TSLA Market Action: 2018 Investor Roundtable

[Artful Dodger]

Funny thing, another guy in the feed tells me his family has 3 Model 3 as well all in the same colors!

Hi Gene. Congrats on being first 2 three 3s!

But I'm dying to know, what brand/model/year car(s) did you trade-in to start your Model 3s fleet?

Cheers, and have fun!

 

[EnzoXYZ]

Simple question:

In what year will a German manufacturer sell at least 50,000 units of a BEV? Pick a year and name the vehicle.

2019
2020
2021
2022
2023+

2022, VW, used Model 3.

 

[EnzoXYZ]

I think you cropped off a datapoint on the right side of the graph. Here, I've FTFY:
View attachment 331584

This deserves a tripple funny button.

 

[gene]

Hi Gene. Congrats on being first 2 three 3s!

But I'm dying to know, what brand/model/year car(s) did you trade-in to start your Model 3s fleet?

Cheers, and have fun!

These 3's replace one Model S, one VW TDI, and one Leaf.

 

[Esme Es Mejor]

Wow! I never realized the power of Twitter and especially Elon's twitter feed. Yesterday when @tesla retweeted my tweet top of their page I was getting 100 or so impressions a minute. Then today Elon retweeted my tweet. Guess what? I am getting 2,000 impressions a minute! Had I been smarter I would have included my business url...J/K

Elon Musk (@elonmusk) | Twitter

Thanks for this, @gene. I think it’s important to stay relentlessly positive on Twitter, and you’ve done a great job of it.

 

[jhm]

Hopefully next week I will turn 82.

Happy birthday! If all goes according to plan, I'll turn 51 this week myself.

 

[Intl Professor]

Happy birthday! If all goes according to plan, I'll turn 51 this week myself.

Believe me, the fun is just beginning!

 

[beachbum77]

It's amusing to see shorts/bears/trolls raising the accounts payable and inventory argument, because it's actually a Tesla positive factor, i.e. it's harmful to their negative thesis about Tesla. It gives the impression that these shorts don't really know what they are talking about.

Firstly, you are committing a very basic accounting mistake in your argument: you are counting liabilities while not counting assets. In particular you are considering accounts payable while you are not counting either accounts receivable nor inventory. This kind of omission is a permanent feature of most variants of the Tesla short thesis I've seen so far, but you are clearly trying to reach new intellectual lows here.

While accounts payable increased in Q2 (which will happen for any manufacturer that ramps up fast and thus has much more goods 'in the pipeline'), its inventory counterpart increased at an even faster rate. A quick look at the data confirms:

Quarter

Dec 31, 2018

Mar 31, 2018

Jun 30, 2018

[TD2] Inventory [/TD2] [TD2] +$increase [/TD2] [TD2] Accounts payable [/TD2][TD2] -$increase [/TD2] [TD2] $net [/TD2] [TD2] +$2,263m [/TD2] [TD2] … [/TD2] [TD2] -$2,390m [/TD2][TD2] … [/TD2] [TD2] … [/TD2] [TD2] +$2,565m [/TD2] [TD2] +$302m [/TD2] [TD2] -$2,603m [/TD2][TD2] -$213m [/TD2] [TD2] +$89m [/TD2] [TD2] +$3,324m [/TD2] [TD2] +$758m [/TD2] [TD2] -$3,030m [/TD2][TD2] -$426m [/TD2] [TD2] +$331m [/TD2]

Note how the value of 'Inventory' has leaped ahead of 'Accounts payable' in Q2 already: this is an early sign of the Model 3's cash generation capability.

Inventory is in large part 'finished goods' (Model S3X's on way to the customer), raw materials, work in progress and service parts - i.e. future Model S3X's. Money spent on inventory isn't money disappearing like a short bet gone wrong, it's a real (temporary) asset that transfers into future revenue and cash at a high conversion rate.

If we consider accounts payable as a product pipeline liability, and inventory and accounts receivable as assets, we can tentatively (and somewhat sloppily: see the disclaimers below) compare them with cash levels and estimate "equilibrium" cash levels - what would happen if all Model S3X's in the pipeline were sold and accounted for:

Quarter

Dec 31, 2018

Mar 31, 2018

Jun 30, 2018

Sep 30, 2018 (est.)

