Tesla glory/failure

[Archimid]

GSY. Demand was never there, other than with the Tesla cult fateful. Demand is created by each model 3 sold. The more Model 3 on the road, the more demand will be created. 

[GoSouthYoungins]

GSY. Demand was never there, other than with the Tesla cult fateful. Demand is created by each model 3 sold. The more Model 3 on the road, the more demand will be created.

Lol. Total nonsense. You brainstorm with Neil for this one?

[Bob Wallace]

They are producing close to 7k cars a week in the same line and with less employees than when they were producing 4K cars a week. The ASP is lower and lease accounting may have a role to play that, but the cost of manufacturing has very likely gone down.

So the last #s available are from Q1, where Tesla made less than 5k model 3s per week. Pretty sure I recall Tesla making a big deal about producing 5k model 3s a year ago. (BTW, there is no sign Q2 will have greater production than 5k weekly model 3s.)

I agree the cost of manufacturing has to have gone since they were cranking them out by hand in a tent last year. And they are selling them for about $20k less.

The last official production numbers we have are for Q1 2019 and Tesla did average under 5k T3s per week.  About 4,833 to nail it down a bit.  Since then we have only unconfirmed numbers because Tesla reports production on a quarterly basis. 

May 23 (Reuters) - Tesla Inc has on an average produced 900 Model 3 cars per day this week, bringing the company closer to its target of making 7,000 cars per week, according to an email from Chief Executive Officer Elon Musk to employees that was widely posted on social media and authenticated by a source familiar with the matter.

No Teslas have seen a $20k price reduction. 

[Bob Wallace]

GSY. Demand was never there, other than with the Tesla cult fateful. Demand is created by each model 3 sold. The more Model 3 on the road, the more demand will be created.

Lol. Total nonsense. You brainstorm with Neil for this one?

There is only anecdotal data but it does seem that satisfied owners are doing a great job of selling Teslas to others.  As people experience riding and driving Teslas and get first hand information about how Teslas are for long distance driving, maintenance, etc. they seem to be opening up to the idea of making their next car an EV.

[Bob Wallace]

"By continually dropping prices, Elon Musk may have found a demand level that can sustain production of about 5,000 cars per week in Q2. However, these steeply discounted pricing levels cannot sustain Tesla. Even the meager demand is not sustainable as competition increases and as Federal Tax credits reduce by half effective July 1st and disappear altogether by the end of the year. Looking ahead, Tesla is faced with lower demand in what is already an unprofitable business."


There is no indication that demand is dropping.  And there are still large parts of the world where Teslas are not yet being sold.

lol

https://seekingalpha.com/article/4271538-tesla-may-need-heavy-fleet-sales-meet-q2-guidance

[GoSouthYoungins]

No Teslas have seen a $20k price reduction.

Mister Bob, why do you post about stuff where you totally lack knowledge?!? The S and X most expensive variants have all seen reductions WAY more than $20k.

Alas, I hadn't even claimed that any version was reduced that much...simply that the Model 3s being sold were $20k cheaper (mostly because the first ones went to rich cultists willing to pay $80k for a model 3).

It is pretty lame to make a straw man argument and not even get your information right.

https://www.autoexpress.co.uk/tesla/model-s/106168/huge-tesla-price-cuts-make-top-model-s-and-model-x-over-40000-cheaper

[GoSouthYoungins]

There is no indication that demand is dropping.

Econ 101 bro. Price drops to keep quantity the same if demand decreases. Probably the first day of Econ 101.

[Bob Wallace]

No Teslas have seen a $20k price reduction.

Mister Bob, why do you post about stuff where you totally lack knowledge?!? The S and X most expensive variants have all seen reductions WAY more than $20k.

Alas, I hadn't even claimed that any version was reduced that much...simply that the Model 3s being sold were $20k cheaper (mostly because the first ones went to rich cultists willing to pay $80k for a model 3).

It is pretty lame to make a straw man argument and not even get your information right.

https://www.autoexpress.co.uk/tesla/model-s/106168/huge-tesla-price-cuts-make-top-model-s-and-model-x-over-40000-cheaper

You are correct.  I did not realize that Tesla had dropped the cost of their top of line versions as much as they have.   Upon checking the P100D-L dropped from $135k at the end of 2018 to $117k in March.

