TSLA Analyst Coverage - 2019 Q1

Bokonon

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#1
Just going to kick off this thread with a pair of contrasting (albeit predictable) perspectives from The Motley Fool:

Tesla Wraps Up a Big Year With Record Deliveries

Tesla Cuts Prices as Model 3 Deliveries Miss Estimates

As you'd expect, the bearish viewpoint centers around the (slight) delivery miss, and the across-the-board $2K price cut in the U.S. as an indication of (and response to) drying demand for Tesla vehicles (as if the U.S. were the only market that mattered).

I don't see the price cut as a primarily reactive move. I think Tesla decided a while ago that, in the absence of unforeseen, stratospheric demand, when the tax cut stepped down "splitting the difference" with the buyer was the best way to keep demand consistent and elevated (especially for Model 3). Keeping that demand up (along with the associated cashflow) will buy Tesla some more time to continue building the bridge to the $35K base Model 3, unlocking additional demand at lower and lower price points along the way. If you ask me (or, I would venture to guess, Elon) reaching that goal is much more important to Tesla's long-term health than squeezing every dime that it can out of Q1, at the expense of Q2, Q3, Q4, and beyond...
 
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#2
Wondering how the market will react to Tesla’s latest sales numbers. My guess is that it will be positive overall.

Nice how the moderators decided to split up the thread into quarterly chunks!
 

garsh

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#3
Wondering how the market will react to Tesla’s latest sales numbers. My guess is that it will be positive overall.
The market doesn't like it so far.

Which is fine with me; I took the opportunity to pick up a few more shares. If the stock price drops further, then I'll pick up some more. I love a good sale! :D

It seems to me that the company is no longer in danger of going bankrupt. The versions of the Model 3 that they're currently selling are profitable. Production is "good enough" to sell a $44,000 car profitably, and will continue to improve. The "lack of demand" thesis is complete hogwash. I expect that Tesla will unveil the Model Y in March, and maybe we'll see a surprise pickup sneak peek (ok, probably not, but I can dream). That's really going to give the stock a boost. I think this quarter is going to be the last time TSLA is available to be purchased below $400.
 
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#4
Amazing how the news is portraying TSLA yet again. I sold shares break even in order to reduce risk. Today’s stock behavior is similar to what happened back in October when the company announced a stellar quarter being cash flow positive, beating even the most bullish estimates by leaps and bounds, and yet the stock crashed to around $250 a share.

Doesn’t make sense, but will try to look for a lower buying opportunity. It paid me big time back in October. All this fake FUD and TSLA crashes are like a broken record playing over and over again.
 

garsh

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#6
Is Tesla Special?

Another great article by Randy Carlson on Seeking Alpha.

Summary
  • Tesla's valuation compared to that of legacy carmakers suggests this is a very special company.
  • If other carmakers can build electric cars and have access to the same technology and suppliers as Tesla, what makes Tesla different?
  • An interview with Sandy Munro and a look at Bolt cooling and electrical systems illustrate some of what makes Tesla both different and special.
  • Tesla's differences with respect to legacy carmakers are durable and form a powerful moat against competition.
 

garsh

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#7
Oh, this is laughable.

The Tesla Killers Are Finally Here

Summary
  • Tesla has enjoyed a near-monopoly on the high-end BEV market; the Model S sedan and Model X crossover have been the only options for many luxury buyers.
  • The Jaguar I-Pace and Porsche Taycan represent the first serious threats to Tesla's dominance of the luxury BEV market, though a host of others are in automakers' pipelines.
  • Both the I-Pace and Taycan compare favorably to Tesla's luxury models on all important levels, including price, range, performance, and quality.
  • Tesla is reportedly cutting back production of the Model S and Model X, ending the long-running narrative that these models were production-constrained.
  • With no sign of a model refresh, increasing competitive pressure, and significant near-term financial stresses, Tesla is poised to lose its leadership position in the electric vehicle market.
Now, don't get me wrong. He's partially correct. There really is a Tesla killer that's causing Tesla to reduce production of the S an X. But it's not the i-Pace, which is smaller and less efficient than the Model X and otherwise doesn't compare as favorably. And it's certainly not the Taycan, which isn't even available to purchase yet. No, the real Tesla killer is...

