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  • Cadillac And Audi Launch All-New Plug-In Hybrid Sedans In China: How Will This Impact Tesla? [View article]
    Mr. Greenhalgh, please point to some actual evidence of thousands (as in >= 2,000) Tesla Model S's unsold in China.
    Apr 19, 2015. 02:59 PM | 8 Likes Like |Link to Comment
  • Tesla Motors fires up the Model S 70D [View news story]
    Actually, most people that bought the Model S 60 kWh also bought the tech package ($3,500) and the Supercharger option ($2,000). For that same price, you now get the Supercharger, the critical part of the tech package, AWD, 8 year power train and battery warranty and 10 kWh. So really, this is a much better value.

    This may also mean that Tesla's costs are lower to be able to offer this upgrade.
    Apr 8, 2015. 11:43 AM | 8 Likes Like |Link to Comment
  • Tesla: Shattering The Lack Of Demand Myth [View article]
    LT, you have to give credit to Tesla for the 1,400 vehicles in some manner. Either last quarter or this quarter. If you choose to put it into last quarter, then Tesla hit the revised 33,000 vehicle guidance and broke all sorts of records last year and TSLA stock would likely not have hit the lows that it did in the past couple of months. This was a gift to the bears, but has no real bearing on the long term.

    Then Q4 -> Q1 would have had a substantial sequential drop. However, the 55,000 guidance for 2015 was given together with the guidance of 9,500 deliveries in Q1. Tesla exceeded that number. Delivering 10,030 vehicles in Q1 in no way reduces the chances that Tesla delivers to the 2015 guidance number.

    Tesla communicated a lower production volume for early 2015 while still sporting a very thick order book. With a single factory and several choke points, there is going to be variance in the production volume. There is plenty of evidence of reasons for a lower production and deliveries in Q1 2015, including the west coast port strike, the one week less of production, the paint shop upgrade, the P85D launch in non-U.S. markets, and the S85D global launch. As a result, it doesn't really matter where you put the 1,400 vehicles in the context of the 2015 guidance. You can look at 1,400 added to last year and this year is 53,600 guidance or put it in Q1 and have the 55,000 guidance.
    Apr 6, 2015. 03:55 PM | 5 Likes Like |Link to Comment
  • Tesla Motors +4% after delivery update [View news story]
    Tesla buys the cells from Panasonic in yen. As the dollar strengthened, the cells have gotten cheaper. Even if Panasonic buys commodities like synthetic graphite, nickel, aluminum, lithium (that's all the major constituents) in USD, the value of those commodities in USD terms has also dropped.

    45% of the vehicle is sourced from imported parts. The copper and aluminum have both dropped significantly. Aluminum is about 15% off the highs last quarter and back to 2013 pricing. Copper has dropped about 20% in USD. Of course, it all depends on when Tesla locks in commodity pricing and for how long.

    The lower gasoline prices are not low enough to change the electricity/gasoline equation significantly enough - partially because gasoline prices are buffered somewhat from crude oil price changes to the downside. Most people don't expect the price of crude to remain this low - U.S. crude production can't continue at this pace with prices this low. At some point, we have to return to $75-85 crude. The battle will just be over who is cutting production to make that happen. By the time the Model 3 ships, we are likely looking at much higher crude and much lower cost battery cells.
    Apr 6, 2015. 01:36 PM | 2 Likes Like |Link to Comment
  • Tesla Motors delivers 10K vehicles in Q1 [View news story]

    Production capacity doesn't work that way. Your entire logic is based on the idea that Tesla's maximum production capacity at Fremont can be achieved all the time, and therefore if they sell anything less than maximum capacity, they are demand constrained. That's absurd since there are lots of other evidence. For example, the customer wait times are still extremely long. The delivery cadence doesn't make sense for a demand constrained environment. Several factors that causes delay in production, like new model launches, paint shop upgrade, and so forth.

    So at most they could have delivered 12,900 cars, not at least. And by at most, it means the shipping delays of the final products were near minimal, the west coast port strike didn't cause any delays, constructing the first batches of the S85D didn't cause any delays at all, and so forth. Unlikely given the layout and parallelism of their factory at the moment. Of course, that will change over time and it has been changing. For example, the Model X production will have more parallelism.
    Apr 4, 2015. 08:42 AM | 4 Likes Like |Link to Comment
  • Tesla Motors delivers 10K vehicles in Q1 [View news story]
    Mr. Mason,

    If you do remove the 1,400 units, that would have made Q4 last year at 11,234. That would have been a terrific showing and they would have made their 33,000 vehicle guidance. They have to get credit for those 1,400 somewhere, you can't remove them out of both Q4 last year and Q1 this year.

