2017 Investor Roundtable:General Discussion

[LoL Rick]

If Tesla charges ~$500 per annual service visit how does Tesla lose money on Tesla service when just about every Service Center is backlogged. I know there is warranty work too. Presumably, the percentage of warranty work goes down as time goes on and the percentage of work being paid by the customer goes up as Tesla gains more manufacturing experience.

Maintenance Plans

And Obviously, Tesla Store margins are included included in car's overall margin.

And don't Tesla stores make mint selling Tesla branded clothing and accessories?

Last question first: No. All the shirts/hats/jackets have been removed from the stores and must now be ordered online.

Then there is paid work for cars that are now out of warranty, for which Tesla has a monopoly. A personal pet peeve. At $550 to clean rust off the axle splines and $2700 to replace a touchscreen, there seems to be plenty of margin built in.

 

[RobStark]

So they want to use the network, so that will protect the price gouging though they could still price gouge in areas where they are not selling cars. Not that I car as a Tesla owner, I just thought they would set a price range or something to keep them from gaming the system. Say 20% over cost as a maximum and never to exceed some specific amount per KWh.

The EPA,CARB,and Courts can't micromange Electrify America down to the cent and have it become a workable solution.

But essentially VW is a convicted felon on parole. They really don't want to piss off the EPA,CARB, and the Judge overseeing Electrify America by doing something egregiously unethical.

 

[GoTslaGo]

VW is allowed to profit from Electrify America. They are not allowed to discriminate against non-VW group vehicles. Presumably they will all be CCS and CHAdeMO.

For the life of me I can't figure what why charging stations don't just use Credit Cards. Why have to go through App if I don't want too And stupid RFID cards. Just charge my CC and go.

My guess is they would charge between what Supercharger's charge and what private networks charge.

SC in CA will be 20 cents per kW. Private networks is usually 49 cents per kW. The basic rate in Los Angeles is 11 cents per kW.

Credit card skimmers? Many of these are sitting there by themselves without anyone watching. Problems? Call the number, they try to fix it remotely.

 

[RobStark]

$2700 to replace a touchscreen, there seems to be plenty of margin built in.

Back in 2012 that was $4200 to replace the touchscreen.

Well that concern has abated a bit.

 

[RobStark]

Credit card skimmers? Many of these are sitting there by themselves without anyone watching. Problems? Call the number, they try to fix it remotely.

Can't sophisticated thieves steal info off your phone too?

I mean I can buy a Coke off a vending machine with a CC. I should be able to buy a charge too.

 

[howardoark]

I guess I need to take back my, "What are you going to do if the TM3 reviews are, 'meh' nice car but you can get an equally nice Bolt today for less money." since Motor Trend liked the Bolt more than the Model S60.

Is that capability worth the $30,000 premium over the Bolt? Well, if you have to travel long distances regularly, then possibly. But if simple fuel-free driving is what you’re after, the Bolt’s stellar real-world range can cover a week’s worth of commuting plus errands for the average American without charging. Its 238 miles of range also easily enable intercity—but not interstate—travel. Toss the Bolt’s puppy-dog driving dynamics into the mix with its stellar efficiency and family-friendly packaging, and the choice becomes pretty clear: the Chevrolet Bolt EV wins. More than any EV that’s come before it, the Bolt makes emissions-free, environmentally friendly transportation a realistic proposition for millions of Americans. It has made the current crop of pricey, short-range electric cars from BMW, Nissan, and others utterly irrelevant.

http://www.motortrend.com/cars/chev...7-chevrolet-bolt-ev-vs-2016-tesla-model-s-60/

 

[GoTslaGo]

Can't sophisticated thieves steal info off your phone too?

I mean I can buy a Coke off a vending machine with a CC. I should be able to buy a charge too.

Don't disagree. Not sure why Blink network, etc... don't take credit cards and require you to use RFIDs or have a membership and stuff. Maybe with the new chip technology it may become a reality. Does it make it harder to use skimmers?

Then again, maybe we're just getting old. Apparently everyone is buying things with their phones these days...?

 

[Yggdrasill]

I guess I need to take back my, "What are you going to do if the TM3 reviews are, 'meh' nice car but you can get an equally nice Bolt today for less money." since Motor Trend liked the Bolt more than the Model S60.

