Short-Term TSLA Price Movements - 2016

[MitchJi]

I wonder if Tesla might decide to build GF2, GF3 before they fully complete GF1? With 3x the output it might make more sense to build GF's in Europe and Asia before fully building out GF1.

Nitin Gadkari visits Tesla Motors; offers land for Asia manufacturing hub for electric cars - The Financial Express

Nitin Gadkari visits Tesla Motors; offers land for Asia manufacturing hub for electric cars

In a step to control pollution in India, especially by vehicles, Nitin Gadkari, Union Minister of Road Transport, visited the factory of Tesla motors in USA and offered to incorporate joint ventures between the world's biggest electric car manufacturing company and Indian automobile companies. By offering land near major ports, Nitin Gadkari has asked Tesla to make India as their hub for manufacturing cars for Asia.

In a step to control pollution in India, especially by vehicles, Nitin Gadkari, Union Minister of Road Transport, visited the factory of Tesla motors in USA and offered to incorporate joint ventures between the world’s biggest electric car manufacturing company and Indian automobile companies.
Gadkari said that the Government was focused on alternate form of free transport which are pollution-free by using bio-fuel, CNG, Ethanol and electric vehicles.
By offering land near major ports, Gadkari has asked Tesla to make India as their hub for manufacturing cars for Asia.
A senior executive from Tesla said that the company wants to create manufacturing hubs for production outside the USA to cater to the rest parts of the world. Tesla appreciates the offer from India and they would contemplate on the cooperation in the near future, accepting that their low cost car like model-3 will get a big market in the country.
In the discussions with the minister, Tesla said they are planning to manufacture trucks and pick up vans but two wheelers are not in the immediate plan, while the minister asked them to provide the proposal for the Indian market.
Prasing the Indian automobile manufacturers, Gadkari said that they have made progress in making electric vehicles, and will become very competitive in the future.
PIB reported that the minister was told that when Prime Minister Narendra Modi visied Tesla earlier, he was interested in knowing about future of electricity generation in rural India, by usin solar energy.

Modi govt woos Tesla with land offer

Nitin Gadkari, minister of road transport and highways, who visited the company’s San Francisco factory on Friday, offered land near major Indian ports to facilitate exports, an official statement said.

The minister offered to promote joint ventures between the global leader in electric car technology and Indian automobile companies to introduce pollution-free road transport in India.


Gadkari not only showed interest in electric cars but also battery-powered commercial and public vehicles. He said Indian government was committed to encourage pollution-free transport by providing incentives to bio-fuel, CNG, ethanol and electric vehicles.

The official statement quoted a senior Tesla executive as saying, the Indian government’s offer would be considered at an appropriate time.

Replying to a query from the highways minister regarding manufacturing of electric trucks, buses and two-wheelers, Tesla said they plan to manufacture trucks and pick-up vans but not buses and two-wheelers. Tesla team evinced interest in knowing about subsidy on electric vehicles in India.

Gadkari asked the company executives to outline their proposal for entry into India.

As part of his Silicon Valley visit last year, Modi had toured Tesla factory in California. Tesla CEO Elon Musk showed Modi the cutting-edge robotic auto assembly plant. The PM was also shown the inside of a lithium-ion
battery pack, which powers Tesla’s cars.

Musk and Modi had said they saw batteries and solar panels as the future of electricity generation in India. Musk, also CEO of SpaceX, had said, just like India skipped landlines and went straight to cell phones, it could skip traditional grid power and adopt distributed solar and battery packs.

Even though Tesla cars have become quite popular among some of the wealthiest Indians, there is still no infrastructure of electric cars in India. According to analysts, there was a huge potential for Tesla’s batteries combined with solar panels in India. Tesla’s grid batteries have also found overwhelming demand across the world.

“Given high local demand, a Gigafactory in India would probably make sense in the long term,” Musk had told reporters after Modi’s visit. Electric cars use lithium ion batteries and a manufacturing facility for such batteries is called Gigafactory.

Indian carmakers have also shown keen interest in partnering with Tesla to popularise electric cars and develop infrastructure. On the other hand, In China, Tesla has 15 stores and there are about 350 Superchargers and more than 1,600 destination chargers.

