Tesla Q2 numbers, production, shipment & forecast

Loss from Operations of 620M and 450M new Debt Cash balance still lost 500M and Accounts Payable up substantially.

 

A few things in the conference call that were alarming;

1. China factory will be 250K car capable, that is down from the 500K Tesla announced when Elon was in China, Why? China market could suck up 500K car easily.

2. On the question about Tesla 2020 1M production, Elon's answer was all over the place. I am surprised a high ranking executive is so scatterbrained. First he said Yes, then 750K, then 600K, then 800K. Lets think about this for a moment, Tesla is guiding the China factory construction starting in 2 to 3 quarters (in the SEC filing) so that puts us well into 2019 for start of construction... Even if they were to build and equip the fastest auto plant and battery plant ever built in the world, we are talking 2 years of construction and setup time, that puts us in 2021, clearly for the start of production. I think Fremont will top out at 450K, and that is assuming Tesla solves massive problems.

3. Financing the China factory? Adding debt from local banks, it not a clear and detailed answer

4 Cross country Autopilot trip, again answer was all over the place but it came down to by the end of the year... Yeah, we have heard that before...

 

This kind of answer just means, he is pulling them out of nowhere or somewhere stinky.
I'm very skeptical of the 50k Model 3 deliveries in Q3 also. Tesla it seems is pulling demand levers already to get people to buy Model 3. I think, the high production and delivery pace of July was only to brag about those in the earnings calls and cause a short burn. After July, I expect a slowdown in deliveries and also production. We will see.

#3: Is there any particular benefit in borrowing money from Chinese banks? I thought, China will like foreign investment more. No?

 

Well, actually I think Elon is trying to listen to the other execs, and his chief counsel and then formulate the answers, on the call I hear the lawyer talking in the background a few times, somebody was slow on the mute button... Haha! He is just not good on his feet, unless he is selling dreams, once he goes off talking about the future he can go on and on talking about unicorns and rainbows, but talking about real issues, or getting deep into financial details he is not at all smooth. Anyone on here that disagrees with me, listen to Mary Barra, or Tim Cook, or Satya Nadella on an earnings call, man... they are smart, and sharp as a tack... Elon kinda reminds me of the druggie screwup when you are talking about executive level explanation. We are friends with a few high ranking execs in local companies, and even when at a BBQ or wine dinner together, you can tell, these guys are super smart.

https://www.cnbc.com/2018/06/22/teslas-musk-uses-seventh-grader-language-on-earnings-calls.html

 

Real (long) Tesla investors: "This was the best conference call ever!"

Smear campaigner posting here: "Elon kinda reminds me of the druggie screwup..."

Notice how the two anti-Tesla smear campaigners here, "short" investors who persist in posting FUD, desperately focus only on the few, mostly unimportant bad things they can find.



Some excerpts from "TESLA AND THE SMEAR" by Roger Pressman

In recent months, all of us who follow Tesla have noticed a dramatic increase in what Elon Musk characterized as “relentlessly negative” news, rumors, and innuendo concerning Tesla and its vehicle lineup. You’ll find damaging Tesla stories and commentary on obscure blogs and twitter feeds, across mainstream news sites and aggregators, and in national web sources and publications.

A few years ago Tesla and Elon were the darlings of the media—eco-friendly, tech-savvy, hyper-innovative—the wave of the future. Now, if you were to believe the conventional wisdom as reported by the media, things have changed. Sure, there are still staunch defenders of the company, but the tsunami of news presented with a distinctly negative spin often drowns them out.

The big question is why, and the answers I’ve seen are a little naïve and often overly-simplistic.

Defenders of the company—and there are many—blame “the shorts” (investors who bet large sums on shorting TSLA in the hope that stock prices will fall) or “big oil” or “big auto”, recognizing that Tesla’s success represents a significant long-term threat to all of those constituencies.

