hey what’s going on everyone it’s Sean from all things Evie and back with another video this time I’ve got my buddy Rob from Tesla daily podcast on to talk about Tesla’s q1 numbers and what q2 might look like for the company Rob super glad to have you on again welcome yeah thanks for having me Sean always happy to be here yes absolutely so you were uncharacteristically accurate with your prediction for deliveries for q1 of 2020 did that surprise you when you heard Tesla’s numbers when they publish them it did surprise me it did as much as I would love to take credit and say you know that’s what I expected it is what I forecast so I had production that 100 1000 deliveries at 88,000 production came in out like 100 and 2.7 and deliveries at 88.4 so pretty close but as I talked about with gali sort of the day before that we did sort of a similar thing to what we’re doing today and you know the point that I made there is while these numbers are my forecast there’s so much unknown with this quarter that I wouldn’t be surprised to be significantly off so yeah I’m happy I came in with what I forecast but I was also surprised just because there were so many unknowns this quarter specifically with just how much Tesla is going to be able to deliver in the macro-environment going on you know how much that would affect their actual ability to deliver cars and then how much that would affect actual customers ability to take delivery so I think all things considered definitely a really strong quarter for Teslin I think obviously the market reaction has shown that it was ahead of expectations but yeah there was certainly a lot of uncertainty heading into it yeah it was a big variable I mean the you not only had coronavirus and China impact the first part of the quarter but then it sort of managed to scale in grow globally and eventually impacted Fremont manufacturing in in the US so certainly a very unique unique impact global impact to manufacturing for Tesla where do you see Tesla going and adjusting now it looks like China is is sort of back up and running again where at the moment we’re recording this video Fremont is still shut down so how does Tesla pivot in in continued to strive to meet the annual production number of manufacturing or delivery numbers of half a million vehicles in 2020 yeah for sure and I think that was one of the interesting things about the q1 production and delivery report I think a lot of people were looking for an update there on guidance whether that update be you know lowering guidance or sort of just refusing to give guidance or whether that be reaffirming their 500-thousand delivery target and we didn’t see either so it’s sort of I don’t know you could see it as a neutral or maybe even a positive that they didn’t actually lower guidance so we’ll definitely see on the q1 earnings call just sort of what Tesla’s thoughts are around that if they if they do update I’ve done a couple of videos just sort of outlining a path I think if Tesla does restart production around May 4th and they can kind of get that up and running within a couple weeks after that to sort of the speed that they were at before there’s still a really clear path to 500,000 deliveries this year based on what’s happening with gigafactory Shanghai in China so that’s I think one of the reasons that the stock has also been performing strong is the delivery in production report was good but since then we’ve had really good news on production from China the reports are that they produced about 10,000 vehicles in March so over you know four and a half weeks that’s about 2,300 per week which means that you know the peak rate for Tesla in one week in March was probably actually a little bit higher than that maybe up to 3,000 per week so we can kind of project that forward going through q2 and then Tesla’s basically gone from zero to you know 3000 a week within four months there from when they first started production at Shanghai so that’s incredible progress and I think what investors are looking at is saying okay if Tesla can do that in four months what can they do in the next four months and that’s really offsetting the risk that we’re seeing from Fremont being shut down does Tesla accelerate their plans to manufacture model Y in China in your opinion is that something that is as they’re looking at shifting where they’re producing and delivering cars in a coronavirus environment is that is that a higher probability in your opinion I think theoretically it does make sense the question I would have is can they really accelerate it anymore than what they already have I think the the expansion plans at Shanghai are ready really aggressive so yeah my biggest question on that would be you know if they can do it and if that would detract from ramping up the model 3 from Shanghai because obviously that’s the path they’ve headed down here first so I’m sure you know the demand is would obviously be there no question if they were to do something like that I think it’s just a matter of priorities and what tests I can actually accomplish in that span of time are there other lines of business for Tesla that they could potentially leverage if if manufacturing the vehicles is is slow or depressed just globally in general are there some other lines of business that you think that they could spool up as well to help compensate for the lack of of automobile sales yes we’re looking a question obviously they’re still gonna have least revenue coming in that’s still a pretty small percentage of Tesla sales though so that’s not gonna do a whole lot though it would be pretty good margin revenue I think solar sort of solar and energy sort of face similar constraints to the vehicle business in terms of tests actually being able to produce so you know maybe if they were able to for some reason get gigafactory Nevada up and running more quickly and get you factoring New York up and running more quickly than Fremont for example just based on