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Interesting Model X comments from Morgan Stanley

Interesting Model X comments from Morgan Stanley

Tesla 2015 shareholder meeting will set the tone for key risk events
through the launch phase of the Model X and its place as a creator
of economies that did not exist just a few years ago.
Tesla Motors will webcast its annual shareholder meeting later today after the
market close (2pm PT). Despite nearly a 40% recovery in the shares over the
past 2 months, we have received very little incoming interest from investors on
the name. We expect this to change between now and the commercial
introduction of the Model X, particularly as the company gears up for a season
of factory tours, shedding further light on the operations of the firm ahead of
its critical new product introduction. We are looking out for 3 main items
to be addressed at the shareholder meeting:

1. Reconfirmation of Model X timing. While Tesla Energy seems to be
getting the lion’s share of attention in recent weeks, we still think it’s the Model
X that can have the greatest potential impact on the investment debate
through the rest of the year. If Elon Musk is able to reiterate timing of the
commercial launch of the X by the end of 3Q, we would read this positively
given the proximity to launch. We expect the Model X to be superior to the
Model S in a variety of important technical aspects including powertrain
efficiency, safety, utility, quality and functionality of interior… with broadly
similar performance qualities of the Model S – making the Model X perhaps
the most exciting series production SUV ever tested. Success of the X could
significantly alleviate the working capital/cash burn rate of the company and
greatly expand the TAM of its sports car range longer term.

georgehawley.fl.us | 2015年6月9日

Tell us something we don't already know...

vandacca | 2015年6月9日

There are 3 types of people in this world. Those that are good at math, and those that aren't.

I only see 1 point in the original post, not 3. I'm pretty sure I know what category that person lies in.

grant10k | 2015年6月9日

They probably didn't want to copy the entire article, and just stopped at the first point. I imagine the other two points also boil down to "We'll know more after the shareholder meeting".

wmg | 2015年6月9日

Here you go. Was trying to keep it relevant to the X, but inquiring minds want to know.

2. Further indications of interest on Tesla Energy. Late last week,
Advanced Microgrid Solutions announced that Tesla would provide batteries
for its utility-scale energy storage projects. Under the agreement, AMS will
install up to 500-megawatt hours (MWh) of Tesla batteries in its energy
storage projects over 5 years. While we’d take the headline 500-MWh number
(equal to nearly 6 thousand Model S’s worth of batteries, or roughly 6 weeks
of current production) with a grain of salt, this is nonetheless magnitudes
larger than any one order we’ve seen so far. Any further partnerships Tesla can
reveal can help the investment community more confidently include
potentially billions of revenue in their earnings model that previously did not
exist.
3. Addressing potential funding needs. A successful launch/ramp of Model
X into 4Q could make a very significant difference in determining whether
Tesla burns $1bn this year (our best case estimate) or more than $1.5bn (abear case). In any case, we believe Tesla may find a capital intervention
desirable if not absolutely necessary. In our discussions with investors, we find
a near unanimous acceptance that the company must address its liquidity
position. The fact that this issue is now an open part of the regular debate on
the company is encouraging to us.

vandacca | 2015年6月9日

Thanks! :) BTW, I was only trying to be funny...

georgehawley.fl.us | 2015年6月9日

But you are funny, Dan, in a very special way :-))

toby_wan_kenoby | 2015年6月9日

@vandacca
Stand corrected. There are 10 types of people, those that understand binary and those that don't

vandacca | 2015年6月9日

Argh, @toby_wan_kenoby! You stole my follow-up line!!

Red Sage ca us | 2015年6月9日

You guys are one in a megabyte.

NumberOne | 2015年6月9日

Well, Elon just reiterated again that Model X will launch August/September. He specifically said 3 to 4 months during his presentation at the Annual Meeting.

paradis | 2015年6月9日

@Leonard - No he pushed it back again. 3-4 months is September/October. If there aren't substantial deliveries in October, I consider them having missed another target (3rd Q).

Steve18 | 2015年6月9日

@Paradis is spot on. It's another timing miss, no matter the spin doctoring jargon used. Forget the 1st delivery timing, we'll be lucky if the option page is up by august... I know his product over-delivers, by why does Elon persist in chronic over-promising/under-delivering on timing, interspersed with long periods of lack of communication/no information flow. Magical marketing recipe. Don't get me wrong - it's a disruptive, one-of-a-kind driving experience, but you start to lose even the most devout followers when they are left in a vacuum for continuously extended periods of time, no?