But they almost never talk about the mechanism that I believe is responsible for the negative news tsunami we’re seeing—a mechanism that CBS journalist, Sharyl Attkisson calls, “The Smear.” In her book, Attkisson describes a smear this way: “In simple terms, it’s an effort to manipulate opinion by promulgating an overblown, scandalous and damaging narrative … Paid forces devise clever, covert ways to shape the information landscape in ways you can’t imagine.”

...I suspect that the smear we’re witnessing is a disinformation campaign conducted by professional smear shops who are experts at manipulating friendly members of the media and through them, the general public. And behind the smear shops, hidden from view, are paying clients who desire anonymity.

But what are the explicit characteristics of a “smear,” and how can you learn to recognize them? As important, how do the shadowy figures who operate professional smear shops do their work?

...Professional smear shops hire enthusiastic young college grads and plenty of unpaid interns who follow the target of the smear—Tesla—24/7. Every news story, every social media post, every rumor no matter how insignificant or untrue, is logged. Every tweet and every public comment made by Elon Musk is dissected to find a way to spin it negatively, preferably questioning Musk’s mental stability, his character, and his honesty. This stream of information goes to copywriters who formulate releases that are passed on to “friendly journalists” who, as Attkisson notes, gain something for promoting them.

Much of this can be accomplished using social media as a driver. In fact, professional smear shops increasingly use a combination of bots and boiler rooms of paid employees to troll social media in ways that amplify the smear.

...As ugly and dishonest as it is, the smear works … and whether we like it or not, it’s now working against Tesla.​

Full article: "Tesla and the Smear"

https://evannex.com/blogs/news/tesla-and-the-smear

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Is it wrong to revel in schadenfreude, when it's about the money being lost on "short" investments by smear campaigners whose motive is to damage and destroy a company like Tesla Inc.; a high-tech "green tech" company which is creating American jobs, and is truly trying to make the world a better place?

Nah. Sometimes evil really is its own reward!

I'm going to be very pleased thinking about how much money these smear campaigners are going to lose today. Especially the smear campaigners posting FUD in InsideEVs comments!

 

Domenick Yoney had a pretty good summary of the Tesla conference call, in his InsideEVs news article:

