TSLA Market Action: 2018 Investor Roundtable

[HG Wells]

Well the naysayer in me was working overtime last night, so this morning I went looking for data that said we are all wrong about the fourth quarter.
All the following information I got from the Troy spreadsheet on TMC. Note that the people reporting has gone down significantly over the last few months.
Fewer and fewer people are entering data into his spreadsheet. This may be throwing the numbers off.

Let me say I think (hope) it's wrong.
Vicky Salvador's numbers don't match up with the data Im going to present.
She has at times, spoken about producing 1300 bodies passing through the paint shop.
This is why I think production is higher than Troy's spreadsheet shows.
At the very least it means production capability is high they just are making fewer cars.

First let me present the bad news that might be right.
It's the ratio of all-wheel-drive to rear wheel drive.

Notice over time that the production of rear wheel drive as a percentage has increased dramatically.
RWD is most likely medium-range (lemurs) production.
While those units are not priced that much lower than the old long-range rear wheel drive, it's definitely less money.

The above chart shows Troys weekly production estimates.
Notice that there is one week with a high production number of 6230.
Perhaps that week was the week Vicki was referring to.
But again, these numbers are influenced by Tesla registering new VIN's.
If Tesla has just been using up the excess VIN's it can throw these numbers way off.

This last chart of Troy's shows Q4 being about the same production as Q3 three.

The above data shows a Q4 that's basically the same as Q3 but with a reduced average sales price.

I hope this is all hog warsh and they are producing far more.
The only item I am fairly sure of, is the swing to RWD.

Link
Teslike Model 3 Order Tracker #3
Go to very bottom for PRODUCTION tab.

 

[bhtooefr]

Could sampling bias also affect the RWD vs. AWD mix? After all, we're working under the assumption that Troy's data is undersampling more and more due to the hardcore fans already having their cars... but there's another factor at play. There are presumably a lot of hardcore fans that wanted a SR, and then went for a MR. This would have unlocked another group of people reporting, without unlocking LR AWD reporters.

 

[HG Wells]

Could sampling bias also affect the RWD vs. AWD mix? After all, we're working under the assumption that Troy's data is undersampling more and more due to the hardcore fans already having their cars... but there's another factor at play. There are presumably a lot of hardcore fans that wanted a SR, and then went for a MR. This would have unlocked another group of people reporting, without unlocking LR AWD reporters.

A quick trip to the tesla store and a question on how AWD vs RWD sales is in order.
Will go first thing tuesday morning. Its so innocent a question I think they will answer.

 

[jbcarioca]

BTW, an addendum on use of derivatives:

in my academic and professional career I have worked with and/or for/regarding two Nobel Prize winners, large numbers of Ph.D. quants from 'the Chicago school' and countless people much smarter than am I. All of them, without exception, thought they could somehow use quantitative models to predict market movements. Anybody who's ever studied the academic foundations of statistics in general, stochastic models specifically and VaR(or any of the more recent concepts) specifically understands that the very nature of the subject depends on the future being closely analogous to the past.

My most famous example of that of Long Term Capital Management (look it up). What happens when the "new Russia" does nto behave like the old one? What happens if a few huge banks discover that creditworthiness does not matter and documentation is for wimps? Well, taht produces simultaneous failure of everything from Merrill Lynch to Bank of America to Wells Fargo plus dozens of others. Everyone knows that, I hope.

Today we have Trump, Erdogan, Netanyahu, ISIL and others, destabilized Saudi Arabia, internecine conflict between Qatar and Saudi Arabia, Iran feeling for power, Italy/UK/EU all in disarray plus every global/multilateral institution/agreement under attack (UN, NATO, NAFTA...). Anybody tell me if the market stochastic models have their 'boundary conditions' intact. Obviously nobody can say that because none of those models can recognize current global conditions.

None of this implies that we're headed for global depression. It does clearly show tact the global balance of power is shifting 'Eastward' at breakneck pace.

All of this is why Steve Mnuchin made his panicky call to the six big banks. Almost everyone says he overreacted. The poor reception to recent treasury auctions foretold the impending doom. I agree; he NEVER should have made a press release. Mr. Powell understood something almost nobody wants to admit, some sectors fo the economy (agricultural commodities and basic metals, for example, tourism, construction among others) are suffering both decreased demand and rising prices due to erratic trade barriers and large scale cessation of seasonal worker visa programs. Those factors combine to put the Fed in an impossible situation, partly because of the drop-off in demand coupled with rising prices. These factors are emerging now, but mostly were not in the historical statistics. Thus, I think the Treasury Secretary is wise to be terrified.

