I've been working on my own cash flow estimates for Tesla and while I'm not yet ready to post the whole thing, here is one item from Goldman's note that seems out of line given what I've calculated:
"Our base case forecast calls for 290k units by 2020, somewhat below Tesla’s 500k assumption, with volumes growing to 760k by 2025 and remains relatively unchanged."
So 290k units by 2020. Maximum production now is roughly 150k/year. That's with the new line running 24/7 and some production on the old line. These aren't practical run rates at this time but you'll see my point. From 2006 through June 2014, Tesla has spent a cumulative $1.16 billion on capex. A CUMULATIVE $1.16 billion. Ignore the possibility that some of that money, which was used for Roadster production, has little value for MS production, the newest equipment is more cost effective or that Tesla now has more experience and will be able to spend more wisely on capex. With that in mind, if Tesla were to spend an additional $1.16 billion they would presumably double production capacity as well as the current number of Superchargers and probably some additional capex items but let's leave them out for now.
Assume the Gigafactory will cost $5 billion for the full buildout by 2020 and add in the $1.16 billion discussed above. That puts us at $6.16 billion. The headline from the story on the Goldman note is "Goldman Warns Tesla Will Need To Raise At Least Another $6 Billion".
How can that be? We know the Gigafactory will likely be built out in phases and we know that Tesla isn't footing 100% of the bill. Tesla also currently has around $2.7 billion in cash. So to believe Goldman's note, Tesla would pay for the Gigafactory, a doubling of production and have $2.7 billion in cash after. That doesn't add up.
Some will say Tesla will need the cash for the RVG and/or the convertible notes. True, it may. But if Tesla pays to expand production, sales and therefore cash flow will also increase.
No surprise that you cherry picked what you wanted. I'd suggest that you read the full report but in your case there'd be no point.
The first sentence and the last one should generate plenty of debate. "...as well as those not currently communicated..." and "...management has noted that the company could self-fund these amounts..."
"With numerous projects laid out (as well as those not currently communicated) ahead for TSLA, we see a possible need for additional capital.
In the near term (end of 2014 through 2015) projects include upgrading the paint and body shops for Model S and Model X, continued Model X development/launch spending, and initial gigafactory costs. Into 2016, spending for the gigafactory accelerates and Model 3 spending begins. Beyond that, there will be incremental follow through capital deployment related to the Model 3 and gigafactory. TSLA management has noted that the company could self-fund these amounts but would consider external funding depending on its growth cadence and other projects it takes on."
You make some good points, some less so. I'll just point out that Tesla needs just over 1% of the global auto market or 4% of the U.S. market (using 2014 figures) to hit the high end of sales estimates in 2020. That's it. You can point out the many "inconveniences" that you see while underestimating the conveniences that people like me see and feel outweigh your inconveniences but only a very small percentage of buyers is needed to see things like Tesla fans do in order for the company to succeed.
1%, 4%. The odds are in our favor.
Cost is one factor. Time and a half, double time-those costs can add up. Battery constraint is likely the other. Elon never said that the supply of batteries isn't a problem anymore, he has only said that Panasonic has been increasing production and that has helped to alleviate some of the shortage.
Tesla has gone from 800 cars/week to 1000. Panasonic would have had to increase their production at least 25% to keep up. Would you disagree that's not insignificant? The other thing that I think some are missing when it comes to batteries is that Tesla is using some of the batteries for products other than cars. Many, maybe all Superchargers use batteries to smooth out usage spikes. Batteries are also used for the same thing in the Fremont plant and some I believe are being sold to Solar City. I'm not saying any of these uses are massive but it all adds up.
Your question about VINs is a good one. I don't have an answer but maybe we'll get one whenever the next block of VINs gets assigned.
I think your reasoning is mostly sound. Here are 2 additional things to consider:
1. Fremont was shut down for 2 weeks, not 3.
2. From Tesla's comments, the plant had been running 12 1/2 hours/day, 5 days per week. There is plenty of room to add some additional production time although it will be more expensive as I'm assuming that workers will paid overtime rates.
"But I will say I have serious doubts about Tesla even reaching 30,000 sales in 2014."
Is this yet another increase of your estimates for 2014? First it was 26k then 29k now you have serious doubts about 30k but you're not saying it's impossible, a pipe dream, a zealot's dream, whatever, as you characterized far lower estimates. You're raising while pointing out analysts who are less confident?
BTW the Fremont plant was shut down for 2 weeks, not 3.
You may have to adjust that waterline although this number is looking like an outlier at this time:
"sirgrif | SEPTEMBER 17, 2014 NEW
So this is my final posting to this topic...
I confirmed my car 56603, a red P85+, on 8/18 @9:43:45 pm and I am picking it up tomorrow 9/18 @9:00:00 am from the delivery facility in Seattle. That will be an end to end (confirm to delivery) time of 30 days 11 hours 16 minutes 15 seconds.
