2017 Investor Roundtable:General Discussion

[MitchJi]

I'm okay with disagreement, because if no one is disagreeing with me, I'm not doing enough to push the limits of our TMC bubble. It may be helpful to keep in mind that I feel more free to express some of my more aggressive/optimistic views here, and then scale back based on feedback, rather than include these aggressive/optimistic views in my free-to-public articles that are read by thousands of people who may not be knowledgeable enough in finance/economics/accounting/manufacturing etc. as some TMC members.

Note that an accelerated gigafactory buildout would in fact accelerate the world's ultimate transition to sustainable energy, not slow it down.

I disagree with the premise tha Tesla should ignore customers feelings and base their actions solely on mathematically optimizing their finances.

You could make similar arguments in favor of making a huge profit on maintenance. Traditional dealers do that. Tesla is leaving a lot of money on the table that they could use for faster expansion. And instead of low energy prices at superchargers they should try to maximize their profits three as well. Oil companies profit on energy sales, why not Tesla?

 

[ValueAnalyst]

I disagree with the premise tha Tesla should ignore customers feelings and base their actions solely on mathematically optimizing their finances.

You could make similar arguments in favor of making a huge profit on maintenance. Traditional dealers do that. Tesla is leaving a lot of money on the table that they could use for faster expansion. And instead of low energy prices at superchargers they should try to maximize their profits three as well. Oil companies profit on energy sales, why not Tesla?

To be clear: I'm not arguing for maximizing profits at the expense of customers' feelings. I'm arguing for making certain slights adjustments in the near term (2H17 and 1H18) that would help Tesla accelerate world's transition to sustainable energy even further in the mid-to-longer term (2H18 and 2019+) while using higher gross profits from higher-than-expected ASP to accelerate Gigafactory buildout and satisfy its consumers' needs quicker. I agree that such adjustments would need to be carefully communicated to customers and investors.

Thank you all for your feedback. Enjoy the rest of your weekends!

 

[Rarity]

Gene Munster discusses his model of Tesla's future. There are a few out of date items, like theorizing that the Model 3 will reduce demand for X and S, but overall it rivals various highly positive models discussed here.

It seems to be a conservative model to me -- well below Tesla's aspirations and expectations, to be sure.

 

[kenliles]

M3 Easter eggs

 

[MitchJi]

To be clear: I'm not arguing for maximizing profits at the expense of customers' feelings. I'm arguing for making certain slights adjustments in the near term (2H17 and 1H18) that would help Tesla accelerate world's transition to sustainable energy even further in the mid-to-longer term (2H18 and 2019+) while using higher gross profits from higher-than-expected ASP to accelerate Gigafactory buildout and satisfy its consumers' needs quicker. I agree that such adjustments would need to be carefully communicated to customers and investors.

Thank you all for your feedback. Enjoy the rest of your weekends!

I also believe that Tesla's plans to accelerate their Gigafactory buildouts are more aggressive than you are giving them credit for!

I believe that the exciting part of the announcements is partly due to funding. For example how much did the NY Gigafactory cost SCTY?

 

[GoTslaGo]

Could this be achieving milestones for Model 3 for employees? Each individual doesn't get that much to be mentioned like the CEO and management incentive grants, but pooled together could be significant if they have this kinda thing.

Pesky Convertible notes: (from the 10Q):
__________________________________________________
p.53:

Upon conversion of the applicable Tesla Convertible Notes, we will be obligated to make cash payments in respect of the principal amounts thereof, and we may also have to deliver cash and/or shares of our common stock, in respect of the conversion value in excess of such principal amounts on such Tesla Convertible Notes. For example, in June 2017, pursuant to separate privately negotiated agreements, we converted $144.8 million in aggregate principal amount of the 2018 Notes in exchange for 1.2 million shares of our common stock.

Found this too.

 

[Waiting4M3]

I think Tesla should raise more debt in Q2'18 to fund additional GGF as quickly as possible.

One the risk side, 2 questions we face now are whether they can ramp M3 and whether they can profit from the M3. By Q2'18 those 2 questions should be answered, and allow more debt to be raised.

Another factor is how quickly can and should Tesla build. There is a cliche that you can't have 9 women and get a baby in 1 month. That is true for the current M3 production line, there is 1 line, and the M3 is being built in a serial fashion, there is a saturation point where you get the most bang for your buck in terms of accelerating growth, past that point, more money doesn't help much. Also while the line is still not proved out to be able to build 100K's of cars, you don't want to spend money to build another line, in case something doesn't work with this line and need to be changed.

