Blowing smoke

[bwilson4web]

About 10 days before the Q3 production and sales numbers were released, a Tesla e-mail was cited as claiming Tesla was predicting '110,000' sales. So Tesla achieves 97,000 and there is great rending of cloth and ashes. The stock took a hit so the second 'kick of the mule' begins:
https://finance.yahoo.com/news/tesla-tsla-expected-beat-earnings-143302618.html

Tesla (TSLA) Expected to Beat Earnings Estimates: Can the Stock Move Higher?

Tesla (TSLA) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2019. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.
. . . ​

We've seen this tune before. A rumor of great Tesla news is followed by a good but not 'good enough' result leading to TSLA price softening. So this suggests:

• Sell TSLA pre-Q3 results - the price inflated by 'blowing smoke' of great Tesla news
• Buy TSLA post-Q3 results - the price depressed because the earnings were not 'good enough'

We'll find out in the next seven days.

Bob Wilson

 

[R P]

Has gone up pretty good since your last sell. Maybe sell some more and it will get another boost...

 

[David Green]

Has gone up pretty good since your last sell. Maybe sell some more and it will get another boost...

Next Wednesdays report will be interesting... Tesla will pitch first "production" (Hand Built since the factory does not have permanent power yet) cars from Shanghai giga, and an earlier than wall street expects launch of Model Y, to cover up the quarterly losses. Going to be lots of promises, "but tomorrow things will be better"... trust us... haha! Just like this time last year when they told us profits in all quarters going forward...

 

[bwilson4web]

Source: https://insideevs.com/news/377230/tesla-model-3-delivery-time-us-extends/

A Tesla Model 3 ordered today in the U.S. will be delivered in 6-10 or 8-10 weeks for the Performance version.

It seems that Tesla once again has a "demand problem", ​

What a nice problem to have.

Bob Wilson

 

[David Green]

Source: https://insideevs.com/news/377230/tesla-model-3-delivery-time-us-extends/

A Tesla Model 3 ordered today in the U.S. will be delivered in 6-10 or 8-10 weeks for the Performance version.

It seems that Tesla once again has a "demand problem", ​

What a nice problem to have.

Bob Wilson

Interesting, still showing inventory in bellevue WA... Can get delivery today...

Well Bob, Wednesday next week we will see the numbers, I guess we will see a loss, and revenue down YoY, which is something you never see in a "growth" company

 

[R P]

Not sure if just YoY growth comparison is totally relevant in this case. There was a lot of pent up demand last year while Tesla worked out the manufacturing issues and also began offering the lower priced M3s. However, if after that backlog was cleared, and demand continues to drop off MoM, that would be really bad. Will have to see which way that trend progresses.

Of course there are other even more serious issues, like falling margins due to competition and not being able to achieve mass market economies of scale. That could lead to the dreaded financial death spiral, not being able to spread fixed costs with falling sales, and having to cut prices even further to gain back working capital but beyond the point where profit is possible, without massive downsizing. Not to mention cutting capex spending to pay off operating costs. No company wants to get into that situation.

 

[Pushmi-Pullyu]

Source: https://insideevs.com/news/377230/tesla-model-3-delivery-time-us-extends/

A Tesla Model 3 ordered today in the U.S. will be delivered in 6-10 or 8-10 weeks for the Performance version.

It seems that Tesla once again has a "demand problem", ​

What a nice problem to have.

I doubt that such a sudden, radical change in delivery wait time comes from increased demand alone.

Just a guess, but my guess is that Tesla is rotating some down time on its production lines, to upgrade them for dual-use, Model Y plus Model 3 production... or more precisely, "pre-production production" of the Model Y. Tesla is certainly going to need a few hundred "validation prototypes" to use for crash tests, extreme road testing, and the like, just as it did with the Model 3.

I will admit, tho, that my theory has a rather large hole in it: That doesn't explain the longer wait time for the Model S and Model X.

​

 

[Pushmi-Pullyu]

Interesting, still showing inventory in bellevue WA... Can get delivery today...

You TslaQ cultists really are in love with meaningless anecdotal "evidence", aren't you? Oh look, your favorite Tesla waypoint holding lot didn't have its cars counted today. Better run!

...and revenue down YoY, which is something you never see in a "growth" company

This is what a growth company looks like, and none of your whinging is going to change that reality:

Tesla's global automobile sales totals:
2012: 2650
2013: 22,300
2014: 31,655 (+41.95%)
2015: 50,580 (+59.8%)
2016: 76,230 (+50.7%)
2017: 101,312 (+32.9%)
2018: 245,240 (+142%)

"To put our growth into perspective, we delivered almost as many vehicles in 2018 as we did in all prior years combined."

