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

[StarFoxisDown!]

Although those 20k in transit at beginning of Q4 will be delivered, if Tesla continues unwinding the wave, there could be more than 20k in transit at the end of this year. And the fact that new U.S. incentives begin Jan. 1 means customers who have their cars delivered the first week of Jan., will see a large benefit, so it’s possible Tesla purposely pushes deliveries out in the U.S.

Yes, Tesla could, and likely will expand the number of cars in transit. But the point was that in Mengy's number's, he wasn't accounting for the 20k cars in transit from Q3.

 

[Todd Burch]

And don't forget that Tesla has sent some people from Giga Shanghai to Fremont to help increase production there...so an increase of just 4k produced in Q4 compared to Q3 sounds like an extremely conservative estimate. Tesla wouldn't bother to send those people if they felt they could basically do nothing to boost production in Fremont.

 

[Artful Dodger]

While I do think Troy is being too conservative, I personally don't think he's off by as much as most others here at TMC think he is.

If Shanghai continues to ramp up <long, long snip...>

That's not his justification for this revision: he predicts a large change based on 4 days of local insurance data:

• No attempt to describe the noise in that insurance signal (avg, std dev, trend - how unusual is this?)
• how well is 4 days of data correlated to quarterly deliveries (how relevant is this data?)
• how well correlated is local ins. data for an entire quarter of global deliveries? (validity)

Do you not see the fundamental problem with his methodology? It's unsupported, it's arbitrary, and thereby unreliable. Some would say 'proprietary confidencial'. I would say there's no evidence he's even doing this type of assessment. Picking random facts that (short-term) support a narrative isn't analysis; it's pandering to your patreons. His update looks more motivated than analytical.

My old Stats490 Prof. would be entertained. I, however, am not.

 

[Discoducky]

Troy's estimation method is garbage. He is looking at lagging indicators and making lots of questionable assumptions, which is inherently flawed when modeling for factories that are rapidly growing production and deliveries. The only realistic way we're getting 415k deliveries in Q4 is either major extended production shutdowns or a huge addition of like 69k vehicles to inventory in transit in an epic single-quarter unwinding of The Wave.

Fremont made about 142k last quarter. Conservatively 146k in Q4 I think. Tesla has reported S&X are still gradually ramping. Troy is estimating 146k too so no conflict there.

The massive problem is the other estimates of deliveries:

• 214k Shanghai
• 29k Berlin
• 26k Austin.

Shanghai produced 88k in October, with a holiday week and presumably partial production rate. Also they're probably still making tweaks and fixes after the recent line upgrades. They also have a long-term trend of increasing production in nearly every month that's uninterrupted by major external forces. 90k in Nov and 92k in Dec is likely, if not a bit more. 88+90+92 = 270k for Q4. How the heck would they only deliver 214k? What is Troy thinking there? He keeps harping on demand collapsing in China, but really? ~56k cars from that factory not being delivered in Q4?

Berlin and Austin already are making 2k+ per week and are ramping faster than ever. Conservatively assume 3k per week quarterly average and only 12 weeks worth of Q4 production between the winter holidays and other downtime, and thus we get 36k each. Remember, Tesla guidance of 5k per week run rate by Dec 31st has not changed.

146+270+2*36 = 488k of production for Q4, with plenty of headroom for an extra 10-30k depending mainly on Ber&Aus ramp speed.

Sanity check:

Tesla again has guided for hitting 50% YoY production growth​

2022 production was 930k as of Q3​

2021 production was also 930k​

50% growth --> 1.40M​

1.40M - 0.93M = 0.47M​

0.488M is slightly greater than 0.47M, aligning with confident expectation of slightly exceeding 50% target​

​

So barring any disruptions, 488k production is in the bag based on known production rates. If so, Troy is predicting an incredible 488 - 415 = 73 THOUSAND cars being made in Q4 but not sold. Tesla is selling about 5k cars per day right now. 73k/5k = ~15 days of sales. Troy's estimate implies roughly a tripling of vehicle inventory QoQ from 8 days to 8+15 = 23 days.

