TSLA Market Action: 2018 Investor Roundtable

[dandurston]

2500 end of Q1 and about 1000 a week now translates to about 20,000 cars in Q1 and 40,000 to 50,000 in Q2.

If you recall the Model X ramp, Tesla would announce hitting a certain production rate at the end of a quarter, but then hardly average that rate for the next quarter because of early Q slow downs to tweak production. Historically, it's a been a mistake to assume the exit rate from one quarter will be the starting production rate for the next.

A couple weeks ago (Dec 21), I speculated on Q1 2018 production and correctly guessed both the late December rate and the revised March 2018 rate (if the new guidance holds). I think this forecast continues to be a good guess, if not also a bit optimistic.

I think Tesla is running at ~500/wk now [Dec 21], but will shut to down in early January to make a week of changes/tweaks/upgrades after a late December burst. I expect they'll get running again at 500/wk around Jan 7, and finish January closer to 1000/wk. So my guess is 2k total cars in January.

Then 1-2k/wk in Feb, and 2-3k/wk in March. Q1 total of 18k.

 

[RobStark]

Very interesting wording. Here is my translation:

• We did not actually hit 1K cars per week (note the word "extrapolates")
• We did not hit it in 2017 (note "in the last few days")

My translation

We made 567 Model 3s the last 5 working days of the year but can make 1000 per week if we get the needed parts from suppliers.

 

[mongo]

My translation

We made 567 Model 3s the last 5 working days of the year but can make 1000 per week if we get the needed parts from suppliers.

I like the sentiment, but shoudn't Tesla have way more than 1k worth of parts on hand by now? (other than battery packs) They are multiple months after the start of production with low usage. Even at 500 units per week, it would be 6k worth of parts.

 

[BornToFly]

We were also thrown off by the "5,000 parts/week from suppliers" article.

 

[flankspeed8]

My translation

We made 567 Model 3s the last 5 working days of the year but can make 1000 per week if we get the needed parts from suppliers.

"As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time"

 

[Paracelsus]

.......... what’s more, pretty clear Tesla will hit 200K US deliveries until Q2, which means larger tax credits for more people.

I am glad to see this discussed. I will also be looking for a discussion over the coming weeks and in the Q4 earnings regarding the ramp rate of battery production capacity vs. the ramp rate of the Model 3. In short, the stationary storage-side of the business appears to be growing as fast as TE can build product at the moment. I would have to believe that their decision to take all the time necessary to optimize and fine-tune the Model 3 assembly line is driven in-part by the lack of any pressure to get 100% of their current battery production capacity to market through the combination of TM and TE, while optimizing tax credits in the process.

At some point the growth in M3 deliveries has(had) to be constrained by the production capacity at GF1, particularly when given their quick response to very sizable and successfully completed projects like South Australia, Hawaii, and Puerto Rico, combined with the potential for many more projects we are yet to hear about in the Q4 report. My interest is peaked on this dynamic. It was very uplifting to see TMC postings regarding new job position postings for increased production capacity at GF1 today. The 50,000 foot-view might be that the planned scale increase of the Model 3 production PLUS the size of the TE stationary storage projects in the que for Q1 and Q2 are already matched to the increased rate of production of GF1 suggested in the job postings. Given this scenerio we would certainly expect a forward-thinking company to take full advantage of the opportunity to get a huge assembly line 100% right before moving on to the next project if time allows them to do so. I don't see Tesla in a crisis-management mode at all in their response. I see them moving forward with even more confidence.

 

[RobStark]

I like the sentiment, but shoudn't Tesla have way more than 1k worth of parts on hand by now? (other than battery packs)

They should be at 5k/week production rate by now too.

You can only produce as fast as your least lucky/competent supplier.

 

[RobStark]

"As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time"

That doesn't contradict my statement.

If they tested each portion of the production line for 1k/week I think we can safely assume that means 1k/week at targeted quality not at craptastic quality.

How many they can produce at craptastic quality is irrelevant.

 

[Hogfighter]

All they've done is shifted 5k/ week from end of Q1 to sometime in Q2. Not earth shattering.

If there's a major pullback based on that news, I'll load up the truck. But yea, they did give the bears some ammo.