• Elon starts with thanks to employees for production of 7,000 vehicles in the last week of June and continuing that level of output through most of July. Suggests these deliveries are helping to drive sales.
• Potential for increasing production with existing equipment is greater than expected. Aim to hit 10,000 a week next year.
• Plan to be profitable every quarter going forward. (!!!) (There may be a few exceptions, Musk notes)
• Autopilot team is there, introducing themselves. Will discuss what they are working on. Musk says making advances in neural net and other self-driving technologies.
• AutoPilot 3rd gen hardware is developed should be deployed next year.
• A lot of discussion about the superiority of the Tesla approach to AutoPilot development. An order of magnitude more processing power.
• Toni Sacconaghi asks first question about what is driving increased vehicle margins. Musk apologizes to him for being rude on the last call. Musk puts increased margins down to improvements in the production process. Improved efficiency increases margins.
• Robin Ren (world-wide sales) mentions about half of customers are choosing dual motors at the moment. Since configurator opened, many non-reservation holders are ordering.
• Ren says top five non-Tesla trade-ins for Model 3 are Toyota Prius, BMW 3 series, Honda Accord, Honda Civic, and Nissan LEAF.
• Musk apologizes to the next analyst, Joseph Spak from RBC Capital Markets. Gigafactory3 in China costs should be closer to $2 billion for 250,000 unit production to begin. Take lessons learned from building Gigafactory1 and apply them to reduce capital expenditures.
• Note* Tesla up +$33 in after-hours trading, possibly due to much better performance here by Musk.
• All Performance Model 3 Dual Motor sedans are assembled in the tent. Says efficiency level is higher in tent.
• Analyst James Albertine asks about the funding of future projects. Musk says no to capital raises. China Gigafactory will be financed using loans sourced within China. Musk talks about paying off debts instead of financing them further.
• Adam Jonas of Morgan Stanley remarks on the improved tone of the call. Asks whether Tesla tech can be turned into Terminators…talks of (China) turning tech into weapons-grade AI technology. (!!!) Asks if BMW or Amazon might be the bigger competitor in future. Musk laughs about the Terminator suggestion, doesn’t see Amazon getting into automaking.
• Romit Shah asks about the coast-to-coast capability of AutoPilot. Musk says they could do it be “gaming the system” by focusing on a specific route, but wants the system to be more generally capable before releasing. Might be able to pull off a demo before the end of the year (believe he said the same a year ago). Breakthrough stuff coming in a month or so with Version 9 of AP.
• John Murphy of Bank of America, is tent permanent and a model for future? Experiment for now but they are learning from its implementation. Musk says they are still aiming for steel frame buildings.
• Confident in increasing margin projections – 15% in Q3, 20% in Q4, 25% in 2019? Musk: Yes.
• Musk: Manufacturing at volume is mostly a software problem, which Tesla is good at. JB Straubel adds many problems came in Model 3 production when they outsourced some of the processes.
• Ben Callow from Baird asks how close are they to being cash flow positive. Deepak Ahuja says they haven’t done July numbers yet, but will be cash flow positive by the end of the quarter. Musk adds they are confident in being profitable.
• Tim Higgins from WSJ asks if they are confident in building 1 million units in 2020. Musk bounces around a few numbers, ends up at more than 7 to 8 hundred thousand with a shot at a million. They may announce Model Y production site before end of the year, as well as Europe Gigafactory.
• Zachary Shahan of CleanTechnica asks about vehicle portfolio pipeline. Musk mentions the vehicles already known about, says production ability depends ultimately on battery production capabilities.
• Musk says they are cell starved for Powerwall. Ramping up production later this year and next. Several hundred SolarRoof homes now, still in validation program. Will ramp up more next year.
• Current bottleneck includes body production. Just made over 800 bodies in a 24-hour period.
• Galileo Russell of Hyperchange asks about where Semi production will happen and whether it uses a lot of Model 3 parts. Musk demures on production location, says yes about Model 3 parts in Semi. Russel asks about future energy production and they discuss the ramping up process. Reveal PG&E energy project is over a GWh. They say its growing faster than automaking.
• Speaking of future profitability, Musk says they won’t always be rolling in cash, but still should be cash positive. Should be self-funding, though with temporary debt, says it won’t constrain growth.

Full article: "We Listen In On The Tesla Q2 Financial Call: Real-Time Updates"

 

On the Tesla Motors Club forum, ZsoZso posted this yesterday:

now, lets see how the short-bears will spin this one !

- Biggest loss ever ? Check!
- Decreasing reservation deposits => demand problem!
- GF3 financed from local debt => $TSLAQ going bankwupt!
- Tesla energy income dropped compared to Q1 => now valued LESS than ZERO

Did I miss anything ?
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He got 16 "funny" votes for his post!

 

What got the contributors to the "investors roundtable" discussion most excited, during the Tesla conference call last night, was the announcement of Tesla's new drop-in computer "Autopilot chip".

One comment said:

current GPU solutions runs at 200 FPS
Tesla chip runs at 2000 FPS

times 10 performance

slam dunk
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Another said:

On the up side, we might be going to Mars tomorrow

On the down side, my NVDA is absolutely F****D
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I think he doesn't understand. This is a specialized chip which is (according to Elon) about 10x faster at running the Autopilot software than the general-purpose chip they were using. That doesn't in any way mean it's going to take business away from Nvidia -- well, not any more business than I presume Tesla was giving them for that one chip -- and logically it shouldn't cause a hit to NVDA stock... not that the stock market reacts logically.

A related article posted late yesterday: "Tesla is building its own AI chips for self-driving cars"

 

Yes, This one was just Elon trying to BS, he is already 2 years later then he guided, and I think with the very little amount of on road testing they have done, they are further away from the true self driving, then Waymo, or GM.