Will production likely exceed deliveries as Tesla continues unwinding the wave? Yes. Will inventory triple? Very unlikely, especially in light of Tesla's firm comments on strong global demand and aggressive expansion of production output.

View attachment 875183
(Source: Tesla quarterly reports)

Saving this post and @StarFoxisDown! post and will refer back to them the next time we start talking about Troy in March I'm guessing (but in reality you can almost set your watch to it).

 

[dhanson865]

I mean just look at this exchange

https://twitter.com/x/status/1592745377807372289

Guy acts like he knows Tesla's exact backlog # specifically for China.......the arrogance is unbelievable

This is what I see on twitter for that URL. I guess Troy blocked me. I was able to see the tweet by going there in a browser where I'm not logged in. I can see posts by James Cat if I scroll down so it's just Troy's tweets I can't see while logged in.

So maybe a good idea if you want to quote Troy's tweets to screen shot them while you can.

vs

 

[traxila]

And don't forget that Tesla has sent some people from Giga Shanghai to Fremont to help increase production there...so an increase of just 4k produced in Q4 compared to Q3 sounds like an extremely conservative estimate. Tesla wouldn't bother to send those people if they felt they could basically do nothing to boost production in Fremont.

I keep hearing this but I don't understand why people are so quick to assume this will work to increase production at Fremont, or what the time period required will be for it to work.

For example, they could simply be observing now, with plans to implement improvements in the early 2023 shut down.

I don't see how you can work that into a calculation for this quarter.

 

[jw934]

------------------------------------------------------
11:46 AM 11/16/2022
WSJ
Elon Musk Says He Expects to Find Someone to Run Twitter
By Meghan Bobrowsky and Rebecca Elliott

Elon Musk said he expects to find someone else to run Twitter.

In testimony during a trial over his compensation package at Tesla, Mr. Musk was asked about buying the social-media company. The $44 billion deal closed late last month.

"I expect to reduce my time at Twitter and find somebody else to run Twitter over time," Mr. Musk said

For the past few weeks Twitter has taken the lion’s share of his time, he said, while adding that was not likely to be the case over the longer term.
Mr. Musk said he expected “the fundamental organizational restructuring” of Twitter to be completed soon.
Mr. Musk said some Tesla engineers had been deployed to Twitter, though said it was on a voluntary basis and for the short term.
------------------------------------------------------

No timeframe mentioned, unfortunately.

Link (behind paywall) - WSJ

 

[traxila]

I am guessing these ridiculous articles about 2 fatal Model 3 car crashes with autopilot engaged that 'came to light' are what is whacking the SP today.

Funny, and here I thought it was your usual SP weakness.

I would appreciate regular updates on any car fatality world wide personally. From all car makers. I am sure we all have enough time in the day for this important issue.

"Each year, 1.35 million people are killed on roadways around the world."

 

[Max Plaid]

Elon testifying now:

https://twitter.com/x/status/1592884048011362305

Obviously referring this this thread here: "The shareholders were sophisticated investors. They made decisions according to what they believed would result in the best outcome for shareholders. We did have — we do have — some of the most sophisticated investors in the world."

 

[Gigapress]

If Berlin and Austin increase by 50% for Q4 they'd be at about 28,000 and 15,000 respectively.

Tesla posted on Twitter that Berlin was already at 2k per week run rate as of October 1st. That may have been a burst rate, but they also don’t even have a third shift yet which is supposedly coming in December as we last heard publicly.

2k extrapolated for 13 weeks = is 26k quarterly run rate. Berlin is rapidly growing. 28k implies Berlin's Q4 average production will be just 8% more than the rate in the last week of September.

