Open Side Menu Go to the Top
Register
TSLA showing cracks? TSLA showing cracks?

12-11-2018 , 05:50 PM
It also wasn't hard hitting journalism.
TSLA showing cracks? Quote
12-11-2018 , 06:35 PM
holy **** who the **** cares
TSLA showing cracks? Quote
12-11-2018 , 06:40 PM
Skabooshka again, from Twitter, who was spot on on production numbers last quarter:



Yesteday:

Quote:
21 hours ago

Model 3 production at a rate of < 2.5k/wk model 3s today and very likely < 2k/wk.

My view is that they're running lines dry. To cut overtime expense, the co. slows GA but runs paint shop. It catches up on Mon. Problem: this weekend was slow too.
Today:

Quote:
Much like yesterday, Model 3 is being produced at a rate of < 2.5k/wk model 3s today and very likely < 2k/wk.

We should not see depressed production well into a Tuesday.
20 days away from running out of the $7500 tax credit, and promising Dec 31 delivery for everyone who ordered by 30th November, three weeks away from the point at which Elon said people should have "absolutely no doubt" that they would produce 10,000 per week, they've never had a sustained rate above 4500/week and are now down to roughly 2000/week.

This is weird, no?

420,000 people (ho ho ho) are on the reservation list according to Musk, yet they still have spots available for the 25K or so cars they can deliver in December? And now production is down for days? How does that work?

If demand is this weak now, it's also quite possible the end of the $7500 tax rebate will be a demand cliff as it was in Europe when a particular countries' subsidies ended. Worth watching closely imo.

Last edited by ToothSayer; 12-11-2018 at 06:49 PM.
TSLA showing cracks? Quote
12-11-2018 , 08:19 PM
SP wise not sure how long they can cover this up? Expecting a massive lay-off notice coming up soon that could be good to get ahead of.
TSLA showing cracks? Quote
12-11-2018 , 08:24 PM
Hoping for a little more pop above 375 to lay into.
TSLA showing cracks? Quote
12-11-2018 , 08:27 PM
Does the sharp decreased price of crude and gasoline lead to reduced demand for EVs or is that not even much of a factor here?
TSLA showing cracks? Quote
12-11-2018 , 08:35 PM
Quote:
Originally Posted by case3
SP wise not sure how long they can cover this up? Expecting a massive lay-off notice coming up soon that could be good to get ahead of.
I don't see it as that, yet. Lots of explanation for it...line problems, money crunch (they want to have 1.4 billion on the books so they don't default on their loan), paint shop bottleneck at 5000/week, switch/testing to European production, etc.

What it does show is two things imo:

- Demand generally is fairly weak. <20,000 people of 420,000 supposed reservation holders wanted to get in before the huge tax credit ends. Musk's guarantee of delivery by December 31 if you order by November 30 proves that. In European countries with expiring tax credits, demand soared prior to the end and then died, as low as 10% of before expiry. I see no reason the US would be different. I also see no reason to produce for/switch to Europe if there was still unlimited US demand with unlimited tax credit for whatever they can make by the end of the year.

- Production scaling has failed, as has profitability. If they cold make 7000/week M3s at a profit at $40K, they'd be flying them out the door.
TSLA showing cracks? Quote
12-11-2018 , 10:48 PM
How would the bears here approach deciding on an appropriate strike price for long term puts (e.g. jan 2020/jun 2020)?
TSLA showing cracks? Quote
12-12-2018 , 01:00 PM
I don't know if it matters to any of you , but this seekingalpha guy thinks the 2018 4th quarter will be profitable for Tesla:

Projecting Tesla's Fourth Quarter Results: Boom Or Bust?

