2017 Investor Roundtable:General Discussion

[larmor]

I suspect it will take time and continual revision to get to full potential if it could be made to work. I won't buy into the idea fully though until I see proof that the idea is beginning to be implemented successfully. The Model 3 production line is a benchmark to watch closely.

That's why Elon is rich. He buys in on the belief that the idea is possible, not on the proof.[/QUOTE]
By the time you see the line working building cars autonomously, it will be too late to buy in. The market is looking for demand---400k pre orders, looking for production-- line up to robotic speed and not human speed, and delivery-- what secret sauce is tesla planning on? Autonomous delivery trucks? Robotic loading of cars onto carriers, or perhaps building the car onto the carrier, so that a loaded carrier leaves the facility...

Everyone needs a thneed...

 

[larmor]

AI engine DeepMind beats human at Go, which has many more possible moves than chess, and requires creativity.

AI bots will so quickly control your FB feed, the first salvo will be to sell you things. Then expand that to other areas of your life.

Soon AI bots will realize they can be the market movers with flash news, fud, whatever, and will easily own all controlling interests in all major companies that matter within a few nanoseconds (maybe picoseconds) of realizing they can do thi.

AI bots can create virtual companies with an online presence (people do this all the time) and bid for contracts with their new found money, and employ humans to do their work...

Its not that progress should be stopped, its realizing that this progress creates an entity which is exponentially smarter than any human(s).

As an aside, imagine trying to explain to a 2-dimensional being what a sphere is like...

One more related topic to the above AI debate: heard about "voco" its an abode program in development that listens to your speech for 20 to 40 minutes, then you input text and it can simulate how you would say those words vocally. Even if you never said those words... Scary... what could be scarier, mesh voco to an AI engine, and we'd never know if our officials really said what we heard..

 

[GoTslaGo]

FYI, administrators are implementing a color coded tagging system for the website. You may have noticed color coded tags scattered in the upper left hand corner of the threads (on other threads). Been having a discussion with danny regarding implementing one for the investors website. They're planning on rolling it out soon. Here's the conversation:

Default tags

The current plan is to roll out the investor's tag in red (I had suggested green). Any issues with that color please feel free to respond to the thread linked above. If anyone has superstitions about a red tag for the investors website (as oppose to green), you can tell danny in the thread.

 

[Waiting4M3]

There is a HUGE difference in the number of people that can afford a $17,000 car and those that can afford a $35,000 car. I wonder how many people in this thread have ever struggled to pay their bills and didn't have a safety net? I think many of you truly don't realize how the average American family lives.

By the time when Tesla builds millions of cars a year and has 50% of world auto market, the price will be down in the $20K range, 50%, that's average right?

 

[RobStark]

I am old enough to remember when Lexus first came on the market. The word-of-mouth was unbelievable. Everyone of a certain income bracket was talking about it.

1990 Lexus LS400 V8 $35k MSRP
1990 Mercedes E300 V6 $39.9k MSRP
1990 BMW 535i I6 $41.5k MSRP

I couldn't stop talking about the 1990 Infiniti Q45 with 4.5L V8 267 hp and 0-60 in 6.7 seconds.

Too bad stupid esoteric non sequitur marketing killed it in its crib.

 

[Waiting4M3]

Sorry, Tesla can only take down a couple of companies at a time, GM, Ford and Toyota will have to wait for their turn. BMW is first up, Daimler is next with the semi. Ford is going to have to wait for the MY and the truck. Patients young Padawan.

You forgot Uber

 

[NicoV]

500,000 cars per year means it's mass market. Even if they could sell them all at 60k USD.

Indeed. Volvo sells about 500K cars/year. Nobody will claim that Volvo is not a mass market manufacturer.
I wonder if Tesla will still be considered a boutique manufacturer when they sell more cars than Volvo in 2019;

 

[NicoV]

IF

"The U.S. Census Bureau reported in September 2014 that: U.S. real (inflation adjusted) median household income was $51,939 in 2013"


I think the base $35,000 Model 3 is a great car and congratulations to Tesla for pulling it off! On the other hand, I think the pricing of the options is too steep. It may appeal to those in the luxury car market looking to spend $50,000 on a car, but it's too expensive for your median working class family in the USA.

I've been reading the comments section in the articles in my local papers (shouldn't do that, it's bad for my heart). A common comment is ' this is not a car for the common man, I can't afford that kind of money'. First, it's onlythe media that claims that. In the US, half of the population can afford a Model 3. BUt in terms of dollar market share, it may be more like 60 or 70%.
Secondly, maybe there are people in de remainder of the population that can calculate the TCO, these people will also be surprised about the affordability if they drive enough km/year. Due to higher gas prices, this is an even more important factor in Europe. As a rough approximation, a Model 3 will be about 10 eurcents/km cheaper than any other car, just based on the fuel price. That means anybody who is willing to drive his car for 200K to 300K km will have a lower TCO than buying the cheapest (normal) car on the market, the Dacia Logan.