(Here's some basic information for you.  I post what I believe to be true and then look to see if it holds up.  When I learn that I was incorrect I 1) acknowledge my mistake and apologize if needed and 2) attempt to not repeat the incorrect information.)

[Bob Wallace]

There is no indication that demand is dropping.

Econ 101 bro. Price drops to keep quantity the same if demand decreases. Probably the first day of Econ 101.

You are inferring a demand drop.  You are overlooking the fact that Tesla is working to make its EVs less expensive in order to speed the movement off of ICEVs.

Logic 101.  Do not get too far ahead of the available data.  We have no objective measurement of demand.

[SteveMDFP]

There is no indication that demand is dropping.

Econ 101 bro. Price drops to keep quantity the same if demand decreases. Probably the first day of Econ 101.

You are inferring a demand drop.  You are overlooking the fact that Tesla is working to make its EVs less expensive in order to speed the movement off of ICEVs.

I don't think we need to depend on presuming altruistic motives for picking a lower-price/higher-volume/less profit price level.  Low prices to build market share (and avoiding profits) is exactly what Amazon did.  For quite a number of years, it was a money hole.  Then the strategy paid off, in spades.

Not a strategy for the faint of heart in business.  The strategy might fail.  Or succeed.  Profits and losses over a single year (or quarter) don't do much to illuminate the question.

My own impression is that the China gigafactory might save the strategy.  Labor costs should be lower, and building inside China side-steps the trade war and tariff problem in serving the Asian market.  China is unparalleled as a parts supplier.  But what may be most determinative is that the Chinese government seems to be an enthusiastic supporter.   My bet is that China will not allow that enterprise to fail.

[Bob Wallace]

I'm not presuming altruism caused the price drop.  I'm simply saying that there are at least two possible reasons and we don't know the actual reason.

[Archimid]

Tesla SolarRoof Receives Building Code Approval From ICC-ES

https://cleantechnica.com/2019/06/21/tesla-solarroof-receives-building-code-approval-from-icc-es/

You can have the greatest new building product in the world, but until it has been certified to meet applicable building codes, it is just a gleam in some inventor’s eye that will never see real-world acceptance. The good news is the Tesla SolarRoof has recently been certified to meet the International Building Code, the International Residential Code, the California Building Code, and the California Residential Code by ICC-ES.

[Sigmetnow]

Reasons for the FUD-mania?  Besides simply upsetting “the way things are,” there are so many industries Tesla threatens to disrupt:

Ross Gerber (@GerberKawasaki) 6/4/19, 5:32 PM
Industries at risk when Tesla succeeds:
Oil
ICE cars
Car dealers
Rail and other energy transportation
Auto parts
auto service
Gas stations
Did I forget some? You wonder why there is so much FUD out there. …

https://twitter.com/gerberkawasaki/status/1136022818376654848
Also: Insurance.  Ride-sharing and Taxi services.

Tesla’s Alligator-Like Adversaries Represent $3.6 Trillion In Revenue Per Year (Infographic)

There are many reasons for the deluge of anti-Tesla “news” stories, but, as is often the case in human affairs, one major motivating factor stands out: money. Tesla’s success imperils the profits of the most powerful economic interests the world has ever known, and the company’s possible failure offers financial opportunity for others.

Tech and marketing maven John Mayo-Smith has created an engaging infographic entitled “Elon Musk vs. The Alligators,” which describes some of the powerful industries that are rooting for Musk and Tesla to fail (and in some cases, devoting substantial cash and effort to discrediting Musk’s enterprises in the media).

Writing in Medium, Mayo-Smith estimates that Tesla and SpaceX together threaten to deprive various entrenched stakeholders of some $3.6 trillion worth of annual revenue. …

https://cleantechnica.com/2019/06/07/teslas-alligator-like-adversaries-represent-3-6-trillion-in-revenue-per-year-infographic/

[zizek]

Reasons for the FUD-mania?  Besides simply upsetting “the way things are,” there are so many industries Tesla threatens to disrupt:

Ross Gerber (@GerberKawasaki) 6/4/19, 5:32 PM
Industries at risk when Tesla succeeds:
Oil
ICE cars
Car dealers
Rail and other energy transportation
Auto parts
auto service
Gas stations
Did I forget some? You wonder why there is so much FUD out there. …

https://twitter.com/gerberkawasaki/status/1136022818376654848
Also: Insurance.  Ride-sharing and Taxi services.