Looking forward I cannot see how they will have production any higher then 450K for 2019, 2020, and 2021, with 2022 being the first year any volume from China could be counted on. On thing I thought about is they may plan to launch the Y out of Fremont in late 2019, as I feel by that time high volume 3 business will be saturated. They may try to do a flex line combining the 2 vehicles? But they would still need 2B for the launch development, shoot just the line tooling is about 1B., if all the hardware is in place.

 

I take an I will believe it when I see it with all Tesla's supposed advancements... Its like Self Driving, Tesla has been promising Level 5 for a couple years now as right around the corner.... Hmm, Autopilot is still hitting firetrucks as of this ear.

 

Yeah, the full self driving demo happend in 2017 already

PP, don't know what you are writing up there. What investor round table? If it is only Tesla bulls, then God bless!
Just remember one thing: Elon talks super optimistically, to the point of feeding BS to his followers. His projections are rarely backed by any kind of research or practicality. Don't ask me, just google it.

 

Well of course it's nearly all Tesla bulls participating in an investor's round table discussion. Duh! What do you think the term "Tesla investor" means? Hint: It's not a short-seller like you or our other resident Usual Suspect, "TeslaInvestors"! There was one short-seller who metaphorically poked his head into the discussion... and pretty much got it handed to him.

Well I do agree that Elon throws out a lot of hype, but of course like all anti-Tesla smear campaigners, you can never be satisfied with sticking to truthful statements. Your second and third sentences are of course just more smear campaign FUD. As has often been pointed out by many people, what Elon claims nearly always comes true, altho usually later than he predicts.

Contrariwise, the claims made by Tesla smear campaigners almost never, never turn out to be true. I've been reading the bull pucky and Big Lies from anti-Tesla smear campaigners for years, and I recognize the smell of bully pucky when it wafts through comments.

The assertions made by well-informed Tesla "bulls" are quite often bang on the mark. The comments the "round table" made during Tesla's conference call last night were interesting and very well informed. Your comments, Mr. anti-Tesla smear campaigner, were sadly just more of your usual bull pucky.

Hey, one of your "heroes", Mark B. Spiegel, one of the leaders of anti-Tesla smear campaigning, retweeted a claim that Tesla is going to collapse financially before November of this year. You wanna bet that's actually gonna happen, dude? (Now, I don't mean bet money. You proved by reneging on your bet with Nix that we can't expect you to pay off when you lose a bet.)



BTW -- How much money did you lose on your TSLA short investment today, dude?

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I think Elon was talking about Chinese investments in the Chinese Gigafactory. So for the Chinese, that wouldn't be "foreign investment". At least, that was my impression in the context of what Elon was talking about; I could be wrong.

EDIT: Oh, I see Domenick already said the same.

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You usually are wrong.... Tesla is borrowing the money in China because the loans they already have in the USA have covenants that do not allow more borrowing (I assume), there is a reason Tesla is not raising capitol, they have been told not to... So now Growth is going to be slow.... I see they will not have any new manufacturing capability until 2021 at the absolute earliest per their filing yesterday, says China production starting in 3 years which is late 2021, so that means value in 2022. All they can do at Fremont is pump the existing lines as hard as they can... Lets say 7K a week or 364K a year, and I give them a theatrical limit of 450K a year... Still barely a niche player. What about Semi release Elon promised in 2019, how are they paying for that? where will they build that? And 2020 roadster, aka vaporware? I notice in the filing yesterday there is barely mention of the Semi, and Roadster. No dates, or cost schedules.

There is also sighs of slowing in the USA economy, housing has started to slow, many business outside of Tech are tightening up... Car sales for July were weak... I think that is why Elon mentioned Force Majoure and Recession 12 times as risks to profit... they can see a storm beginning to brew. See China'a markets today... Not looking too pretty...

 

You really are desperate to control the conversation here, aren't you dude?

That was one of the short-sellers' conspiracy theories that the Tesla Motors Club's round table discussion talked about. They also noted that Elon dismissed that in the Q&A. You need to update your anti-Tesla Smear Campaign Talking Points, unless you want to keep repeating debunked B.S.

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