TSLA Market Action: 2018 Investor Roundtable

[tsunamiofhurt]

It was at around 147k earlier today IIRC - they must have adjusted/updated it.

New Bloomberg Q4 estimate corresponds to 60k Model 3 production.

Jumped from ~54k to 60,801.

FWIW, my final estimate is 58.5k. Model 3 VINs on Twitter

 

[Artful Dodger]

Q4 Model 3 production and deliveries estimate

So @Troy asked for people to make their Q4 Model 3 production estimates, and here's my entry for the 2018 Q4 Model 3 production estimates lottery pool:

So my official estimate for Q4 Model 3 production is 62,800 - with deliveries about 4,000 higher than that: 66,800.

Methodology:

My method is exceedingly simple, it relies on a visible cyclical feature of Tesla Model 3 VIN registrations with the NHTSA, which can be seen on the Model 3 VIN tracker website:

Model 3 VINs​

This "feature" is an apparent 'quiet period' or 'pause' in new VIN registrations at around the end of quarters - preceded by small adjustments to the maximum VINs. This defines a maximum allocated VIN for that quarter, which can be extracted historically for all 4 quarters of 2018:

 Model 3 VIN allocation ratios:

 Quarter  Maximum VIN    VIN increase  Production           VIN-to-Production-Ratio
 ==================================================================================
 2018/Q1       20,581         +15,787       9,766                            61.86%
 2018/Q2       53,800         +33,219      28,578                            86.02%
 2018/Q3      116,270         +62,470      53,239                            85.22%
 ==================================================================================
 2018/Q4     ~189,964         +73,694      62,804 (est.)                     85.22% (est.)

Note how the 'VIN allocation ratio' has stabilized to around 85-86% in Q2 and Q3, and that we already know the Q4 maximum VIN today - what we don't know is Q4 production.

If we make the (big) assumption that in Q4 Tesla has set their production targets in a similar fashion as they did in Q3, and allocated VINs accordingly, then the production target can be calculated by applying the Q3 ratio of 85.22% to the Q4 increase in VINs allocated (+62,804) - which gives a 62,804 production target for Q4.

Also note that these VIN numbers are not sampled and don't suffer from selection bias - they are the pure maximum VIN numbers registered with the NHTSA at the (near) end of the quarter. Hence the 'only' flaw of my estimate might be that VIN allocations might not be uniform across quarters - like they weren't in Q1.

Caveats:

• Both the Bloomberg tracker and @Troy's tracker is projecting much lower Q4 production rates: the @Troy tracker's estimate is now down to 51.6k Model 3's made in Q4.
• Tesla is free to change their VIN allocation patterns at any time. They could make much fewer (or more) Model 3's than my projection.

Anyway, Tesla keeping this ratio more or less constant would be a funny and predictable way to communicate their production target without actually communicating it officially.

(Not advice. In 5 days I might be looking back at this post in embarrassment, wishing for a 'delete' button.)

LOL, that aged quickly..

So with a new high VIN the estimate would be:

Calculator result:
(193,556 - 116,270) * 85.22% =
65,863 Model 3s produced in Q4

MOODY'S ARE YOU LISTENING? YOU ASKED FOR 65K/qtr b4 u upgrade.

F/C, thanks for this methodology. It'll be fun to see how close it gets.

Cheers!

 

[Fact Checking]

LOL, that aged quickly..

So with a new high VIN the estimate would be:

No, note that my crude estimate is not affected by end-of-quarter VINs: my VIN delta numbers are calculated at the "flat" part of the VIN registration chart - I.e. today's new VIN allocations go towards Q1'2019 already.

The logic is that there's no time to assign these new VINs, make the cars and deliver them today. (Or the last couple of days of the quarter.)

 

[Artful Dodger]

Delivery volunteer in China:


Ben on Twitter

Elon replied in that thread:

Elon Musk on Twitter

Replying to @Ben757677 @vincent13031925

Thanks Tesla owners in China! Looking forward to visiting soon for the groundbreaking of Gigafactory Shanghai!

12:08 PM - 30 Dec 2018​

 

[MP3Mike]

The other question is deliveries... I know this won't be a popular opinion: My *gut* feeling is that M3 sales are below target. This is based on circumstantial evidence we have all seen like stories about excess inventory at delivery centers and incentives that are being offered to employees. For example the latest email obtained from Musk and written up by Electrek is titled about the FSD test program, however besides offering free EAP and FSD, the terms seem to be incentivizing Q4 sales. The offer allows employees to credit accrued vacation time towards the purchase price and ends on Dec 31st.

I think the employee incentive is less about demand and more about getting employees into the program to test FSD. Many of them don't make that much and can't afford a "fully loaded" Model 3. So Elon is getting employees into Tesla's at much more affordable prices. And a bonus of that he is essentially letting them cash-out their PTO for down-payment, etc. If done properly that reduces the tax liability for the employee and costs for Tesla. (But it does lower the GM on those cars.)

