Just thought everyone would like to read this. Feel free to sound off.
Consensus seems to point to Tesla needing to make some adjustments to ensure delivery of a quality car... But who knows?
Actually I see the Tesla news today as a very positive sign. Start with emphasis on fundamentals & quality, then ramp up the production.
"Patience is a virtue."
Don't be virtueless.
Are we there yet? :o)
Tesla has over 10,000 virtuous people, some very virtuous.
Still a ton of short sales out. I suspect some of this is a we gotta get the price down or we are in chase London whale trouble.
Man, it beat the beejezus out of the stock today though.
One of the things that Tesla has been very very carefull of is to manage expectations (sometimes to our frustration when we would like more info). I'm not clear what the article means though. The spokesperson from Tesla states, nothing's changed, nothing bad happened. The article reports it as "no comment". Given that Tesla has held their cards close, but always been acurate and honest when they do speak, I tend to take the spokesperson at her word as "nothing changed, nothing bad happened".
Since Tesla has never provided a 3Q production number, you have to wonder where this WunderKid got his numbers. Sounds like a short trying to cover after the 10% run up in the stock last week.
It's the shorties!
News says: They cannot produce as much cars as they said, they are behind, the short term perspective is not that perfect... just a hot breeze, not more- because:
Real information included: Tesla is ramping up slowly and precisely, because they don't want to get in trouble like all the other EV's... they have real quality management and they decide in a more sustainable way...
so, falls info at it's best.
So, the shorties will bash on Tesla at least until they get their biggest positions closed. It's depressing a little, because I was really hoping on a big short squeeze!
sorry- false info
If you read the analyst's report who suggested the production delay it's written without any official confirmation and strictly refers to a rumor. It seems stupid to ask, but does this analyst read TMC or these forums? Or maybe he just took George B.'s blog post from 7/12 and went wild on what he actually said about the appearance and durability issue on the carbon fiber front lower valence and rear lower diffuser of the Performance models?
All told, the stock has nearly regained the loss it took from the Wunderlich analyst.
However, other analysts reaffirmed their ratings on the stock which caused it to tick up:http://www.streetinsider.com/Analyst+Comments/Analyst+Defends+Tesla+(TSLA),+Says+Checks+Show+Considerable+Rise+in+Model+S+Reservations/7587305.html
I love how they construe Tesla's "nothing has changed, we're still on schedule" into "no comment from Tesla Motors".
Yeah, 'Prove you're not the Queen of the Space Unicorns, in disguise!' The old prove-a-negative ploy. Yapping dogs chasing the fire engine.
false info at it's best (Whity Whiteman)
What bullshit (Vawlkus)
Yapping dogs chasing the fire engine. (Brian H)
Not so sure.
First, let's do a little exercise and assume, for the sake of the argument, that Tesla were having some serious trouble with their production quality. What would their comment be? Very much "Tesla's plan has been and continues to be a focus on quality", I bet. The emphasis on quality (rather than just saying "we are on schedule") does convey that they are lagging behind their own schedule.
Second, let's do some very simply math. Full tilt production for the Model S according to plan (1 line, single shift) is 20k units per year which translates to 5k units per quarter. According to plan, slow ramp-up was meant to be going well into 2013, meaning that for Q4 2012 far less than 5k units were planned. In fact, as we all know, 5k was the planned total for Q3+Q4. I seem to remember that the planned production for 2013 was around 16k units, due to slow ramp-up in the beginning of the year, with the production rate running at full tilt of 20k/y some time in the second half of the year. Assuming a strictly increasing production rate without any major bumps, the rate at the end of 2012 should be lower than the average rate of 2013, i.e., lower than 16k/y which equals 4k/q. As far as I know, that's all according to plan.
Now, if they were originally planning for less than 4k units in Q4 2012, and now go on record saying that there will only be .5k units produced in Q3 -- it simply does not add up to 5k units in 2012. If they are already struggling in Q3 2012, however serious the problems may or may not be, it is very unlikely IMO that they will make good on the delay by reaching full tilt production rate of 20k/y already in the middle of Q4 2012. There is a consensus that quality should be a priority, but given the numbers as we know them at this point, it is already impossible to reach 5k units in 2012.
What does that mean? Not necessarily anything serious. Maybe they will get out 3k units in 2012, maybe even close to 4k, instead of 5k according to plan. That doesn't mean that Tesla is doomed in any way as long as they get the quality right. But the stock price may not develop as quickly as many of us have hoped for. The ride will still be bumpy for a while.
Amazing professional well researched sound investment advice...
Yes... Lots and lots and lots of oozing thick gooey sarcasm.
" tell our clients to buy pork bellies @ 60... Mr. Valentine has set the price..."
I believe this just posted by Tam supports your research. If a P248 is "sometime" in November, then I would guess with about 1700 sigs and R reservations that would be about 2000 and ramp up would have to be significant to make 4000 for 2012. I guess we will find out more information on the Q3 call next week.
Tam | July 19, 2012
I am Model S General Production #248. I just got an e-mail to place my order. I followed the link and my delivery is around 11/2012.
