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 will say that this story honestly loses me.  

Just when you think we’ve reached Peak Sensitivity, the scolds of social justice sprinkle more sand into their underpants. The Museum of Fine Arts in Boston is currently showing a superb exhibition of the art of Hokusai. As per common practice at scholarly institutions, it is displaying related material, including an exhibition of contemporary Japanese photographers responding to the devastating earthquake that hit the northern part of the country in 2011. It also rehung La Japonaise, an 1876 canvas in its collection by Claude Monet, depicting his wife Camille in a vermillion kimono.

Among the educational programming at the MFA was “Kimono Wednesdays,” an opportunity for museumgoers to try on replica of that kimono in the presence of Monet’s canvas. It was slated for Wednesday evenings, when the museum’s entrance fee is by donation, starting June 24 and running throughout the month of July. But it didn’t make it that far.

Demonstrators showed up at the first two events bearing posters accusing the participants of grave wrongdoing. “Try on the kimono; learn what it’s like to be a racist imperialist today!” exclaimed one. “Let’s dress up Orientalism with more Orientalism,” read another. The protest had been arranged through a Facebook group named Stand Against Yellow-Face @ the MFA (the discussions have moved to a Tumblr), where the principals and their supporters expressed great umbrage. “A willingness to engage in thoughtful dialogue (or not) with museum employees and visitors on the bullshit of this white supremacist ‘costume’ event are welcome,” wrote one of the organizers.

Unfortunately, despite several appeals, I have not taken any photos around the hotel.  One reader asked if I have seen anyone famous.  The answer is, I don't know.  Let me explain.

Some years ago (maybe 8-10) my wife and I were driving through Malibu on vacation, when we stopped at a little coffee shop for breakfast.  After we were done eating, my wife went to the bathroom while I sat outside on a bench to wait for her.  Sitting there was another husband who was clearly also waiting for his wife to come out.  We chatted for about 5 minutes, with this British gent telling me he had just gotten back from London on business.

Well, my wife came out and I met her at the car.  The first thing she said to me was "Oh my god, you were talking to Pierce Brosnan."  I said "??"  Sure enough, on reflection, it did seem to be he, particularly since my wife also recognized his wife from People magazine.  In my defense, one does not expect to encounter James Bond in a psuedo-Denny's wearing sweats and a week-old beard.  But since then, I have not really trusted by celebrity-identification skills.

Romney-care, which looks surprisingly like v1.0 of Hillarycare, is over-budget by $135 million (and counting*) in Massachusetts.  TJIC is stunned.

* must be pronounced in that deep eastern European voice from the early James Bond films, where in the bad guy's lair the PA system kept saying "one minute, and counting."

As a way to celebrate the holidays and perhaps compensate for a more relaxed pace of blogging for a while, I am beginning a serialization of my new novel BMOC.  If there is interest, I will keep it going for a while.  So, lets get started.  Enjoy!  (You didn't really feel like doing any real work today, did you?).   By the way, for you prospective business school students, though it may seem un-serious, embodies my best advice for you.  Chapters 3 and 4 continue here.

chapter one

Robert
Gladstone, multi-millionaire CEO of the M Group, looked around the
room at his fellow conspirators and longed for the piranha
button. 

Continue reading ‘BMOC, Chapters 1 and 2’ »

A while back Glenn Reynolds had a series of posts on European birth rates and the social costs of having children (I would link the articles but my timer on this computer in the library is running out and I don't have time to search). 

Our first few days here in the [English] countryside have really reinforced different cultural attitudes about children.  The first night here, we walked into a restaurant with our kids, and the whole place went silent, staring at us.  We were told children were not allowed.  In retrospect, it felt like that scene in Chitty Chitty Bang Bang when the townspeople are all staring at the family because in that town kids are illegal.  The next restaurant did not let kids in after 7.  The next saw us and said that they had a large group arrive and couldn't serve us (despite the fact the parking lot and restaurant were empty). 

We thought at first this might have something to do with liquor laws, since many local restaurants are also the pub.  But that first night when we finally found a restaurant that would serve our children, they said we could not sit in the restaurant but they could seat us in the bar!

Not sure I have a conclusion here, except to observe how different attitudes about children and families are here.  Kids here are also much quieter in public than American kids, perhaps because they have learned to keep a low profile in a society that doesn't always want them around.  It will be interesting to see if London is any different.

Bonus trivia question, answer below the fold:  The writer, producer and several of the actors in Chitty Chitty Bang Bang also were responsible for what other quite famous series of movies?

Update:  I left off that it was in the English countryside (near the border of England and Wales).  Sorry.  I am finally on a decent Internet connection and just caught onto the confusion.

Continue reading ‘Eek! Children!’ »