TSLA corporate outlook

[Zythryn]

Why TSLA wanted publicity this week to focus on the cars it hasn't yet started to manufacture?

Tesla missed guidance with only 14,820 vehicles delivered in Q1 2016, blames Model X supplier parts shortages

Today Tesla announced deliveries for the first quarter 2016 and the company missed its delivery goal of 16,000 units, with only 14,820 total deliveries from January to March...

http://electrek.co/2016/04/04/tesla-deliveries-q1-2016/

Yes, Tesla planned this timing a year ago with just that in mind :roll:

This wasn't a surprise to much of anyone as we all know the Model X ramp up took longer than they wanted.

 

[sparky]

Why TSLA wanted publicity this week to focus on the cars it hasn't yet started to manufacture?

Tesla missed guidance with only 14,820 vehicles delivered in Q1 2016, blames Model X supplier parts shortages

Good catch. Next quarter is going to be even worse when Tesla discloses how much money it spent paying people to stand in line for hours to reserve a car it hasn't yet started to manufacture.
Meanwhile: http://www.investopedia.com/articles/investing/040416/fords-march-auto-sales-miss-target-f-gm.asp?
Buying opportunity?

 

[lorenfb]

Tesla missed guidance with only 14,820 vehicles delivered in Q1 2016, blames Model X supplier parts shortages

So ironic isn't it, i.e. 300K orders but can't achieve a low guidance of only 16K for Q1 when the 2016 overall
guidance is 80 - 90K units? So on average, Tesla needs to deliver about 25K units per the remaining quarters.
They did exceed the average quarterly volume for 2015 of about 13K units. Can't wait for those Model 3
deliveries to start to "work-off-the-backlog" of the 300K reservations.

 

[sparky]

On the other hand, Tesla deliveries are up almost 50% over Q1 last year so extrapolating 2 years puts them almost on track without the heroic effort it will take to satisfy the demand. And Musk indicated their estimate for the initial Model 3 reservation count being 1/4 to 1/2 of what happened. At least the production trend is in the right direction. These are problems most CEOs would kill for.

 

[lorenfb]

So ironic isn't it, i.e. 300K orders but can't achieve a low guidance of only 16K for Q1 when the 2016 overall
guidance is 80 - 90K units? So on average, Tesla needs to deliver about 25K units per the remaining quarters.
They did exceed the average quarterly volume for 2015 of about 13K units. Can't wait for those Model 3
deliveries to start to "work-off-the-backlog" of the 300K reservations.

But if you remove the Model X deliveries of about 2400, the Model S deliveries in Q1 become less than the
average quarterly 2015 deliveries. Could the demand for the Model S have peaked and will 2016 Q2 deliveries
of the Model S further indicate this, i.e. possibly the result of the Model 3 intro?

 

[abasile]

Could the demand for the Model S have peaked and will 2016 Q2 deliveries of the Model S further indicate this, i.e. possibly the result of the Model 3 intro?

Another factor is that some people who may have in the past ordered the Model S are now ordering the Model X. Especially in North America, as a CUV/SUV, the Model X more closely corresponds with consumer preferences than the Model S.

The Model 3 "reveal" may also have the effect of stimulating Model S and X demand, by further increasing the visibility of the brand. When I placed my Model 3 reservation, I was asked at the bottom of the (short) form whether I'd like to test drive the Model S. (I chose "no" because I've already driven the Model S on a couple of occasions, but that's beside the point.)

 

[Zythryn]

So ironic isn't it, i.e. 300K orders but can't achieve a low guidance of only 16K for Q1 when the 2016 overall
guidance is 80 - 90K units? So on average, Tesla needs to deliver about 25K units per the remaining quarters.
They did exceed the average quarterly volume for 2015 of about 13K units. Can't wait for those Model 3
deliveries to start to "work-off-the-backlog" of the 300K reservations.

