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Tesla Temporarily Stops Model 3 Production Line (theverge.com)
An anonymous reader quotes a report from The Verge: Tesla is temporarily stopping production of its Model 3 electric car, amid a long waiting list and several missed targets. The company, however, says the shutdown is intended to resolve some of the problems that have contributed to the numerous delays in getting the cars to hundreds of thousands of reservation holders. The automaker said Monday it would halt production of the Model 3 sedan for 4-5 days at its Fremont, California assembly plant, BuzzFeed reported. Tesla, however, says this is part of a planned period of downtime that was similar to another shutdown in February, and it isn't intended to have an affect on the company's current production targets for the car. "Our Model 3 production plan includes periods of planned downtime in both Fremont and Gigafactory 1," a Tesla spokesperson told The Verge. "These periods are used to improve automation and systematically address bottlenecks in order to increase production rates. This is not unusual and is in fact common in production ramps like this."
Why such obsession over trivial and routine manufacturing decisions at Tesla? Are we also going to get "Janitors at Tesla factory had to put overtime to unclog plugged toilet" headlines?
Tesla is the most shorted company right now.
The problem with the situation is that most investors *want* Tesla to fail so that they can make money from the short sales.
OTOH, Elon Musk is aware of the shorts and tends to do something to prop up the stock price whenever it drops a little. Like announcing a new model or a new production goal. (The production goals are never met, but the announcements make the stock tick up a couple of percent.)
So right now we're awash in bear market opinions, and many suggestive (but worthless) statements keep making the rounds such as:
"Tesla has never made a profit"
"Tesla loses money on every car they sell"
"Tesla only survives due to government handouts"
"Tesla is so far behind that some people will get their cars $SOMENUMBER years from now"
"Tesla is burning through cash, will be bankrupt in $NUM months"
"Musk is a serial liar"
Those are the highlights - have I missed any?
To analyze #4 as an example ("burning through cash"), note that this is something the CFO and CEO keep track of and anticipate, and are responsible for raising more cash before the bankruptcy actually happens. Also, specifically Tesla predicts that they won't need another round of financing, but that option is certainly open if they need it.
It's nigh impossible to get an accurate assessment of Tesla's worth right now, due to corruption in reporting.
Tesla expects to turn a profit for the first time later this year. Their stock will probably skyrocket when that happens.
Meanwhile, even with the delays, Tesla made their first 10000 Model 3s in less time than it took GM to make their first 1000 Bolts, from the start of tooling. And the first Model 3s were rolling off the line well sooner than the first Bolts (again, relative to the start of tooling).
Bankwupt! Bankwupt, I say! ;)
Hey, let's put or skeptic's hat on. Let's say that Musk is wrong about 5-6k/wk at the end of this quarter. Let's say they only do 4k at the end of this quarter. That would still be 80% of the line's initial design spec, aka the point where it's designed to be turning a 25% gross margin. Even a miss this quarter still means that they've pretty much succeeded with line development. Yes, they'll tune it over Q3 to get the rate up as high as they can, and this might mean a couple weeks downtime here and there. Sure, they'll probably take a quarter or two to realize the full margin. But at the end of this quarter, they're probably going to be earning at least 10% margin on at least 4k cars per week with an average sale price in the early run of around $45k (it's worth pointing out that the early cars are option-heavy and likely to have higher margins, so 10% is very pessimistic). That's Model 3 profits of $234M in Q3 (positive-$234M, vs a Model 3 loss in the last quarterly report) if Q3 averages only 4k/wk across all of Q3 (vs. the target of 5k/6k per week at the start of Q3). If Q3 averages 5/wk and 15% margin? That's $438M. Q4, at say 6k and 20%? $702M. I mention these numbers to contrast with the 598M quarterly loss they had in Q4.
Even if we ignore everything else - how the solar gigafactory is finally starting consumer sales, the huge boom in energy orders, the half billion or so they're going to get from deposits on the Y, etc, etc - Tesla's cash burn is all but over in Q3, and they're profitable in Q4. And even in Q2, their burn is heavily slashed from Q4/Q1.
And this is just the start of reasons I could go into as to why this "bankwupcy" thing is nonsense; there's about a dozen more. The shorts, strangely enough, always only develop their hindsight in the rearview mirror. To them, Tesla is always bankrupt in six months. Last summer, Tesla was going bankrupt this winter. Last fall, they were going bankrupt this spring. This winter, the bankruptcy was scheduled for summer. Here we are in the fall sweeps. Well, sorry to rain on the parade, but their predictive ability is worth squat. They keep pointing to reasons that Tesla did better than they expected, and it's always, "Well, of course they could do that, but they can't do it again, so now they're doomed!". Yeah? Well where were you pointing out what they could do? They were just off screaming "Bankrupt!" to their Seeking Alpha echo chamber, only developing their "foresight" after the fact. It's like listening to the Nostradamus crowd insisting that he predicted the 11 September attacks - if the predictions were so great, where were you on 10 September?
I will pull over this spaceship right now!
If it weren't for the massive injections of credulous investors' cash, Tesla would already be bankrupt. The problem with the model 3 production line is not "can they get it up to capacity" but "can they get it up to capacity in time". All the while they are not profitable, they are accruing debt and that debt is getting more and more expensive (because their credit rating is getting downgraded). It may get to the point that Tesla cannot increase production of the model 3 fast enough to produce the required profit per car to service their debt.
Then the FSD issue might become a millstone. What if they can't do FSD without expensive upgrades that have been promised for free? What if people start taking legal action because FSD hasn't arrived or the advertising is deemed fraudulent.
Don't buy Tesla stock right now unless you are up for high risk investments.
All I want is a secure system where it's easy to do anything I want. Is that too much to ask ~~ Randall Munroe
Shutdown production because the waiting list is too long? Wow, that will make things even better. Another Obamanation moment brought to you by Millennials, born without a clue.