Elect Sam Toll For County Commissioner
TWIT - This week in Tesla

The Weekly TWIT – This Week In Tesla July 14th

The Weekly TWIT – This Week In Tesla July 14th

Another interesting week for Tesla is in the books, and Elon Musk didn’t disappoint the folks watching him make news. From hell in Fremont to caves in Thailand to Chinese Gigafantasies to the Flint water savior, Elon was hopping the globe this week making news. As we lift the hood and look at the details of the events of the week, we see it was more of the same; distractivision to keep us from paying attention to the man behind the curtain.

TSLA Stock began the week at $ 308.90 and closed the week at $318.87

1) Hell for Elon Musk Is a Midsize Sedan – Bloomberg

At the Fremont plant, Elon Musk is enduring a hell on earth. He is discovering that while promising to make 200,000 Model 3 sedans as he promised by January 1, 2018 has not completely destroyed his credibility, it has come close to destroying him.

“I was wearing the same clothes for five days,” Musk says in an interview with Bloomberg Businessweek. “My credibility, the credibility of the whole team,” was at stake.

Musk initially promised as many as 200,000 Model 3s by the end of 2017. To get there he planned an unprecedented investment in factory robots, calling the production line “the machine that builds the machine.” He’d said it would look like “alien dreadnought”—a manufacturing process so futuristic, unstoppable, and cost-effective that it would seem extraterrestrial.

Featured in Bloomberg Businessweek, July 16, 2018. Subscribe now.

Photographer: Balazs Gardi for Bloomberg Businessweek (car); Source: SpaceX (rocket)

It hasn’t worked out that way. Tesla ended 2017 having made not quite 2,700 Model 3s. As of the end of June it had turned out about 41,000, and some analysts express doubts about whether it will ever be able to show a profit on the car, and Tesla hasn’t even started selling the $35,000 base model.”

2) Tesla’s Latest Aim: Build 500,000 Cars a Year in China – New York Times

In the first of three stories we are sharing about China, New York Times is reporting on the announcement of another Gigafactory in China. While the announcement of the Shanghai factory caught the attention of the world, there are serious doubts about the reality of building cars in Asia.

“The investment in China is the latest initiative that Tesla’s chief executive, Elon Musk, has announced with lofty ambitions, some of which he has fallen well short of achieving.

Two years ago, Mr. Musk predicted that the company’s plant in Fremont, Calif., would churn out close to 500,000 cars by this year, but the effort has been hampered by over reliance on automated machinery and by production bottlenecks. By the end of June, about 40,000 had been delivered or were in transit.

Last fall, he unveiled a battery-powered semi truck that he said Tesla would begin producing by the end of 2019. The truck is now being redesigned, and no plans have been announced for a factory to produce it.”

3) Tesla’s China factory: Will it ever be built?

Elon has talked about a Semi, a Roadster and a pickup truck within the last year. Each of these vehicles will, austensibly need their own factory. With Tesla being $10 billion in debt (some of it coming due early next year) and suffering a credit rating cut to junk bond status, how will any of these things come to pass? Equity raise in new stock? Floating more bonds? Government “too big to fail” money? Only time will tell.

“Tesla faces some big challenges before it will be able to produce half a million cars in China. And how the company, which has had numerous problems with its U.S.-based production facility, plans to get the China factory up and running is unclear.

Billions of dollars will be needed to build such a factory. The company also has plans to build factory lines for upcoming products including an electric semi truck, an electric pickup truck, and an electric crossover car. That will cost billions more. Money was not discussed in the Shanghai news release. No investments in the project or in Tesla were announced, although an agreement between Tesla and an industrial park developer was mentioned.”


Elect Nicole Barde


4) Tesla could be collateral damage in Trump trade war with China

In an ironic twist on the factory story, Telsa found itself caught up in the middle of the trade war with China Trump promised on the campaign trail in 2016. While the announced factory could allow Tesla to bypass the tariffs by making cars in China, the factory won’t be ready any time soon. Until then, the coveted Chinese market, whose sales Musk suggests could outpace the United States will get hammered. The tariff is estimated to add an additional $ 20,000 to the sticker of a new Model S or X.

“Tesla could be particularly vulnerable to any restrictions on Chinese investment because of the company’s underlying reliance on advanced technology. Few fields have become more competitive than advanced battery design and manufacturing, and Tesla’s batteries are finding a variety of uses beyond its vehicles. Among other things, they’re being used for home and office energy storage devices, a field that is expected to grow exponentially over the coming years.

