brian45011
Active Member
Thanks. I am not conversant with the efficacy of AP 2.0 vs AP 1.0. Is the current version significantly more reliable?The very first picture shows pre ap 2.0 Tesla logo where camera now goes.
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Thanks. I am not conversant with the efficacy of AP 2.0 vs AP 1.0. Is the current version significantly more reliable?The very first picture shows pre ap 2.0 Tesla logo where camera now goes.
Or one more Model S sold. LOL. You didn’t think that one through.Every person who is turned off by something like the phone key is one car less sold.
Depends on who you ask, but between AP 1.0 and AP 2.0 hardware cars with newest firmware versions, 2.0 seems to be better and less prone to getting into bad situations.Thanks. I am not conversant with the efficacy of AP 2.0 vs AP 1.0. Is the current version significantly more reliable?
If your turned off by technology ride in a rickshaw.
I hope they hit 5,000/wk in Q2. There will be no hiding the structural unprofitability at that point.
Yet sometimes he does things that make people LESS likely to switch to electric cars, like the phone key. Making his products narrowly aimed at tech addicts SHRINKS his potential customer base, which keeps more people in ICE cars, and puts more C02 into the air.
The losses at 100/wk were eclipsed by the ones at 500/wk, then 1000/wk, and then again now at 2000 and 2,500/wk. The more they make, the greater the losses. This is why I can’t wait for 5000/wk, there will be no hiding at that point.Be careful what you wish for.
I agree that the moment of truth for Tesla is when M3 production hits 5k / week (give or take some, depending on profit margins on options such as P & AWD), because at that production speed they can be expected to turn from loss to profit.
With a short position you would want that point in time to come as late as possible, long after Tesla has run out of money to pay back their CapEx on the M3 production.
Thus reaching 5k / week in Q2 would be the worst case scenario for a short position.
Are you maybe Elon Musk, trying to bait those pesky shorters into expanding their positions, so they can be utterly bankrupted, when Tesla turns its first quarterly profit after the M3 launch?
PS. Yes, I am long again on TSLA, with Elon's "nervous breakdown" as the trigger to buy...
The losses at 100/wk were eclipsed by the ones at 500/wk, then 1000/wk, and then again now at 2000 and 2,500/wk. The more they make, the greater the losses. This is why I can’t wait for 5000/wk, there will be no hiding at that point.
Got it, so in your opinion, what will Q2 show? Would you expect Q2 losses to be less than Q1?
You listed 5 points in production, 100, 500, 1000, 2000, and 2500. Even if 2000 and 2500 were meant to be lumped together, that is 4 quarters of data you are theoretically referencing on a car that was only in production for 3 quarters. With a first quarter production of 220 units...The losses at 100/wk were eclipsed by the ones at 500/wk, then 1000/wk, and then again now at 2000 and 2,500/wk. The more they make, the greater the losses. This is why I can’t wait for 5000/wk, there will be no hiding at that point.
The losses at 100/wk were eclipsed by the ones at 500/wk, then 1000/wk, and then again now at 2000 and 2,500/wk. The more they make, the greater the losses. This is why I can’t wait for 5000/wk, there will be no hiding at that point.
I do believe in those things, but none of them are happening here.So your basis for all of this is that there is a (linear-ish?) proportional relationship between production rate and loss?
That's it.? You don't buy in to curves to account for initial capex, efficiencies, fixed costs amortized over greater unit volume, etc...?
... So Tesla needs about $1.125B per quarter to cover their costs. If they can get there, then they can eek out a profit. But once they get there, as Model 3 revenue and gross profit ramps, the profit will only grow.
So how and when does Tesla get to a point where they can cover the $1.125B in Tesla CORE expenses (plus interest expense)?
If Tesla can sell ~25,000 Model S/X cars for roughly $2.5B and with a gross margin of 27%, they can have $625M gross profit.
And if Tesla can sell 65,000 Model 3 (13 weeks of 5,000 cars production, average selling price of $50k), that would be $3.25B and with a gross margin of 18%, that would be $585M is gross profit.
So $625M + $585M = $1.21B in gross profit, which will cover the $1.125B in operating expenses and interest expense. Net profit of $85M.
It is ironic that you say this. I live part time in Mexico, I frequently see hovels made out of cardboard and corrugated metal....................with a satellite dish on the roof and the owner standing outside talking on their smartphone (often Apple which are about 50% more expensive in Mexico). It is a matter of personal priorities and necessities.Every unemployed, food stamp collecting, on Medicaid patient I have ever seen at my office has a giant smart phone. I really don't think using a smart phone as the car key for a Tesla is going to be a problem.
