General Discussion: 2018 Investor Roundtable

[sundaymorning]

I find it hard to believe that anyone woudl think 1500/w is anything but a huge disaster. Especially given the 700 in some number of days that equated to 1k/W at the end of Q4. This rate of improvement would be worse then terrible. But the good thing is that there are serious signs that things are much better then that. But lets be clear. 1500 would be a disaster regardless of peoples personal feelings. Time will tell.

When news of the internal email was leaked yesterday the stock shot up and closed at $266. Although 1500/ week isn’t a win, it helped relieved a lot of fears and shows progress that is 2-3x higher than last Q. Based on current stock price of TSLA, 1,500 is inline with market expectations. I don’t expect a big move one way or the other after they release numbers. I’m leaning towards being slightly green if we’re at 1500-1800 burst. If we’re at 2,000 and above then that would be a great time for me to deploy the rest of my funds. A major bonus for us bulls would be if Tesla announced the 2,500 by mid April, giving Elon the two weeks he asked for during CC. This ramp is progressing and we are in much better times than at any point in Tesla history. The M3 is indeed designed to be more efficiently built, and it’s starting tos how some sign of life.

 

[Ichabod]

When news of the internal email was leaked yesterday the stock shot up and closed at $266. Although 1500/ week isn’t a win, it helped relieved a lot of fears and shows progress that is 2-3x higher than last Q. Based on current stock price of TSLA, 1,500 is inline with market expectations. I don’t expect a big move one way or the other after they release numbers. I’m leaning towards being slightly green if we’re at 1500-1800 burst. If we’re at 2,000 and above then that would be a great time for me to deploy the rest of my funds. A major bonus for us bulls would be if Tesla announced the 2,500 by mid April, giving Elon the two weeks he asked for during CC. This ramp is progressing and we are in much better times than at any point in Tesla history. The M3 is indeed designed to be more efficiently built, and it’s starting tos how some sign of life.

There is no doubt the bearish euphoria on SA is wildly over ambitious. However, to call this "much better times than at any point int Tesla history" is also a bit optimistic, in my very, very humble opinion. From about midway through the X launch until I'd say August of last year, I ready literally hundreds of comments to the effect of, "The 3 has to go better than the X launch," and, "Tesla can't afford for the 3 launch to like the X launch." These were followed by various explanations about lessons learned in S and X, much simpler car, built for manufacturing, etc. etc. Well, the ramp is further behind the predicted ramp of the X. Although the quality issues are not nearly as dramatic as the infamous malfunctioning falcon wing doors, even the quality has not been anything approaching exemplary.

My question is, for those who see this current dip as the buying opportunity of the decade, what total production number for the month of April would make you worry? To me that number/4 will give a better picture of what the true exit rate at the end of Q1 is. I would recommend writing that number down, and then looking at that number at the end of April to benchmark where they are.

 

[davecolene0606]

My answer to yet another hit piece in the NY Times:

Tesla is reinvesting all of its profits from S&X and outside capital into expansion. Analysts predict doom and gloom assuming only that Tesla will miss all of its production targets, something that has never occurred to date. Tesla sets aggressive goals all of which are met and often characterized as impossible. Nearing 500k cars that "will never be built" and "won't sell for lack of demand" that have collectively been driven a few billion miles and the subject is 2 accidents? A recall? A shareholder lawsuit? Model 3 was originally planned for a late 2018 launch and volume production in 2019. In excess of 400k folks plop down 1k for an EV site unseen and Tesla decides it to be wise to move up production and they have. Positive cashflow occurs at 5k cars per week after which no further requirement for outside capital exists. So what matters a date or a rate? Tesla is often compared to monolithic mature ICE car companies. Let's see, Tesla, EV's with a charging network (that exists) powered by Tesla power packs powered by Tesla solar. Grid power solutions that outperform fossil fuel solutions on cost and operation. Homes powered by Tesla PV panels where energy is stored in Tesla Powerwalls linked together to form a virtual grid that powers homes and vehicles. Happening now made in expanding US facilities (where the cash is"burned") and shipped worldwide where demand continues to exceed supply. Tesla continues to be a viable business.

Let's see if it sees the light of day.

Fire Away

 

[D-egg-O]

I'm feeling optimistic about the ramp. The very first indication of the ramp being real are the NHTSA VIN registrations. The frequency of these registrations has noticeably picked up. #rampy

There is intense activity at the Fremont logistics lot too.

And some delivery centers are ready to deliver a significant number.

 

[tander]

Regarding the "300 per day" email; anybody have a sense of whether that was just a goal they were trying to sustain for a week and then go back to less or if it was going to be a sustained rate? As I understood it the main constraint was some equipment from Germany that wasn't supposed to come online till sometime in q2, so I'm wondering if maybe that 300 per day (6,000 per month) was just going to be till the end of q1 since they might not have all the parts so continue at that speed for now?

 

[Reciprocity]

When news of the internal email was leaked yesterday the stock shot up and closed at $266. Although 1500/ week isn’t a win, it helped relieved a lot of fears and shows progress that is 2-3x higher than last Q. Based on current stock price of TSLA, 1,500 is inline with market expectations. I don’t expect a big move one way or the other after they release numbers. I’m leaning towards being slightly green if we’re at 1500-1800 burst. If we’re at 2,000 and above then that would be a great time for me to deploy the rest of my funds. A major bonus for us bulls would be if Tesla announced the 2,500 by mid April, giving Elon the two weeks he asked for during CC. This ramp is progressing and we are in much better times than at any point in Tesla history. The M3 is indeed designed to be more efficiently built, and it’s starting tos how some sign of life.

You mean the current price of $266 which is over $100 below the ATH. Yeah, people loved the leaked email. Again, Im bullish on production and the ramp, but I can assure you that if its 1500/w and some shenanigans around the last few days, then the stock will find new lows. When you promised 5000/w by the end of last quarter originally, 1500 a full quarter after that is not going to be pleasant. I guess people might have been born yesterday and were not aware the target has already been moved by 2x and this would be the third. But my guess, and this is not an advice, 1500 would be a disaster. Again, to be clear, im in the 2000+ camp and think they will surprise some of us. I think the email was actually bad news. It left me feeling very uneasy. What bothered me most was that it contradicted to much other information. So much that I had to figure how it could all work together. I hope I am right and that the Email was pre-cursor to Field knowing that they could achieve the goal and he was just doing some team building and solidarity by having a William Wallace moment... "They can take away your options stock price, but they can never take it away for very long! Freedom!." Think how bad it would be to ask people to chip in, only to have them sitting there while engineers fix machines. I think they knew the ramp was going to accelerate and I think it was all planned in late Feb. This is a meaningful goal, made so much more important by Elon reiterating and moving it back 2x. It cannot be moved back again. And the evidence mostly points to it being achievable and maybe even achieved already. Again. 4700 VINS in 10 days, then they needed 2000+ more on that 10th day. Why try to game bulls at this point? This is almost like a beacon of light in the dark for Bulls. Its not Tesla setting up bulls for a bull trap. It all points to a more positive print next week. I wont go all nutty and say 2800, but I wouldn't be shocked at 2500 for a full 7 days, no PT Barnum flim flammery. A legit 2500 from 7 days before the end of the quarter and going forward at that rate and on pace for 5k at the end of Q2. Even if you discount the 4700 VINs by more then 80% in 10 days to 3600 in 10.. or 360/day or 2520/w! They basically needed 2000 VINs every 3 days for more then a week. Bull trap? Why would Tesla do that us?

 

[Waiting4M3]

When news of the internal email was leaked yesterday the stock shot up and closed at $266. Although 1500/ week isn’t a win, it helped relieved a lot of fears and shows progress that is 2-3x higher than last Q. Based on current stock price of TSLA, 1,500 is inline with market expectations. I don’t expect a big move one way or the other after they release numbers. I’m leaning towards being slightly green if we’re at 1500-1800 burst. If we’re at 2,000 and above then that would be a great time for me to deploy the rest of my funds. A major bonus for us bulls would be if Tesla announced the 2,500 by mid April, giving Elon the two weeks he asked for during CC. This ramp is progressing and we are in much better times than at any point in Tesla history. The M3 is indeed designed to be more efficiently built, and it’s starting tos how some sign of life.

1500/wk is a 2-3x quarterly improvement as you say, this also means we're maybe only 1-1.5 quarters away from ~5k/wk, cash flow positive, and doubling 2017 revenue, and maybe 2 quarters from 20% GM on M3. I personally don't see how that justifies a $266 PPS.

 

[Waiting4M3]

You mean the current price of $266 which is over $100 below the ATH. Yeah, people loved the leaked email. Again, Im bullish on production and the ramp, but I can assure you that if its 1500/w and some shenanigans around the last few days, then the stock will find new lows. When you promised 5000/w by the end of last quarter originally, 1500 a full quarter after that is not going to be pleasant. I guess people might have been born yesterday and were not aware the target has already been moved by 2x and this would be the third. But my guess, and this is not an advice, 1500 would be a disaster. Again, to be clear, im in the 2000+ camp and think they will surprise some of us. I think the email was actually bad news. It left me feeling very uneasy. What bothered me most was that it contradicted to much other information. So much that I had to figure how it could all work together. I hope I am right and that the Email was pre-cursor to Field knowing that they could achieve the goal and he was just doing some team building and solidarity by having a William Wallace moment... "They can take away your options stock price, but they can never take it away for very long! Freedom!." Think how bad it would be to ask people to chip in, only to have them sitting there while engineers fix machines. I think they knew the ramp was going to accelerate and I think it was all planned in late Feb. This is a meaningful goal, made so much more important by Elon reiterating and moving it back 2x. It cannot be moved back again. And the evidence mostly points to it being achievable and maybe even achieved already. Again. 4700 VINS in 10 days, then they needed 2000+ more on that 10th day. Why try to game bulls at this point? This is almost like a beacon of light in the dark for Bulls. Its not Tesla setting up bulls for a bull trap. It all points to a more positive print next week. I wont go all nutty and say 2800, but I wouldn't be shocked at 2500 for a full 7 days, no PT Barnum flim flammery. A legit 2500 from 7 days before the end of the quarter and going forward at that rate and on pace for 5k at the end of Q2. Even if you discount the 4700 VINs by more then 80% in 10 days to 3600 in 10.. or 360/day or 2520/w! They basically needed 2000 VINs every 3 days for more then a week. Bull trap? Why would Tesla do that us?

I think possibly when Doug wrote the letter they were at 200/day or 1500/wk, and when they reached 300/day this week, they decided now it's safe to "leak" the letter. It's not as disastrous as your original suspicion, and not as "exciting" as the "bear trap" theory that some have floated.

 

[geneclean55]

High 14XXX just got assigned
VIN progression, registration algorithm & other VIN-related exchanges

 

[j0hn]

High 14XXX just got assigned
VIN progression, registration algorithm & other VIN-related exchanges

interesting , those were registered march 20th , only 10 days ago !

 

[EinSV]

First report of a VIN in the 14xxx. VIN progression, registration algorithm & other VIN-related exchanges

It is a second hand report but there are also a bunch of 13xxx reported this morning so it seems credible. Be nice to see some more 14xxx and 15xxx to confirm.

This is from the March 20 batch of VIN registrations, so lag time between registration and first report continues to drop (from 15 days for March 2 batch to 11 days for March 10 batch to 10 days for March 20 batch). I don't think it can go down much from here.

In any case, another indication of a solid ramp.

I tend to think the increased registration rate reflects increased production, not a head fake/gaming the system.