But after M3 production ramp is proven, say it cost $2B to build out that line, now if Tesla can borrow $10B, they can confidently build 5 more lines in parallel. This also applies to GGF and TE production, once they achieve some 10's of GW capacity, now they will be confident that the GGF design works, and can spend more money copy/paste in parallel. I agree with idea in recent post that GGF1 is a prototype, once it's proven, it can be copied in parallel, and also done cheaper and faster.

Another factor is that since MY will be built on the same platform of M3, successful and profitable ramp of M3 should also de-risk MY, and allow Tesla to raise debt and aggressively ramp initial MY production, in contrast to the M3. Maybe they will build a factory that house 1M capacity of MY right from the start.

I think the capital raise in 2018 will be shocking to anyone who don't see the growth potential, and I expect TSLA stock will continue to be volatile. If it's not, then Elon has played it too safe, and not executed the master plan as quickly as he could.

 

[kenliles]

Yes I know, but still...

 

[TradingInvest]

In the big picture the effects of shorts on the SP are less than mouse nuts.

Shorting itself is not a big deal. But these guys actively try very hard to destroy Tesla, which act as a durable competitive disadvantage for Tesla. Try ask someone on the street what's their impression on Tesla, you are likely to find many haters only because they read too many bashing articles. "Tesla is funded by tax money", "Elon is the biggest liar", "They are always late", "Their service is terrible", "Their quality is terrible", "They will bankrupt soon, so don't buy their products", "Teslas don't work in winter", "No place to charge", "Elon and his friends milked all the money, leaving investors holding the bag"...

In 2012, the negative attacks combined with other things almost drove Tesla to bankruptcy (at one point Elon had to seek ways to sell Tesla to Google).

Shorting game is not that simple: just short or buy Puts and wait. When Ackman shorted $1B of HLF, he spent 75 million dollars actively against HLF. It's conceivable the big Tesla shorts have been spending hundreds of millions actively against Tesla. Shorts have been surprised their effort hasn't destroyed Tesla already. They indeed created lots of drag and stress for Tesla. It's time for them to see some serious losses and never have the means to hurt Tesla again.

 

[RobStark]

Poor Prius
A Funny Story — Used Tesla Model S vs Toyota Prius Prime

And the Prius has the solar roof option too.

 

[Alketi]

@Waiting4M3 I agree 100%. Aside from the Model 3 meeting expectations and not suffering a recall, the only thing that matters is whether Tesla can manufacture 250K of them profitably. If that happens, capital raises for expansion are largely irrelevant. Companies will be lined up to throw buckets of cash at Fremont.

Consider the following scenario:

Due to unforeseen circumstances, Tesla only makes 250K Model 3s next year, but exits the year with a backlog of more than 400K. (Both likely reasonable or even conservative numbers)

Consider that the 3-series and the A4 simultaneously suffer sequential volume drops of 10% or more.

Reasonable possibilities, right? This, in fact, is the beginning of ICE Armageddon.

The chain-reaction:

- The press will be giving the ICE industry its last rights
- Meanwhile, Ford will brag about their truck sales
- Meanwhile, everyone else will point to increasing SUV sales amid even sharper declines in ICE sedan sales
- There will be upheaval in their corporate boardrooms (recall that Ford's CEO was already fired and BMW already sat out this year's Paris Auto show)
- Big Auto will scramble to announce more PowerPoint EVs
- More 3rd party battery factories will be announced
- And Tesla will be selling everything they can make while being the hottest commodity in tech or automotive

Repeat the scenario in 2019.

The necessary lag (~3 years) from announcements and plans to real products is exactly how I suspect we'll see the EV industry go irrevocably exponential in the early 2020s, per the futurist's predictions.

 

[Reciprocity]

View attachment 239906

Yes I know, but still...

Useless as a means of travel but very useful as a means to make it to the next supercharger if you are like me and fly by the seat of your pants and dont plan anything.

 

[Reciprocity]

@Waiting4M3 I agree 100%. Aside from the Model 3 meeting expectations and not suffering a recall, the only thing that matters is whether Tesla can manufacture 250K of them profitably. If that happens, capital raises for expansion are largely irrelevant. Companies will be lined up to throw buckets of cash at Fremont.

Consider the following scenario:

Due to unforeseen circumstances, Tesla only makes 250K Model 3s next year, but exits the year with a backlog of more than 400K. (Both likely reasonable or even conservative numbers)

Consider that the 3-series and the A4 simultaneously suffer sequential volume drops of 10% or more.