This is spot-on but shorts don't seem to get it. It is much clearer to focus on the total quarterly production number rather than the weekly production rate achieved in the last few weeks of the quarter. In the earlier stages of the ramp, it is more expensive to produce more cars because efficiency is very low and margins are negative. We don't know exactly where the intersection to positive margins is. At the 5,000/week sustained production rate, quarterly production should be around 60,000, assuming 12 weeks of production with 1 week of shutdown. That should happen in Q3, which Elon has said will be a profitable quarter. It's obviously a guessing game to predict what level of quarterly production during the ramp will start to show less losses. At what level of quarterly production during the ramp is there enough efficiency to allow for this? There is also the factor of how the expenses are accounted for. There will be an intersection where the financials start looking much better. Q2? I would hope so. If Tesla averages 2,500 per week for 11 weeks (given the expected 2 weeks of line shutdown), that yields a little under 30,000 for the quarter. I would expect that level of production to have enough efficiency to show lower losses due to improved margins, but there is more to it with the accounting for expenses, etc... For instance, I don't know when the expense for the new Grohmann line at GF1 will be shown, nor how much it is. There may well be other expenses incurred in Q2 that were not anticipated but became necessary for the ramp. Those are the things that could throw off the financials but not in a permanent way. Q2 will be interesting financially but I wouldn't place too much weight in it, though it would be nice to see lower losses.You listed 5 points in production, 100, 500, 1000, 2000, and 2500. Even if 2000 and 2500 were meant to be lumped together, that is 4 quarters of data you are theoretically referencing on a car that was only in production for 3 quarters. With a first quarter production of 220 units...
Again, I caution you against extrapolation from small values.
Further, they only hit 2k/wk in the last week of Q1. So 2000, along with your 2500 number, are not statistically present/ relevant. Q1 production was <10k or <1k/wk.
This is spot-on but shorts don't seem to get it. It is much clearer to focus on the total quarterly production number rather than the weekly production rate achieved in the last few weeks of the quarter. In the earlier stages of the ramp, it is more expensive to produce more cars because efficiency is very low and margins are negative. We don't know exactly where the intersection to positive margins is. At the 5,000/week sustained production rate, quarterly production should be around 60,000, assuming 12 weeks of production with 1 week of shutdown. That should happen in Q3, which Elon has said will be a profitable quarter. It's obviously a guessing game to predict what level of quarterly production during the ramp will start to show less losses. At what level of quarterly production during the ramp is there enough efficiency to allow for this? There is also the factor of how the expenses are accounted for. There will be an intersection where the financials start looking much better. Q2? I would hope so. If Tesla averages 2,500 per week for 11 weeks (given the expected 2 weeks of line shutdown), that yields a little under 30,000 for the quarter. I would expect that level of production to have enough efficiency to show lower losses due to improved margins, but there is more to it with the accounting for expenses, etc... For instance, I don't know when the expense for the new Grohmann line at GF1 will be shown, nor how much it is. There may well be other expenses incurred in Q2 that were not anticipated but became necessary for the ramp. Those are the things that could throw off the financials but not in a permanent way. Q2 will be interesting financially but I wouldn't place too much weight in it, though it would be nice to see lower losses.
Got it, so in your opinion, what will Q2 show? Would you expect Q2 losses to be less than Q1?
Let 'em. That's the kind of thinking that is creating this opportunity for TSLA shareholders right now. Shorts assuming that a Q2 exit rate of 5,000 means the quarterly production was around that rate is partly what is tripping them up in their assessment of Tesla's financial performance right now. They are also not giving enough thought to the inefficiency of the ramp to this point, and it's impact on financials. They assume that if Tesla can't make a profit on the model 3 at this point in the ramp that it's a huge warning sign of what's to come. They are assuming an awful lot of future negative financials based upon a distorted interpretation of the model 3 ramp. This will become crystal clear to them in the coming months. I'm very much looking forward to it.Q2 will show a smaller loss on accelerating revenues as the average output will be in the 3000/ week range. An exit rate of 5000 week will post a clear path to Q3 profitability and positive operating cash flows.
But don’t worry, I fully except you to ignore that and pretend that an exit rate of 5000/week in Q2 is somehow the same as a full quarter at that rate.