2017 Investor Roundtable: TSLA Market Action

[Waiting4M3]

BTW, M3 delivery is still on going, new VIN 420 just spotted, it's not like MX in Jan 2016 when it went completely MIA:

Pictures of production Model 3s

 

[Fallenone]

My post was under the assumption that the M3 cost is already sunk. The extra MS/X for sure is peanuts compared to the production ramp cost of the M3. But so is the missing revenue from not being able to sell 1500 M3. Missing that bag of money doesn't make the entire Q3 margin that much worse either. Emphasizing my last sentence in my previous post.

Oh yes I agree on this. Unless they spend big time on fixing some issues they didn't anticipate earlier, which I doubt. I expect overall GM still be close to 20% as guided. The whole thing started because I wish to explain whether they delivered 0 model 3 or 2000, overall GM would still be close to guidance because they lowered it due to the planned fixed cost of model 3 production.

 

[ValueAnalyst]

Some of it hits back as depreciation. And since they started production of Model 3. Those depreciation hits COGS starting Q3. I don't know how big it is, but big enough to make management think Q3 overall margin would dip below 20%. I doubt product mix of S/X alone would have such huge impact as all the base S/X should have over 20% gross margins.

Very little if any, because Tesla uses Units of Production method for depreciation. So if no units produced, then minimal depreciation.

What will hit the income statement is labor hours allocated to hand building Model 3's.

I don't think overall margin will dip below 20%. I think management was sandbagging. Maybe I'm wrong, but I don't see how that's possible.

 

[avoigt]

Have one of you guys seen this? Likely the worst presentation I ever seen (It hurts) besides the ones from EM -just kidding, but content counts.

Sometimes I feel like the discussion about Tesla miss the most important point(s) and all go just around the cars with Units, GM, Revenue and you name it but as a matter of fact Tesla is much more than a Auto Manufacturer with all it implications and that gets easily overlooked. To see the broader more holistic picture may help to evaluate the single parts and the opportunity of it much better....

P.S. remember when Amazon was called a Book Shop and Apple a Computer Manufacturer....

EVTV: Jack Rickard Says Tesla Stock Will Hit $950

BTW, SP prediction of $950 in 5 years and $1500 in 10.

 

[Fallenone]

Very little if any, because Tesla uses Units of Production method for depreciation

That's only true for tooling.

 

[ValueAnalyst]

That's only true for tooling.

That's majority of Giga cap-ex. Which category are you talking about?

 

[TMSE]

VIN420 delivered! First green car

Midnight Silver Model 3, VIN420, Redwood City, CA • r/teslamotors

---------------
Second Model 3 delivered in Austin! Silver, Aero wheels - Tesla employee • r/teslamotors

 

[ValueAnalyst]

How many "subsystems" are there on the Model 3 production line? What percent does "a handful" comprise?

"Although the vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at high rate, a handful have taken longer to activate than expected."

 

[Fallenone]

That's majority of Giga cap-ex. Which category are you talking about?

I dunno. Like the new pressing machine they bought? Like the Fremont factory expansion? And who knows what in GF.

At the end of 2016. Machinery, equipment, vehicles and office furniture amount to 2.2 B. Land and buildings 1.1 B. Tooling, 0.8 B. Tooling is not the majority of giga cap-ex.

 

[dc_h]

Some of it hits back as depreciation. And since they started production of Model 3. Those depreciation hits COGS starting Q3. I don't know how big it is, but big enough to make management think Q3 overall margin would dip below 20%. I doubt product mix of S/X alone would have such huge impact as all the base S/X should have over 20% gross margins.

And they have new staff for the new line and are adding more charging stations and service and delivery capacity in anticipation of the 3. I think added S/X deliveries help, but I think 25k+ S/X and real 3 production inQ4 and Q1/18 are needed to drive margins past 25%. For this quarter margins are hardly impacted by 200 vs 1000 Model 3 deliveries. 50,000+ in Q1 will matter.

 

[TrendTrader007]

If you don't mind, what type of charting software are you using?

