting ground for Teslas, as it is well served by Superchargers and is often used by wealthy commuters into London.
Obviously anecdote != data, but pleasing nonetheless.

Apologies if this could be considered off topic. I thought a bit of positive news might be a welcome change.

*James May purchased a Model S some time ago. Jeremy Clarkson loathes Electric Cars in general and Tesla in particular. This is unlikely to change.

 

[Silent Ludicrosy]

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

Since October, Tesla went from 4.2 to 4.9 million Twitter followers. BMW went from 1.8 to 1.9 million. Ford went from 1.1 to 1.2 million. Mercedes (3.4 million), Audi (2 million), Porsche (1.8 million), Lamborghini (1.8 million) and Chevy (1 million) stayed the same. Everyone else is 1 million or below.

 

[Fact Checking]

*James May purchased a Model S some time ago. Jeremy Clarkson loathes Electric Cars in general and Tesla in particular. This is unlikely to change.

Jeremy Clarkson is a terrible human being, so him not buying a Tesla is a benefit to the brand.

 

[ev-enthusiast]

California Governor Gavin Newsom has upgraded the entire West Coast population to stay at home.
The curfew for nearly 40 million people came into effect on Friday night, Newsom says.
link
twitter

Is this true or is it fake news?

Update: Seems to be true, link

 

[KarenRei]

Positive story involving a Model X, involving Richard Hammond and his wife Mindy:

Notable as the popularity of the ex Top Gear trio is still very high here in the UK. Hammond is clearly fond of the Model X, and seems intent on buying. This would make him the second of the three* to purchase a Tesla. My hope is that this is yet another step towards Tesla becoming mainstream here.

I certainly do seem to be seeing more Tesla vehicles on the main roads, and even more encouragingly, not just on the M40 corridor but pretty much everywhere. (The M40 is a large motorway that serves as the primary link between London, Oxford and the Midlands. It tends to be a happy hunting ground for Teslas, as it is well served by Superchargers and is often used by wealthy commuters into London.
Obviously anecdote != data, but pleasing nonetheless.

Apologies if this could be considered off topic. I thought a bit of positive news might be a welcome change.

*James May purchased a Model S some time ago. Jeremy Clarkson loathes Electric Cars in general and Tesla in particular. This is unlikely to change.

I watched that last night as it just randomly popped up in my feed (I don't watch that channel). Already up to 624k views. The comments seem very positive; Hammond's childlike joy about the vehicle is contagious, even though he almost runs himself out of charge The banter between him and his wife is also rather cute.

 

[Ellec]

I'm guessing market is moving toward max pain prices, think Tesla's is $480.