Tesla’s Alligator-Like Adversaries Represent $3.6 Trillion In Revenue Per Year (Infographic)

There are many reasons for the deluge of anti-Tesla “news” stories, but, as is often the case in human affairs, one major motivating factor stands out: money. Tesla’s success imperils the profits of the most powerful economic interests the world has ever known, and the company’s possible failure offers financial opportunity for others.

Tech and marketing maven John Mayo-Smith has created an engaging infographic entitled “Elon Musk vs. The Alligators,” which describes some of the powerful industries that are rooting for Musk and Tesla to fail (and in some cases, devoting substantial cash and effort to discrediting Musk’s enterprises in the media).

Writing in Medium, Mayo-Smith estimates that Tesla and SpaceX together threaten to deprive various entrenched stakeholders of some $3.6 trillion worth of annual revenue. …

https://cleantechnica.com/2019/06/07/teslas-alligator-like-adversaries-represent-3-6-trillion-in-revenue-per-year-infographic/

ahhh, I love modern journalism. You can make the claim that alligators are on a crusade to specifically destroy Tesla, but then provide absolutely no evidence. Cool.

[Sigmetnow]

Morten Grove  (@mortenlund89) 6/22/19, 8:07 AM
In Zeebrugge a truckload Tesla cars leaves every 10 minutes at present time 

https://twitter.com/mortenlund89/status/1142403663408848897

Carina Larsen (@carinalarsen76) 6/20/19, 8:50 AM
BAM! Model 3 is now the 8th most registered BEV in Norway. It shot past VW e-UP on the list today 
Next to beat is Renault Zoe. Source: Elbilstatistikk.no

https://twitter.com/carinalarsen76/status/1141689695644073985
Model 3: 9,336 (in less than 5 months!)
Zoe: 10,973 total
Image below.

—-
Organic Demand Growth:

Marc Bloomquist (@m40dotcom) 6/21/19, 4:38 PM
Just got this text from a friend I play basketball with as he and wifey know I have a 3, but not sure they know what they just walked into by asking to come over and see/learn about it from me. Ha

https://twitter.com/m40dotcom/status/1142170013027074049
Text image at link: “Hey man. Random ask, we’re contemplating Tesla. Any chance…”

—-
Alex Roy:
The Penalty of Leadership: From Cadillac To Tesla
Brands don't lead—leaders do.

People often ask why Elon Musk doesn't pay a penalty for being such an insufferable jerk. The big question. As I enter my third month of Tesla ownership, I too have been struggling to reconcile my bottomless love for my Model 3 with my contempt for Elon….  But then I get back into my Tesla, and I just don't care.

I don't care because I know I let myself get caught up in $TSLA debate rather than the Tesla debate. Investors care about $TSLA. Consumers? Tesla. Two markets. Two products. Is $TSLA a steaming pile? I'm not an investor, so I don't care. Does Tesla make the most innovative cars on the planet?  The question answers itself. That's leadership. …

https://www.thedrive.com/opinion/28550/the-penalty-of-leadership-from-cadillac-to-tesla

[oren]

Morten Grove  (@mortenlund89) 6/22/19, 8:07 AM
In Zeebrugge a truckload Tesla cars leaves every 10 minutes at present time 

By the much-heightened final week activity, it appears the "wave" was not fully defused. This could lead again to many cars in transit at Q end.

[Bob Wallace]

Morten Grove  (@mortenlund89) 6/22/19, 8:07 AM
In Zeebrugge a truckload Tesla cars leaves every 10 minutes at present time 

By the much-heightened final week activity, it appears the "wave" was not fully defused. This could lead again to many cars in transit at Q end.

