2017 Investor Roundtable:General Discussion

[adiggs]

And I was happy with my '94 Accord until 2013 when I gave it to a relative. But that's irrelevant. These new things aren't cars, they're computers on wheels. They will obsolete much, much faster.

Maybe yes, maybe no. I think you'd agree that "obsolete" isn't an absolute condition - it's relative for each person.

There are plenty of people that have a hard time relating to driving a car that lacks air bags and anti-lock brakes. That car still does a fine job of going from A to B. That car also doesn't get driven very much these last 4 years now that I've also got a Roadster.

And now the Roadster and the CRX aren't getting driven much now that we've got the Model X. The Model X was my end-game / targeted end state from 2012, and it's way more capable than what I was looking for back in 2012. It's also still transportation that gets me from A to B, and back again.

Do I believe that 20 years from now, my 2017 Model X will do everything a 2037 Model X will do? Of course not. Will it still be a drivable and usable vehicle for a wide range of uses? I expect yes. I believe there's a reasonable chance it'll be an FSD vehicle, even if it's wide considered to be first gen FSD in 2037, and the 10th gen stuff is way better.

So will it be obsolete in the sense of much less capable than newish vehicles of that era? Absolutely.

Will it be obsolete in the sense that it can't be driven or used for the basic purpose of personal vehicles - get me from A to B and back again? Possibly, but I hope for all of our sake not. Just look at how capable the bottom of the barrel used car market is going to be in 2037

 

[Bet TSLA]

Will it be obsolete in the sense that it can't be driven or used for the basic purpose of personal vehicles - get me from A to B and back again? Possibly, but I hope for all of our sake not.

Think about the reasons your smart phone becomes obsolete. Your car will become obsolete for the same sorts of reasons. Sure, that old phone can still make calls and read e-mail and do text messages, but so can your new one along with a bunch of other now essential things. Why would you carry two?

So sure, your car can drive. But it won't work with the school's software to allow the grandkid to get picked up automatically. And it can't drive in auto-pilot only lanes because its software is no longer supported. Useless! Well, not really useless, just not useful enough to carry around (i.e. maintain insurance and registration).

 

[tander]

Certainly sounds reasonable to me. My '91 CRX has kept my wife and I happy through 2013, and we still use it today. This year's Model X will hopefully be the car I'm driving 40 years from now when they take away the fob from me Maybe I only get 20 years though ...

It's gonna be driving for you by then! Just had this discussion for my Grandpa (94), hoping he can hold out long enough to get his car back.

 

[adiggs]

It's gonna be driving for you by then! Just had this discussion for my Grandpa (94), hoping he can hold out long enough to get his car back.

That's the one thing I can see for sure today, that I can readily imagine the current generation cars not doing, that would be a feature that would cause me to upgrade again. Specifically the feature that might make the difference between staying in my home and maintaining independence, vs. moving to some sort of assisted living arrangement.

Wouldn't be something for your Grandpa to get his car back, eh?

 

[kbM3]

It is somewhat counter intuitive, but that is exactly what you want in a more startup type environment. Much like going into debt every quarter is not sustainable you want to create lots of technical debt in your startup phase.

Please elucidate.

 

[traxila]

If your accusations are true to the extent that you're comfortable posting them in a public forum with such certain words, how do yo explain the fact that he has, let alone being jailed, never even been tried for literally anything you listed?

Is any of that technically illegal?

 

[landis]

Think about the reasons your smart phone becomes obsolete. Your car will become obsolete for the same sorts of reasons. Sure, that old phone can still make calls and read e-mail and do text messages, but so can your new one along with a bunch of other now essential things.

Nope.
But I will grant that the reason some folks are disappointed with the in car browser is similar.

A phone with a closed architecture is completely useless a short generation later when all the latest UX (gunk) expects more horsepower. A smartphone is a very bad analogy for what I expect to be classic BEVs.

A Tesla car isn't a smart phone. Most of the value of the car is in the batteries, inverters, motors, and environmental systems. Yes, these will all age very well. Just like the AP computer can be replaced if/when necessary, there is little preventing the same for the central UX display/computers. If Tesla doesn't offer an upgrade path, then I expect the aftermarket will find a way.

