Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[StealthP3D]

But I put like a 5% chance of them hitting those numbers at those prices.

Now I need to know: Why are you feeling so optimistic this morning?

 

[JustMe]

We need these trucks to trickle down from the posers. 2-5 years as a “city” truck and 20 years as a depreciated work truck is fine with me. As long as it fits 4x8 material, can tow, seats 4-5, get 80+mpge and is FSD it will be a winner for everyone. I want a fully depreciated one with only 50 miles of range left on a full charge as a beater right now, but it does not exist.

If they put a million mile battery in it you’ll be waiting an awfully long time for that 50-mile range beater. But I see your point

 

[lklundin]

Details taking shape around GF4 investment on Twitter. Probably needs additional verfication.

On the topic of GF4:

Some Green Party politicians in Berlin are starting to make rumblings about the harvesting of the timber in the pine plantation that will become GF4.

However, more than one German tweeter has pointed to a regional media article from a couple of years ago, that the area in question can legally be converted to e.g. a Tesla Gigafactory:

Claus Vaske | Autor on Twitter

Now that may still not prevent some people from chaining themselves to these pines, but it seems given that they will then be removed by the authorities so the construction can go ahead.

 

[mrdoubleb]

Incidentally I posted about this in the finance thread shortly before you wrote that, here's a repost:


I think there's an increasing chance that Tesla will be able to surprise us positively in Q4 again:

• Q4 European deliveries are intriguingly high so far, per the graph posted by @KarenRei:
• 
  
  
• This suggests (but doesn't prove) a substantially higher early quarter production rate in Fremont compared to Q3. Just 35 days into Q4 Tesla started delivering at late-Q3 rates (!).
• This graph by @JustMe shows record Q4 units underway to Europe via ships:
• 
  
  
• The rate is significantly beyond any previous quarter: 30-40% higher than Q2, if the "ship loading hours" method is accurate.
• We still don't have an answer to the mystery production increase leak from Jerome, back in July: “While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”
• Q3 Model 3 production was 79k, up from 72k in Q2 - which I don't think matches the tone of Jerome's email.
• There's the leak to Cleantechnica about 7,000 excess Q3 battery packs sent to China:
• Tesla Gigafactory 3 Has ~7,000 Battery Packs In Stock For Chinese Model 3 Production, Will Use LG Chem Cells In 2020 | CleanTechnica
• U.S. order book appears to be almost 100% full in Q4 already, according to Tesla's own "weeks of delivery" estimates. (Which tend to lag true demand.)
• EU order book has closed for Q4 deliveries yesterday: most configs are for February 2020 delivery only.
• Inventory levels are very low in the U.S., to the extent Tesla allows us to see them.
• The 10-Q has shown a significant increase in non-finished goods inventory. Part of it could be battery packs for GF3 - but maybe they stockpiled parts for Fremont as well, for a full quarter demonstration of maximum sustained production rates?

Those 5-8 independent pieces of data/clues point towards a skillfully masked attempt by Tesla to hit the ball out of the ballpark in Q4: they might have sandbagged Q3 production and deliveries to maximize Q4 results.

If they do then even Q2 margins would be enough for record Q4 revenue and record GAAP profits.

And here's a final mystery: in their Q4 report Tesla updated the 360k-400k 2019 deliveries guidance range to 360k only. Everyone, including me, interpreted this as an admission that they cannot hit 400k and can barely hit 360k in the best of cases.

But there's another possible explanation for why they removed the 400k upper guidance ...

Anyway, calling Q4 a record quarter at this point is premature I suspect (the rates of ships could slow down, U.S. deliveries could be weaker, etc.), but the evidence so far is incredibly intriguing, and there's not a single counterfactual I've been able to find, other than Tesla's track record of punishing our optimism most of the time.