But if you remove the Model X deliveries of about 2400, the Model S deliveries in Q1 become less than the
average quarterly 2015 deliveries. Could the demand for the Model S have peaked and will 2016 Q2 deliveries
of the Model S further indicate this, i.e. possibly the result of the Model 3 intro?

1st quarter Model S sales are up about 25% over 1st quarter of 2015. That is without counting Model X sales.

While the quarterly delivery sales missed by about 7%, that seems to have been overwhelmed by long term investors. Stock is currently up another $5.

 

[redLEAF]

Stock ended up at $8.48 up today to close at $255.47 (plus after hours trading shows it still higher; another 0.54/share or over $256); this was the level I sold some Tesla shares at back in August 2014 because I was getting too heavy with them but wanted to still stay in the game; less than 1 1/2 years later its well on its way ... would wonder how long until we see another record (last 52 weeks it was $286.65) and this when the market was down .75 % overall.

 

[LTLFTcomposite]

I saw a Ford commercial this morning for the Focus EV. Seriously, the Focus EV!

Legacy manufacturers are starting to fidget.

 

[Nubo]

Tesla missed guidance with only 14,820 vehicles delivered in Q1 2016, blames Model X supplier parts shortages

So ironic isn't it, i.e. 300K orders but can't achieve a low guidance of only 16K for Q1 when the 2016 overall
guidance is 80 - 90K units? So on average, Tesla needs to deliver about 25K units per the remaining quarters.
They did exceed the average quarterly volume for 2015 of about 13K units. Can't wait for those Model 3
deliveries to start to "work-off-the-backlog" of the 300K reservations.

Not particularly ironic. Transitioning from a single model to multiple model production is a major leap. One they will have under their belt when implementing Model 3 line.

The fact that they have that many orders (many sight-unseen) is incredible and swamps the quarterly miss by a couple of orders of magnitude in importance when you consider the beneficial effect on capital acquisition, which will be the prime mover for this expansion. And there's plenty more where that came from. These aren't "early-adopters", these are the people who are ahead of early-adopters. May not seem like it to people who've been involved with LEAF for 4 or 5 years, but these folks still constitute the pioneers, or what are called "innovators" in the "adoption curve". "The Chasm" is still several years out and will hit after all of the success, accolades and back-slapping of Model 3's outrageous success are established.

 

[Zythryn]

I thought this was an interesting piece on Tesla and if they should be evaluated as a manufacturer or tech company.

I agree with one of the conclusions that ramping up manufacturing will be Tesla's biggest challenge.

http://www.fool.com/investing/general/2016/04/11/the-most-compelling-argument-for-how-tesla-motors.aspx

 

[sparky]

Thanks. The Model 3 rollout will be interesting since it's so loaded with pitfalls for Tesla. I don't know the first thing about auto manufacturing. I'd really like to understand better if the problem of scale is that unique to autos or to "things" in general.

The peril for Tesla is multiplied when you consider possible dirty tricks from Big Auto, controlling suppliers. The GF is important just from that perspective as well as providing the most expensive part in the Model 3.
Tesla, like SpaceX strives for vertical integration, making as much in-house as they can. But rockets and Model S's are high-margin. Model 3 not so much.
I wonder, if in the course of Model 3 rollout, Tesla will turn more to China for subassemblies and then more than 50% of their auto assembly. There will be tremendous price pressure to do so despite Fremont's heavy use of robotics and Tesla's low worker-hours per car (supposedly only BMW has lower numbers).

Yes, Tesla may be more tech than auto. Silicon Valley sources from Korea, Japan, China, Europe and USA but assembles in China and Taiwan, not Calif. Curious to see what they come up with.

 

[Zythryn]

Thanks. The Model 3 rollout will be interesting since it's so loaded with pitfalls for Tesla. I don't know the first thing about auto manufacturing. I'd really like to understand better if the problem of scale is that unique to autos or to "things" in general.