I am still using perfectly good USB keyboards/mice approaching 20 years of age. Plenty of USB hubs still support them. I consider the AP sensor hardware (peripherals) to be a decent analogy, with the wiring harness as the USB bus, and the AP computer as the "Moore's law component" that certainly will become trapped in time/functionality. This is why making the AP computer replaceable is genius.

I contend that all the talk of the floating (not integrated) central display is missing the point, that this can also be replaced independently of the drive train and coach bits, when the UX expectations of many (but not all) pass it by. This is also genius.

Then there is a whole other conversation about incrementally learning to use the available hardware more efficiently. Seems to be pretty much a lost art these days. But not completely...

No way a Tesla car is a computer on wheels. A much better analogy is a set of wheels with a place of honor for its current computer brains. ;-)

edit:

Why would you carry two?

Because I can't fit the M3 in my pocket!

 

[terracaines]

Please elucidate.

Lets say you take shortcuts to skip 6 months of work which will have to be paid back in the form of 8 months of work next year.

Even though it will mean more work overall you want to take those shortcuts if they offer enough money to justify the extra 2 months.

 

[Krugerrand]

I hope that Elon stays with Tesla for five more decades, but as shareholders, we need to be thinking about all tail-end risks to our investment.

We have all thought about this one particular possibility. But there's no way to mitigate for it. He goes suddenly and we're all just going to be screwed. It's just that simple. We've discussed the chance of JB being able to take up the reins and continue, and how that'll affect the whole ball of wax too since originally (long before you arrived) Elon said he'd stay on board as CEO of Tesla only until Model 3 was in full production. Many here already had an exit strategy for that occasion. He has since changed his mind.

 

[MitchJi]

I have discussed Tesla with one Apple software engineer who moved over there. He was more horrified than impressed, but I'm hoping his experience was not typical. My impression is that there's lots of cowboy code hacking and very little software engineering. That works for a while, but it's not sustainable. We shall see, but I'm a bit worried. I am not at all impressed with the progress in the auto-pilot software since AP2 was released.

Did you notice that Intel just paid 15 billion for mobileye which Tesla has managed to more than replace (at feature parity with abetter underlying system [more camera's]) in about 10 month's:
Why Intel is paying $15 billion for Mobileye

 

[Krugerrand]

I would usually post something like this in the Climate Change thread, but I think this needs more exposure. I saw this doc yesterday and SolarCity and SpaceX were featured in it. I didn't see the first one that came out years ago and I think Leo Dicaprio's doc 'Before the Flood' did a better job at getting the point across, but the ending of this nailed it on the head.

I've never really followed Al as a politician, but I respect him on his 40 years of trying to make people understand what is going on. Everyone should see this.

I didn't particularly care for the last statement in that video.

 

[MitchJi]

It seems like barron's has great sources for drugs:
http://www.barrons.com/articles/PR-CO-20170811-910657
3. GM (NYSE: GM)
The obvious answer to who will win from the EV revolution would be Tesla (NYSE: TSLA), and while that is a very viable possibility, GM offers investors more security while also giving investors exposure to electric vehicles. GM recently rolled out its Bolt, a fully-electric mass market vehicle that is competing with Tesla's Model 3 at the roughly $35,000 price point. GM has initially struggled with the Bolt amid rising inventories and tepid sales, but the automaker says that the Bolt will finally be going nationwide this month.

The legacy carmaker will still have a tough time competing with the flashier Tesla, and its share price is down a bit recently, as Tesla has made news with the first deliveries of its Model 3. Still, one should not dismiss GM, which has more electric and electric-hybrid models in the works and is in it for the long haul.

 

[Krugerrand]

Wall Street's 'dean of valuation' calls Tesla’s bond buyers 'naive,' sees stock worth half as much
"<
The company is "trying to woo bond buyers with the same pitch of growth and hope that has been so attractive to equity markets. That suggests that those making the pitch either do not understand how bonds work (that bondholders don't get to share much in upside but share fully in the downside) or are convinced that there are enough naive bond buyers out there, who think that interest payments can be made with potential and promise," the professor wrote.
>"
I think he's missing the 500,000 queue of transactional growth

He's way behind the curve here- but interesting to see the perspective of a 'traditional valuation' -
another mold broken by Tesla- who'd a thunk it--

Isn't he cute? He and Mr. Jonas should go on a lunch date.