And since he mentioned arranging delivery in a couple hours, it allows them to deliver as many cars coming off the line at the end of the month as possible. (Since most Tesla employees are at the factory.)

 

[engle]

Fremont Delivery Center 12/30/2018 @ 4:15 PM Video Drive Around!

End of Q4-1 day to go for $7,500 IRS rebate in Fremont and the place was slammed! Check out this 3-minute video:

I noticed right away how much more organized the delivery system is compared to the end of Q3!

It is all hands on deck now. Large portable freeway construction-type lights are placed around the parking lot so they can stay open until 12/31/2018 @ 11:59:00.000!

I (along with several other members of the Silicon Valley Tesla Owner's Club) will be spending my New Year's Eve over there volunteering to help them get as many people in and out of there by answering new owner questions, helping them connect their app to their new car, etc.

I will try to do a Youtube live feed during my downtime. If it is anything like Sept. 30, then Elon will show up with Deepak (CFO) who will personally approve customers who would like to put a new Tesla on their credit cards for the airline miles.

My gut feeling is Q4 will be a blowout quarter due to the end of $7,500. I counted 15 car carriers just waiting south of the factory on the side of Kato Road yesterday evening.

My San Diego cousin bought "hers and his" Model 3's last weekend. A 66 y/o DDS friend of mine bought a Model 3 Dual Motor last weekend and told me today she "loves her car". My 85 y/o TSLA-owning Mom (won't get a Model X until her 200K+ miles gas car totally falls apart) just called to say the NY Times finally published an article that is 100% positive about TSLA.

We now have Larry on the BOD who owns ~$1B stock so he is totally shareholder value-creation focused, too. A software contractor manager I worked for in the 1990s told me she once reported to Larry. She said Larry, like many (most?) founders of successful Silicon Valley start-ups, works his W-2's really hard. Sounds familiar, doesn't it?

 

[Hock1]

trade as you like Karen.

I've been in my core position since 2012, and have only grown it.

I've still been able to make hundreds of trades, with a clean record.

perhaps your circumstances are different, but, for me there's virtually no disadvantage to adding trading shares during selloffs, rather than selling core shares after runups. In 6.5 years there's only been one roughly 24 hour period when I thought the shares had crossed over fair value. I don't see selling core shares when I think they are undervalued... what I see as a massive advantage to the direction I choose for the trading I do.

No strategy is zero risk. If Elon was not exaggerating about Tesla being single digits away from death this past spring/summer (and literal in his use of the word "death"), than I was taking more risk than I realized, and I could have seen the lion's share of my net worth exit my accounts. I'd thought there was very high probability that if funds were needed it would not be an issue with multiple options (a cap raise, Elon's friends, 3 of whom alone have over $150 billion of net worth, Elon tapping his SpaceX net worth (~$12billion)).

As to the specific scenario you offered, about the NASDAQ going up 25% in those few months in 2013- I never saw a single post from anyone who'd sold at $80, saying, "yeah I watched you guys soar to $180, but I stayed, cool and calm because I'd bought the NASDAQ and road that up 25%, so when you guys dropped back down to $120 for a few days, of course, I perfectly timed getting back into Tesla... phew, still have 83% as many Tesla shares as I would have if I'd of just stayed long." I did see multiple posts about "watching it go... discomfort... hard to buy back in... when to buy... if only I'd held..."

Agree 100%.. Fools and their money!

 

[S3XY]

Or like me buy and stay long - and buy calls.

I don't think I'll ever sell my $26 shares. My kids will get them or they go to charity.

Hi EVNow, let me introduce myself. My name is Charity. I was just wondering, any idea when were you planning on giving me those shares?

 

[EVNow]

Hi EVNow, let me introduce myself. My name is Charity. I was just wondering, any idea when were you planning on giving me those shares?

Next year. Send me your address and SSN.

 

[Artful Dodger]

No, note that my crude estimate is not affected by end-of-quarter VINs: my VIN delta numbers are calculated at the "flat" part of the VIN registration chart - I.e. today's new VIN allocations go towards Q1'2019 already.

The logic is that there's no time to assign these new VINs, make the cars and deliver them today. (Or the last couple of days of the quarter.)

Okay. Any idea on what date in Q3 the VIN count passed passed the 116,270 threshold? It's important to have a consistent overlap, whether that is in days or VIN volume, or # of VIN update events.

Cheers!

 

[MarcusMaximus]

You may have missed the follow up video where Munro admitted he had to “eat crow” on many of his earlier comments. And one of them, I believe, was the foolhardy design of the doors (“far too expensive” or something like that), which of course we now know WHY they were built like that — protecting the occupants in an accident. The second video is where he got into the electronics, where he was blown away by the design. After that second video, he stopped making comments altogether. If I remember correctly, the speculation around here was that his masters (whoever had commissioned his research) told him to stop commenting if he couldn’t say bad things about the Model 3.

