Nov 5, 2014
Johan Just thought I'd create this thread for recording the discussion following the release of the Earnings Report and the Call that follows.
Web link to the webcast (Wednesday, November 05, 2014, 5:30 pm EST = 2.30 pm PT)
2014 Q3 Earnings Report
Alternative link (Dropbox) to the 2014 Q3 Earnings Report�
Nov 5, 2014
emupilot Here it is.�
Nov 5, 2014
Cattledog Initial AH response is better than I would have expected.�
Nov 5, 2014
GenIIIBuyer ZEV credits to the rescue!�
Nov 5, 2014
hockeythug The X delays are getting old real fast.�
Nov 5, 2014
Johan OK. A break down attempt.
Positive:
Q3 production met guidance
Gross margin maintained
Positive non-GAAP EPS
Future growth trajectory very positive:
- Selling and administration expenses up another 18% equals continued expansion.
- Gigafactory to produce actual cells in 2016!
- Expecting to exit 2015 at 2000/week run rate (that's something like 100k/year combined Model S+X going in to 2016!)
Negative:
Guidance for whole year 2014 down from 35k delivered to 33k delivered
Model X delayed to Q3 2015
Basically no ZEV income in Q4�
Nov 5, 2014
justthateasy
1) I'm a little confused going back and forth between the 2 threads and my stock platform.
2) I think I only asked about 2014 deliveries in the other thread. The rest is for Q3 specifically and why TSLA is up instead of down.�
Nov 5, 2014
mulder1231 Also setting up for a nice beat, if they can still hit 35,000 despite this lower guidance.�
Nov 5, 2014
yngwie_2012 i hope we hear something about model s demand in china, and model iii in the cc�
Nov 5, 2014
TexasEV Any predictions on what "reducing the number of options and powertrain combinations" will mean? Is that the end of the 60? Will air suspension become standard?�
Nov 5, 2014
techmaven I like this part:
�
Nov 5, 2014
ggies07 Agreed! Pure balls comment there.�
Nov 5, 2014
austinEV Well, getting rid of the P85+ is a solid start. I bet that was a pain for the line.�
Nov 5, 2014
EarlyAdopter This, I think, is the key statement from the earnings report and puts all this "slowing demand" nonsense to bed:
'nuff said.�
Nov 5, 2014
Johan I think they will bundle more stuff together. Maybe time to loose the "tech package" all together? (make it standard)�
Nov 5, 2014
dalalsid Anyone else unable to download the shareholder letter?�
Nov 5, 2014
pGo Its a miss IMO. specially q4 delivery.
Now, I cannot take them by word on timing. The GF thing being early a bit may just be a relief note which has no value. We'll see in next few quarters.
Model X was speculated to be delayed including from Jonas. I don't like this earnings. Elon needs to beat his words. He somehow over-promises and under-delivers. Thank god thats the opposite when it comes to actual product.�
Nov 5, 2014
Johan Here ya go: Dropbox - Q314_SHL_Final.pdf�
Nov 5, 2014
pGo Another point I would like someone to ask is this: What is taking so much to increase freaking production? Before, it was a battery availability issue. Now what? They need to somehow resolve these issues quickly.�
Nov 5, 2014
dalalsid Thanks. Was able to download from the site after my 10th attempt. First thing I looked at was customer deposits and it looks like they didn't go up at all. I'm wondering if this is from them delivering the s sigs in Asia but not taking any new Sig orders.�
Nov 5, 2014
Johan I think you underestimate how difficult the art of manufacturing is. They are steadily increasing production while at the same time adding the feature of dual motors, sensors and during 2015 adding in Model X. That is difficult! They still expect to exit 2015 with a 2000/week run rate. That is nothing short of amazing.
Elon said in his MIT interview recently: "I wish more bright people got in to manufacturing. Building one of something is easy. Building hundreds is maybe 10 times more difficult when you want to maintain quality. If you think building the machine is important than how important isn't building the machine that's building the machine?"�
Nov 5, 2014
Todd Burch Now?!? Tesla is late for almost everything. We should all be used to that by now. Being late would be a very bad thing were it not for the fact that their products end up kicking a** when they do eventually come out.�
Nov 5, 2014
SBenson "This also is a legitimate criticism of Tesla � we prefer to forgo revenue, rather than bring a product to market that does not delight customers. Doing so negatively affects the short term, but positively affects the long term. There are many other companies that do not follow this philosophy that may be a more attractive home for investor capital. Tesla is not going to change."
