this nails it. I hear money coming to all of us who stay a bit more patient to let this play out...$$$$cha-ching$$$$
(stationary storage is a nice wild card to add in there too)
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this nails it. I hear money coming to all of us who stay a bit more patient to let this play out...$$$$cha-ching$$$$
(stationary storage is a nice wild card to add in there too)
Demand for Model X will be much higher than for Model S. Porsche Cayenne outsells Panamera 2.5 to 1 for example.
[FONT="]" In 2014, the Cayenne was once again the most popular model with 65,941 vehicles delivered. . 24,864 Panameras were delivered [/FONT]" (note btw that Model S already well outsells Panamera, not just in US, but worldwide)
Sure, some of that will cannibalize Model S sales, but looks like we should not expect 1:1 split (1000 X and 1000 S / week)
Also, there's quite a bit of geographies with untapped demand for Model S - the thread on EU deliveries shows, how sales in most countries in Europe are just ramping up (UK and France are good examples). Almost not started yet in countries like Italy, Spain, Portugal, Finland, all of Eastern Europe, South Korea, Israel, Turkey, etc.. There's a lot of untapped potential.
[FONT="]" In 2014, the Cayenne was once again the most popular model with 65,941 vehicles delivered. . 24,864 Panameras were delivered [/FONT]" (note btw that Model S already well outsells Panamera, not just in US, but worldwide)
Sure, some of that will cannibalize Model S sales, but looks like we should not expect 1:1 split (1000 X and 1000 S / week)
Also, there's quite a bit of geographies with untapped demand for Model S - the thread on EU deliveries shows, how sales in most countries in Europe are just ramping up (UK and France are good examples). Almost not started yet in countries like Italy, Spain, Portugal, Finland, all of Eastern Europe, South Korea, Israel, Turkey, etc.. There's a lot of untapped potential.
What you said is true, but it won't happen until end of 2016 or early 2017 which is still 20 months away.
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That's a joke. Check how many times Elon's tweets saved the SP from technically broken. Most recent ones are "end range anxiety" and "new product line reveal on 04/30". The timing is just perfect to save the stock and I think Elon is very good at TA (technical analysis) than most of the folks here.
In 2014, every time there was a bad ER, Elon would sell the distant prospect hard to investors to mitigate the impact of poor earning report in SHORT term.
Q2 ER: Elon pre-announced 2k/week production by end of 2015 which is almost 18 months away
Q3 ER: Elon mentioned D demand is very high and 60K model S demand is not an issue in 2015, later on he changed the guidance to 50K in Q4 ER
Q4 ER: Elon said that TSLA market cap will catch up AAPL in about 10 years
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TM first cut guidance by 2000 in Q3 ER, then miss the reduced guidance by 1400 in Q4. So total 3400 2014 would be orders pushed out to 2015. That being said, if TM did achieve 35000 delivery in 2014, then the carryover backlog to 2015 would be only 6600 which is about 6-7 weeks production, and this is the result from a very good quarter with brand new P85D/S85D release.
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That's a joke. Check how many times Elon's tweets saved the SP from technically broken. Most recent ones are "end range anxiety" and "new product line reveal on 04/30". The timing is just perfect to save the stock and I think Elon is very good at TA (technical analysis) than most of the folks here.
In 2014, every time there was a bad ER, Elon would sell the distant prospect hard to investors to mitigate the impact of poor earning report in SHORT term.
Q2 ER: Elon pre-announced 2k/week production by end of 2015 which is almost 18 months away
Q3 ER: Elon mentioned D demand is very high and 60K model S demand is not an issue in 2015, later on he changed the guidance to 50K in Q4 ER
Q4 ER: Elon said that TSLA market cap will catch up AAPL in about 10 years
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TM first cut guidance by 2000 in Q3 ER, then miss the reduced guidance by 1400 in Q4. So total 3400 2014 would be orders pushed out to 2015. That being said, if TM did achieve 35000 delivery in 2014, then the carryover backlog to 2015 would be only 6600 which is about 6-7 weeks production, and this is the result from a very good quarter with brand new P85D/S85D release.