Quite possible, but what I think is interesting is 1,000 per day / 24 hours 6 (ten minute intervals in hour) = 6.9.   Six every ten minutes is about what one would expect.  Actually a bit more if you add in about 275 S/X per day assuming production levels snapped back up.  Let's try that...

1,275 / 24 / 6 = 8.9 per ten minute block.  Of course we shouldn't assume the six per ten minutes was rigorously collected data.

The wave question is whether ships are sailing at somewhat regular intervals or did they get piled up early or late in the quarter.  And also if cars are piling up in harbors after coming off ships.  There were processing problems in Q1, IIRC.

Getting rid of the wave, seems to me would be shipping regularly to Europe, to China, the the East Coast, and West Coast.  Not sending a bunch of cars to one or two places and starving other places.

We're closing on the end of the quarter.  We should know soon.

[Tor Bejnar]

We should know soon.

  I recall they report over a month after the end of the quarter.  To teach us patience, I think. 

[oren]

The delivery report is delivered very few days after Q end.

Re shipping, last Q Europe and China each got zero ships in Jan, 4 ships in Feb and 4 ships in Mar. This Q each got zero ships in Apr, 2 in May and 3 in June. Wave still seems intact, but the real proof will be whether July sees any arriving ships.

[sedziobs]

We should know soon.

  I recall they report over a month after the end of the quarter.  To teach us patience, I think. 

Earnings are released over a month after the end of the quarter, but delivery numbers are reported after just a few days. Q1 numbers were released on April 3.

[Tor Bejnar]

Glad to be corrected about delivery number release timing.

[Bob Wallace]

The delivery report is delivered very few days after Q end.

Re shipping, last Q Europe and China each got zero ships in Jan, 4 ships in Feb and 4 ships in Mar. This Q each got zero ships in Apr, 2 in May and 3 in June. Wave still seems intact, but the real proof will be whether July sees any arriving ships.

Early or late June?  And I wonder if they've solved the 'check in' bottleneck that held up delivery last quarter.  IIRC there was some sort of paperwork SNAFU in one port.

[oren]

There was a sticker problem in China that led to non-compliance of the cars until it was fixed, and in Europe there were logistical problems that resulted in the sacking of the local company hired to do the logistics.

[Sigmetnow]

This ship-tracking spreadsheet shows 1 ship arriving at Zeebrugge in April, and 4 in May.
https://docs.google.com/spreadsheets/d/10Uh_GSkShwPPlrE5mOJcrkZ-T3NmLkLnTo6xqbdtaOI/htmlview#
Data image below.
Edit: Correction, date shown below is when they departed San Francisco. But Zeebrugge arrivals still appear to be 1 in April, 4 in May 1 May, 3 June. Gah. Whatever!

The line-graph below shows ships and deliveries in Norway, Q1 vs Q2, to June 19.
Plus:

Morten Grove  (@mortenlund89) 6/21/19, 5:20 AM
Yesterday at Drammen under the cover of no ones eyes except @flyvendefrosk upwards of 600 Teslas arrived (low res picture, but Kristian who lives in Drammen confirmed them to be Tesla cars).
https://twitter.com/mortenlund89/status/1141999265860001792
- They arrived on #PrometheusLeader who had sailed from Zeebrugge via Bremerhaven to Drammen.

[oren]

Nice chart. The orange line should be reduced by 600-700 leftovers from last Q, but it's still a good result so far, a relatively small drop from the initial deliveries one-time craze.
Shipments still seem to be back-ended.

[Sigmetnow]

Cleantechnica interview.

Our Interview With Tesla President Jerome Guillen, Part Deux

We then slid into a chat about Tesla’s lessons from scaling up production of a truly mass-market, high-production vehicle. He noted that the Model 3 body was still super complex, “like origami,” something we’ve heard Elon Musk discuss more specifically in a recent interview with Ryan McCaffrey for his “Ride the Lighting” podcast. Kyle summarized Elon’s comments like this: “The current manufacturing process requires a mix of 70 aluminum and steel parts being pieced together into the rear frame for the Model 3. Tesla is swapping all of these parts out for a cast part from a small casting machine that will allow the company to initially go down to just 4 parts. Tesla is already looking at a larger casting machine that would allow it to consolidate this down to just one part.”

