Charlie Grant

speaker

422 appearances 10 recordings 1 series first heard Jul 2017 last heard Apr 2024

Charlie Grant’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Tesla: Model 3 Production Levels Spook Investors · 28 Jun 2018 podcast

That's right.

5000 cars a week was a goal that Elon Musk expressed last summer that they would reach by the end of 2017.

And I just took a look at my calendar and it looks like we're about halfway through 2018.

Yes, we are.

So maybe maybe this week is the time.

So it's a closely watched figure because there's been some hiccups as Tesla's tried to approach this goal in the past.

It's also important because Moody's Investor Service is watching carefully and weighing their credit ratings on Tesla.

That's right, yes.

And Moody's downgraded Tesla's debt back in March because of production issues.

And when they issued that downgrade, they warned that the $5,000 a week hitting this production figure was important to them.

So there's a lot at stake here.

Right, right.

So in the fourth quarter, Tesla produced a third of the total Model 3s in the last week or so of the quarter.

And in the first quarter of 2018, it was about a fifth of total production.

There are, of course, about 12 weeks in a quarter.

So what is important is not just what you achieve at a maximum Hail Mary burst rate, as Elon Musk likes to call it.

The burst rate is his term, not Hail Mary.

But what matters is what can you sustainably produce week after week because that's how you lower costs and eventually turn the manufacturing operation towards profitability, which is the whole reason investors should be here.

That's right.

In Tesla's services and other segment, which includes vehicle maintenance, analysts at Bernstein Research came out with a report last week that showed the gross margin in this segment has fallen from about 5% late in 2016 to negative 45%.

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