The whole discussion about Tesla automotive demand is a wild goose chase, just waste of time and intellectual potential of this Forum. It has nothing to do with SP at this point.
My suggestion is to stop responding to the incendiary claims.
bump
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The whole discussion about Tesla automotive demand is a wild goose chase, just waste of time and intellectual potential of this Forum. It has nothing to do with SP at this point.
My suggestion is to stop responding to the incendiary claims.
I never said the plant couldn't handle it and you possess the reading comprehension to know that. Tesla has stated the level of production the current S and X lines are capable of both verbally and in SEC statements, and that is what I'm speaking about. I also didn't say anything about 80-90k, I said 100-150k. The guidance for this year includes model X ramp. As has been stated many times both by members here, and public statements by Tesla directors, they aren't just shutting down the X line to crank out model S on the COMBINED line, so model X has a direct effect on the production capability of the line in total. All of this is public information.How would you possible know Tesla's real word options for producing more than 80-90K cars this year?
In my experience, having studied production management undergrad and then working in a professional job in General Motors manufacturing in a plant the size of Fremont, Tesla could easily double Model S production year after year from 2014 forward. You seem to think they would need another line to make that volume. How do you come to your conclusion?
Mao, a Q2 prediction of 100k/year at the end of Q4 is not the same as achieving that prediction. Everyone here knows they did not get there due to X delays, and I know you know that too. I'm not sure why you are so married to the idea that demand has slowed when it is so absolutely clear that, at worst, the publicly acknowledged X ramp issues exist and slow total production. You seem unwilling to consider that the most obvious answer could be the actual answer. Do you have some reason to doubt that? Honestly asking.For record, there is a video interview with EM back to May 2014. China Market situation and outlook
EM was predicting almost 44000 production in 2014 and at least 80000 in 2015. Later on TM announced in Q2 2014 shareholder letter that 2015 exit rate will be 2000/week, i.e. 100000/year. I think there is no need of more arguments for the facts that how TM intentionally dialed down the production growth rate due to slower than expect demand growth rate while yet claiming production constrained.
As a TSLA investor, I care the stock value no less than anybody else here. If I would find an explanation for the disappointing stock price trend, the model S demand constraint (demand growth lower than expectation) would attribute the most in the past a few years. And this constraint won't change materially until model 3 volume production.
Can't get you a link on my phone, but I saw the article in question today or possibly a anecdote from reddit, can't remember. Anyway, he apparently said this in the beginning of a meeting a few years ago.You keep saying "demand" when you mean "production". No wonder everyone is confused.
Also, I'd be interested to see a source for the claim that Musk has described himself as the world's best salesman.
Just saw this. Good call. I'll bow out of the circular discussion. Mao, if you have any responses to the few questions I asked I'd still be interested to hear them, or past discussions have been quite useful.bump
Can't get you a link on my phone, but I saw the article in question today or possibly a anecdote from reddit, can't remember. Anyway, he apparently said this in the beginning of a meeting a few years ago.
Agreed. It's hard to argue that he isn't a fantastic salesman, so even if the quote is legend and not actually true, I was fine semi corroborating it.I think it is from a seekingalpha article which claimed he said it in an interview from 2008.
Even if it apocryphal, there is some truth in it. And I don't mean that in a negative way. No one here would have heard of Musk if he didn't have great instinctive selling skills.
Mao, a Q2 prediction of 100k/year at the end of Q4 is not the same as achieving that prediction. Everyone here knows they did not get there due to X delays, and I know you know that too.
much to raise the price when it's priced on model 3 already, so I don't think much growth should have been expected over the last 2 years.
Yawn. Who paid this shill to write this article?
Tesla throws cold water on its own hype by admitting huge risks in building the Model 3
EM was predicting almost 44000 production in 2014 and at least 80000 in 2015. Later on TM announced in Q2 2014 shareholder letter that 2015 exit rate will be 2000/week, i.e. 100000/year. I think there is no need of more arguments for the facts that how TM intentionally dialed down the production growth rate due to slower than expect demand growth rate while yet claiming production constrained.
I'm also wondering if I should stop shorting TSLA and go long.
