2017 Investor Roundtable:General Discussion

[racer26]

This fits into something I've been wondering. How will Tesla get all these Model 3 vehicles shipped fast enough to avoid a perpetual traffic jam.

This building is being placed where the rail car loading area was (thanks Curt). Assuming plant layout was mostly optimized, this would be the wrong end for incoming raw goods. So I'm going to guess this is the buffer system where Model 3 will go before shipment. So how many cars can they fit in it (federal tax credit maximization)?

It would be nice to know if the rail tracks were pulled, or just covered with gravel for protection/ ease of construction. If the large single story area has room to loop the rail cars, loading could be faster than splitting the rail-cars into 6 lanes and then reconnecting.

Also, will Elon go more 3-D with a Vert-A-Pac style rail car?

edit: credit to Curt on the rail line location/ change
2nd edit: plural, not possessive...

Perhaps that structure has some cool automated way for the factory to load completed 3's into it, and then it automatically puts them into the rail cars to go on their way?

I grew up a few miles from GM's Oshawa Operations, and they have humongous parking lots where completed vehicles are staged, and then an army of workers who drive new cars off the line, check them out, and put them in the parking lot, and then another army of workers to load them into the rail cars. Maybe this is a more efficient way to accomplish essentially the same thing?

 

[racer26]

Tesla is cutting out the middle man. In contract, GM has ~3000 dealerships, and each dealer can make ~$1M per year pre-tax profit according to NADA data in 2013, so GM is giving away $3B a year to the dealers.

Tesla owns their own stores, IIRC they have something like 300-400 stores? If each one is as profitable as a GM dealership, we're looking at $300-400M of profit that Tesla kept for itself, with a modest PE of 20, this translates to $6-8B, or 10-15% of the market cap. I never hear the talking heads on CNBC talking about that.

Thank you for citing sources for the numbers you use! More people need to do this more religiously. It makes our arguments stronger and less refutable.

 

[Intl Professor]

(The actual competitive threat to Tesla is new startup car companies, such as BYD.)

Or possibly Baidu, now.

 

[mongo]

Perhaps that structure has some cool automated way for the factory to load completed 3's into it, and then it automatically puts them into the rail cars to go on their way?

I grew up a few miles from GM's Oshawa Operations, and they have humongous parking lots where completed vehicles are staged, and then an army of workers who drive new cars off the line, check them out, and put them in the parking lot, and then another army of workers to load them into the rail cars. Maybe this is a more efficient way to accomplish essentially the same thing?

Now imagine, you have cars that can drive themselves into the Tesla Tower (oh yeah, I said it ) and then out again when summoned to the train cars. What height is the ceiling? Is there a floor, or just track width supports?

edit: typo

 

[larmor]

Tesla is cutting out the middle man. In contract, GM has ~3000 dealerships, and each dealer can make ~$1M per year pre-tax profit according to NADA data in 2013, so GM is giving away $3B a year to the dealers.

Tesla owns their own stores, IIRC they have something like 300-400 stores? If each one is as profitable as a GM dealership, we're looking at $300-400M of profit that Tesla kept for itself, with a modest PE of 20, this translates to $6-8B, or 10-15% of the market cap. I never hear the talking heads on CNBC talking about that.

I would presume that the big automakers are looking on with interest regarding sell direct. Most of the resistance that tesla faces are from Dealers. Isn't cadillac's per month fee for a car-lease a type of sell direct? What about the Lincoln, bmw, and cadillac showcase galleries in the malls?

 

[MXWing]

I am genuinely short 350 shares at an average price of $351.

Was a paper gain of $11,000. Now $8,400.

Will it go up, or will it go down?

Based on your expert analysis, the correct move is to short more to capture the 11,000/8,400 spread. As the stock goes keeps dropping, you capture all that difference.

Dollar cost averaging. Very fundamental and sound investment theorem.

 

[ValueAnalyst]

Was a paper gain of $11,000. Now $8,400.

Will it go up, or will it go down?

Based on your expert analysis, the correct move is to short more to capture the 11,000/8,400 spread. As the stock goes keeps dropping, you capture all that difference.