On Thursday, Musk, announced that he was close to releasing “Top Secret Tesla Masterplan, Part 2.” The new corporate manifesto is likely to connect the dots between Tesla’s myriad projects, including its proposal to acquire solar installer SolarCity Corp. Tesla’s website, which historically has focused on clean transportation, now said the mission was to “accelerate the world’s transition to sustainable energy.”

Speculation about the future of the company — a potential green conglomerate that integrates rooftop solar, energy storage and increasingly autonomous, fully electric cars — has sparked imaginations of analysts and boosted confidence. That’s despite a customer using Tesla’s Autopilot driver-assist technology being killed in a crash in Florida, subsequent safety and possible securities investigations, the defection of a manufacturing executive to Facebook and missing yet another sales target.

In August 2006, Musk published “The Secret Tesla Motors Master Plan,” which laid out the rationale for building increasingly affordable electric cars while also providing zero-emission electric-power generation options. But it’s not just about the cars. Tesla has always focused on the vehicles as well as their fuel — in this case their growing network of Supercharger stations and efforts to increasingly clean the electric grid that powers them.

And while the mission of the company has historically been to “accelerate the advent of electric transportation,” Tesla’s website now said the mission is about sustainable energy.

“Tesla is not just an automaker, but also a technology and design company with a focus on energy innovation,” says the website. In a call with analysts last month, Musk talked about the need for the Tesla Powerwall for the home to be designed in tandem with solar panels, as one integrated, Tesla-branded system. He was as bullish on solar as he has been on electric cars.

“Like, only about 1 per cent of US homes have solar, so you have a massive addressable market that’s unserved and there’s at least 40 million to 60 million households that where solar — where they could do solar if they wanted to,” said Musk. “So if the economics were right and they like the aesthetics and it was easy to do, then they would do it. So the future market there is really gigantic.”

In 2013, India introduced a National Electric Mobility Mission Plan (NEMMP) to have six million electric vehicles, including two-wheelers, by 2020. Government aims to provide fiscal and monetary incentives to popularise the nascent technology. If this plan becomes a reality, India could save 9,500 million litres of crude oil equivalent to Rs 62,000 crore savings.

 

[MitchJi]

Musk and Modi had said they saw batteries and solar panels as the future of electricity generation in India. Musk, also CEO of SpaceX, had said, just like India skipped landlines and went straight to cell phones, it could skip traditional grid power and adopt distributed solar and battery packs.

I'm getting excited thinking about this in the context of the SCTY acquisition. Tesla could become a huge company even if their only business was making Solar Panels and TE products for the Indian market.

 

[doggusfluffy]

I'm getting excited thinking about this in the context of the SCTY acquisition. Tesla could become a huge company even if their only business was making Solar Panels and TE products for the Indian market.

Agreed. People still seem to have an intractable backward looking view of SolarCity as a panel installer who finances overly complicated leasing PPA's. This is a bit outdated but hopefully it will remind investors about their Gigafactory coming online soon-ish too.

A Look Inside SolarCity, WNY's Largest Construction Project in 20 Years

 

[Gerardf]

I am not counting to much on the "Secret Masterplan part -2" to increase rhe share price on Monday unless it also includes a clear vision for the SolarCity integration and TE financial validity that is relevant for the next 2 years.

Elon's visions are way to far ahead for the general public. SMP-1 was seen by many as impossible, 500k / 1M production the same, did not move price up, but IIRC even down.

SMP-2 will probably span a timeframe of at least 10 years again, many might regard it as crazy-out-of-touch-with-reality and I actually expect shorts be already standby to (again) ridicule his vision.

Hope to be wrong about that, would be great to see the SP at 230 at market open.

 

[AlMc]

Thought you might be interested in this post from Jon McNeill in one of the other forums re increasing number of service centers ....

Anyone else extremely frustrated with getting Model S in for service?

Thanks @EinSV: the thread shows that TM is acknowledging the problem with wait times at SCs.
It is also good to see JM posting about it.
It does not change my short term (H2) delivery concerns.

Again, thanks for sharing

 

[sundaymorning]

VW diesel owners are bringing their business to Tesla

 

[TMSE]

I am not counting to much on the "Secret Masterplan part -2" to increase rhe share price on Monday unless it also includes a clear vision for the SolarCity integration and TE financial validity that is relevant for the next 2 years.