The Republican Party of the US is emulating Neville Chamberlain very, very well. They mostly know it too. Nothing will stop this until Republican donors rebel. When they do the crisis will become much, much worse before it can get better.. The global situation is painfully similar to cancer. If there is not surgery before metastasis sets in... Problem: many are refusing to accept that the present situation is cancerous.

 

[jbcarioca]

Could sampling bias also affect the RWD vs. AWD mix? After all, we're working under the assumption that Troy's data is undersampling more and more due to the hardcore fans already having their cars... but there's another factor at play. There are presumably a lot of hardcore fans that wanted a SR, and then went for a MR. This would have unlocked another group of people reporting, without unlocking LR AWD reporters.

It's much deeper. The Model 3 reporting is a fraction of what S and X were. That is simply because the Model 3 has become mainstream so owner involement is far less intense than it was before. Now we have exacerbating reporting selection bias becasue we have only teh most intense buyers reporting.

What does that mean? Among other things note Elon comments. The Lemur is a huge success that we cannot confirm with any sampling technique we currently have available. if that is correct we might begin looking seriously at individual store reports just as @HG Wells suggests.

 

[mongo]

OT
Also the possibility of fleet sales to companies. They get $7,500 off too. Enterprise Tesla loaners?

I know Europe gets a different VIN for the restraint system, but would China bound cars be distinguishable? We haven't seen reports of partly assembled cars leaving the plant, so it seems they would be completed units. There was that article regarding governmental vehicles going electric...

 

[jbcarioca]

OT
Also the possibility of fleet sales to companies. They get $7,500 off too. Enterprise Tesla loaners?

... There was that article regarding governmental vehicles going electric...

Fleet sales will be exceedingly interesting. Several of my contacts are people now in large renatl companies, two of whom tell me they have lots of demand for Tesla rentals but cannot make the economics work in volume. Lemurs? special runs of RWD LR's? As M3 production rises there are many new opportunities that would not work for much more expensive vehicles. You post reminded me of that.

China government procurement eligibility redefinition gives them flexibility to procure Tesla vehicles produced in China.

We cannot know for certain whether CKD plans are accelerating even more. Were that to happen it might be shocking but probably not surprising.

 

[HG Wells]

Another item to keep in mind is that the MR (lemur) is only available as RWD.
AWD MR (lemur) does not exist, YET.

What was that pricing curve called. Where demand goes up as pricing falls ?

To repeat, I think Q4 production is up, sales are up but inventory will be higher.
Troy's spreadsheet says Im wrong. But I have no data and it's just a hunch.

 

[mongo]

To repeat, I think Q4 production is up, sales are up but inventory will be higher.

So you're saying everything scaled up?

 

[HG Wells]

Finally found something that supports my hunch.
I hope i'm not cherry picking too much.

Note the crossing of lines in the first week of November.
This indicates more availability. Could be fewer orders or more production.
I'm betting on more production.

I think everything is up but production is currently exceeding demand just a bit. That's why they will have more inventory.
That inventory will go away as soon as they start making cars for Europe.

 

[neroden]

If I were betting on a specific outcome (which I am) I’d quit all investments directly linked to anti-Trump ire anywhere. That I have already done during the last two years.

This isn't quite clear: you mean you're divesting from companies which will be *hit* by anti-Trump ire, right?

(The other interpretation is that you're divesting from companies which are *expressing* anti-Trump ire, but that doesn't fit with the other htings you said)

 

[Cherry Wine]

One other data point for folks: I spoke with someone that works in production recently and asked them about numbers. They wouldn’t say much due to NDAs; all they could say was that they have produced 5k/wk. Wish I had better info, but there it is.

 

[Dreadnought]

Sooo... macros are fubar and while there is a small chance of slightly better mood after the holidays, nobody knows and a couple more negative news could as well send us all into panic territory. Does this correctly summarize the board's pov?

This level of uncertainty makes it even harder to predict absolute price action up to and into Q4 earnings but after yesterday's plunge I was re-evaluating my assessment of Q4 and Q1.
We got contradictory production estimates from increasingly unreliable VIN tracking attempts and insiders that don't have the full picture. On the other hand, Tesla appears very confident that they can deliver last-minute orders before EOY while at the same time not pulling international demand forward. My interpretation is that they churn out L3MuRs in numbers as they would've otherwise put priority on the higher ASP versions for export. However, this can be wrong if overseas demand is not sufficient to absorb the output until SR becomes available to unlock domestic demand after the tax incentive cut. Are there any other indicators that help us gauge whether we are trending towards 6..7k or rather at a 4k level?

