TSLA Market Action: 2018 Investor Roundtable

[brian45011]

BTW., the real financial metric to look for is what led to Amazon's meteoric rise: which is not profits but cash generation ability.

And that's going to be a huge story in Q3: over 1 billion dollars of cash generated, ~$600m of that invested into payments for Model 3 lines, the rest positive cash flow in the $600m-$700m range:

I need to do more research, but $2.2+ billion of his cash estimate seems to be predicated on a large increase in the Accounts Payable/Accrued Liabilities on the Balance Sheet, which looks anomalous on first glance:

…	luv q4-18e	luv q3-18e	Jun-18	Mar-18

[TD2]accts pybl/accr liabs[/TD2][TD2] -142,942 [/TD2][TD2]2,233,309[/TD2][TD2] 591,737[/TD2] [TD2] 317,983[/TD2]

 

[Lessmog]

Model 3 is much better for Europe. I am not exactly in deepest countryside (1 hour from London) but this kind of road was a daily occurrence for me until recently (well not so bad..):

You don't want to meet a John Deere coming in the opposite direction in a shiny $100,000 Model S!
Or try parking here:
View attachment 340457

Summon?

 

[MikeQ]

I agree with your other points, but I'd like to disagree here: the amazing thing is EVs like Teslas, despite lacking the economies of scale of millions of units, are already significantly superior to every comparable ICE car, in every metric, to over 90% of the new car customers.

I.e. my thesis is that due to this the EV transition is going to happen incredibly fast not because people care about the environment, but because people genuinely want a superior car, and once there's a Tesla in their favorite form factor that's affordable, they convert and never go back to ICE cars, ever again.

Once you buy a car without the high pressure sales, hours of negotiation and sleazy tricks you'll never want to go back to the dealership model either.

 

[Fact Checking]

Just don't expect a single profitable quarter to do the trick.

Yeah, there's a fair chance for that, but after Apple and Amazon there's increased investor awareness and search for the next trillion dollar company, and Tesla is very much that story ...

I believe Q3 financials are already going to prove that story, black and white.

Then there's additional, shorter term benefits of the Q3 results as well:

• With cash growing and almost 3 billion dollars of cash bankwuptcy is visibly off the table,
• the timer for a Moody's upgrade will start ticking,
• first quarter in a series of four, until addition to S&P 500.

 

[MXWing]

If you are in for the long haul, stop watching the daily action. Go live your life and have fun while you can! This craziness will give you an ulcer otherwise. Come back and check the numbers once a month at the most. You will live years longer.

If you are an options trader like me on TSLA, Pepto helps! lol

I have some calls I need to hit next week. Can you please pen some long FUD?

 

[Tslynk67]

Diesel deaths – complete list of 2018's axed models | Autocar

Don't see many VW's on that list. The Bentley is an abomination...

 

[beachbum77]

I agree with your other points, but I'd like to disagree here: the amazing thing is EVs like Teslas, despite lacking the economies of scale of millions of units, are already significantly superior to every comparable ICE car, in every metric, to over 90% of the new car customers.

I.e. my thesis is that due to this the EV transition is going to happen incredibly fast not because people care about the environment, but because people genuinely want a superior car, and once there's a Tesla in their favorite form factor that's affordable, they convert and never go back to ICE cars, ever again.

ICE cars are not the cigarettes that are bad for your health but to which you secretly go back because you enjoy them.

Instead ICE cars are the old trailer and stinky outhouse you move out of after winning the lottery, replacing them with a modern luxury home with full amenities. Once you enter your new home you'll never look back.

If out of nostalgia you visit the old trailer after three months, it's all awkward, embarrassing, surprisingly limiting, and you don't fully remember how it all works anymore.

At this point I'll also make a bold prediction: ICE cars are never going to catch up ever again, it is downhill from now on, until they reach horse carriage economic status in 10-20-30 years.

I think you'll fully appreciate this competitive advantage of Tesla cars once your new Model 3 Performance arrives!

Being superior in every way makes no difference to the mass-market buyer here in this country. All they care about is monthly payment and how much they have to put down.

The mass market buyer here is a couple with 2-3 kids, a dog and a couple of angry cats. The youngest child is still in a car seat and carrying along what was once a teddy bear named Boo-Boo that is now an unrecognizable ball of matted fur from multiple machine washings. These folks do not buy "superior"; they buy "affordable".