Not advice, as usual.​

One thing I would caution about is drawing too many conclusions from the eu-evs.com data. Remember those are only 3 countries - though responsible for 40% of Tesla EU sales this year - and all 3 have something "special" about them.
- The Netherlands has the upcoming tax change that is pulling a lot of demand forward. Q4 should be a record, no question about it, they may even become the No1 Tesla market in Europe this year, but there is a danger that we could fall of a cliff in Q1 like we did in Denmark a few years back,
- Norway is the No1 EV market in Europe and is traditionally a huge Tesla buyer. Absolutely not indicative of other countries. Also, it looks like demand has - naturally - stabilized at a lower level here than Q1 and Q2 indicated and it feels like Tesla has become a bit too mainstream,a victim of its own success. The Audi e-tron is selling like hot cakes here, several times the Model X sales, even though the range and efficiency are way worse than the X which was a big hit here.
- Spain is a very small EV market, much smaller than the country's size would suggest.

 

[replicant]

Success will depend on 1, how crazy Elon got with the design (one key Tesla success factor was that their cars look like normal cars) 2, how quickly thy can start making them.

Tesla should definitely be bold and design the truck as it should be for maximal usability, range and other physical things (etc) and not for what people want it to look.

By the time the truck is actually mass produced, most will have rethought what they find beautiful. Remember that it took years for many to accept (and appreciate) the Model S/3 toothless face. Now, most understand that an wide-open mouth is stupid and therefor ugly, because an EV has no radiator.

The cybertruck does not need to appeal to the majority of buyers at first, there will be iteration just like Model S>3. It's an introduction to what the future of truck could be, so it shouldn't be judged to quickly.

Tesla should be doing aesthetics from first principle , and not try to please us with our expectation of what is beautiful, because that reference frame is soon to be obsolete.

 

[CorneliusXX]

Here you go:

Carsonight:

"I have it on good authority that GF1 is ramping up to 10k batteries per week. In China, initial production of 3k per week will be batteries from GF1."
​

Note how according to the CleanTechnica leak, Tesla stopped sending excess battery packs to GF3 in Q3:

Tesla Gigafactory 3 Has ~7,000 Battery Packs In Stock For Chinese Model 3 Production, Will Use LG Chem Cells In 2020 | CleanTechnica

"Tesla Gigafactory 1 has been supplying battery packs to Gigafactory 3 since the beginning of August. The company has been sending between 400 and 750 battery packs per week depending on what was needed in the Fremont factory at the time. The final shipment for 2019 was sent 2 weeks ago. So, basically 2019 GF3 battery packs were shipped over a period of 12 weeks."​

Why would they need 10k/week Model 3 battery pack production capacity in Q4?

As always, you are the fastest researcher in the west. But to counter:

• Carsonight gives no timeframe for the ramp.
• Around 145k vehicles are required to be delivered in Q4 to breach the 400k historical upper bound for deliveries. (I'll assume 20k S&X for deliveries in Q4, leaving 125k M3s required to be delivered to hit the "target", or 10k per week assuming a 12.5 week quarter)
• "Only" 450-700 packs per week were sent to China. That's a long way from the production increase needed to get to 10k a week. Tesla delivered c.80k M3s in Q3 which is a little over 6.3k per week. The additional packs would still be be far from the 10k target. Although I do concede that adding the surplus pack production rate from Q3 could lead to 90k M3s this quarter from packs produced in the quarter (ignoring any further improvement in Q4), plus the additional 7k from GF3 would get close to 100k M3s. There is still a hole of 25k (another 2k per week) vehicles to beat.
• If Tesla went from 70k M3s produced in Q3 to the roughly required 115k in Fremont, wouldn't we have heard of additional shifts starting up?
• Again, no 3rd party supplier increases we have heard of.

All that said, If Tesla were to reach the lower end of the above numbers it would still be considered a surprise to the upside, which was your original premise.

 

[Steve m]

Reviews only influence sales but not pricing. People outside the US don't even read CR. Tesla's strategy seems to be continue to lower price as supply becomes better. It after all is Tesla's mass market car.

CR can continue to not recommending Tesla and Tesla will continue to sell cars. To a point CR must realize we are not that influential at least in this case. People will find that out too if we don't stop doing this. How do you think headlines like "The best selling car for the last three years was the car Consumer Reports does not recommend" looks to them?

When Consumer Reports releases a study it gets echoed all over the world. For example.

Tesla Model 3 和 S 重獲 Consumer Reports 推薦

Price is related to demand.

Demand can be influenced by reviews.

Tesla's pricing strategy seems to be charge as much as they can and sell the number that they can build. Tesla has recently raised prices.

