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They still have 450,000 orders on the books. It's at least a year and a half before they can deliver those.Major assumptions in OP's model:
I think this is a pretty weak assumption. Tesla still hasn't given us any idea of conversion or take rates for the Model 3. It seems a little farfetched that 65,000 people are going to spend over $35,000 to buy a car every quarter with no marketing expenses for Tesla.
- Tesla has a sustainable 5k/week demand for the Model 3 and won't have to invest in marketing.
This seems pretty unlikely, especially given recent changes (more humans, more factory shifts, fewer robots) and just the general uneasiness around Tesla's accounting for warranties, superchargers, etc.
- Tesla will achieve an 18% gross margin for the Model 3.
They still have 450,000 orders on the books. It's at least a year and a half before they can deliver those.
Shorting comes with strings attached ... daily interest, deadline to return (buy), margin account with funds that cover possible raise in prices..
VW went up 3000% in about 3 years. Peaked in 2008. Then went back down. That's how a major short squeeze works.
The coming Tesla rally should be similar percentage wise, even without a short squeeze. Future earnings will support the rally.
In my view, Tesla's growth in the next 10 years will be the main story. Short squeeze or not, is only side note.
Regardless of how much money I might personally make on this, watching such a squeeze unfold to teach the TSLA-shorters a lesson would interest me about as much the maiden flight of FH. That's a lot.
They still have 450,000 orders on the books. It's at least a year and a half before they can deliver those.
They are having to build out service infrastructure in advance of the Model 3... and thus there's low utilization/high overhead. Once that's largely built out and amortized over 10X as many vehicles it's reduced substantially, right?
Outside of California, wait times are minimal. Just about anytime I ask for something, they ask if I can come in that day or the next.The service and other explanation is just one I’m not buying. I don’t believe the service centers are underutilized, judging by the long wait times noted right here in the forums. Also the service center expansion plans would be capex, not operating expenses.
I just think the poor results are due to the “goodwill repairs”
I just think the poor results are due to the “goodwill repairs”
I think it’s a combination of labor and parts. To be fair though, it doesn’t affect my short thesis at all. It’s just worth noting that Services & Other should be included along with auto sales and auto leases when analyzing the segment. When you look at all 3 together, it doesn’t matter what costs are in what bucket.I am having a hard time with that as well. Why the sudden increase right now for example? And where is the real spend then? $120M is an awful lot of man hours at the regular service technician rate. Like 10 000 full time positions.
I think your statement is just silly. Who would pay $1000 (or more, in other countries) to reserve a car that they subsequently wouldn't order? Sure, some, but certainly not all. We have anecdotal evidence of reservation holders actually converting to S and X owners. And Tesla has now delivered what, 20000 or so Model 3s? So you would expect the reservation list to have shrunk, but it hasn't... it's now up to 450,000 according to the last call. Now, Musk chose not to answer the question about conversion rates. I think this was very smart. For one thing, it's proprietary information, since any proper answer would give away information about how many were waiting for a more expensive configuration (me) or how many are holding out for a cheaper version (my friend). Why give such information to your competitors? Anyway, any answer would feed the bear argument: either "cheaper versions mean ASP down, so GM down" or "expensive versions mean smaller market". The reality is, by definition and the Mean Value Theorem, somewhere in between, which is a fine answer.We have no idea how many of those 450,000 people will actually convert to a Tesla owner. Elon Musk ignored the question about this on the most recent conference call.
We have no idea how many of those 450,000 people will actually convert to a Tesla owner. Elon Musk ignored the question about this on the most recent conference call.
I think your statement is just silly. Who would pay $1000 (or more, in other countries) to reserve a car that they subsequently wouldn't order? Sure, some, but certainly not all.
Yes we do. If you didn't pay the $1000, you don't have a reservation. (Someone above corrected me for calling them deposits... when you actually finalize the configuration, you top up to $2500, and that's a non-refundable deposit.) If you cancel your reservation you get back (after some delay) the $1000. So unless you're again going to assert that Elon is lying, we know that all of those 450,000* people have $1000 on the line.We also don't know how many of them actually have deposits. If you get your deposit refunded, do you still have an active "reservation"?
The cars in transit at quarter end would be capitalized in inventory until delivered to a customer...
So it boils down to you (& @schonelucht ) both:I think it’s a combination of labor and parts. To be fair though, it doesn’t affect my short thesis at all. It’s just worth noting that Services & Other should be included along with auto sales and auto leases when analyzing the segment. When you look at all 3 together, it doesn’t matter what costs are in what bucket.