Elon's visions are way to far ahead for the general public. SMP-1 was seen by many as impossible, 500k / 1M production the same, did not move price up, but IIRC even down.

SMP-2 will probably span a timeframe of at least 10 years again, many might regard it as crazy-out-of-touch-with-reality and I actually expect shorts be already standby to (again) ridicule his vision.

Hope to be wrong about that, would be great to see the SP at 230 at market open.

At this stage we need more than Elon's grand vision for any further move up in stock price. Any GF surprise is helpful, however improved execution has much bigger impact. So, Q3 guidance is key.

Any production guidance above ~25K for Q3, should propel SP above 260. Then, actually meeting this guidance should further propel SP above 300.

 

[30seconds]

I am not counting to much on the "Secret Masterplan part -2" to increase rhe share price on Monday unless it also includes a clear vision for the SolarCity integration and TE financial validity that is relevant for the next 2 years.

Elon's visions are way to far ahead for the general public. SMP-1 was seen by many as impossible, 500k / 1M production the same, did not move price up, but IIRC even down.

SMP-2 will probably span a timeframe of at least 10 years again, many might regard it as crazy-out-of-touch-with-reality and I actually expect shorts be already standby to (again) ridicule his vision.

Hope to be wrong about that, would be great to see the SP at 230 at market open.

SMP1 still heavily discounted by the market. Company is on track for $10B run rate, 50% y/y growth over next 4 years (at least) and 25% margin but trading at 3x forward sales. Considering lack of near term competition I would say that is a big discount to future cash flows.

 

[MitchJi]

https://www.inverse.com/article/18257-tesla-changes-mission-from-transport-to-energy

Elon Musk is thinking up part 2 of the Tesla master plan, and a subtle change in the “About” section of Tesla’s website hints at what’s next: a focus shift from “sustainable transport” to “sustainable energy.”

The one-word shift, noticed by Bloomberg, represents an entire company shift. The future that Musk envisioned and laid out in his first master plan in 2006 (build an affordable electric car) will be complete with the Model 3.

Just one word — “energy” — means that part two will likely be much, much more grand.

”Tesla’s mission is to accelerate the world’s transition to sustainable energy.”

Tesla is already more than just a transport company. It makes batteries, and will be making a whole lot more of them when the Gigafactory is complete. Musk also recently made a controversial move to buy SolarCity and add solar panels into Tesla’s services. Investors initially hated it while Musk maintained that he has “zero doubt” about the acquisition. Judging by the rise in market price in the face of the first fatal autonomous crash, Musk knew what he was talking about.

Inverse compared the current “About” page to one from March, and “energy” is the only word changed on the entire page, in the headline. The stated mission in the opening paragraph still says the mission is about “sustainable transport.”

So what does this small but noticeable change mean? Most likely that Musk is preparing a clean future for us all, beyond just cars?

 

[tander]

I wonder if Tesla might decide to build GF2, GF3 before they fully complete GF1? With 3x the output it might make more sense to build GF's in Europe and Asia before fully building out GF1.

Nitin Gadkari visits Tesla Motors; offers land for Asia manufacturing hub for electric cars - The Financial Express

Modi govt woos Tesla with land offer

It would make sense to get started at least. This is super long-term stuff so it doesn't happen overnight unless they happened to have a really cheap idled plant for sale.

 

[dc_h]

https://www.inverse.com/article/18257-tesla-changes-mission-from-transport-to-energy

A better mission statement might be: Sustainability via superior design and engineering. Or: Providing transport, home and industrial products to create a cleaner, safer and more productive planet.

 

[tinm]

A better mission statement might be: Sustainability via superior design and engineering. Or: Providing transport, home and industrial products to create a cleaner, safer and more productive planet.

With mission statements, less is often more.

 

[vgrinshpun]

https://www.inverse.com/article/18257-tesla-changes-mission-from-transport-to-energy

I am convinced that the Master Plan Part 2 will be about TE, it is just so obvious, and now is punctuated by the change in the Company's mission.