It's easy to succumb to confirmation bias when looking retrospectively. The stock did "technically break" and we didn't hear a thing from Elon when the SP fell below the 200 DMA ("death cross"). The stock was below 200 for weeks - eventually he was going to tweet something and it was going to move the stock. To infer that this is evidence that Elon is studying TA instead of running the company requires a certain amount of Cramer logic.
As far as selling distant prospects - that's just what Elon does. He's the visionary CEO. It doesn't imply he is trying to mitigate anything.
Perfectlogic
Member
If we have a great X launch with praising reviews and happy customers, which I expect as Elon has been very excited when talking about it, then I am sure backlog of 40k+ would quickly amass, which I believe would cause Tesla to guide for at least 100k vehicles delivered for 2016. This would be an even higher growth than this year and the revenue would be amazing. If this happens I'm sure it would mean an SP of $300 some time late this year, but untill the X launch is in the bag I too believe we will see a lot of volatility. Personally I am hoping for a rally going into the April 30. announcement and earnings as we are still at a pretty depressed SP level. Hoping to cut my position a bit somewhere around in the $230-$260 area if we can get there, and then look for a reentry some time over the summer where I expect the increased volatility, I am sure the bears will be very creative going into this critical launch. This is all speculation ofcourse and I have not been very good at predicting short term movements for Tesla previously, just saying.
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Even I put a lot of cautious views here, but I would agree with you for below. It's in high possibility (>60%) to have a May rally to 240-250 range.
TM needs to meet or beat guidance to prove strong demand as predicted, otherwise market will dictate demand is ths the constraint to meet guidance and suppress future growth potential. Excuses like assembly line upgrade or model X ramp up hiccup might not work well as in 2014.
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1K/week entering rate for 2015 is a low balled number already. Check this blog
http://www.teslamotors.com/blog/factory-upgrade
It's understandable that 2014 exiting rate was 1k/week due to new P85D assembly mess and seat logistics issue. But as stated in blog, the run rate could be significantly more with minor adjustment, why this adjustment didn't happen in beginning of 2015 or even Q1? If TM did it, 1200/week (20% is not an significant number though) run rate is an easy reach by minor adjustment, 70K guidance is sth. reasonable.
Edit: oops, this is response to bresser's question but the original post deleted.
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1K/week entering rate for 2015 is a low balled number already. Check this blog
http://www.teslamotors.com/blog/factory-upgrade
It's understandable that 2014 exiting rate was 1k/week due to new P85D assembly mess and seat logistics issue. But as stated in blog, the run rate could be significantly more with minor adjustment, why this adjustment didn't happen in beginning of 2015 or even Q1? If TM did it, 1200/week (20% is not an significant number though) run rate is an easy reach by minor adjustment, 70K guidance is sth. reasonable.
Edit: oops, this is response to bresser's question but the original post deleted.
You can't be serious... I am observing you pushing this time after time and time again in mild amusement. I pointed out many times this to you personally, but you are continuing to ignore and distort the reality.
The post you are referring to is about general assembly line upgrade. The quote you are mentioning is also referring to the capacity of this just upgraded line. It can produce 2500 cars/week with two shift per day operation. The vehicle is assembled on this line, i.e. interiors, drive unit, battery pack, etc. are installed into the painted body of the car.
The body of the car, however, is assembled on another line, called body in white assembly line. This BIW line was originally designed to handle 800 cars/2 shift week. The last we heard from TM on the status of this production area upgrade (As well as some other areas of the production) was in Q4, 2014. According to shareholder's letter, the BIW production area will be upgraded by late summer:
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So in order to keep production at 1000 cars/week TM is running current BIW line at more than two shifts, using overtime, not the most efficient way of using resources. As a result TM can easily assembly cars at a rate of 2500 cars/week with two shift operation, if only they had enough car bodies.
