TSLA Market Action: 2018 Investor Roundtable

[MikeC]

Charley Grant of WSJ who demonstrates straight up animosity towards Elon hasn't tweeted since the letter

LMFAO

He's probably busy with his dad, checking on their friend Chanos to make sure he's okay.

 

[NicoV]

Please, please have Tesla shorts as merchandise in stores worldwide. I'd wear them everywhere.

I’d even wear short Tesla shorts.

 

[goinfraftw]

Is it just me or did Elon Musk sound pretty cold-blooded on that call? Like a "its-just-the-start-folks" kinda mentality to where Tesla's going in the next 12 months and forward?

 

[winfield100]

Summary:
1. 5k a week Model 3 is the new 10k a week. Kiss that 10k/week good bye. 5k/week enough to support Europe, China and US demand in Q1. Gotcha!
2. All talks about 10k a week vanished.
3. Was the $35k Model 3 contingent upon 10k a week Model 3 on a sustained basis? I think it was. So bye bye that too.
4. FSD bye bye.
5. $100 a KWh battery has been hyped up so long in the past. Gone. Won't comment anymore.
6. Solar roof tiles that was ready to sell 2 years ago is now in R&D and testing!

The only sad part is I can't find shares to short.

@mmd
hugs, kisses and a quote (partial) 4 U (but it settled at only up a bit over $31, 11+%
(and an iggy)

 

[azaz]

so Tesla will start taking orders for SR around January I'd assume?

 

[Ulmo]

They have to be disciplined with spending - if they are going to build a factory in China then they may have to hold off a little on lots of CapEx in Fremont in order to go from 7-10k per week… They want to stay cash flow positive every quarter going forward.

Another way to put it is they can't spread themselves too thin now, they'll have to prioritize between different projects that require spending where the pay-off is a bit delayed: China factory, build out of GF, build out/upgrading Fremont, Tesla Semi, development of Model Y, etc.

This is something we bought into when KSA didn't take the company private; we knew that would sequentialize some events to a degree when that announcement came out. They took the opportunity to decide to state at that time that they intend to fund all growth via revenue. They reiterated that today.

 

[Fact Checking]

So it sounds like batteries are no longer the bottleneck. What’s holding them back from 6 to 7 k per month. Paint?

No, as they explained it in the conference call, the higher optioned cars take more time to build: more cells to add, more premium interior features to add (such as 12 speakers), a full AWD powertrain to add, premium paint layers to apply, etc.

Their original 10,000/week figure probably included a significant percentage of non-PUP, non-AWD, minimal battery pack and minimally optioned $35k units as well. Now that they are making $50k-$70k units those obviously take longer to assemble.

What we should care about is cash generated per week, not units per week.

 

[neroden]

Change of strategy: Repair shop is to be profit center. Formerly Elon said the service was not to produce profits, but to break even in time. Now he foresees profits from repairs shops as the fleet ages.

Well, he said he expects profits from repairing out-of-warranty cars. I suppose you wouldn't expect them to repair out-of-warranty-cars at a loss. I hope he doesn't mean high, gouging-level profits, but I'm fine with a 1% profit margin on out-of-warranty repairs...

 

[Thekiwi]

Along these lines, someone here previous mentioned starting the Tesla Network early, with people driving manually for now, and using that to essentially drive further demand in addition to profits. That still sounds like a fantastic idea to me.

But there is no profit in these ride sharing networks currently is there? They are running at a loss, dependent on investor financing until the point where they can get rid of there main expense (the drivers) - which means they arent profitable until full autonomous driving is achieved.

 

[tivoboy]

Are either expected to be doing autonomous taxi service in a widespread fashion any sooner? Clearly Tesla is not competing with human drivers today.

Not that I know of, but Tesla is alluding that FSD (full autonomous) is going to somehow be able to compete with other ride share services and I don't see that for 3+ years at least. Now, it COULD be they are planning to disinter-mediate UBER ride coordination, letting tesla OWNERS be DRIVERS and take less than the 25% spiff that Uber takes. that could occur I think, use your Tesla (with lower operating costs) to do ride share service, but if they haven't built that technology YET, I see that as 12-18 months out. It would be pretty cool though, for those tesla owners that have extra time on their hands.

 

[BioSehnsucht]

Frankly, I can't even see that as possible. The VOLUME of vehicles is soon going to be Model 3, all under warranty so there is basically no service revenue. They have a lot of legacy S and X in the market, but it will soon be DWARFED by the Model 3 in the marketplace, USA at least. So, how do they see Service revenue going up significantly? I mean, are they expecting to launch a model 3 service contract, that will add 500-900$ per car in revenue, for maybe 40% of buyers and with less than that amount in spend?

Clearly warranty work won't make money - but don't they set aside some amount of money for each vehicle sold for warranty work? Plus the body repair centers won't usually be doing warranty work, so that can be "pure profit". Plus there are non-warranty tasks to be done, plenty of people buy their tires from Tesla (vs a 3rd party), and eventually there will be some maintenance which may not be included in Model 3 (they're not selling maintenance plans yet, IIRC).

But I suspect most of the cash flow coming in will be from body repairs.

