2015 Q1 Discussion thread for Delivery numbers, Earnings Report and Conference Call

[Drax7]

I have my sources, please read my posts on China last few months.

You are very well informed. Tell me how many of the inventory cars are red.

 

[schonelucht]

The Tesla Model X body line was to be established/realised in Q1 of 2015 at the Tesla Fremont factory, right?

The assembly line was established/realised in July 2014.

That's more or less also what I understood under the 'Increasing capacity to meet demand' title of the 2014Q3 shareholder letter. After Sept 2014, model X factory build out should not disrupt model S production anymore, allowing them to increase production capacity at a steady and predictable rate. With 11600 vehicles produced last quarter, the current production rate should not stress factory capacity at all nor should it be a bottleneck for beating the modest guidance for this quarter.

 

[techmaven]

If all three were indeed handled smoothly, we should expect a large beat on the deliveries. But if that large beat doesn't materialise, the only conclusion is that Tesla deliberately throttled production a the factory since they were capable of producing just as much last quarter when they DID have big issues both on production (seat saga) and logistics (port strike). In that case, it's hard not to follow the bear case that production has outrun demand.

Whoa. There are several things to untangle there.

Let me try again to be clearer.

There are 11 production weeks in Q1 according to Tesla. At 1,000 a week, that's 11,000 possible production. However, in Q1, there were issues that lowered estimated production output. At the very least, we know that P85D's were launched in Europe and Asia (unknown homologation delays) and the S85D was launched (again, possible production delays). In addition, there was the threat of west coast port strikes. They also did something with paint - new colors are being made available. I don't know if that is part of the new paint shop upgrade or not, but something did change. Guidance was 1 week less than "full" production.

Handled smoothly in this case doesn't mean better than guidance... it means no major snafus that is visible to those of us on the outside. No delivery black hole thread with many pages and page views on TMC. No visible large halts in production as the port strike drags on and on.

Sandbagging means that they guided lower and they should be able to pull off a beat. The data, while still very early, doesn't support a major miss and we could get a big beat.

However, if they don't beat or if they miss, it doesn't mean that they were capable of producing much more than last quarter and therefore they are throttling production and production has outrun demand. That requires knowing exactly why production didn't meet expectations and knowing why deliveries didn't meet expectations. There are any number of explanations that could make sense, but it's a real logical stretch to imagine that the company will make customers wait for product while they have product sitting around or the capability to deliver product and refuses to deliver it. That bear thesis never made any sense on the face of it. Just go and look at the delivery threads where people are clamoring for their cars, calling and emailing their DS's repeatedly, sometimes daily or intra-daily. Apparently the bears believe that Tesla deliberately makes these people wait a few extra weeks just to be cruel in order to drive the perception of demand? That makes zero sense.

 

[Benz]

That's more or less also what I understood under the 'Increasing capacity to meet demand' title of the 2014Q3 shareholder letter. After Sept 2014, model X factory build out should not disrupt model S production anymore, allowing them to increase production capacity at a steady and predictable rate. With 11600 vehicles produced last quarter, the current production rate should not stress factory capacity at all nor should it be a bottleneck for beating the modest guidance for this quarter.

EQC posted this message on the Tesla Motors website forum:

"I believe Elon explained that production rate would slow a bit in Q1 2015 to work on production efficiency....Q4 2014 was a mad dash to produce tons of cars...but this used lots of man hours. They want to slow down a bit and work out the kinks so they don't have to double the workforce at the factory as they ramp production this year."

So, the focus is on production efficiency. And that will work in their favour in the next quarters, and that's a good thing.

 

[pGo]

For market, it will be 3rd consecutive excuse now if they don't deliver this quarter. My take is if they don't this q, they won't this year. With multiple products you are bound to have more issues than a single product with some variations.

 

[Benz]

For market, it will be 3rd consecutive excuse now if they don't deliver this quarter. My take is if they don't this q, they won't this year. With multiple products you are bound to have more issues than a single product with some variations.

That's rather pessimistic.

What exactly would you like them to deliver this quarter?

 

[pGo]

That's rather pessimistic.

What exactly would you like them to deliver this quarter?

This quarter out of all recent ones, has the best chance of a beat and I expect an easy beat. Over 1500 undelivered cars at the end of q4 and some inventory rumor in China and already lowballed production numbers don't leave room for much excuse. Beat and win back market. Miss and loose trust.

