TSLA Market Action: 2018 Investor Roundtable

[Waiting4M3]

It’s going to take some time. It’s not like their job is to simply disseminate new information. It takes time to run that information through the fun house mirror.

I used the time delay to add shares in my account and a friends at $288xx : )

Excellent strategy take advantage of major media's blind spot to any websites willing to publish anything positive about Tesla!

 

[Todd Burch]

Another angle of this: Did Tesla ever mention before that they were planning on targeting 6K on this line? It was originally supposed to be 5K, then duplicate the line to get to 10K/week right?

If we're going to see an additional 1K cars/week with the same line, we should expect gross margins to be perhaps even higher than initially predicted.

 

[CuriousSunbird]

A lot of people have commented on this, but I am doubtful. Has Tesla ever given a mid-quarter production number when asked on earnings? I can't remember them ever doing so.

Only vaguely - on August 2, 2017, Elon said the line was running at "a few hundred vehicles a week".

 

[CuriousSunbird]

Another angle of this: Did Tesla ever mention before that they were planning on targeting 6K on this line? It was originally supposed to be 5K, then duplicate the line to get to 10K/week right?

If we're going to see an additional 1K cars/week with the same line, we should expect gross margins to be perhaps even higher than initially predicted.

That is exactly what the shorts ware wondering. The previous plan was to produce 5,000 with two shifts of eight hours five days per week - 80 production hours per week. Now it's 6,000 per week on a 3 shift 7 day basis - 168 hours per week. So from 62.5 cars per hour to 35.7 cars per hour. What will that do to the gross margin?

 

[Waiting4M3]

That is exactly what the shorts ware wondering. The previous plan was to produce 5,000 with two shifts of eight hours five days per week - 80 production hours per week. Now it's 6,000 per week on a 3 shift 7 day basis - 168 hours per week. So from 62.5 cars per hour to 35.7 cars per hour. What will that do to the gross margin?

Do you have any support for that?

 

[Todd Burch]

That is exactly what the shorts ware wondering. The previous plan was to produce 5,000 with two shifts of eight hours five days per week - 80 production hours per week. Now it's 6,000 per week on a 3 shift 7 day basis - 168 hours per week. So from 62.5 cars per hour to 35.7 cars per hour. What will that do to the gross margin?

Tesla never said anything about 2 shifts of 8 hours, AFAIK. Plus, given the level of automation, it won't have nearly as much impact as you and other shorts wish it had.

But, stick with that theory. See how it works for you.

 

[techmaven]

That is exactly what the shorts ware wondering. The previous plan was to produce 5,000 with two shifts of eight hours five days per week - 80 production hours per week. Now it's 6,000 per week on a 3 shift 7 day basis - 168 hours per week. So from 62.5 cars per hour to 35.7 cars per hour. What will that do to the gross margin?

Not sure that was ever the case... 5,000 on two shifts were each 10 hours a day, but I think they were 6 days a week. That's 120 production hours a week. On a 3 shift schedule, the number of employees on the 3rd shift might not be the same on the 3rd shift. As it stands, the Tesla Master Plan has 2 shifts with the day shift at 2,980 employees and the night shift is 2,030 employees. (illustration with 6,000 employees). Taken from their 2016 Master Plan as presented to the City of Fremont. In a 3 shift schedule, I am not sure the number of employee hours goes up all that much per car.

In any case, Model 3 production is very different from S/X where the GA is almost all human labor. So the extra employee count and production hours don't really divide in as cleanly.

 

[CuriousSunbird]

Do you have any support for that?

Elon's email confirms the 2 to 3 shift change (so a 33% increase in hours for a 20% production increase). The 5 day is my recollection and I will try to find where I heard it.

 

[MTL_HABS1909]

Bears on Twitter are rallying around 6k burst rate at June end, with the intent to get to that steady state a few months later. This wording is a bit worrying. I'd have much rather preferred a reiteration of steady state 5k for Q3.

Not too long ago the bear argument was that the Model 3 would never even be produced. Then they said Tesla could never ramp production over 1000/week...etc.

Part of the bear modus operandi is to continually shift the goal posts. Nothing new here.

 

[Waiting4M3]

Elon's said expanding from 2 shifts to 3, so it's a 50% increase. This expansion will happen over several weeks, the way I read is it will take Apr/May, then in June we will have complete 3 shifts, and it will produce 5-6k/wk. So a 50% increase in labor will produce 2.5-3x more cars, this will help the margin significantly.

I suspect the reason that Tesla is starting to add this 3rd shift now is that the Grohmann line was just installed, and now they have enough battery packs to start running the Fremont line at full tilt.

