TSLA Market Action: 2018 Investor Roundtable

[brian45011]

... we need the right sort of questions ask in quarterly conference calls. We need some visibility into the ways value is being created or destroyed before it has a material impact on financial statements.

It would be great if anyone, regardless if they are intrinsic investors or old-school Wall Street sell-side analysts, would ask for an updated plan for GF-1. The original conceptual plan was published in late February, 2014 . Gigafactory

It stated "Tesla and its partners will invest ≈$4-5 billion in the Gigafactory through 2020. CapEx will be shared by Gigafactory partners. Tesla will directly invest ≈$2 billion." and showed facility construction would be completed by early 2016.
https://www.tesla.com/sites/default/files/blog_attachments/gigafactory.pdf

Nearly four and a half years later the facility has been reported to be about 30% complete, and no new construction to expand the foot-print has been undertaken since mid-2016. The only "strategic battery manufacturing partner" of any consequence has been Panasonic, which announced it would spend UP TO 100 billion yen (frequently converted in the media as $1.6 billion). It's unclear if this is all CapEX or includes PENA's operating expenses. Since the agreements with Panasonic are classified as capital leases, the funds that Panasonic fronts are not their investments; but financing arrangements, obligating Tesla for the return of (and a return on) Panasonic's funds through the price of the cells supplied.

The latest 10Q states: " We had cumulatively capitalized total costs for the Gigafactory 1 of $3.54 billion ... as of March 31, 2018 "

The $3.5 billion includes amounts for the Panasonic obligations: As of March 31, 2018 we had cumulatively capitalized costs of $576.4 million on the consolidated balance sheets in relation to the production equipment under our Panasonic arrangement."

So Tesla has capitalized about 50% more than intended for the entire facility even though it is only 30% complete. Part of this is undoubtedly because Tesla transferred significant parts of the assembly of Model 3 drive-train systems to GF-1, but what are the other contributors? Plans change to adapt to new information and unexpected contingencies; however, failure to publicize the revised plans and schedules with some explanation as to why they are better for intrinsic investors leaves a vacuum that is easily exploited by FUDsters with seemingly legitimate questions such as:

-why did Diuramid O'connor and Kurt Kelty, the two 2nd-tier executive most instrumental in GF-1 negotiations, unexpectedly leave in 2017?
-why hasn't construction of the on-ground solar panels and wind-farms shown in the conceptual plan started?
-why were Samsung cells, rather than cells produced at GF-1, used for the Hornsdale world's biggest battery?
-when will the 30% reduction in the cost per kilowatt-hour of a pack show up in the financial results?
-etc

The more Tesla volunteers about both value creation and value realization in its shareholder letters, the better.

 

[RobStark]

So Tesla has capitalized about 50% more than intended for the entire facility even though it is only 30% complete.

Tesla said they tripled capacity per foot and said full capacity would go from 35 GWh to 105 GWh. So 30% footprint should give us ~30 GWh at full production given some space going to non-battery production.

Pretty obvious they used Samsung cells instead of GF cells for Hornsdale because they did not have enough cells for Model 3, powerwall other powerpacks,and Hornsdale project.

 

[Cosmacelf]

The GF “slowdown” in build out can be explained by a) more efficient use of space. Once construction began, Tesla realized they could cram more stuff into it. I believe Elon mentioned that in a previous CC. And b) with the slow Model 3 ramp, they don’t need nor can afford a faster GF expansion.

Btw, the one thing people aren’t talking about these days is Panasonic cell manufacturing capacity. It is possible that the long lead times people are finding with Powerwalls is due to cell supply constraints. Panasonic could be running into ramp up issues of their own.

 

[Waiting4M3]

It would be great if anyone, regardless if they are intrinsic investors or old-school Wall Street sell-side analysts, would ask for an updated plan for GF-1. The original conceptual plan was published in late February, 2014 . Gigafactory

It stated "Tesla and its partners will invest ≈$4-5 billion in the Gigafactory through 2020. CapEx will be shared by Gigafactory partners. Tesla will directly invest ≈$2 billion." and showed facility construction would be completed by early 2016.
https://www.tesla.com/sites/default/files/blog_attachments/gigafactory.pdf

Nearly four and a half years later the facility has been reported to be about 30% complete, and no new construction to expand the foot-print has been undertaken since mid-2016. The only "strategic battery manufacturing partner" of any consequence has been Panasonic, which announced it would spend UP TO 100 billion yen (frequently converted in the media as $1.6 billion). It's unclear if this is all CapEX or includes PENA's operating expenses. Since the agreements with Panasonic are classified as capital leases, the funds that Panasonic fronts are not their investments; but financing arrangements, obligating Tesla for the return of (and a return on) Panasonic's funds through the price of the cells supplied.

