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2017 Investor Roundtable:General Discussion

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Tesla had said 6 billion miles are needed before it can achieve FSD and pass it through regulators, but I mistakenly excluded AP miles that have been accumulated between October 2014 and October 2016 in my estimate, which led me to predict Tesla would not accumulate 6 billion miles until end-2018.

Tesla likely has already accumulated 2+ billion AP/EAD miles and 1+ billion FSD shadow miles, putting it on track to achieve 6 billion miles by end-2017, just in time for the demo ride from LA to NY "with no controls touched throughout the trip... even if you change the route dynamically."

I expect CA and NY to be the first states to pass the necessary laws for Tesla Network to launch with Level 4 autonomy in geofenced metropoles by end-2018. I expect FSD regulations to be in place in majority of states, and a handful of other countries, by end-2019. That's two years after the LA to NY demo ride, and two-and-a-half years after Elon received a bipartisan standing ovation from the US governors.

It's worth repeating that I do not expect revenue from Tesla Network to comprise more than 5% of Tesla's companywide revenue until 4Q22 due to the S-shaped market adoption rate of new tech. Having said that, however, no other player is on track to achieve FSD before 2021; therefore, I expect FSD to be a competitive advantage for Tesla and favorably affect its unit sales and margins for 2-3 years.

No one, not even Tesla really knows how many miles because not all miles are the same. EAP can run in all HW2 cars in ghost mode so it doesn't have to be engaged to get the types of data they need. It's Certainly better when EAP is engaged because you get a unique data point which is disengagements and specifically what happened around that event. The data from the car that is really useful is the image data and point cloud created by the radar + vision combo. Machine learning requires a quantum fu**toone of image data to be able to identify objects and know how they act/react in the environment. Street signs don't move but bicycles do. The more variations of all those objects the better the system will be at knowing what they are and how they are likely to move. Machine learning is not a static tech either, as it gets better the amount of data you needs becomes less and less. Also, you could have to much data and not have the power to process the data fast enough. More is not always better, better is better. If your algo can see 100,000 stop signs and identify them at 99% then your a billion times better then the comp. Today the best algo needs to see millions and millions to identify 85% of something. Efficiently being able to process billions of images gives you a huge advantage. I think Tesla biggest advantage is that they definitely have the data and with the right people working on the problem, I hope they have the processing efficiency as well. It is certainly something that will improve alot as they go because algos get better and machines get faster. If it was 6B miles last year it could be 3B by now and only 1B next year. No one knows when they really started in ernest and no one knows how many miles, it's really a silly metric to use to estimate when they will have a good enough system, as defined as 10x better then humans.

As important as teaching the machine is, it's almost as important to be able to validate what the Nadine knows and maybe they have a better idea there how many miles they need to show the system is safe and find edge cases where the system fails. You run you're solution against this massive data and determine how many times your car would crash and feed the failures back into the system. How many miles do you need to have a good sampling of every situation? Trick question because the situations are infinite, but what they can show is that in 6B miles, the human had 1000 crashes, then machine had only 2. That would be statically relevant to show regulators the advantages. No doubt enough data to have the system act as a guardian angel and gather more data to show regulators. The guardian angel would intervene in situations where an accidental is imminent, like running a stop sign or light. Show a regulator 1000 of these situations and you will have regulators stumbling over themselves to approve it.
 
Exactly. A company like VW, that can permit/encourage a massive emissions fraud, is to be expected to pull a feature/cost prediction worth nothing out of their a**. VA should not use such a bogus marketing prediction as support to back into a conclusion that in a few more years Model 3 prices will be lowered substantially. We all know Tesla's mission. As long as other car companies are unable to ramp their EV sales up as fast as Tesla, advancing the mission requires that Tesla maximize the profits it can generate from car sales. These profits then will mostly be plowed back into building 3rd and 4th rounds of GigaFactories to push Tesla's production into the millions per year.
Come 2025 and beyond, if other manufacturers still can't get EV sales to 50% or more of new cars, Elon will build 20 or 30 GFs to support building tens of millions of EVs. That is entirely consistent with his way of thinking. SpaceX is fairly far along in developing engines, fuel tanks, etc. for BFR, before Falcon 9 Heavy has even had its first test launch!

My primary reason for expecting Model 3 price to decline is not related to VW's marketing.

It is related to Tesla's mission statement (which I interpret as prioritizing market share) and Elon & Team's obsession with gutting costs.