The peril for Tesla is multiplied when you consider possible dirty tricks from Big Auto, controlling suppliers. The GF is important just from that perspective as well as providing the most expensive part in the Model 3.
Tesla, like SpaceX strives for vertical integration, making as much in-house as they can. But rockets and Model S's are high-margin. Model 3 not so much.
I wonder, if in the course of Model 3 rollout, Tesla will turn more to China for subassemblies and then more than 50% of their auto assembly. There will be tremendous price pressure to do so despite Fremont's heavy use of robotics and Tesla's low worker-hours per car (supposedly only BMW has lower numbers).

Yes, Tesla may be more tech than auto. Silicon Valley sources from Korea, Japan, China, Europe and USA but assembles in China and Taiwan, not Calif. Curious to see what they come up with.

Tesla has discussed opening a factory in China.
I don't see that as moving production there, but instead, producing cars within China for the Chinese market. This would allow Tesla to increase speed of deliveries to Asia as well as avoid some hefty tarrifs.
The same idea as been mentioned for Europe.

 

[palmermd]

Tesla has discussed opening a factory in China.
I don't see that as moving production there, but instead, producing cars within China for the Chinese market. This would allow Tesla to increase speed of deliveries to Asia as well as avoid some hefty tarrifs.
The same idea as been mentioned for Europe.

And with the quantity of cars that they are projecting to need to build by 2020-2025 they will need additional factories anyway just to keep up with demand. So building a factory in each of the large markets around the globe they can both build "local", keep their shipping costs down, keep the tariffs at a minimum and most importantly have a backup to the factory in Fremont. All of this is part of a growing company.

 

[sparky]

Tesla has discussed opening a factory in China.
I don't see that as moving production there, but instead, producing cars within China for the Chinese market. This would allow Tesla to increase speed of deliveries to Asia as well as avoid some hefty tarrifs.
The same idea as been mentioned for Europe.

Yes, this is understood to be their public plan. I suppose there is something unique to autos that makes it cost effective to assemble in the economic region that sales are booked. But to the point of the article that Tesla is more tech than auto, the same manufacturing rules do not seem to apply for laptops and cell phones. So, "perhaps" in 5 years China will be assembling more Tesla's in China than for just the Asia market. Dunno, just figuring that cost pressures will bear down more strongly with the Model 3.

 

[Rebel44]

Tesla has discussed opening a factory in China.
I don't see that as moving production there, but instead, producing cars within China for the Chinese market. This would allow Tesla to increase speed of deliveries to Asia as well as avoid some hefty tarrifs.
The same idea as been mentioned for Europe.

And with the quantity of cars that they are projecting to need to build by 2020-2025 they will need additional factories anyway just to keep up with demand. So building a factory in each of the large markets around the globe they can both build "local", keep their shipping costs down, keep the tariffs at a minimum and most importantly have a backup to the factory in Fremont. All of this is part of a growing company.

It would also help minimize effect of exchange rate on Teslas regional manpower cost

 

[lorenfb]

Tesla, like SpaceX strives for vertical integration, making as much in-house as they can. But rockets and Model S's are high-margin. Model 3 not so much.

Which is the case for most all high volume products, e.g. Apple initially just designed iPhone chips and outsourced
their fabrication to chip houses. Now Apple has become more vertically integrated with their chip fab house.
The problem with Tesla and Giga, though, is that economies of scale only "buys" so much cost reduction,
which might not help achieve the price target for the Model 3, i.e. the battery is the key cost element of the
Model 3 and all BEVs.

Tesla has no real key technology (rent) advantage over other automotive OEMs, i.e. all the BEV technologies
are widely known. So it's really questionable how Tesla will succeed in the high volume and highly competitive
low-end of the automotive market. Yes, Tesla presently has an ecosystem which has some value now, the SC,
but will this be enough in 2 -3 years?