​

 

[bwilson4web]

I will admit, tho, that my theory has a rather large hole in it: That doesn't explain the longer wait time for the Model S and Model X.

Elon has reported a battery supply limit on production. Panasonic reports unprofitability at the Nevada Gigafactory as why they are not expanding their capital investment. What I know of the Panasonic production processes, it is a nightmare of solvent processing.

My thinking is Tesla needs a second USA source and building out their own battery cell manufacturing to work in parallel with Panasonic might do the trick. Begin applying technology from recent Tesla acquisitions, giving Panasonic a 'wake-up.' This is also true if Tesla can draw on Chinese sources so a Panasonic 'strike' would have limited effect.

Bob Wilson

 

[David Green]

Elon has reported a battery supply limit on production. Panasonic reports unprofitability at the Nevada Gigafactory as why they are not expanding their capital investment. What I know of the Panasonic production processes, it is a nightmare of solvent processing.

My thinking is Tesla needs a second USA source and building out their own battery cell manufacturing to work in parallel with Panasonic might do the trick. Begin applying technology from recent Tesla acquisitions, giving Panasonic a 'wake-up.' This is also true if Tesla can draw on Chinese sources so a Panasonic 'strike' would have limited effect.

Bob Wilson

I see the biggest Tesla Bull on wall street sold 90,000 plus shares today, Cathie Wood must have forgotten her $6000 price target on those shares as she sold them at $259 Things must be great at Tesla...

 

[Pushmi-Pullyu]

Elon has reported a battery supply limit on production. Panasonic reports unprofitability at the Nevada Gigafactory as why they are not expanding their capital investment.

Yup. Can't blame Panasonic. Why would they continue to invest money in Gigafactory 1 when they're not making any profit? It's an unfortunate situation. Ideally, Tesla should start paying Panasonic more, so that the latter can make a profit. But that would cut into Tesla's profits, so I can understand why Tesla isn't doing that.

My thinking is Tesla needs a second USA source and building out their own battery cell manufacturing to work in parallel with Panasonic might do the trick. Begin applying technology from recent Tesla acquisitions, giving Panasonic a 'wake-up.'

There is a running narrative through several, or many, InsideEVs news articles, suggesting Tesla and Panasonic are headed for a "divorce", and that Tesla will start making its own cells. Given Tesla's recent acquisition of a small battery manufacturer, this may be the case. One thing that's obvious is that the build-out of Gigafactory 1 has stalled. It has also been reported that Panasonic has said they will make no more investments in either Gf1 or Gf2, at least for the time being. Gigafactory 2 is Tesla's Buffalo factory where they make solar panels and solar roof tiles. However, according to reports, this has become pretty much just a Panasonic operation.

I suppose Tesla could supplement its domestic Panasonic 2170 cell supply with LG Chem 21700 cells, as they are in China. But presumably Tesla would have to pay LG a higher cost per kWh. If they're gonna do that, then why not simply pay Panasonic more?

I'll be eager to see what Tesla announces at its upcoming Battery Investors Presentation. Hopefully they'll let us know the direction the company has decided to take with regard to increasing cell supply.

* * * * *

I doubt that the limitations of cell supply are the main reason for the recent abrupt increase in wait time, between order and delivery, from 2-3 weeks to 6-10 weeks. Unless Panasonic has suddenly reduced their output, that shouldn't result in such a dramatic increase in wait time in such a short period.

If Panasonic has decided to throttle back the production, as a "We don't need your business that badly" lesson, then that would be an extremely bad sign. Even if these companies go through a "divorce", it would be better for both partners to bring the partnership to an end in an orderly and planned manner.

​

 

[bwilson4web]

There have been critics of the Tesla vertical integration which stems from an early, bad experience. A subcontractor (seats?) was late which led to early delays in Model S production. This led Musk to opening car seat production in Fremont which traditional car makers decried.

Batteries are a critical component for an EV and in 2012 using 18650 cells was a brilliant move as these were and are a commodity item for laptops. But the quantities were significantly smaller for Model S/X production versus the Model 3.

The Model 3, 2170 cells are ~5x the quantity and an optimized design. But reports suggest Panasonic has not changed from a solvent based, production which is both expensive, risky, and takes time. Since Panasonic wasn't changing their processes, Tesla bought Maxwell and Hibar which Panasonic was unwilling or unable to buy or license.

There will always be a manufacturing conflict between build or buy. But being limited to a single supplier means a business relationship is not always going to be in harmony. Musk insistence on getting the best technology today is the irresistible force meeting the unmovable object of more methodical management.