Volker's dire plan is not that sound but may be correct. If they are planning 16000 for 2013 then they could have put out 8000 in Q3&Q4 this year.... actually at full tilt they can squeeze out 10k in Q3&Q4. I am not saying they will at all but they still have over 5 months to produce 5000 cars and that is plenty of time without adding an extra shift.
If P248 is in November then about 1500 cars would have rolled off the line at that point. If everything is going well in those last two month then 1600 cars can come out each month of November and December. That will hit the 5000 mark although some of the cars made in December will probably actually delivery early January so I will concede they may be 200 to 400 cars short for 2012, technically.
If they work out the quality issues before October they can still exceed the 5000. That is still over 2 months away. Then P248 will get their car early and I am sure they won't complain.
Based on the fact that almost 50% of the Sig's were given an October, 2012 estimated delivery date, the statement makes perfect sense.
Also, based on the fact that many of ‘minor options’ and features (software, console, USB ports, etc) on the test-drive cars have been fairly ambiguous, it makes perfect since that few cars will be delivered until all the minor kinks are worked out.
Remember, the more vehicles on the road that have to be tweaked under warrantee, for the 2012 release, the higher the cost to Tesla to travel around the nation to fix them.
As much as I needed this car yesterday, I also don’t want to have to keep bring it into the shop every time there is a new TSB, because the process was done too fast (thus the reason why I never update my various computers operating systems the same year a new version comes out).
Actually, VB's production rate estimates were explicitly contradicted by Elon, who said that by the end of December they'd be producing at or above the 20K/annum pace. I don't think 20K/annum is the production line 1-shift "flat out", either. On a standard work week/shifting basis, that's about 10 cars/hr. No specifics have been given about the line's "speed limit", AFAIK. And a bit of overtime goes a long way!
Volker et al
Your post and my post hit about 2 seconds apart and just wanted to make sure you knew it was directed at the wunderkind anaylst.
Also, I am under the impression from Imthink, the last earnings call that Elon was very specific about the ramp up to 80 vehicles per day and that 20000 units was 2013 production.
Looking at a 5 day 1 shift scenario, TM has until 11/1 give or take a few days to get to that rate. This allows for an easy 4000 units by December 31. This of course assumes that between now and then 1000 units get produced. I still see ample room for the 5000. I just don't see where this anaylst is pulling info from and still see a considerable amount of wiggle room for TM to hit the mark.
What is so interesting to me is to watch the press, financial and otherwise, whose full time job is to watch this stuff and for me/us to be able to be far more accurate with the facts ALL of which are readily available.
Aside from all that's been said, downgrading to $28/share is ridiculous. Does he (not V.B.) believe that all investors expect to sell all of their stock by the end of 2012?
Given the higher-than-expected weight of the car, I'm wondering if a late change in battery pack design or cell selection might be the real reason for the delayed production ramp. If so, it could be a blessing in disguise, because it would likely provide some sort of competitive advantage in the form of cost, range or longevity. And that would be good news for long-term shareholders!
Sounds to me like he has to reach a $28/share price to avoid losing his shirt. According to the engineer I spoke with at the factory tour last October, the current line is capable of 10 cars/hour. I wouldn't bet against Elon! Speculation is just that, speculation. No ground in reality.
Interesting comments all, but they don't address the point that the analyst said that TESLA HAD REDUCED the number of units they will produce in 3Q-- even though Tesla has never given an estimate for 3Q production! They have never deviated from the statement that 5000 will be produced in 2012. That is all they have said. So where does he get the basis for his comment. You can't compare without two points!
Exactly! Just like where did the 16000 for 2013 come from? All that was ever said that I have ever seen from TM is 5000 by the end of the year, no per quarter estimate and ramp up to accommodate 20000 in 2013.
Nothing else..... Anywhere... Except extrapolation and rumor.
The 16000 for 2013 comes from an expecte monthly production something like this...
6 30 1000
7 300 1666
8 700 1666
9 1000 1667
10 1000 1667
11 1000 1667
12 1000 1667
... where the 20,000/yr production rate is realized in July 2013.
I think you lost a year of your life somewhere. Are you sitting down? It's 2012 already!
off by 1 ;)
You get the drift.
Great discussion. You almost have me convinced that there's smoke without a fire. Maybe the remaining skepticism is just personal expectation management on my part, trying to avoid frustration just in case that bad news were upon us (I'm not trying to be ironic here, I mean it as I write it).
Let's still be vigilant and realistic. It is all too easy to get swept away by our own wave of enthusiasm. All I'm trying really is not get blinded by my own wishful thinking (which probably very much aligns with most of your's).
Some bumps and delays are all but unexpected when a new car model starts being built by a relatively new company on a completely new factory line! It is only reasonable to assume some slip, and actually, it doesn't matter. Whether they will have 6000 cars produced at the end of 2012, or 3000, what's the difference in the grand scheme of things? None, practically. With the exception of notoriously irrational stock price movements, but that's about it.
