TSLA Market Action: 2018 Investor Roundtable

[anticitizen13.7]

I think they're having more problems than we thought. Today they moved back the delivery of the short range battery to late 2018. If they are having problems making the battery modules it would seem that the short range would increase the number of cars by one third.

Therefore they must be having problems on the car assembly line, because they could make more cars using the short range battery pack.

It may simply be more optimal right now from a revenue/margin standpoint to sell the pricier LR cars.

Adding SR to the product mix also adds an additional SKU to the parts mix.

 

[ZenMan]

I think they're having more problems than we thought. Today they moved back the delivery of the short range battery to late 2018. If they are having problems making the battery modules it would seem that the short range would increase the number of cars by one third.

Therefore they must be having problems on the car assembly line, because they could make more cars using the short range battery pack.

I have a different take.

Tesla didn't know if the Model 3 would take sales away from Model S. So to preserve Model S sales they thought they would delay the AWD version of the Model 3 since all S's are AWD. But now they know the 3 is not stealing sales from the S so they changed the features introduction to sell higher margin vehicles first. That is why the AWD version of the Model 3 is now being introduced ahead of the RWD SR Model 3.

 

[anticitizen13.7]

The general mood in the Model 3 subforum is getting pretty sour as reservation holders ponder the news that lower-margin configs are pushed back.

I believed from the beginning that the kinds of delays and oddities that occurred during the S and X launches would be far less tolerated by the Model 3 crowd.

Today’s quarterly report does not change my strategy or long-term outlook, but I expect that between now and June-July 2018, there’s going to be a lot of angry reservation holders.

 

[ggies07]

Which underscores a critical issue: Tesla by itself cannot transition the world to EVs, any more than Apple could transition everyone to touchscreen phones.

For the longest time, the true retail cost of a base iPhone was $649. Android handset makers rushed to fill the gap in demand for good phones priced at half or even less.

Then they should not have advertised it as a 35K car. Theyve harped on that for 3 years now. **** that. Ive kept my emotiins at bay until now. Dont tell the world you have a 35k for people. You answer is a tired excuse.

 

[2virgule5]

The general mood in the Model 3 subforum is getting pretty sour as reservation holders ponder the news that lower-margin configs are pushed back.

I believed from the beginning that the kinds of delays and oddities that occurred during the S and X launches would be far less tolerated by the Model 3 crowd.

Today’s quarterly report does not change my strategy or long-term outlook, but I expect that between now and June-July 2018, there’s going to be a lot of angry reservation holders.

Yes some anger is likely. I thought earlier that an additional quarter of full EV tax credit may be an unfortunate consequence of further delay on getting to sustainable 2.5k then 5k (and not just peak rate) but that's a stretch. Even with the pretty bad orange curve below and assuming same US deliveries than last year for S/X, the 200k threshold is still happening in Q2. It would take even less M3 production and a lot of shifting of S/X to International orders (to the tune of about 15k vehicles) to reach it in early Q3.

 

[Tenable]

Then they should not have advertised it as a 35K car. Theyve harped on that for 3 years now. **** that. Ive kept my emotiins at bay until now. Dont tell the world you have a 35k for people. You answer is a tired excuse.

Being upset over a delay is understandable. My uber eats order was 40 minutes late and I was PISSED! However, its important to put things in perspective. The promised me the food I wanted without having to leave my house and they delivered, just not quite on time. Tesla isn't denying you or anyone else the car they promised for 35k. Its just taking a bit longer than they or we had hoped. As an investor that actively trades short term and has a lot of faith in the Tesla team I'm pretty disappointed. As a consumer of their vehicles, I'm not thrilled about the delay, but neither is Tesla. They are doing the best they can. For better or worse we will get our cars as quickly as is humanly possible for them.

As a happy Tesla owner I can promise you that its worth the wait. However, if you feel otherwise, I think all of us can respect your perspective.

 

[postpast]

Here’s what’s decisive for me:

Until today, the message was: we have identified the M3 production problems, and we are confident we can solve them soon.

Today the message is: we have engineered and tested the solution, we just need a short amount of time to implement it.

That’s a substantial reduction in the risk of extended delays in the M3 ramp.

To me, the risk is that they won't be running the rest of the line very fast or hard until the cell production is fixed. Let's say they do get the new battery cell line installed in April and can make 3k battery packs a week; this now makes April the first time the whole line is going to be tested under fire. If any mass production bottlenecks across the rest of the line pop up, we could be talking about Q3 before any meaningful ramp.

 

[sundaymorning]

Looks like production ramp is going to take longer than expected. If Tesla is flying in module production equipment in March to the GF and then need that to get to 2000-2500, then we're probably looking at 1000 cars/week average until we get that up and running. And Elon is probably thinking he can get it up and running by last week of March... but it's probably cutting it close. And then they need to get a new parts conveyance system installed by end of Q2 to reach 5000 cars/week, and I'm not sure how far along they are with that.

Looks like also Tesla pushed back delivery estimates for everyone's online accounts... even with an owner reservation the standard battery is now pushed back from "early 2018" to "late 2018".

So, ramp is probably going to take longer than expected. But they'll get through it, like Elon said. It's a solved problem. Funny, I used those exact words in a post this morning on my site, "Tesla has their work cut out for them in terms of ramping Model 3 production. But in my opinion this is a solved problem. In other words, ramping production has been done by every major auto manufacturer on the planet, and Tesla will be able to do it as well. It might take a bit longer than expected, but they’ll get there."

As to stock price action tomorrow... I don't know. I think you got a lot of good things from Q4 earnings, but more production ramp delays might take dampen spirits. We'll see.

