Coyote Blog

I do not have any insider knowledge, so this is pure speculation, but I have worked in a lot of organizations that did insane things to try to reach milestones or goals, and so I think it is educated speculation.

A lot of Tesla's market valuation comes from the prospects of getting a lot of volume with their mid-priced (sort of) Model 3.  They need to get production rates up both to reduce costs and to try to get ahead of a huge oncoming rush of competitors entering the BEV space.  Last year, they promised to have Model 3 production at 5000 a week by the first of this year, a goal they missed by a mile.  So now they have set the expectation that they will be at 5,000 a week production by the end of the second quarter, which is basically this week.

One of the weird things about Tesla is the difficulty in getting good information about its operations, particularly since it is a public company.  So many investors, for example, were trying to figure out Model 3 production numbers that an entire cottage industry of VIN analytics and delivery reporting has arisen.   But the basic story is that they are not there yet and that's not going to change by the end of the week.

But that does not mean they won't be trying to achieve something that looks like 5,000.  In the past Tesla has resorted to the "run-rate" claim, that their run rate for a day or an hour was at such and such much higher number.  So that is, I think, what is going to happen this week.  Parts and subassemblies are likely being stored up so that in a great burst 714 can be completed in one day or if not that, 30 or so can be completed in an hour so that the company can claim a 5,000 unit weekly run rate was achieved.  This is obviously BS -- any bottlenecked process can usually be juiced for a short period of time (examples:  Transcontinental Railroad track laying record, Liberty ship build time record) -- but I predict we will see it.  I also wouldn't be surprised if you found the numbers for last week were actually below trend due to Tesla hoarding sub-assemblies and parts for huge one-off production push this week.

As an aside, we are coming up to June 30, which for taxpayers can be considered Tesla subsidy day.   I have written about this before, but if Tesla can manage its deliveries down a bit in the second quarter, it can extend the taxpayer subsidy of its vehicles another 3 months (the subsidy starts winding down after the 200,000th electric vehicle sold in the US and Telsa is right about there, so much so that rumors are it is sending all its output to Canada this week so it doesn't put them over the US number.  Bloomberg estimates that pushing the 200,000th sale from June 30 to July 1 will cost US taxpayers hundreds of millions of dollars:

In my previous post I wrote about Tesla's attempt to prolong the $7,500 U.S. incentive for electric cars by pushing sales into the next quarter. A reader on Twitter who goes by the handle @Smack_Check did the math on how much such an effort would be worth to Tesla's customers: $366 million.

That's the value of additional credits available if Tesla waits just one day (July 1, instead of June 30) to record its 200,000th sale in the U.S. Here are @Smack_Check's fairly conservative assumptions:

Tesla will produce an average of 5,000 cars a week in the third quarter, all models combined (that means about 3,000 Model 3s/week, on average).
Each quarter after that, total weekly production will rise by 1,000.
U.S. sales will account for half of all Tesla sales worldwide during the subsidy period.

Disclosure:  I am short Tesla via the ownership of one (1) put option which in my mind constitutes more of a bar bet than an investment.  Shorting fan-boy stocks is risky, as is shorting companies the CA legislature is probably scheming right now to bail out somehow with their taxpayer money.  If it were not for these two problems I would be all-in on the short like James Bond at the end of Casino Royale holding a straight flush.   The odds that Tesla will really be worth $60 billion * (1+i)^10 in ten years is pretty much zero.  Also, it's amazing how many of Elizabeth Holme's behaviors at Theranos as documented in Bad Blood one can observe in Musk.

Update:   Fixed Tesla current market value, which is closer to $60 billion today.

My kids and I drive my wife crazy when we are watching a movie at home.  We have all kinds of conversations going, conversations we would never even consider in a theater (another reason, beyond screen size and sound systems, why I consider the home movie watching experience distinct and not entirely competitive with the theater experience).   No movie can be watched without a dozen IMDB lookups of what else so and so actor was in.