Bob Wilson

 

[David Green]

There have been critics of the Tesla vertical integration which stems from an early, bad experience. A subcontractor (seats?) was late which led to early delays in Model S production. This led Musk to opening car seat production in Fremont which traditional car makers decried.

Batteries are a critical component for an EV and in 2012 using 18650 cells was a brilliant move as these were and are a commodity item for laptops. But the quantities were significantly smaller for Model S/X production versus the Model 3.

The Model 3, 2170 cells are ~5x the quantity and an optimized design. But reports suggest Panasonic has not changed from a solvent based, production which is both expensive, risky, and takes time. Since Panasonic wasn't changing their processes, Tesla bought Maxwell and Hibar which Panasonic was unwilling or unable to buy or license.

There will always be a manufacturing conflict between build or buy. But being limited to a single supplier means a business relationship is not always going to be in harmony. Musk insistence on getting the best technology today is the irresistible force meeting the unmovable object of more methodical management.

Bob Wilson

Tesla can vertically integrate as much as they want, however some things are not smart to do that way. Seats for instance are something many people complain about in Tesla vehicles, Bjorn Nyland for one has numerous videos with seat problems and seat replacement.

Battery cells is a good spot to vertically integrate as they represent 33% of the cost content of an EV, and going forward that may increase. As for Tesla though I have little faith their management can do anything better than a professional supplier like Panasonic when it comes to cost / quality.

Tesla is so vertically integrated is one reason they cannot offer features that most other OEM's offer, with very small investment. Like Gesture Tailgate, Massage Seats, 360 camera, and and HUD, It is Simple, Tesla does not have enough engineers to do all of these projects and work the bugs out, where other OEM, just buy the parts from a supplier, and integrate it.

Toyota is about 80% vertically integrated when it comes to cost content on their vehicles, but they do a great job of managing their supply companies like Denso and Aisin, which not only supply the mothership (toyota) but also sell parts to other OEM's, Toyota's structure is vertical integration done right. I cannot imagine how much money Toyota could make if they ever figured out the American truck market... They have good designs, and modern features, but Tundra is not taking F150 share, Why? Loyalty, this is what is going to hit Tesla like a ton of bricks if they think pickups will be easy... People who buy Ford, Dodge, GM are locked in, there are a small number of defectors each year that go to Toyota or Nissan, or even Honda, but you see the big 3 numbers stay pretty much the same, or grow slightly with average transaction prices (revenue) growing every year. For the last few years GM, Ford, and Dodge had all their factories running overtime to keep up with demand and still can barely keep up. At the same time Toyota built their new amazing factory for Tundra, and Tacoma down in Texas, and while Tacoma has had fairly stable market share, Tundra is a loser for Toyota, Why?

 

[Pushmi-Pullyu]

Battery cells is a good spot to vertically integrate as they represent 33% of the cost content of an EV, and going forward that may increase.

Actually, a Tesla spokesman -- I think it was J.B. Straubel -- said 2 or 3 years ago that the battery pack was about 25% of Tesla's average cost (not price, cost) for making the Model S. Note that's the pack-level cost, not just the cell-level cost. We can figure the cell cost is about 25-30% lower.

That fraction may be larger for the Model 3, which is a less expensive car but still has a large battery pack. However, due to rapidly falling battery cell prices, it may be that even for the Model 3, the fraction of cost for the battery pack is about 25% of the entire vehicle. the Model 3 has an average of about 25%.

As for Tesla though I have little faith their management can do anything better than a professional supplier like Panasonic when it comes to cost / quality.

For once, Mr. "Green", I agree with you. It's not likely that Tesla will be able to produce cells at a cost as low as Panasonic is doing. After all, Panasonic has decades of experience with manufacturing battery cells, and Tesla doesn't have any experience other than making batches in the lab.

What Tesla moving into making its own batteries will do is finally put Tesla firmly in control of the quantity of battery cells it's getting. I expected the partnership with Panasonic at Gigafactory 1 to accomplished that, but sadly that isn't the case. It's very frustrating that Tesla's production remains constrained by limited battery supply. No doubt Tesla's executives find it far more frustrating than I do!

Will Tesla be able to control costs, or even undercut Panasonic's costs, by using Maxwell "dry electrode" tech? Or will Tesla's apparent venture into making its own battery cells prove to be a costly mistake?

Stay tuned for the next thrilling chapter of "As the Switched Reluctance Motor Turns" (...or What's a South-African-Canadian-American Futurist Visionary Entrepreneur Rocket-Scientist-Innovator Billionaire to do?")

 

[bwilson4web]

It's very frustrating that Tesla's production remains constrained by limited battery supply.