Tesla also tweeted that Austin went from 10k cumulative as of Sep 17th to 20k on Nov 1st, 45 days later. 45 days is slightly less than half of a 93-day quarter, so this already proves Austin can do at least 20k+ in Q4. In reality they're already trending well past 20k. On the Q3 call three weeks ago, Elon said:

On the production ramp, Giga Berlin achieved another milestone of 2,000 cars made in a week with very good quality and is ramping rapidly. Giga Austin or Giga Texas should reach this milestone very soon. And in fact, just yesterday, we extrapolated yesterday's [inaudible] rate, it would be 2,000.

So, both B&A are trending for at least 3k average weekly production across Q4 if they get anywhere close to 5k per week by EoY as Tesla has repeatedly guided for. They will probably make 40k or more.

 

[betstarship]

------------------------------------------------------
11:46 AM 11/16/2022
WSJ
Elon Musk Says He Expects to Find Someone to Run Twitter
By Meghan Bobrowsky and Rebecca Elliott

Elon Musk said he expects to find someone else to run Twitter.

In testimony during a trial over his compensation package at Tesla, Mr. Musk was asked about buying the social-media company. The $44 billion deal closed late last month.

"I expect to reduce my time at Twitter and find somebody else to run Twitter over time," Mr. Musk said

For the past few weeks Twitter has taken the lion’s share of his time, he said, while adding that was not likely to be the case over the longer term.
Mr. Musk said he expected “the fundamental organizational restructuring” of Twitter to be completed soon.
Mr. Musk said some Tesla engineers had been deployed to Twitter, though said it was on a voluntary basis and for the short term.
------------------------------------------------------

No timeframe mentioned, unfortunately.

Link (behind paywall) - WSJ

It's got to be fun being a great engineer for Elon -

"I just bought a multi-billion dollar business that hundreds of millions of people use for themselves, their businesses, and including you...any interest volunteering time away from your current projects and try out rearchitecting and improving something you really enjoy using? If not, you could totally work on space travel, global internet coverage via satellites, mining/tunneling projects, curing brain diseases, or just your current work building a sustainable future for the planet too"

 

[Gigapress]

I would appreciate regular updates on any car fatality world wide personally. From all car makers. I am sure we all have enough time in the day for this important issue.

"Each year, 1.35 million people are killed on roadways around the world."

Tesla will deliver roughly 1.35 million vehicles in 2022. Just a coincidence?

 

[GOVA]

I don't know if Neroden made a rash decision ...

In short, he was a terrible analyst. Just plain wrong. I could never figure out why he had so many followers as he had a way of making wrong-headed thinking sound almost reasonable ...

It is easy to be wrong, especially when there are no repercussions for being wrong. One needs to do nothing to be wrong. Just floss and wait. There have been more like Neroden here as far as I can tell.

And don't forget that Tesla has sent some people from Giga Shanghai to Fremont to help increase production there...so an increase of just 4k produced in Q4 compared to Q3 sounds like an extremely conservative estimate. Tesla wouldn't bother to send those people if they felt they could basically do nothing to boost production in Fremont.

I've seen this enough times to ask - what are the sources of this? Who did they send exactly, and now, why did Tesla do it?

 

[Gigapress]

Don't forget to add the Q3 cars to Q4's deliveries though.

I disagreed because this will not likely happen. Those 20k extra cars from Q3 will be delivered in Q4, but they'll be replaced by new cars in transit as Tesla smooths out delivery flow globally.

Unwinding the wave means a permanent increase in inventory at the end of the quarter because more vehicles will be in transit at midnight on the last day of the month. It's more efficient but affects the reported numbers snapshotted at arbitrary calendar dates.

 

[Kenypowa]

https://twitter.com/x/status/1592917205712527360

Here are the leading candidates.

 

[Gigapress]

Are folks ignoring possible impact of the EV credits in the US? Sorry to sound Debbie Downer but we have over a month remaining. Obviously Tesla could do a number of things to fill any theoretical gap, and are likely doing so presently - if it even exists at all. Could China extreme output be necessary?

