Tesla Poised To Post Massive Q1 Loss

Summary

• CoverDrive isn’t perfect. Far from it. But he’s better than any other Tesla forecaster.
• He has penciled in some preliminary numbers for Q1. He sees $855 million in GAAP losses, which shatters Q4’s staggering record of $675 million.
• CoverDrive lays it all out here, explaining his assumptions and confessing where he’s guessing.
• Tesla Charts is back with some more excellent graphics, including his take on the Bloomberg Model 3 tracker.
• We’ll make amends for a few misses in our last article, and end with a look at a recent Reddit post about another Model 3 production problem.

We're a month away from the end of a calendar quarter, and that means it's time to check in with CoverDrive about his Tesla (NASDAQ:TSLA) earnings forecast.

His effort one month out always incorporates an unavoidable element of "SWAG" (scientific wild-ass guess). There is no sense pretending to be certain about the number of deliveries or the size of the regulatory credit variables. They bounce around from quarter to quarter, and so one must make an educated guess.

That said, I make no apologies for offering the preliminary forecast, as CoverDrive has been close to the target in the past.

Has he been perfect? Of course, not.

Has he been closer than the contemporaneous analyst consensus? Indeed he has. Just as Mohammed in the end determined the mountain would not come to him, and so he must go to the mountain, so too do the analysts inevitably work their way toward CoverDrive's numbers rather than vice versa.

I. CoverDrive Speaks

Enough throat clearing. Without further ado, I give you CoverDrive. What follows is his missive, delivered on the evening of Feb. 28.

Deliveries:

As always, I begin with estimating car deliveries. Let's look at Model 3 first. Being a new model, there's plenty of forum discussion upon which to draw.

The most surprising thing is that for the last 10 days of February, new VIN assignments dried up almost completely. My take is that the automated battery line will arrive soon, and pending the arrival Tesla has concluded it doesn't make sense to continue cranking the batteries out on the manual line.

In any case, Tesla is running out of time to schedule, build, and deliver more cars this quarter. I'll join my friend Adam Jonas and predict 8,000 Model 3 deliveries this quarter.

For the Model S and Model X, this time it's not as simple as counting VINs. Weekly VIN assignments are running at about 1,500 for Model S and 950 for Model X. That's a very healthy rate of 27,000 for the quarter.

However, in Q4, Tesla drained the inventory and cars-in-transit. Some of this will need to be replenished. I'm going to say 24,000 delivered - 13,000 Model S and 11,000 Model X.

So overall, that adds up to 32,000 - a new record and undoubtedly the headline item of the upcoming Q1 Quarterly Update Letter.

Revenue:

Without taking time to parse out direct sales vs. leases, I expect automotive revenue will be slightly lower than last quarter due to the absence of ZEV credits. On the other hand, I expect non-automotive revenue will recover back to Q3 levels.

So, in the end, Tesla's overall Q1 revenue should be almost identical to Q4.

ZEV Credits:

Because of the change in corporate tax rates, I believe everyone who needed ZEV credits bought them last quarter. I predict only mouse nuts this quarter.

COGS and Gross Margins:

Since this is the first SWAG, I'm just making a common-sense SWAG.

Gross margin will be pulled down by the Model 3, which now represents about 25% of sales. Gross margin for the two luxury cars should be improved now that Tesla is not dumping inventory. In aggregate, I expect a 2% improvement in non-ZEV gross margin.

Ah yes, those "lumpy" ZEV credits. My model shows that without those record credits of last quarter, automotive GM will be down a whopping 5% in Q1 (from 18.9% to 13.8%).

Can that be right? It sounds impossibly low, but I've been reading a fascinating interchange between xonkd, Bill Cunningham, and doggydogworld, and it's given me the courage of my convictions. (Montana Skeptic tells me he'll write about it soon).

Tesla Energy and Services and Other:

Not enough change to tip the needle.

Overall Gross Profit:

Assuming gross margins of 13.8% for Automotive (up 0.6%), 10% for Energy (up 4.5%), and -25% for Services (up 6%), gross profit calculates out at $319 million. That's down about $120 million over Q4.

Operating Expenses:

At this point in Q4, I was projecting very modest growth of operating expenses in 2018. However, Q4 had a surprise increase (5.3%) and the 10-K suggests even more:

We expect operating expenses to grow in 2018 as compared to 2017, although operating expenses should decrease significantly as a percentage of revenue due to the significant increase in expected revenue in 2018 and as we focus on increasing operational efficiency. The growth in operating expense will mainly be driven by engineering, design and testing of new products or changes to existing products and higher sales and service costs associated with expanding our worldwide geographic presence. In addition, we expect operating expenses to increase as a result of increased selling, general and administrative expenses incurred by our energy generation and storage business.