 

[Benz]

This quarter out of all recent ones, has the best chance of a beat and I expect an easy beat. Over 1500 undelivered cars at the end of q4 and some inventory rumor in China and already lowballed production numbers don't leave room for much excuse. Beat and win back market. Miss and loose trust.

Maybe they used (part of) Q1 2015 to improve production efficiency, and therefore produced less cars than they normally could have produced?

 

[jhm]

EQC posted this message on the Tesla Motors website forum:

"I believe Elon explained that production rate would slow a bit in Q1 2015 to work on production efficiency....Q4 2014 was a mad dash to produce tons of cars...but this used lots of man hours. They want to slow down a bit and work out the kinks so they don't have to double the workforce at the factory as they ramp production this year."

So, the focus is on production efficiency. And that will work in their favour in the next quarters, and that's a good thing.

This is a very good quote. Makes perfect sense that Musk wants to refine the process before ramping up Model X.

 

[aznt1217]

This is a very good quote. Makes perfect sense that Musk wants to refine the process before ramping up Model X.

That and they were running out of parking. In addition to that it was mentioned that the 2014 delay was not only due to timing of projects but they saw efficiency that could be utilized in 2015 so they took the extra time in 2014 so there was less of a hit in 2015. The main thing that is being done in Q1 15 is the upgrade paint shop. This was crucial on 2 fronts and I hope they cover this. They can do a high output paint line (the colors you see on site) and the bespoke line with custom colors which is basically free Gross Margin which Tesla used to do before focusing on mass market and axing the Green and Brown shades.

 

[Benz]

This is a very good quote. Makes perfect sense that Musk wants to refine the process before ramping up Model X.

Yes, they want to be well prepared before the situation gets more complex when they will have to simultaneously and efficiently produce the Tesla Model X besides the Tesla Model S, and ramp up at the same time. They very well have to prepare for that. Just think about the fine-tuning of the robots on the Tesla Model X body line for example.

 

[aznt1217]

Yes, they want to be well prepared before the situation gets more complex when they will have to simultaneously and efficiently produce the Tesla Model X besides the Tesla Model S, and ramp up at the same time. They very well have to prepare for that. Just think about the fine-tuning of the robots on the Tesla Model X body line for example.

They are probably doing that as we speak. They made 30+ prototype/beta model X's

 

[schonelucht]

However, if they don't beat or if they miss, it doesn't mean that they were capable of producing much more than last quarter and therefore they are throttling production and production has outrun demand. That requires knowing exactly why production didn't meet expectations and knowing why deliveries didn't meet expectations.

EQC posted this message on the Tesla Motors website forum:

"I believe Elon explained that production rate would slow a bit in Q1 2015 to work on production efficiency....Q4 2014 was a mad dash to produce tons of cars...but this used lots of man hours. They want to slow down a bit and work out the kinks so they don't have to double the workforce at the factory as they ramp production this year."

Maybe they used (part of) Q1 2015 to improve production efficiency, and therefore produced less cars than they normally could have produced?

Remember they gave guidance halfway through the quarter. Any impact on capacity because of a focus on improving efficiency/port shutdown/model roll out, must already be reflected in the guidance because they would've had visibility on it by that time. Missing beyond what was laid out Feb 11th will disappoint the market and there will be no spin to right that wrong. Anything less than a beat is simply not good enough, but luckily that's what the data we have for now is pointing to.

There are any number of explanations that could make sense, but it's a real logical stretch to imagine that the company will make customers wait for product while they have product sitting around or the capability to deliver product and refuses to deliver it. That bear thesis never made any sense on the face of it. Just go and look at the delivery threads where people are clamoring for their cars, calling and emailing their DS's repeatedly, sometimes daily or intra-daily. Apparently the bears believe that Tesla deliberately makes these people wait a few extra weeks just to be cruel in order to drive the perception of demand? That makes zero sense.

First of all, I am not convinced by the number of explanations given. All the issues brought up here were well known by the time of their latest shareholder letter.

Secondly, why would it be so out of the question to let new customers wait a bit? They put down the deposit, they are not going anywhere! Most of their existing customers waited even longer. And if a salesperson has a contact that wants the car now, they have a full roster of CPO and loaner cars to deliver immediately.

 

[uselesslogin]

I see "pure" Gross Margin(without ZEV and other credits) in 15-17% Range (vs 20% in Q4)

I don't know I might argue flat but inventory clearance could be a good sign for Q2. They want to get the bad GM out of the way so next quarter is full of freshly produced, higher GM cars. I may even bet big for Q2 especially if the stock falls further after Q1. We'll see.