Bravo!�
Nov 5, 2014
Words of HABIT Sometimes in thinking short term it's best to take a long term approach. This is one of those times. 50% production increase yoy for the foreseeable future of a $100,000/unit product. Wow!�
Nov 5, 2014
Citizen-T I read Model X delay as, "Holy hell, a LOT of people want dual motor Model S."�
Nov 5, 2014
pGo I am long Tesla but being long, I also have hyper expectations. I would like Elon to talk less and deliver more. Than, I will be happy.
- - - Updated - - -
Another thing to point here, Elon is preparing the market for 2015 expectations. A few months back, this board was talking in the tunes of 75K. Now, it looks like somewhere around 48K (50% more model S) + ~10K (model X being delayed till Q3 2015) = 58K. I like 2000/week numbers, but the math does not add up unless they quickly raise Model X production. But that's been difficult so far.�
Nov 5, 2014
Derek Vinyard Go TSLA !
guys, time to go to sleep for me. It's 11.10pm over here. Hope Elon will show up some "hidden cards" at the CC !
�
Nov 5, 2014
32no The order page for the Model S isn't working at the moment. Something to do with wait times maybe?�
Nov 5, 2014
SteveG3 or Model X reservationists throwing in the towel and ordering AWD S in hordes (joking re order page going down, but there actually will be some of this happening increasing S orders for some time)�
Nov 5, 2014
Perfectlogic They wrote more than 50%, and it was production they were talking about, they might very well produce 35k this year, and they did talk about a fast ramp of X production, I think they can hit 70k deliveries in 2015.�
Nov 5, 2014
clmason Bottom Line (My take):
I don't care about the narrow beats and small numbers.
With each passing quarter, the Model III doubt becomes less and less. It was vaporware and still is to some degree. However, as Tesla matures, it looks more probable that Model III will happen and sell 500,000 units+ per year. The fluctuation in # of deliveries Q to Q or Model X 90-day delay is immaterial. The whole point is Model III, that's what I am buying when I bought the stock. The rich market cap is all about delivering on the Model III.
I think when the Model III is certain, we should see a $45-Billion market cap. Then the Team will start on making millions of cars per year, new auto-platforms, actual selling of commercial battery storage, etc. Then TSLA jogs towards another doubling in Market Cap.�
Nov 5, 2014
pGo This is what the note says:
Model S orders and deliveries alone expected to increase by 50% in 2015�
Nov 5, 2014
SteveG3 I very much agree with your main point... 33K or 35K deliveries because of production ramp mean so little compared to Gen 3 becoming a reality.
Unfortunately, I suspect the next bear broken record might be, "if they keep delaying Model X, how many years late will Gen 3 be." I'm not worried about this in terms of Tesla's execution, just annoying to hear the bears bs.�
Nov 5, 2014
JRod0802 Does anyone have audio yet?�
Nov 5, 2014
BlueTan85
Hey I'm a long (I'll exit after $1000/share thank you very much), and I'm already playing that broken record..�
Nov 5, 2014
32no The Good:
- "Together with Panasonic we are making good progress toward first cell production in 2016, slightly earlier than originally scheduled. Starting operations earlier will reduce ramp-up risks for Model 3 and provide some potential expansion capacity for Model S and Model X."
- $0.02 earnings per share, $31 million in power-train sales, $93 million in regulatory credit sales
- $0.30-$0.35 earnings per share guidance for Q4
- "Future capacity investments extend to the Gigafactory where we have already started to pour concrete for the foundation. A modular build strategy is enabling us to scale construction, capital requirements and capacity commensurate with growing demand."
- Reaffirmed 2000 vehicle run rate for the end of 2015
- Tesla is confident in a 50% increase of net orders in 2015 alone due to leases and AWD models. Also, Tesla expects annual production to increase by more than 50% in 2014, 2015, and several years to follow.
- Gross margin will be >28% in Q4
The Bad:
- Guidance for deliveries went down to 33,000, while maintaining guidance of 35,000 produced.
- Model X deliveries in Q3 of 2015, a few months later than expected
- One time costs meant a 23% gross margin
- Total diluted share count is rising fast: ~141 Million in Q2, 142.7 million in Q3, and guidance of 143-145 million in Q4.
- Cash position went down by $304 million
In Other News
- The Model S order page is currently down. Perhaps there are wait time changes...
- The stock has recovered its 2 day losses in after hours trading with a 5% increase in value.