For those of us who use calculators, I'll translate that statement into "3% growth per quarter." Bottom line: $1.068B Op-Ex in Q1.

Operating Income:

Gross Profit - Op-Ex = $750 million loss. That's a new record by $150 million. Just a guess, but I'll go out on a limb and predict Tesla won't highlight that in the Quarterly Update.

Interest and Other:

I'll guess about $175 million based on 2017 data.

GAAP EPS:

Subtract interest and other, and add $70 million for the noncontrolling interest adjustment, and we get a net GAAP loss of $855 million. Yes, another Tesla record.

That's very close to $5.00 per share loss, or a dollar per share worse than last quarter.

(Q1 GAAP loss of $855 million would shatter Q4's record of $675 million. Chart courtesy of Tesla Charts)

Non-GAAP EPS:

Because non-GAAP is preferred by Tesla and analysts alike, we can improve the EPS by $1.00 for them. There, now, that feels much better, right? We're down to an EPS of ($4.00).

Analysts' Estimates:

Well, there you have it. My preliminary forecast is lower than the lowest of the analysts. I'm very much surprised with the result, but I suspect it's mostly in the ZEV credit expectations.

II. Tesla Charts Improves on Bloomberg's Tracker

It's me again, the Montana fellow, to say, thank you, CoverDrive, and to promise that once Tesla announces its Q1 delivery numbers, CoverDrive will be back with an updated "earnings" forecast.

Also, my sincere thanks to Tesla Charts for the splendid graph that illustrates CoverDrive's Q1 forecast.

Tesla Charts continues to do some splendid work at Twitter, and if you are a member there, you'll have a great deal of fun looking at his admirably clear charts and his amusing posts.

Like many of us, he has been fascinated by Bloomberg's Model 3 Tracker. Based on the Bloomberg graphics, he has made his own chart, which I regard as even better than that of Bloomberg. Here's the latest (8:11 a.m. 3/1/18) version:

What's that note about the 2/9/18 8K? Tesla Charts draws out the implications of the most odd post-conference call correction in two tweets, here and here. If you're on Twitter, Tesla Charts is most certainly an excellent person to follow.

III. Things I Missed in the 10-K

In my recent article on the 2017 Annual Report, I mentioned some items that had appeared in earlier 10-Ks but were absent this time around, and some disclosures that had changed.

As my alert readers pointed out, my list of omissions was incomplete and I missed the significance of a few changes.

A. The Evil ICE Vehicle Manufacturers

CoverDrive noted that this is new:

In addition, California implemented regulations phasing out a $2,500 cash rebate on qualified electric vehicles for high-income consumers, which became effective in March 2016. In certain circumstances, there is pressure from the oil and gas lobby or related special interests to bring about such developments, which could have some negative impact on demand for our vehicles.

How rich it is that this whining should come from America's all-time corporate welfare queen?

Can you imagine the temerity of those right-wing California legislators, deciding that people with average incomes of $320,000 should not be subsidized by the middle class?

B. Regulatory Credit Opacity

CoverDrive also noticed that whereas Tesla used to break down the amount of ZEV credits and overall regulatory credits, it no longer does.

C. Total Cars Produced

Yet another CoverDrive discovery: Tesla no longer details the total number of cars it produced during the year.

D. The "Battery Pack Flexibility" Omission

I noticed Tesla had deleted this language:

In so doing (designing our battery pack to permit flexibility in cell chemistry and form factor), we can leverage the substantial investments and advancements being made globally by battery cell manufacturers to continue to improve cost.

But I whiffed on the obvious reason why. TheDoktor graciously helped me out, explaining it was to cover for Tesla's admission that it was not going to redesign the battery packs for the Models S or X to accommodate the new, and supposedly superior, 2170 cell.

Once he pointed it out, it was blindingly obvious. Thanks, Dok, you've restored my vision.

E. The Sneaky Omission

Finally, as doggydogworld pointed out, Tesla's earnings release "specifically spoke of changing the Model S and X mix to maximize margins but omitted any similar statement for the Model 3, though they obviously knew they were delaying the low margin base Model."

Yeah, not a good look, Tesla.

