TSLA Market Action: 2018 Investor Roundtable

[Words of HABIT]

For Shanghai, is it possible that the G3 facility, infrastructure and supporting office buildings, housing et all has already been built by China government and just waiting to be fitted out and occupied? I'm not suggesting Tesla had this in the works, however looks like China has built a fair amount of projects just waiting for multi-national companies to occupy. shanghai ghost city

 

[Unpilot]

@Unpilot I did not want to hijack your fun I know the excitement.

Friday the wife and I went back into town (Olympia, WA) for a doctors appointment, but first had to stop by Starbucks for egg bites and my why bother latte’ (decaf w/nonfat milk). As we were approaching the area, traffic was backing up. On coming was a silver Model 3, he pulled into the center turn lane, I was getting excited as I alerted my wife. Then a damned cabbie stops right in front of me to allow the 3 to cross traffic.

I get so discouraged that there is no command button to make those falcon wings flap. As traffic slowly moved forward, my wife searched the parking area for the 3, “I see it” she exclaims, “hey there is a Model S there too!” Damned if those Tesla guys did not invite us for pizza too!

The egg bites just did not have the punch I was looking for:-( This was my first up close (sort of) since last October at the Fremont Factory

I know how you felt. I took our daughter to summer camp and on the way thru Chicago we say a red model X and just had to catch it and follow it. Then in the other direction comes a dark Model 3.

I felt like a kid at Christmas!

 

[mongo]

Yes, that would be a rational response to the shortage.

Is it though? Tesla benefits from gross margin, not from number of units sold. If (rough numbers) LR is 75 kWh and SR is 50 kWh, then they can sell 4 SR or 3 LR with the same battery supply. SR w PUP is 40k, LR w PUP is 49k. 160k gross price vs 147k, with one less body to pay for and assemble. So the profit advantage may go to building less of the higher end cars.

Note this shifts based on what option content is ordered. 4x5k for EAP is better than 3x5k for instance, but 4 SR base cars would only be 140k in gross revenue.

 

[rameshbende]

If you do get a chance to speak with Elon it would be great to get a little more detail around volume production at each factory and the source of batteries to support it.

At the moment we know that Fremont can support 100k S+X with batteries from Japan and 500k+ M3 with batteries from G1.

But things get a little less clear from there. The Q2 earnings letter puts the Shanghai factory (G3) start at 2-3 years. Will that be needed to produce MY? Should we expect MY production to move hand in hand with G3? On the earnings call, it sounded like the MY is expected to start production in about 18 months - so the timing is a little confusing.

Where will the Semi and Roadster be built and where will the batteries come from for these vehicles? My guess is that they will want another US plant for MY, Semi & Roadster with G1 ramping up to the 150GWh limit to support Fremont and the as yet undisclosed NA factory. There was talk of Tesla buying the old A's stadium site in Oakland which would be big enough to build ta factory but the timing seems difficult. I'd assume that even if they purchased the land today it would take a few years to knock down an old stadium and build a new factory. My understanding is that all 3 models are planned to start production in 2020.

Also, If a Euro factory (G4) is announced by the end of the year, and production starts 2-3 years after that, what will be built in Europe? A few of each vehicle or will it just be M3/Y with the more premium vehicles being produced in NA and transported globally?

I'm assuming G3 and G4 will produce sufficient batteries to support vehicle production in each location.

Here is how it works in my opinion. Roadster with 2000 vehicles year will be produced in Fremont. Largely manual and leveraging whaterever it can from existing infrastructure of S/X/3 for stamping, welding,paint and assembly. Roadster drivetrain in GF1 should not big deal.
Semi in my opinion in GF1 with production of 5k.
Now model Y is big mystery. The way I see it Model Y will be million vehicles program. So it will be built in GF1 , China and Europe. It will start in GF1 and when production process is stabilized it will move to China and Europe. China and Europe GFs in my opinion first will start with production of S/X/3 and then move to model Y , semi and pickup.

 

[madodel]

elon musk just retweeted the hitler video lol

And he is immediately attacked for it. Interesting that some posts tried to say he posted it because he is a NAZI, some say it is just thoughtless and uncaring to post anything about NAZIs, and quite a few said they cracked up at the line about how Musk lied because he never sent the Etherium he promised on Twitter.