 

[kenliles]

Isn't he cute? He and Mr. Jonas should go on a lunch date.

They'd probably sit there forever, waiting on the other one to reach for the bill...

 

[Krugerrand]

For all our sakes we need to be certain that we do not shut out contrary views. As for me, I appreciate a challenge. I still will not ever be a pushover for sloppy thought nor weak logic, at least as far as i can discern such. It is wise for others to treat me just as I do them.

I have spent much of my life living in rigid and intolerant societies. I hope TMC never succumbs to groupthink.

For the most part I can get behind the general sentiment. However, we've been here for MANY years now. We have picked Tesla's bones clean. We are the first to question their decisions - Solar City merger uproar, anyone? And we are the harshest on them when they screw up.

There is NO contrary view that we haven't already thought of, researched, dissected, and gnawed on over and over and over and over again. Of the few standing on the other side of the Tesla/TSLA fence, all are pretty much talking out their derrieres. IMO, they aren't making us anymore rigid or intolerant than we are generally and individually by nature - which we aren't in the scheme of things.

 

[MitchJi]

Isn't he cute? He and Mr. Jonas should go on a lunch date.

Tesla (TSLA) price target moves with Model 3 deliveries, Morgan Stanley updates bull case to $516
Cmon now, Adam Jonas is a great analyst. His success rate is 1-3% better than flipping a coin.

Adam Jonas is ranked #444 out of 4,618 analysts on Tip Ranks with a 53% success rate and an average return of 11.6%. Here’s his track record on Tesla’s stock:

 

[Krugerrand]

Just like Elon Musk jumping from 1GW in solar capacity to 10GW and then (as soon as SCTY deal was done and voting over) back to 1GW.

A delta of 9 GW. Peanuts, right?

Same for the CFO promising positive cash-flows again and again for years...yes, it's apparently all due to "faster expansion" and "moving investments forward":

Funny thing is, the $ for Tesla's entire portion of GF1 were supposed to have been funded back in February 2014.

All the money (number of pre-oders close to 400k already done and ramp moved up from 2020 to 2018) for Model3 back in 2016.

Yet Tesla keeps raising more debt in 2017 for GF1 and Model3 while many of the "old" money from 2014-2016 has been used to plug operational expenses instead of cap-ex projects.

When it rains, it pours and new money won't flow - and that will be coupled with a sharp demand reduction for high-end S and X cars whenever the next market downturn or recession arrives..

Right. So the point being, Elon sucked at determining how long it would take the rest of the OEMs to get on board with sustainable transport - in that they never would unless he made them. Insert we need more money to grow bigger and faster since everyone else is out to lunch. Whereas you've sucked at every turn at predicting the demise of Tesla.

 

[Krugerrand]

MitchJi:

In another 5 years, tesla will have the capacity to produce millions of cars.

This will be when the other ICE manufacturers will feel the hurt, when their most profitable car models are effectively "killed" by Tesla competitors.

No, the hurt starts way before 1M cars produced each year. The pain has already started, it's just being ignored as an annoyance. By the time the hurt gets to a point where the other OEMs can no longer ignore it, is when it's too late.

 

[AcesDealt]

The hurt scale is logarithmic base 2. I know this for a fact. Tesla passed level 16 hurts last year (log base 2 of 86k volume), and they only have 8 more to pass Toyota and Ford (log base 2 of 10M). It is looking like production hell is equivalent to around 2.5 hurts rounded off or maybe 8/pi. That's not as clear. It basically took 8 years from Roadster till now for 16 hurts, so you can get through about 2 per year. We can contrast this to Conor McGregor who will take 2 hurts: one in the face and then one him hitting the floor. Anyway, the point is definitely that we are more than half way to maximum hurts for the other brands.

 

[ggies07]

I didn't particularly care for the last statement in that video.

haha, I know, me either, but I think it was there just to get people to focus on the task at hand....