IV. What Happens When You Shortcut A Car's Development Process?

In my short thesis, I included this as Item 6:

6. The Model 3 Shortcuts

Tesla took huge risks in abbreviating the production parts approval process, production line validation, and professional beta testing for the Model 3. The car already has been plagued with quality issues, and while those eventually will be corrected, it's likely more will emerge. It's a ticking time bomb.

As I sat down to write this, two of my favorites on Twitter, @MinskysC and @librab103, called to my attention a Reddit post made this evening (February 28) about a Model 3 service center visit.

Let's pick up at the point where the poster's five problems had been addressed and the service center people were just about to roll out his car:

Then they are about to close out my service visit in the computer when they get an urgent alert that my VIN (306*) has been flagged for a Drive Selector Replacement. The issue is the current drive selector could fail and not go into park. So they then explained to me that I could not have my car back and they are waiting on the replacement part from the factory. Here is the kicker... They say it may take weeks to have a new park because it has to be completely redesigned and shipped to SC. There could be a massive recall alert coming...

I doubt Tesla will announce any recall. The problem probably will be handled much more quietly than that.

But the drive selector problem is not the first Model 3 problem and it won't be the last one. Not by a long shot. I'm standing by Item 6 in my thesis (and the other 22 items as well).

Analyst’s Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am short TSLA via long-dated options.

Comments

[Dansplans]

Ace I think you will enjoy these predictions:

https://seekingalpha.c...

[Aceinmysleeve]

Ok, I bookmarked it. Thanks for pointing out.

I guess I'm in for 150k Model 3 as of what's known right now, which of course isn't fair to those on that list who guessed 2 years ago.

[Dansplans]

When Tesla added the third shift in the second half of 2017, there was no increase in production. Removing the shift would appear to have had little affect on the downside. There is in fact no evidence from the S and X production numbers, that there ever was a third shift implemented. Tesla games the numbers as and when needed. It is that simple.

Ace I am on record estimating non-employee and insider sales of the model 3 at below 40,000 units for 2018. So far my estimates are the gold standard.

[Aceinmysleeve]

40,000. So since they are selling non-employee cars right now, you mean to say that for the remainder of the year they will come in under 40k? I think that's pretty darn unlikely. Some probability in production maybe (< 5%), almost no probability on demand (< 1%). I do admire predictions so long as the giver holds himself accountable.

[Andreas Hopf]

My assumption still is 110,000 Model 3 in 2018.

[watchingfromabove]

@Andreas Hopf

>>>My assumption still is 110,000 Model 3 in 2018.<<<

I personally think you are overly optimistic. I'll be happy if they manage 70K-80K for the year if they exit the year at 2500/week pace.

[TryingVeryHard]

dhatheway,

The cover story is that they pulled the personnel to concentrate on the Model 3 production ramp. This is of course BS, it is to cover for the loss of demand for the S and X. That is why they are projecting only 100k production even though with 2 shifts they can do more than that. It actually makes sense to cut to 2 shifts though, no one runs 3 shifts for long unless necessary, there are things that need done daily on the lines to keep them running efficiently.

[kitsinu]

There seems to be a significant difference in sales estimates between this article and Anton Wahlman's article. https://seekingalpha.c...

While this article assumes a 24,000 Model S and Model X production rate, Mr. Walhman's article suggests 23,000 iff Tesla miraculously doubles its January and February sales for the month of March. My understanding is that Tesla reduced the number of shifts producing Model Ss and Model Xs from three down to two. Since Tesla probably didn't manage to increase the rate those remaining two shifts could produce vehicles at by 50%, I believe Mr. Wahlman's figures. This suggests we may be looking at total sales of 18,000 Model Ss and Model Xs this quarter.

The stock market has been very patient forgiving of Tesla's new product production problems, but I doubt the stock market will be as patient if Tesla has a demand problem for its core products.

[Aceinmysleeve]

Model 3 is by far the dominant variable. Estimates for the year might range from 100k-300k which overwhelms the mathematics of S/X deviating a bit from 100k. OF course the majority of bears here likely have more extreme scenarios but then they tend to conveniently forget later they had extreme scenarios.

[dlhatheway]

kissing: "My understanding is that Tesla reduced the number of shifts producing Model Ss and Model Xs from three down to two. "

And why would they do that? Tesla says the demand is there and they need cash. Presumably, the S and X have much better margins than the 3 (far higher prices), so cutting production its financial idiocy.

[kitsinu]

Finally found it.

From Laurie Shelby's blog at Tesla: On workplace safety at Fremont:
<>
https://seekingalpha.c...