Your assertion is absolutely wrong, yet you continue to repeat it, even after this was pointed out multiple times. I would really kindly ask you to stop this - you are misleading people who are reading this.
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Feedback loop: TMC Investors start drawing information from the wait times -> equity analysts publish conclusions based on wait times -> Tesla pays attention to wait times.
Lots of people read these boards; some of them are on Wall Street, some on Deer Creek Road.
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dennis
Model S Plaid
Excellent point vgrin. We also don't know to what extent the current paint shop is a bottleneck to increasing production. We do know that they plan to bring the new paint shop online later this year in time for Model X production.
For the blog I quoted from http://www.teslamotors.com/blog/factory-upgrade, it has nothing to say about the bottleneck you mentioned. So it's either you misread the information or TM misled the readers by hiding sth. I believe >99% of the people will think the TM production rate is @ 1k/week level instead what you claimed bottlenecked @ 800/week level after read the blog. Btw, I've pointed out this to you several times, you just can't provide solid proof and I assume it's based on your speculation!
Even in Q4 shareholder letter, the BIW upgrade has nothing to do with model S production rate, it only talks about model X. So it still can't explain why the "minor adjustments" can't be done in Q1/Q2 to significantly improve the productivity for model S as stated in blog.
Edit: Why running current BIW line at more than two shifts, using overtime, not the most efficient way of using resources? If BIW is indeed the bottleneck, keeping this bottleneck and make rest of the assembly line idle for a large percentage of time is the most inefficient way of using resource and capital. Should demand is not an issue and solely production constrained, TM should had all the motivations to attack any bottlenecks. Dealing with production line in house is way much easier than stimulating demand.
Even in Q4 shareholder letter, the BIW upgrade has nothing to do with model S production rate, it only talks about model X. So it still can't explain why the "minor adjustments" can't be done in Q1/Q2 to significantly improve the productivity for model S as stated in blog.
Edit: Why running current BIW line at more than two shifts, using overtime, not the most efficient way of using resources? If BIW is indeed the bottleneck, keeping this bottleneck and make rest of the assembly line idle for a large percentage of time is the most inefficient way of using resource and capital. Should demand is not an issue and solely production constrained, TM should had all the motivations to attack any bottlenecks. Dealing with production line in house is way much easier than stimulating demand.
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Hogfighter
Professional Lurker
I'm sorry, Maoing....but ya gotta do better than this. So you REALLY believe that Tesla, rather than advertising and using 'other levers' to increase demand, is secretly slowing the production ramp-up to hide a demand problem?? Like, really?
If you want others on this forum to respect your opinion, it needs to be plausible.
maoing I appreciate your cautious approach and some concerns about demand. I agree that Tesla needs to pull the demand levers, like Tesla seems to be doing with releasing first the D now 70D and with expansion outside of US. I doubt that they would be able to sell 55k cars this year without doing these activities.
I disagree with your views on Tesla's ability to pull the levers on their production capacities so quickly and easily. To be able to raise capacity of their bottlenecks, a team of people needs to work very hard to conceptualize and design the new lines of the plant to fit adequately into the existing layout and plant, then someone needs to build all the equipment that provides more capacity.
All that new equipment then needs to be installed and appropriate infrastructure needs to be brought in. Then perhaps more people need to be hired and trained. This is a very simplistic outline of many activities that need to take place to enable capacity expansion.
Some activities, like building the equipment, often take several months or longer, depending on the equipment supplier and how busy they are and how unique is their product. It is not unusual for the process of capacity expansion to be in a planning stage far longer than execution stage, however Tesla is a very different business that does all this at a lightening speed compared to other businesses. I find it unrealistic to expect even more of them.
It is interesting that your choice of words to talk about production is always so ominous. This is not the first time we are having discussion on this topic, and words like "bottleneck" and "hiding" are always at the core of your argument. It seems to me that you are missing the big picture regarding the upgrade of factory production.