    Total production for Q1 and deliveries were guided down - Tesla knew there were challenges for this quarter, including the west coast port strike which wasn't resolved until about half way through the quarter, launching the P85D in Europe and Asia, the S85D launch in all regions, the start of the paint shop upgrade, and the productivity enhancements. All of these have some sort of negative impact on production rate.

    Therefore, production was likely capped at somewhere around 11,500, but realistically a week or so further delay due to the above issues for production means 10,500 produced. Take two production weeks of inventory out as the normal delivery overhang and we're at 8,500 production. Add back in the 1,400 P85D overhang and we're roughly at the deliveries for the quarter.

    Note that the delivery mix in Q1 2015 versus Q4 2014 has about 1,100 more vehicles overseas... it is far more difficult to get volumes within a quarter with the delays associates with a substantial increase in overseas deliveries. Reports are that Europe is going to have a substantial volume next month as the P85D's and S85D's are popular.

    In other words, Tesla executed the goals for the quarter and exceeded them somewhat. Part of the issue is also looking too closely at the variance, reading far too much into it. For example, some people freaked out that the Netherlands had 110 deliveries in Jan, then 48 in February. They were declaring that demand was cratering. And yet March was 266. Sweden had a similar pattern - 38, 12, 122. A big bearish reaction to 38 -> 12 decrease is an overreaction and a big bullish reaction for 12 -> 122 increase is also an overreaction. But the pattern on a quarterly basis for Sweden has been: 1, 26, 89, 48, 96, 172. The 48 number is a result of the factory shutdown in Q3 where Tesla made relatively few overseas deliveries. So again, it's possible overreact 89 -> 48 and overreact 48 -> 96.
    Apr 3, 2015. 02:28 PM | 6 Likes Like |Link to Comment
  • Tesla Motors delivers 10K vehicles in Q1 [View news story]
    gwashn didn't adjust for number of production weeks in Q1, which is 1 less or about 1,000 vehicles.

    Tesla was not focused on increasing the average production rate for the quarter - there were several things that affected production rate. They spoke at the Q4 earnings call about focusing on increasing productivity. They also started the paint shop upgrade and launched the S85D variant. They managed to do this without a huge drop in average production rate over the quarter.

    As for margins, the FX issues are complex. 45% of the parts of the car, according to the sticker, is imported including the cells for the battery pack which is denominated in yen. The 55% domestic content may also include Canadian sourced parts. Raw materials prices, including aluminum and especially copper dropped significantly. Expansion costs overseas also correspondingly dropped. Finally, a price increase was also in effect. So while there probably were FX headwinds, the effect is not as pronounced as some might think.

    Tesla specifically grows costs roughly in line with revenue increases. Sometimes they are higher, sometimes they are lower. It isn't like they have to purchase and install a paint shop to paint 500,000 vehicles a year in 2014/2015 if they weren't expecting on using it at some point. If the revenue growth doesn't come, then they don't expand as fast. I think people are not understanding how one dramatically scales a manufacturing company like this one and how the value of the company grows - it's like people here have never studied business. Tesla isn't a mature business and shouldn't behave like one.
    Apr 3, 2015. 11:53 AM | 9 Likes Like |Link to Comment
  • Tesla Motors delivers 10K vehicles in Q1 [View news story]
    Q1 has 12.5 weeks. They always take 1 week off and said so during the Q4/2014 conference call as well as previous conference calls. So maximum production was 11.5 weeks.

    They also said during the conference call that the aim in Q1 isn't to increase production rate, but to focus on productivity and groundwork for higher volumes. That translates to reducing the labor per car and installing parts of the new paint shop. Also, the S85D is a new variant that launched during the quarter.

    So maximum production was 11,500, not 13,800.

    Also, the overall production constraints are determined by a number of different factors... and so while some parts of the production process have been upgraded to much higher capacities, not everything is upgraded at the same time. For example, the paint shop upgrades this year should be enough to hit the maximum capacity of the Fremont factory. But that doesn't mean the rest of the production is ready for that.

    Also, ever since overseas deliveries have begun, Tesla has had about 2-3 weeks of production rate in finished goods inventory. It is normal that there would be output that isn't delivered yet. it's not possible to get every last car delivered. At a current rate of 1,000 or so a week, that's 2,000 to 3,000 cars that is normal in the process of delivery at end of the quarter. In Q4, there were an extra 1,400 cars on top of that which were pulled aside due to the seat issues with the P85D launch. You can see this pattern clearly if you actually track the production and deliveries correctly.