Okay, so this happened last year and does not seem to have altered production. My mistake.

So much for the easy answer to why the numbers appear to be slipping. The alternatives are suppliers getting back at Tesla, a possible lithium or cobalt shortage and just running out of money without being able to do a cash raise. Well, we shall see in a month.

[combatcorpsmanVN]

Musk is the leader of a Cult. The Believers want to believe rather than question why the real facts are avoided, hidden, or discarded by the Cult leader. Cult believers have a very difficult time dealing with the reality that TSLA is a failed company, Musk has shown a complete ineptitude of running a successful automobile company even though he had a decade and a half to get it right. Also, ten of those years saw TSLA in a monopolistic position and still couldn't get it right.

When the Believers find reasons to avoid the condition of the Balance Sheet and other financial statements, the reality that TSLA has existed on government handouts, Junk Bonds, and mythical promises that all is good and will be even better...tomorrow, tomorrow, tomorrow. You have the be a cult follower to buy into the nonsense in the face of the undisputed facts.

Trees don't grow to the sky and there's no free lunch. The share price is all Water.

[Aceinmysleeve]

I enjoy the psychological projection around here as discursive essays like this talk about 'cults' while the writer himself has all the emotional hallmarks and lack of incredulity you'd find in someone whipped to mob-level frenzy. What's going to be interesting is watching the sociology of this place as these precious 'balance sheet' fundamentals turn around. My guess is none of the shorts here will acknowledge all their prior sins. It will just be as if someone turned down the volume knob slowly until few are left, and the various anonymous contributors will just slink off to their next project.

[wilibear]

"I enjoy the psychological projection"

Clearly.

[e-golf]

Which strike prices of 2020 PUT options are you guys buying? Most of them have huge bid/ask spread.

[User 828881]

100, 150 and 200's - At BK the 100's pay out 14 to 1

[Les Ismore]

Fortune Cookie model say "Unwise to bet fortune on kooky CEO".

[rnn]

Some stocks rally huge on bad earnings and some have superb earnings and rally down.
The good news is not always good.

[B4B00SHK4]

Excellent article, Montana. Thanks. It will be interesting to see whether investors will positively receive Tesla's "favorable working capital arrangement" in 2018H1. That, after all, was Adam Jonas's prediction. The delays and your report that Panasonic cells are piling up do not bode well for his prediction. Looking forward to your analysis of gross profits and cash flow.

[traxx]

BTW this is an interesting video of the new Jaguar I-Pace vs ModelX

Not only is the Jaguar way cheaper and better looking its performance is better

http://bit.ly/2t6TMGg

[watchingfromabove]

@traxx

>>>Not only is the Jaguar way cheaper and better looking its performance is better<<<

Although the performance of the I-pace is adequate and even good, they did not actually compare it against the performance version of the Tesla Model X.

Even though they stated they were going to compare it to the P100D, the car actually run against was the X100 D, not the P(performance) version. Slightly sleazy but it has come to be what we expect from ICE manufacturers with only tiny differentiation between models. The P version would have beat the Jag pretty handily according to the specs demonstrated to date but that wouldn't have looked good for the advertisement demo, so no actual P100D comparison.

[Aceinmysleeve]

The iPace is fine. It's about the size of the model Y and clearly coming out 2+ years before it. It seems to me that at the premium end we're probably going to see a convergence in performance on 'sufficient for 99% of people'. I kind of doubt at 75k$+ price points people will be unhappy with BEV performance going forward.

What the iPace won't be able to do is generate enough interest to literally dent X sales. Jaguar is going to have a lot harder time selling the idea of a BEV to its customers than Tesla does, and most of them will sit moribund at dealerships. Which is why it's targeting 13k appropriately in the first place. Although I would assume somewhere like Norway is itching for some diversity and will be all over it.

[Montana Skeptic]

Ace: "What the iPace won't be able to do is generate enough interest to literally dent X sales."

Wake up. Jag marketed first to Norway. Huge demand there, and it's already gutting Tesla orders and margins. Next up: UK.

Tesla is totally screwed in Europe, and Tesla cultists (you are Exhibit A) won't know what hit them.

[Yield on Cost]

I like Elon Musk and Tesla. Tesla is leading the way but not really doing anything Ford and GM cant or aren't doing. Therefore stick with Ford.

[Peteresmond]

Is this the end of the beginning or the beginning of the end?

[Montana Skeptic]

Petersmond: "Is this the end of the beginning or the beginning of the end?"

Guess right and you can be quickly wealthy. Guess wrong and...