�
Nov 5, 2014
Perfectlogic Under Increasing capacity to meet demand they wrote that they expect production to increase by more than 50%.�
Nov 5, 2014
Benz "we expect ourannual production will increase by over 50% in 2014, again in 2015 and probably for several years to follow"�
Nov 5, 2014
hockeythug Call audio quailty is way better than in the past.�
Nov 5, 2014
Johan "We don't pay anyone to endorse our car or to say they like it. If you see our car in a movie we haven't paid for it - it's just there"
�
Nov 5, 2014
Zzzz... I love how Tesla do Q&A- less than 1 min disclaimer and then Q&A starts!�
Nov 5, 2014
Johan Elon is saying exactly this at this very moment, during the Conference call.
... And again...�
Nov 5, 2014
NannerAirCraft Order button is back up. It seems they've removed the dual motor option for 60kwh cars and you can no longer have the p85 performance without dual motors and the range estimate is at 285 miles instead of 275. Also dual motor for the reg p85 is now $5000.�
Nov 5, 2014
hockeythug This thread answered but a single word. "No" :smile:
http://www.teslamotorsclub.com/showthread.php/37646-Should-Tesla-publish-monthly-sales-numbers�
Nov 5, 2014
techmaven Boom. Elon "Shutdown" Musk.
Monthly sales data: No.
Resellers in China: No. Thanks for letting us know, we will have those removed.�
Nov 5, 2014
Johan Interesting question about hedging with regards to Euro and Yen:
Deepak answers no hedging. Elon answers: "Product hedging" - natural hedge by selling and delivering cars in the EU and Japan. Will have to increase price in EU due to stronger Euro v.s. USD.�
Nov 5, 2014
Tasmanian Devil Elon Musk just elaborated again (and again and again) that demand is not an issue and that they could pull other triggers (ad for example) to even increase it. The main difference to other car companies is simply that at this point EVERY car Tesla produces is simply ripped out of their hands. For other car companies thats just not the case so demand is a factor for them. I hope this will sink in with the press someday.�
Nov 5, 2014
Papafox Elon just gave away that something special is taking place with second row of seats in X. Rotating on door opening for the moms with kids and car seats I suspect.�
Nov 5, 2014
Johan Regarding battery "breakthroughs":
Elon: "If anyone has a better cell, please send it to us. Don't send us a powerpoint. Send us a working cell. The battery industry has the highest BS-factor of any industry I have encountered"
�
Nov 5, 2014
FluxCap Call is live:
Tesla - Events Presentations
This just in, again: DEMAND IS NOT A PROBLEM. :biggrin:
70k Model S deliveries next year net of cancellations...that would be a significant increase...
Lovallo: CAN I HAS BEAR ARGUMENT DATA?
Elon: "Um, no."
"Send me one working battery cell, not a powerpoint." - Nice.�
Nov 5, 2014
mershaw2001 "if we can't get a 30% reduction in cost, someone should shoot us". LOL�
Nov 5, 2014
tdiggity Interesting. I would think the 60 Dual would be popular.�
Nov 5, 2014
Johan 3rd quarter production was about 7200 which was about 2000 cars less than they had planned for.�
Nov 5, 2014
Johan Probably not good enough margin. When demand is no issue you have the luxury of cutting it out.�
Nov 5, 2014
FANGO This is actually a surprise to me. I figured the 30% would be due to technology improvements, and that the economies of scale were supposed to go on top of that. They're now saying that location and economies of scale will account for 30%, with technology on top of that. I expect that there will be 30% cost improvement between S and 3 due to technology, so that leaves us at roughly half cost for batteries at launch of 3 as compared to launch of S...which is a fair bit of acceleration above the standard 7-10% I (and Tesla) expect. Interesting.�
Nov 5, 2014
EarlyAdopter I've speculated they could even have the second row rotate to be rear facing, to improve safety for children.�
Nov 5, 2014
austinEV if we all contribute $10, could we form "TMC and associates", a brokerage firm with $200 in investments and be able to ask questions on the call?�
Nov 5, 2014
Rifleman I'm in on that�
Nov 5, 2014
Familial Rhino Analysts before: "U.S. deliveries dropped significantly! North-American demand is collapsing!!"
Analysts today: "U.S. deliveries increased significantly! International demand is collapsing!!"�
Nov 5, 2014
Benz "Model X production of 2015 is basically sold out"�
Nov 5, 2014
EarlyAdopter 
�
Nov 5, 2014
Johan Here comes AJ! (*the female). She has the BEST questions always. Boom!
Andrea James: "What's the maximum capacity of the line in Fremont"? Elon tries to dodge...