Is that capability worth the $30,000 premium over the Bolt? Well, if you have to travel long distances regularly, then possibly. But if simple fuel-free driving is what you’re after, the Bolt’s stellar real-world range can cover a week’s worth of commuting plus errands for the average American without charging. Its 238 miles of range also easily enable intercity—but not interstate—travel. Toss the Bolt’s puppy-dog driving dynamics into the mix with its stellar efficiency and family-friendly packaging, and the choice becomes pretty clear: the Chevrolet Bolt EV wins. More than any EV that’s come before it, the Bolt makes emissions-free, environmentally friendly transportation a realistic proposition for millions of Americans. It has made the current crop of pricey, short-range electric cars from BMW, Nissan, and others utterly irrelevant.

2017 Chevrolet Bolt EV vs. 2016 Tesla Model S 60 Comparison

The Model 3 will be cheaper, faster, have a better interior, as good or better range, be vastly better for long range driving, look better, have a lot better tech, option for AWD, tow bar, etc. I said it before, and I can repeat myself, the Bolt has one advantage over the Model 3, and that is the hatch. Other than that, the Model 3 looks like it will win on every metric.

That makes it very understandable the Bolt isn't selling - everyone is waiting for the Model 3.

 

[RobStark]

Then again, maybe we're just getting old. Apparently everyone is buying things with their phones these days...?

I was waiting inline the other day at Starbucks.

A girl walks in, walks straight to the pickup counter,takes a drink and leaves.

I was like WTF. Apparently, she ordered and paid for her drink with her phone. LOL.

 

[GoTslaGo]

I was waiting inline the other day at Starbucks.

A girl walks in, walks straight the pickup counter,takes a drink and leaves.

I was like WTF. Apparently, she ordered and paid for her drink with her phone. LOL.

Yep. Getting old...

 

[Fallenone]

If Tesla charges ~$500 per annual service visit how does Tesla lose money on Tesla service when just about every Service Center is backlogged. I know there is warranty work too. Presumably, the percentage of warranty work goes down as time goes on and the percentage of work being paid by the customer goes up as Tesla gains more manufacturing experience.

Maintenance Plans

And Obviously, Tesla Store margins are included included in car's overall margin.

And don't Tesla stores make mint selling Tesla branded clothing and accessories?

First of all, I don't think we should separate the stores and service centers here. Stores serves as sales and part of marketing while service is just service. Put these two together you will have sort of the equivalent of dealership. So I think they should be discussed together, if that's the purpose.

On the service side, it is Tesla who has always been saying they don't aim to make money on service. And based on previous earning reports, they have been doing exactly that, around 0% gross margin on services. It doesn't matter how much they charge for the annual service or how backlogged the centers are, at the end of the day, they are not making money from the service as the records indicated. Note that the "service" line usually includes other parts of the business that do earn positive gross margin such as selling drivetrain in the early days, TE when PW1 came out. So the pure service part has been making negative margins most of the time. Also the warranty cost is baked into the COGS (latest number is around $3k per car IIRC) so I think it should be left out from here.

And if Tesla doesn't change their goal of not making profit from service, more cars/service center won't help. I don't see they changing this business model yet.

For the stores, certainly their cost are included in the overall (net) margin. And the result is not that great as net margin is negative. Tesla's operating efficiency has been terrible because they don't have dealers taking the cost. It's a path they have to walk and pay for. I do hope this changes with Model 3.

 

[Reciprocity]

Battery supply may not be a constraint - Chart: China Leading the Charge for Lithium-Ion Megafactories

Musk has already said that he needs to build (and have someone else pay for - hence is meeting with the governors) more GFs since the current one can't make enough batteries for more than ~400,000 cars a year (34 GWh/75kWh minus something for the battery storage people). So this graphic probably understates the supply that will be available in 2020 if (big if) there is a demand for millions of BEVs.

I admire what Musk has accomplished. I admire what the VisiCalc people did. I have less admiration for the Lotus123 people since they essentially just stole VisiCalc's idea and put them out of business. And of course, I have no admiration whatsoever for Excel, except that's what I use every day. Being the first mover is frequently not helpful, specially if you run out of money. If Apple buys one of the BEV companies and says they're going to put $20 billion into it, that's a real problem for TSLA. And it would hardly be a black swan event since Apple's car project is the worst kept secret in corporate history.