[The Crysenburger]

it feels much too late to be the end of the beginning, but I have no skin in this game other than a front row seat at an impending financial calamity. So there's your caveat.

The thought of selling options has crossed my mind numerous times but this thing is just not for investors who want to risk money they might need one day.

It's for gamblers and people who like risk. Lots of risk.

The beginning of the end??? Who the heck knows how many more rabbits they can pull out of their .... hat. They can do a lot of things for who knows how long (other than sell cars at a profit).

[Stevo56]

The Deer Hunter of investing....

[Montana Skeptic]

Jeff Sipe: "Could Musk be: the new Henry Ford; from scratch, changing the way cars are made on the planet?"

Interesting you should say that. In 2014, Goldman Sachs published a very influential research report about Tesla, which included three scenarios:

Elon Musk as Steve Jobs
Elon Musk as Henry Ford
Elon Musk as the Maytag Repair Man

In all three scenarios, Tesla was profitable. In the Jobs scenario, stratospherically profitable, and in the Ford scenario wildly profitable.

Goldman offered endless spreadsheet detail. Its projections showed Tesla beginning to be profitable in 2015. For the "Musk as Ford" scenario, Goldman projected Tesla would earn $9 per share in 2017 and $12 per share this year.

Goldman now forecasts, of course, steep losses both in 2018 and 2019. Not sure about 2020, but I'll check back with GS soon.

[User 828881]

Well things change when you are no longer involved in the secondaries.....

[combatcorpsmanVN]

Always eschew GS. GS sells. GS is strictly a MARKETING COMPANY -- zero expertise in markets. BS sells -- that is why GS loves Musk.

[Maxed Out Mama]

Yes, the famous "Great Expectations" work of financial fiction. I am waiting for the one with the Tom Swift case model.

People forget that GS does these straight-line things that rarely work out, such as their oil @ $200 a barrel. As if that could ever happen in a vacuum. There are things I would like to write, but I won't. However, any investor should always take GS reports with half a shaker of salt - GS is big enough to have its own environment and its own interests, and sometimes their efforts have a lot more to do with what they wish will happen than what is likely to happen.

[Jeff Sipe]

Could Musk be: the new Henry Ford; from scratch, changing the way cars are made on the planet?

And to boot, changing the way they run, are sold, maintained, and charged;

So this author expects that wholesale and necessary innovation to be FREE and instant. No books has ever researched what facilitated Ford to innovate cars before there were even but a few thousand miles of macadam; he simply knew Americans would want to be seen in a car! Just like want to be seen on a cell.

IF anyone has seen the videos on how the “3” looks, works, and operates ... save that center display ... it is nothing short of innovative, interesting and cool;

Will the batteries die? Sure, it is a new art; is it a pain to charge on a long trip, yep?

But who ever bought a Corevtte, as the primary long ride? No one!

The 3, if you just buy and hold it, those first production runs, will be worth double easily; buy two, store one, worth its weight;

So collectors should pray, Musk moves on to 4;

NOW, owning the stock at these levels, and its nearly year of chop, sideways, and shortedness ... is the ride of a life time.

Buckle Up!

[User 828881]

Yeah buy the most over hyped, over valued stock in the market at the apex of a bull market right before the Fed goes on a massive tightening cycle to unwind and wring out over 4 trillion dollars of excess capital injected into the system. It's gonna be a ride, but trust me you aren't going to enjoy it.....

[Maxed Out Mama]

Well, he's definitely not changing the way cars are manufactured! There isn't anything new in Tesla's planned production lines for the car itself. Time to sober up.

[insaneinthemembrane]

Hahaha, "save the center display" -- you do realize that the center display is a critical piece of equipment, without which the car would be even more undrivable?

[RWDS]

Tesla won't exist in 5 years. Mark it. It only got off the ground thanks to Obama bucks and Trump won't be repeating that mistake. Little Elon is a failure in everything he's ever done. Maybe he'll get one of his rockets to Mars with him on it so he can build his unicorn farming commune and leave such petty matters as turning a profit behind for good.

[insaneinthemembrane]

Elon did profit off his Yellow Pages website and PayPal.

Nothing to do with building cars though.

[djunh1]

i am not a fan of tesla, but you have to give him credit for zip2 and making a killing on that. Any one of us here wish we had the programming chops and luck to have an exit like he did...all before 30. Maybe car manufacturing isn't in his wheelhouse, but to dump on the guy for what he did in the past would be wrong in my book.

