TSLA Market Action: 2018 Investor Roundtable

[SW2Fiddler]

This is one of the silliest bearish theses I've seen.

Falls short of when that other guy undertook to BearSplain Linux ...to @Johan . Close, but no cigar. As they say.

 

[MarcusMaximus]

Firstly almost none have been shipped to Canada in the last 2 months. Secondly, I was just pointing out that if 11K were in transit at the end of Q2 and only 14K sold in the first month of Q3, it implies that not many more were built/shipped in that month. People get so defensive whenever valid points are raised. Seems the market is underwhelmed with the 17K deliveries as well.

I’m not seeing how it implies that unless the number in transit after the first month in Q3 was at/near 0. # sold= y + z - x(where y is #in transit at end of Q2, z is #built since then and x is #in transit at the time you’re talking about). You don’t know x but are assuming you can solve for z.

 

[MTL_HABS1909]

Because there are still 11k (or more) in transit. When you take some out of one end of the transit pipe, more get pushed in the other side.

I agree. But let’s think logically here. If 11K were in transit at the end of Q2, all 11K should have been sold in the first month(July) correct? Therefore, it means only 3K more were sold in July? Just seems strange. Again everyone is disagreeing, but it seems like a valid question. People are so defensive.

 

[beachbum77]

People also said that about the 11K in transit at the end of Q2. If there were 11K in transit, why have there only been 14K and 17K sold the last 2 months. I was expecting higher numbers.

It is a domino effect. If 11k Model 3's were in transit on 6/30 and they only delivered about 14,250 in July that means they only delivered about 3,100 of July's production. Assuming July was 16,000 that left about 12,900 in transit at the end of July. If deliveries were 17,800 only 4,900 of August production got delivered within the month. So somewhere around 13-15,000 were in transit on 8/31.

This indicates that about the last three weeks of September's M3 production would not get delivered in the quarter. The new delivery group is going to need some quick countermeasures. I do not believe 52,000 M3 deliveries will reach profitability in Q3. I think they need to finish at 56-57,000.

 

[uselesslogin]

Firstly almost none have been shipped to Canada in the last 2 months. Secondly, I was just pointing out that if 11K were in transit at the end of Q2 and only 14K sold in the first month of Q3, it implies that not many more were built/shipped in that month. People get so defensive whenever valid points are raised. Seems the market is underwhelmed with the 17K deliveries as well.

Counterpoint, a car produced in August is bound for me in mid-September. It could take up to 4 weeks from production complete until I have it if I opt for home delivery. So, for July and August the in-transit pipeline is maintained with customers outside of California. However, if September production is reserved for Californians then that will reduce the number in-transit at the end of the quarter.

 

[MarcusMaximus]

The incentive was terminated on July 11, which meant those who got the car before July 11 were eligible anyway, the wind-down did not affect those. The wind down period of 2 month was setup such that those who "ordered" a vehicle before July 11 and the vehicle was delivered and plated before Sept.10 would still be eligible. Tesla was originally excluded (unfairly) from this wind-down and they have filed a law suit for discriminatory handling and won. So the ruling of the judge affected those Model 3 purchases that were ordered prior to July 11 and delivered between July 11 and September 10, according to the Toronto Star article this number was about 600.

Right, but it excludes any purchases that may have happened after/on July 11 and have been delivered(no idea what delivery timelines are like there, so not sure how many that could be). Presumably, the number only includes those who actually configured by July 11?

 

[neroden]

With due consideration to WS antics, Musk being fined seems as though it should be a low chance. But seeing the dog pile on him it will be interesting to see the SEC taking action here whilst ignoring all else.

Fire Away!

My point is simply -- I don't see any scenario under which *Tesla* gets fined.

Even Bloomberg has published an article saying that there's no chance of Musk being barred from acting as a corporate officer. If Musk has to pay any sort of fines or lawsuit penalties personally, it's no different than Steve Jobs dealing with his paternity lawsuit.

 

[beachbum77]

Why were you expecting higher numbers? This is in range with the guidance from Tesla.

Tesla guided to production of 50-55k Model 3's. They did not guide on deliveries.

 

[jelloslug]

I agree. But let’s think logically here. If 11K were in transit at the end of Q2, all 11K should have been sold in the first month(July) correct? Therefore, it means only 3K more were sold in July? Just seems strange. Again everyone is disagreeing, but it seems like a valid question. People are so defensive.

What's hard to understand? There is about a three week lead time from when a car is completed to when it is delivered. A car delivered on July 1st was built around June 8th and a car built on June 30th was delivered around July 21st. The cars delivered around July 22-31st were all built in July. No matter when the car was built, a car sold in July was sold in July. Cars in transit just give an indication of what will be sold within the next few weeks.

 

[MTL_HABS1909]

My point is simply -- I don't see any scenario under which *Tesla* gets fined.

Even Bloomberg has published an article saying that there's no chance of Musk being barred from acting as a corporate officer. If Musk has to pay any sort of fines or lawsuit penalties personally, it's no different than Steve Jobs dealing with his paternity lawsuit.

Steve Jobs paternity lawsuit is completely unrelated to Apple in any way. Thats a bad analogy.