At 7k weekly rate in Q1, I was initially wondering if demand could become the limiting factor. I'm not worried about selling half of the quarterly production in EU and China. With only 15 days for the sea route to NL, they can continue production for export for the first eight, maybe 9 weeks of the quarter, leaving even more wiggle room. There could well be enough demand for 40k AWD+ and they could open MR orders gradually otherwise.
What about NA? To me still a big question mark. When announcing the Lemur, Elon said something on the lines of "we can do it now instead of ~February", referring to the SR battery pack. If they manage to meet this target, they can introduce the SR+PUP and that should take care of keeping the NA order books filled.

Any further insights, particularly differing views appreciated. After all, we're not in a bull echo chamber amber amber amber!

 

[PANN]

I want to share some interesting charts I just saw, hope to cheer people up on holidays.

1. If Q4 ends yesterday, it makes the 14th worst quarter since 1926.

2. But guess what's the 1-year return% after those worst quarters, mostly positive!

3. In fact, except the 1930s great recession, 1-year/3-year/5-year return% after the worst quarters since 1940 are ALL quite positive!

 

[HG Wells]

Dread Nought
With Europe opening up, I think we won't have any demand problems.
We might have had a slight demand problem this month but we are only shipping to the us.
With the SR and Europe I can easily see 7-9 thousand demand. Chinna only adds to that.

Will take production of the model Y to justify a gigafactory in Europe.

When on board the good ship Tesla, dread nought.

 

[jbcarioca]

This isn't quite clear: you mean you're divesting from companies which will be *hit* by anti-Trump ire, right?

(The other interpretation is that you're divesting from companies which are *expressing* anti-Trump ire, but that doesn't fit with the other htings you said)

Sorry about the confusion I created. Some companies are sometimes perceived as having an anti-Trump agenda, by which I mean that they explicitly operate in areas to which he has declared public opposition such as renewable energy, especially wind power. These I invest in.

Some others are publicly allied to Mr Trump or are publicly promoting his agenda. Those are sometimes direct targets by some countries. In those companies i will not invest. I have divested of a couple of Hotel companies and one agricultural firm that are in that category. That is what I meant. I prefer not to name these firms because I want to avoid injecting more politics in these posts than I have already done. Maybe, as some say, 'that horse has already left the barn".

 

[Alphacrux]

Asking the experts here a what if scenario. What if na demand for model 3 has reduced to 4K per week and they deliver just slightly more m3 than in q3, yet come out with a highly optimistic q4 conf call in feb due to high demand in Europe and reiteration of mod y unveiling in March. What happens to stock price between now and then?

Also, having purchased (and still have) two mod s’s - one in 2015 and one in 2017 and follow tsla closely, I was barely aware of the vin tracking and never bothered to report a vin. Maybe there are a lot of ppl like me right now.

Any comments from the experts? Oh, btw, Merry Christmas!

 

[HG Wells]

Just saw this appearing in the Highest VIN thread.
Entry above it had VIN 1020XX built in October.

Highest production VIN in the wild

Highest VIN thread
Now that Tesla has built well over 100,000 Model 3’s, this thread has gone quiet.

Here’s an update. Last Sunday I was on I5 in California and over a period of a few hours saw multiple car transporters full of new Teslas and some with not new (not wrapped) Teslas, probably end-of-year fleet sales. At a rest stop I parked next to a Tesla transporter to do a driver change and looked at a new Model 3 on the bottom level of the transporter.

It’s VIN was 177672.

HG Wells
No this does not mean they made 177672-102000= 75,672 between October and now.

 

[AudubonB]

...
If I were betting on a specific outcome (which I am) I’d quit all investments directly linked to anti-Trump ire anywhere. ...I totally ignore short-term movements as much as I can, and read by discard analysts, all of whom seem to be clueless about world developments. ...

On behalf of the community, I thank you for this well-thought out précis; as you know, it closely mirrors my own investment strategy.
When you have the time, though, might you be willing to expound on the first point above - its internal logic is a tad confusing to me; and perhaps there is an editing error in the second?

Thank you in advance and muitas boas festas p'ra vôces -

(on edit: I see now I wasn't the only one confused....)

 

[HG Wells]

jbcarioca & AudubonB

Well I think you are both wrong. I will be investing in any company that supports Trump, by shorting their stock.
HG Wells