Dollar cost averaging. Very fundamental and sound investment theorem.

As funny as these posts are, I would encourage to not drop to their level. I know, it's not easy, but take the moral high ground, and you'll be happier.

 

[D-egg-O]

The problem with Ford buying Lucid as I see it. Lucid wont sell for just the value of the tech and ford actually doesnt want to build Lucid cars. They have high margin, high priced cars already and wont want to displace them. What they need is a Model 3 competitor before their lunch gets ate. I just dont see Lucid selling out like that, though I could be wrong. Now Faraday is so underwater and its main backers are hurting enough to sell for pennies on the dollar.

But yeah, like Elon said, building cars is not fun and its really hard to manufacture them. Specifically, he stated that they only need 50-60 people and 6 months to build a prototype and they need 10,000 people and 3 years to actually manufacture it and Tesla has cut that time almost in half. The average is more like 5-6 years.

I look back at the history of Tesla and they really got lucky with the financial crisis when you think of it. They picked the "best" time to start a new car program because they basically stole the Fremont factory from the struggling auto business. They also benefited on the government loan programs (because of the struggling auto industry). Though it (2008/2009) was almost the breaking point of Tesla, it was also their saving grace.

 

[ValueAnalyst]

Tesla is cutting out the middle man. In contract, GM has ~3000 dealerships, and each dealer can make ~$1M per year pre-tax profit according to NADA data in 2013, so GM is giving away $3B a year to the dealers.

Tesla owns their own stores, IIRC they have something like 300-400 stores? If each one is as profitable as a GM dealership, we're looking at $300-400M of profit that Tesla kept for itself, with a modest PE of 20, this translates to $6-8B, or 10-15% of the market cap. I never hear the talking heads on CNBC talking about that.

Interesting thought process. I agree there is some margin benefit to going direct to consumer, but I think the math should also incorporate the downside of not having a dealership network (i.e. lower brand awareness and service than customers would have otherwise).

Having said that, however, Tesla does not have a demand problem, so going direct to consumer is definitely the right strategy for now, among many other reasons about which TMC members are already well aware.

 

[RobStark]

VW is already saying there will be massive battery shortages if 40 gigafactories are not built, just for them (VW r&d chief sees need for more battery production capacity).

Wow, this is a big misreading of what VW said. Very good overall post but what VW said was that if all legacy automakers get to 25% BEV production the world will need 40x 35 GWh Gigafactories.

Not that VW will need 1400 GWh of batteries for themselves by 2025.

 

[Curt Renz]

Perhaps that structure has some cool automated way for the factory to load completed 3's into it, and then it automatically puts them into the rail cars to go on their way?

I grew up a few miles from GM's Oshawa Operations, and they have humongous parking lots where completed vehicles are staged, and then an army of workers who drive new cars off the line, check them out, and put them in the parking lot, and then another army of workers to load them into the rail cars. Maybe this is a more efficient way to accomplish essentially the same thing?

Now imagine, you have cars that can drive themselves into the Tesla Tower (oh yeah, I said it ) and then out again when summoned to the train cars...

Bingo! Of course! Even if the autonomous driving software would not immediately be activated for a buyer, it can be temporarily implemented to the degree needed for shipment preparation on factory grounds. This could be another fine example of how Tesla is in the process of completely disrupting the automobile industry. Thanks for the inputs from both of you.

 

[RobStark]

Didn't bob lutz say the bolt would seriously hurt Tesla.
It now seems to seriously hurt GM .
Got to make that guy accountable CNBC.

More laughable is our friend Anton Wahlman of Seeking Alpha.

How The Chevrolet Bolt Strangled Tesla's U.S. Growth Rate Down To Only 6% - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

 

[RobStark]

The problem with Ford buying Lucid as I see it. Lucid wont sell for just the value of the tech and ford actually doesnt want to build Lucid cars. They have high margin, high priced cars already and wont want to displace them. What they need is a Model 3 competitor before their lunch gets ate.

Ford has many more sales in Model 3 price range than in the Lucid Air price range.