Andrea James: "It's not clear to me that the Model X is necessary. The higher-cost vehicles are a bridge to the larger market. How important is the Model X really?"
Elon: "Great question. The X is not necessary to get to Model 3. The Gigafactory is needed, will take 2-3 years. We're kind of making the Model X in the meantime. It will generate great cashflow, will reduce dilution and need for cash raise for Model 3. I think the Model X is going to be something special." Deepak: "This is an opportunity to bring an amazing car to market, that isn't there at all." Elon: "It should exist".
GREAT questions from Andrea James.�
Nov 5, 2014
c041v I cringed a bit at this one. They've moved back the release date to Q3, which sort of undermines exactly what 2015 is.
Hehe - AJ's repsonse "cool"�
Nov 5, 2014
chickensevil haha on the call they were like: we will be cutting the call at the half hour... Elon was like... eh, slightly longer than that.
He must be in a really good mood�
Nov 5, 2014
Johan Oooh. AJ nr 2 (Jonas) again with his autonomous car stuff. "Why buy a Tesla if you're not going to hold the wheel or touch the pedals?"
Elon brings him back to reality... "No sooner than 7 years from now, could be up to 10".
Just wait for the "Moore's law for ICEs" question...�
Nov 5, 2014
EarlyAdopter Here comes the other AJ (*the male) with his whole weird "Who will want to buy a Tesla when people don't actively drive a car anymore."
So weird. People are still going to want a nice car they can charge at home.
When you don't need to drive anymore, and are just a passenger, you sure as sh*t aren't going to want to have your car take you to the gas station and tell you "fill me up!"�
Nov 5, 2014
FANGO goddamit Elon don't answer this question about the share price
edit: thank you.�
Nov 5, 2014
Johan Elon: "We don't see any near-term need to raise capital". Well, that's we he said a week before they did their raise in 2013�
Nov 5, 2014
Familial Rhino Not at all. I remember clearly that in 2013 he said "we aren't planning to, but we will certainly be opportunistic about it." And since the stock ended up making a monster jump, they seized the opportunity, just as he said.�
Nov 5, 2014
Johan True. The "color" on the statement was different that time...�
Nov 5, 2014
chickensevil Yeah, was a close call. haha! I was cringing... I think all trading stopped during that question. I was biting my hand in anticipation. /sigh of relief�
Nov 5, 2014
EarlyAdopter Speaking of "color," green and brown are gone (back to streamlining manufacturing and reducing options).�
Nov 5, 2014
FANGO Nooooo! Canceling green and brown!??!? Brown was great :-/ Green looked good too. Stupid people not buying them! Cancel black and silver instead, so boring.�
Nov 5, 2014
joefee George B gets his new visors! :wink:�
Nov 5, 2014
Zzzz... Tesla would not offer green Model S anymore.
�
Nov 5, 2014
andrewket New wipers.. when did those go into production? That was definitely one thing on my P85+ that needed improvement. Speed, and chatter.�
Nov 5, 2014
joefee No more P85 must be P85D....maybe P85 resale will rise!�
Nov 5, 2014
jerjozwik oh my god!!! i am so sad right now. what the heck am i going to order if they are killing off the brown color???�
Nov 5, 2014
aznt1217 For people who want RWD I think it will.�
Nov 5, 2014
Zzzz... I hope Tesla will improve S85D acceleration simultaneously with discontinuing P85...
�
Nov 5, 2014
chickensevil They did look good, but I understand why they are reducing the choices. Looks like they removed the "performance" option on the seats. So there are only 3 seat choices again. Textile, Leather, and then New Awesome Seats. (So no more of the Leather with the red piping and the suede on the sides).�
Nov 5, 2014
austinEV Black is by far the most popular, so no don't do that.�
Nov 5, 2014
MartinAustin The 30% will be saved by simply "lining up" the various manufacturing processes inside the Gigafactory. Instead of travelling thousands of miles, each part will advance down the production line just a few feet. And as JB said, this is the same chemistry they're using now. If they happen to develop anything denser than what they've got now (likelihood = very high... they're just not announcing it yet), there will be opportunities to offer the same capacity for an even lower production cost.
Get rid of silver? Harsh
I expect them to get rid of all two-wheel-drive Model S cars, eventually. Standard AWD will be part of the quality jump you get over the Model 3 product line, whose base model will still be 2WD.
They've effectively discontinued the P85 and P85+ in a matter of a month! Who would have guessed that...