Oh, and I just noticed the upload an Image/File button (I am new here, but not a troll, I swear; troll's never post on days when the stock they're trolling has a big up day), The screen shot below is my history of shorting TSLA. I own no car or oil companies, though I probably have some of both in mutual funds in retirement plans and I'm long Kinder Morgan (though that Tony Soebel video is making me rethink that).

I put in a stop loss on TSLA today at $345. So unless it gaps up $20 on an open one morning, I'm probably not going to lose money on the investment.

And one final thought - I get the feeling that some of the posters on this board would burn me at the stake as a heretic if they could. And it isn't a good sign that they start there posts, "I stopped reading as soon as he said he was short." There is a lot of money in Tesla from people with closed minds. That isn't necessarily the crowd you want to run with.

Lol visicalc and lotus123. You are old as dirt, like me. At least you figured out how to get that screenshot loaded and you at least proved you practice what you preach, that's much more then most of the people who troll this board. Now if we can just get you to drive a Tesla, then I think we will have made some real progress. You really shouldnt be investing in tech companies if you do not understand at least the basics of the tech. If you have to understand how they are different and why one is better then the other and why one is the future and one is the past. Like Visicalc and Lotus123 were awesome at one point and now they are dust in the wind.

I would hate for you to loose money and its probably not a bad idea to occasionally have a short position and occasionally have a long position if for no other reason then the stock is volatile, but I am sure there are stocks that you are long and this really should be one.

As far as Chinese battery factories, I think others have already responded, but those cells are not leaving China. They have millions of 2 and 4 wheel vehicles that are battery operated and they also have a government mandate of 8% EV by 2020. That is an enormous amount of cars, roughly 2M a year. Even with smallish battery packs, that's 100GWh/Y just for the cars and probably another 50GWh for the other types of vehicles. I believe that 8% increases over time as well. China will not be exporting cells for a decade or more and will more then likely being importing Tesla and/or Tesla's to meet their goals.

 

[RobStark]

And if Tesla doesn't change their goal of not making profit from service, more cars/service center won't help. I don't see they changing this business model yet.

.

It most certainly does change things if they have 1 annual service per day at a service center or 100. And get $500 in revenue or $50k in revenue per day.

Sometimes their targets don't line up with the reality. And you can jumble the numbers around when you own the manufacturing as well as the distribution.

Apparently, like some dealerships, Tesla Body Shops are coming soon too.

 

[esk8mw]

I guess I need to take back my, "What are you going to do if the TM3 reviews are, 'meh' nice car but you can get an equally nice Bolt today for less money." since Motor Trend liked the Bolt more than the Model S60.

Is that capability worth the $30,000 premium over the Bolt? Well, if you have to travel long distances regularly, then possibly. But if simple fuel-free driving is what you’re after, the Bolt’s stellar real-world range can cover a week’s worth of commuting plus errands for the average American without charging. Its 238 miles of range also easily enable intercity—but not interstate—travel. Toss the Bolt’s puppy-dog driving dynamics into the mix with its stellar efficiency and family-friendly packaging, and the choice becomes pretty clear: the Chevrolet Bolt EV wins. More than any EV that’s come before it, the Bolt makes emissions-free, environmentally friendly transportation a realistic proposition for millions of Americans. It has made the current crop of pricey, short-range electric cars from BMW, Nissan, and others utterly irrelevant.

2017 Chevrolet Bolt EV vs. 2016 Tesla Model S 60 Comparison

It looks like you want to base your investment thesis on outdated articles with flat-out incorrect data and car review magazines - another bastion of independent unbiased thought. Sounds like you've got it all figured out - please add to your short. The interest rate I've been earning off you guys has been stagnating lately.

 

[Oil4AsphaultOnly]

Battery supply may not be a constraint - Chart: China Leading the Charge for Lithium-Ion Megafactories

Musk has already said that he needs to build (and have someone else pay for - hence is meeting with the governors) more GFs since the current one can't make enough batteries for more than ~400,000 cars a year (34 GWh/75kWh minus something for the battery storage people). So this graphic probably understates the supply that will be available in 2020 if (big if) there is a demand for millions of BEVs.