There was a lot of discussion about the distributed energy generation, but it is just a part, and minor one at that, of the picture. As was highlighted by Elon during the 2015 Edison Electric Institute annual convention, about 2/3 of the future electric energy generation will be in the form of utility scale, power plant type generation (start listening at about 19:10min mark)

I believe that Master Plan Part 2 will be about laying out the future plans on TE (perhaps even around the Elon's talk that I linked above), and utility scale solar generation (Solar Merchant Power Plants, anybody?) will be a central (and surprising as nobody is talking about it so far) part.

 

[Papafox]

I am convinced that the Master Plan Part 2 will be about TE, it is just so obvious, and now is punctuated by the change in the Company's mission.

There was a lot of discussion about the distributed energy generation, but it is just a part, and minor one at that, of the picture. As was highlighted by Elon during the 2015 Edison Electric Institute annual convention, about 2/3 of the future electric energy generation will be in the form of utility scale, power plant type generation (start listening at about 19:10min mark)

I believe that Master Plan Part 2 will be about laying out the future plans on TE (perhaps even around the Elon's talk that I linked above), and utility scale solar generation (Solar Merchant Power Plants, anybody?) will be a central (and surprising as nobody is talking about it so far) part.

I think you're right. For this reason, it'd be helpful if Elon says "we're pencil down" on the Model 3 now and everything is running on schedule. The bear angle on the Master Plan Part 2 will be that all this Tesla Energy distraction will negatively affect Tesla's ability to deliver Model 3 on time. Go ahead and promote TE in the plan, but be sure to reinforce that Tesla Motors is on time and in focus.

Edit: Obviously, short term accomplishments such as "pencils down" don't fit into a master plan, but maybe there is some way to slip that info in on the side.

 

[vgrinshpun]

I agree that there is no evidence that there WILL be s problem delivering 50% more vehicles in H2 then H1

I am over my concerns that there is demand for >2,000 vehicles per week and that the factory can turn out > 2,000
Vehicles per week in H2. We have reports that confirm these numbers.

The SCs that are currently overtaxed now with routine service and repairs COULD have issues delivery these vehicles. My local ( your local SC Vginsphun as well) appears on two recent visits to be maxed out.
My concerns could be unfounded. There are several solutions people have suggested. Put off regular service....there is already 6 week waits at many facilities. Go 24/7...Need more service techs and space to house the vehicles....possible.

So, yes, it is quite possible but until we see it we are taking it on faith.

Please feel free to point out my baseless concerns when 50k vehicles are delivered in H2.

IMO there is no need to increase capacity of SC to deliver at the 50 K / 6 month pace as existing SC already demonstrated that they have such capacity, and were delivering at this rate for the whole 1/3 of the Q1 2016 - during month of March. I agree that Tesla needs continuing expansion of the SC for several reasons, but inability to deliver at the 100K/year rate is really not one of them.

Here is what we know about deliveries in March:
Europe: ..2496 MS
US: ........3990 MS, 1860 MX

So even without taking into account Asian/Pacific and Canadian deliveries Tesla delivered 8,346 cars in March, which is equivalent to the rate of deliveries of 8,346 x 6 = 50,076 cars that Tesla projected to deliver during the H2 2016. They do no need to increase capacity of SC to deliver 50K cars in H2 at all - all they need to do is to switch to an even production of cars for all regions instead of extreme batching to maximize deliveries of all cars manufactured within a given quarter during the same quarter. Since extreme batching they used lately results in majority of cars delivered in the last month of the quarter, switching over from this method of allocation of production to the even distribution among the geographical regions (proportional to the rate of incoming orders from each region) will result in even distribution of the deliveries between each of the month within a quarter.

The good news is that Tesla is well on their way to fill the pipe that is required for this even distribution of the production between the regions, as at the end of Q2 they had 5,150 cars in the pipeline. Assuming that average in-transit time worldwide is 4 weeks and average production of 2100 cars/week indicates that they need to have 8,400 cars in the pipeline to accommodate even production distribution (as defined above). In order to bring the quantity of cars in the pipeline from 5,150 to 8,400 Tesla needs to add 3,250 cars. So we will need to see that Tesla guides for about 3,250 cars gap between the production and deliveries in Q3 (a gap similar to Q2 guidance).

Looking at the capacity to deliver from another angle, Tesla has 67 SC in US and 64 in the rest of the world for a total of 131. In order to deliver 50K cars in H2 the average delivery rate per SC should be about 2.1 cars/day - totally doable rate IMO, without any need for expansion (50,000 / 182 / 131 = 2.1).