From Elon’s statement, I think Tesla is able to get to at least 1,500-1,800 without the new parts flown in from Germany. But in order to get to 2,000-2,500, Tesla needs those equipment installed.

 

[SunCatcher]

Then they should not have advertised it as a 35K car. Theyve harped on that for 3 years now. **** that. Ive kept my emotiins at bay until now. Dont tell the world you have a 35k for people. You answer is a tired excuse.

Reality bites. Tesla is doing what they must to get this giant ball rolling, and stay solvent in the process. If they fail to do this, none of us will benefit from it in the end.

I believe they will fulfill the promise of a $35,000 car in time. Just not right now. Patience. No, more patience. Good things come to those who are willing to wait.

It takes 8 minutes and 20 seconds for sunlight to reach the solar panels on our roofs. That is a known fact. It remains to be seen how long Tesla will take to deliver on its promises. But they have shown time and time again that they eventually do deliver.

 

[anticitizen13.7]

Then they should not have advertised it as a 35K car. Theyve harped on that for 3 years now. **** that. Ive kept my emotiins at bay until now. Dont tell the world you have a 35k for people. You answer is a tired excuse.

People have every right to be angry at Tesla, and I expect no less.

However, remember that as I have no operational control over manufacturing or delivery at Tesla, I am in no position whatsoever to make excuses for their conduct. The buck stops with Elon Musk. I’m just an idiot pretending to be a chicken. And waiting in vain for Half Life 3.

 

[postpast]

Reality bites. Tesla is doing what they must to get this giant ball rolling, and stay solvent in the process. If they fail to do this, none of us will benefit from it in the end.
I believe they will fulfill the promise of a $35,000 car in time. Just not right now. Patience. No, more patience. Good things come to those who are willing to wait.

Justy a thought I had. If they prioritize the higher cost vehicles this year and push back the base cars to next year, what effect will there be on next years TM3 margins when they have to start chewing through 100's of thousands of base orders.

 

[SPadival]

One data point- M3 First production and AWD delivery estimate for Australia changed from early 2019 to late 2018. Only SR RWD remains at early 2019

 

[sundaymorning]

I thought the ER and conference call was okay tbh. I don't see the " terrible" as some of you see though?

Maybe because I didn't have any special expectations ?

There has been numerous times where this forum thought the ER was great and the SP tanked, and vice versa.

 

[MP3Mike]

To me, the risk is that they won't be running the rest of the line very fast or hard until the cell production is fixed. Let's say they do get the new battery cell line installed in April and can make 3k battery packs a week; this now makes April the first time the whole line is going to be tested under fire. If any mass production bottlenecks across the rest of the line pop up, we could be talking about Q3 before any meaningful ramp.

I'm pretty sure that they said they have been doing burst tests. So you store up parts until you have enough to run at a higher rate of speed, and you go. You don't just run the line at the speed of the slowest part supply. (It does cause staffing issues, as you might end up not using people "full-time" until the parts supply problem is resolved.)

 

[Todd Burch]

There has been numerous times where this forum thought the ER was great and the SP tanked, and vice versa.

Yep. The only thing more difficult than selling even small quantities of TSLA stock is predicting how the market will react to one of its ERs.

 

[MP3Mike]

Justy a thought I had. If they prioritize the higher cost vehicles this year and push back the base cars to next year, what effect will there be on next years TM3 margins when they have to start chewing through 100's of thousands of base orders.

It will impact it less negatively than if they start selling the SR versions now.

 

[anticitizen13.7]

Justy a thought I had. If they prioritize the higher cost vehicles this year and push back the base cars to next year, what effect will there be on next years TM3 margins when they have to start chewing through 100's of thousands of base orders.

Given that gross margins on Model 3 suck right now thanks to low volume, I’d say that chewing through 100’s of k’s of orders, even SRs, would be pretty good. Utilizing production assets to full capacity should help overall gross margin.

Tesla’s expectation was an ASP of 42.5k/car, which roughly corresponds to a Model 3 SR with Autopilot and optional color (35k + 5k AP + 1k paint + delivery/paperwork).

 

[TrendTrader007]

In general the tone of this forum is cautious to slightly pessimistic this evening with few notable exceptions
That from a contrarian standpoint is good for SP tomorrow
I suspect a Lower open and higher close
Even if there is a few days of sell off it will be short lived
This ER reduces uncertainty about M3 ramp
In any case trying to predict SP based on fundamental basis is super hard
Unless you have a clear AH reaction to ER which we did not get tonight
My best guess that SP closes higher tomorrow than today’s close
It could even confound the biggest bulls and end markedly higher
I’ve bought this stock all the way from $202 to $386 and my average cost basis is $266 I think
So either ways it’s going to be interesting
I just feel for my way OTM $680s, $600s $500s
Still monthly chart looks super sharp

 

[Esme Es Mejor]

Then I will keep driving an ICE, which is not the company's mission. Until some other company comes along.........

60 kWh Model S 5YJSA1S14EFP51046 | Tesla

 

[postpast]

I'm pretty sure that they said they have been doing burst tests. So you store up parts until you have enough to run at a higher rate of speed, and you go. You don't just run the line at the speed of the slowest part supply. (It does cause staffing issues, as you might end up not using people "full-time" until the parts supply problem is resolved.)

I'm sure that can help simulate full production, but it is just a simulation. If a tooling machine wears out after 30,000 uses or the supply chain has problems; these are things you can't really tell until you are stressing max rates. Even if they are using burst tests they will not have needed more than a thousand or so cars worth of parts a week from all of the suppliers - will any of them flake at 3k a week? Not saying this will happen, just that it is a risk. The current report and CC now puts the time of this risk developing in April-June. If the downside of that risk materialises than you are now Q3 or even Q4 before real production.