Tesla increases range and price of the Model 3 Long Range - Electrek

 

[StarFoxisDown!]

One thing I would caution about is drawing too many conclusions from the eu-evs.com data. Remember those are only 3 countries - though responsible for 40% of Tesla EU sales this year - and all 3 have something "special" about them.
- The Netherlands has the upcoming tax change that is pulling a lot of demand forward. Q4 should be a record, no question about it, they may even become the No1 Tesla market in Europe this year, but there is a danger that we could fall of a cliff in Q1 like we did in Denmark a few years back,
- Norway is the No1 EV market in Europe and is traditionally a huge Tesla buyer. Absolutely not indicative of other countries. Also, it looks like demand has - naturally - stabilized at a lower level here than Q1 and Q2 indicated and it feels like Tesla has become a bit too mainstream,a victim of its own success. The Audi e-tron is selling like hot cakes here, several times the Model X sales, even though the range and efficiency are way worse than the X which was a big hit here.
- Spain is a very small EV market, much smaller than the country's size would suggest.

Not to single you out but it feels like every month, we go through this discussion on Euro market sales. Norway sales in Q2 and Q3 have nothing to do with demand and everything to do with supply. Just look at the ratio of LR verses SR for Model 3 in what sales there are for Norway this month. Almost entirely LR and P Model 3s. If Tesla was seeing even remotely soft demand in Norway, that ratio would be reversed

 

[mrdoubleb]

Tesla should definitely be bold and design the truck as it should be for maximal usability, range and other physical things (etc) and not for what people want it to look.

By the time the truck is actually mass produced, most will have rethought what they find beautiful. Remember that it took years for many to accept (and appreciate) the Model S/3 toothless face. Now, most understand that an wide-open mouth is stupid and therefor ugly, because an EV has no radiator.

The cybertruck does not need to appeal to the majority of buyers at first, there will be iteration just like Model S>3. It's an introduction to what the future of truck could be, so it shouldn't be judged to quickly.

Tesla should be doing aesthetics from first principle , and not try to please us with our expectation of what is beautiful, because that reference frame is soon to be obsolete.

I wasn't talking beautiful, just not a "weirdmobile". It's one thing if something looks cool on a sci-fi movie est and a different matter what people would actually drive home. But Hans is yet to disappoint, so I am optimistic.

 

[Fact Checking]

Carsonight gives no timeframe for the ramp.

He does:

"I'm told the current goal at GF1 is 10k batteries/week by the end of the year."​

If we assume that GF1 made 80k+7k packs in Q3 and ramps up to 10k/week in Q4, then the math goes like this, assuming 13 weeks per quarter, and a linear ramp-up both in Q3 and Q4:

• Q4 entry rate: 6.15k+0.54k×2 = 7.2k/week
• Q4 exit rate: 10k/week
• Q4 average: 8.6k/week
• Q4 M3 production: 8.6×13 = 112k

With 20k S+X that's 132k, or 386k for 2019, minus any inventory buildup. Plus the 7k China packs from Q3 - so 393k max.

But I'd agree that 10k/week at Fremont is quite likely optimistic, so the push-back is justified.

Yet the outgoing Model 3 ship capacity appears to be ~60% higher than in Q3, which would map to a Q4 Model 3 production rate of 6.15×1.6 = 9.8k/week.

Intriguing coincidence of numbers.

 

[Prime_Number]

Dear God, how can this be coincidence? It is cleverness turned up to eleven.

If the product is as clever as its logo, look out automajors (especially Ford).

All these permutations on the name alone, seen to hint at permutations of the underlying product. The first real "Transformer" (?) (!)

 

[kengchang]

Here you go:

Carsonight:

"I have it on good authority that GF1 is ramping up to 10k batteries per week. In China, initial production of 3k per week will be batteries from GF1."
​

He wrote that a month ago.

Note how according to the CleanTechnica leak, Tesla stopped sending excess battery packs to GF3 in Q3:

Tesla Gigafactory 3 Has ~7,000 Battery Packs In Stock For Chinese Model 3 Production, Will Use LG Chem Cells In 2020 | CleanTechnica

"Tesla Gigafactory 1 has been supplying battery packs to Gigafactory 3 since the beginning of August. The company has been sending between 400 and 750 battery packs per week depending on what was needed in the Fremont factory at the time. The final shipment for 2019 was sent 2 weeks ago. So, basically 2019 GF3 battery packs were shipped over a period of 12 weeks."​

Why would they need the full 8k-10k/week Model 3 battery pack production capacity in Q4?