Just as a recap of the big picture, the Company miscalculated demand for MS/MX and equipped the factory for a roughly 40K of combined yearly production of MS/MX. One has to be aware that production of automobiles, especially at the factory that is as vertically integrated as Tesla Fremont factory, is a very complicated process, with a general assembly line is just at the tip of the multiple independent manufacturing processes feeding into the final general assembly. These include stamping of body parts, body in white (BIW) assembly line, motor and drivetrain assembly, battery assembly, internal aluminum parts casting and machining, plastic parts casting, paint shop - just to list a few. So after couple of quarters of production, seeing demand much stronger than originally expected, the Company realized that in order to meet this demand they need to upgrade all of the production processes and production areas to reach the originally not anticipated demand which, as far as we know is now expected to exceed 100K per year. Since the company needed to achieve all these upgrades with minimal interruption to the continuous production, they came up with the plan to upgrade these multiple production areas in steps, starting with the top of the chain - general assembly line. We are now still going through this multistage process that is expected to be completed by the end of this year, with the company guidance production reaching 100K run rate. So your use of words like "bottleneck" and "hiding" indicates that perhaps you are not cognizant of this bigger picture.
During our several discussions on this topic you always mention that I did not "prove" these things to you, and all of this is therefore my speculation. I think that the problem here is that you either did not make time to listen through the several quarters worth of the earning calls, or did not pay attention to the portions of them that addressed the production issues. This is evident to me because all of the production issues described above I know from listening and then reading through the transcripts of the earnings calls. I strongly recommend going through the past ER calls if you want to understand the issues related to steps involved in the the factory upgrade.
So the blog referred in your post addressed things that **WERE** upgraded during the last summer stoppage, but it was not addressing things that **WERE NOT** upgraded last summer. In another words the blog post did not mentioned any upgrades to the factory that were planned, but not accomplished yet simply because that was not the subject of it.
One, however, can't claim that the company is "hiding bottlenecks" based on the fact that other future upgrades required to reach the planned 2,000 cars/week running rate by the end of 2015 are not included in the post - simply because these additional steps were discussed by the company multiple times **BEFORE** this blog post was published. It is completely frivolous to maintain that company is hiding something because you are simply unaware of it.
I do not have time to go through the multiple ERs to educate you on all of the steps involved in factory upgrade; as I mentioned before I strongly recommend you do it before continuing sharing conspiracy theories with the Forum. I am, however, going to address one specific issue which seem to always come up during our discussions - the need for BIW upgrade which was originally planned for Q1 of 2015, but I suspect is probably slipping into Q2 due to multiple reasons - we should hear more on this during the upcoming Q1 ER call.
Here is the exchange between Ben Kallo of Baird and Elon during the Q2 2014 ER. Note that similar to the general assembly line, the body assembly line is common to both Model S and Model X, but unlike with the general assembly line, TM is not going to add new line instead of the old one, but will add it in parallel with existing (800cars/wek) body assembly line, and then operate two of them in parallel for a while, before switching MS to the new body assembly line (2500 cars/week), and blending it with the MX which will be produced on the new body line right from the start. This will allow for a much more streamlined switch-over than what we observed with the upgrade of the general assembly line during last summer.
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vgrinshpun, thanks for your persistence in making this situation clear.
I think it's worth noting that the Q2 2014 call was in August 2014, and since then, Tesla has pushed out the Model X launch by a quarter+. Thus, it seems likely that the start up of the new body line (and with it Tesla's opportunity to push production up) has been pushed out a similar period of time from last August's expectation of Q1 2015. This scenario is quite consistent with Tesla's comments in February that 60% of 2015 deliveries will be in the second half.
Undoubtably at some point Tesla will be demand constrained on S/X (Musk has publicly suggested as early as 2016, at least for S), and I think it's reasonable to have wondered why Q1 would have deliveries below a 1K/week production rate (there are various possible reasons), but you've made it quite clear here that Maoing's demand constrained thesis based on speculated production throttling is contrary to what Tesla has consistently said.