The latest 10Q states: " We had cumulatively capitalized total costs for the Gigafactory 1 of $3.54 billion ... as of March 31, 2018 "

The $3.5 billion includes amounts for the Panasonic obligations: As of March 31, 2018 we had cumulatively capitalized costs of $576.4 million on the consolidated balance sheets in relation to the production equipment under our Panasonic arrangement."

So Tesla has capitalized about 50% more than intended for the entire facility even though it is only 30% complete. Part of this is undoubtedly because Tesla transferred significant parts of the assembly of Model 3 drive-train systems to GF-1, but what are the other contributors? Plans change to adapt to new information and unexpected contingencies; however, failure to publicize the revised plans and schedules with some explanation as to why they are better for intrinsic investors leaves a vacuum that is easily exploited by FUDsters with seemingly legitimate questions such as:

-why did Diuramid O'connor and Kurt Kelty, the two 2nd-tier executive most instrumental in GF-1 negotiations, unexpectedly leave in 2017?
-why hasn't construction of the on-ground solar panels and wind-farms shown in the conceptual plan started?
-why were Samsung cells, rather than cells produced at GF-1, used for the Hornsdale world's biggest battery?
-when will the 30% reduction in the cost per kilowatt-hour of a pack show up in the financial results?
-etc

The more Tesla volunteers about both value creation and value realization in its shareholder letters, the better.

Footprint-wise they are at 30%, but given the revised target of 3x more capacity in terms of GWh, I think a 30% footprint is good progress. New construction could be underway soon as the large area to the north seem to be paved as parking lot, likely to free up the current parking area for future construction.

At 5k/wk M3, assuming long term avg of 65kWh per car, that's 16-17GWh of batteries, already 1/2 of the original 35GWh target, just supplying M3. There will be TE on top of that but I'm patiently waiting to see how TE expands in 2h'18 once M3 ramp is out of the way.

There were multiple plausible hypothesis why they used Samsung without suspecting that GF is not working as intended.

30% cost reduction could be seen in M3 margin soon.

I think it's understandable that Tesla is not as transparent as some investors would like, but I don't see any reason to suspect anything wrong with the GF, I think there will be lot of good news coming out in a quarter or 2.

 

[sundaymorning]

The GF “slowdown” in build out can be explained by a) more efficient use of space. Once construction began, Tesla realized they could cram more stuff into it. I believe Elon mentioned that in a previous CC. And b) with the slow Model 3 ramp, they don’t need nor can afford a faster GF expansion.

Btw, the one thing people aren’t talking about these days is Panasonic cell manufacturing capacity. It is possible that the long lead times people are finding with Powerwalls is due to cell supply constraints. Panasonic could be running into ramp up issues of their own.

Assumptions in first paragraph makes a lot of sense. Currently, it’s all hands on deck at the GF for Model 3 ramp. This is currently the most single important product foe Tesla and what investors care about most. All efforts are utilize for Model 3 ramp, and from what I know, things are looking very good along the semi auto lines.

 

[AlMc]

His LinkedIn page still lists
Vice President of Business Development
Company NameTesla Motors Inc
Dates EmployedJul 2006 – Present
Perhaps he never updated after he left if he didn't get another job.

AFAIK he is enjoying early retirement/family. Good for him!

 

[Quassinoid]

When it rains, it pours....
Tesla with Autopilot slams into truck stopped at red light

 

[mongo]

When it rains, it pours....
Tesla with Autopilot slams into truck stopped at red light

I assume you must referring to FUD, first sentence of article:

A Tesla sedan with a semi-autonomous Autopilot feature has rear-ended a fire department truck at 60 mph (97 kph) apparently without braking before impact, but police say it's unknown if the Autopilot feature was engaged.

"Car with human driver..." would be just as accurate a title...

 

[Quassinoid]

I assume you must referring to FUD, first sentence of article:


"Car with human driver..." would be just as accurate a title...

Yes, the media's addiction to painting Tesla in a negative light is unrelenting. However, I'm pleased to see a renewed interest by EM and other Tesla Bulls to hit back at this FUD.

 

[ggr]

Dave, not confusing at all. He had a very good second in command to fill his position and really was tired of all the travel and wanted to spend time with family. Moved to colorado and AFAIK he is enjoying watching little league games, etc.

While I do not know it for a fact I would not be surprised if he resurfaced sometime in another company/or even government job.