So, based on the above, I just do not believe that delivering 50K cars in H2 would be the limiting factor to meeting the guidance. My number one concern is ramping up production - the company clearly had problems with this in the past, and could have problems in H2 as they are set to about maxing their current production capacity of the general assembly line.

 

[tinm]

I would advise caution if counting on a good Q3 based on those magical 5150 in-transit vehicles. A win should feel like a win, Elon said. No cheats or crib sheets or slights of hand or other trickery. It's time for simple, no-excuses execution.

 

[AlMc]

IMO there is no need to increase capacity of SC to deliver at the 50 K / 6 month pace as existing SC already demonstrated that they have such capacity, and were delivering at this rate for the whole 1/3 of the Q1 2016 - during month of March. I agree that Tesla needs continuing expansion of the SC for several reasons, but inability to deliver at the 100K/year rate is really not one of them.

Here is what we know about deliveries in March:
Europe: ..2496 MS
US: ........3990 MS, 1860 MX

So even without taking into account Asian/Pacific and Canadian deliveries Tesla delivered 8,346 cars in March, which is equivalent to the rate of deliveries of 8,346 x 6 = 50,076 cars that Tesla projected to deliver during the H2 2016. They do no need to increase capacity of SC to deliver 50K cars in H2 at all - all they need to do is to switch to an even production of cars for all regions instead of extreme batching to maximize deliveries of all cars manufactured within a given quarter during the same quarter. Since extreme batching they used lately results in majority of cars delivered in the last month of the quarter, switching over from this method of allocation of production to the even distribution among the geographical regions (proportional to the rate of incoming orders from each region) will result in even distribution of the deliveries between each of the month within a quarter.

The good news is that Tesla is well on their way to fill the pipe that is required for this even distribution of the production between the regions, as at the end of Q2 they had 5,150 cars in the pipeline. Assuming that average in-transit time worldwide is 4 weeks and average production of 2100 cars/week indicates that they need to have 8,400 cars in the pipeline to accommodate even production distribution (as defined above). In order to bring the quantity of cars in the pipeline from 5,150 to 8,400 Tesla needs to add 3,250 cars. So we will need to see that Tesla guides for about 3,250 cars gap between the production and deliveries in Q3 (a gap similar to Q2 guidance).

Looking at the capacity to deliver from another angle, Tesla has 67 SC in US and 64 in the rest of the world for a total of 131. In order to deliver 50K cars in H2 the average delivery rate per SC should be about 2.1 cars/day - totally doable rate IMO, without any need for expansion (50,000 / 182 / 131 = 2.1).

So, based on the above, I just do not believe that delivering 50K cars in H2 would be the limiting factor to meeting the guidance. My number one concern is ramping up production - the company clearly had problems with this in the past, and could have problems in H2 as they are set to about maxing their current production capacity of the general assembly line.

Thanks for the excellent analysis. Time will tell and it certainly won't hurt my feelings to be wrong, proven wrong and reminded that I was wrong to be concerned.

 

[TMSE]

I would advise caution if counting on a good Q3 based on those magical 5150 in-transit vehicles. A win should feel like a win, Elon said. No cheats or crib sheets or slights of hand or other trickery. It's time for simple, no-excuses execution.

What is good execution for Q3 and Q4 in your view?

 

[vgrinshpun]

Thanks for the excellent analysis. Time will tell and it certainly won't hurt my feelings to be wrong, proven wrong and reminded that I was wrong to be concerned.

There is no need for such a reminder, and none will be coming from me. The truth is that we all are speculating here, and hopefully the honest sharing of different views on the same subject can bring more clarity for the benefit of all.

 

[vgrinshpun]

I would advise caution if counting on a good Q3 based on those magical 5150 in-transit vehicles. A win should feel like a win, Elon said. No cheats or crib sheets or slights of hand or other trickery. It's time for simple, no-excuses execution.

I am not sure if your post was intended in response to mine, but if it was, you might have missed that according to my analysis Tesla will need to add to the 5,150 cars already in the pipeline in order to have even distribution of the deliveries within the quarter. So as far as I am concerned, there is no "counting" of the 5,150 cars that were in the pipeline after the Q2 for Q3...