That was not what I was doubting, though. He is a great salesman, but I seriously doubt he has crowned himself as the world's greatest, unless he was joking and the reporter didn't get it (which wouldn't surprise me in the least).Agreed. It's hard to argue that he isn't a fantastic salesman, so even if the quote is legend and not actually true, I was fine semi corroborating it.
If history tells you anything it's don't bet against Musk or Tesla.
A much more likely explanation is that they simply couldn't reach their 2k/week run rate because of technical challenges. They have been and still are going through a very steep learning curve. Every car manufacturing guy says that cars are not iPhones, and that it is very hard to scale up production. Why is it not more likely, then, that Tesla is simply going through growing pains? Look at their suppliers, they can barely keep up.X delay is only part of the reason. If demand is as strong as TM claimed (they can stimulate demand at will), TM should had achieved 2k/week run rate as promised. They just doing more S to fill the X gap. But the reality is they can't because S demand is limited and TM can't generate demand at will.
For record, there is a video interview with EM back to May 2014. China Market situation and outlook
EM was predicting almost 44000 production in 2014 and at least 80000 in 2015. Later on TM announced in Q2 2014 shareholder letter that 2015 exit rate will be 2000/week, i.e. 100000/year. I think there is no need of more arguments for the facts that how TM intentionally dialed down the production growth rate due to slower than expect demand growth rate while yet claiming production constrained.
As a TSLA investor, I care the stock value no less than anybody else here. If I would find an explanation for the disappointing stock price trend, the model S demand constraint (demand growth lower than expectation) would attribute the most in the past a few years. And this constraint won't change materially until model 3 volume production.
Second TV show when Elon visited China China Central Television. Some interesting takeaways:
~11:20 Elon : this year we’ll almost double the production rate
~29:00 Elon: 3 years ago, we made 600 cars. Last year, we made 22000 cars. This year we’ll almost double production. Probably next year double again.
So no experience or training in a relevant field. Law school?
Thanks for laying things out. But it won't beat his argument because he defines YoY growth ~50% as "OK" demand (not "demand problem/constraint/issue" anymore, thankfully) and consider constant 100% the passing score for Tesla all these years. As many other people pointed out, semantic game here nothing else.Here are a few select metrics over the past 6 quarters:
View attachment 176197
First, deliveries are high in Q4, 2015, but remember that's a lot of hangover from Q3. If you smooth Q3 and Q4 out, looking at total deliveries by moving 2k into Q3, then the deliveries looks like it stair steps up pretty handily. During all this time, the customer deposits number hold pretty strong, even going up for Q4 2014 while deliveries was quite strong. If demand was flat, we should have seen a $14 million dollar drop - instead, we got a $14 million dollar increase. If you look at Q1 2016, Tesla claims that there was a $100 million dollar increase on Model S and X alone. No mention of Model 3 in the customer deposits number, I suspect because the credit cards need to be processed first.
Now back to production. Note how the raw material and work in progress numbers jump up massively for the last two quarters. We had been at under $400 million for some time in raw materials. The work in progress is expected to increase as the factory increases in production rate - so we go from roughly $60-90 million to $163 million in Q4 and almost $200 million in Q1, 2016! All the time, deliveries have not kept pace. Finished goods inventory normally also increases as production rate increase, but it actually dropped from Q3 to Q4 as a big backlog of Model S finally got delivered. Again, look at production in Q1 and Q2 of 2015... 11k to 13k. We get all the way to Q1, 2016 and it's 15.5k, a 40% increase. But the work in progress skyrockets at more than double as customer deposits also go up.
This doesn't look like Tesla is holding back production. The answer Tesla has been giving us and the Model X's sitting at Service Centers awaiting final parts tells us the straight forward answer. Since the parts commonality between the Model S and X is not altogether that high, Tesla has to choose the production allocation between the two models well in advance. Obviously, they ordered up a lot of raw materials. And they have a lot in work in progress. If the Model X production stalls, they can only move so much production over to the S between the shared production lines and the parts ordered. Obviously, they did some hedging since they did order a lot of S parts, otherwise the last two quarters would have been disastrous. But not enough to fully cover the Model X shortfall. Obviously, Tesla still felt that the Model X production problems would have been solved already. Simply, the numbers don't tell us that they're holding back production due to demand issues, it's clearly production problems with the X.
There's basically an extra $150 million dollars or so of raw materials and work in progress due to Model X production problems.