There is history. For example, the Russians frustrated Elon by refusing to sell any of their rockets:

I won't underestimate Elon's skills and abilities ... the SHORT playbook. Making batteries is well within his abilities to assemble a skilled team and work the problems. After all, batteries have no moving parts, just ions and chemical reactions.

Bob Wilson

ps. The longer version:

 

[interestedinEV]

At the same time Toyota built their new amazing factory for Tundra, and Tacoma down in Texas, and while Tacoma has had fairly stable market share, Tundra is a loser for Toyota, Why?

Why? Toyota has not focused on improving their trucks. They either do not understand the truck craze in the US or have chosen not to cater to it.
Quoting Cnet
https://www.cnet.com/roadshow/reviews/2020-toyota-tundra-2wd-review/

The Good The 2020 Toyota Tundra comes standard with several driver-assistance features and strong V8 power.


The Bad It's not very good to drive, it can't match the capability of rival trucks and its interior comfort and infotainment technology leave a lot to be desired.


The Bottom Line If you want a solid, no-frills work truck, get a Tundra. If you want a comfortable and capable daily driver, get something else.
.........

The current Tundra's last major update came in 2014, but it still largely uses the same mechanical components from when the second-generation truck initially debuted in 2006....................Where the Tundra makes a strong case for itself is in value. Consider this: You can't get a 2020 Tundra for more than about $55,000, but a fully loaded Ram 1500 Limited will touch $70,000 if you aren't careful. Of course, the Ram is better at everything, so you could consider it money well spent.

 

[David Green]

There is history. For example, the Russians frustrated Elon by refusing to sell any of their rockets:

I won't underestimate Elon's skills and abilities ... the SHORT playbook. Making batteries is well within his abilities to assemble a skilled team and work the problems. After all, batteries have no moving parts, just ions and chemical reactions.

Bob Wilson

ps. The longer version:

I can Agree with you Bob, it is within Elon's skills to assemble a team, but in the process how many unforced errors should we expect? Budget for? In the last couple years there has been;

Funding Secured?

Pedo Guy?

Model 3 terrible launch?

I could easily see him piss on Panasonic, and they suddenly freeze production and remove their equipment for GF1, (this by the way is listed as a risk in Tesla's reports)

 

[David Green]

Why? Toyota has not focused on improving their trucks. They either do not understand the truck craze in the US or have chosen not to cater to it.
Quoting Cnet
https://www.cnet.com/roadshow/reviews/2020-toyota-tundra-2wd-review/

The Good The 2020 Toyota Tundra comes standard with several driver-assistance features and strong V8 power.


The Bad It's not very good to drive, it can't match the capability of rival trucks and its interior comfort and infotainment technology leave a lot to be desired.


The Bottom Line If you want a solid, no-frills work truck, get a Tundra. If you want a comfortable and capable daily driver, get something else.
.........

The current Tundra's last major update came in 2014, but it still largely uses the same mechanical components from when the second-generation truck initially debuted in 2006....................Where the Tundra makes a strong case for itself is in value. Consider this: You can't get a 2020 Tundra for more than about $55,000, but a fully loaded Ram 1500 Limited will touch $70,000 if you aren't careful. Of course, the Ram is better at everything, so you could consider it money well spent.

Toyota just introduced a new Tundra, and its pretty good, but not good enough to pry the die hard Ford, GM, or Ram fans away from their trucks. Toyota, Nissan, pick up a percentage of swing voters, meanwhile the big 3 trade spars back and forth. In the half ton class its a battlefield, in the HD diesel class the loyalty goes very deep. For example I just bought a new GMC 2500 Denali HD a few months back, I looked at Ford and Ram at the auto show, but never gave them serious considerations as I have always been a GMC guy... My friends that are Ford and Ram guys are the same, we just replace our trucks when we feel a compelling option comes along, and of course they are business expenses that qualify for section 179 deduction, so there is little second thought given to price.

 

[interestedinEV]

Toyota just introduced a new Tundra, and its pretty good

The review I quoted was on the Tundra 2020, the latest one. As per the reviewer, it still does match up and is aimed at the price conscious entry buyer.

 

[David Green]

The review I quoted was on the Tundra 2020, the latest one. As per the reviewer, it still does match up and is aimed at the price conscious entry buyer.

I agree with a lot of this review, but Camry is similar, as it is not the highest tech, best driving car in class and sells great, so why so much trouble getting into the truck market for Toyota? Again it goes back to loyalty... Nissan has the Titan HD Diesel now which is also not a bad truck but has not penetrated the market much, and even with a really good Cummins diesel engine has struggled to gain traction.