So I decided to price out my exact Model Y with FSD ordered months ago. Now I can get this same vehicle in Dec-Mar time frame. This would indicate a potential gap. (Side note: As I've said before, I believe congress may have gone along with parts of the IRS even if it meant EV discounts for Tesla, especially to try and dampen Tesla Q4 *** known to be a rock and roll quarter moons ago *** having simultaneous Factory ramps. But maybe that's just me.)

Just in case, what's wrong with a lower estimate anyway? Wouldn't it be more in line with the typical street and could make the pop ever so sweeter?

• The credits don't apply to S, X, or the 3P due to the price caps

• A decent number of buyers will be over the $150k single/$300k married filing jointly modified adjusted gross income limits
  • These affluent buyers are the least likely to be concerned with price and just want something with less wait time

• Model Y is so popular it probably doesn't affect Tesla's ability to sell everything from Fremont and Texas in Q4 at current list prices. Maybe the backlog will temporarily get shorter but not to the point Tesla will have undeliverable inventory with no buyers.

• Canada and Mexico could receive priority for deliveries in Nov/Dec

Worst case scenario is Tesla sits some Ys and 3 RWDs in parking lots around America in Dec and waits until Jan to hand them over. I'm sure if that happened the corrupt folks and morons in the market might emphasize deliveries being low even though Tesla would probably explain that they just held the cars so customers could get the tax credit.

 

[Ogre]

Are folks ignoring possible impact of the EV credits in the US? Sorry to sound Debbie Downer but we have over a month remaining. Obviously Tesla could do a number of things to fill any theoretical gap, and are likely doing so presently - if it even exists at all. Could China extreme output be necessary?

So I decided to price out my exact Model Y with FSD ordered months ago. Now I can get this same vehicle in Dec-Mar time frame. This would indicate a potential gap. (Side note: As I've said before, I believe congress may have gone along with parts of the IRS even if it meant EV discounts for Tesla, especially to try and dampen Tesla Q4 *** known to be a rock and roll quarter moons ago *** having simultaneous Factory ramps. But maybe that's just me.)

Just in case, what's wrong with a lower estimate anyway? Wouldn't it be more in line with the typical street and could make the pop ever so sweeter?

It was weird this time last year too as many people were expecting the legislation to be in effect by January.

Worst case, Tesla could offer a bridge discount to consumers similar to what they've done elsewhere. Customers who order after a certain date might get a discount if they take delivery before year end. Sort of the reverse of what they are doing in Germany where they give a discount if they take delivery after the German subsidies end. FSD discounts are an even easier way to go since it would maintain margins.

Maybe Tesla isn't pushing cars out the door in a year and purge, but they are probably not going to want huge inventory built up for beginning of Q1.

 

[Artful Dodger]

For example, they could simply be observing now, with plans to implement improvements in the early 2023 shut down.

Elon has a term for employees who stand around 'observing': Ex-employees.

Further, do you have some source for your claim of an "early 2023 shut down"? Or was this an artifact of the "observing" gambit?

Extraordinary claims require extraordinary evidence.

 

[AudubonB]

The news that Renaissance has sold effectively all their TSLA is music to my ears. Although for a decade I have beaten the drum about how institutional investors need to load up on the stock, RenTech is one Poisoned Purse, in my opinion, to the extent I just as soon would not have any overlap at all with my portfolios.

Good riddance!

 

[Gigapress]

I keep hearing this but I don't understand why people are so quick to assume this will work to increase production at Fremont, or what the time period required will be for it to work.

For example, they could simply be observing now, with plans to implement improvements in the early 2023 shut down.

I don't see how you can work that into a calculation for this quarter.

Every production line has a bottleneck at all times. If you make an improvement on the bottleneck, then production rate of the whole factory increases. It depends on what impact those Chinese employees are having on the line. If they're working on projects with longer flow time, then maybe it won't have an impact. If they are helping get quick wins on the current bottlenecks, then they might materially increase Q4 output.