That captures the essence of Tesla quite well, something Jerome conveyed to us in various ways in our 45 minute interview. Tesla is never stagnant, is continuously pushing itself to take both little and big steps forward, is constantly innovating and evolving its processes and products.

Jerome added a note, with great emphasis, that the Tesla Grohmann equipment has created much better machines, dramatically improving the overall manufacturing efficiency of the Model 3. He also said they are building a giant machine using Tesla’s Grohmann sub-division, something he was clearly eager to share but couldn’t yet talk much about. Hmm. He basically just emphasized that it was a “giant, giant, giant machine” that duplicates everything, is modular, is simple on the modular level, and … is gigantic. We’ll all have to wait a bit longer for more information on that. ...

https://cleantechnica.com/2019/06/23/our-interview-with-tesla-president-jerome-guillen-part-deux/

[Bob Wallace]

He noted that the Model 3 body was still super complex,

I think this the most important point Sandy Munro brought to the table.  Too many separate parts and too many different types of fasteners where it would be possible to standardize.  Replacing nine different pieces with one single piece should speed up assembly and cut costs.  If Tesla can shave some more costs then they will be able to sell a $35k T3 with a 20% margin.

 

[Tor Bejnar]

Bob,
Your comment inspired the thought that one of Tesla's goals is to 'replace' the $20,000 car with a $35,000 car that will last four times as long (and therefore save people money, and give more value).

For example, my parents, in 1947, bought a house in Michigan for $1,000 (with electricity but without running water - yes, an outhouse out back - sold a year later with some improvements for twice that).  I believe it (with many others) was built a few years earlier for married student housing 'for the war effort'.  I cannot imagine a house (with an occupancy permit) today in the $10,000 - $25,000 range (the equivalent, per here) (without being a 'tiny house').  "Modern" standards require many more features, and people just 'budget' for the higher base price 'without thinking'.

[Bob Wallace]

Bob,
Your comment inspired the thought that one of Tesla's goals is to 'replace' the $20,000 car with a $35,000 car that will last four times as long (and therefore save people money, and give more value).

That may have already happened, with a $39,500 Tesla EV.  Teslas are holding their value very well.  Better than anything except for a limited issue exotic.  If one compares the cost of ownership for a T3 with a $23,945 Toyota Camry the cost of ownership over five years is about $20 per month less for the Tesla.  That's due to lower operating costs and much higher value at the end of five years.

Monthly out of pocket is about $200 higher for the T3 but cost of ownership is lower due to the higher residual value of the T3.

$5k down, 5 years financing at 5%.  13,000 miles per year.  $3/gallon gas and $0.10/kWh electricity.  $3,750 federal tax credit for the T3.  Without the tax credit the T3 would cost about $40 more per month.

Not included are insurance and maintenance costs.  Insurance should be higher for the T3 due to its higher value and maintenance costs should be higher for the Camry with oil changes, more frequent brake rebuilds, ....

[Sigmetnow]

CleanTechnica has compiled an excellent page of Tesla facts and links.

“Responses to Common Tesla Myths”

Tesla Myths & FAQ
https://cleantechnica.com/tesla-myths-faq/

[Sigmetnow]

Sam Korus (@skorusARK) 6/24/19, 2:42 PM
GE is shutting down a power plant 20 years early b/c it is uneconomic to run.
According to EIA data the plant's capacity utilization was ~6%. ...

https://twitter.com/skorusark/status/1143227839493431296

The Addressable Market for Utility Energy Storage Could Scale to $800 Billion

Elon Musk has stated that Tesla’s energy storage business will be as large as its car business in the long-term.¹ ARK’s research shows that foregoing planned gas peaker plants and replacing them with utility scale energy storage could generate roughly $10 billion in revenues per year, more than six times Tesla’s $1.5 billion utility energy storage revenue in 2018. As battery costs continue to fall during the next five to ten years, the global addressable market for utility energy storage should expand to $800 billion.