Ford only has Lincoln Continental in the $45k-$77k price range. Ford doesn't have a sedan in the $60k-$120k price range. They have trucks up to $90k and limited edition sports cars over $100k.

So far in 2017 Lincoln has sold 6246 Continentals in the USA plus 309 in Canada.

Plus an unknown moderate amount in China plus even more modest number in Mexico.

Rumor is Lucid is also working on a Model 3 competitor.

Plus Ford would instantly hire ~300 Silicon Valley engineers with Lucid takeover. Hire not buy but it would be a start.

 

[GoTslaGo]

I'm up $11k so far - though that's just because there were so many people short when I first tried to short TSLA (at $225) that Schwab wanted a minimum $50,000 position and was going to charge me 3% interest on top of that. I tried again at $300, same story. They let me short 50 shares at $382 and I've shorted six more times since then (all 50 shares at a time). Schwab let me short a measly 50 shares without paying 3% interest on the borrow (I forgo the 0.3% interest they pay me on my cash for the $110k I'm short) because six million shares had been covered between January 1st and today. So, yeah, I've been horribly wrong about TSLA in the past and I'm currently right and could easily be wrong again in the near future. Everyone long was right for a long time, is currently wrong and could easily be right agin in the future.

The big trouble with being short is that every day you're wrong, your problem gets worse. Whereas when you're long and wrong, every day your problem gets smaller. I am keenly aware of that dichotomy. Short sellers help longs in the short term (because we allow you to buy shares at a lower price) and whether we're right or wrong, we help you in the long term (covering drives up the price and if Elon Musk gets caught in bed with a dead girl [Edwin Edwards reference, assuming him getting caught in bed with a live boy wouldn't hurt TSLA] shorts will be the only people buying which will support the share price and help you get out).

PS: thank you

I do appreciate your post, especially this one. It gives me more insight into how the brokerages work regarding shorts. So when you first tried to short (presumably last year when prices were at 225), there was so much demand that you had to pony up 50k and pay huge interest to maintain your position. So all the big boys were playing the short position and thus the brokerages were raking it in, and not letting retail investors in on the action. We knew that here, by tracking the short interest rates.

Suddenly you CAN short. Short interest went down from June to July. Sounds like the brokerages are seeing less demand for shorting from the big boys. I understand contrarian market plays, but to me this implies that the big boys have taken their profits, and are NOT getting back in... especially since Schwab is giving you (a retail investor) a deal.

I do not agree with your thesis for TSLA, but you are free to short what you will. Just be careful when the big boys start moving in the opposite direction of you, especially with borrowed money (either short or margin long). The danger of shorting is you have to be on top of the market. Being a cash-secured long, I can forget about things for a while and barring a major calamity, be ok. I do not short because I would have to pay more attention to the day to day than I really care to, or have time to.

Be careful out there.

 

[RobStark]

I would presume that the big automakers are looking on with interest regarding sell direct. Most of the resistance that tesla faces are from Dealers. Isn't cadillac's per month fee for a car-lease a type of sell direct? What about the Lincoln, bmw, and cadillac showcase galleries in the malls?

You can't buy from showcase galleries in malls nor lease direct from GM through Book by Cadillac.

They direct you to a local dealer. I stepped into a Lincoln gallery at a local mall a few years ago. I talked to a sales rep from a local dealer.

 

[Reciprocity]

Ford has many more sales in Model 3 price range than in the Lucid Air price range.

Ford only has Lincoln Continental in the $45k-$77k price range. Ford doesn't have a sedan in the $60k-$120k price range. They have trucks up to $90k and limited edition sports cars over $100k.

So far in 2017 Lincoln has sold 6246 Continentals in the USA plus 309 in Canada.

Plus an unknown moderate amount in China plus even more modest number in Mexico.

Rumor is Lucid is also working on a Model 3 competitor.

Plus Ford would instantly hire ~300 Silicon Valley engineers with Lucid takeover. Hire not buy but it would be a start.