 

[Big Earl]

That is exactly what the shorts ware wondering. The previous plan was to produce 5,000 with two shifts of eight hours five days per week - 80 production hours per week. Now it's 6,000 per week on a 3 shift 7 day basis - 168 hours per week. So from 62.5 cars per hour to 35.7 cars per hour. What will that do to the gross margin?

6,000 per week in 3x7 will be the toward the beginning. I expect they’ll have plenty of headroom to increase the speed of the production line in the second half of the year. Perhaps they’re pulling back a little bit from 10,000 an that one line, but I won’t be betting against it. Realistically, I expect 10k/week be this time next year.

 

[CuriousSunbird]

Tesla never said anything about 2 shifts of 8 hours, AFAIK. Plus, given the level of automation, it won't have nearly as much impact as you and other shorts wish it had.

But, stick with that theory. See how it works for you.

I think the point here is to reduce automation as per Elon's recent comments. That's why they're hiring 400 people per week for the next "several weeks".

 

[Waiting4M3]

I think the point here is to reduce automation as per Elon's recent comments. That's why they're hiring 400 people per week for the next "several weeks".

The "several weeks" should end in June, so adding this 3rd shift (50% increase in labor) will allow them to produce 5k-6k cars (2.5-3x)

The exact quote from Elon's letter:

As part of the drive towards 6k, all Model 3 production at Fremont will move to 24/7operations. This means that we will be adding another shift to general assembly, body and paint. Please refer anyone you know who you think meets the Tesla bar for talent, drive and trust. Between Fremont and Giga, Tesla will be adding about 400 people per week for several weeks.

I think you're assuming that the 3rd shift is added as a result of changing the target from 5k to 6k/wk, thus your claim of 20% productivity increase. I disagree. I think the 3rd shift has always been planned, it is starting now because the battery pack supply is finally high enough for the M3 line to run at full speed. So the 3rd shift enables them to increase from 2k/wk to 6k/wk. The increase in speed will be gradual as they hire and train more people over Apr/May, as well as making additional production line tweaks.

 

[techmaven]

I think the point here is to reduce automation as per Elon's recent comments. That's why they're hiring 400 people per week for the next "several weeks".

In addition to switching conveyance over to humans driving stuff around in Fremont, they need people for final prep, paint, and so forth. At GF1, they need people for drive unit assembly and the manual parts of pack assembly. It isn't all switching out robots. They simply didn't need the extra labor until the robots were fixed.

 

[CuriousSunbird]

Not too long ago the bear argument was that the Model 3 would never even be produced. Then they said Tesla could never ramp production over 1000/week...etc.

Part of the bear modus operandi is to continually shift the goal posts. Nothing new here.

Not all bears have the same theories.

 

[JRP3]

Surely shorts should come here to elicit opinions disproving their theories just as longs should go to SA to see points of view contrary to their own.

If you only debate with or listen to people who agree with you, you will learn little and lose much.

It's been years since I learned anything from SA. Their viewpoints are mostly contrary to reality, I go there occasionally for amusement.

 

[Cattledog]

Recall that in February there was a stop for several days to implement improvements and then the production made a step change, in very rough terms going from 1,000/week to 2,000/week over the month of March. Perhaps we'll see a similar doubling over the next several weeks on our way to 5,000 by quarter's end.

If you read Elon's email, cattledog was only off in that he didn''t hit the 6,000/week target.

Pick up the slack next time, cd.

 

[dc_h]

FYI, CNBC is about to talk about Tesla after commercial break, said, "the real reason Tesla is having a production halt".

They are shutting it down to get some free consulting from Lora koladny to improve safety and put a stop to the part rebuild problems.

 

[dc_h]

I’ll be honest. It appears to me there very well may be bottlenecks soon due to suppliers being terminated and/or not being able to keep up and the slack needing to be picked up elsewhere. The next few months will be awfully interesting. Reaching 5k+/wk may not be an easy feat.

The jet will be gassed up and ready to go. Any suppliers not on target will be getting a visit from Elon. No one will want him sleeping on their plant floor.

 

[bdy0627]

Bears on Twitter are rallying around 6k burst rate at June end, with the intent to get to that steady state a few months later. This wording is a bit worrying. I'd have much rather preferred a reiteration of steady state 5k for Q3.

I think this is a fair assessment. If they hit a full week of 5,000 produced, it may well be in the very last week. That would be perfectly fine with me but the FUD will focus on the idea that it's a burst rate. Essentially, it could very well be interpreted as a small miss or maybe JUST meeting guidance. Either way, it's a huge amount of production. The stock will eventually react favorably. No idea when though. The burst rate bear argument will fall soon enough.