"With that in mind, I predict earnings will fall around $80 million for the quarter. While not as transformative as third quarter, a result in this range would be a win for Tesla when you factor in the $230 million in debt retired. Sustained profitability will release much of the pressure on the company and allow them more flexibility going forward."

https://seekingalpha.com/article/422...ults-boom-bust
TSLA showing cracks? Quote
12-12-2018 , 01:38 PM
Quote:
Originally Posted by ToothSayer

What it does show is two things imo:

- Demand generally is fairly weak. <20,000 people of 420,000 supposed reservation holders wanted to get in before the huge tax credit ends. Musk's guarantee of delivery by December 31 if you order by November 30 proves that. In European countries with expiring tax credits, demand soared prior to the end and then died, as low as 10% of before expiry. I see no reason the US would be different. I also see no reason to produce for/switch to Europe if there was still unlimited US demand with unlimited tax credit for whatever they can make by the end of the year.

- Production scaling has failed, as has profitability. If they cold make 7000/week M3s at a profit at $40K, they'd be flying them out the door.
I can't remember the details of the reservation number. Were those world wide reservations? If so then I think it is logical that they have pretty much exhausted the USA#1 reservations for the higher end models. Surely more than half those reservations are for the base model, and a significant portion are from Europe. I think it is safe to assume that base model and europe make up at least 280K out of the 420K. And they have sold about 140K according to the Bloomberg tracker.
TSLA showing cracks? Quote
12-12-2018 , 01:58 PM
Worldwide. And that would be reasonable except that Musk said he still had "420,000" reservations in July. He was responding to a report that there had been cancellations after his meltdowns, saying total active reservations hadn't changed despite delivering 30K cars so far in the US + reported 20% cancellations.

The base model won't exist for > 6 months, so I dunno how they're going to survive if your numbers are correct. Point taken about high end vs low end demand though. Although they're selling RWD now near exclusively so I'm not sure how that equation is going to change.

The bear case has always been that high end demand for M3 will dry up and they'll lose money on every car at the low end as the production ramp is pure fantasy and they're tapped out inefficiencies. Then they need tens of billions in capital to scale further. Up until now they've been able to tap equity markets than to the huge market cap compared to capex size.

I suspect that Panasonic even discounted their batteries to keep Tesla alive/show a profit last quarter given the enormous profit hit Panasonic had out of the blue last quarter.
TSLA showing cracks? Quote
12-12-2018 , 02:16 PM
Thanks for the clarification.

I find predicting what the Model 3 demand will be 1-2 years from now very difficult. Right now the demand is entirely from people who are knowledgeable about electric cars and willing to "take the leap" when things are a bit new and uncertain. I'm just guessing but it seems like that might be 10% of car buyers? I feel like 90% of buyers don't even have an electric car on their radar.

If the combination of seeing Model 3's in person and maybe advertising and improved infrastructure bring a large proportion of that 90% into the electric market, then model 3 demand could be massive. Not sure if that might be in 1-2 years or more like 8-10 years.

On the other hand the loss of tax credits and competition from other car makers could destroy model 3 demand, as has been pointed out many times.

I have a really hard time balancing these two factors and making a prediction about the future demand.
TSLA showing cracks? Quote
12-12-2018 , 02:23 PM
Yeah it's a tough thing to guess and I don't know either. I think "business as normal" Tesla are screwed, because the higher priced car segment just isn't that large. They really do need the $35K car profitable and produced at high numbers reliably to be able to get volume going and the huge revenue/free cash flow for the next step. Musk has essentially had a freebie for a long time with a giant market cap vs tiny capex (for a car maker) due to their very low volume of big margin high end cars. He could screw up (and did, often) and the market cap was the cushion for more funds. Hence the desperate and constant lies to pump the stock of course.

As for Model 3, there's talk of a "Tesla stretch" - people willing to pay more than they normally would for the fun and coolness of a performance electric car. Corollas trading in for Model 3s, type of deal. I think that's definitely real and I think Tesla's future depends on how big it is. The iPhone certainly managed to do that but $300 extra isn't remotely comparable to $15K extra.
TSLA showing cracks? Quote
12-12-2018 , 03:25 PM
Quote:
Originally Posted by Sherlockyyyy
How would the bears here approach deciding on an appropriate strike price for long term puts (e.g. jan 2020/jun 2020)?
If I was looking to short I would buy the June 19 400 puts and sell the Jan 19 340 puts against it. Roll the short Jan puts out a month if they become semi worthless or get tested on a down move to collect more premium. Repeat until June or you are satisfied. You should profit nicely if the price stays the same or goes lower. Playing bankruptcy is a fools game imo. Timing is very difficult. I would rather hit 6 singles or doubles than bleed to death looking for a grand slam
TSLA showing cracks? Quote
12-12-2018 , 04:04 PM
Scheduled a test drive for January... for my wife.