 

[emir-t]

Someone please tweet and ask about Model 3 coming to Europe fully assembled at the cost of import tariffs unlike Model S&X or are they prepping Tilburg for another assembly center. I hope we shouldn't read this as Norway deliveries first. (Norway is not in EU so Model S/X comes fully assembled whereas rest of EU gets battery and body seperate from CA)

I already tweeted but he needs to see it.

 

[SOULPEDL]

Is it just me or did Elon Musk sound pretty cold-blooded on that call? Like a "its-just-the-start-folks" kinda mentality to where Tesla's going in the next 12 months and forward?

Yes and he sounded way more awake than last quarter!

 

[Ulmo]

to 7k not 10k

They said Fremont downtime is to get Model 3 Fremont production from 7K/wk to 10K/wk; they said getting to 7K/wk is capital efficient, and 10K/wk will be more capital efficient than the initial 5K/wk.

 

[ls7corvete]

There's no need for you to repeat this same argument many times, we already know roughly how much capex is required for 8k-10k/week, independent experts from Evercore ISI recently audited the Fremont factory and estimated a capex in the 'tens of millions of dollars' range to reach 8k/week and 10k/week:

• “Based off our tour and what we saw, we see no reason why Stamping and General Assembly should not be able to handle [seven to eight thousand cars per week] today, and even potentially 10k units, with very little incremental Capex. We believe the same is also true for the Paint Shop when it comes to reaching 8k units a week, with some incremental capex potentially required to get to 10k units."
• "For Body, our understanding is that incremental capex is required (our impression is in the tens and not hundreds of millions) in order to get to both 8k units and eventually 10k units."

I'm sure they reported to Tesla with more precise estimates as well, but we don't have access to that report.

For a factory currently producing 75 Million a day, a couple hundred million does not seem excessive.

 

[neroden]

The difficulty now though, is figuring out *when you are wrong*.

Correct.

This, however, is quite a bit more simple than specifying self-driving - and shadow mode is exactly this. It enables training of a network against baseline "perfect" human behaviour.

Ah... but it doesn't unless you actually *do* that, and they're not doing that.

You have to hire perfect drivers and then drive these perfect drivers through every possible situation. If you're just using random incompetent schmoes... you're not going to be giving the network accurate feedback as to whether it's wrong.

This is what you, and practically everyone else, has missed. I do NOT want a "self-driving" car which is as crappily incompetent as the average American driver!!!! And neither does anyone else. There are stupid, incompetent, dangerous things which *the majority* of American drivers do. How are we going to train the car to not do that?

Tesla is doing great at the tech and missing the human factors. Which is actually totally normal for them. I hope they eventually wake up about the human factors.

When they finally get that right -- when they really start looking to experts to figure out what the car *should* do in situations where most American drivers get it wrong -- then I'll expect self-driving to be done in about 2 years. They haven't started yet.

Now do you get where I'm coming from?

 

[oneday]

Summary:
1. 5k a week Model 3 is the new 10k a week. Kiss that 10k/week good bye. 5k/week enough to support Europe, China and US demand in Q1. Gotcha!
2. All talks about 10k a week vanished.
3. Was the $35k Model 3 contingent upon 10k a week Model 3 on a sustained basis? I think it was. So bye bye that too.
4. FSD bye bye.
5. $100 a KWh battery has been hyped up for so long in the past. Gone. Won't comment anymore.
6. Solar roof tiles that was ready to sell 2 years ago is now in R&D and testing!

The only sad part is I can't find shares to short.

 

[joefee]

Summary:
1. 5k a week Model 3 is the new 10k a week. Kiss that 10k/week good bye. 5k/week enough to support Europe, China and US demand in Q1. Gotcha!
2. All talks about 10k a week vanished.
3. Was the $35k Model 3 contingent upon 10k a week Model 3 on a sustained basis? I think it was. So bye bye that too.
4. FSD bye bye.
5. $100 a KWh battery has been hyped up for so long in the past. Gone. Won't comment anymore.
6. Solar roof tiles that was ready to sell 2 years ago is now in R&D and testing!

The only sad part is I can't find shares to short.

Were you on the same CC that I was???????

 

[neroden]

Frankly, I can't even see that as possible. The VOLUME of vehicles is soon going to be Model 3, all under warranty so there is basically no service revenue. They have a lot of legacy S and X in the market, but it will soon be DWARFED by the Model 3 in the marketplace, USA at least. So, how do they see Service revenue going up significantly? I mean, are they expecting to launch a model 3 service contract, that will add 500-900$ per car in revenue, for maybe 40% of buyers and with less than that amount in spend?

They said "eventually". I.e. when Model 3 comes off of warranty.

Everything in that discussion was super long term. So there's your answer.

 

[Carl Raymond]

I've had time now for the past 48 hours to sink in.

My initial excitement was about the cash. Yes, it's great to turn $60K into $100K. But the gain is taxable and it's not really going to change my life.

What will change my life is having hope for the future. Tesla is now full on into disruption mode. The Tesla Effect is officially a thing, and it's going to sweep away coal, oil and eventually gas. When people see that greenhouse emissions can and do go down, they will see that this magic needs to be repeated everywhere - concrete, steel, fertiliser etc.

Hope has returned. For that, I thank Elon Musk and all at Tesla. Fantastic work.