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Here is an interesting comment on last night:
Tesla's Elon Musk Ignorant Of Hoerbiger Experience And Basic Facts Of Car Production
Over long stretches, yesterday’s earnings call of electric carmaker Tesla Motors TSLA -7.64% (full transcript here) sounded like the game of softball it usually is. It fell to Alexandria Sage of Reuters to make it interesting. She wanted to hear from Elon Musk whether he learned anything from the “Hoerbiger experience.”
Investor relations chief Jeff Evanson tried to intervene, claiming “that’s all the time we have.” Tenacious Sage pressed on.
“I don’t understand who you are referring to,” Musk said.
“Hoerbiger?” Sage repeated.
“Hoerbiger? I am not familiar with that name,” Musk insisted.
Not many people are familiar. Hoerbiger is a maker of specialized auto parts, located in bucolic Sonthofen in Germany’s southern Bavaria. Pretty much nobody outside the tiny world of compressor valves and specialized hydraulics would be familiar with that name, if the company would not have reached worldwide fame a few months ago for being fingered as the villain that allegedly caused the delay of Tesla’s Model X.
In January 2016, Tesla filed a federal lawsuit against Hoerbiger “for allegedly misrepresenting its ability to design the signature “falcon wing” doors on its Model X electric sport-utility vehicle, leading to a last-minute change to a new supplier that caused delays,” as we can read in the Wall Street Journal.
In yesterday’s conference call, we also learned from Mr. Musk that his “desk is at the end of the production line,” and that he has “a sleeping bag in a conference room adjacent to the production line.” With that much attention to detail and quality, Musk should remember the name of the company he sued for sabotaging the Model X launch, but he didn’t. Should the suit still be ongoing, Hoerbiger’s lawyers will be delighted to hear of Musk’s lapse of memory. Hoerbiger is not all that escapes Musk.
For someone who works and sleeps that close to the line, Musk continues to display a surprising amount of naiveté when it comes to car production. In conference call after conference call, Musk shows childlike fascination with the fact that “even if 99% of the internally produced items and supplier items are available, we still cannot produce the car.” Any legacy carmaker will agree, and that’s why they have processes and systems to make sure that 100% of the parts are there when needed. Meanwhile at Tesla, Musk already is sure that he will miss the July 2017 date for volume production of the Model 3, because some of those darned parts will continue to be missing, and because “volume production will then be some number of months later as we solve the supply chain and internal production issues,” as Musk predicted yesterday. At any legacy automaker, the manager responsible for the start of production of a strategically important model would be led away by security after having made such a cavalier statement.
Despite not having the most trivial aspects of car production under control, Musk was confident enough to say yesterday that Tesla is “aiming to get to the half million unit per year run rate in 2018,” and that “our 2020 target for volume is closer to maybe close to 1 million vehicles in 2020 or something like that.”
This is a monstrous statement, and I am amazed that the analysts at yesterday’s conference call did not interrogate Musk mercilessly on how on earth he is planning to perform such a miracle. As the Telsa shareholder letter saw it necessary to point out, the 500,000 cars amount to “increasing production five fold over the next two years.” Going to a million cars by 2020 would be a tenfold increase, just two years later.
I called an old friend of mine who climbed up the ladder at a very large global automaker, and I asked him what would happen if he, after having made 50,000 units last year, suddenly submitted plans for 500K units in two years, and a million two years later.
“They would call the company doctor,” my friend said.
If taken seriously, the ramp-up to such capacity would take a lot of time, and a lot of money. Toyota, the world champion in car production, announced in 2015 that they would build a small 200,000 unit car factory in Mexico. It is expected to come on-line in 2019, that’s how long it takes. The cost of the small plant will be around a billion dollars. That’s how much it costs, in Mexico.
“If you haven’t secured your permits and broken ground for a few new car factories years ago, that plan is pure fantasy,” my car company contact said, and I learned to trust him in these matters.
Reading the transcript again and again, you will find no indications of a serious production ramp-up. Follow the money: CFO Jason Wheeler said he wants to fund the Model 3 ramp-up “as much as possible with cash flow from operations.” With the company bleeding money, there won’t be much cash.
Even if Tesla would be half serious about the expansion, there wouldn’t be the required management depth to set the ramp in motion. A day before yesterday’s announcements, two key production people were let go. Looking at their CVs, one wonders why they were put in charge in the first place. Sacked VP of Tesla Production Greg Reichow went from chips to solar panels, and with zero experience in the industry, he was put in charge of the Model S drivetrains. Their failure rate was enormous. Sacked Josh Ensign, until yesterday VP of Manufacturing at Tesla Motors, had a little more production experience, but none at a carmarker. Yesterday, Musk said he wants to “sort of send the message out there to the best manufacturing people in the world, we want you to come join our company.” Musk had the best of them years ago due to Tesla’s alliance with Toyota and Daimler , but both fled, and their engineers still tell horror stories of amateurish arrogance.
Another sign of a lack of commitment to the lofty numbers: Musk said yesterday that the million cars by 2020 might be “feasible to do with just Fremont and the Gigafactory.” No, they are not.
As pointed out a few weeks ago, the Fremont factory, when it was jointly operated by Toyota and GM as NUMMI, had a max capacity of 400,000 units on two lines. Also, it was disclosed that Toyota had dismantled most of the interesting machinery before leaving. Any of those “best manufacturing people in the world” would recommend building a few new plants, preferably in Mexico, or China, instead of cramming new machinery into an old building that was abandoned by the best auto manufacturing people in the world.
Which brings us to the biggest flaw in the 1 million in 4 years plan. China is the world’s largest EV market, and it just has started to take off in earnest. China is where the growth is. China was mentioned only one time at yesterday’s call, and that only in passing. “At some point,” Musk said, “it’s going to make sense to have a plant in Europe and a plant in China,” but any such plans would be “sort of speculative.” Meaning not any time soon.
I am still waiting for the softballers at these quarterly calls to ask the most important question, namely how does Musk plan to deal with Chinese rules.
Any carmaker needs a joint venture to produce in China. The license for the brand and the tech can remain with the overseas carmaker. In the case of EVs, the joint venture must own the tech, and the brand must be Chinese. That’s the reason for Nissan’s Leaf being made and sold as the Venucia in China, and it is not selling in big numbers. According to these rules, there will never be a Made in China Tesla car. Unless a Chinese company buys Tesla.
I have gained a certain notoriety in Tesla enthusiast circles for hat eating bets. OK, here comes a new one. If Tesla, all by itself, makes and sells 500,000 cars in all of 2018, I will eat five hats. A million cars in 2020: Ten hats. On Youtube.
Tesla's Elon Musk Ignorant Of Hoerbiger Experience And Basic Facts Of Car Production
Over long stretches, yesterday’s earnings call of electric carmaker Tesla Motors TSLA -7.64% (full transcript here) sounded like the game of softball it usually is. It fell to Alexandria Sage of Reuters to make it interesting. She wanted to hear from Elon Musk whether he learned anything from the “Hoerbiger experience.”
Investor relations chief Jeff Evanson tried to intervene, claiming “that’s all the time we have.” Tenacious Sage pressed on.
“I don’t understand who you are referring to,” Musk said.
“Hoerbiger?” Sage repeated.
“Hoerbiger? I am not familiar with that name,” Musk insisted.
Not many people are familiar. Hoerbiger is a maker of specialized auto parts, located in bucolic Sonthofen in Germany’s southern Bavaria. Pretty much nobody outside the tiny world of compressor valves and specialized hydraulics would be familiar with that name, if the company would not have reached worldwide fame a few months ago for being fingered as the villain that allegedly caused the delay of Tesla’s Model X.
In January 2016, Tesla filed a federal lawsuit against Hoerbiger “for allegedly misrepresenting its ability to design the signature “falcon wing” doors on its Model X electric sport-utility vehicle, leading to a last-minute change to a new supplier that caused delays,” as we can read in the Wall Street Journal.
In yesterday’s conference call, we also learned from Mr. Musk that his “desk is at the end of the production line,” and that he has “a sleeping bag in a conference room adjacent to the production line.” With that much attention to detail and quality, Musk should remember the name of the company he sued for sabotaging the Model X launch, but he didn’t. Should the suit still be ongoing, Hoerbiger’s lawyers will be delighted to hear of Musk’s lapse of memory. Hoerbiger is not all that escapes Musk.
For someone who works and sleeps that close to the line, Musk continues to display a surprising amount of naiveté when it comes to car production. In conference call after conference call, Musk shows childlike fascination with the fact that “even if 99% of the internally produced items and supplier items are available, we still cannot produce the car.” Any legacy carmaker will agree, and that’s why they have processes and systems to make sure that 100% of the parts are there when needed. Meanwhile at Tesla, Musk already is sure that he will miss the July 2017 date for volume production of the Model 3, because some of those darned parts will continue to be missing, and because “volume production will then be some number of months later as we solve the supply chain and internal production issues,” as Musk predicted yesterday. At any legacy automaker, the manager responsible for the start of production of a strategically important model would be led away by security after having made such a cavalier statement.
Despite not having the most trivial aspects of car production under control, Musk was confident enough to say yesterday that Tesla is “aiming to get to the half million unit per year run rate in 2018,” and that “our 2020 target for volume is closer to maybe close to 1 million vehicles in 2020 or something like that.”
This is a monstrous statement, and I am amazed that the analysts at yesterday’s conference call did not interrogate Musk mercilessly on how on earth he is planning to perform such a miracle. As the Telsa shareholder letter saw it necessary to point out, the 500,000 cars amount to “increasing production five fold over the next two years.” Going to a million cars by 2020 would be a tenfold increase, just two years later.
I called an old friend of mine who climbed up the ladder at a very large global automaker, and I asked him what would happen if he, after having made 50,000 units last year, suddenly submitted plans for 500K units in two years, and a million two years later.
“They would call the company doctor,” my friend said.
If taken seriously, the ramp-up to such capacity would take a lot of time, and a lot of money. Toyota, the world champion in car production, announced in 2015 that they would build a small 200,000 unit car factory in Mexico. It is expected to come on-line in 2019, that’s how long it takes. The cost of the small plant will be around a billion dollars. That’s how much it costs, in Mexico.
“If you haven’t secured your permits and broken ground for a few new car factories years ago, that plan is pure fantasy,” my car company contact said, and I learned to trust him in these matters.
Reading the transcript again and again, you will find no indications of a serious production ramp-up. Follow the money: CFO Jason Wheeler said he wants to fund the Model 3 ramp-up “as much as possible with cash flow from operations.” With the company bleeding money, there won’t be much cash.
Even if Tesla would be half serious about the expansion, there wouldn’t be the required management depth to set the ramp in motion. A day before yesterday’s announcements, two key production people were let go. Looking at their CVs, one wonders why they were put in charge in the first place. Sacked VP of Tesla Production Greg Reichow went from chips to solar panels, and with zero experience in the industry, he was put in charge of the Model S drivetrains. Their failure rate was enormous. Sacked Josh Ensign, until yesterday VP of Manufacturing at Tesla Motors, had a little more production experience, but none at a carmarker. Yesterday, Musk said he wants to “sort of send the message out there to the best manufacturing people in the world, we want you to come join our company.” Musk had the best of them years ago due to Tesla’s alliance with Toyota and Daimler , but both fled, and their engineers still tell horror stories of amateurish arrogance.
Another sign of a lack of commitment to the lofty numbers: Musk said yesterday that the million cars by 2020 might be “feasible to do with just Fremont and the Gigafactory.” No, they are not.
As pointed out a few weeks ago, the Fremont factory, when it was jointly operated by Toyota and GM as NUMMI, had a max capacity of 400,000 units on two lines. Also, it was disclosed that Toyota had dismantled most of the interesting machinery before leaving. Any of those “best manufacturing people in the world” would recommend building a few new plants, preferably in Mexico, or China, instead of cramming new machinery into an old building that was abandoned by the best auto manufacturing people in the world.
Which brings us to the biggest flaw in the 1 million in 4 years plan. China is the world’s largest EV market, and it just has started to take off in earnest. China is where the growth is. China was mentioned only one time at yesterday’s call, and that only in passing. “At some point,” Musk said, “it’s going to make sense to have a plant in Europe and a plant in China,” but any such plans would be “sort of speculative.” Meaning not any time soon.
I am still waiting for the softballers at these quarterly calls to ask the most important question, namely how does Musk plan to deal with Chinese rules.
Any carmaker needs a joint venture to produce in China. The license for the brand and the tech can remain with the overseas carmaker. In the case of EVs, the joint venture must own the tech, and the brand must be Chinese. That’s the reason for Nissan’s Leaf being made and sold as the Venucia in China, and it is not selling in big numbers. According to these rules, there will never be a Made in China Tesla car. Unless a Chinese company buys Tesla.
I have gained a certain notoriety in Tesla enthusiast circles for hat eating bets. OK, here comes a new one. If Tesla, all by itself, makes and sells 500,000 cars in all of 2018, I will eat five hats. A million cars in 2020: Ten hats. On Youtube.
Massive tin-foil hattery going on there.
Bloke sounds like a total loon.
China? He has 500k pre-orders from the US and EU yet according to that fella "China is where the growth is".
Sure... Musk should be losing sleep about how to ramp up in China...
And who gives a crap about some lawsuit in Germany????
I already said that I don't disagree that the ramp up will need a miracle but why not stick to the prescient stuff...
- Toyota took 4 years to get to 200k.
- Tesla themselves took 4 years to get to 100k.
That's all you need to say.
Bloke sounds like a total loon.
China? He has 500k pre-orders from the US and EU yet according to that fella "China is where the growth is".
Sure... Musk should be losing sleep about how to ramp up in China...
And who gives a crap about some lawsuit in Germany????
I already said that I don't disagree that the ramp up will need a miracle but why not stick to the prescient stuff...
- Toyota took 4 years to get to 200k.
- Tesla themselves took 4 years to get to 100k.
That's all you need to say.
twinturboz said:
Won't happen but Apple should just ditch their car project and simply acquire Tesla, should have done it a long time ago if they were thinking of getting into that market. Same with Netflix when it was dirt cheap few years back.
Apple not buying Netflix was a HUGE error.(Not as bad as the Blockbuster CEO passing on them for $50m!!!)
http://www.techinsider.io/blockbuster-ceo-passed-u...
With TSLA though, isn't Musk too much of a "change the world" guy that he wouldn't sell?
Could he block a deal?
walm said:
Apple not buying Netflix was a HUGE error.
(Not as bad as the Blockbuster CEO passing on them for $50m!!!)
http://www.techinsider.io/blockbuster-ceo-passed-u...
With TSLA though, isn't Musk too much of a "change the world" guy that he wouldn't sell?
Could he block a deal?
Yup he isn't exactly an Apple fan don't think he'd sell, would solve the funding issue though what with the £150 billion + stockpile. Not sure if he could block a sale though he owns roughly 27% I think. (Not as bad as the Blockbuster CEO passing on them for $50m!!!)
http://www.techinsider.io/blockbuster-ceo-passed-u...
With TSLA though, isn't Musk too much of a "change the world" guy that he wouldn't sell?
Could he block a deal?
PapaJohns said:
I'm by no means up on my share dealing, but how about buying Interserve shares ?
They were upto £7.40 last year,a recent fine on a contract in Scotland has seen the shares drop below £3 this week,
Dunno, they seem to have increased turnover but reduced profit.... What's the reason behind that?They were upto £7.40 last year,a recent fine on a contract in Scotland has seen the shares drop below £3 this week,
ETA : Possibly going to drop out of FTSE250.. I think they've got a little more lower to go, then....
Edited by eps on Thursday 12th May 10:14
twinturboz said:
shopper150 said:
Staggering.
Hoping for a bit of a pull back! What do the charts say?
You might just get it, these next two days could be fun, if the usual pattern of Thursday/Friday lows the week before monthly option expiry holds true. Hoping for a bit of a pull back! What do the charts say?
New 52 week lows on Apple, $75-$85 region for me is buy, stick them in a draw and forget about them. Gets back over the high today could have been a capitulation low.
Think Amzn could get to $680 which should be good support for a quick trade.
Edited by twinturboz on Tuesday 17th May 14:57
twinturboz said:
Was wondering why GS upgraded TSLA today, makes sense now, of course they're the ones leading the secondary.
How can that possibly be legal - surely Goldmans will end up in court or at least ripped apart in the press for that?Anyway shares are down again - so happy days
PALO ALTO, CA -- (Marketwired) -- 05/18/16 -- Tesla today announced an underwritten registered public offering of about $2 billion of common stock. Tesla is offering about $1.4 billion of shares with the remaining shares to be sold by Elon Musk to cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options. On a net basis, Mr. Musk will increase his overall Tesla shareholdings through these transactions.
Capital supports accelerated ramp of Model 3
Because of the overwhelming demand that it has received for Model 3, Tesla intends to use the net proceeds from this offering to accelerate the ramp of Model 3. As noted in the Company's first quarter shareholder letter, Tesla intends to start volume production and deliveries of Model 3 in late 2017 and to accelerate its 500,000 unit build plan from 2020 to 2018. Proceeds may be used for working capital and other general corporate purposes as well.
Elon Musk increases his shareholdings in Tesla
In connection with this offering, Elon Musk, Tesla's CEO, will also be exercising stock options to acquire 5,503,972 shares of Tesla stock. These stock options were granted to Mr. Musk in 2009 and are due to expire in December 2016. Because the value of Tesla stock has increased considerably since 2009, Mr. Musk will owe a significant amount of taxes from exercising these stock options and will fund this tax obligation by selling only the amount of shares needed to do so. To be clear, all cash proceeds from the sale of stock by Mr. Musk will go to the federal and state governments to satisfy the 52% tax withholding on his stock option exercise. In addition, Mr. Musk will be donating 1.2 million shares of his Tesla stock to charity. Mr. Musk is a net buyer of Tesla stock in these transactions.
Morgan Stanley and Goldman, Sachs & Co. are acting as lead joint book-running managers for the offering
traxx said:
twinturboz said:
Was wondering why GS upgraded TSLA today, makes sense now, of course they're the ones leading the secondary.
How can that possibly be legal - surely Goldmans will end up in court or at least ripped apart in the press for that?
walm said:
traxx said:
twinturboz said:
Was wondering why GS upgraded TSLA today, makes sense now, of course they're the ones leading the secondary.
How can that possibly be legal - surely Goldmans will end up in court or at least ripped apart in the press for that?http://www.zerohedge.com/news/2016-05-18/how-not-c...
Edited by twinturboz on Thursday 19th May 11:03
twinturboz said:
walm said:
traxx said:
twinturboz said:
Was wondering why GS upgraded TSLA today, makes sense now, of course they're the ones leading the secondary.
How can that possibly be legal - surely Goldmans will end up in court or at least ripped apart in the press for that?http://www.zerohedge.com/news/2016-05-18/how-not-c...
Edited by twinturboz on Thursday 19th May 11:03
but at least then they replaced them and advised clients to go long $/Yen
traxx said:
Didn't they get stopped out of 5 of their 6 "Top Trades for 2016" by the end of Feb?
but at least then they replaced them and advised clients to go long $/Yen
Yup that's if you believe they took those trades and not the opposite side. but at least then they replaced them and advised clients to go long $/Yen
As much as I know your not a fan of TSLA has that look where it might want to test 260 over the coming months.
twinturboz said:
twinturboz said:
shopper150 said:
Staggering.
Hoping for a bit of a pull back! What do the charts say?
You might just get it, these next two days could be fun, if the usual pattern of Thursday/Friday lows the week before monthly option expiry holds true. Hoping for a bit of a pull back! What do the charts say?
New 52 week lows on Apple, $75-$85 region for me is buy, stick them in a draw and forget about them. Gets back over the high today could have been a capitulation low.
Think Amzn could get to $680 which should be good support for a quick trade.
Edited by twinturboz on Tuesday 17th May 14:57
What are your thoughts? $600 to $703 is quite a rapid rise.
shopper150 said:
I'm in a short trade at $673. It does seem quite strong, planning to reposition some more later of it keeps going up, which it seems like it might.
What are your thoughts? $600 to $703 is quite a rapid rise.
I took the bounce trade end of last week. This week will be keeping an eye for a short if it breaks below $690, momentum seems to be fading a bit on the charts. What are your thoughts? $600 to $703 is quite a rapid rise.
eps said:
PapaJohns said:
I'm by no means up on my share dealing, but how about buying Interserve shares ?
They were upto £7.40 last year,a recent fine on a contract in Scotland has seen the shares drop below £3 this week,
Dunno, they seem to have increased turnover but reduced profit.... What's the reason behind that?They were upto £7.40 last year,a recent fine on a contract in Scotland has seen the shares drop below £3 this week,
ETA : Possibly going to drop out of FTSE250.. I think they've got a little more lower to go, then....
Edited by eps on Thursday 12th May 10:14
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