 

[GaryW]

Fred said at r/teslamotors that Tesla banned him because he leaked pictures of the next gen Model S/X interior. Wonder if the ban is lifted until the next EC.

If this is true, I completely support Tesla.

The Osborne effect is real.

Even a 10-20% reduction in model S and X orders would make a noticeable dent in the 3Q results.

edit for clarity.

 

[Tslynk67]

Anyone any idea how accurate this is?

Daily Short Sale Volume

If its correct then we're still looking at >50% of trades since EC are shorts. Which I find nuts...

 

[Tslynk67]

And he is immediately attacked for it. Interesting that some posts tried to say he posted it because he is a NAZI, some say it is just thoughtless and uncaring to post anything about NAZIs, and quite a few said they cracked up at the line about how Musk lied because he never sent the Etherium he promised on Twitter.

If people make a thing out of this then they're just sad losers. TBH the business with Miley was overblown too (but I have to say that)...

 

[CorneliusXX]

Here is how it works in my opinion. Roadster with 2000 vehicles year will be produced in Fremont. Largely manual and leveraging whaterever it can from existing infrastructure of S/X/3 for stamping, welding,paint and assembly. Roadster drivetrain in GF1 should not big deal.
Semi in my opinion in GF1 with production of 5k.
Now model Y is big mystery. The way I see it Model Y will be million vehicles program. So it will be built in GF1 , China and Europe. It will start in GF1 and when production process is stabilized it will move to China and Europe. China and Europe GFs in my opinion first will start with production of S/X/3 and then move to model Y , semi and pickup.

Do you think G3 & G4 will have 6 lines each (S/X/3/Y/Semi/Roadster)? or multiple factories? TBH i don't know how many models are expected to be produced in a standard automotive factory, or if EV production in any way would allow for more/fewer models in general.

 

[lklundin]

elon musk just retweeted the hitler video lol

Regarding Elon Musk's tweeting I will resign and just remember the words of Oscar Wilde:

"The only thing worse than being talked about is not being talked about."

 

[oneday]

Anyone any idea how accurate this is?

Daily Short Sale Volume

If its correct then we're still looking at >50% of trades since EC are shorts. Which I find nuts...

It’s been discussed before. I think the consensus was that these numbers are double counted and that true short volume is 25-30% of daily trading. Which is still very high.

 

[GaryW]

I was surprised that it seemed he hadn't thought about it a lot before my question. And I'm hopeful it lingers and he comes up with an ideal approach. I'm not sure what that would be at this point.

Zach, thanks for all your work on Clean Technica and all your other sites.

He was clear in the Tom Randall interview that model Y is top of mind after model 3.

I would appreciate any thoughts about the model Y 'dilemma'.

Mid sized SUV's are among the hottest vehicles in the US, while mid sized sedans are among the weakest.

I really think the Tesla team was surprised by the number of model 3 reservations. The demand may have caused them to push model 3 production harder than they would have otherwise. This push was not all positive.

What if they recreated this with the model Y? Since the size of the market is so much bigger, is it possible they get 1,000,000 - 2,000,000 reservations? Or even more? I'm thinking they don't want another trip to Hell, either with money or manufacturing.

So maybe they are mulling over their options, and don't have a plan yet? Here are a few changes I could see them contemplating:
1) Announce the car after they are farther along? If the care is closer to production, this could reduce a number of risks.
2) Announce a higher end model Y first? They could always bring out a lower end model whenever it makes sense. They get a lot of unwanted press about the lack of the $35K availability for the model 3.
3) Ask for a higher deposit? This could reduce the craziness of many people getting in line to get in line.

I remember reading that when Sears sent out their first catalog, they got so many orders, they ended up taking a bunch of them out back and burning them. Too much demand can be overwhelming.

Any thoughts? Please let me know.

 

[rameshbende]

Do you think G3 & G4 will have 6 lines each (S/X/3/Y/Semi/Roadster)? or multiple factories? TBH i don't know how many models are expected to be produced in a standard automotive factory, or if EV production in any way would allow for more/fewer models in general.