I admire what Musk has accomplished. I admire what the VisiCalc people did. I have less admiration for the Lotus123 people since they essentially just stole VisiCalc's idea and put them out of business. And of course, I have no admiration whatsoever for Excel, except that's what I use every day. Being the first mover is frequently not helpful, specially if you run out of money. If Apple buys one of the BEV companies and says they're going to put $20 billion into it, that's a real problem for TSLA. And it would hardly be a black swan event since Apple's car project is the worst kept secret in corporate history.

Oh, and I just noticed the upload an Image/File button (I am new here, but not a troll, I swear; troll's never post on days when the stock they're trolling has a big up day), The screen shot below is my history of shorting TSLA. I own no car or oil companies, though I probably have some of both in mutual funds in retirement plans and I'm long Kinder Morgan (though that Tony Soebel video is making me rethink that).

I put in a stop loss on TSLA today at $345. So unless it gaps up $20 on an open one morning, I'm probably not going to lose money on the investment.

And one final thought - I get the feeling that some of the posters on this board would burn me at the stake as a heretic if they could. And it isn't a good sign that they start there posts, "I stopped reading as soon as he said he was short." There is a lot of money in Tesla from people with closed minds. That isn't necessarily the crowd you want to run with.

I'm one of those who refrained from replying, because I felt like you were just myusername, but with a different account. But after a few replies, I guess you really are here to discuss the issues.

Although there were a few posts that you can probably disregard, I think most of the other responses have been sincere attempts to address your questions. I feel techmaven's responses have been the best.

Two things I'd like to contribute. One is a counter to your assumption that the incumbents have this HUGE capacity to trounce Tesla anytime they feel like. Without the capacity to build the batteries, they can't out-compete Tesla. Hyundai had plans to sell 8,000 Ioniq's, and sourced their cells from LG Chem (same company providing the batteries for the bolt). Demand was double what they expected, and thought they could just ramp production only to find out that LG Chem couldn't ramp that quickly: LG Chem Can't Keep Up With Unexpectedly High Demand For Hyundai IONIQ Electric

The takeaway is that no one else is building the worlds largest cell (as distinguished from battery) factory in order to compete with Tesla in the forseeable future. Until one of those incumbents starts one, any announcements of a competitive car is at least 3 years out. The stock is a reflection of that 3-year minimum lead.

2nd. EV owners view charging/refueling in a VERY different light than ICE owners. It's a thought process shift that isn't obvious until you've owned one. Once internalized, all those incumbent "advantages" become their own impediments.

 

[ValueAnalyst]

Model 3. Similar to iPhone or iPhone 3G?

IIRC, it was the iPhone 3G that really introduced the iPhone to the masses.

 

[AlMc]

Peter Rive also leaving: Tesla executive in charge of solar roof is leaving the company ahead of the launch

 

[howardoark]

It looks like you want to base your investment thesis on outdated articles with flat-out incorrect data and car review magazines - another bastion of independent unbiased thought. Sounds like you've got it all figured out - please add to your short. The interest rate I've been earning off you guys has been stagnating lately.

I'm sure I'm not the only person here who would like to know how you do that - how do you get your broker to share the interest they charge on borrowed shares with you? For those of you who aren't aware of how this game works, the brokers and mutual funds will happily lend your shares to other people and charge them interest (it can't be much interest at this point but in January Schwab wanted 3% to borrow TSLA shares). That's one of the reasons they can have $4.95 commissions, they have this huge pool of free money they can lend out to optimists (from my point of view) like me.

I have no doubt whatsoever that the Model S would be the best car I ever drove. I also have no doubt that I will never spend $100k on a depreciating asset. My history of car ownership (you'll like this) is 1965 Corvair ($95), 1972 Pinto (free), new 1984 Dodge Charger ($8500 - the brakes on the Charger failed as I was driving it to the dealership to trade it in ), new 1992 Ford Ranger ($8000 - my mechanic listed the repairs it needed and it was about $2,500 more than the blue book on it), used 2000 Ford Mustang GT ($10,000 - best car ever, but my wife got car sick in it - at this point in my life I think I had spent a grand total of $40,000 on cars including insurance, maintenance and gasoline), used 2007 C230 ($22,000), used 2011 C300 ($27,000 a guy in a Subaru parked three feet inside the trunk of my C230 on the 580 freeway in Livermore). And I mostly ride my bicycle to work. The next car I buy will be fully autonomous and I cannot wait.