Last July, California utility PG&E proposed four energy storage projects to replace natural gas plants in the South Bay.2 Two of these projects are the largest utility energy storage projects ever proposed – 1,200MWh and 730MWh – dwarfing the current record holder, Tesla’s 129MWh battery in Australia. As battery costs continue to fall, utility energy storage will begin to compete with existing natural gas peaker plants, reaching a price point that will motivate utilities to shut down underutilized plants.

The chart below compares the cost of electricity from natural gas peaker plants to the cost of electricity from battery-based energy storage, with two scenarios highlighted. The brown circle illustrates the scenario we face today: the average natural gas peaker plant is utilized ~10% of the time in the U.S. resulting in a levelized electricity cost of ~$0.14/kWh.3 The red lines show ARK’s forecast: utility energy storage battery costs should drop from $400/kWh to $150/kWh in the next five years, which results in an electricity cost of ~$0.09/kWh, undercutting the cost of natural gas plants that operate 25% of the time or less.

Energy storage solutions should be able to compete for all future peaker plant additions. Economically, battery solutions already are competitive with new natural gas plants.  Because increases in capacity will be offset by battery cost declines, the addressable market in the U.S. should remain at roughly $10-12 billion per year....

https://ark-invest.com/research/utility-energy-storage

[KiwiGriff]

Epic.
Top gear tests model 3  up against the BMW M3, an Alfa Romeo Giulia, and a Mercedes C63S.
The result?
Harris tweets he is going to buy one.
In the rest of the world outside the USA this is a monumental endorsement.
https://cleantechnica.com/2019/06/24/top-gear-tesla-model-3-is-an-ak47-disguised-as-a-butter-knife/
Electric cars are the future and Tesla is not only ahead of every one else by at lest 5 years  they are already ahead of the best ICE cars.

[Bob Wallace]

Epic.
Top gear tests model 3  up against the BMW M3, an Alfa Romeo Giulia, and a Mercedes C63S.
The result?
Harris tweets he is going to buy one.
In the rest of the world outside the USA this is a monumental endorsement.
https://cleantechnica.com/2019/06/24/top-gear-tesla-model-3-is-an-ak47-disguised-as-a-butter-knife/
Electric cars are the future and Tesla is not only ahead of every one else by at lest 5 years  they are already ahead of the best ICE cars.

I'm waiting to see what the Roadster will do.  Given that the P100D sedan blows the doors off just about every other production car the Roadster may completely destroy the exotics.

[NeilT]

Getting into the deeper details of the financial reporting.  I was wondering about the impact of 90 day payment of invoice for Tesla suppliers.

Are Tesla using accruals of invoices?  Otherwise would Q1 not have had to cover the parts for 90k vehicles, paid in Q1 but delivered, assembled and billed in Q4 2018, out of the Q1 ~60k delivery revenue.

Equally, without accruals, Q2 would be covering the 90 day invoice payment for ~70k vehicles (adding the vehicles manufactured but in transit to the cost as they would be invoices to pay), on revenue for 90-100k vehicles.

I can't see how this would be anything other than a total rollercoaster, on quarterly P&L accounting, without accruing the actual invoice cost into the quarter in which the vehicles were manufactured.

I can only read a bit of the detailed Tesla financial statements so would appreciate a bit of enlightenment on it.

[oren]

What you describe is the behavior of the cash flow, which can indeed be a roller coaster.
Profit and loss in acounting are accrued by matching the invoice for parts with the revenue from the car made with these parts.

[crandles]

Getting into the deeper details of the financial reporting.  I was wondering about the impact of 90 day payment of invoice for Tesla suppliers.

Most companies invoice daily. It would be rare for a company not to invoice at end of month but if this did happen for some reason it should be accrued for.

With daily invoicing, it is taken into account by recording the invoice (the transaction being Dr Purchases Cr Accounts payable).

If for some reason there were goods received not yet invoiced at a period end there would be an accrual: dr purchases cr accruals. This is reversed at start of next period and then you expect that goods are then invoiced and the normal recording of the invoice adds purchases but this should just cancel the accrual reversal.

If you didn't record the invoices received but not yet paid, yes the accounts would be all over the place, but that doesn't happen. You record the purchases on receipt of invoice not on payment of the invoice. *

(* A tiny business might record purchases on payment then at period ends work out the creditors and adjust purchases for this but this doesn't happen with any sizable business.)