OHOH, I'm not sure why everyone is doubting VW can ramp up to 2-3 million plug-in cars annual production rate by 2025. 8+ years of lead time for ~50-100 GWh depending on what portion will be all-electric... If they came out and said "10 million annual cars by 2025," I would agree with you, but with their 10+ brands, they've set the bar too low to severely doubt their plans.
 
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Bertel Schmitt is trying to push this story as a negative, but it's fantastically positive:

Tesla Denies Reports Of Model 3 Display Shortage

According to JL Warren’s research, only some 730 central consoles were shipped to Tesla in June. JL Warren expects that when the yield troubles are solved, “20-25K screens will be shipped via air to California in Q3 (<2K,in July,~7K in August, and ~14K in September) and 15K per month throughout Q4.“ That would limit total Model 3 production to 70,000 in 2017, which would be well within Elon Musk’s tweeted guidance.

"Only" 730 Model 3 displays shipped in June.
<2,000 in July
~7,000 in August
~14,000 in September
15k a month throughout Q4!!!

Wow!

If you take these numbers, delay by a month and cut to 50%, we're looking at:

<1,000 in August
~3,500 in September
~7,000 in October
... then ramp really goes
~9,000 in November
~15,000 in December, exiting at near 5k a week

Would be near a 35,000 unit volume in 2017. That would be fantastic. Anywhere from 30k to 70k...
 
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Tesla had said 6 billion miles are needed before it can achieve FSD and pass it through regulators, but I mistakenly excluded AP miles that have been accumulated between October 2014 and October 2016 in my estimate, which led me to predict Tesla would not accumulate 6 billion miles until end-2018.
Even if Tesla tried to use shadow mode and pre AP2 miles in order to gain regulatory approval there is absolutely no way that regulators would buy off on that plan.
 
My primary reason for expecting Model 3 price to decline is not related to VW's marketing. It is related to Tesla's mission statement (which I interpret as prioritizing market share) and Elon & Team's obsession with gutting costs.

Tesla's mission is to accelerate the world's transition to sustainable energy. The mission statement doesn't mention what Tesla's market share goals may be. Not maximizing profits to then reinvest in more GFs - if other auto makers don't do their share - doesn't maximize the acceleration of the transition. If manufacturers in China (and then India) are successful in making/selling very low cost EVs, Tesla will gladly let them handle that low gross margin segment. If M3, then MY, then Tesla pickup, etc. are all as compelling as we think they will be, Tesla will have its hands very full until 2025 or later meeting that huge demand. One of the biggest challenges to meeting that huge demand as fast as possible will be internally funding the stream of new GFs that will be needed. It's understood that if M3 after 2018 has MS/MX GM level, Tesla will have plenty of cash to fund building more and more factories. We will probably see some battery production cost reductions passed along to customers in the form of higher range, HUD displays, reduced cost for FSD, etc.
 
It's worth repeating that I do not expect revenue from Tesla Network to comprise more than 5% of Tesla's companywide revenue until 4Q22 due to the S-shaped market adoption rate of new tech. Having said that, however, no other player is on track to achieve FSD before 2021; therefore, I expect FSD to be a competitive advantage for Tesla and favorably affect its unit sales and margins for 2-3 years.
You can compare your predictions to Tony Seba, who expects Automated Transportation as a Service to begin in 2021.

His whole report is well worth the read for every Tesla investor.


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Bertel Schmitt is trying to push this story as a negative, but it's fantastically positive:

Tesla Denies Reports Of Model 3 Display Shortage

Would be near a 35,000 unit volume in 2017. That would be fantastic.
Or it's completely irrelevant. Completely false information.

Asked to comment on the display units, a Tesla spokesman called the JL Warren report “absolutely false.” According to Tesla, “there is no issue with the supply of any aspect of our screens for Model 3.”

Tesla must have had the Warren research note before I had it. Tesla’s reply says that “the report mentions Japan Display as the maker of the LCD screens, despite the fact that they are not even a supplier of ours.” I did not mention Japan Display when I asked Tesla. TPK and Lens Technology remain undenied by Tesla.
 
Even if Tesla tried to use shadow mode and pre AP2 miles in order to gain regulatory approval there is absolutely no way that regulators would buy off on that plan.

"there is absolutely no way"

Could you point me to a law/precedent where regulators flat out dismiss shadow, or even simulation, data?

Are you aware of any regulator that said that such data would "absolutely" be unacceptable?

Has Tesla management, or any company management, predicted that shadow mode data would not in any way be used?

Your words indicate absolute confidence in what you said. Do you have any evidence to back it up?
 