With respect to tomorrow's stock price, I have to assume for now, that it'll open where it is currently at ($246)... which is definitely an upside surprise given the "pragmatic" ER. However the silver lining I see is the investment community's reaction to this pragmatism and emphasis on "carefully steering the ship" - Tesla is anxious to promote quality, and only advance at the speed that it can properly do so. There is no "Model X in Q2 2015, that's a garon-tee!!!" There are no hasty sales in China, until there are service centers and chargers in the vicinity. Pilot production line inside the Gigafactory ahead of the main production ramp-up. Everything indicates a measured approach that ensures no failures. It's almost as if someone runs a space rocket company in their spare time... anyhow, these things bring respect from investors, rather than a quarterly-earnings/fiscally-oriented goals approach that other car manufacturers might take.�
Nov 5, 2014
austinEV I came *this close* to getting brown. Its kind of understated cool.�
Nov 5, 2014
liuping That would make a lot of sense. it seems like the S85D should be at least be under 5.0..�
Nov 5, 2014
AudubonB Scarcity value rules! According to me, the re-sale value of our GREEN P85 just increased.
We shall see. Such a beautiful color.�
Nov 5, 2014
jerjozwik i REALLY REALLY hope they reevaluate this position by december of next year...�
Nov 5, 2014
jhm When will Tesla get the new paint shop? I would think new colors would come on line with it. Until then, they just need to crank the volume.�
Nov 5, 2014
chickensevil Looks like that answer is "soon"
Edit: wouldn't hold my breath on them doing more colors right now though, given that the reason they dropped two colors was to speed things up, I would take that as a sign that until we hit high production they won't stick more color choices in there. Because they probably have to batch cars by color and there just wasn't enough Green and Brown orders to justify it, so it made sense to drop the colors. When they are finally "demand contrained" I could see them adding the colors back (and hopefully getting some new ones... like Orange! Hint, hint...) at that time.�
Nov 5, 2014
Words of HABIT Progress on GF - check (Refer to page three of Tesla's 3Q '14 Letter to Shareholders for photo of GF progress. Noah would be proud)
http://files.shareholder.com/downloads/ABEA-4CW8X0/3604795152x0x791902/d7b8cc04-9c3e-4216-9ce3-7fb4d7e0c00b/Q314%20SHL%20Final.pdf
Progress on Model X - check (albeit mass production delayed one Q to Q3 '15 to get it right) Some things are worth waiting for.�
Nov 5, 2014
Benz After Hours: TSLA $247.00 = + 16.03 (6.94%)�
Nov 5, 2014
jhm When people don't have to drive their cars they will live, work and play in them. Tesla will make some awesome rolling executive man caves. You'll want to spend more time in them.�
Nov 5, 2014
Robert.Boston So does this mean my green Model S just went up in value as a discontinued color?�
Nov 5, 2014
TexasEV There is nothing wrong with the S85D acceleration. For almost every buyer it will be the fastest accelerating car they have ever owned and faster than they need. If 0-60 under 5 seconds is important to someone, they can buy the P85D.�
Nov 5, 2014
RobStark With the exception of the short lived 40 kWh, every Model S is faster than anyone needs.
Model S is about wants. Lust and Desire. :love:�
Nov 5, 2014
austinEV No, it is worthless now. But I will bail you out and buy if for $10k.�
Nov 5, 2014
Zextraterrestrial TyRwd s drifting is sick! Won't trade that for awd
Yay
Don't let me try a awd drift!!�
Nov 5, 2014
anticitizen13.7 5.2 (Tesla's specified 0-60 time, probably conservative) for the 85D is indeed already very fast. It's likely a tenth or two faster.
By comparison, an Acura TLX with SH-AWD (290 HP V6) was clocked at 5.9 seconds 0-60 in a Motor Trend test.�
Nov 5, 2014
chickensevil One important thing to takeaway from this is that the stock is NOT proceed for perfection as many have tried to claim.
Tesla has had their first pretty decent blunder in that they got behind on production ramps. I don't know if others caught it in the call but they said they only produced something like 7600 cars thereby missing production targets by over 2,000. The deliveries came from loaner/store/test cars mostly... And they just "ran out" of cars to sell.
Also we have another hard line on a push back for the Model X and a year miss of the 35k number.
So for the stock to be rebounding because it was basically priced for a huge miss says a lot about the intrinsic value of the company and what investors think it is worth.