you know Tesla’s allowed to operate but who knows sort of how they play that with the county and things like that if they were to you know get those up and running quicker then maybe they could generate some revenue off of energy and solar but I think they’re kind of in the same constraint situation right now the only other one that you know immediately comes to mind would be the ventilator situation but it sounds like Tesla’s going to pretty much donate those which is you know it’s obviously a really nice thing for them to do both working on it and then providing them at either at cost or free whatever their their plane is there so that’s probably not gonna be anything significant from a revenue perspective so I think we’re kind of just waiting there and then you know maybe if there’s anything with software like if we’re supposed to see some new full self-driving features come out here pretty shortly we’ve obviously seen in early access the stoplight stop sign functionality when Tesla does end up delivering that to a broad set of users they can start to recognize some revenue from deferred revenue over time from those features that have been missing so that’ll be a revenue busan again that’s high margin it’s not going to cover the loss of vehicle sales but it is you know in my position to financials a little bit a little bit better that’s not gonna affect the cash flow because they’ve already got the cash but from a profitability perspective that would show up I’ve kind of kicked around the idea of energy storage you you’ve got governments in hospitals that are continuing to operate in need sustainable sustainable power and energy part of me wonders if if they can start to transition and and and be able to have an exemption for manufacturing battery cells for for governments for governments and and hospitals and and the like during this coronavirus will this thing last long enough Willie issues last long enough globally for that to make business sense in your opinion um I think it’s sort of a two-pronged question like the first piece of it I would agree I think the situation that we’re in right now probably heightens awareness and heightens demand for you know having your own sources of energy not necessarily relying on a third party so I think from a residential perspective and certainly from a commercial perspective situations like this just make people think about those risks a little bit more and trying to offset them and Tesla energy is a great way to do that with more energy independence even from a national level I think that’s something to consider so you have residential commercial in the national so I think there’s a lot of macroeconomic forces that sort of benefit Tesla in in those regards and then in terms of like how the shutdown might you know how long it lasts and how the impact from that is I think it’s a great point that there would probably be an exemption for projects like that but Tesla as an automotive you know player they already can technically manufacture it’s more just an issue of okay doing what’s best for the employees you know you have supply chain issues because every supplier is sort of managing this thing a little bit differently so you know if you have one missing part you can’t really ship your vehicle so maybe with fewer parts and things like that energy is able to get you know back up to speed a little bit more quickly but I don’t think that would happen from like a regulatory perspective necessarily I noticed that with the q1 numbers we saw quite a big difference between production and delivery I don’t follow it as closely as is you do so is that is that typical of each quarter because I seem to recall that there’s usually a little bit more parity with the two so what do you make of that is that because they were they started producing and then coronavirus disrupted the ability for Tesla to deliver those vehicles that they produce in the quarter yeah it’s a really good question and I think it’s something that’s pretty often misunderstood because as you say a lot of a lot of the time Tesla is either at parity or they’re actually delivering more vehicles than what they produce so if we go back to 2019 Q to 2019 q3 2019 q4 2019 all of those quarters deliveries outpaced production obviously you can’t do that forever because our gonna run out of vehicles so what you see then is you’ll have a quarter where production outpaces deliveries and then the following quarters so you kind of go back to that path so over time and obviously evens out it’s just a little bit seasonal in nature about when those when you’re drawing down from inventory or when you’re building it back up and q1 was very predictably built back up quarter even before all the chronovisor situation started to impact things so my estimate for the spread between production and deliveries was always pretty significant thousands of vehicles just because Tesla had shipped you know ten thousand more vehicles than they deliver or than they had produced over the last three quarters so you need to make that up at some point and the inventory at the end of q4 was the lowest it’s been in four years they only had 11 days of inventory that’s basically you know what’s on the ships and not really a lot else so Tesla needs to have it in stores they like to carry inventory now with the model 3 being such a high volume product that people can just come in and walk away with a vehicle so yeah it was pretty expected that that would happen the variability that I talked about was really just like how much inventory would would be remaining and I think with the deliveries coming in at 88,000 it shows that there was still really strong demand because that sort of a spread between production and deliveries was pretty close to what I had spected prior to all this happening so I think they’re pretty much sold what was available and sort of what they intended to in q1 I think the really interesting question that was like