General Discussion: 2018 Investor Roundtable

[Mario Kadastik]

I think you forget that about hakf of the reservations are outside US and still at deposit level

 

[avoigt]

Its just amazing to see the reaction of people driving the 3 - just amazing...

How the Model 3 has Ruined All Other Cars for Me.
r/teslamotors - How the Model 3 has Ruined All Other Cars for Me.

 

[RobStark]

New York Post reports on the Downfall Parody video.

https://nypost.com/2018/08/05/elon-musk-tweets-video-parody-of-hitler-shorting-tesla-stock/

 

[neroden]

I think the AI/software dev side of Tesla is probably divided into 2 different team.

- 1 team, being led by Andrej Karpathy, working on the research side, trying different stuff, innovating.

- 1 team, focused on making incremental updates, improving gradually the current software, UI/UX, implementing what the research team has created/found out.

I would like it if there was a team focused on making the infotainment system work, but as far as I can tell, there isn't even one person. If they had even one full-time employee working on it, they would probably have fixed the five-year-old bugs.

 

[Ugliest1]

The 900m+ in reservations reported in Q2 are now either refunded or have been converted to non refundable cash as of when they opened all orders up starting July.

I think you forget that about hakf of the reservations are outside US and still at deposit level

And, even for North America I don’t believe the $1,000 reservation deposit automatically gets converted — it’s only when you actually *order*. So anyone waiting for SR still has a reservation, and can cancel and get a $1,000 refund.

Once your *order* is placed and you pay the $2,500 non-refundable deposit, as soon as the car enters the production queue the total $3,500 is really non-refundable.

That’s my understanding, anyway.

 

[neroden]

Has anyone here done a back-of-napkin calculation of what Tesla earnings might be when the company is actually able to supply enough product to meet the market demand for its products?

I haven't done this estimate because I don't think Tesla will supply enough product to meet market demand for *so long* that I can't really project the size of the market that far out.

To be clearer about this... I think that Tesla will be production-limited for the forseeable future. Arguably, the market demand is essentially the entire vehicle market *plus* enough stationary batteries to take every building in the world off the grid. Really, the market demand is this amount divided up among the other major EV makers and major stationary battery makers.

But right now there aren't any other major EV makers (Tesla seems to be dominating the market in terms of both prestige and volume) and there aren't any other major stationary battery makers (Tesla seems to be dominating the market in terms of prestige and also dominating on volume even with their current low production).

By the time there are such competitors, it's going to be so far into the future... I just don't think I can make projections that far out.

 

[ggr]

And, even for North America I don’t believe the $1,000 reservation deposit automatically gets converted — it’s only when you actually *order*. So anyone waiting for SR still has a reservation, and can cancel and get a $1,000 refund.

Once your *order* is placed and you pay the $3,500 non-refundable deposit, as soon as the car enters the production queue the total $4,500 is really non-refundable.

That’s my understanding, anyway.

Not quite right. The deposit is $2500, to which the $1000 is added for a total of $3500 (this is where I am in the process). If you didn't have a reservation and just landed at the web site, I think you still only need to put down $2500, but maybe it's $3500. Either way, it isn't $4500.

 

[ValueAnalyst]

Even if the VW brand will bring good EVs out one day

Why is this assumed? If they haven't been able to do so yet, and haven't even started a mass-scale battery manufacturing facility, what will change?

 

[elasalle]

This is how Big Oil will die – NewCo Shift

 

[Ugliest1]

Not quite right. The deposit is $2500, to which the $1000 is added for a total of $3500 (this is where I am in the process). If you didn't have a reservation and just landed at the web site, I think you still only need to put down $2500, but maybe it's $3500. Either way, it isn't $4500.

Oops, yes, I pre-added the $1,000 to the $2,500. Thx for the correction. No wonder I don’t trust my memory. The strange thing is, I still use it.

[EDIT:] and I was able to go back and correct the original post, to hopefully not increase confusion.

 

[Sancho]

I haven't done this estimate because I don't think Tesla will supply enough product to meet market demand for *so long* that I can't really project the size of the market that far out.

Thanks for replying Neroden, as well as for so many excellent posts of yours on this forum. It’s really a privilege to participate with such knowledgeable people.

I get your point about the difficulty of long term projections. I hope you get mine that we need something to counter bears who argue valuation based on just a few years out, during which Tesla is still struggling to meet immediate demand.

So ignore TE and semis. If we just look at light vehicles, I recently saw a projection of 10 million EVs in about 5 years. Assume Tesla had a 25% share, that’s 2.5 vehicles, which seems possible that Tesla could be manufacturing 5 years out. You pick an ASP, margin and fixed costs. What earnings does that imply?

 

[Esme Es Mejor]

Has anyone here done a back-of-napkin calculation of what Tesla earnings might be

At steady state, S/X should bring revenues of $10-15B. Let’s say $12.5 B. They’re nearly there already.

3 should be $22.5B (500k x $45k), and Y should be $45B (1 million x $45k), though I think that’s a substantial underestimate on Y’s average price.

So SEXY should bring annual revenues of $80 billion by 2023, if not sooner.

 

[Esme Es Mejor]

But wait, there’s more.

500k vehicles annually in Shanghai. That should hit steady state between 2023-2025. I don’t know the mix of vehicles, but if the average price is $40k, that’s another $20B annual revenues. $100B total.