Take heart knowing that Tesla is not only not priced for perfection but should have plenty of upside to run away with before it becomes "overvalued again.�
Nov 5, 2014
Zextraterrestrial Less overall torque and hp, wouldn't expect much under 5�
Nov 5, 2014
ItsNotAboutTheMoney Given the variety of problems that Tesla has had, I've long considered the idea that they require "perfect execution" to be a load of cobblers.�
Nov 5, 2014
aznt1217 i thought an interesting point made was about how the second motor in front is a precursor to Gen 3's motor. Smaller, lighter, and essentially a second gen motor. this is great because they are essentially rolling out and getting real world experience for gen 3 key components.�
Nov 5, 2014
justdoit I believe Elon had mentioned on a previous ER call that he'd guess next years deliveries to be around a minimum of 60k. He seemed pretty confident with that number and even seemed like he was really low balling. But 50% growth over 33k is only around 50k. I wonder if if that 50% growth in deliveries is a real low ball number or if the Model X delay is the reason?�
Nov 5, 2014
Buddyroe Man, I am a newbie here but I must say, this report from Tesla is disappointing to me. Not so much the deliveries, but the continued delays of the Model X. Getting something perfect is one thing, but delaying it too much might mean the market changes before you ever produce the first one. When Tesla was designing the S, that was one thing. But they are a much more mature company now. There's no way they can compete when it takes 3 to 5 years years to design and start production of a car.
The pattern I'm starting to see with Musk is to promise things aggressively that are far in the future - moving up the GF to 2016 for example, and then start pushing them back as they get closer - and do it incrementally as to lessen the shock. I think the original date on the X was late 2013 or early 2014. When was the last time Musk actually met his own timeline? The SC map for 2014 will be a miss by about 75 SCs, the swap station is a year or more behind, the X is now about a year or more behind.
Who out there can be confident in the projection for the Model 3 and the GF? At some point, you lose your credibility. Again, I understand the desire for perfection, but I'm REALLY starting to think this gull-wing door thing is killing the Model X. Surely, its advantages are FAR outweighed by how much it has delayed production. I mean, what the heck else could it be? The technology for the drive train is there. The battery technology is there. Other than those doors, it's nothing but designing the body and the interior. It's been SO long since Musk and Tesla surprised us with GOOD news - whether it be significantly beating the delivery guidance or bringing something to market earlier than expected.
My GOSH, change the dang doors and build the freaking car. Enough already. At some point, all the great work and accomplishments have to lead to a profit. If you can't get the cars to market, you sure can't make a profit. Tesla will lose close to $200 million dollars this year. How long can they do that?
Admittedly, a bad example, but Musk is starting to remind me of Axl Rose after he split with the rest of the band Guns N Roses and got all new people. He worked on a new album for years. Every time, about 3 months before it was due to be released, he would delay it by 3-6 months. Same thing - he said he wanted it to be the perfect album. 13 years later, he released an album of music that had gone "out of style" about 9 years earlier. Relatively speaking, the album sold VERY poorly.
Other than that, I love Tesla.�
Nov 5, 2014
EarlyAdopter So, to sum up Elon Musk on today's earnings call: Model X is delayed and investors can go suck it. We're dropping options. Your question about "inventory" is dumb. We really did sell out of absolutely everything. And, are we going to report monthly sales, reservation numbers, or regional breakdown?
"No."
Like a boss.
�
Nov 5, 2014
pz1975 I disagree about the X delay. I think it is much more important to get it right and release it when ready then to rush it to meet a schedule. They aren't losing put on sales and profits as they still don't make enough cars to satisfy demand.
In 5 years, no one will remember that the X was released months or even a couple years late if it an amazing of a car as Elon keeps alluding it will be (just like no one cares now that the S was delayed). However, in 5 years if there are serious enough problems with it now that they needed time to fix, but instead they just "change[d] the dang doors and build the freaking car" and rushed it just to get it out, no one will remember that it was released on schedule. They will remember that that it was a flawed car with problems.�
Nov 5, 2014
CHG-ON I wholeheartedly agree. This is the problem with all US corps. They sacrifice the long term for the short. It is a mentality that will bring our nation to our knees. Quite foolish.�
Nov 5, 2014
EnergyMax Waaaaa!
Everyone knows Model X is a year out until they show the beta.�
Nov 5, 2014
Johan Regarding delaying the X to get everything right Elon put it this way: it's like the difference between a diamond with a flaw and a flawless one. I like this thinking.
Also chicken, I'm quite sure they said 7200 (not 7600) produced in Q3 which was 2000 less than planned.�
Nov 5, 2014
pz1975 Yes, I heard 7,200 as well.�
Nov 5, 2014
Citizen-T I couldn't disagree more. I think your whole argument hinges on the assumption that bringing Model X to market would increase Tesla's profitability, and I find fault with that assumption.