This is purely for the purposes of getting the opinion of a complete non-geek who's only begrudgingly using iPads for her work (art teacher).

I actually am seriously thinking about buying one because most of the high end buildings/garages in NYC have parking spots with chargers and my wife will be commuting from Manhattan to Queens or I will be commuting from Queens to Manhattan next year. Since her school isn't really accessible by subway, one of us will have to drive (or deal with 20 minute bus+40 minute subway, if no delays in middle).

This is a reach/backup plan.

Chances are I'll ask my mom to give me her 6 year old Infiniti QX4 that's been in her driveway idle since she bought a BMW X5 last year.
TSLA showing cracks? Quote
12-12-2018 , 04:53 PM
Quote:
Originally Posted by ToothSayer
As for Model 3, there's talk of a "Tesla stretch" - people willing to pay more than they normally would for the fun and coolness of a performance electric car. Corollas trading in for Model 3s, type of deal. I think that's definitely real and I think Tesla's future depends on how big it is. The iPhone certainly managed to do that but $300 extra isn't remotely comparable to $15K extra.
This is def true but the coolness factor is already fading and will fall off a cliff if/when the cheap models hit the market. Soon all you'll have is last year's hip thing with no tax incentive. The Model 3, as expensive it is, cheapens the brand immensely and imo will be terrible for higher end sales when there's more electric bmw/audi/etc alternatives. I can't see the coolness premium being sustainable when luxury european car manufacturers start catching up and selling cars with a tax incentive tesla no longer has.

There's so so so much **** going against tesla there's no way there's a route to decent sustained profitability that isn't 5+ years out. There's no fundamental bull case. The bull case is literally hoping the big boys HODL while fan boys keep propping up the share price while tesla continues to dilute equity through convertibles if they can even issue them. It actually looks very similar to the ICO craze in the sense that it's funneling all the value from Joe public's "investment" into a worthless financial instrument to a more savvy group who are essentially freerolling on their high strike convertibles.
TSLA showing cracks? Quote
12-12-2018 , 06:50 PM
Twitter skabooshka again:
Quote:
For at least the third consecutive day, Model 3 is being produced at a rate of < 2.5k/wk and very likely < 2k/wk.

This slowdown has been ongoing since the weekend, and potentially earlier.
Given that their lead time for delivery is 7 days now, this is very very weird.
TSLA showing cracks? Quote
12-13-2018 , 05:41 AM
that's actually kind of smart. they can't put more of these cars on the road.

you just need to look at reddit, tmc and twitter with two open eyes.
their expected warranty expenses just aren't enough and people are already waiting weeks for the simplest repairs.
i think there's a possibility when we look back 5 years from now they will have lost money on these ~140k m3s sold up to now.

Last edited by BooLoo; 12-13-2018 at 05:50 AM.
TSLA showing cracks? Quote
12-13-2018 , 07:13 AM
Tesla is accruing ~1500-2000 in warranty expense per Model 3, depending on what they're accruing for X and S (before 3 ramp up they were doing ~3000 per vehicle).

Those are REALLLY high, like double or triple at least (5x even depending on what comps you use), of what's typically accrued by auto manufacturers.

Tesla knows their cars are unreliable and they are ACCOUNTING for it even if they are not yet actually servicing their warranties. You could argue their cars are even more unreliable than they are accounting for but there just isn't the data to back that assertion up.
TSLA showing cracks? Quote
12-13-2018 , 09:50 AM
Quote:
Originally Posted by grizy
Tesla is accruing ~1500-2000 in warranty expense per Model 3, depending on what they're accruing for X and S (before 3 ramp up they were doing ~3000 per vehicle).