Roadster should be steady by then, but low volume. 8k/year is $2B, 20k is $5B. Your guess is as good as mine.

If Tesla Energy grows at just 50% per year, it should be at $12.7B by 2023. Services & Supercharging should provide at least another $10B in revenue, but no earnings.

So that’s somewhere around $130B in revenue by 2023 or so. Without consider the Pickup, the Semi, or Tesla Network.

 

[Esme Es Mejor]

I have no idea what to make of the Pickup. If it’s a hit & achieves Ford F-series levels, it’ll be worth $45B+ annually. Or it could be like Honda Ridgeline— a hit with fans of the company, but no one else. Maybe $5-10B then.

The Semi seems like something of an all-or-nothing proposition. Either the Semi is a better financial proposition than diesel & it dominates the market, or people keep buying diesel & Tesla drops it. If it succeeds, it’s a $50B+ market. Paccar, with 30% of the North American market, 15% of the European market, and seemingly none of the Asian market, has revenues of about $20B annually.

Finally, I don’t know enough to even project guesstimates for Tesla Network, other than that it’s likely to be huge or non-existent.

 

[Mike Smith]

Elon Musk on Jun 10 said he'd do the Joe Rogan podcast "after Model 3 production reaches 5k/wk steady".

He just tweeted that he'd do the podcast "maybe Thursday".

 

[Mike Smith]

2018 Nissan Leaf Review

'even though this redesign improves on the original, it offers little beyond an attractive price to distinguish it from its EV competitors.'
'A low-energy effort'
-Consumer Reports

 

[doctoxics]

I would like it if there was a team focused on making the infotainment system work, but as far as I can tell, there isn't even one person. If they had even one full-time employee working on it, they would probably have fixed the five-year-old bugs.

Agreed. Very disappointed in music quality in my Model X, played from high resolution files on a flash drive.

 

[adiggs]

The 900m+ in reservations reported in Q2 are now either refunded or have been converted to non refundable cash as of when they opened all orders up starting July.

It will now be interesting to see how shorts deal with this reality of reservation conversions. Since many orders are getting a 3-5month delivery window, potentially much of this converted cash will still be there in Q3 cash&equivalents, all the while revenues and margins increase notably with potentially 2X-3X more m3 deliveries as compared to Q2 occur.

There is also the surprise potential of energy revenues and margins increasing as well. The second half of the year is traditionally the largest portion of yearly revenue for solar, so shorts shouldn’t sleep on these numbers either.

It’s always fascinating the so called analysts never ask any questions on Tesla Energy which is all the better for Elon to use as a suprise revenue item that not many pay attention to.

Bottomline, cash position is appearing to be a neutralized issue as evidence of production sustainability and real demand in terms of current order volume (50k+) into the end half steadily increasing (as noted by test drive to order conversion revealed in the conference call), short positions based on Tesla’s insolvency are extremely hazzardous.

Again, the big short whales haven’t covered yet, and it will be very interesting to see how they exit or figure out a revised talking point narrative to string along the stable of short traders till they do.

I've got $1k of that $900m in reservations. My reservation hasn't been refunded, nor has it been turned into non-refundable cash.

Historically (and I have a perspective on this as well), the money will sit there in the state it was in before. I have the option of placing an order which will turn that deposit into non-refundable cash, or getting my money back - which I've had for awhile. I also have the option of just letting it sit there. I can't say what fraction of the pool are like me (I expect I'm more minority than not).


(My perspective - I had a Signature Model X reservation. Never did place a Signature order, the 40k deposit sat there until last summer, when we were finally ready to buy, and we'd decided that Model X had matured enough that we were ready to get it. If anything, I never had much in the way of follow up from Tesla nudging me to complete the Signature reservation - it just hung out the extra year or so until we were finally ready).

 

[adiggs]

Thanks for replying Neroden, as well as for so many excellent posts of yours on this forum. It’s really a privilege to participate with such knowledgeable people.

I get your point about the difficulty of long term projections. I hope you get mine that we need something to counter bears who argue valuation based on just a few years out, during which Tesla is still struggling to meet immediate demand.

So ignore TE and semis. If we just look at light vehicles, I recently saw a projection of 10 million EVs in about 5 years. Assume Tesla had a 25% share, that’s 2.5 vehicles, which seems possible that Tesla could be manufacturing 5 years out. You pick an ASP, margin and fixed costs. What earnings does that imply?

A simplistic analysis - for every ~$170m, you'll have $1 in earnings per share.

If you believed Tesla could average ~$400m in earnings each quarter next year, that's about 1600m for the year - I'll round that up to 1700m for easy math, and that's $10 EPS for 2019.


How much annual earnings do you imagine / guess / forecast, for any coming year?

 

[Matias]

The latest but not greatest from VW or how to fall further behind in EVs.

VW will not deliver any EVs and Plug-ins any more until end of this year. This has been officially confirmed by the speaker from VW. Today they have a bottle neck to get the certification for Diesel and Gas cars done. That has been reported previously.

Because of that bottleneck they concluded and decided that, "EVs and Plug-Ins are comparably sold less often and for the reason they do not get priority." "EVs will be delivered again next year" .

How the problems with Diesel and gas cars are related to EV manufacturing (meaning how to postpone EV's helps resolving those problems)?