 

[DragonWatch]

First, I share Tesla's view of direct sales I did not mind the bare minimalist look of the sales office too much Good thing Starbucks with our App had our order ready since we arrived too early and had to wait for the doors to open for our appointment with Jim. We had driven up from Olympia to the Seattle store and brought along our extended family (Mom (daughter) & Dad w/two GrandPups) to see how all six would or would not fit into the MX 5 or 7 configuration.

The hands-on approach enabled my wife to kiss the MS P100D goodbye and embrace the MS 100D standard 5 seater. I got a charge out of the experience (charge ~ get it) and got the color I wanted too.

Had a minor maintenance/warranty issue a month after purchase that was promptly taken care of by the Seattle store. Gave us a MX 100D dark gray (my other color) and a 7 seater, which gave us a chance to be happy with our 5 seater. Pretty much hastle free other than the drive again to and from Seattle from Olympia But lucky no traffic issues either day

Heard they added SuperChargers in Arlington & Sequim, WA, announced by email today. Service centers will have to be added especially since the M3 is about to bust the doors open. Hint, Hint, there is an open space in Olympia since Toyota moved to Tumwater sniveling about taxes.

Dealerships, from my personal experience, are about as worthless as, well I better be nice. As I once mentioned before, I had a 2001 VW Beetle that just as it went past warranty the warning light kept going off and I would swear (which I have always done too much of) went off every time I drove past the dealership. Probably because I deliberately bought our car in a different city because I had been put off by the sales people. That warning light issue cost me $5,000 +/- above and beyond the purchase price of the car before the MotherLand (Germany) and the service department finally resolved the problem. While the did the final service ($1,500) for free there was never any compensation or apology for my time, trouble or cost. So, if I were a judge, franchise dealerships would go tomorrow.

Again from my experience when I bought a Toyota Celica back in '75 timeframe I was told that since the dealership owned the lot there was no destination fee charged. At some point a hubcap fell off and the service manager replaced it free of charge. I was very impressed and to this day, if I could remember for sure where they are I would go back to them ~ oh and they would have to sell Tesla's. Oh yeah, Fullerton, CA.

Franchised dealerships need to go the way of the dodo bird. Is there a solution? Yes, but we have not talked about the solution or at least I have not participated in such a decision ~ maybe for a good reason. The hybrid version that Tesla is working around does have merit. Another thing about franchises, based on what I was told at some point was that the Mother Company paid for warranty servicing.

Again, on my third and final Volvo towards the end of our use at or about 85,000 miles the service was costing us $2,000 every other year. That was when we went back to Toyota. So the four year contract does not bother me from Tesla.

Then there is the money issue. We seldom get cash anymore since almost everyone either takes credit cards or use Apps or like here PayPal So get over it, "cash is out," credit cards are phasing out and I am waiting for the in body chip myself Remember now, like it or not every car has a VIN and in Tesla's case you are WiFi connected, so why should I need a credit card or body chip? Oh, and Canada is no longer making pennies ~ good cost savings.

If you think for a moment you live a life under the radar, think again and go back to your voucher school and ask for your money back. Uncle Sam or should I say Uncle Business knows more about you than you know about yourself. PSE (electric company) knows every time I plug in at home since I opted to allow them to monitor my home charging for $500 rebate. The $500 helped defer the home charging station So, between PSE and Tesla they know where I live and how frequently I plug in the car.

In all openness here, I (we were) was given free supercharging after the fact and that makes it really hands free if you will when it comes to refueling at home and on the road; no card ~ nothing. Also, we have only used about 15 minutes total once away from home at a Supercharger, to ease range anxiety issues since purchase/delivery 29Mar17 (1Q17).

 

[Dwdnjck]

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

"Next year" will always be the most important year for Tesla, for many years to come.