Crown

By March 2019 we'll already know how this story ends. 

Boxster Coupe GTS:

It's also worth keeping in mind that Tesla's debt maturities include convertible bonds... another reason for a CEO to watch the stock price! 

For example, Tesla has a $230 million bond inherited from SolarCity due in November with a strike price of nearly $561 per share; a $920 million convertible in March 2019 with a strike price of about $360; another $566 million SolarCity convertible bond due in November 2019 with a strike of about $760 per share... 

While $230 million in November 2018 and $566 million due in November 2019 are a significant distance from converting into equity, Elon may be hoping that Tesla stock recovers to trade above $360 by March 2019 which would avoid another $920 million of debt maturing... 

Excellent post and extremely relevant!

One is not prone to post from the UK's The Sun but the following includes a brief video highlighting the level of automation at Volkswagen Group's SEAT Barcelona factory.  This is but one small area of Volkswagen's technological prowess and something that should worry the likes of Tesla.

https://www.thesun.co.uk/motors/6233848/inside-seats-barcelona-factory-which-uses-2000-dancing-robots-to-build-their-motors/

Of late, one has noticed that even FCA is producing relatively high levels of fit and finish BIW with parallel, tight shutlines on its products.  They have also focused on interior quality and produce a relatively decent product from Alfa Romeo to Dodge.  

So for the last quarter they lost roughly 700mil, Elon said Tesla will make a profit later this year. Safe to assume it's not gonna be next quarter, that means in 2 quarters.

Average selling price of a Model 3 is what 40k? How much profit is there in one car? Maybe 4k if that? 

Lets say Elon's 'profit' means getting into black ink, maybe barely, so they have 700mil loss to make up.

That means selling 175,000 Models 3 in 6 months. That's slightly more than 29,000 Model 3s a month.

Roughly 7300 Model 3s a week.

Tesla is not even close to making that many a week right now.

It's just simple math from publicly available data.

But if we being generous and consider 'before end of year' means Dec 31st. That means giving them 8 months instead of 6.

Works out to be 21,875 Model 3 a month, just under 5,500 cars a week. 

That's 'almost' doable. if their per car profit is indeed $4,000 a car or more. 

Elon did claimed that they are aiming for 25% gross margin on the Model 3 and a profit margin of mid teens.

But that was based on their forecast of using mostly robots to cut cost. Now that those robots are useless and the need to hire more personal and run them 24 hours, the labour cost suddenly jumped by a big margin and erode the optimistic profit margin, dropping them down to perhaps 10% or even less.

Whoopsy:

So for the last quarter they lost roughly 700mil, Elon said Tesla will make a profit later this year. Safe to assume it's not gonna be next quarter, that means in 2 quarters.

Average selling price of a Model 3 is what 40k? How much profit is there in one car? Maybe 4k if that? 

Lets say Elon's 'profit' means getting into black ink, maybe barely, so they have 700mil loss to make up.

That means selling 175,000 Models 3 in 6 months. That's slightly more than 29,000 Model 3s a month.

Roughly 7300 Model 3s a week.

Tesla is not even close to making that many a week right now.

It's just simple math from publicly available data.

But if we being generous and consider 'before end of year' means Dec 31st. That means giving them 8 months instead of 6.

Works out to be 21,875 Model 3 a month, just under 5,500 cars a week. 

That's 'almost' doable. if their per car profit is indeed $4,000 a car or more. 

Elon did claimed that they are aiming for 25% gross margin on the Model 3 and a profit margin of mid teens.

But that was based on their forecast of using mostly robots to cut cost. Now that those robots are useless and the need to hire more personal and run them 24 hours, the labour cost suddenly jumped by a big margin and erode the optimistic profit margin, dropping them down to perhaps 10% or even less.

 

ASP for the Model 3 is closer to $55,000.   Burst production volume, however Tesla defines it, has exceeded 5,000 a couple of times but weekly volume is roughly 2,400 units.  Gross margins are negative and traditional automakers at one time needed nearly 90% capacity to break even.  During the Carl Hahn era at Volkswagen, Wolfsburg needed 103-105 % utilization to just break even.  

CGX car nut:

Whoopsy:

So for the last quarter they lost roughly 700mil, Elon said Tesla will make a profit later this year. Safe to assume it's not gonna be next quarter, that means in 2 quarters.

Average selling price of a Model 3 is what 40k? How much profit is there in one car? Maybe 4k if that? 

Lets say Elon's 'profit' means getting into black ink, maybe barely, so they have 700mil loss to make up.

That means selling 175,000 Models 3 in 6 months. That's slightly more than 29,000 Model 3s a month.

Roughly 7300 Model 3s a week.

Tesla is not even close to making that many a week right now.

It's just simple math from publicly available data.

But if we being generous and consider 'before end of year' means Dec 31st. That means giving them 8 months instead of 6.

Works out to be 21,875 Model 3 a month, just under 5,500 cars a week. 

That's 'almost' doable. if their per car profit is indeed $4,000 a car or more. 