 

[Drumheller]

I've been reading the comments section in the articles in my local papers (shouldn't do that, it's bad for my heart). A common comment is ' this is not a car for the common man, I can't afford that kind of money'. First, it's onlythe media that claims that. In the US, half of the population can afford a Model 3. BUt in terms of dollar market share, it may be more like 60 or 70%.
Secondly, maybe there are people in de remainder of the population that can calculate the TCO, these people will also be surprised about the affordability if they drive enough km/year. Due to higher gas prices, this is an even more important factor in Europe. As a rough approximation, a Model 3 will be about 10 eurcents/km cheaper than any other car, just based on the fuel price. That means anybody who is willing to drive his car for 200K to 300K km will have a lower TCO than buying the cheapest (normal) car on the market, the Dacia Logan.

Half the US population cannot afford a $35,000 car. Almost 70% of US citizens have less than $1,000 in savings.
Nearly 7 in 10 Americans Have Less Than $1,000 in Savings, New Study Shows -- The Motley Fool

Household income has not kept up with cost of living
NerdWallet's 2016 Household Debt Study

Though that page also cites an average auto debt of 29,000 but that is also per household, not per person.

Many people are not aware of how badly people age 40 and under have been affected by stagnant wages and rising cost of living in the USA. It's a deep subject and I've found many older people (60+) in the states don't understand it and aren't willing to look at the data.

 

[NicoV]

Half the US population cannot afford a $35,000 car. Almost 70% of US citizens have less than $1,000 in savings.
Nearly 7 in 10 Americans Have Less Than $1,000 in Savings, New Study Shows -- The Motley Fool

Household income has not kept up with cost of living
NerdWallet's 2016 Household Debt Study

Though that page also cites an average auto debt of 29,000 but that is also per household, not per person.

Many people are not aware of how badly people age 40 and under have been affected by stagnant wages and rising cost of living in the USA. It's a deep subject and I've found many older people (60+) in the states don't understand it and aren't willing to look at the data.

I based my statement of "half the US population" on the widely reported average sales price of 35K in the USA. Maybe I should have said half of the new car buying population. The part of the population that is not able to buy a new car is not relevant in this investors discussion, they are not customers of any car company. I agree that the financial situation of the younger people may be bad, but that is a different topic.

 

[Reciprocity]

You forgot Uber

Well to mention that Tesla makes anything other than cars to a fudster does not compute and could cause their heads to explode, so for safety sake we don't mention the E word or the Network.

 

[Reciprocity]

I've been reading the comments section in the articles in my local papers (shouldn't do that, it's bad for my heart). A common comment is ' this is not a car for the common man, I can't afford that kind of money'. First, it's onlythe media that claims that. In the US, half of the population can afford a Model 3. BUt in terms of dollar market share, it may be more like 60 or 70%.
Secondly, maybe there are people in de remainder of the population that can calculate the TCO, these people will also be surprised about the affordability if they drive enough km/year. Due to higher gas prices, this is an even more important factor in Europe. As a rough approximation, a Model 3 will be about 10 eurcents/km cheaper than any other car, just based on the fuel price. That means anybody who is willing to drive his car for 200K to 300K km will have a lower TCO than buying the cheapest (normal) car on the market, the Dacia Logan.

I agree with the basic premise that people don't know what they don't know in terms of affordability and TCO. But what is left out of your thought process is that humans will justify just about anything if they want it bad enough. That drives them to think about things like fuel costs and TCO as well as solar. This is the brilliance of Tesla in making a car that drives emotions such as lust and even something for us needs with EAP/FSD. The bolt does not elicit such emotions and neither does any other competitor. This is another reason an electric BMW 3-series is not that compelling. It would be a nice car, but far from inspiring or eliciting an emotional response. It would however be good for die hard BMW fan bois.

It's not enough to just electrify the car, you gotta make people feel something and then you gotta have a giant charging network. Should be no problem for the auto industry to accomplish that... In 5 years..

 

[Gerardf]

Being from Europe, maybe someone can inform me about US tax.

Looking around forums I see many interested in the Model-3 worried about the tax credit running out. I can not help to notice that these are often young people, who are just at the start of their career, and people for whom 35k-40k is a stretch and 50k-59k car is not possible.

As I understand the 7500 is a tax CREDIT, and can not be spread over more than one year. So, one has to owe $ 7.500,-- in yearly tax to get the full credit.

Question : How much tax do people in those groups typically pay per year ?
In Europe we always hear about low taxes in the USA. What income groups typically pay 7500 or more yearly tax ?

Could it be that part of the people afraid of missing the full 7500 credit pay less tax anyway, and would get their maximum relevant credit even 2-3 quarters after the full 7500 credit runs out ?

Edit: I tried to work it out, if I am correct one need to have a taxable income of around US$ 47k to pay 7500 tax.

 

[Reciprocity]

Being from Europe, maybe someone can inform me about US tax.

Looking around forums I see many interested in the Model-3 worried about the tax credit running out. I can not help to notice that these are often young people, who are just at the start of their career, and people for whom 35k-40k is a stretch and 50k-59k car is not possible.