Others with better memories and/or search skills please chime in with more/better facts.

It was confirmed that he went silent due to being sued w/ regards to his comments on Tesla. Last I heard, still no word on who was suing him, but speculation about it being UBS.

 

[anthonyj]

Obviously Q4 is going to be good since Tesla is confident that they will pay back the bond holders at the $360 conversion price

 

[Cherry Wine]

At what time of day are delivery reports usually published? All I could find were indications that Q3’s report came out in the morning. Is that typical?

 

[ggr]

At what time of day are delivery reports usually published? All I could find were indications that Q3’s report came out in the morning. Is that typical?

Neither typical nor correct. The report comes out soon after market close, about 16:10 or so Eastern time. The conference call is usually scheduled at 17:30 Eastern.

 

[Electroman]

Have you guys seen this? Larry is gushing about Elon, Tesla and SpaceX

 

[SteveG3]

At what time of day are delivery reports usually published? All I could find were indications that Q3’s report came out in the morning. Is that typical?

Neither typical nor correct. The report comes out soon after market close, about 16:10 or so Eastern time. The conference call is usually scheduled at 17:30 Eastern.

Think you guys are both correct, just talking about different things.

CherryW, while I think those reports have tended to come out in the morning (perhaps all have) they are a fairly recent addition and I don't think Tesla ever commented re a time of day for these reports.

 

[NicoV]

Have you guys seen this? Larry is gushing about Elon, Tesla and SpaceX

Wow. Everybody reading this message board should watch that video!

 

[SebastianR]

Most of those improvements are to make the car worse while saving some costs, what they seems to be not understanding or thought impossible is some of those things could be automated and not adding as much cost as them thought.

Exactly. A German car engineer told me that traditionally you work backwards: you start with a safety standards you want to achieve + a cost target, then you remove/modify stuff until you just (barely) make the standard while saving all the costs. I was told that these engineers are sweating blood & water while the car is randomly picked off the line by the crash-test authorities...
From folks that worked on the Model 3 we know it is - by industry standards - quite "primitive" or "simple". I think this is another reason why many Germans have big issues with Tesla. They claim those are not "real" cars due to them lacking the sophistication of the German engineering marvels. I think they are missing the point: a rock solid, well built mechanic system combined with a sophisticated software is much more of a winning concept in future as it will keep maintenance costs down. If you ever have the choice to fix a problem in hardware or software, go for the software: you don't need to touch the thing physically and it scales across the fleet...

I'd like to add why I think the 4Q Production and Delivery report will move the stock price, one way or the other, depending upon whether it is negative or positive. [...] In 4Q, though, the gross margin numbers are far less guesswork at this general level of production, and so more analysts will be plugging the 4Q P&D numbers into their spreadsheets and coming up with nicely profitable conclusions if the numbers are good.

Any person with half a brain would do this and act accordingly. However, will this matter? I was wondering about your take on spinning these numbers: if you look at the options expiring in two weeks, those are massive amounts... and then there is this:

What makes 4Q so important is that the shorts have been claiming that 3Q will be the best quarter that Tesla ever sees and that it's downhill from there. If 4Q can beat 3Q, then the short thesis has once again been torn to shreds. OTOH, the shorts will maximize the negatives if Q4 is lower than Q3. Much depends upon this P&D report.

I expect this particular story to die a slow and silent death and expect (in line with the points about the Jan puts above) a new way to spin something. What is your thinking about this all?

If we were in a rational market, folks would look at the numbers, admit defeat and move on. But we are not and I kind of see the coming weeks as one last chance to have the bankruptcy theory be worked to the max: after the next Earnings Call aside from outright fraud there is no way the Tesla story is unraveling. I know a lot of shots made that transition from "it can't be done" to "it can be done but Tesla is simply a ponzi scheme" long time ago. So I wonder with all this - what would be next?

 

[saniflash]

I expect this particular story to die a slow and silent death and expect (in line with the points about the Jan puts above) a new way to spin something. What is your thinking about this all?

My top fear (always the pessimistic German that I am) currently stems from the following possible spin story:

• In order for everyone in the US to be able to get the USD 7,500 credit (even if you're sitting at home and spontaneously make your decision to buy a Tesla on 12/31 @11.45pm), Elon has decided that it is better to have a little bit more inventory at stores all across the US (as a classic Muskian move, because he wants to accelerate the advent of sustainable transportation).
• Inventory level may thus be higher than last quarter (!! omg inventory +xx% compared to Q3 !!)
  
• This build up of inventory obviously and clearly shows that there is a lack of demand!!!!!1!! and that Q3 and Q4 were only profitable due to the huge backlog. But from here on everything is downhill since only xx% of reservations have converted at all, and besides fanboys clearly no one else is buying Teslas (else there would not be such a huge inventory buildup!).

sounds far-fetched? have read much stranger tales from shorts this year.

 

[WarpedOne]

Part of the life wisdom is also realizing that idiots do not stop being idiots when proven wrong.