Musk has made it clear that any new Tesla plants, including one in China, would not only assemble vehicles but also produce batteries and other components, such as its electric motors. That’s another high-tech field in which the Chinese have been making a push for dominance.”

5) Elon Musk Defends His Rejected Mini-Sub Plan for Thai Cave – New York Times

In a ploy that reeks of a publicity stunt out of P.T. Barnum’s playbook, Musk made world news by having his engineers at Space X to stop, drop and roll out a nearly useless submarine. Turns out the professionals on the ground were able to get the boys out safely without Musk the Magnificent’s help. Elon was on the ground and in the cave for a few minutes, and then was asked to leave.

“On Tuesday, the head of the search operation, Narongsak Osottanakorn, until recently the provincial governor, rejected the notion that Mr. Musk’s custom-made submersible was suitable for the extraction.

“I assure you that the equipment he brought to help us is not practical for our mission,” Mr. Narongsak said. “Even though the equipment has state of the art technology, it does not fit our mission in the cave.”

6) Tesla confirms hitting federal tax credit threshold, $7,500 credit cut in half at end of 2018 – Electrec

The notion of giving tax credits for Tesla vehicles (or any electric vehicle) should be clear to any clear thinking person. By allowing the Government to pick winners and losers instead of the free market, manufacturers can produce a car that would otherwise not sell. Or at least sell as well.

In the case of Tesla, the tax credits are doubly bad because they are taxing the poor and middle income earners as well as the wealthy to subsidize a car that only the affluent will be able to afford. The Model X and S are $ 70,000 – $100,000 per, and while the Model 3 was supposed to have a base price of $35,000, Musk says he can’t make a $35,000 Model 3 or “Tesla will die”. Most middle and low income earners can’t afford a $ 35,000 model 3 anyway.

“With the removal of the tax credit, demand for Tesla cars will be reduced as other Electric Vehicles come to market. With over 20 separate cars slated for the next 18 months, the competition for the Electric Vehicle space is getting thick.

“After refusing to confirm the timing of the federal tax credit phase-out for months, Tesla has now confirmed that it has hit the 200,000th US delivery threshold, which triggered the phase-out period.

Tesla buyers will lose the full $7,500 credit by the end of the year unless the law is changed, hitting $3750 for the first half of 2019 and $1875 in the second half of 2019.”

7) I Believe Musk Is Bluffing About Tesla Q3 Profits – Seeking Alpha

In a nice and thick article, the always cerebral Montana Skeptic pens a meaty piece about how the promised (second ever) profitable quarter in Tesla’s history may be a pipe dream. And by pipe, he means bong.

The article lays out the argument that the profitable 3rd and 4th quarter talk is just that, talk. And it is talk designed to ferment hope for a capital raise. Tesla will need some cash to feed the furnace that is the Model 3. Without an infusion soon, none of the promises that Musk the Messiah professes will come true.

“Elon Musk has said he’s aiming for a GAAP profitable quarter in Q3. If you wanted to shift profit from Q2 to Q3, then you defer the higher-margin Model S and X sales rather than Model 3 sales. And yet, the opposite happened. Tesla deferred no Model S and X deliveries in Q2. Instead, it had excess production of Model S and X cars, which went directly into inventory. And for those models, inventory largely translates into new car inventory, or “lot cars.”

The history of lot cars at Tesla is important. For the past two years, Tesla has been making almost exactly 25,000 Model S and X cars per quarter. In quarters where supply exceeded demand, thousands of cars ended up on virtual dealer lots. Inventory levels reached a point of crisis in 2017, forcing deep discounts to achieve a net inventory reduction of 6,054 units during the second half of last year. This was accompanied with reductions in OEM pricing and resulted in automotive gross margins being sliced in half.

It sounds like something you would never want to repeat, doesn’t it? In a moment of sobriety, Tesla advised us that Model S and X production would not grow exponentially in 2018 but instead would be capped at 100,000 units.

But here we go again. In Q1, 1,388 lot cars were added. And now in Q2, another 2,629 were added. I understand why inventory sales will be important for the Q3 profit burst, but can it be done without discounting? It seems unlikely.

Oh, well, if SpaceX can land two rockets simultaneously, then I perhaps Tesla can accomplish this modest task. We’ll see.”

8) Where is the Money for Tesla Model 3? – 1reddrop

In this article some interesting things are discussed including Average Fixed Costs, variable costs and the costs of the recent short burst of activity to hit 5,000 units of the Model 3 in Fremont. Interesting reading for the economic nerd.