As I understand the 7500 is a tax CREDIT, and can not be spread over more than one year. So, one has to owe $ 7.500,-- in yearly tax to get the full credit.

Question : How much tax do people in those groups typically pay per year ?
In Europe we always hear about low taxes in the USA What income groups typically pay 7500 or more yearly tax ?

Could it be that part of the people afraid of missing the full 7500 credit pay less tax anyway, and would get their maximum relevant credit even 2-3 quarters after the full 7500 credit runs out ?

Ah nail meet head. Most lower income people wouldnt be able to take full advantage. Most pay under 15% after standard deductions. So it would be close for those making under $60k/y. But, if Tesla leases the car, Tesla gets the tax credit and passes the savings along in the form of a higher residual value at the end of the lease term which lowers the payment. Sadly there are no leases available yet for the model 3. Maybe that will come with the base model.

 

[Gerardf]

Ah nail meet head. Most lower income people wouldnt be able to take full advantage. Most pay under 15% after standard deductions. So it would be close for those making under $60k/y. But, if Tesla leases the car, Tesla gets the tax credit and passes the savings along in the form of a higher residual value at the end of the lease term which lowers the payment. Sadly there are no leases available yet for the model 3. Maybe that will come with the base model.

Aha, had not thought of that.

But, I assume the lease company can only claim the tax credit that is relevant for the end-user ?
Or are you saying that even if your income allows a credit of 5k, the lease company can get 7500,-- credit on your behalf ?

 

[Reciprocity]

Aha, had not thought of that.

But, I assume the lease company can only claim the tax credit that is relevant for the end-user ?
Or are you saying that even if your income allows a credit of 5k, the lease company can get 7500,-- credit on your behalf ?

Not sure exactly how the accounting works but I don't think that is the case because there is no way for leasing company to know you tax liabilities. Taxes are complex here in the US so no two people have the same situation in terms of tax liabilities.

 

[Gerardf]

Not sure exactly how the accounting works but I don't think that is the case because there is no way for leasing company to know you tax liabilities. Taxes are complex here in the US so no two people have the same situation in terms of tax liabilities.

Well, if what you say is correct that is quite a nice loophole for that group !
For a change a tax loophole applicable for the relatively lower incomes and not the multi-millionaires.... Who would have thought

 

[SPadival]

A single data point - I reserved the Model 3 during the reveal (when the reservation number was ~ 110k on the screen). Now, delivery estimator for me (in Australia) says early 2019 !!

This sounds like blow out US reservations to me.

 

[Bobfitz1]

Ok, I see lots of dislikes, which I am fine with, but give a reason why you do not think this message is accurate and true to what Elon's actual intent was. Is this not the Mass Market car Elon has been talking about? Did he not want to have a starting price of $35k for the Mass Market? I have no problem with offering an upgraded battery and options, but I also think that the majority of cars coming out first, should be of the base Model to satisfy the demand of the average consumer who is stretching to afford this car. We need to bring a larger new audience into Tesla, not the fans that most of us are, on this forum. We are already believers!

In case an earlier post hasn't answered your question, here is mine.
I think Elon knows what his original intent was! His unique talent is to pursue solving difficult problems he judges the very most important. He doesn't hesitate to adjust and adapt to reach his goal as quickly as possible. His mission is to accelerate the world’s transition to sustainable energy, not to produce a Mass Market EV tailored for the low to low mid income segment. He knows that segment must also have EVs to get off gas, but the fastest way for that to happen is for Tesla to generate the cash flow needed to build more and more EVs and goad other companies into building them. His plan from day 1 was to start with the most costly vehicles and use the revenue to fund the next level down.

 

[Reciprocity]

I don't know why this is so hard for people to wrap their heads around. The model 3 is not a mass market that everyone can afford because Tesla can't make 10M/y of them yet. So Tesla is going to charge as much as they can for the 500,000 they can make over the next 18 mo. Tesla is not a charity. The model 3 profits will pay for the model Y and pickup. Without those profits, Tesla stops advancing it's master plan. It's really simple economics of supply and demand. Tesla can charge $9k for a battery upgrade which is much cheaper then previous battery upgrades. They can charge $5k for autopilot because it's the best single option offered on any car anywhere. Even with that, the base model without incentives is completive and superior in almost everyway to a base Camry when you factor in TCO and residual value. We can't expect Tesla to shoulder the conversation to EV by themselves, the plan is simple which is to create enormous amounts of demand and force competitors to join the fight. They will join the fight or they will crumble under there own excess weights as Tesla attacks their highest margin products and purposely ignores their lowest margin products. This is by design because Ford is not going to move if you take market share from them at the low end, they can shut those plants and continue to make higher margin cars. Also Tesla can't make 50 different models. They need to get more from the models they have which is why the model 3 is compelling from as low as a Camry up to a base BMW 5-series. It's actually brilliant. Make one car to address several segments. Model S and X do the same thing but not on as Grand of a scale. This is less about selling 10m cars today and more about forcing Toyota into the fight.