[Tokyo Picker]

I disagree. Can you think of a better way for BYD to enter the US than to buy Tesla out of Chapter 11. If I was them, I would already be in touch with the senior lenders. They could pick up the brand, the DTAs, the supercharger network and the service centers for less than $10bn.

[CoverDrive]

I must send out my thanks to Tesla Charts for his contribution to the article!

Although the blue bar on the earnings chart looks ominous, keep in mind that last quarter's earnings would have looked identical, were it not for the salvation of record ZEV credit sales.

[User 828881]

I think they will actually really impress us and lose over 1 billion this quarter....

[CoverDrive]

I don't think there's any sales volume scenario that will drive losses to $1B. There would have to be a large one-time expense or the M3 gross margin would have to be truly horrific.

[insaneinthemembrane]

CoverDrive:

1. Do you have any position in TSLA?
2. What do you think about the I Pace as a car?
3. What impact do you think the I Pace will have on Tesla sales?

[User 33983175]

Colorado just announced that they are looking to end their tax subsidy to rich people buying teslas as well

[Tokyo Picker]

Like Hong Kong: https://seekingalpha.c...

[bleebo]

Wife has banned me from discussing Tesla with her. Hopefully it is not an obsession but the guy really rubs me the wrong way. He didn’t have the vision to start the company and in fact used his position as an Angel investor to oust the original owner. He then rewrote history to take all the credit. I really, really dislike people who over promise and under deliver. The reverse should be the case. Did a search on YouTube for Elon Musk and the fawning interviews sicken me. Pride goeth before a fall and I am betting with long dated puts that Elon will continue to fail. Thanks for letting me rant here as it will save the relationship with my wife.

[User 828881]

No problem - she will love to hear you talk about Tesla when you make 8x on your money....

[insaneinthemembrane]

My wife is more understanding. You know how Elon's cheerleaders always say "just take a drive"? Well, I took my wife to the Tesla store, and she said the thing felt like a tank, was way too complicated to drive with all the screens, and was way too expensive for what you're getting.

[taxistan]

bleebo, my beloved Libby does not approve of my long short puts on Tesla, but as I'm making paper profits on said puts she's coming around.

[snaimpally]

Thanks for a refreshingly honest assessment of TSLA. I fail to understand the lofty valuation afforded TSLA given that they have not been able to ramp up production for the model 3. Their motto should be "we overpromise and under deliver". GM has the Bolt and the Volt, Nissan has the Leaf, etc. and these companies can easily scale up production of existing models and expand their model line up. Once Mercedes, BMW, and VW ramp up and offer stylish electric vehicles, they will drive TSLA out of business.

[The Crysenburger]

Their motto should be "we overpromise and under deliver".

Not so much a motto as it is a way of life.

[arondaniel]

Tesla balleted: "In so doing (designing our battery pack to permit flexibility in cell chemistry and form factor), we can leverage the substantial investments and advancements being made globally by battery cell manufacturers to continue to improve cost."

Montana explanation: "TheDoktor graciously helped me out, explaining it was to cover for Tesla's admission that it was not going to redesign the battery packs for the Models S or X to accommodate the new, and supposedly superior, 2170 cell."

Huh... I don't follow Herr Doktor's logic, at all.

The Model S and Model X packs are a finished piece of engineering. Tesla already stated there is basically no more room for batteries so 100kWh is all we can expect... for THIS iteration of S and X.

But what about the NEXT iteration of S and X? New Roadster will have 620 miles of range (~200 kWh pack). S and X have more space for batteries so they should eventually put up similar numbers.

At that point, what do you care? (Assuming of course you don't own a "classic" S/X and are therefore super sad about being forever limited to a paltry 100kWh and those GLACIALLY SLOW 2.3 second sprints to 60 that also happen to beat every production gasoline car ever made, lol.)

[puddnhead]

The main point of the 2170 is supposedly reduced cost, nothing to do with performance. Though some Tesla stockholders don't pay much attention to that, competent businessmen usually do.

[arondaniel]

@puddin

Rarely is the question asked: is our Tessie Bears learning?

Larger batteries = better performance.
Larger batteries = better charging speed.
Larger batteries = better lifespan.

[CoverDrive]

arondaniel, when comparing 2170 to 18650 cells, the larger cells do not achieve better performance, charging speed, or better lifespan. The improvement is in manufacturing cost and battery pack cost due to fewer interconnects.

If you want to double the capacity of the battery pack (100 kWh to 200 kWh), you simply double the battery mass. Brute force engineering.