Multiple lines. S/X can share lot of production processes since they are on same platform and so will be case for 3/Y. Semi could be seperate assembly line. Semi can again share lot from 3/Y since it uses same platform.
I think Paint shop and Stamping can be shared across different models. Not sure about body shop and assembly, in my opinion they can be shared if they have same platform. Drivetrain motors and battery packs production can be shared across models again.
I don't think roadster will be produced outside US.

 

[Words of HABIT]

My thoughts on MY:
* No refundable reservations in favour of non-refundable deposits, and only accept for premium orders to start (refer to next point).
* Acknowledge upfront LR and Dual Motor and Premium Package and Performance to be produced first. (it will happen anyway.)
* Once the worldwide demand has been sustained for premium MY orders, say 3 years after start of production, only then offer the base version SR MY to keep ramping production higher.
* Tesla should not even comment on SR MY base price as this traps them into a potentially far lower price that what the market is willing to pay, which is what is now happening with the M3 SR base model.

While I never though M3 would bite into MS or MX sales (we now know the opposite to be true, M3 increasing MS & MX sales due to cross selling), I do believe MY will bite into M3 sales. I for one would have preferred small SUV over a Sedan type and would have changed my order in a heartbeat had MY been available now. If Tesla follows the above points, they can ensure continued increase in M3 sales for the foreseeable future and keep MY as a premium product, which is really no different than MS is to the MX now. IMHO anyone hoping for a $35k base price for SR MY will be sadly mistaken. Law of supply and demand, and demand will outstrip supply for the foreseeable future.

 

[ZachShahan]

I agree with the sentiment.
Never underestimante how the average persone is *not* informed about Tesla and believes the media... And the media is primarily talking of a playboy billionaire with a Mars-sized ego (well, kinda true...) that just plays God in everything he touches and sell expensive electric toys to rich people.
I bet the Semi will be really trasformative also regarding Tesla narrative, as will be the 35k M3 and on scale Powerpack/Powerwalls projects:
it will show the world that Tesla mission is really "advance sustainable transport/energy", we're not there yet.

And it seems the rapid cut in emissions it can offer will be amazing. Unfortunately, I expect Tesla will be supply limited for years.

 

[rameshbende]

My thoughts on MY:
* No refundable reservations in favour of non-refundable deposits, and only accept for premium orders to start (refer to next point).
* Acknowledge upfront LR and Dual Motor and Premium Package and Performance to be produced first. (it will happen anyway.)
* Once the worldwide demand has been sustained for premium MY orders, say 3 years after start of production, only then offer the base version SR MY to keep ramping production higher.
* Tesla should not even comment on SR MY base price as this traps them into a potentially far lower price that what the market is willing to pay, which is what is now happening with the M3 SR base model.

While I never though M3 would bite into MS or MX sales (we now know the opposite to be true, M3 increasing MS & MX sales due to cross selling), I do believe MY will bite into M3 sales. I for one would have preferred small SUV over a Sedan type and would have changed my order in a heartbeat had MY been available now. If Tesla follows the above points, they can ensure continued increase in M3 sales for the foreseeable future and keep MY as a premium product, which is really no different than MS is to the MX now. IMHO anyone hoping for a $35k base price for SR MY will be sadly mistaken. Law of supply and demand, and demand will outstrip supply for the foreseeable future.

Although I agree most of the above. I don't think demand for 3 will be problem. Because some prefer smaller cars or sedan look. Also model Y base version will be priced at 42k and will be available only in 2021. By that time frame with improved efficiency 3 base version will drop to 30k in my opinion. Remember German tear down analysis pointed 28k price for long range which is priced at 50k that is 40% gross margin. So I expect price of 3 will drop. And I don't remember where Elon was asked why don't you make car priced at 10k and Elon answered in long term he sees 3 price droping to 15k due to manufacturing improvements and economies of scale especially battery cost.

 

[ZachShahan]

If you do get a chance to speak with Elon it would be great to get a little more detail around volume production at each factory and the source of batteries to support it.

At the moment we know that Fremont can support 100k S+X with batteries from Japan and 500k+ M3 with batteries from G1.