I think it's worth noting that the Q2 2014 call was in August 2014, and since then, Tesla has pushed out the Model X launch by a quarter+. Thus, it seems likely that the start up of the new body line (and with it Tesla's opportunity to push production up) has been pushed out a similar period of time from last August's expectation of Q1 2015. This scenario is quite consistent with Tesla's comments in February that 60% of 2015 deliveries will be in the second half.
Undoubtably at some point Tesla will be demand constrained on S/X (Musk has publicly suggested as early as 2016, at least for S), and I think it's reasonable to have wondered why Q1 would have deliveries below a 1K/week production rate (there are various possible reasons), but you've made it quite clear here that Maoing's demand constrained thesis based on speculated production throttling is contrary to what Tesla has consistently said.
Hogfighter
Professional Lurker
Thank you, vgrinshpun.
In February of 2013, during the 2012Q4 conference call, Elon stated 'We feel very confident of achieving a demand level in excess of 20,000 units a year'. At the time many analysts thought that statement was absurd (anyone remember the Elon tweet about some guy picking his nose?). If they spent the amount of CapEx required to build a complete manufacturing process to handle 100,000 cars per year the first iteration, they would have burned Elon on the stake.
Those who have not followed TSLA for years don't appreciate how far they've come in a relatively short time.
In February of 2013, during the 2012Q4 conference call, Elon stated 'We feel very confident of achieving a demand level in excess of 20,000 units a year'. At the time many analysts thought that statement was absurd (anyone remember the Elon tweet about some guy picking his nose?). If they spent the amount of CapEx required to build a complete manufacturing process to handle 100,000 cars per year the first iteration, they would have burned Elon on the stake.
Those who have not followed TSLA for years don't appreciate how far they've come in a relatively short time.
This is an interesting connection indeed. While I think that Elon initially pushed MX back because he did not see urgency to bring the new SUV to market at the time when MS demand was consistently exceeding the company projections, and he, similarly to the stated goal for Model S, wanted MX to be the best SUV in the world, at certain point it became evident that starting MX production by building it’s body on the BIW production line that could be dedicated just to MX made a lot of sense. Firstly it decouples MS and MX body assembly, minimizing risk that any manufacturing adjustments that need to be done due to MX production are not adversely affecting production of MS. Secondly it allows for a more robust ramp-up of MX as compared to the case of both cars being produced on the same line.
As for the demand in general, I agree with both you and Maoing – at certain point we will reach saturation, as market for a $100K sedan, even if it is indeed the best sport sedan in the world, is not infinite. But I would not characterize this point as a demand **problem**, as it just a natural market saturation point for a premium sport sedan from one company, however innovative and disrupting it is.
So we, as investors need to understand where this saturation point is, so we can gauge whether Tesla is not overextending resources to invest in additional capacity that they might not ever utilize. However, at this point it looks that from the point of view of the demand we are clearly not at a saturation point, and TM are very shrewd in charting just the right course. My personal view is that we will be approaching saturation at about 120K MS/MX per year, perhaps toward the second half of the next year.
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I agree with you that historic perspective is very important, as it is very easy to get lost in the panic of the minute du jour.
Another couple of interesting points are that when Elon in the beginning of 2014 indicated that production will reach rate of 800 cars/week by year’s end, his projection was met with a significant amount of skepticism, however, as we know, exit rate of the 2014 was nominal 1000 cars/week.
Another reference is that delivery goal for 2014 was also back loaded, similarly to this year. I think this is natural cadence when a company is starting producing new revolutionary products **and** growing with an exceptional yearly rate of more than 50%+, as opposed to a company bringing to market evolutionary products at a natural 3%-5% yearly rate of growth.
dirkhh
Middle-aged Member
Very surprising that the 70D is supposed to arrive in RHD countries before the 85D/P85D... I would have assumed that it has the same problems...
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