One game we play is spot the rifle.  This probably does not mean what you think it means.  It refers to Checkov's rule (the writer, not the astrogator) never to put a rifle on stage in Act 1 if someone is not going to use it in Act 3.  Our game assumes that movies are following this rule, so we look for elements sometimes awkwardly thrown into Act 1 so they can be used later.  Note this is distinct from a macguffin, and is really not the same as foreshadowing either.  The "save the clock tower" fund raiser early in Back to the Future is an example.  Calling your shot in this game, like on Jeopardy, requires the answer to be in a specific form, ie "Never put a lightening strike on a clock tower on stage in Act 1 if you are not going to use it in Act 3".  It goes without saying that winning answers must be shouted out in Act 1, not Act 3.

My daughter, who is quite an aficionado of romantic comedies, texted me an updated corollary:  Don't put a pregnant woman on stage in act 1 of a comedy unless she is going to go into labor at the most inconvenient moment in act 3.

Postscript:  The "Q" armorer dynamic in James Bond is a version of this on steroids.  The rules of Q were:  1.  Every tool he gives Bond gets used and 2.  No matter how odd or arcane the tool (e.g. high powered electromagnet built into a condom) it turns out to be exactly the niche tool Bond needs to escape at some point.   For example, one and only one time is Bond issued with a CPR device but that one time he needs it to save his life (Daniel Craig version of Casino Royale).

• I added some updates to my negative review of the new Bond film.  I said:

I feel I need to clarify one thing.  I am a huge fan of the old Bond movies.  Goldfinger, Thunderball, Diamonds are Forever, Goldeneye -- all great.  Despite my comments above, I even like most of the Roger Moore films, though you have to take a different approach to them.  But the formula was tired.  The Survivor formula was hugely popular at first, but in season 9 or 10 or whatever, it's just done.  You either are repeating the same tired cliches, because you feel locked into a formula by your fans who will get pissed (as they did with Casino Royale) when you violate any minute detail the Formula, or you fall into the trap of trying to top yourself with goofier and goofier plots.  I actually thought the series was dead around about View to a Kill, but Pierce Brosnan really brought new life to the series for a while.

Oh, and I wanted to really make fun of the plot in the new movie, because it really is a great WTF moment, but I didn't want to include a spoiler, since there is some mis-direction in the movie.  However, the spoilers have already come out in the comments, so if you are interested, I reveal the incredible world-shaking evil plot around comment #6 here.

• I saw a trailer for the upcoming Star Trek movie, which could essentially be called "young Spock and Kirk."  It could be good.  Talk about a franchise, though, that has been milked to death.  A new take would be refreshing.  We'll see.  Never forget Battlestar Galactica - from the ultimate in goofiness came one of the better science fiction series to hit television.

• The note above reminds me of an idea I have for a movie that I think would be a no-brainer.  The Star Wars clone wars stuff has pretty much lost me  (actually the dialog in episodes 1-3 pretty much lost me).  But I always thought a young Han and Chewie movie - how they met, various pirate adventures, young Lando, etc.  would be almost a layup to make succesful.  I am increasingly convinced that that the Star Wars movies were good almost in direct proportion to how much Han Solo was on the screen  (well, maybe pre-dryfreeze Han Solo -- after he was unfrozen, he was a little goody-two-shoes for my taste.)

First, I want to preface that I absolutely loved Casino Royale.  I had expected not to like it, being skeptical of Daniel Craig and the apparently trendy substitution of Texas Hold'em for Baccarat.  But the movie was fabulous, easily the best Bond ever, and a long-overdue retooling of the franchise.  In comparison, the campy Roger Moore 70's Bond movies are almost embarassing.