Those are REALLLY high, like double or triple at least (5x even depending on what comps you use), of what's typically accrued by auto manufacturers.

Tesla knows their cars are unreliable and they are ACCOUNTING for it even if they are not yet actually servicing their warranties. You could argue their cars are even more unreliable than they are accounting for but there just isn't the data to back that assertion up.
You havent actually looked up the claim that this is high have you? As a percent of revenue its low, but on a per car it is high because the cars are 70k ****boxes (by count is not a reliable metric really, for obv reasons). They are severely underaccrued. If you spend even 5 minutes on TMC you will notice almost all repair work is coded as goodwill (right on receipt). I cant prove it, but this has to be in SGA instead of warranty expense because if the royalty expense jumps too much then they have to extrapolate that onto all cars as opposed to taking the one time SGA hit.


That is really questionable accounting practice bordering on fraud. You will find some people talking about how great Tesla service is because they fixed their car under goodwill when out of warranty. This is very likely because they have a goodwill policy that enables them to code so many repairs outside warranty expense.

Last edited by syndr0me; 12-13-2018 at 09:57 AM.
TSLA showing cracks? Quote
12-13-2018 , 11:03 AM
Quote:
Originally Posted by grizy
You could argue their cars are even more unreliable than they are accounting for but there just isn't the data to back that assertion up.
i'm arguing exactly that. obviously there's no data since the car is one year old.

you can get your own data if you look at tmc or reddit.
you can find tens, maybe hundreds of cases already where the drivetrain had to be replaced within the first few months (mind you, they basically started selling the car in numbers this summer). those are covered under warranty for 8 years or 100.000 miles driven (120.000 for long-range). i don't care what accounting shenanigans they pull to hide these, in the end it's parts they have to replace and manhours they need to pay for.

that's going to be a fun 8 years.

Last edited by BooLoo; 12-13-2018 at 11:15 AM.
TSLA showing cracks? Quote
12-13-2018 , 12:36 PM
There hasn't been a massive recall yet either. 120k s's voluntarily recalled earlier this year for bad power steering, just imagine what the 3's issues will be... 2020-21 gonna become a bumpy ride .
TSLA showing cracks? Quote
12-13-2018 , 01:53 PM
https://www.wired.com/story/elon-mus...e-gigafactory/

A fun read.

At about 10 o’clock on Saturday evening, an angry Musk was examining one of the production line’s mechanized modules, trying to figure out what was wrong, when the young, excited engineer was brought over to assist him.

““Hey, buddy, this doesn’t work!” Musk shouted at the engineer, according to someone who heard the conversation. “Did you do this?”

The engineer was taken aback. He had never met Musk before. Musk didn’t even know the engineer’s name. The young man wasn’t certain what, exactly, Musk was asking him, or why he sounded so angry.

“You mean, program the robot?” the engineer said. “Or design that tool?”

“Did you ****ing do this?” Musk asked him.

“I’m not sure what you’re referring to?” the engineer replied apologetically.

“You’re a ****ing idiot!” Musk shouted back. “Get the **** out and don’t come back!”

The young engineer climbed over a low safety barrier and walked away. He was bewildered by what had just happened. The entire conversation had lasted less than a minute. A few moments later, his manager came over to say that he had been fired on Musk’s orders, according to two people with knowledge of the situation. The engineer was shocked. He’d been working so hard. He was set to get a review from his manager the next week, and had been hearing only positive things. Instead, two days later, he signed his separation papers.”

Totally normal behavior.
TSLA showing cracks? Quote
12-13-2018 , 04:19 PM
LOL, I worked at a company before where the owner wasn't really aware of all the day to day stuff going on but when he came in and saw something he didn't like he would get pissed off and demand people fix it or change it. So annoying. It never resulted in someone getting insta-fired though.
TSLA showing cracks? Quote
12-13-2018 , 04:45 PM
Rumors flying that Chanos dumped his short position, for those who believe in technicals stock is on the verge of a massive range breakout. +$130 off the October lows... Heh.
TSLA showing cracks? Quote

      
m