[TD2] Inventory [/TD2] [TD2] Payables [/TD2] [TD2] Receivables [/TD2] [TD2] Cash [/TD2] [TD2] "Equilibrium" Cash (est.) [/TD2] [TD2] Cash delta [/TD2][TD2] "Equilibrium"-Cash flow (est.) [/TD2] [TD2] +$2,263m [/TD2] [TD2] -$2,390m [/TD2] [TD2] +$515m [/TD2] [TD2] +$3,367m [/TD2] [TD2] +$3,756m [/TD2] [TD2] … [/TD2] [TD2] … [/TD2] [TD2] +$2,565m [/TD2] [TD2] -$2,603m [/TD2] [TD2] +$652m [/TD2] [TD2] +$2,665m [/TD2] [TD2] +$3,280m [/TD2] [TD2] -$702m [/TD2][TD2] -$475m [/TD2] [TD2] +$3,324m [/TD2] [TD2] -$3,030m [/TD2] [TD2] +$569m [/TD2] [TD2] +$2,236m [/TD2] [TD2] +$3,100m [/TD2] [TD2] -$429m [/TD2][TD2] -$180m [/TD2] [TD2] +$4,626m [/TD2] [TD2] - $4,684m [/TD2] [TD2] +$1,082m [/TD2] [TD2] +$2,933m [/TD2] [TD2] +$3,957m [/TD2] [TD2] +$696m [/TD2][TD2] +$857m [/TD2]

(Note that this is only a coarse estimate, I'm estimating equilibrium flows from balance sheet items: in reality cash equivalents will also fluctuate for other reasons than the product pipeline; inventory value doesn't transform into revenue at a 100% rate; some consumer payments arrive before the car is made and thus increase cash balance; doesn't account for deferred revenue; plus it's all a dynamic snapshot with different time delays of the flows, etc. It's still an interesting and quick way to look at the equilibrium cash state behind the very dynamic Model 3 ramp-up which is by far the quickest moving part of the picture. This estimate probably over-estimates the equilibrium cash position - but I challenge shorts to come up with a Tesla-negative estimate on inventory effects, without misleading/lying that is.)

I.e. while cash dropped by -$429m in Q3, when coarsely corrected for accounts payable, accounts receivable and inventory values, "effective cash" only dropped by about -$180m in Q2, i.e. Tesla was much closer to an estimated equilibrium cash flow break-even point in Q2 already.

In Q3 Tesla is generating serious cash flow: cash equivalents are expected to rise to $2,933m, a growth of +$696m over Q2. I.e. the extra cash generated in Q3 alone is enough to pay off 75% of the $920m 2019 convertible notes - and then there's the additional cash generated in Q4 and much of 2019/Q1...

Conclusion: the Tesla "cash crunch" or bankwuptcy thesis is not supported by facts, it remains an elusive fever-dream by Tesla shorts/bears who are fundamentally disconnected from reality.

You missed one key point that we will have to wait until Q3 to confirm. Under normal conditions, the finished goods inventory would not increase by much despite an increase in production if the company was effectively increasing the delivery actitivty to keep pace. Q2 was an anomoly because Tesla was holding back deliveries to ensure the 200k mark was not reached until Q3. If we do not see a drop in FGI in Q3, then we will know the delivery operation is indeed a bottleneck. If that is the case, dialing up production beyond what can be delivered in an equal period of time makes no sense and just creates a growing inventory.

 

[Electroman]

Terms of Service Violation

Nice interview, the b!tch reporter tries to put some words into his mouth. But he doesn't fall for it. He tells doesn't read NYT and that it is biased.

Well the angel reporter referring to Elon uses words like , 'cheater, lier' as a statement of fact. She stopped short of saying scumbag. If that reporter had been a guy i would have used the adjective 'dick'. Because it is a women I will say 'angel' not to offend the sexist police.

 

[Krugerrand]

Simple question:

In what year will a German manufacturer sell at least 50,000 units of a BEV? Pick a year and name the vehicle.

2019
2020
2021
2022
2023+

I feel that’s a trick question.

 

[RobStark]

How so? The question was about 50.000 cars. Assuming 60 kwh for a compact car like the I.D. that's a lousy 3 GWh? Their plant in Poland will start production this year and they trippled planned capacity during the last year. According to the last numbers i read, LG Chem currently raised their construction plans to 90 GWh capacity (worldwide) by late 2020. CATL plans for ~80-90 GWh, BYD aims for 60 GWh, Lishen for 30 GWh and SK Innovation for ~14 GWh. You may realize that Samsung SDI, Northvolt, TerraE, AESC, Guano High-Tech, Panasonic (ex Tesla) and some others are missing, since i couldn't find up to date numbers for them. I'm pretty sure there will be one or two GWh to spare for the poor germans. Things are developing fast.

Poland houses Europe's largest electric vehicle battery factory

Roskill: LG Chem locks-in more raw material to meet future Li-ion battery demand

https://australianmines.com.au/application/third_party/ckfinder/userfiles/files/Introduction to SK Innovation.pdf

Panasonic braces for all-out battery war with Chinese rivals

BYD to more than double battery production by 2020 - electrive.com

I was thinking the ID Van that needs 80 kWh-120 kWh. This is desirable and a unique value proposition and have lots of demand.