Marketsmith from investors business daily

 

[dc_h]

VIN420 delivered! First green car

Looks perfect. Based on the covered trucks, I'd guess a couple of minor and physically noticeable issues left in supply chain that can be resolved offsite - and hopefully at a service center.

 

[TrendTrader007]

I love the pessimism on this board despite stellar MS+MX numbers
I agree with Papafox that SP will rebound very nicely
Technically we are at the bottom of trading range and I fully suspect a weak open and strong close tomorrow maybe a hollow red candle or even a white candle by the end of day
Either ways like Papafox I stay superlong
I'm using the majority consensus on this board which seems overly and needlessly pessimistic as a contrarian indicator and a bullish sign
I mean seriously you're gonna sell TSLA now? Just when its about to go into super hyper exponential growth mode?
Really!

 

[Ulmo]

BTW, M3 delivery is still on going, new VIN 420 just spotted, it's not like MX in Jan 2016 when it went completely MIA:

Pictures of production Model 3s

Highest VIN has been 512 since Saturday September 30th. Highest Production VIN seen

 

[ValueAnalyst]

I dunno. Like the new pressing machine they bought? Like the Fremont factory expansion? And who knows what in GF.

At the end of 2016. Machinery, equipment, vehicles and office furniture amount to 2.2 B. Land and buildings 1.1 B. Tooling, 0.8 B. Tooling is not the majority of giga cap-ex.

My friend... Giga tooling cap-ex ramped up substantially throughout 2017, closer to Model 3 production. 2016 year-end breakdown is not relevant to this discussion. Also, land is not depreciated.

Keep calm and carry on.

 

[Fallenone]

My friend...

Giga tooling cap-ex ramped up substantially throughout 2017 closer to Model 3 production. 2016 year-end breakdown is not relevant to this discussion. Also, land is not depreciated.

Keep calm and carry on.

Take a look at the most recent 10-Q then. Actually tooling experienced the least increase, both in absolute numbers and %.

I'll just stop clicking the thing in the lower right of my page. Shouldn't click it to begin with.

 

[AlMc]

For what’s it’s worth - I’m a Day one reservation holder and my delivery estimate of oct -
Jan has not changed.

I have been having an off TMC discussion about this with other people.

My feeling is that if I were in charge of the press release, ( Thank God I am not you are rightfully saying at this moment), I would have indicated that I was opening the design studio today for early reservation holders. Why?? It would have shown confidence that whatever ramping issues have been, or would be experienced, were/are quickly controlled.

Edited for my notoriously poor grammar/spelling/autochecking

 

[jelloslug]

VIN420 delivered! First green car

 

[ValueAnalyst]

Take a look at the most recent 10-Q then. Actually tooling experienced the least increase, both in absolute numbers and %.

I'll just stop clicking the thing in the lower right of my page. Shouldn't click it to begin with.

I will ignore the personal attack, and respond kindly.

The following is from the latest 10-Q:

As you can see, the biggest jump is in Construction in progress, which is "primarily comprised of tooling and equipment related to the manufacturing of [the] vehicles."

The latest 10-K also states depreciation on machinery (straight-line) doesn't start until it's ready for its intended use. So if Model 3 was built by hand in 3Q, why would depreciation hit the income statement? And tooling is units of production, so that doesn't hit at all.

In conclusion, depreciation from Model 3 tooling and equipment will be minimal in 3Q. Labor hours will hit gross margin, but the gross profit benefit from increased Model S/X deliveries will offset part of that.

I don't expect less than 20% overall gross margin in 3Q. Again, maybe I am wrong, but I don't see how that's possible given these deliveries.

 

[pGo]

I have been having an off TMC discussion about this with other people.

My feeling is that if I were in charge of the press release, ( Thank God I am not you are rightfully saying at this moment), I would have indicated that I was opening the design studio today for early reservation holders. Why?? It would have shown confidence that whatever ramping issues I have been, or would be, quick;y controlled.

Agreed. The language around the M3 production ramp doesn't give a good confidence. The aftermarket reaction is that and nothing else. Stock will recover when solid delivery numbers are visible. VINs are not produced in order so doesn't give a good idea.

Also, should we strike through the teslarati and electrek sources from discussion here?