“It’s clear that Gigafactory is going over budget, but with production capacity already well over half the planned capacity, the cost overrun is not going to keep going on forever. With Fremont’s capacity addition expected to slow down sharply during the third and fourth quarter due to the reasons I explained above, Tesla has no reason to keep expanding its capacity in Giga.

Simply put, 30% of capex has gone into Gigafactory 1 since 2014 and that number is going to sharply decline in the next two years as capacity is already well over the half way mark and Tesla will only need incremental additions to capacity in the future.”

9) Tesla May Be Seeing Limited Demand For Its Current Production – Seeking Alpha

In this article, jaberwock lays out the notion that even though Tesla got 450,000 people to put up $1000 to reserve their $ 35,000 Model 3, they have now opened up the ability to design and put money down on a Model 3 that could be delivered in a couple weeks. Since they have delivered less than 65,000 Model 3’s, one has to wonder what happened to that backlog of excited customers.

It could very well be that these folks have seen the promise of the cheaper base model evaporate and the well documented woes at the factory and decided to buy a Jaguar or BMW or Nissan instead.

The comments at the end of this article could take an entire day to read and digest. There are some really smart folks at Seeking Alpha.

Two weeks ago, Tesla changed its policy on allocating Model 3 sales to reservation holders. Instead of inviting reservation holders to configure their cars and place a firm order based on their position in the reservation queue, Tesla (TSLA) opened the “Model 3 design studio” to all reservation holders in the USA and Canada.

I interpreted this as a sensible move by Tesla. Opening the system to all reservation holders provides Tesla with firm data for orders and allows them to schedule production more easily. It is also a necessary move if they want to load the sales of the more expensive options into Q3 to help fulfill Elon Musk’s prediction of a GAAP profit.

However, on July 9th, Tesla opened the Model 3 design studio to all prospective buyers, irrespective of whether they had a reservation. Orders can now be placed for a Tesla Model 3 by paying a $2,500 non-refundable “order processing fee.” New buyers pay only $2,500 whereas reservation holders pay a total of $3,500 (including the initial $1,000 deposit) to order a Model 3. News of this move on SA has attracted several comments and much speculation about the depth of Tesla’s order book.

10) The Flint Water Crisis Is Bigger Than Elon Musk – Wired

This article from Wired sums up the bigger picture and shows why the master distracter should get his fanny back to Fremont and TRIC and fix his own damn house. Dude, seriously.

“It’s worth spending more time talking about those filters, not because they demonstrate Musk’s lack of familiarity with Flint’s current situation, but because they underscore the city’s deeper challenges.

First, it’s important to note that Flint’s drinking water has met federal standards for contaminants for at least a year. “From every objective measure that is out there, Flint’s water is like any other US city with old lead pipes,” says Siddhartha Roy, who works on the Virginia Tech research team that helped shed light on the Flint water crisis and has tracked it ever since. Water from old lead pipes still isn’t ideal, obviously, and makes filters a necessity. But even then, Flint residents remain understandably wary.”

If you made it this far, thank you!

There was a lot to digest this week, and if you think this is not a waste of you and my time, take a moment and comment or send an email to let me know.

And Now a Word From Us.

As you may know, The Teller is being sued by Storey County Commissioner Lance Gilman for our reporting efforts.
e are seeking donations from our readers to defend ourselves and the First Amendment.
To the many people who have donated to our cause, I extend my humble gratitude.
If you like what we do and would like to take a step in helping pay our lawyers, please follow the links below.
If you would rather send a check and help us even more by saving the service charges with PayPal and GoFundMe, our mailing address is Box 78 in Virginia City 89440.

Thank you for reading The Teller and tell a friend.

Elect Sam Toll For County Commissioner

About Sam Toll

Sam Toll is a native of Gold Hill and returned home in 2016 after 35 years in the Sacramento Valley. He enjoys old cars and loud music. And writing.

Check Also

Will Special Interests Control Storey County for the Next Four Years?

Special Interest Money Dominates Storey County Commissioner Races As the first weekend of early voting …

One comment

  1. Steve Toll,
    Thank you again for continuing to report the Truth about the scandal-plagued TRIC, gigafactory, etc that the rest of the Northern Nevada media refuses to report.
    Just like a real Reporter is supposed to do.
    Don’t the outlandish activities almost comparably make their human traficking at Mustang look like child’s play? Almost?

    Sam DNA Dehne

If you have something to say, say it here!

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: