Alright, we can talk about these delivery numbers then.
Q2 is now in the past, we just need to spend this month, discovering the actual damage,
then we can all move on, to continual record breaking quarters again.
NUMBERS You have obviously all seen the numbers, we
ended up with about 15% fewer vehicles produced this quarter over the last.
Given everything we just went through in Q2, to only be down 15% doesn't seem too bad.
Sure deliveries were down 20%, due to the discrepancy between deliveries and production.
But remember as Tesla is supply constrained, production is the only figure we need to really
care about, in judging Tesla's progress.
There still doesn't appear to be any great progress on the S or more likely X line yet,
those cars really are quite complex, with deliveries only up another 2,000.
With a total of 16,000.
This should be around 25,000.
These models carry a lot of profit too obviously, however, that is starting to look relatively
smaller these days as production is increasing so much for the other vehicles.
IMPORTANT I said this before, but just to re-iterate,
this Q2 is not an important quarter, it does not provide an accurate portrayal of the trajectory
this company is headed.
We know that, but does the rest of the market, or does it even matter.
Perhaps it's more of a concern of how the media decide to spin it.
No matter what they were always going to have a losing quarter over quarter figure to play
with.
How brutal will they be with the stock?
This was a quarter we all had to bear, and on top of some other major macro issues, and
some Elon activities.
The stock is down and hurting, even now still we are sub $700.
Sub 700 still seems like an exceptionally low price for this stock.
But so many people who likely know a lot less about the stock than you, well they are saying
it's going to 500.
Therefore, it might make you a little hesitant too, you don't want to buy some more stock
and then risk it going down to 500.
Sure, Tesla can drop to 500, and apple to drop to $100, Amazon to $80.
In fact if Tesla did drop to 500, then that would probably be around where Amazon and
Apple would be sitting.
Why?
Because for Tesla to drop to $500, it would have to be something that affected the broad
market, some macro activity.
Currently, there is no reason for Tesla to drop that low, relative to the rest of the
market.
Tesla are on top of all the issues they are facing and making some great progress.
So just be careful listening to unqualified opinions on Tesla, and letting them sway your
opinion.
In my opinion and experience, the ones who are most qualified, and know the most about
Tesla, seem to already have invested already.
They aren't sitting on the sidelines, hoping for $500.
EXPECTATIONS Now although this deliveries figure was around
what the street expected, the more recent expectations had actually dropped significantly,
to around 240 or so.
They are referring to deliveries of course, but in their minds, I think there is little
difference.
We were close to 260,000 units produced though, in other words Tesla kind of beat expectations
by nearly 20,000.
I think Dan Ives said the line was drawn in the sand at 250,000, higher than that will
be good, lower will be bad.
Well we are higher than that, even with deliveries.
I also agree with him on this.
I think this was a positive result.
Especially if Tesla had taken some from inventory, instead of added.
We would have broken 260,000 deliveries.
DELIVERIES They were pushing deliveries at the end too,
in fact in full force.
Which might make you think there was an extra push in production towards the end of the
quarter, especially given they couldn't deliver all vehicles in time.
We are being told that June was Tesla's best month ever in production.
And it sounds like Shanghai was running well, only to have to endure another shut down for
the Model Y now, albeit temporarily, and back with extra upgraded vengeance on the line.
Hearing it likely that Model Y Shanghai is going to be approaching 2,000 units a day.
CHINA I don't how many of you remember me saying
end of last year, that we were hearing reports of that line at run rates as fast as 1600
a day, and rumors of potential 2000.
It sounded unfathomable back then, and many of you thought it was unbelievable.
Well reflect back as to how unbelievable that felt, and as to what it would have meant to
the future success of the company.
Well Tesla have cracked it.
But we have been under so much turmoil, we haven't had enough time to stop and appreciate
this insane run rate we are at now.
And what it means for future capacities of future factories, that's right.
I promise you, the reason for this run rate, is not because Chinese workers work harder,
it is because Tesla engineers are great with robotics.
These run rates will be seen in all factories over time, and then some.
This is of course just the Model Y line, which is going to be at twice the run rate of Tesla's
model 3 line in Shanghai.
I think that has been somewhat neglected, likely due to the opportunity cost of a battery.
I.e.
place said battery in a Model 3 with $10,000 profit, or a Model Y with $15,000 profit.
Every Model 3 sold, has an opportunity cost of $5,000 additional profit in a Model Y.
Hence why Tesla are expanding the Model Y factory first.
The Model Y is just an incredibly popular vehicle, in case you couldn't tell.
TRADE [option]
As some of you know, I am back to doing short term options trading.
I made a bet on this quarter being better than expected.
I have an option that expires at the end of this month.
I got to cover deliveries and earnings.
It cost me $30 a share, but I am aiming to sell it for about $100.
This is my high, high risk fund, which is a bit of a do or die account.
It's really more for fun, don't read into it too much.
I think I just needed something a little extra to entertain me during these times.
My target is to eventually afford 2 more LEAPS from that account, or lose it all.
NEXT I was hoping that we could see one million
deliveries on the back half of this year, but I think that will require several rabbits
out of several hats from Berlin and Texas.
We have Texas ramping with 2170 cells now.
That was a bit of an oversight there by Tesla, which I am somewhat conflicted with.
On one hand, they were so confident about the 4680 ramp they didn't bother having a
2170 back up, on the other hand, they've barely produced any 4680 vehicles.
I can't see them getting to volume production with 2170 cells, perhaps half way at best.
I just don't know if they could get that quantity of cells.
China will be doing well in Q3, but we do have some downtime, although the full shut
down is only a few days, there will be some additional line downtime on top of that.
But should be super strong once back up.
Then it's really going to come down to the 4680 ramp up, for Q3 and Q4, oh and next year
and the year after.
A lot this company comes down to 4680 cells.
And that is where most of our focus will be for the rest of the year, any 4680 progress
is headline news for us.
It is also what I care about most before I re-evaluate my investment strategy.
Yes, investment strategy, not trading strategy.
I think the 4680 cells will become the core of this company for sometime.
Therefore that is the actual product we are investing in for the future growth of this
company.
Of course not be confused with Tesla's actual product, the machine that makes the machine.
SUMMARY All in all, deliveries numbers really were
about what the community expected, no surprises either way.
And I feel that these days, no bad surprises is hopefully good news.
As long as the economy is about where it is now, then I am hoping for a little push of
about 3-5% when the market opens again on Tuesday.
And I would likely expect an overall upward trend for the rest of the month, heading towards
the financial results, possibly even reaching $800, depending on the financials.
North of 800 is a much more comfortable stock price to be sitting around, and in my opinion
is probably where it should be, if Tesla only had to deal with macros this quarter.
But the other events will soon be forgotten, and no longer reflected in the stock price.
We should get the China numbers shortly too, and then I can get into the financials.
Of which my current thoughts are, it won't be as brutal as people suspect, due to us
already working out the estimated loss of the new factories.
Anyway given what Tesla were facing this quarter, we should appreciate how hard a job they did
in getting this many produced.
Let me know what you thought about these delivery numbers, and how it might affect the stock.