    As for demand versus supply constraints, you can see that the delivery cadence does not follow a demand constrained scenario. Look at the delivery numbers for the first two months of a quarter versus the 3rd month of a quarter. Notice how the 3rd month of a quarter is almost always vastly higher than the first two months combined? If they were demand constrained, you should see something more normal, like seasonal variations that dominate instead of this intra-quarter surge in the 3rd month. That's because the factory builds primarily vehicles for overseas markets in the beginning of quarter and then as those vehicles are being delivered overseas, the factory switches to building primarily for North America by the end of the quarter. Hence the bulk of deliveries globally happens on the 3rd month of quarter, with spillage into the next quarter. Overseas deliveries made in the 1st month of a quarter has to be almost all from finished goods inventory overhang from the previous quarter due to the length of time for shipping. You probably won't see this kind of cadence if Tesla was demand constrained... they could have a far more steady flow and less variance between delivery times of the shortest wait versus the longest wait. That's also why delivery wait times for top spec cars for North America, especially CA is very short at the end of a quarter, but the delivery wait times for low spec cars, especially overseas increases.
    Apr 3, 2015. 10:42 AM | 11 Likes Like |Link to Comment
  • How Volkswagen Thinks It Will Undercut Tesla On Battery Cost [View article]
    LT, there still isn't enough information. Yes, Audi claims 154 Wh/kg at the pack level. But we don't know what they include in the pack level. Is this NCA? Is this NCM v2? Do we have air cooling or liquid cooling? You can get some pretty good pack level specific energy if you skip some critical items like liquid thermal management.

    Audi/VW already laid out their plans:

    Chances are, the R8 e-tron has the 35/37Ah cells referenced in the VW presentation given last summer. It is likely NMC v2 with 220 Wh/kg cells, but availability of such cells is extremely limited and extremely expensive. Longevity and yield are not yet known. Which is why coming R8 e-trons are basically hand built experiments and the Q6 is the first real mass production car from Audi/VW to have those cells, slated for 2018. If they skip the liquid thermal management, they can get the higher specific energy at the pack level, but suffer in range in cold weather conditions and we'll see about heat effects in both longevity and ability to charge quickly. Which would be one of the reasons why Audi has not claimed very high speed DC fast charging (over 100 kW) with the R8 e-tron.

    Tesla's Model S cells are already over 250 Wh/kg at the cell level and 156 Wh/kg at the pack level including liquid thermal management. Tesla's pack can do 6C discharge and 1.5-1.7C charging. However, we are likely to see new cell chemistry before 2018, so Tesla will still be ahead. Remember, Tesla's cells were shown in 2011 and improved in early 2013 (improved c-rate for charging) and cell chemistry has been improving. Also, weight has been taken out of the Model S already but the specs have not been updated - so it is possible that the 2015 Model S is already much better at the pack level.

    Strategically, this means that about 220/230 Wh/kg is the limit for the next few years of NMC which is what is going into all the next gen BEVs. LG Chem has already signaled this and so has Argonne National Labs. It does mean that in 2017/2018 the various automakers will be able to build almost 2012-ish Model S like vehicles or worse. But by 2017/2018, Tesla will have moved on. Automakers that choose to forgo liquid thermal management will get to see the range degradation you see from the Leaf in the winter, so we'll see who does what. Tesla's solution is already 250 Wh/kg and improvements on the way.
    Mar 15, 2015. 04:55 PM | 6 Likes Like |Link to Comment
  • How Volkswagen Thinks It Will Undercut Tesla On Battery Cost [View article]
    Actually, LT, it's not settled. Audi's paper specs don't provide enough information to actually evaluate properly so I've stayed away from that. There's a difference between comparing at the cell level and at the pack level. Do you know what chemistry Audi has chosen to use with the R8 e-tron? Do you know the price point of the cells, the battery, or even the vehicle? There is so little information forthcoming from Audi, I'm wondering what they are hiding. GM is no better as they are also hiding a lot of information about the Bolt, far more than they hid about the initial Volt concept.
    Mar 15, 2015. 01:09 PM | 5 Likes Like |Link to Comment
  • How Volkswagen Thinks It Will Undercut Tesla On Battery Cost [View article]
    Maybe, finally, some of the Tesla detractors will finally put to rest the idea that Tesla is doomed for choosing cylindrical cells. There has been a mistaken impression that since Tesla uses the 18650 form factor which is the same form factor that many laptops used to use, that Tesla had laptop cells in the Model S and therefore the technology in the Model S battery pack was outdated or old, which isn't true. There was also a mistaken impression that a large number of cells in the battery pack is necessarily a problem. Which is also untrue.