One data point -- the gap between VIN registration date and first report of a VIN being assigned has dropped dramatically from 4-5 weeks to 15 days for the March 2 batch (post below dated March 17):

And then from 15 down to 11 days for the March 10 batch (VIN 127xx reported March 21).

I expect they'll assign something in the most recent batch registered March 20 (13844-15885) within the next few days to a week at the outside (7-11 days total).

So most likely, they just needed more VINs. This is not conclusive since there are older VINs out there still being assigned, but together with other signs of a ramp it does suggest this is not a head fake and that we are seeing a significant production increase.

If there already has been a significant ramp as I suspect, the delivery centers should be very busy handing off Model 3s to happy customers between now and March 31.

Edit: I see @geneclean55 and @j0hn beat me to the punch!

 

[Waiting4M3]

interesting , those were registered march 20th , only 10 days ago !

 

[Ichabod]

1500/wk is a 2-3x quarterly improvement as you say, this also means we're maybe only 1-1.5 quarters away from ~5k/wk, cash flow positive, and doubling 2017 revenue, and maybe 2 quarters from 20% GM on M3. I personally don't see how that justifies a $266 PPS.

1500/week is roughly 2x improvement over last quarter, but the rate of growth appears to be linear, and the 2x is only there because the base number from q4 was so low. As such, at the current growth rate 5k/week is much farther off than 1-1.5 quarters. Especially when considering the 5k/week is all supposed to come from existing equipment at the Fremont factory. It's not like they are starting up a parallel line at Fremont to go from 2500 to 5k. It seems optimistic to think that the difficulty of going from 500 to 1500 is any easier than going from 1500 to 2500, 2500 to 3500, etc. Typically, the difficulty increases the closer you get to max rate. The "S curve" is real, it's just that the middle part is progressing much flatter than predicted. It still flattens out even more as you keep going up. The bottom line is that life isn't getting any easier on the Tesla production line for a long time.

 

[D-egg-O]

Nope, this what the delivery report is going to say,

View attachment 290471

 

[Waiting4M3]

1500/week is roughly 2x improvement over last quarter, but the rate of growth appears to be linear, and the 2x is only there because the base number from q4 was so low. As such, at the current growth rate 5k/week is much farther off than 1-1.5 quarters. Especially when considering the 5k/week is all supposed to come from existing equipment at the Fremont factory. It's not like they are starting up a parallel line at Fremont to go from 2500 to 5k. It seems optimistic to think that the difficulty of going from 500 to 1500 is any easier than going from 1500 to 2500, 2500 to 3500, etc. Typically, the difficulty increases the closer you get to max rate. The "S curve" is real, it's just that the middle part is progressing much flatter than predicted. It still flattens out even more as you keep going up. The bottom line is that life isn't getting any easier on the Tesla production line for a long time.

By linear rate of growth, do you mean rate of growth is constant, and production rate is increasing linearly vs time? If so I would disagree and point to the recent VIN registration, the stagnation around 700/wk in Jan/Feb and the subsequent (apparent) jump after the Feb shutdown, and Dog's letter showing Tesla attempting to go from 200/day to 300/day in 1 week.

I think the tapering off of the logistic function (S-curve) towards the upper end is a reasonable concern, but it won't have significant slow down until you get to ~80% of the max rate, so at ~4000/wk. I think 1500/wk now still gives us a very good chance at hitting 4000/wk by Q2 end, which is close enough to cash flow positive.

Another thing, as you say the tail of the "S" is more difficult. IMO it's not exactly the right way to look at it. I think the adjustments/improvements come at slower paces at that time because there are fewer of them that can be worked out in parallel, and also the line is mostly working so what's left are just minor tweaks that doesn't improve your speed very much. This is why the "S" curve flattens out. But the upside is that the cost of those improvements also reduces significantly at that point, both because there are fewer of them, and also that the tweaks are more minor. This contributes to Tesla hitting cash flow positive.