 

[Sudre]

I agree with RobStark. We don't know the details but it does sound like the lines can produce at 1000 (combined) a week but either they need more manpower to run all the lines at that pace or there is a part missing (battery packs?). I would think the more likely event is a part missing. It only takes one screw.

IF they have tested the individual lines at the run rate needed for the combined total to equal 1000 a week then what the heck would they be waiting for if they have all parts?

If it is that the quality isn't there then they shouldn't report an equivalent craptastic run rate of 1000 a week. I would call that deceptive. IMO if you are putting out poor quality vehicles at 1000 a week then your run rate is not 1000 a week. It's whatever a high quality output rate is (less than 1000).

 

[Quassinoid]

I think the long view on the report is that major bottlenecks have been addressed and the ramp has begun. Hopefully, over the next few weeks, investors will see this as more important news than the ramp got delayed by 3-months. Also, with S/X sales remaining strong, this may indicate if there are any M3 buyers that are getting impatient, they're opting to buy an S instead. That just means better margins. Finally, the fact that M3 reviews have been, in general, very positive, this will also keep people waiting in line hanging on as opposed to buying another non-Tesla vehicle.

 

[NZ10K]

If you recall the Model X ramp, Tesla would announce hitting a certain production rate at the end of a quarter, but then hardly average that rate for the next quarter because of early Q slow downs to tweak production. Historically, it's a been a mistake to assume the exit rate from one quarter will be the starting production rate for the next.

A couple weeks ago (Dec 21), I speculated on Q1 2018 production and correctly guessed both the late December rate and the revised March 2018 rate (if the new guidance holds). I think this forecast continues to be a good guess, if not also a bit optimistic.

It is abundantly clear by now that there will be NO so-called "exponential" ramp up in production. It's just a mirage. automobile production is such a difficult thing, it's a miracle if they can just ramp up linearly. My ambitious goal for the 2018 production of M3:
Q1 - 15K
Q2 - 25K
2H - 75K

2018 total: 115K.
year end run rate: 5K/week.

Let's see if they manage to miss this.

 

[NicoV]

It is abundantly clear by now that there will be NO so-called "exponential" ramp up in production. It's just a mirage. automobile production is such a difficult thing, it's a miracle if they can just ramp up linearly. My ambitious goal for the 2018 production of M3:
Q1 - 15K
Q2 - 25K
2H - 75K

2018 total: 115K.
year end run rate: 5K/week.

Let's see if they manage to miss this.

They are still guiding exponential, see my post above.

 

[dandurston]

All they've done is shifted 5k/ week from end of Q1 to sometime in Q2. Not earth shattering.

Tesla's release today says 5k at the end of Q2 not sometime in Q2, so it is a full quarter delay. Not earth shattering but not great either.

 

[NZ10K]

Tesla's release today says 5k at the end of Q2 not sometime in Q2, so it is a full quarter delay. Not earth shattering but not great either.

And the real problem is, even with this delayed schedule, you can't trust that it is going to happen. And my guess is that it won't.

 

[theschnell]

Overall I'm happy. They exceeded my expectations for this quarter, and I'm pretty confident in the 2,500 exiting Q1 and the 5,000 per quarter exiting Q2. If they miss those significantly, then I will be disappointed, but I'm pretty confident in those. I honestly never believed the 5,000 per quarter by end of Q1. Just seemed too good to be true. 2,500 per week by end of Q1 is a lot of cars people!

 

[theschnell]

The reality is always harder to achieve than Elon thinks it will be....

 

[cranker2k]

While Model 3 deliveries + transit and production rate pushed back by a quarter are big disappointments, but Model S/X numbers are great. So are we likely to see the post Q3 delivery reactions where stock price went down first, and then rapidly restored since investors felt that the Model S/X deliveries exceeded expectations were a good thing?

One thing I'm curious is how many of the S/X are pre-owned... Those impact revenues as can't just assume average purchase is around $100K...

 

[BornToFly]

Probably going to have to roll 20 Put contracts I sold for mid-Jan.
6 months off on your original prediction, and 3 months off on the prediction you gave less than 3 months ago? Really? Thanks Elon....

 

[DragonWatch]

You are making the same mistake a lot of people make. You are thinking of Ventura Blvd area of LA. Ain't no Valley Girls in Ventura, it ain't "The Valley". Ventura is 100k people, just south of Santa Barbara,

Oh well it sounded good