I agree that the benefits to Ford would be great, but I dont think Lucid would necessarily sell based on what Ford needs. I dont think Ford is going to make the Lucid Air and call it the Ford Air, which would give more value to what Lucid has accomplished to date. I know Lucid has said the car will only be like 52,500, there are a lot more Fords in that range, though I get your point. I am also not buying that price as Tesla said the same thing for the S40. Could it be possible that Ford just invests and partners with Lucid? Cash for Lucid's tech, but allows Lucid to manufacture their cars with help from Ford? I think that would actually be a win, win and a win for the market as more choices are always good. I could also see Lucid partnering with Tesla on the charging network. I am not one that thinks competition is bad, I think there is more then enough market share. I just dont see traditional automakers surviving long enough to put up a real fight, with the exception of some out-lyres that have made some progress like Nissan and VW and maybe Hyundai. I see a lot of consolidation in about 5-10 years in both Oil and Auto manufactures.

I know Ford doesnt own RangeRover or Jag anymore but do they have any other Lux brands besides Lincoln?

 

[hobbes]

Thats awesome, but much cheaper to have people park away from the facility and have regular shuttle buses from the facility.

You´re talking about employee parking, right? I believe the OP meant a store for newly produced vehicles before they´re shipped.

 

[racer26]

Bingo! Of course! Even if the autonomous driving software would not immediately be activated for a buyer, it can be temporarily implemented to the degree needed for shipment preparation on factory grounds. This could be another fine example of how Tesla is in the process of completely disrupting the automobile industry. Thanks for the inputs from both of you.

The other part I forgot to mention is that the yard has its own rail spur line that crosses some of the area roads, and loading the trains is a ridiculously arduous operation, because loading those rail cars is done via the end of the car, and that means you have to disassemble the whole train in the yard, load all the cars into the railcars, and then reassemble the train. In doing this, the train spends a non-trivial amount of time blocking the city streets in the area.

Perhaps a purpose built machine could take an assembled train of railcars, peel one rail car off it, automatically load it with cars, and then reassemble the train on the output side? Sounds like a cool idea, though I have no idea if technically feasible, never mind economically viable.

 

[RobStark]

I agree that the benefits to Ford would be great, but I dont think Lucid would necessarily sell based on what Ford needs. I dont think Ford is going to make the Lucid Air and call it the Ford Air, which would give more value to what Lucid has accomplished to date. I know Lucid has said the car will only be like 52,500, there are a lot more Fords in that range, though I get your point. I am also not buying that price as Tesla said the same thing for the S40. Could it be possible that Ford just invests and partners with Lucid? Cash for Lucid's tech, but allows Lucid to manufacture their cars with help from Ford? I think that would actually be a win, win and a win for the market as more choices are always good. I could also see Lucid partnering with Tesla on the charging network. I am not one that thinks competition is bad, I think there is more then enough market share. I just dont see traditional automakers surviving long enough to put up a real fight, with the exception of some out-lyres that have made some progress like Nissan and VW and maybe Hyundai. I see a lot of consolidation in about 5-10 years in both Oil and Auto manufactures.

I know Ford doesnt own RangeRover or Jag anymore but do they have any other Lux brands besides Lincoln?

They had a fire sale during the Great Recession and have no other brands besides Ford and Lincoln. They sold Land Rover Range Rover,Jaguar, Aston Martin and Volvo.

Lucid's projected base price is $60k for the Air before incentives for the 260 mile range 400 HP version. And well over $100k for the 400 mile range 1000 hp with Private Jet rear seat version.

There is zero chance Air would be sold as a Ford. Either Lincoln(which exist in China but not Europe) or Lucid. Or some entirely new brand. I don't see the benefit of Ford giving Lucid cash but not buying them. Ford should want those ~300 Silicon Valley engineers and their work on a Model 3 competitor.

In Silicon Valley the Lucid Air is known as the revenge car. Peter Rawlinson was the Chief Engineer for the 2012 Model S. Just before the Model S launch Elon wanted to fire Peter but Tesla couldn't afford a severance package so Elon demanded Peter's resignation. Like Elon thought he was POTUS LOL. Well, eventually Peter left. On very bad terms. So doubtful Lucid and Tesla cooperate on Supercharger Network.

 

[Starno]

2018 is probably going to be the most important year for Tesla.