Tesla is still sending battery to Shanghai

 

[Fact Checking]

If Tesla went from 70k M3s produced in Q3 to the roughly required 115k in Fremont, wouldn't we have heard of additional shifts starting up?

Model 3 production is already on 3 shifts. If they can do 8k, 9k or 10k per week then it would be done via improvements in efficiency and automation.

Plus we do know that Tesla is hiring line workers - from Jerome's email, and from the web trackers.

 

[Fact Checking]

Tesla is still sending battery to Shanghai
View attachment 477988

Great info!

Can you track the volume of these shipments, per week or so?

 

[replicant]

I wasn't talking beautiful, just not a "weirdmobile". It's one thing if something looks cool on a sci-fi movie est and a different matter what people would actually drive home. But Hans is yet to disappoint, so I am optimistic.

Has there ever been a weirdmobile that was well designed for what it it? I'm pretty sure these were made to fit requirements that had nothing to do with the primary purpose of the car. Which is my point.

 

[kengchang]

Great info!

Can you track the volume of these shipments, per week or so?

Not really, a parser has to be written. It's too much info to consume manually

 

[keydiver]

Remember that it took years for many to accept (and appreciate) the Model S/3 toothless face. Now, most understand that an wide-open mouth is stupid and therefor ugly, because an EV has no radiator.

Yes, all this angst about what the CyberTruck will look like reminded me of all the FUD that came out after the Model 3 was revealed:
Blunt nose: "deal breaker"
No HUD: "deal breaker"
Single center screen: "deal breaker"
Glass roof: "deal breaker"
No key Fob: "deal breaker", etc, etc, etc
Now that the Model 3 is selling by the 10's of thousands per month, I have to wonder how many of those people who said it was a "deal breaker" have gotten used to the Model 3 looks and features, and have since purchased one.

 

[Fact Checking]

Again, no 3rd party supplier increases we have heard of.

Actually, we have such a leak, from 4 months ago:

Tesla supplier hints at massive increase in Model 3 production - Electrek

“will increase monthly shipments for components of relays used in Tesla Model 3 vehicles from about 20,000 units currently to 40,000 units beginning August 2019”.

“CFTC has also landed orders for other components used in Model 3, with shipments to begin in October 2019, the sources said. As Tesla is hiking Model 3 output and its Gigafactory 3 in Shanghai, eastern China, will kick off production of the electric vehicle by year-end 2019, CFTC’s shipments to Tesla are expected to rise, the sources noted.”​

Several months of lead time for a 100% increase in production would be justified. These components (relays) might be battery pack or power train related.

This supplier increase leak too is consistent with a significant increase of Model 3 production in Q4.

 

[M3Rider]

Hm, I'd normally be sceptical, but back in February @KarenRei mentioned a rumor from a "little birdie" about one of the Big Three having a powertrain partnership agreement with Tesla:



My guess was FCA - but maybe it's Ford?

The timing mentioned by Karen would fit.

There's also this recent poll by Elon:

Elon Musk on Twitter:

"Poll: Gentrify Mordor?"​

Mordor = the Rust Belt and Ford?

Could Tesla and Ford unveil a truck at Tesla's event?? (And the Cybertruck would be driven by Harrison Ford. )

Might explain the Blade Runner form factor: non-compete with Ford for the traditional pickup truck form factor?

Speculation runs wild lately around here.
Especially non-compete with Ford.

 

[Beltsbear]

Not in Q4 though: first Model Y units might be built at the end of Q1, with 1k/week rate by the end of Q2.

I don’t take the statement that GF1 has stopped sending batteries to GF3 as true. I also think as batteries still are usually the limiting factor that Tesla will take the overage from GF1 and stockpile a reasonable amount vs ****ing over Panasonic again. They will need them in the end and within 90 days. As an investor I take the news that GF1 is pumping out more as very good news. They could change a line to energy with little downtime as well right now.