Oren beat me to it with simpler explanation.

[NeilT]

Thanks guys.  I wondered if it was accruals which were being used in the financial reporting.

I've met companies which do not pay invoices till 180 days after receipt.  Interest on cash flow becomes a real factor then.

[magnamentis]

Thanks guys.  I wondered if it was accruals which were being used in the financial reporting.

I've met companies which do not pay invoices till 180 days after receipt.  Interest on cash flow becomes a real factor then.

while it has been true (the interest part) what you are saying and certainly the late paying part is still true for cash-flow reasons, interest rates are so low at the moment that the effect on the interest level is almost negligible and one has to consider what's worth more, the damage in relationships with providers or the few dollars made.

of course in case of tesla it makes totally sense to pay very late or never because the don't have the money to do proper business.

[Bob Wallace]

Thanks guys.  I wondered if it was accruals which were being used in the financial reporting.

I've met companies which do not pay invoices till 180 days after receipt.  Interest on cash flow becomes a real factor then.

My understanding is that Tesla has negotiated long enough due dates that the finished cars are generally sold before the pay date on the invoices. 

[oren]

Tesla's payment terms are 60 days, if I am not mistaken.

[Bob Wallace]

Tesla's payment terms are 60 days, if I am not mistaken.

And throughput is generally less than 60 days.  Q1 2019 problems in getting exported cars may have pushed on the timelines to some extent but I haven't heard whether the delays caused a problem for cash flow. 

[NeilT]

Tesla's payment terms are 60 days, if I am not mistaken.

And throughput is generally less than 60 days.  Q1 2019 problems in getting exported cars may have pushed on the timelines to some extent but I haven't heard whether the delays caused a problem for cash flow.

I was thinking it was 90 days.  So if you front load the first half of the quarter with deliveries then they don't get delivered in the quarter, your cash flow has taken a beating as you have, potentially, already paid the invoice for components but not received payment for the vehicle.

[crandles]

of course in case of tesla it makes totally sense to pay very late or never because the don't have the money to do proper business.

What is the point of such bad mouthing of Tesla, when they had $2.1bn in cash and cash equivalents at end of q1 and the terms are pretty similar to other car manufacturers?

Enough cash for 3 really bad quarters like q1 but deliveries likely to be circa 50% higher than q1 so cash is likely to be enough for more than 9 months. If losses continue, yes they will get into trouble but that isn't the issue with your comment. It is more like: does your criticism stack up or does it just make you look silly?

[b_lumenkraft]

All this talk about cash is obsolete anyway IMHO.

Should Tesla need more money, it is not imaginable for me Elon wouldn't find some rich Silicon Valley guy giving him some. This ship has sailed, the company has proven to produce greater products than literally any of the competitors.

[Bob Wallace]

Tesla's payment terms are 60 days, if I am not mistaken.

And throughput is generally less than 60 days.  Q1 2019 problems in getting exported cars may have pushed on the timelines to some extent but I haven't heard whether the delays caused a problem for cash flow.

I was thinking it was 90 days.  So if you front load the first half of the quarter with deliveries then they don't get delivered in the quarter, your cash flow has taken a beating as you have, potentially, already paid the invoice for components but not received payment for the vehicle.

Yes, but it's more likely the case that Tesla schedules 'just in time' parts deliveries so that purchased items get used soon after reaching the factory and those cars squirt out the shipping dock.  Tesla's best strategy would be to keep supplies a few days ahead of need just to smooth over any temporary parts delivery problems.

I'm now thinking that one of the two parts of the Q1 loss was having profits from some Q1 car production shoved into Q2 due to transit time/problems.  The other was a major disruption of S/X production/sales.