JeffreyR | 2015年6月9日

@Steve18 +1
It shows you the absolute strength of the Model S and the originality of the message that Tesla can miss schedules by so much but still be so widely lauded. I wonder about the strategy of the AWD dual-motor release. Was it planned all along or did someone come up w/ a brilliant save?

The P85D in particular has really helped keep interest on the Model S and not the missed Model X schedule. I think bumping up to the base 70D has also helped move sales. Imagine a world where the 'D' never happened, the Model X web page is basically deleted, and Elon either does not talk about a delivery date or continuously adds another month (or six) to his delivery date estimate. We'd have a much different situation for sure.

The 'D' in all its different flavors, has also energized the CPO program which helps to keep delivery dates (very) short.

Now if only they had never come up w/ falcon wing doors. I think they are cool and useful and beautiful and all, but it's pretty clear they are the biggest part of the delay. I'd rather have standard doors and the Model X already being delivered (my wife wants a test drive before she'll make a down payment). If wishes were fishes....

The silver lining is that the Gigafactory and Fremont factory have had some time to really prepare and develop. And I hope Elon and Co. have learned their lessons for the Model ≡.

David Trushin | 2015年6月10日

Classic case of letting the better stand in the way of the good. No reason why not to have a fairly large limited introduction to iron out any last minute difficulties. Could have been released months ago.

johnse | 2015年6月10日

@paradis Elon gave a range of 3-4 months. only the last 9 days of that range will miss Q3. I do not see that as a further slip.

Again he mentioned FW doors, 2nd row seats, and "other things no-one knows about" as things they are tweaking.

I found it interesting that the new body line will have up to triple the throughput of the current model S body line--and can produce either S or X bodies. That would imply that for body production, they have the lines built to scale to about 4000 bodies per week!

jamesd567 | 2015年6月10日

Morgan Stanley and Wall Street NEVER tell what they know. They chatter about less important drivers, such as whether the Model X will come out in September or October or November. All three dates are irrelevant to Tesla's future..

Tesla key drivers are: Utility kWh price trends, gasoline prices at the pump, the growth rate of usable battery innovations, production growth rate of their vehicles, the rate of growth in solar panel innovations, the rate of cost declines in battery prices and the success and scaling up of activities (esp engineering) at SpaceX.

Ambitious, hard working people do not retire at 52. The CFO was kicked out by Elon so Tesla can bring in someone stronger. They just sugar coat this to keep investors calm.

I've been significantly and continuously invested in Tesla since 2012. Elon is far from perfect, but I sure don't see anyone better out there to push Tesla success forward. I am sure Elon will succeed in accomplishing the stated mission.

JeffreyR | 2015年6月10日

@JamesD567: "Ambitious, hard working people do not retire at 52. The CFO was kicked out by Elon so Tesla can bring in someone stronger. They just sugar coat this to keep investors calm."

That may be part of it, but it may also be he has more money than he can spend in a life time and he is tired of working 80-hour weeks. Also, he may be more interested in initial growth and management than large cap public companies. It may just not be a good fit or he may be ready to rest a bit. Or maybe a bit of both.

I am glad he was shown some respect and lauded for his achievements. He started w/ Tesla and has taken them this far.

hsadler | 2015年6月10日

Actually, 3-4 months 'Elon' time puts it at Dec 28th this year.

vandacca | 2015年6月11日

@jamesd567 wrote:
...Ambitious, hard working people do not retire at 52. The CFO was kicked out by Elon so Tesla can bring in someone stronger...

I might be reading into this way more than I should, but it actually looked to me that Elon was very moved by the CFO retiring. His eyes were all watery and why bother having such a long-winded "goodbye" speech if you didn't genuinely like the guy and have respect for him?

There are lots of reasons to retire, even at 52. He may have been diagnosed with an illness or he has some family issues he needs to attend to. I don't see any evidence that he was "kicked out", in fact I would say that there are signs that point to the opposite.

sdj | 2015年6月11日

@vandacca
Yes, I saw the teary eyes as well and a bowed head, seems Elon cares about this guy.

Red Sage ca us | 2015年6月13日

The Model X that Customers begin to take delivery of within a few months will be tremendously better vehicles than what could have been released in Fall 2013. Then, initial deliveries would have been single motor only. You would have been lucky if dual motor AWD arrived for Model X by Christmas 2014. Autopilot hardware and software might be only just now introduced. Tesla Motors would have sold perhaps the same number of vehicles thus far, but a lot more of the existing fleet to Customers in the US. What if Bjørn Nyland had to wait another year to get his Millennium Falcon?