Considering two relatives just bought/leased new ICE vehicles last month both with no money down and payments under $400 per month that is Tesla's headwind for the Model 3. The Model 3 could lay solid gold eggs but if people can't afford to buy it, it will not make a bit of difference.

I am waiting on an SR, RWD, MSM, 19", PUP Model 3 to replace my poor, aging '98 SL500 daily commuter.

 

[ItsNotAboutTheMoney]

- get massive line of credit for rainy day
- get killer chairman
- less tweets
- up guidance
- get investment from AMZN and Berkshire
- announce 3 year succession plan. In 3 years JB (or similar) replaces Elon and Elon resume chair position

As much as I <heart> JB Straubel, he's best left as CTO.

Tesla has its next CEO in Jerome Guillen. He's already been promoted to head automotive from his previous position as Head of Playing With Trucks. He left for a break and came back. I think his Daimler and broader Tesla experience makes him a much better fit.

 

[lklundin]

The present 10 lines have an output of 20 GW, the 3 extra lines have a higher output and will bring the total to 35 GW at the end of this year. Correct me if I’m wrong.

Your units are probably wrong.

In principle, the production could be 20 GWh every hour (i.e. 20 GW), but that is too much.

Maybe an annual production of 20GWh ? (that is a production speed of 2.3 MW)

(We all make typos, but I think on TMC we should try to get the units rights).

 

[Papafox]

I need to do more research, but $2.2+ billion of his cash estimate seems to be predicated on a large increase in the Accounts Payable/Accrued Liabilities on the Balance Sheet, which looks anomalous on first glance:

…	luv q4-18e	luv q3-18e	Jun-18	Mar-18

[TD2]accts pybl/accr liabs[/TD2][TD2] -142,942 [/TD2][TD2]2,233,309[/TD2][TD2] 591,737[/TD2] [TD2] 317,983[/TD2]

Increase in accounts payable is a natural effect of increasing production volume. We'll see another round of cash generated in Q4 by increasing accounts payable, but it will be supplemented by a much higher amount of profit. When you have 60 days to pay your suppliers and you can build and sell the vehicles in substantially less than that time, increasing volume is a huge cash generator. The good news is that as long as your volume stays the same or increases, you never see those accounts payable biting you. OTOH, look at the effect of 15,000 vehicles in transit over end of quarter. Those are assets.

Bottom line is that when Tesla pays off its bondholders between now and early 2019, bondholders could care less if accounts receivable has increased. They just want stock in the company or cash, depending on how well TSLA is doing at the time.

 

[beachbum77]

I have some calls I need to hit next week. Can you please pen some long FUD?

LOL... I am on the sidelines. I can't get a reading on where this SP is headed. One news story in either direction could have it soaring or plunging. Guess that means it is time to go private again?

 

[Tslynk67]

What you are pointing out is pulling levers for an engineered profit. That does not point to a sustainable profit and I think the recent SP movement points to that uneasiness.

A profit similar to 3Q16 of $100-$150 million, when such a large portion of the pent-up demand was exhausted in Q3, will not drive the SP much higher. In fact, it could drive it down with an overall attitude of "is that all there is?". For a real SP bounce we need to see $500 MM to $1B, and based on Musk's email to employees that does not seem to be in the cards.

I believe Q3 may have suffered from the "law of diminishing returns". Where the extra push for 55,000 versus 50,000 or 48,000 deliveries actually cost so much it reduced the average profit per car once all expenses are tabulated. I also think the Model S & X deliveries were achieved with a high degree of discounting. We will see what the numbers show in a few weeks.

The overall report was not as good as I was hoping for. So we are now on the sidelines. We closed the remaining 50% of our Oct 5 calls yesterday morning on the early bump.

I agree that these quarter-end pushes need to stop, I think they erode market confidence in the demand, which is production constrained on all models at this moment.

But what I would point out is that S&X deliveries are way ahead of 3Q16 deliveries, which, if people had more than one brain-cell to rub together, would answer many questions.

Tesla has never been in a better position - I realise someone says this every couple of weeks or so, but each time it's uttered, it's true.

 

[Unpilot]

Burning Small profit creative engineering of the levers.

You can't help yourself can you?

 

[Fact Checking]

Are you referring to the current 3 lines, the GF1 cell/ pack lines, and or the new Chinese ones? I thought the Fremont side of things had already been paid for.

Tesla is paying $650m + $650m cash in Q3 and Q4 for capex - I presumed it's final installments for Fremont - but maybe something else as well?