BTW, I just realized that my fellow European low-reservation holders and I (EU P#3) are probably about so set a record in wait time for the Model S. The time between putting down my reservation payment and taking delivery of my Model S will easily exceed 4 yours... *Sigh*
And if they allocate a whole month to produce EU versions only (instead of doing one now and then), I'll get my car (P#1088) less than a month after you ;)
jkirkebo, which is still anywhere between 6 and 12 months in the future... patience is a virtue, patience is a virtue, ... [repeat and fade]
Yeah, I'm happy if I get it before next years summer vacationn, starting June 17th ;)
Where did the 50% of sigs got October dates come from? I'm sig 915 and my paperwork says September.
and I am Sig 692 and my paperwork also still says September and I changed wheels so received an updated MVPA just a week ago?!
I'm Sig 353 and my paperwork says October. It may involve how the Sig cars are batch produced. We already know Sig before Production. But maybe they're doing PanRoof before metal? Performance after Non-Perf?
"Second, let's do some very simply math. Full tilt production for the Model S according to plan (1 line, single shift) is 20k units per year which translates to 5k units per quarter."
I'm a little confused, here. How do we know what "full tilt production" capacity really is? Just because they have announced a 5K goal for this year and 20K for 2013, are we to assume that is maximum capacity for 1 line, single shift? My point is, they may only be using a portion of total theoretical capacity and have plenty of room to ramp up further, if necessary...
Tesla229, the 20k per year per shift per line have been mentioned repeatedly, in various contexts. I'm pretty sure you can actually find it in writing in one of the past Shareholder Letters, look around the time when they purchased the Fremont facility. This number also corresponds to the number of Model Ss that Tesla wants to sell annually -- according to their plan.
The 16k for 2013 on the other hand, I made up for the sake of the argument (16k units nicely divides by 4 quarters). Regarding the plans for 2013, varying statements have been made. Remarkably, the more recent statement are bolder than the earlier ones. Earlier statements predicted a slow ramp-up well into 2013, which seems plausible to me and which I based my "simple math" on.
Brian H referred to the latest statement from the Q1 2012 conference call. It came as a surprise for most listeners-in at the time, and it still sounds too good to be true in my ears:
Elon: "[...] And our goal is to be at a run rate, an annualized run rate of greater than 20,000 you’d see at the end of the year ."
Investor: "Would you do feel comfortable that you can hit the 20,000 or greater by the end of the year?"
Elon: "I’m highly confident with that, yeah."http://seekingalpha.com/article/576141-tesla-motors-ceo-discusses-q1-201...
"Tesla229, the 20k per year per shift per line have been mentioned repeatedly, in various contexts."
Yes, but how do we know that the 20K per year figure is dictated by factory capacity and not a desire to proceed carefully and methodically, until they are comfortable that all production and quality issues have been resolved? Knowing Elon's track record, I would imagine that the latter scenario is the case...
20K per year per shift, probably does not include Overtime. I think Elon has OT in his back pocket to flex and chew at the backlog as he sees fit. We'll see...
The robotic line in place can support 10 cars per hour maximum per Tesla employees.
@bshortell - sounds like a lot of capacity based on continuous duty of the line...the limitations will be quality control and labor.
This reminds me of the Papa Bull and The Baby Bull on a cliff over looking the heard. The Baby Bull says "Hey Dad, lets run down there and hump one of those cows!" The Papa Bull said "No son, lets walk down and hump them all."
Relax people. If you have ever started up a company, slow and steady wins the race. If there has ever been a time to throw out our absolute demand for instant gratification, it is now.
I just drove the Performance model today. They have not left anything untouched and have done an absolute stellar job creating a next level vehicle. This is not just another car. If they want to fine tune the production, its ok with me. I am still buying the car.
Etographer +2 (every paragraph!)
PilotSteve in the feedback thread had an interesting paraphrase of a discussion with GeargeB after his test drive:
"...ramp up will be exponential and that Tesla would rather delay customer shipments "for a few weeks" in order to guarantee the product quality is superb even if it makes some people unhappy re. stock price and making them wait..."
I noted the words "exponential" and "a few weeks"
I think we do not have anything to worry as future car owners or investors going long. These moves make sense to me.
10/hr. works out to 20K/yr on a 5-day work week. Throw in a Saturday or two and you can start getting above that fairly quickly.
Note that this implies that the 2013 Model X production will be either on a second shift or a second line. GenIII a couple of yrs later is certainly going to need more lines, tho' not necessarily right away.
It will be very interesting to see what mods/upgrades to the lines happen when they start going in. TM won't likely be able to do as much of the 'fire-sale' acquisition of equipment as before, but should be in a position to put some real brain-muscle into the next iteration(s). New robot types? More elaborate and flexible line geometries?
This will be fascinating to track.
“We never actually reported what third quarter production will be,” Musk told me. “The only number we talk about is the production target of 5,000 this year. It’s not a demand issue: We have orders for well over 10,000 cars. We’re confident that the 5,000 number will be approximately correct. The production ramp is very narrow as we iron out the supply chain, but it ramps up very quickly. We want to be careful about the quality of each car.”