The Tesla Model 3

The AWD and Performance versions of the Model 3 are eating into low-end S and X sales. Why spend $75k on a base Model S with only 250 miles of range when you can get a Model 3 with all the bells and whistles and spend $10k less?
 

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#8
I do think that there are signs of softening domestic demand for current Model 3 configs. Those signs include the price drop—utterly not necessary if sold out—and the addition of the MR, and how often Tesla calls me about our second reservation. That is not to say that overseas markets can't fill the factory near term, but I think we are looking at a slight lull in deliveries as the US near-term demand for $50K cars has been largely caught up with and overseas shipments have just begun. I mean, it is what it is. As awareness builds, demand will grow, but that takes time. Relatively few average US consumers are more than vaguely aware of Model 3.

I think the weakening outlook/gap for Q1 led to the recent layoff. Service Centers in the US are not as slammed as they have been, and overseas deliveries are higher cost, and those delivery centers need some spending to get them ready.

I guess the positive spin I would put on it is that whenever Tesla makes a move like adding a new configuration or hosting special test drive events it shows that Tesla is ramping up the kinds of things it will need to do in the future to promote sales when the factory supply is not the issue. It is startling how few promotional events there have been—and no advertising.

Are we close to seeing the first Tesla advertising?
 

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#9
I think the weakening outlook/gap for Q1 led to the recent layoff. Service Centers in the US are not as slammed as they have been, and overseas deliveries are higher cost, and those delivery centers need some spending to get them ready
We can’t forget that after the layoff announcements in June or July they hired back a lot of guys almost more than they could support. Plus they also have a 900 mil bond repayment coming up in March, so that also might be a reason.
 

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#10
Oh, this is laughable.

The Tesla Killers Are Finally Here

Summary
  • Tesla has enjoyed a near-monopoly on the high-end BEV market; the Model S sedan and Model X crossover have been the only options for many luxury buyers.
  • The Jaguar I-Pace and Porsche Taycan represent the first serious threats to Tesla's dominance of the luxury BEV market, though a host of others are in automakers' pipelines.
  • Both the I-Pace and Taycan compare favorably to Tesla's luxury models on all important levels, including price, range, performance, and quality.
  • Tesla is reportedly cutting back production of the Model S and Model X, ending the long-running narrative that these models were production-constrained.
  • With no sign of a model refresh, increasing competitive pressure, and significant near-term financial stresses, Tesla is poised to lose its leadership position in the electric vehicle market.
Now, don't get me wrong. He's partially correct. There really is a Tesla killer that's causing Tesla to reduce production of the S an X. But it's not the i-Pace, which is smaller and less efficient than the Model X and otherwise doesn't compare as favorably. And it's certainly not the Taycan, which isn't even available to purchase yet. No, the real Tesla killer is...

The Tesla Model 3

The AWD and Performance versions of the Model 3 are eating into low-end S and X sales. Why spend $75k on a base Model S with only 250 miles of range when you can get a Model 3 with all the bells and whistles and spend $10k less?
Today’s model s and x announcement makes their production more streamlined. A software locked battery means you can charge to 100% all the time isn’t it?

Also why are they holding back from putting in 2170 cells in s and x? Do they really want to put out a redesigned car along with the battery pack because putting in 2170 cells means they have to think about car and pack redesign as well. Because supercharging v3 needs 2170 cells isn’t it?
 

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#11
Also why are they holding back from putting in 2170 cells in s and x?
The 2170 cells are a different size, both longer and wider. So the whole battery pack needs to be redesigned. Even worse, the pack has to be a different size. So do you try to redesign the floor of the car and raise it a little to make room? Do you just have the pack stick down further than the current one, compromising ground clearance? It's a difficult problem. They have to redesign a lot of the chassis to accommodate it.
 

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#12
The 2170 cells are a different size, both longer and wider. So the whole battery pack needs to be redesigned. Even worse, the pack has to be a different size. So do you try to redesign the floor of the car and raise it a little to make room? Do you just have the pack stick down further than the current one, compromising ground clearance? It's a difficult problem. They have to redesign a lot of the chassis to accommodate it.
So musk said on the call that they don’t plan on using 2170 in model x/s. This means they are not really worried about adding more range on s and x until the completion catches up or they really have something superior to 2170s? Any thoughts on this?
 