 

[Garlands]

Tesla guided to production of 50-55k Model 3's. They did not guide on deliveries.

They did say that deliveries would be higher than production

 

[EngRyan]

They did say that deliveries would be higher than production

Really? Unless they plan to blitz Cali deliveries the last 3 weeks of the quarter that would be nearly impossible (given a constant ramping in production) and a dumb thing to say...

 

[beachbum77]

If you mean he has hired legal counsel when you say "lawyered up" then yeah, so what? That's the prudent thing to do when you are being attacked incessantly in the courts and anywhere else where people think they can take advantage of you. Smart move.

Meanwhile in relevant news, production, deliveries, satisfied customers are all on the rise. How are those legacy numbers looking?

Dan

"lawyered up" was the wording in the headline I read. It is specific to expected action from the SEC, not the courts or the press. As far as the numbers, not good enough for a Q3 profit. The delivery group needs to step it up focusing on the West Coast for the rest of the month. They should try offering free SC use to get home to anyone willing to come to CA to pick up their cars. Things like that. It can certainly be done.

 

[jkirkwood001]

Nothing solid, but an article about the law-suit of Tesla vs Ontario (which was won by Tesla forcing the Ontario gov to allow the wind-down period of the EV incentive to include Model 3s) mentioned that the ruling affected about 600 people, so that implies a total of 600 Model 3 sales in Ontario for the 2 months of July + August. No info about the break-down, and also no info abut other provinces.

The following is based on 963 AWD & Performance orders only (tracker), but suggests Canada has ~7.3% of the total NA volume:

However, Canada orders have a much lower % which have received a VIN or delivery date (i.e. 3.1% of Canadian orders have received a VIN and/or Delivery date vs. 22.1% for US), and those are the important number for sales volumes:

 

[beachbum77]

What's hard to understand? There is about a three week lead time from when a car is completed to when it is delivered. A car delivered on July 1st was built around June 8th and a car built on June 30th was delivered around July 21st. The cars delivered around July 22-31st were all built in July. No matter when the car was built, a car sold in July was sold in July. Cars in transit just give an indication of what will be sold within the next few weeks.

You seem to be missing the point. Tesla has promised a profit in Q3. From all of the profit projections I have read everyone was banking on next to zero "in-transit" at the end of September. Tesla cannot afford to have three weeks of this month's production in transit on 9/30. They need to cut that to 2 weeks or even less for any hope of a profit.

 

[jelloslug]

It is a domino effect. If 11k Model 3's were in transit on 6/30 and they only delivered about 14,250 in July that means they only delivered about 3,100 of July's production. Assuming July was 16,000 that left about 12,900 in transit at the end of July. If deliveries were 17,800 only 4,900 of August production got delivered within the month. So somewhere around 13-15,000 were in transit on 8/31.

This indicates that about the last three weeks of September's M3 production would not get delivered in the quarter. The new delivery group is going to need some quick countermeasures. I do not believe 52,000 M3 deliveries will reach profitability in Q3. I think they need to finish at 56-57,000.

They are delivering as many per month in the 3rd quarter as they did for the entire 2nd quarter. I think as long as they maintain what the ramp they are currently on, profitability will happen in Q3.

 

[jelloslug]

You seem to be missing the point. Tesla has promised a profit in Q3. From all of the profit projections I have read everyone was banking on next to zero "in-transit" at the end of September. Tesla cannot afford to have three weeks of this month's production in transit on 9/30. They need to cut that to 2 weeks or even less for any hope of a profit.

It's physically impossible to not have lead time when distributing cars across the country. In transit is not a bad thing, it's just an indication of what will be sold in the near future. Profit predictions were based off of ramping up production, not getting cars from the factory to the customer a few days faster.

 

[Garlands]

You seem to be missing the point. Tesla has promised a profit in Q3. From all of the profit projections I have read everyone was banking on next to zero "in-transit" at the end of September. Tesla cannot afford to have three weeks of this month's production in transit on 9/30. They need to cut that to 2 weeks or even less for any hope of a profit.

There was a 3 week lag in July/August, because they were probably delivering to East coast. If they move to delivering more to the West Coast in September, the lag should get much shorter.

 

[AWDtsla]

You seem to be missing the point. Tesla has promised a profit in Q3. From all of the profit projections I have read everyone was banking on next to zero "in-transit" at the end of September. Tesla cannot afford to have three weeks of this month's production in transit on 9/30. They need to cut that to 2 weeks or even less for any hope of a profit.

You're just trolling. No one cares. Longs are happy not to have end of period pushes just to satisfy wall street. Getting on the books by a certain date doesn't matter.

 

[EngRyan]

You seem to be missing the point. Tesla has promised a profit in Q3. From all of the profit projections I have read everyone was banking on next to zero "in-transit" at the end of September. Tesla cannot afford to have three weeks of this month's production in transit on 9/30. They need to cut that to 2 weeks or even less for any hope of a profit.

I don't presume to read everything but I can't imagine why anyone would think that there would be near zero in transit ever with increasing production...that's just poor modeling. My bet would be 48-50k delivered for the quarter (more if they do something like only west coast for the last few weeks but I kinda doubt it) and the factor that will make Tesla profitable will be the much higher than what will be normal selling price. (forget the technical term)