 

[Ichabod]

By linear rate of growth, do you mean rate of growth is constant, and production rate is increasing linearly vs time? If so I would disagree and point to the recent VIN registration, the stagnation around 700/wk in Jan/Feb and the subsequent (apparent) jump after the Feb shutdown, and Dog's letter showing Tesla attempting to go from 200/day to 300/day in 1 week.

I think the tapering off of the logistic function (S-curve) towards the upper end is a reasonable concern, but it won't have significant slow down until you get to ~80% of the max rate, so at ~4000/wk. I think 1500/wk now still gives us a very good chance at hitting 4000/wk by Q2 end, which is close enough to cash flow positive.

Another thing, as you say the tail of the "S" is more difficult. IMO it's not exactly the right way to look at it. I think the adjustments/improvements come at slower paces at that time because there are fewer of them that can be worked out in parallel, and also the line is mostly working so what's left are just minor tweaks that doesn't improve your speed very much. This is why the "S" curve flattens out. But the upside is that the cost of those improvements also reduces significantly at that point, both because there are fewer of them, and also that the tweaks are more minor. This contributes to Tesla hitting cash flow positive.

I would quibble a bit with the reliance on VIN registrations. As others have noted, they must increase for production to increase, but they have proven to be a very unreliable indicator in the past of changes in production rate. Time will tell.

to directly answer your question, yes, it appears to be roughly linear growth rate. I think the Bloomberg tracker, though delayed, shows this fairly well.

 

[Waiting4M3]

I would quibble a bit with the reliance on VIN registrations. As others have noted, they must increase for production to increase, but they have proven to be a very unreliable indicator in the past of changes in production rate. Time will tell.

Yes by all means quibble away That's one of the most popular topics here. My take on relying on VIN registration is that fore sure there is a delta to procution, and since no one outside of Tesla know what that delta is, we can't really rely on it for an exact production #. But if one assumes that the delta is a constant, either in # of cars (y-axis), or in time from registration to production (x-axis) , then the exponential increasing trend in VIN registration is still valid.

 

[30seconds]

I think another important investment issue is that if Tesla is able to ramp the Model 3 to 4,000+ / week they will be substantially ahead of the curve on automated production compared to other manufacturers. Not just in terms of speed, but also cost.

A while ago Elon had said that the software behind the GF & Fremont are going to be a large competitive advantage and we are in the middle of testing that claim.

 

[Reciprocity]

I would quibble a bit with the reliance on VIN registrations. As others have noted, they must increase for production to increase, but they have proven to be a very unreliable indicator in the past of changes in production rate. Time will tell.

to directly answer your question, yes, it appears to be roughly linear growth rate. I think the Bloomberg tracker, though delayed, shows this fairly well.

Yes, but at some point, you have to have the cars show up somewhere. Unless you think Tesla is perpetrating some kind of trickery by purposely making it seem like more is being produced then is? And doing so to the detriment to your biggest supporters and to benefit your most ardent haters? Given that they will have to come clean next week and longs will be crucified for supporting the stock in light of all the fancy VIN registrations and assignments. I guess they could be randomly assigning and randomly registering and randomly producing.. but I doubt it. Again, to the detriment to longs and benefit of shorts.

 

[Reciprocity]

I think another important investment issue is that if Tesla is able to ramp the Model 3 to 4,000+ / week they will be substantially ahead of the curve on automated production compared to other manufacturers. Not just in terms of speed, but also cost.

A while ago Elon had said that the software behind the GF & Fremont are going to be a large competitive advantage and we are in the middle of testing that claim.

Your bolded statement there is why they will not partner with a Chinese manufacturer. The cars can be reverse engineered and it wont help anyone that that much. The Cells can be reverse engineered and Tesla would have given you the formula if you would built a billion of them. You can buy the entire Kuka company and own all the robots. But the code for the Machine that makes the Machines. No... not a chance.