The VW compact will have direct competitors from Renault,Hyundai, Nissan et al..

LG Polish plant has plans for ~4 GWh, Samsung ~2 GWh and SK maybe 14 GWh. 2020 is 15 months away.

Global LG Supply will be feeding Hyundai Kia, Renault, Nissan LEAF big battery, GM, Ford,Fiat Chrysler Pretty much every one.

VW won't have exclusive rights. A lot of the "global EV battery supply" is getting ready to feed the the guaranteed China market. Where 10% then a rising percentage of new car sales must be either BEV or FCEV. And we know it won't be FCEV.

CATL has plans for an extra 50 GWh in China but not building. 2020 is 15 months away. These batteries are substandard or have been to date.

NorthVolt plans to get started in 2023.

TerraE hopes to be fully ramped by 2028.

You can't find up to date numbers on Panasonic et al because they are not building new automotive EV batteries for the general market. Panasonic will likely be partnering with Tesla for 1-3 new GFs. Panasonic does not have an endless supply of capital and management talent. Panasonic's "new" battery factories in China are the ones they took over from Sanyo.

VW has had limited supply of eGolf in North America this year. It had stopped taking orders of the PHEV Golf and Passat in Europe. It is not because they lacked internal combustion engines.

 

[30seconds]

Part 2

In what year will VW (main brand alone, no Audi or Porsche) sell 50,000 full BEVs (combined models) in US +EU + UK?

2020
2021
2022
2023+

 

[Phlebas3]

Interesting facts in these charts:
- BEV market is growing
- Tesla by far the largest brand in the BEV market
- Tesla has increased sales since April
- Aggregated non-Tesla brands have declining volume since May

Also posted this on Twitter: Phlebas on Twitter

 

[Papafox]

Terms of Service Violation

Nice interview, the b!tch reporter tries to put some words into his mouth. But he doesn't fall for it. He tells doesn't read NYT and that it is biased.

My biggest takeaway from the Terms of Service Violation video occurred at 2:56 when Rabois says, "The New York Times is so biased on technology that I just avoid it."

 

[FirebirdAlpha]

Electrek: According to the same source, Tesla produced about 53,000 vehicles including over 34,700 Model 3 vehicles in Q3 as of Friday.

So, with 4 more weeks at a relatively conservative 4500 per week, we arrive at 52,700 - bang in the middle of guidance

Don't care about production (I don't believe Electrek's anonymous source, either. That's MNPI and a huge crime by the source with the SEC already poking around.)

Only deliveries matter at this point.

That's why the August decline in NY state, Norway, and Canada registrations is significant. These should be some of their most dominant markets.

Also stale cars in Burbank, Lathrop, and now Chicago:
phoenix10 (smartish) on Twitter

And delivery complaints, analysts seeing declines in money xfers to Tesla, quality problems on delivery, etc.

 

[Papafox]

Discipline, discipline,

I'm not going to feed the trolls, I'm not going to feed the trolls.

 

[WarpedOne]

In this thread there are 40 trolls. None can be seen.
-- ignore list

 

[FirebirdAlpha]

I do have a longer response for @Fact Checking but lost draft on a page refresh. I'm sure any analysts or anyone with a business degree should be skeptical of the meaningfulness of his argument.

Short version since I'm on my phone.

Tesla burned a lot of cash in Q2. He's right that NWC dropped ~200M to 2.6B. He misses the 1.2B in committed CapEx (off sheet liability). Negative working capital is more financially stressful as debt payments near. Using AP/revenue is a red herring, especially when Tesla now takes 45 days to refund customer deposits and is asking suppliers for credits.

And remember, that was Tesla's best cash day of the quarter.

 

[Esme Es Mejor]

You missed one key point that we will have to wait until Q3 to confirm. Under normal conditions, the finished goods inventory would not increase by much despite an increase in production if the company was effectively increasing the delivery actitivty to keep pace. Q2 was an anomoly because Tesla was holding back deliveries to ensure the 200k mark was not reached until Q3. If we do not see a drop in FGI in Q3, then we will know the delivery operation is indeed a bottleneck. If that is the case, dialing up production beyond what can be delivered in an equal period of time makes no sense and just creates a growing inventory.

Yep. We’ll also have to wait to find out whether other automakers delivered vehicles, or just dialed up production & didn’t bother to deliver them. The suspense is killing me!

 

[Artful Dodger]

Goldman Sachs Reinstates Tesla Motors (TSLA) at Sell ... reinstates coverage on Tesla Motors (NASDAQ: TSLA) with a Sell rating and a price target of $210.00.

Goldman Sachs Reinstates Tesla Motors (TSLA) at Sell