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Little News From Tesla

Discussion in 'Similar Vehicles' started by Coss, Nov 3, 2017.

  1. 3wheelin

    3wheelin Elio Addict

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    I could step right in and take over EM and bring them closer to production by year's end! I can also fix Tesla Motor's model 3 production woos and deliver all 400-500K to reservation holders also by year's end....no talent and experience needed! :D:D:D
     
  2. RSchneider

    RSchneider Elio Addict

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    I can tell you how to be a world class chicken farmer who can raise them for only 50% the cost of the ones that do it today, plus it'll reduce the cancer rate in America by 20%. Give me money and I'll prove it to you because i have a plan for commercial production that will be up an running in 12 months. I can't tell you what it is because big chicken will shut me down.
     
  3. 3wheelin

    3wheelin Elio Addict

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    That sounded familiar.....gimme, gimme, gimme money! Gimme, gimme, gimme the honky tonk blues..too!:D
     
  4. NSTG8R

    NSTG8R Elio Addict

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    Big Chicken heard you, and Big Chicken don't play! :eek:
    ;)

    Big Chicken.jpg

    ...We're going to need a bigger fryer!
     
  5. Coss

    Coss Moderator Staff Member Moderator

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    How about some Q4 news?:

    Tesla's Q4 Red Flags For New Products
    Feb. 13, 2018 6:03 PM ET
    |
    118 comments
    |
    About: Tesla Motors (TSLA)

    [​IMG]
    Donn Bailey


    Long-term horizon, portfolio strategy, growth at reasonable price, contrarian

    (2,538 followers)
    Summary


    New reservations in Q4 did not come close to what readers and contributors were expecting, myself included.

    After breaking down the additional new funds by individual products serious concerns emerge.

    It is unclear just how much financial planning Tesla put into the development of the new product lines introduced in November. Was it all just a reservation "cash grab?"

    Frankly, I was surprised. I expected Tesla (TSLA) to hit about $250 million in new reservations in 4Q17. I was not expecting to see an increase of just $167.8 million from $686 million at the end of Q3 to just $854 million at year-end as reported in the Investor Letter to Shareholders last Wednesday.

    Now it is possible that there were indeed some cancellations of Model 3 reservations. We know $1.5 million in Model 3 reservations were retired in the quarter based on the number of cars delivered (1,542) at $1,000 each. I'm not going to include Model S or X retired reservations since many of the Q4 deliveries were inventory units. These would have come in and out of the reservation funds pool within the quarter. Remember we are looking for growth in reservations. So for discussion let's assume new reservations in Q4 resulted in $175 million. How would that break down? Tesla, as usual, did not provide any breakdown on reservations for any products. It left it to all of us to try and piece the picture together. Here's my take.

    New reservation breakdown
    [​IMG]

    Remember these are estimates based on comments gathered from Tesla owner sites and the little information we have from press reports on Semi reservations. I have taken a position of pushing most of the new reservation money to automotive products. For Tesla's sake, I hope I'm on the right track. The numbers are bad enough for Semi even with the help.

    So here we go. Again these are my guesses for the new reservation funds from Q4 I am estimating at $175 million.

    500 ea. Founder's Edition Roadsters at $250,000 each = $125 million.

    We know people swarmed the car at the unveiling in November, almost ignoring the new Semi. There were long lines of people plunking down $5,000 (as reservation deposits) just to take test drives. There are surely enough Tesla fans globally with big bank accounts to throw down the full purchase price to take 500 of these reservations without blinking an eye. I also recently confirmed with Tesla staff that a Founder's Edition can still be ordered so we know the actual number of reservations in under the 1,000 unit cap.

    700 each Regular Edition Roadsters at $50,000 each = $35 million

    Based on the released financial data on Wednesday I think $35 million is what we now have in Roadster reservations. That gets us to $160 million with $15 million left in our total of $175 million in new reservations.

    Semi - Founder's Edition. Number crunching trucking companies could care less about being first in line for units that may have "bugs." They get the same PR mileage from just announcing they are reserving trucks without paying a premium to do so. Here's a 2014 video from Wal-Mart (NYSE:WMT) when they took a shot at a previous electric Semi. With over 4 million views Wal-Mart obviously got some PR mileage from this video and as far as we know the truck was never road tested. In this case, Semi Founder's Edition will be set to just 10. There are always a few who defy logic, right? So that's 10 x $200,000.

    10 each Founder's Edition Semi at $200,000 each = $2 million

    Regular edition Semi. If Tesla has 2,000 reservations I would be surprised. Why? Because these trucks also will require a big upfront investment in Megachargers to power the trucks. Paying an upfront premium for an electric semi-tractor is bad enough. Doubling the price to pay for a charger unit at the home base or secondary locations for longer trips will not be feasible for companies that have small numbers of trucks and would be ordering low single-digit quantities. I discussed this issue in a recent article here. I also do not believe anyone reserved units after Tesla raised the reservation price from $5,000 to $20,000. Operating cash is too precious to trucking companies. Without any escrow or other guarantees? Never going to happen. $5,000 is the most anyone would risk, in my opinion. If a few did, remember each one reserved for $20,000 would reduce the number of reservations on a 4 to 1 ratio. So let's hope no one did pay $20 grand.

    2,000 each Regular Edition Semi at $5,000 each = $10 million

    The Tesla Q4 letter states there were increased deposits for Model S and X as well so we need to allocate some funds to those products remembering this would include CPO deposits, along with Solar Roofs and storage products.

    So Model S and X reservations in excess of those delivered in Q4 will get $2 million.

    That leaves $1 million for new reservations for solar and energy products. With that last million we have $175 million in new reservations and that is all there is unless a ton of people canceled Model 3 reservations. But at just $1,000 each, it would take a ton of cancellations to move the needle.

    New product realities
    So now using these estimates for reserved units where does that leave Tesla?

    There's a glaring liability here for $125 million with the Founder's Edition Roadster. If my number is correct, which matches an earlier estimate from ValueAnalyst here, Tesla now has to deliver 500 of these cars and will not receive any additional funds when they are handed over in 2020.

    The question becomes if only 1,200 (500+700) or so people were willing to sign up for the Roadster, is the car worth producing? Will the costs of setting up the production line at a still undisclosed location be worth completing? Even building the Roadster without expensive robotic tooling will still require upfront expenditures. My "back of the envelope" figures put the numbers at $200-$300 million at a production rate of just 200 per month. What happens if new follow-on orders do not materialize?

    If we give the 700 standard Roadster units a generous 40% GM ($200k x 40%) it will only bring in $56 million (700 x $80k) upon delivery, of which they have already received $35 million in reservation funds. So, after delivering the assumed first 1,200 Roadsters just $21 million in new cash will make it into Tesla coffers in 2020. After subtracting the $160 million (received up front in reservations) from the development costs of say $250 million Tesla will still need $90-$21= $69 million in new gross margin from follow-on sales just to break even on the product line. That's 862 additional units (at a GM of $80k), not easily forecast in additional sales. But Tesla cannot survive on breakeven products. The question becomes could sales of 2,400 units per year be sustained? At this time there is no way to tell, leaving the Roadster program up in the air.

    Remember also that the Roadster product development will have to include the new 200 kWh battery packs, a whole new item for Tesla's Gigafactory. I doubt they could just stack two 100 kWh packs on top of each other. With the issues they are having building the L-R 70kWh pack for the Model 3, how feasible is the pack for the Roadster?

    The same issues stand with the Semi due out as soon as next year. At this point, they could be on the hook to deliver as many as 2,010 units having received just $12 million in upfront payments. That's assuming big names like UPS (NYSE:UPS) and Wal-Mart paid anything at all up front. Their support for the program alone may have earned them spots with no upfront reservation fees.

    This means Tesla may not have even received enough reservation cash to cover the costs of designing and building their two prototype trucks. That is a dismal prospect for the program.
     
    Sailor Dog likes this.
  6. Coss

    Coss Moderator Staff Member Moderator

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    Conclusion

    At a time when Tesla desperately needed new cash, the November unveiling ceremony did not produce the "magic" everyone expected.


    The Roadster as a slow, limited production vehicle might have a chance of success since it will not pose a big drain to long-term opex or capex cash. It will utilize the existing service facilities and Supercharger network.


    The Semi program, on the other hand, is clearly not hitting the mark I expect is needed to secure the program. Not only did they not get enough interest from trucking operators, Tesla would have to commit hundreds of millions in new capex for a Megacharger network and separate Semi service facilities, or contract with companies such as Ryder to perform warranty and future service work at additional costs. I believe it is time for the Tesla Board of Directors to reevaluate this program.


    Granted my numbers could be way off for one reason. There may have been 100,000 cancellations for Model 3. That would mean $100 million more was received for these other programs. But I do not believe that occurred. 1,000 cancellations? Possibly - but $1 million, as I said before, is not going to move the needle on the other programs.


    For at least the first half of 2018 Tesla will have no new unveilings. I would expect the Model Y to be the next unveiling late this year. But at Tesla's rate of cash burn, it may be too little and too late to help keep Tesla's ship afloat.




    Disclosure: I am/we are short TSLA VIA OPTIONS.
     
    Sailor Dog likes this.
  7. Rickb

    Rickb Elio Addict

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  8. RSchneider

    RSchneider Elio Addict

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  9. Rickb

    Rickb Elio Addict

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    johnsnownw likes this.
  10. RSchneider

    RSchneider Elio Addict

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    I guess Paul doesn't wear hats. If he did, we'd have a shortage of hats.
     

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