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#13
So musk said on the call that they don’t plan on using 2170 in model x/s. This means they are not really worried about adding more range on s and x until the completion catches up or they really have something superior to 2170s? Any thoughts on this?
previously, when the 2170 cells first were discussed on the 3, the theory on why they were not planning on redesigning the S/X packs to use them was they could have a long term contract for the 18650 cells they get from Panasonic overseas. or their joint Gigafactory agreement stated they needed to continue with their overseas 18650 order.
 

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#14
previously, when the 2170 cells first were discussed on the 3, the theory on why they were not planning on redesigning the S/X packs to use them was they could have a long term contract for the 18650 cells they get from Panasonic overseas. or their joint Gigafactory agreement stated they needed to continue with their overseas 18650 order.
Yes what you said about the contract might be right but It could also be that 2170s could not give them the power o/p for a 100kwh pack that they need for s/x to go ludicrous and they are not willing to compromise the performance on those cars?
 

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#15
Yes what you said about the contract might be right but It could also be that 2170s could not give them the power o/p for a 100kwh pack that they need for s/x to go ludicrous and they are not willing to compromise the performance on those cars?
I doubt it. A Model 3 Performance with a 75kWh pack is quicker than a Model S P85D. So it seems likely that a Model 3 style pack scaled up to 100kWh would be able to delivered ludicrous acceleration as well.

The other thing mentioned in the earnings announcement is that Powerwall production was held back because Panasonic didn't have enough production capacity at Gigafactory 1 to satisfy both powerwall and Model 3 production. So they're still production-constrained for 2170 cells. There's no point in redesigning the S & X to use 2170 cells before they get cell production increased to handle existing Model 3 and Powerwall demand, including the increases in that demand as production for both products continues to climb.
 

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I doubt it. A Model 3 Performance with a 75kWh pack is quicker than a Model S P85D. So it seems likely that a Model 3 style pack scaled up to 100kWh would be able to delivered ludicrous acceleration as well.

The other thing mentioned in the earnings announcement is that Powerwall production was held back because Panasonic didn't have enough production capacity at Gigafactory 1 to satisfy both powerwall and Model 3 production. So they're still production-constrained for 2170 cells. There's no point in redesigning the S & X to use 2170 cells before they get cell production increased to handle existing Model 3 and Powerwall demand, including the increases in that demand as production for both products continues to climb.
So model 3 is a smaller car. From doing some research a model 3 75kwh pack outputs 1000 amps. 2170s 100 kWh pack will output 1338 amps. I think for a car like s and x to go ludicrous you need a lot more power.

Who knows in roadster they could be putting 18650 cells. Because they are smaller and very high performant. And the current model s / x could support 180 kw of supercharging.

I might be totally wrong here, who knows tesla might even have a different cell architecture they might be looking at. Electrek is reporting a Tesla patent today that they filed for a new cell type.
 

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#17
I think for a car like s and x to go ludicrous you need a lot more power.
Two things:
  • The issue they had to overcome was not lack of power. The cells of the time could deliver it. The problem was producing a main pack contactor that could handle all of that energy, and creating a more precise fuse.
  • 2170 and 18650 are just the sizes of the cells. It has nothing to do with the chemistry used inside the cell, how much energy they can hold, or how much power it can delivery. The new 2170 size was designed because it allows for higher energy densities when put into a pack. So a pack designed around 2170 cells will hold a little more energy than a pack of similar size designed around 18650 cells.
 

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#18
Two things:
  • The issue they had to overcome was not lack of power. The cells of the time could deliver it. The problem was producing a main pack contactor that could handle all of that energy, and creating a more precise fuse.
  • 2170 and 18650 are just the sizes of the cells. It has nothing to do with the chemistry used inside the cell, how much energy they can hold, or how much power it can delivery. The new 2170 size was designed because it allows for higher energy densities when put into a pack. So a pack designed around 2170 cells will hold a little more energy than a pack of similar size designed around 18650 cells.
For 2170s to put out power like the model s and x does we need around 130 kWh pack for 2170s