 

[sparky]

I don't think it's a question of tech rent. It's putting tech to use in a way that makes people really want the car.
Apple has no real tech advantage but they have made a boatload of money with how they apply the same tech (SW&HW) others can access.
Superchargers and Autopilot are first mover advantages for Tesla and they seem to be extending their lead. 47M Autopilot miles and counting is a powerful dataset that other companies including Google, don't come close to having.
I think Tesla is well aware of the battery cost factor for Model 3 and are best positioned to leverage what the GF offers.
The Model 3 is not very low end and there's probably no need for it to be.
Bottom rung BMWs, Audis and Mercedes are $32k. Plenty of market share to go after. No need to build a Toyota Corolla killer.
Despite the seeming tech parity, no one's lining up in the cold for what those automakers are promising.

I suppose Tesla could use a supplier Field Marshall like Tim Cook became when S. Jobs brought him on board to fix Apple's biggest weakness.

 

[edatoakrun]

TSLA earnings report preview:

What to expect from Tesla’s earnings

Tesla Motors Inc. is expected to report first-quarter results after the bell on Wednesday.

Tesla TSLA... is expected to widen its quarterly loss but sales are expected to climb by nearly 50%.

Tesla says it is on track to deliver 80,000 to 90,000 vehicles this year, but got off to a rough start: it reported disappointing first-quarter deliveries — Tesla’s proxy for sales — last month...

Reassurance that sales and production jitters are a thing of the past is not the only thing that investors will expect from Tesla this week.

The company has promised it will be profitable by the end of the year and become net cash flow positive for 2016, so investors will want to hear some update on that target. Tesla also has said it won’t need to tap the capital markets to finance its short-term expansion...

http://www.marketwatch.com/story/what-to-expect-from-teslas-earnings-2016-05-02

After yesterday's report that US Tesla sales dropped by more than two-thirds last month from March, meaning TSLA has delivered only ~10,440 BEVs in total in the USA during the first third of the year, I expect the "..80,000 to 90,000 vehicles this year..." worldwide sales target may no longer be seen as credible.

http://insideevs.com/monthly-plug-in-sales-scorecard/

And the revenue shortfall from lower sales could also result in even more doubt over TSLA's claim that "...it won’t need to tap the capital markets to finance its short-term expansion..."

Update on another story being credited for todays TSLA sell-off:

2 top Tesla manufacturing execs to leave as biggest challenge looms

Company denies departures related to Model X issues

Two top manufacturing executives are leaving Tesla Motors, including the global head of production, at a time when the electric-car company is preparing to launch its most important car: the mass-production Model 3.

Greg Reichow, Tesla's vice president of production and one of its highest-paid executives, and Josh Ensign, vice president of manufacturing, will leave the company. A Tesla spokesperson confirmed both departures and said Reichow will remain until his replacement is found.

A person familiar with the situation who isn't authorized to speak about the matter said the executive changes are linked to delays, glitches, and a recall that have bedeviled Tesla's Model X.

But Tesla denied any connection between the departures and production problems with its SUV...

http://www.autonews.com/article/20160504/OEM02/160509943/2-top-tesla-manufacturing-execs-to-leave-as-biggest-challenge-looms

 

[edatoakrun]

=edatoakrun:

...And the revenue shortfall from lower sales could also result in even more doubt over TSLA's claim that "...it won’t need to tap the capital markets to finance its short-term expansion..."

Today's letter:

...we have decided to
advance our 500,000 total unit build plan (combined for Model S,
Model X, and Model 3) to 2018, two years earlier than previously
planned. Increasing production five fold over the next two years will
be challenging and will likely require some additional capital, but this
is our goal and we will be working hard to achieve it...

http://files.shareholder.com/downloads/ABEA-4CW8X0/2006408841x0x889927/27EE2FDA-9C77-4D6A-8CEE-E8DFE45227BA/Q1_2016_Tesla_Shareholder_Letter.pdf

https://www.youtube.com/watch?v=c7AL44keDZw