The reason (of course) is that Tesla is production constrained, not demand constrained. People here seem to understand this when we only talk about Model S, but whenever we talk about Model X they assume that a second model obviously means that Tesla can sell more cars. They can't.
Model X uses the same batteries, sourced from the same partner, assembled in the same space, by the same team. Its design center needs to be build and maintained by the same software developers. It needs to be sold by the same sales people, in the same stores, where it is displayed on the same floor. It is shipped around the country and world on the same trucks and boats, inspected and delivered to customers by the same delivery experts. It is maintained in the same service centers by the same service people.
But here's the catch: it's not the same. It is a different machine. Not completely different, but different enough. Different enough that building x Model S and y Model X is much much more costly than building x+y Model S. And it has to be one or the other. The Model X program steals resources from the Model S program.
I hope that is clear. It is crystal clear to me.
The same logic can be applied to the Supercharger rollout plans and to the battery swapping stations. Both are meant to boost demand for the cars by making them more convenient to own than they would otherwise be. The battery swaping stations seem to be completely unnecessary (nearly everyone is content with Superchargers) and it turns out we don't need nearly as many Superchargers as we thought in order to sustain this level of production.
When Model X was first announced Tesla thought they needed it. They thought that demand for the Model S was around 20k units a year world-wide. But that turned out to be wrong. The truth is (as was discussed on the call today) that Tesla doesn't need the Model X at all. There seems to be enough demand for Model S for Tesla to grow at an enormous rate---about as fast as is possible---until Gen III.
Now, they didn't find that out until well into the Model X program, so there is no point in scrapping it now, but it is very prudent to take their time with it. On the other hand, think of those other Model S derivatives that Tesla talked about around the time of the IPO. There was supposed to be a cabriolet as I recall. Again, they thought they would need it. But they were wrong.
I think what you see as poor execution I see as just good business decisions in the allocation of resources. These predictions were all made with a certain level of demand in mind. A good CEO should change course once they find that reality doesn't fit their initial assumptions. That's what they have done here.
I totally understand if Model X reservation holders are upset about the date being moved back, as a customer, I certainly would be. But, I can't imagine how any investor could possibly be upset. Releasing Model X could do nothing but hurt profitability. Worse, it complicates operations and puts the Model S program (which is doing so well) at risk.
As long as Elon delivers the kind of stock appreciation I'm looking for, I don't much care which levers and knobs he manipulates to do it. It looks to me like he has decided to turn the Model X dial down so that he can crank Model S to the max. For what it's worth, I totally agree with that decision.�
Nov 5, 2014
mdemetri This thesis depends on Model S demand being larger than the number of batteries they can produce, which I believe is ~200K pre-GF (i.e. current panasonic deal is to grow to ~200K batteries per year without GF). I am not so sure that Model S demand will ever be that high; they need Model X to get to this number (pre Model 3). So while a short delay now should not impact profitability, further significant delays or scrapping it altogether certainly would.�
Nov 6, 2014
schonelucht I am a bit surprised how well the stock is doing in the AH. Yes, there is forward guidance for 50% growth over several years but at the same time there is a negative adjustment to prior forward guidance. Secondly, Tesla is clearly continuing to have operational issues. Not only is that explicitly stated in the letter ('fair criticism'), but it also shows in the facts : the retooling took longer than expected resulting in a significant production loss; more retooling is coming over the next months and finally Model X is delayed again. It's consistent with what regular users of this forum already know from smaller events like the difficulty of getting chademo working, the length it took to get a simple vibration issue in the drivetrain under control and the currently only average reliability compared to other cars as assessed by independent research despite the underlying moving technology being inherently simpler than an ICE and marketed as less maintenance intensive.
Tesla does not yet fully grasp control of the production process. Which, to be fair, is a monumental engineering task. But getting it right is a crucial part of hitting the 50% growth in supply, let alone Model 3 mass production. Personally, I am not convinced that Tesla can deliver on the production as currently guided, nor am I convinced that reliable production is Tesla's competitive advantage in the market. Maybe it would be better to aim for an business model by the time Model 3 comes along. Have Tesla focus on what it does best : creative out-of-the-box thinking in designing, marketing and selling an automotive product while outsourcing the actual mundane task of production to companies with a proven track record in actual manufacturing. It's a model that has served Apple well and I see little reason why the same could not be true for Tesla.�
Nov 6, 2014
RobStark That would be unbelievably stupid. That is what Fisker tried to do and ended up in bankruptcy.