going forward into q2 how does this impact things because I think a lot of the coronavirus stuff especially in the United States was happening late in q1 where a lot of buyers probably had already you know made the decision lined up the financing everything like that where you just really have to take delivery of the vehicle versus q2 I think we’re gonna see more of the economic fallout and that’s I think a lot of uncertainty around that right now what did you what did you make of this is the first time that the Tesla combine Model 3 and model wide because it’s the first quarter that they they started delivering them re– surprised that they’re combining the the two it makes it a little bit more difficult to determine how many model wise he actually delivered in q1 yeah for sure I was a little bit surprised I expected them to give an update on model y and I also expected them to give an update on gigafactory Shanghai production rate especially now knowing that it was a pretty strong production month in March from gigafactory Shanghai but they failed to mention the specifics on either of those I think in general Tesla’s trying to get to a place where they’re giving less information and a little bit less guidance because they don’t necessarily need to and when they do start to give more information you know the Tesla community is is pretty rabid about taking that information and run running with it myself included so I think they’re doing what they can to you know keep information light which will set them up later to you know surpass expectations versus getting those expectations sort of out of control and on the piece of guidance which we talked about earlier I think that’s what they did this year with their their guidance of 500,000 plus vehicles their specific terminology was that they expect to comfortably exceed that so that was pretty clear that they you know felt very confident in hitting that number and that’s why I do still think something like that might be possible this year despite all the stuff that’s been going on right because we don’t know it comfortably hit half a million vehicles could be 600,000 it could be 700,000 so there’s a little bit of padding there which I really appreciate is someone who has an interest in following Tesla seems like they’ve matured a little bit in terms of how they have a the expectation is that they do set to investors and media this this this does give them some cushion there in the event that they do under deliver their internal expectations right yeah a hundred percent agree and I think that’s sort of the model that Apple followed for so many years and I think it’s provided a really clear roadmap for you know how to manage investor relations the downside of issuing public guidance that you know is attainable is then it’s potentially a little bit less motivating for your workforce if they know that the public goals are below what the internal goals are so I think that’s why Tesla historically has given really aggressive guidance and aggressive timelines on things and I think that’s sort of a yellen’s mentality in general is to you know put something out there and really strive to meet it and if you don’t at least you know you put in your best effort versus a more attainable goal okay your chief did there’s not as much of a motivating factor to go on a above and beyond that so I think historically we’ve seen that from Tesla but I think lately you know as zach has come on I think as Martin has had more of an influence I think them together with the Elan have sort of revised their strategy around investor relations a little bit I think we’re starting to see that come out both in the guidance that was issued this year and with the piece about mano y and not necessarily mentioning some of the things that we may have expected them to mention in the past what seems to be taking place though is that as far as I can tell looking at the company they are setting an expectation or a timeline for things and then they’re beating it and so as far as I’m concerned what whatever shift and their strategy that they’ve made appears to be working relatively effectively in in terms of under promising and over delivering a really good example is model y I mean they were they were six months six months ahead of timeline or so of they’re they’re they’re they’re publicly stated expectation and that’s always good they should they should do that every single time mm-hmm yeah definitely from how the investor community reacts I think the unknown that we had is okay if Tesla had originally said spring 2024 mono why instead of fall 2020 what would the actual timeline have been when they have been able to you know hit spring 2020 like they are now or would it have actually been able to happen a little bit more quickly and that’s just something you’re never gonna know but that’s sort of the the trade-off that you’re you know you’re hypothesizing around when you make more conservative guidance so I don’t think there’s any real way of knowing but I think certainly Tesla has done an amazing job with getting the amount of wire rolling and I think they’ve done not only in terms of when they actually started shipping it but I think they’re doing the same thing now in terms of getting to volume production you know Elon has said a few times that it doesn’t matter when we start delivering it matters when we get to volume production and he said a couple times that that should be sort of middle of 2020 or some summer of 2020 so I think they’re being really conservative there too and I think like when we’re there in a couple months I think they’re probably going to be well ahead of that 1,000 units per week that Elon said really represents volume production have you been following sandy Monroe’s tear downs and what do you make of that in terms of you know what sort of positive impact that that has on Tesla’s financial situation yeah yeah I definitely have I’m a few videos behind I think he’s