[jai mitchell]

Sam Korus (@skorusARK) 6/24/19, 2:42 PM
GE is shutting down a power plant 20 years early b/c it is uneconomic to run.
According to EIA data the plant's capacity utilization was ~6%. ...

https://twitter.com/skorusark/status/1143227839493431296

The Addressable Market for Utility Energy Storage Could Scale to $800 Billion

Elon Musk has stated that Tesla’s energy storage business will be as large as its car business in the long-term.¹ ARK’s research shows that foregoing planned gas peaker plants and replacing them with utility scale energy storage could generate roughly $10 billion in revenues per year, more than six times Tesla’s $1.5 billion utility energy storage revenue in 2018. As battery costs continue to fall during the next five to ten years, the global addressable market for utility energy storage should expand to $800 billion.

Last July, California utility PG&E proposed four energy storage projects to replace natural gas plants in the South Bay.2 Two of these projects are the largest utility energy storage projects ever proposed – 1,200MWh and 730MWh – dwarfing the current record holder, Tesla’s 129MWh battery in Australia. As battery costs continue to fall, utility energy storage will begin to compete with existing natural gas peaker plants, reaching a price point that will motivate utilities to shut down underutilized plants.

The chart below compares the cost of electricity from natural gas peaker plants to the cost of electricity from battery-based energy storage, with two scenarios highlighted. The brown circle illustrates the scenario we face today: the average natural gas peaker plant is utilized ~10% of the time in the U.S. resulting in a levelized electricity cost of ~$0.14/kWh.3 The red lines show ARK’s forecast: utility energy storage battery costs should drop from $400/kWh to $150/kWh in the next five years, which results in an electricity cost of ~$0.09/kWh, undercutting the cost of natural gas plants that operate 25% of the time or less.

Energy storage solutions should be able to compete for all future peaker plant additions. Economically, battery solutions already are competitive with new natural gas plants.  Because increases in capacity will be offset by battery cost declines, the addressable market in the U.S. should remain at roughly $10-12 billion per year....

https://ark-invest.com/research/utility-energy-storage

Tesla battery packs will come in below $75.00 per kWh by mid 2020.  This would make gas peakers uncompetitive at 50% capacity factors, which, basically, means ALL of them.

[Bob Wallace]

I've read several articles from stock analysts who set Tesla's stock value on the low side.  None has ever mentioned the possibility that Tesla's storage business could grow larger than their car business.

[gerontocrat]

The TESLA EVs are so much better than the competition because they are EVs from the ground up. That was Musk.

The competition's engineers mostly stuck an electric motor into an ICEV and thought there you are, an EV. Wrong. Maybe now they are catching up

Musk has either the ability to blue-sky think and come up with original solutions, or has the ability to grab the ideas of others. That is his great strength. (Add space-X, big batteries, solar roof tiles (great idea if it works)).

But production is a machine, starting with an order and finishing with a delivered vehicle and money in the bank. The best machines work smoothly, able to respond to different levels of demand smoothly, obviously within limits.

Musk makes every quarter end a mad panic rush. Surprise, surprise, in the first month of the next quarter production, deliveries and all are a mess, workers and managers lying around in exhausted heaps.

As a production manager Musk is rubbish. Musk is misusing his and his company's resources. Send him off to the invention and product development shop.

That is my speculation that belongs to me

[Bob Wallace]

Tesla is developing its own cells in-house at a “secret battery lab” as it prepares to launch its own battery cell manufacturing, according to a report.

As we reported earlier this month, Tesla all but confirmed that it’s going to make its own battery cells with its new Maxwell technology.

....

CNBC reports that Tesla is developing its own cells and equipment to produce them at the facility:

“Employees in Tesla’s battery R&D teams are now focused on designing and prototyping advanced lithium ion battery cells, as well as new equipment and processes that could allow Tesla to produce cells in high volumes, employees and former employees said.”

https://electrek.co/2019/06/26/tesla-cells-in-house-secret-battery-lab/

Assuming this happens Tesla is putting itself on route to be a very major manufacturing company.  The dry roll technology that Tesla acquired when it purchased Maxwell should lower battery cost, increase capacity, and speed production rates.

[NeilT]

[

Assuming this happens Tesla is putting itself on route to be a very major manufacturing company.  The dry roll technology that Tesla acquired when it purchased Maxwell should lower battery cost, increase capacity, and speed production rates.

As well as becoming a manufacturer of the cells themselves.

It makes a bit more sense of Musk's goal of moving into mining too..