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  • Why Did Tesla Order 2,500 Danish License Plates? [View article]
    Occam's razor is useful, but a quicker path to the truth is to follow the money trail.
    Nov 19, 2015. 08:05 PM | 2 Likes Like |Link to Comment
  • Why Did Tesla Order 2,500 Danish License Plates? [View article]
    @cparm wrote: "If so, then why didn't they already do this? "

    I was wondering the same thing myself. In fact, I was expecting Denmark to be the EU sales leader in October. Instead they only sold 113, good for 5th place and about average for the year. What would be the advantage in waiting until December? One possible advantage would be for a re-seller. It would minimize the amount of time that he holds the expensive inventory.
    Nov 19, 2015. 03:42 PM | 2 Likes Like |Link to Comment
  • Why Did Tesla Order 2,500 Danish License Plates? [View article]
    It's not a tax increase. It's an expiration of a tax waiver. The waiver was intended to stimulate the EV market segment. It's not a sustainable strategy for Denmark. All countries have limitation on tax incentives. Several states and provinces in North America have already dropped their incentives.
    Nov 19, 2015. 01:42 PM | 4 Likes Like |Link to Comment
  • Why Did Tesla Order 2,500 Danish License Plates? [View article]
    They don't have to be sold by the end of the year, but they will be. The tax law makes it improbable that anything more than a handful will be sold in the next few years. The Model 3 is probably the next opportunity for Danish sales.
    Nov 19, 2015. 01:33 PM | 1 Like Like |Link to Comment
  • Why Tesla Will Fall Far Short Of Elon Musk's Model X Delivery Forecast [View article]
    I have not seen a Signature VIN assignment since Oct 28. There's no indication that more than 836 Sig's will be built. However, I would not declare the other 42% as "cancelled" because they may have changed to a Production reservation or a Model S order.

    I suppose it could be possible to add a few more US Sig's when the Canadian Sig's are scheduled. I expect Canadian Sig's will be invited to configure before the US Production customers, so we should know soon.

    While 50% yield is not out of the question, I don't see any evidence (so far) to expect that it will be that high. I'm a data-driven person. As more data becomes available, I'll revise my prediction.
    Nov 16, 2015. 09:36 AM | 2 Likes Like |Link to Comment
  • Why Tesla Will Fall Far Short Of Elon Musk's Model X Delivery Forecast [View article]
    I have to agree that the Model X rollout is in a completely different context than the Model S rollout. Yet here in mid-November, it looks uncannily similar. I would never have expected that.
    Nov 14, 2015. 01:46 PM | 1 Like Like |Link to Comment
  • Why Tesla Will Fall Far Short Of Elon Musk's Model X Delivery Forecast [View article]
    I thought I should add some colour and data to the yield predictions. In keeping with Kahneman's approach, we should begin the yield from the Model S's sequentially numbered North American reservations. It turns out that of those original 22,722 reservations, 8,903 were converted into VIN's, for a yield of 39%.

    We also have hard data on the US Model X Signature reservations. 1436 reservations have yielded 836 VIN assignments (58%). The Production series will yield less than the Signatures, but by how much? There is a tracking sheet in the Tesla Motor Club forums that might offer a clue. To get a relative indication, we can look at the rate at which people participate in the tracking sheet. Among US Signatures, 194 of the 1436 reservationists are participating (14%). Among the Production US, 708 of the 21282 reservationists are participating (3.3%).

    Taking all of this into account, a predicted yield of 33% is perhaps somewhat generous.

    Looking at the entire year of 2016, we should expect about 10,000 from the 30,000 sequentially numbered reservations. And then we need to guess how many additional orders will be placed. I'll concur with the author and agree that an additional 8,000 seems reasonable.
    Nov 14, 2015. 12:28 PM | 2 Likes Like |Link to Comment
  • Why Tesla Will Fall Far Short Of Elon Musk's Model X Delivery Forecast [View article]
    What an excellent article, Montana (if I can be so familiar as to address you by your first name). A lot of us are mystified by the rollout of the Model X and are wondering what the implications are for 2016. Personally, I could not have imagined another product launch like the Model S, but here we are staring at apparently the same thing. However, I would be cautious about using the MS as a model for the MX production growth. There are different dynamics driving the delays, but arguably the root cause is the same.

    Your discussion of the 2nd row seats is an illustration of everything that’s wrong with Tesla’s engineering process. Any other car company would have PPAP submission completed 6 months prior to launch. Suppliers would already have demonstrated run-at-rate and production yields. To bring a component (especially a major one) in-house at this point in time is an ultimate act of desperation. I suppose I could be wrong – maybe Tesla already has the engineering and manufacturing resources in place to make seats.

    Another interesting topic you raised was the expected conversion yield from the 30,000 reservations that were handed out prior to the September 29th launch. After recovering from the initial shock of seeing 33% (did you really say that out loud?), I have to agree with your analysis. In fact there may be some additional factors that could drive it lower. I’m thinking that there are basically two types of customers for the MX. There is the SUV customer who will find more utility and lower price in competitors’ offerings. And there is the customer who really wants a Tesla and nothing else. Those people will find almost as much room, sexier styling, and lower price in the MS. I know which one I would choose.