Elon did claimed that they are aiming for 25% gross margin on the Model 3 and a profit margin of mid teens.

But that was based on their forecast of using mostly robots to cut cost. Now that those robots are useless and the need to hire more personal and run them 24 hours, the labour cost suddenly jumped by a big margin and erode the optimistic profit margin, dropping them down to perhaps 10% or even less.

 

ASP for the Model 3 is closer to $55,000.   Burst production volume, however Tesla defines it, has exceeded 5,000 a couple of times but weekly volume is roughly 2,400 units.  Gross margins are negative and traditional automakers at one time needed nearly 90% capacity to break even.  During the Carl Hahn era at Volkswagen, Wolfsburg needed 103-105 % utilization to just break even.  

Well yes, traditional car makers have perhaps 10% or even less profit margin.

http://www.motortrend.com/news/tesla-killers-ev-competitors-from-jaguar-bmw-vw-others/

What are the chances of Tesla partnering up with a major car manufacturer? This could change a lot...

RC (Germany) - Rennteam Editor Porsche 991.2 Carrera GTS Cabriolet (2018), Audi R8 V10 Plus (2016), Mercedes E63 S AMG Edition 1 (W213), Mini JCW (2015)

RC:

What are the chances of Tesla partnering up with a major car manufacturer? This could change a lot...

A bit more likely after Chapter 11 restructuring so Tesla is a solvent partner? 

Saw my first model 3 at work today, brand new red one. To me in the $50k segment there is simply no other car that even comes close to it. I found it beautiful in that color and the interior is just whoa. So clean, so modern, so fresh. It looked good quality too. If enough people think the same, and I am very picky for luxury in cars, Tesla will have no issue long term.

As said above, Tesla only builds highly optioned model 3 now so they should definitely have better margins on them.

SciFrog:

Saw my first model 3 at work today, brand new red one. To me in the $50k segment there is simply no other car that even comes close to it. I found it beautiful in that color and the interior is just whoa. So clean, so modern, so fresh. It looked good quality too. If enough people think the same, and I am very picky for luxury in cars, Tesla will have no issue long term.

As said above, Tesla only builds highly optioned model 3 now so they should definitely have better margins on them.

Last week’s not really an analysts earnings call had information that the Model 3 margins are negative.   Since 5,000 units per week is the target, the breakeven point must be not too far away, in terms of production volume.

You are toying with words with a huge bias again.

Of course overall Model 3 margins are negative but that’s expected and normal at this stage. What really matters is the margin on marginal new model 3 production... Is that negative?

SciFrog:

You are toying with words with a huge bias again.

Of course overall Model 3 margins are negative but that’s expected and normal at this stage. What really matters is the margin on marginal new model 3 production... Is that negative?

How can one tell when Musk refused to answer relevant analyst questions last week?   Ol

Elon had always stressed that they are targeting 5000 cars a week, so that has to be the break even point where they stop losing money on each car

On a side note, Tesla was down to around 500mil of the 1.8bil on the credit line, so they had to pledge the factory to gain more liquidity for the rest of the year. 

Whoopsy:

Elon had always stressed that they are targeting 5000 cars a week, so that has to be the break even point where they stop losing money on each car

On a side note, Tesla was down to around 500mil of the 1.8bil on the credit line, so they had to pledge the factory to gain more liquidity for the rest of the year. 

 

Not sure the company even knows where its breakeven point is because of all the changes made to assembly line.  Also recently read an article that suggested that Model 3 production is increasing based on vendor instructions from the company.   Strangely, that article also stated that Tesla ordered suppliers to produce tooling for higher volumes.   This would imply that current tooling at the suppliers is near prototype, not production.  Doubt that’s true but anything with that company is possible.  If true, tooling takes time and the short term goals are then questionable.

SciFrog:

 I found it beautiful in that color and the interior is just whoa. So clean, so modern, so fresh. It looked good quality too.

Have your standards slipped? Doesn't look sleek and fresh here. To be clear my beef with Tesla is their ridiculous pricing and poor handling. I have my views on their stock price too .

I really like how Tesla continuously update small things with the X/S. A new version of the S will probably come 2019/2020, but already now the interior is quite appealing with the changes introduced this week where they got rid of the interior chrome and added some new materials.

The main computer has now also been updated with a much faster Intel processor instead of the old Nvidia Tegra chip (used for the 17" inch screen). The responsiveness is like an iPad pro and probably the fastest infotainment/nav computer in any car out there.
 

crayphile:

SciFrog:

 I found it beautiful in that color and the interior is just whoa. So clean, so modern, so fresh. It looked good quality too.

Have your standards slipped? Doesn't look sleek and fresh here. To be clear my beef with Tesla is their ridiculous pricing and poor handling. I have my views on their stock price too .

 

 

Wait until you see it in person...... looks very ordinary. I saw 2 last week and they don’t look that good but not bad either, it is  too small so it doesnt have a presence. 

crayphile:

SciFrog:

 I found it beautiful in that color and the interior is just whoa. So clean, so modern, so fresh. It looked good quality too.