All that said, I was disapointed in Quantum of Solace.  The movie was entertaining and worth the price of admission, but two aspects really hurt the movie for me:

1. The directors have adopted the currently popular edgy filming style of action sequences which involve lightning quick cuts and jerky camera pans (used in the Bourne movies, for example).  The style really increases the confusion of the moment, and has its place in creating tension and giving a first person feel to the action, but it gets tiring and confusing after a time.  Compare the opening chase sequences in this movie to the absolutely fabulous chase scene through the construction site near the beginning of Casino Royale.  I thought the Casino Royale sequence was much a better, but I must admit I am a big fan of long tracking shots over quick cuts, so I guess your mileage may very.  There was one shot I thought really cool in the new movie.  Bond and mystery villain #3 or 4 fall through a glass ceiling, and you fall with them POV-style. 
2. The movie seems to be a return to the WTF-style plot of a lot of modern action movies, especially sequels, that put one-upping the action sequences of the previous movie over having a coherant plot.  I don't mind twists and turns, but in the end, all the motivations have to make sense.  I mean, how many mystery guys can Bond chase, kill, and then say, well, I guess we'll never figure out who that guy was.  The early parts were like the Seinfeld version of action movies -- they are not about anything, they are just chase scenes.  And, I still don't understand why the bad guys in QoS are doing what they are doing.  Its another one of those "spend a billion dollars in a vast conspiracy to make $100 million" Bond villain plans.  In contrast, Casino Royale was anchored to what I think was the best Ian Fleming book, and it stuck close to the book.  Even when it deviated, for example with the shift from bacarrat to Texas Hold'em, it actually improved the plot, as it shifted to a game that at least involves some skill.

Update:  I feel I need to clarify one thing.  I am a huge fan of the old Bond movies.  Goldfinger, Thunderball, Diamonds are Forever, Goldeneye -- all great.  Despite my comments above, I even like most of the Roger Moore films, though you have to take a different approach to them.  But the formula was tired.  The Survivor formula was hugely popular at first, but in season 9 or 10 or whatever, it's just done.  You either are repeating the same tired cliches, because you feel locked into a formula by your fans who will get pissed (as they did with Casino Royale) when you violate the formula, or you fall into the trap of trying to top yourself with goofier and goofier plots.  I actually thought the series was dead around about View to a Kill, but Pierce Brosnan really brought new life to the series for a while. 

Update #2:  Tigerhawk has similar thoughts

I finally saw Casino Royale this weekend, and though it has been said in many other reviews, I will repeat it:  This is the best Bond ever.  More than just changing Bond actors, the movie represents a retooling of a Bond franchise gone way, way astray in the Roger Moore years.  Pierce Brosnan did a good job bringing Bond back to reality, but he was still too pretty-boy to really portray the ice-cold, very serious Bond of the books.  The double-0's are supposed to be hired as assassins (license to kill, remember) and not because they look good in a tux.  Bond in the book Casino Royale, for example, doesn't even want Vesper Lynd around because he refuses to be distracted by women on duty.  The Bond of recent movies seems to do nothing but get distracted by women on duty.

Casino Royale was always my favorite of the Bond books, and I am pleased that it was this book that brought the franchise into a new era.  Yes, Q and the gadgets are gone, and even some of the classic lines are mostly absent (though shaken not stirred draws a funny joke).  In their place is much sharper and more interesting dialog.  Judie Dench finally gets a role as M that does justice to some of her acting talents.  And  Daniel Craig is fabulous.   

This is also by far the closest any Bond movie has stuck to it's namesake book.  The book was a bit light on action, so rather than try to work it in where it does not belong, they grafted the action onto the front of the movie, which is essentially a prequel to the action in the book.  The book begins about where Bond gets approval to go after LeChiffre in a card game, and from that point forward it follows the book almost exactly, with some minor updating.  The only small amount of pain was seeing Bond playing Texas hold'em rather than Baccarat, but after seeing the movie, poker works much better than Baccarat did in the book - the element of bluffing adds to the tension.

Don't worry, the action is still there.  The opening chase scene is fabulous, all the more so because it is mostly free of gadgets and aircraft and missiles and... you get the idea.  Instead, you get Bond at his most ruthless as well as the improvisational Bond we haven't seen since Sean Connery.  First movie in a while I immediately wanted to see again.  And first action movie in forever where the plot made any sense and the writing was sharp.