With that kind of good fortune I should put in for a Model X and buy some TSLA stock while I am at it."
I'm sure forecasting Tesla's production is a very simple task.
Someone who sees so many conspiracies and so much corruption must be projecting their own (lack of) values and how they act.
You need professional help. I hope you get caught before you cause any more harm.
Oops, should have said 45 days ago, not 90.
Note the parts about "additional production capacity" and "We have also chosen to slightly accelerate our investments in production capacity...":
"We plan to invest between $750 million and $950 million in 2014, an increase of $100 million from prior guidance. We continue to invest in additional production capacity, continued Model X and Model S development, Gigafactory construction, and further expansion of our sales, service, and Supercharger footprints. We have also chosen to slightly accelerate our investments in production capacity and the Gigafactory."
Why would Tesla add capacity and accelerate capacity investments if there won't be enough demand for that added capacity? Many here think they have "figured it out" but Tesla hasn't? How can that be? Does anyone think they know more about sales, sales trends, demand, etc. than Tesla does and if so what is the basis of that belief?
Tesla may well miss delivery estimates at some point but why not wait until there is some real evidence of slowing demand before proclaiming it a pretty much done deal?
You're one of the very few who seems to think q3 is easy in any way. As for q4 and 2014, I think your figures are a little off. YTD sales are 14,000. The forecast is for 9000 cars to be produced in q3. Let's assume that all of those cars are sold by year end. That puts us at 23000 so they need to produce (and sell) 12000 by year end. Current production appears to be at the forecast rate of 1000/week so there is a 1 week "cushion" as there are 13 weeks in q4. Allowing 3 days off for Thanksgiving and Christmas (I'm assuming they won't take 2 days off for each of these holidays) means they have 2 additional days. Of course, only a few cars roll off the line and get delivered shortly thereafter so I'd expect most of the early and mid q4 sales to go overseas while end of quarter deliveries to go to a smaller and closer geographical circle, culminating in mostly local deliveries on the last few days of December. On the other hand, if production is only running 12.5 hours/day 5 days/week, certainly there is room to increase production.
"He seemed cautious in this interview, but not pessimistic."
There's no rule and nothing at all wrong with changing estimates either higher or lower. It's just ironic that while continuing to say that business is getting worse, you raise your estimate by over 10%.
"If the business was ONLY the US, I would have forecasted somewhere in the area of 12-13,000, about a 34% DECREASE in sales versus 2013."
Comparing U.S. sales for 2014 vs 2013 as you've presented it may be factually correct but is misleading, deceitful, dishonest and only those who truly don't know better get a pass. We've been through this numerous times and you know better. Show you have some integrity and put the figures in perspective.
Fox Business has 2 clips of the interview. Watch the second one, it's more about Tesla and entitled "Musk: Will be able to achieve half a million cars by 2020". Unless I missed it, he didn't comment about full year, only q3 as that was what he was asked about.
Where are you seeing European orders getting Dec est delivery dates? What countries? Last I checked the website shows 3-5 months for the several countries I looked at.
My first impression is that if there's a miss it won't be huge while a more than modest beat is unlikely.
I started writing this post with the points below but I have to precede them with this observation:
You ballcoach, YOU JUST RAISED YOUR 2014 ESTIMATE! Do you remember that from only a few days ago? You went from 26k to something like 29k. Granted, it's still low but who raises estimates while saying that business is getting worse?
Anywho, back to my original thoughts...
Sooo the analysts who have doubts are right but those who don't have those doubts are...?
The analysts who have been and continue to be bullish long term are...?
BTW if I'm not mistaken, only 1 analyst is truly doubtful long term. He hasn't changed his $75 price target despite the last 200 points going against him.
Last note: as LR pointed out, Q3 hasn't even ended yet. As the guy in Monty Python's Holy Grail said, "I'm not dead yet".
Sorry you got slighted LR but I'm enjoying the unintentional compliment ballcoach paid me by thinking I was you.
What we see differently is the interpretation of this situation. You consider it a poorly operated business with unexplained slow moving inventory. I see it as the cost of doing business when shipping to more distant locales where there are larger markets.
Assume Tesla began operations on Jan 1. They are producing 800 cars/week or roughly 10,000/quarter. In the middle of February, they begin shipping cars overseas and those deliveries take 6 weeks to make it the customer. At the end of Q1, there would be 4800 cars in transit, unsold and included in inventory, correct? If you don't disagree, I'll take it one step further: in trying to satisfy demand in distant locales, how can Tesla NOT have this large pipeline other than to not ship overseas and sell more production locally? How does this make them a poorly operated business?
Wow, what a great analogy. Never heard that before before but I like it better than "can't see the forest for the trees".
You mean the loaner cars that the conspiracy theorists say Tesla keeps selling after building "inventory" every single quarter for the last 1 1/2+ years? Lol