But things get a little less clear from there. The Q2 earnings letter puts the Shanghai factory (G3) start at 2-3 years. Will that be needed to produce MY? Should we expect MY production to move hand in hand with G3? On the earnings call, it sounded like the MY is expected to start production in about 18 months - so the timing is a little confusing.

Where will the Semi and Roadster be built and where will the batteries come from for these vehicles? My guess is that they will want another US plant for MY, Semi & Roadster with G1 ramping up to the 150GWh limit to support Fremont and the as yet undisclosed NA factory. There was talk of Tesla buying the old A's stadium site in Oakland which would be big enough to build ta factory but the timing seems difficult. I'd assume that even if they purchased the land today it would take a few years to knock down an old stadium and build a new factory. My understanding is that all 3 models are planned to start production in 2020.

Also, If a Euro factory (G4) is announced by the end of the year, and production starts 2-3 years after that, what will be built in Europe? A few of each vehicle or will it just be M3/Y with the more premium vehicles being produced in NA and transported globally?

I'm assuming G3 and G4 will produce sufficient batteries to support vehicle production in each location.

Someone asked on the call about where other vehicles would be built and Elon was pretty direct in saying that they don't want to share that kind of info because the press gets crazy about it.

Also seemed like they haven't finalized a plan on battery production beyond 600K or so, but hopefully they will soon and can speak more about it next time. I imagine someone else will beat me to the question (it's the kind of things the analysts are always curious about), but I'll keep it in mind in case I get another Willie Wonka opportunity like that.

 

[Curt Renz]

elon musk just retweeted the hitler video lol

Here's a similar one I made 4.5 years ago. Es tut mir leid, hobbes.

 

[ZachShahan]

My thoughts on MY:
* No refundable reservations in favour of non-refundable deposits, and only accept for premium orders to start (refer to next point).
* Acknowledge upfront LR and Dual Motor and Premium Package and Performance to be produced first. (it will happen anyway.)
* Once the worldwide demand has been sustained for premium MY orders, say 3 years after start of production, only then offer the base version SR MY to keep ramping production higher.
* Tesla should not even comment on SR MY base price as this traps them into a potentially far lower price that what the market is willing to pay, which is what is now happening with the M3 SR base model.

While I never though M3 would bite into MS or MX sales (we now know the opposite to be true, M3 increasing MS & MX sales due to cross selling), I do believe MY will bite into M3 sales. I for one would have preferred small SUV over a Sedan type and would have changed my order in a heartbeat had MY been available now. If Tesla follows the above points, they can ensure continued increase in M3 sales for the foreseeable future and keep MY as a premium product, which is really no different than MS is to the MX now. IMHO anyone hoping for a $35k base price for SR MY will be sadly mistaken. Law of supply and demand, and demand will outstrip supply for the foreseeable future.

LOVE this. I also wonder if they shouldn't limit such reservations/deposits to whichever continent(s) they will start producing on. It is a painfully long wait for people in Europe (I was there ) and elsewhere to sit with their reservations unfulfilled while cars roll into tens of thousands of homes. I just figure the cash isn't worth the hard feelings that inevitably develop. (Also, I'm a little sick of reading gripes from Europeans and Australians waiting on their cars. )

Yeah ... there are a lot of people buying or potentially buying a Model 3 who would rather have a Model Y. I was a little concerned when Elon said they'd reveal the vehicle in March. Seems too early. But he typically knows best.

 

[ZachShahan]

Is it though? Tesla benefits from gross margin, not from number of units sold. If (rough numbers) LR is 75 kWh and SR is 50 kWh, then they can sell 4 SR or 3 LR with the same battery supply. SR w PUP is 40k, LR w PUP is 49k. 160k gross price vs 147k, with one less body to pay for and assemble. So the profit advantage may go to building less of the higher end cars.

Note this shifts based on what option content is ordered. 4x5k for EAP is better than 3x5k for instance, but 4 SR base cars would only be 140k in gross revenue.

You can play with these kinds of things in a game/spreadsheet a couple of our number nerds created: Vijay's SimTesla Game — Create Your Own Truth About Tesla Finances | CleanTechnica