GF1 lines come from Grohmann, their own subsidiary, that shouldn't be that expensive.

Could it be partly the Shanghai Gigafactory already?

 

[oneday]

September ‘18 Top 30 best selling passenger cars

Model 3 was number 4 best selling car in the US for September!!!!!!

BTW: Tesla Model S was number 31 that’s why I stopped there.

Source: goodcarbadcar

I want to do the same thing for revenue and compare

Edit: to prevent confusion I think I should mention the percent figure next to the numbers are not percent of all cars, only percent of top 30.

 

[skybluecgreen]

The present 10 lines have an output of 20 GW, the 3 extra lines have a higher output and will bring the total to 35 GW at the end of this year. Correct me if I’m wrong.

According to carsonight (who seems reliable) responding to an article by Fred Lambert:

carsonight 7 days ago
Fred, you are a trusted source and I enjoy reading your articles very much, but on GF1 production capacity I question your information.

First and foremost, and my pet peeve, is that planned GF1 cell production is NOT 105 GWh at the cell, 150 GWh at the pack, and this only sows confusion. The numbers to discuss are at the cell.

Second, adding 3 new lines will NOT increase production to 35 GWh, not even close. Production will more likely be increased to 24 GWh per year with 13 lines.

The information I get from the "factory floor", including the problems with labor shortages, check out with what I read concerning Tesla's actual production numbers. You can plug these numbers in for any number of lines of machines.

There are 14 machines in a line, and 10 lines currently at GF1. Each machine has a theoretical top speed of 25,000 cells per day, but reality is more like 20,000 cells per day. Plug those numbers into a 7 day run rate and devide by 4416 cells in a Model 3, and you come up with ~4400 Model 3s per week which is at the top of Tesla's guidance for the quarter. The first 2 weeks of the quarter their production were not that high and Q3 production is likely to be in the 52,000 range for the LR Model 3.

With 13 lines of machines, and using the same numbers, the math is ~ 5700 Model 3s per week by the end of the quarter. Because the SR Model 3 uses fewer cells, 20 lines would likely produce 10,000 per week of a mix of LR and SR Model 3s, and I am told there is room for 20 lines.

When GF1 is complete it will have 77 lines of machines, which at current production rates and using 18 Wh per cell is good for 140 GWh per year, AT THE CELL LEVEL. That's reality in my neck of the woods.

 

[Mike Smith]

In the past I've seen SA remove quite a few positive Tesla articles due to factual errors, so I sent in a complaint about Bill Maurer's latest article as a test to see if they'll remove a negative Tesla article with an important factual error.
Tesla: Q4 Now The Hard Part - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

I wrote:
Regarding profitability in Q3, the article states:
"It will be a tremendous failure if Tesla falls short, especially on the profitability side, given how many times management (especially CEO Elon Musk) guaranteed it would happen."
In fact neither Tesla nor Musk has ever guaranteed profitability in Q3 even once, much less 'many times'. It has only ever been stated as guidance with varying levels of confidence. Never guaranteed.

Let's see if the article gets removed. I predict not.

 

[mongo]

Tesla is paying $650m + $650m cash in Q3 and Q4 for capex - I presumed it's final installments for Fremont - but maybe something else as well?

GF1 lines come from Grohmann, their own subsidiary, that shouldn't be that expensive.

Could it be partly the Shanghai Gigafactory already?

Yah, I'm not sure. My (less that perfect) memory of previous conference calls makes me think they should have already paid their suppliers for the existing line. GF3 should be showing up, it seems.

Would the equipment for Shanghai, Semi, or Y show up already (deposits)?

 

[Fact Checking]

Bottom line is that when Tesla pays off its bondholders between now and early 2019, bondholders could care less if accounts receivable has increased. They just want stock in the company or cash, depending on how well TSLA is doing at the time.

Btw, small detail: those note holders will likely not get shares, regardless of whether the share price is above or below $360, because Tesla has the option to pay them in cash, even if note holders elect to covert to shares.

In that case note holders are paid in share price weighted cash, and the extra amount above $360 is paid to Tesla via the hedges they purchased when the notes were issued.

I.e. the March 2019 conversion event will be anti-dilutive: not only will no new shares be distributed, but any short positions associated with those notes will be closed as well - which reduces the float.

 

[STARR X]

Solid interview... here is the link... cuz embedded video is not working.

Bloomberg

Missing Tesla News Feed