been pumping those out like crazy which is really awesome to see it’s so nice that we get access to to that kind of information from someone that has such a good grasp of what’s going on with a manufacturing perspective but certainly you know a lot of us that are onlookers don’t have that experience so to have that information available as awesome definitely helps investors make sense of what’s going on I think in terms of the manufacturability he’s had a lot of positive comments around like the rear casting and things like that and I think overall he’s been just you know really complimentary there have been a couple of pieces like the ones that are coming in mind right now I was you know some paint issues things like that a little bit of misalignment but overall you know he said it represents a really positive step forward for model 3 and that’s really what you’re looking for because Tesla did such an amazing job with model 3 as represented by you know the market share in the sales volume that it’s acquired so for model Y to be in a better category and be better in initial quality already certainly speaks well to the potential for that vehicle which you know does come as a surprise to anybody yeah there there’s I watched the video that I think he published today where he talked about how it didn’t appear based on his analysis that that Tesla had done any significant improvements to their wiring in the vehicle there was a lot of talk about Tesla significantly reducing the wiring of the Model 3 and utilizing Bluetooth to communicate with with the different systems in the car but from the video he said that it didn’t appear like like they really did much there in terms of reducing the wiring so I I wonder if that that’s still planned because or if or if they’ve shelved it because you know to to cost intensive or I wonder what they’re doing there yeah my perspective on that so we’ve kind of had a couple of pieces of information that led people to believe that the model I would have that you know new wiring system where it originated is I think back in like 2017 on one of the earnings calls Ilan was discussing it and he said basically I’ll probably the numbers wrong here but I think it’s it was like a kilometer kilometer and a half of wiring overall in the model 3 and that they would be reducing that to about a hundred meters in the mono Y so you know an order of magnitude and reduction in wiring which obviously helps with manufacturability and speed of production so we haven’t seen that show up now in the model why we had seen some patents filed for it so I think I like Trek has posted those at various points in time going back a couple of years now and so we’re not seeing it now I think what happened is they probably looked at the timeline for the model through for the model why and they decided that you know the more similar to the model 3 that they can make it while still making some of the improvements that we’ve talked about the better and I think that’s probably the right choice just to you know focus on getting it to market rather than making all these leaps and bounds in terms of the technological progress but I don’t think that’s something that Tesla is shelving I’m sure we’ll see it show up at some point you know it makes sense for them to be working on it and I would be really surprised if it didn’t make sense from a cost perspective if it was something that was originally sort of in the roadmap I think Tesla kind of filters those ideas out pretty quickly so yeah I would be pretty surprised if we don’t see a show up in you know the cyber truck or another vehicle and down the line does do you have model s and X refresh in your models for 2020 I’m curious to get your take on if you’re counting on that making a significant dent in the half a million vehicles delivered in the air not too much I mean for me I kind of think about Model S and X as being steady state and any updates that they make to them sort of carry that forward and just as we continue you know they become a smaller and smaller piece of revenue for investors I think it’s really about model 3 amount of Y and then sort of secondary to that full self-driving and then things like the cyber truck those are so much more important to the financials of the business than snx even if volume does increase there it would be awesome if we could get back to 100,000 per year like we were sort of before model 3 but even regardless you know even with pretty significant updates I don’t necessarily see that happening I think the updates do serve to just prove technological prowess that Tesla has and the competitive advantage and I think that helps with the brand and I think that helps with investor sentiment so there are a lot of benefits to doing it other than just strictly maybe the improved volume that they could get off an improved product because I don’t I don’t necessarily anticipate too much of that happening but we’ll see I mean the plaid refresh is definitely gonna be you know that be the most significant easily since the Raven update and then probably even more more than that maybe back to even when we had the sort of front facia refresh mm-hmm yeah wonderful well I I think we’ll go ahead and wrap up with our conversation here Rob it’s super good to catch up and thank you for your insight I really appreciate all the technical financial insight that you provide on a daily basis and if people aren’t are watching your or your YouTube channel listening to your audio podcast that should definitely do that where can people find that yes so you can pretty much find it on any podcast app just search for Tesla daily it should come up otherwise on YouTube again search for Tesla daily and then I’m also on Twitter at Tesla podcast awesome man all right well thanks for joining the the channel and jumping on a video and catch up with you soon yeah absolutely always a pleasure thanks Sean


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