Have your standards slipped? Doesn't look sleek and fresh here. To be clear my beef with Tesla is their ridiculous pricing and poor handling. I have my views on their stock price too . 

Eh, I mean, it's a normal car. You're paying for the EV technology.

You have an SV right? That's like a $500-600K car, no? Why don't you mind paying for that even though a Performante is half the price and better?

Teslas are not cheap, but you're getting something unique for the money just like the SV is unique for the money. Keep in mind the Model S is "old". There will always be a day when you can pay full price for a car right before the new one comes out. You could order a 991 at full price on the same day the 992 debuts, in theory. The Model S does need a refresh and it will have one eventually. It's 6-7 years old, which isn't too bad for a normal car lifespan.

AP911:

 

Wait until you see it in person...... looks very ordinary. I saw 2 last week and they don’t look that good but not bad either, it is  too small so it doesnt have a presence. 

That's actually one reason Tesla has been successful. They made an EV normal looking instead of like a car from the future. It's just a nice, ordinary looking sedan. I think it's no worse than any high-end Germany car from an exterior design perspective. In fact, I think it's better looking than a lot of the German luxury cars.

I just don't like the no instruments in front of you while driving. Everything is on the center stack and it's just weird. It's a smaller car but it's very large inside and has a HUGE trunk. I"ve been toying with getting one for my 7km commute and running around town but don't want the huge wait. 

Past-President, Porsche Club of America - Upper Canada Region

Mithras:

I just don't like the no instruments in front of you while driving. Everything is on the center stack and it's just weird. It's a smaller car but it's very large inside and has a HUGE trunk. I"ve been toying with getting one for my 7km commute and running around town but don't want the huge wait. 

Not a fan of that either.

Can't you buy one on eBay for a small (by Rennteam Standard Pricing) premium? Are they really more than $5K over MSRP for the flippers?

That cool video explains why Elon Musk wanted to avoid analysts questions on the Q1 numbers and go to YouTube! 

Here's an alternative perspective on Tesla's performance from a close business partner and battery producer...

Link: https://asia.nikkei.com/Business/Business-Deals/Panasonic-rattled-by-high-maintenance-partner-Tesla

...salut Panasonic! 

That's not a problem.  Musk has a new muse:  https://www.youtube.com/watch?reload=9&v=JtH68PJIQLE

If the solution to Teslas future problems was going into the truck business, it doesnt seem like they moving that way

https://seekingalpha.com/article/4172159-tesla-semi-dead

⇒ Carlos - Porsche 991 Carrera GTS

Carlos from Spain:

If the solution to Teslas future problems was going into the truck business, it doesnt seem like they moving that way

https://seekingalpha.com/article/4172159-tesla-semi-dead

Seriously? An article from seeking alpha? You could look up what this guy has written about Tesla previously... In my book a reference like this is not more worth than linking to an article written by a Tesla fanboy predicting that Tesla will rule the world. That ain't true either. We all know that.

Next up might be a reference to anything the famous short seller Mark B. Spiegel is writing on seeking alpha or twitter? (he has been short TSLA since 2013 and probably no further explanation needed why he's a bit angry )

Time will tell like always. I do however hope that Tesla will succeed because what they do is in many ways cooler than what some of the established companies does. That being the new Semi, new Roadster or anything else in between where they're moving the goal post. They challenge the  industry and it's more fun with Tesla aroud, than without 

The shorts are too binary. They think TSLA has to fail completely or pull a rabbit out of a hat. The reality is that there is nothing wrong with TSLA succeeding at a share price of $80.

Complete failure is not the only outcome of not reaching the loft goals originally set upon. It's much more likely that they succeed, but less successfully.

I'm short anywhere above $300 and covering anywhere below $100. I don't expect TSLA to go bankrupt, but I do think it is a plausible scenario.  However there are so few scenarios in which TSLA grows into its current mkt cap that the risk/reward for a long-term short is extremely compelling at this price.

trip:

I'm short anywhere above $300 and covering anywhere below $100. I don't expect TSLA to go bankrupt, but I do think it is a plausible scenario.  However there are so few scenarios in which TSLA grows into its current mkt cap that the risk/reward for a long-term short is extremely compelling at this price.

More importantly, when do you stop yourself if it never reaches $100?

SciFrog:

trip:

I'm short anywhere above $300 and covering anywhere below $100. I don't expect TSLA to go bankrupt, but I do think it is a plausible scenario.  However there are so few scenarios in which TSLA grows into its current mkt cap that the risk/reward for a long-term short is extremely compelling at this price.

More importantly, when do you stop yourself if it never reaches $100?

Luckily its a liquid market and as facts change and information is revealed I can tailor my position accordingly. I shorted from $336 down to $265 and covered there because I thought we were at a temporary period of "max negativity" where they were missing model 3 production, fatal crash investigation, more press on the cash burn, etc. and thought the stock would likely recover in the short term as people realized they could probably reach eventual profitability on the Model 3 line.

I am looking to open the short position again from here if I can only find some shares to borrow!