OHOH, I'm not sure why everyone is doubting VW can ramp up to 2-3 million plug-in cars annual production rate by 2025. 8+ years of lead time
\rant on
I'm not trying to be argumentative, but present a different, non-linear point of view, since i kinda have a POV from the late 1960's (about 50 year POV regarding EV's)

8 years in the future is 2025 more or less..
8 years "real time" in the past is 2009 more or less,
8 years in the past, non linear EV time is more like the 1974, 36v ELcar on the Fiat 500 chassis, or the 48v, electromechanical relay with hand sized heat resistors voltage controls in the late 1970's
(drove the ElCar and owned a 48v Bob Beaumont Citicar)

I'm saying I have literally been stunned and amazed at the speed of the "micro planetary singularity" we are existing, complacently, in,
We fail to realize the speed it is accelerating.
For a possible dim glimpse, read Vernor Vinge's "marooned in realtime" consider the progress in the last 10-15 years, think how we are communicating, (my first phone call was "hello operator, i want to call..., now i can see "real time, time delayed from Mars"
Around 2000 was when i stopped living in the future when it roared past at a red shift of >1.1+ and am now this "oldster" is trying desperately to just keep up

\rant off
 
Or it's completely irrelevant. Completely false information.

Asked to comment on the display units, a Tesla spokesman called the JL Warren report “absolutely false.” According to Tesla, “there is no issue with the supply of any aspect of our screens for Model 3.”

Tesla must have had the Warren research note before I had it. Tesla’s reply says that “the report mentions Japan Display as the maker of the LCD screens, despite the fact that they are not even a supplier of ours.” I did not mention Japan Display when I asked Tesla. TPK and Lens Technology remain undenied by Tesla.

Well... it is false in the sense that these numbers are not a production problem. They're just part of the ramp. It's not a negative but absolutely a positive. But TPK and Lens Technology parts #'s are true, then we have another read on the ordered ramp level. It may very well be that Japan Display is not a direct supplier.
 
Tesla had said 6 billion miles are needed before it can achieve FSD and pass it through regulators, but I mistakenly excluded AP miles that have been accumulated between October 2014 and October 2016 in my estimate, which led me to predict Tesla would not accumulate 6 billion miles until end-2018.

Tesla likely has already accumulated 2+ billion AP/EAD miles and 1+ billion FSD shadow miles, putting it on track to achieve 6 billion miles by end-2017, just in time for the demo ride from LA to NY "with no controls touched throughout the trip... even if you change the route dynamically."

I expect CA and NY to be the first states to pass the necessary laws for Tesla Network to launch with Level 4 autonomy in geofenced metropoles by end-2018. I expect FSD regulations to be in place in majority of states, and a handful of other countries, by end-2019. That's two years after the LA to NY demo ride, and two-and-a-half years after Elon received a bipartisan standing ovation from the US governors.

It's worth repeating that I do not expect revenue from Tesla Network to comprise more than 5% of Tesla's companywide revenue until 4Q22 due to the S-shaped market adoption rate of new tech. Having said that, however, no other player is on track to achieve FSD before 2021; therefore, I expect FSD to be a competitive advantage for Tesla and favorably affect its unit sales and margins for 2-3 years.
As I understand it, Tesla's autopilot is currently not capable of self driving. It requires constant monitoring and intervention. In its current state, it has trouble in many situations.

The 6,000,000,000 miles clock will not start until the car requires no human intervention (or at least constant monitoring i.e. level two) . Once the software reaches the state, they will need 6,000,000,000 miles over which time they can show the vehicle was safer than human drivers.

In other words, they need 6,000,000,000 miles at whichever level (three, four or five) of capability whatever they are aiming for. They are still very much only at level two.
 
My only concern toward Tesla is when the next economic recession will hit. Nothing else. I just hope they will have enough cash to finance their operation for at least 18 months, when demand will relatively be low.

In a recession is when consumers wisen-up to operating costs. EV's should continue to take market share from ICE's in that situation, so Tesla should continue to be production constrained for awhile. Not concerned.

Edit: TSLA stock will probably be hammered though. :(
 
In a recession is when consumers wisen-up to operating costs. EV's should continue to take market share from ICE's in that situation, so Tesla should continue to be production constrained for awhile. Not concerned.

Edit: TSLA stock will probably be hammered though. :(

Yes I hope so :)

Well a solid Tesla but an hammered TSLA is one of the best situation I could dream of.

In this case I just hope I will have enough cash for at least 18 months to buy buy buy :D:D:p
 
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