 

[Lessmog]

Remember they gave guidance halfway through the quarter. Any impact on capacity because of a focus on improving efficiency/port shutdown/model roll out, must already be reflected in the guidance because they would've had visibility on it by that time. Missing beyond what was laid out Feb 11th will disappoint the market and there will be no spin to right that wrong. Anything less than a beat is simply not good enough, but luckily that's what the data we have for now is pointing to.



First of all, I am not convinced by the number of explanations given. All the issues brought up here were well known by the time of their latest shareholder letter.

Secondly, why would it be so out of the question to let new customers wait a bit? They put down the deposit, they are not going anywhere! Most of their existing customers waited even longer. And if a salesperson has a contact that wants the car now, they have a full roster of CPO and loaner cars to deliver immediately.

Maybe I misremember, but I'm not sure the port labor dispute was completely cleared by Feb 11. If so, there was some residual uncertainty over q1 deliveries and results.

Also, it seems to me many people forget about Elon's inherent honesty. I rather doubt he of all people would stoop to HonestHarry/TrickyDick kind of sales tricks.

Though I may be wrong. It has happened

 

[maoing]

http://www.benzinga.com/analyst-rat...p-chowdhry-weighs-in-on-teslas-supply-worries

• January and February production was slow due of the Port Strike. On the other hand, March production has been extremely strong. Hence, the business for the first quarter of 2015 remains uncertain.
• International shipments were quite light, while domestic shipments remained strong.
• With the Port Strike ended, he expects the business to show stabilization in the second quarter, with acceleration in the third quarter and beyond.
• “Investors with mid-to-long term (>8 months) of Investing horizon should build position in TSLA at these levels.”

Pictures showed a large number of supplier containers on the Tesla Factory property, which wasn't the case last year.
A new area held recently-manufactured cars. Chowdry and his team saw about 70 cars held in this area, with potential capacity of about 300 cars. “Majority of cars were P85D, which indicates that demand for P85D is strong.”

Trip was very bullish before, does he imply a not so rosy Q1 ER?

 

[Ingenieur]

Trip has literally no f*cking clue, be advised to ignore him.
There is no indication of weak shipments, it looks like markets outside US will be stronger then Q4, Europe 700-1000 cars more, Asia slightly less.
Also the containers may indicate Tesla ordered too much, its not typical to store stuff in containers outside if you are just "replenishing" your supply pipeline that was reduced due to port slowdown

 

[Newb]

Something I haven't seen discussed around here...

It seems possible to me that Q1 will be the first time Model S is the best-selling plug-in car in America. I'm wondering what the value of this will be as a headline attention-grabber / possible positive catalyst, particularly if Q1 deliveries are pre-announced in the coming weeks.

More attention-grabber-headlines for the quarter:
- March 2015 is going to be best month ever in Germany / Q1 best ever quarter respectively. (based on the estimates on German Tesla Owner's and Friends Forum: TFF Forum - Tesla Fahrer Wieviele Model S werden im März in D neu zugelassen?). 300-400 Tesla Model S deliveries in Germany would be a breathtaking number, having in mind the total 2014 deliveries at only 815...
- Q1 deliveries in Austria, Switzerland and Benelux should be best quarter ever, too. (based on some browsing through above mentioned and other forums)

 

[maoing]

Good. Please keep us updated in next week. All those could be a good setup to push TSLA to 200 next week.

More attention-grabber-headlines for the quarter:
- March 2015 is going to be best month ever in Germany / Q1 best ever quarter respectively. (based on the estimates on German Tesla Owner's and Friends Forum: TFF Forum - Tesla Fahrer Wieviele Model S werden im März in D neu zugelassen?). 300-400 Tesla Model S deliveries in Germany would be a breathtaking number, having in mind the total 2014 deliveries at only 815...
- Q1 deliveries in Austria, Switzerland and Benelux should be best quarter ever, too. (based on some browsing through above mentioned and other forums)

 

[daniel Ox9EFD]

So, well it be Q1 or Q2 where we see a drop in articles and public perception that Tesla is on the verge of imploding?
(the answer of course is neither, but I'd guess after a good Q2 there would be obvious evidence Tesla is at least doing "ok").


Edit: also, what is the current estimate of deliveries this quarter? Is the margin of error small enough to call it a beat?