Tesla did not have expertise in anything 10 years ago. You gain expertise by doing. Expanding production 50% annually is a tough job in any industry more so in one as complex as autos. Tesla has the most experience building BEVs with 18650 cells. They are also continuously upgrading. The feedback loop between engineering and manufacturing is crucial.
Tesla expertise in marketing is Elon Musk doing a stream of consciousness on Free Media. That is a schtik Tesla will be able to ride for another 5-7 years but will eventually need an actual professional marketing department with actual paid media.
People will pay a premium for a Chinese made i-phone but are not traveling 155 mph in an i-phone. Plus, per dollar of product it is much more expensive to ship cars from Asia than phones. That is why all the Asian OEMs that sell in North America build in North America. I think the same is true for Europe. Contracting legacy OEMs to build Teslas? Even more stupid.
People will not trust the safety of a Chinese made car in this price range. Europeans and North Americans will not pay $70k-$140k for a Chinese made car. Even if it gets all the test certifications with 5 stars. Even wealthy Chinese are willing to pay a premium for German made luxury car over a seemingly identical Chinese made German brand one.�
Nov 6, 2014
Auzie I use iphones, but only because of great Apple service. Faulty iphone gets replaced. So far I had few fairly new phones replaced (antenna failing, audio jack failing). In the absence of the replacement guarantee by Apple, I would likely look for a brand with less faults in manufacturing.
Electronic goods (TV etc) made in China are sold at steep discount prices to their Korean and Japanese peers, yet they are difficult to sell. The low maturity of Chinese manufacturing is incompatible with Tesla brand. Buying Tesla car made in China would be akin to buying fake rolex.
- - - Updated - - -
Tesla claims 'innovative manufacturing' as one of its core competencies, in its 2013 Annual Report, p8. It does not make sense to outsource something that constitutes business core competency.
Elon stated that they plan to build factories outside of US. Not sure how that will work.�
Nov 6, 2014
schonelucht It's a tough job, which is all the more reason to evaluate if there are partners who would be able to do a better job than yourself. There is no reason to assume that a 'BEV with 18650 cells' is different than other innovative high tech consumer goods when it comes to manufacturing. Yes, feedback between engineering and manufacturing is essential but they don't have to be in the same building.
The continuous upgrading actually is not a strength but a weakness. (And it is a testament to Tesla's marketing which you dismiss that Tesla customers perceive so differently) Where seamless continuous upgrades on the software side generally is welcomed by consumers, not so on the hardware side. In fact, some of the strongest words of ardent Tesla supporters on this forum towards the company are made wrt hardware updates complaining about a lack of transparency on policy and implementation of them.
That's absolutely not true. For example, the development of the supercharger network is foremost a marketing rather than a technological achievement. It's technologically well executed but not actually terribly innovative. But on a marketing level, it changed the whole message about driving long distance with an electric car. The ability to asses what the market needs for electric driving is something that Tesla understands as no other company and is in my eyes their biggest competitive advantage.
Why would that be stupid? Tesla is already outsourcing the manufacturing of many parts in their cars to traditional automotive OEMs. Regarding the shipping, it's a bit ironic that you say it is too expensive to ship cars from continent to continent while Tesla is a prime example of a car company that is shipping cars from continent to continent ... today (as do other manufacturers).�
Nov 6, 2014
Causalien For a continuously upgrading production line of large scale metal products, Manufacturing's final assembly and RD can only be separated at most by one road. With less than 10 car per hour traffic. Of course, with a sound proof room for RD.�
Nov 6, 2014
RationalOptimist Actually this would eliminate what is actually Elon's greatest genius: the design of SYSTEMS. he's great at making machines. but even better at understanding the smart, long-term-cost-effective way to make the machines that make the machines. Engineers and manufacturing execs from BMW and Mercedes who have visited Fremont have been completely blown away by what they've achieved there. There is zero chance that a standard approach to manufacturing the model S could have resulted in cars being produced at this quality and at a 30% gross margin.�
Nov 6, 2014
Johan You are joking right? Did you listen to the call? Elon talked about it twice, in great depth. Manufacturing is anything but mundande - it is one of the absolute key factors in Tesla's sucess. The moment they outsource their production is the day I sell all my stock. It is a very telling metric that they are insourcing almost everything as opposed to other automakers.�
Nov 6, 2014
Larken + 1�
Không có nhận xét nào:
Đăng nhận xét