    As it turns out, which is what astute observers have been pointing out for some time, that battery chemistry is far more important than the form factor. It still remains to be seen who will have the highest specific energy, at what cost per kWh, and at what production capacity. Certainly, Tesla is the leader here and we will see if anyone bothers to catch up in even one of those metrics.
    Mar 15, 2015. 12:04 PM | 12 Likes Like |Link to Comment
  • BlackBerry launches $2,380 ultra-secure tablet [View news story]
    You do know that the tablet at the center of this discussion runs Android, right? It is also using security technology from IBM, hardware from Samsung, software by Google, and software/hardware by SecuSmart.
    Mar 15, 2015. 11:22 AM | 2 Likes Like |Link to Comment
  • Tesla component part of RAV4 EV recall [View news story]
    Mr. Carlini,

    Care to put the percentage of vehicles recalled for GM up against Tesla? Or how about Toyota? Honda?

    Care to address the recalls for the RAV4 non-EVs? Toyota is also far from being a leading edge car maker? What happened to Toyota's quality control of their suppliers? Isn't Toyota ultimately responsible for any defects?
    Mar 12, 2015. 11:01 AM | 11 Likes Like |Link to Comment
  • Pulling The Plug On Tesla [View article]

    If you actually followed what was going on in December, you would understand the delay in P85D's which were only shipping to North America. No P85D's were slated for overseas markets in 2014. The 1-2 week production hiccup, where vehicles had to be put aside and seats had to be retrofitted and then re-scheduled for delivery was well documented if you cared to look.

    In addition to the 1,400, there was the normal 2 week production overhang due to delivery delays to overseas markets. That dynamic is clear to see if one calculates the number of production weeks of inventory at the end of each quarter in 2013 through 2014. Of course, the actual number of cars for each production week has dramatically increased between March 2013 and December 2014 and the number of overseas markets as well as the delivery delays has also increased dramatically. For instance, UK and China deliveries take a very long time, upwards to 10 or more weeks from production to delivery.

    For a vehicle to be delivered in the UK in January, for instance, that vehicle had to have been produced in November and counted in the finished goods inventory for Q4. We also know, after watching quarter after quarter, that almost all production at the end of a quarter is geared towards high priced cars with short delivery times, which means North America. Especially with the P85D launch, virtually no cars in December were produced for overseas markets. So pretty much every car sold overseas in January was made before the end of Q4 rush. The very first car made when Tesla resumed production in January, if bound for an overseas market, barely has time to make it there to be delivered in January - a delivery straight to Norway or the Netherlands, for example. But we know that with batching of production and batching of shipping, that it is unlikely to make it in January.

    You are also confusing sales with deliveries, which seems to be common theme. Tesla is production constrained... P85D's that were delivered to Norway and Switzerland in the 3rd week of February had to be made pretty much right after Tesla's factory resumed operations in the 2nd week of January. Of course, a smaller portion of Tesla's production in January is geared towards North America. They were also gearing up for the S85D launch in North America in early February. That was one of the risk factors going into this quarter - an unforeseen issue with the S85D launch in North America. Unlike the P85D launch, the S85D launch seems to have gone smoothly.

    We come down to it... you stated that in "all major Europe markets Tesla deliveries collapsed in January and February..." That was plainly incorrect.

    Why insist on distorting the data? It's clear that the first two months of a quarter do not provide a clear picture of the overall quarter numbers, and yet you want to take a quarter average and compare the first two months? Take the average increase on the 3rd month over the first two months and try to understand the folly of taking that approach.

    Yes, you didn't take into account the UK.

    The average sales level for the 3rd month of a quarter in Europe in 2014 was 1,434. So the 1,300 vehicles necessary to reach average quarterly sales of 2014 is less then the 1,434 2014 average for a 3rd month of a quarter. To put it another way, only in Q3 was the European deliveries below 1,300 in the 3rd quarter (694) and we know the reason for that - the factory retooling shutdown.

    By the way, the current data I have is now 505 for January and 530 for February for 1,035 for the first two months.

    The dynamics of Tesla's production and deliveries is really obvious to any observer that actually charts the situation. And yet, repeatedly, people don't bother to put forth the effort to understand.
    Mar 12, 2015. 10:40 AM | 6 Likes Like |Link to Comment
  • Pulling The Plug On Tesla [View article]

    Your posts seem to jumble so many things up.. it's hard to actually pull apart your misconceptions.

    Suffice it to say that you really haven't modeled Tesla business and matched up expenditures. Your understanding of the Gigafactory and what was disclosed is a prime example of your confusion.
    Mar 12, 2015. 09:55 AM | 2 Likes Like |Link to Comment