    Finally, I need to comment on cparmerlee’s most poignant question: "If Model X sales are actually only 18,000 in 2016, then Tesla will be out of business before they can ever get the Model 3 to market.” First a hedge comment – I don’t think that the product split between the MX and MS is that important as long as total sales are strong. And now the fearless comment – Yes, I think that the Model 3 will not make it to market. I think that investor confidence will be shaken by low MX sales and it will be difficult to raise enough money to pay for engineering, capital expenses and the SG&A infrastructure required to support the Model 3. They will simply run out of money.
    Nov 13, 2015. 10:07 AM | 4 Likes Like |Link to Comment
  • Tesla: Something Is Rotten In The State Of Denmark [View article]
    Does Tesla sue in every market where tax incentives are phased out? Netherlands? Georgia? Washington? British Columbia? Does this strategy work?
    Nov 12, 2015. 03:25 PM | 11 Likes Like |Link to Comment
  • My Fearless Forecast Of 2016 Tesla Sales [View instapost]
    The finished goods inventory has grown at an alarming rate over the past year, some 5600. At some point, those will have to be sold, right? Tesla has guided that they will sell 2000 more cars than they produce in Q4, so that sounds like a step in the right direction.

    Regarding the hit on the earnings statement, there really is only the cost of inventory. The cost of goods for these cars (and resulting net profit) will be accounted for in the quarter that they are sold.

    The cost of inventory is not unsubstantial. Basically, you are borrowing half a billion dollars and incurring a 1%/month depreciation on it.
    Nov 7, 2015. 02:42 PM | Likes Like |Link to Comment
  • Notes On The Tesla Q3 2015 Earnings Report [View article]
    Wow, another 1500 added to the finished goods inventory. Assuming that they ended 2013 with 500 in inventory, they now have a total of 7850 two years later. That's like 60 days of inventory, or about half a billion dollars.
    Nov 3, 2015. 08:20 PM | 4 Likes Like |Link to Comment
  • Notes On The Tesla Q3 2015 Earnings Report [View article]
    It doesn't matter whether the Q3 cars were produced in 12 weeks or 13 weeks. Tesla has already demonstrated capacity of 1400/week. 11,603 deliveries is an accurate measure of customer demand in the 3 months of Q3.
    Nov 3, 2015. 08:12 PM | 14 Likes Like |Link to Comment
  • Tesla Motors: The Cold Hard Truth [View article]
    @Nice and Higgs,
    I should temper my statement by saying that the current business plan is unprofitable under any scenario. They could be profitable if the business plan was changed to look more like Bentley or Ferrari.

    Investment in the Gigafactory was a terrible decision. Batteries are low margin commodities, even lower margin if you manufacture in the U.S. The same can be said for Tesla Power. They can scoop up some government funded demo projects, but long term they'll lose out to the low cost supplier.

    A healthy automotive company needs ongoing R&D for future product development. In my experience, R&D expenses do not go down unless product lines are discontinued and engineers are laid off. Do you see that happening at Tesla?

    SG&A has nothing to do with capital investment. It's an ongoing expense that will have to double when the Model 3 is launched. It's not going away either.

    Bottom line: Ignore capital expenses for a moment. Look at how much they lost in operations in 2013. Compare that to 2014. Tonight we'll have a good estimate of 2015. Brace yourself for 2016. Gross margins will be killed with the Model 3 in 2017. Bonds come due in 2018. When does profit begin?
    Nov 3, 2015. 09:54 AM | 3 Likes Like |Link to Comment
  • Tesla Motors: The Cold Hard Truth [View article]
    Good stuff, David. There will be many a thesis written about this company. The hardest thing for Tesla devotees to comprehend is that there is no possibility of the company ever becoming profitable even under the most optimistic scenario. And it's not because they're incompetent or lack the necessary technology. It's because the cost to maintain the necessary R&D and SG&A infrastructure for a broad based product line is absolutely prohibitive. The best illustration is your graph showing cash flow from operations. The Model X is not going to improve it. And the Model 3 will make it far worse.

    To the devotees, at what point do you expect to see profitability? Do you understand the current earnings trajectory? Tesla has been a start-up company for 12 years. Will it continue to be categorized a start-up for another 12?
    Nov 2, 2015. 07:34 PM | 7 Likes Like |Link to Comment
  • Should GM's All-New 2016 Chevrolet Volt Be Compared To The Tesla Model S? [View article]
    The Volt is by far the best engineering solution in the EV world, given the current cost of battery packs. For the average consumer, you can go months without using a drop of gasoline. But when you need the extra range, you don't have to pre-plan your travel route in the least. It's the best of both worlds. Someday, the cost of battery packs will come down (a factor of 4 or so), and a range-extending hybrid solution will not be necessary. Until then, there is the Volt.
    Oct 12, 2015. 01:52 AM | 6 Likes Like |Link to Comment