According to LinkedIn:

Vice President of Business Development at Tesla Motors

Yes, in Colorado.

 

[schonelucht]

Btw, the one thing people aren’t talking about these days is Panasonic cell manufacturing capacity. It is possible that the long lead times people are finding with Powerwalls is due to cell supply constraints. Panasonic could be running into ramp up issues of their own.

No. Last week Panasonic reported growing inventory due to slower than expected take up of its product at the gigafactory.

Btw someone should tell Panasonic that the gigafactory will be a 105GWh facility because they are still sticking to 35GWh in their investor’s communications.

 

[aubreymcfato]

I googled: Diarmuid joined Tesla in 2006, and currently serves as the Vice President of Business Development in which capacity he manages commercial relationships and all aspects of government affairs. Looks like he got a better job/position offered.

Well, still at Tesla right?

 

[Yggdrasill]

At 5k/wk M3, assuming long term avg of 65kWh per car, that's 16-17GWh of batteries, already 1/2 of the original 35GWh target, just supplying M3. There will be TE on top of that but I'm patiently waiting to see how TE expands in 2h'18 once M3 ramp is out of the way.

I would assume 80 kWh per car, given that the SR will be further out than the 5k/week. So, currently something like 19 GWh/year for Model 3 and 1 GWh/year fro Tesla Energy, 20 GWh/year total.

Next year it makes sense to drop the average per car, but at the same, time, Tesla will likely increase to 10k/week. So next year Tesla may be at around 31 GWh/year for Model 3 and maybe 2-3 GWh/year for Tesla Energy. So 33-34 GWh/year total.

 

[RobStark]

Btw someone should tell Panasonic that the gigafactory will be a 105GWh facility because they are still sticking to 35GWh in their investor’s communications.

Panasonic is projecting 35 GWh capacity in Nevada for fiscal year 2019.

Page 5
https://www.panasonic.com/global/corporate/ir/pdf/pana_digest_e_1004.pdf

 

[avoigt]

When it rains, it pours....
Tesla with Autopilot slams into truck stopped at red light

Two options:

Assumption: Truck did stand still
1. Car was on Autopilot: AP did what it supposed to do. All fault with the driver.
2. Car was not on Autopilot: Normal accident. All fault with the driver.

There would be a story if the truck was not standing and the car was on AP.

Either way there is not story here to be told and the Journalist and the media should be questioned as they make driving more dangerous given people will tend to not put AP on given the misleading report.

 

[Teslie]

Assumption: Truck did stand still
1. Car was on Autopilot: AP did what it supposed to do. All fault with the driver.

Are you serious ? You expect AP to slam in every standing object in the street ?

Apart from AP the emergency braking should have reacted

 

[Huskyf]

Yes, the media's addiction to painting Tesla in a negative light is unrelenting. However, I'm pleased to see a renewed interest by EM and other Tesla Bulls to hit back at this FUD.

Yes but why peoples continue to use autopilot on roads with street light it doesn't designed for that please see your manuel.

 

[DragonWatch]

When it rains, it pours....
Tesla with Autopilot slams into truck stopped at red light

Please use your FUDar ~ works like Autopilot

Maybe someone here can quote a comment something to the effect that, “Did Tesla just prevent an accident?” The video attached, probably YouTube, showed a dash-cam version of a four car accident occurring in real time. The location was Europe, but not specific that I recall.

It was, again as I recall, referenced on this blog before we bought Xena, and that was just over a year ago. This is back in the cobwebs or maybe someone has a better video for us.

I think reviewing that video from time to time would be beneficial to better grasping how Autopilot works for those that have not experienced it beyond a test drive. And, improving the functionality of my FUDar

Humans have a lot of control, currently, over autopilot by setting how closely they follow other cars/trucks/buses and trains Set it to zero, and you. . .

 

[bambam4171]

Are you serious ? You expect AP to slam in every standing object in the street ?

Apart from AP the emergency braking should have reacted

Read the fine print. Right now AP will slam into stationary objects. If the object is moving but slower its fine, if it is driving towards the AP vehicle its fine as well but the Release notes specifically say that it cannot detect stationary objects especially if they are offset. See also driver killed in China.
AP is still a hands and eyes on feature and everybody should be aware of that.

 

[Lessmog]

Read the fine print. Right now AP will slam into stationary objects. If the object is moving but slower its fine, if it is driving towards the AP vehicle its fine as well but the Release notes specifically say that it cannot detect stationary objects especially if they are offset. See also driver killed in China.
AP is still a hands and eyes on feature and everybody should be aware of that.

I think the last point holds for most if not all news agencies ...