Reasonable possibilities, right? This, in fact, is the beginning of ICE Armageddon.

The chain-reaction:

- The press will be giving the ICE industry its last rights
- Meanwhile, Ford will brag about their truck sales
- Meanwhile, everyone else will point to increasing SUV sales amid even sharper declines in ICE sedan sales
- There will be upheaval in their corporate boardrooms (recall that Ford's CEO was already fired and BMW already sat out this year's Paris Auto show)
- Big Auto will scramble to announce more PowerPoint EVs
- More 3rd party battery factories will be announced
- And Tesla will be selling everything they can make while being the hottest commodity in tech or automotive

Repeat the scenario in 2019.

The necessary lag (~3 years) from announcements and plans to real products is exactly how I suspect we'll see the EV industry go irrevocably exponential in the early 2020s, per the futurist's predictions.

Interesting, but you left off one thing.. Model Y reveal and opening of reservations makes auto execs pea their pants and curl up in a ball on board room floors all across the world.

Edit: My point is that Tesla does not even have to make a car to hurt the competition, just announce one and start gathering deposits. Apparently this is enough for people to make their current car last 18 more months.

 

[MitchJi]

Shorting itself is not a big deal. But these guys actively try very hard to destroy Tesla, which act as a durable competitive disadvantage for Tesla. Try ask someone on the street what's their impression on Tesla, you are likely to find many haters only because they read too many bashing articles. "Tesla is funded by tax money", "Elon is the biggest liar", "They are always late", "Their service is terrible", "Their quality is terrible", "They will bankrupt soon, so don't buy their products", "Teslas don't work in winter", "No place to charge", "Elon and his friends milked all the money, leaving investors holding the bag.

And how much did that help them during the recent run up to the $380's? Producing over $10k M3's per week is the best and only solution. Not wasting our time or energy worrying about them.

Shorting game is not that simple: just short or buy Puts and wait. When Ackman shorted $1B of HLF, he spent 75 million dollars actively against HLF. It's conceivable the big Tesla shorts have been spending hundreds of millions actively against Tesla. Shorts have been surprised pmtheir effort hasn't destroyed Tesla already. They indeed created lots of drag and stress for Tesla. It's time for them to see some serious losses and never have the means to hurt Tesla again.

I don't believe that it's possible to stop idiots from being idiots and I believe it's a waste of our time and Elon's time to worry about it. Mouse nuts!

 

[Reciprocity]

And how much did that help them during the recent run up to the $380's?

I don't believe that it's possible to stop idiots from being idiots and I believe it's a waste of our time and Elon's time to worry about it. Mouse nuts!

The problem is that the shorts should be right. It should be impossible to create a new car company in the US/California. It should be impossible to build an economical EV. It should be impossible to dethrone BMW, MB and Audi in the large and midsize lux vehicles market segments. The Model X should have been impossible to manufacture. They should have been right, but at some point they must realize they are wrong? Results matter.

Now some are just pushing an agenda and they have more money then brains. They really cannot give up, they must continue forever. But I contend they have not had much of an impact. Its pretty easy to see the stock price is strong and the evaluation is on the high side, this tells me they have caused no real impact on the stock price. Certainly they have tainted some peoples opinions, but not enough to keep us from buying the Dip. My latest thesis is that this stock is being driven higher by two things, short covering by shorts, and longs buying the Dip(tm). With the smallish float, these two groups keep ratcheting up the price. Every time it dips, short covering and longs buy up everything which kicks off a rally. This brings in more shorts, FUD, which finally has some impact to the downside and the entire process starts over. Any real dip has tons of short covering and tons of longs buying.

 

[kenliles]

Useless as a means of travel but very useful as a means to make it to the next supercharger if you are like me and fly by the seat of your pants and dont plan anything.

Yes I know, but still...

And great to celebrate 5 years on Mars- what an accomplishment

 

[MitchJi]

A legendary Ford plant could be inspiring Elon Musk's ideas about how to re-imagine factories

Check out these images and stats from the River Rouge factory (they're from an old film that's on YouTube — it's worth watching but, at a half an hour in length, is a bit too long to embed here).

 

[RobStark]

Where UAW goes now after rejection by Nissan workers in the South

 

[MXWing]

Someone in my area is getting a Model X for nothing. They are giving them out now!
(Can't wait to see my post get picked up Seeking Alpha.. NOT)

 

[kenliles]

It's not my father's job, thank goodness
We really are in a transformative period
(also explains much of the current political and social divisiveness)

The robots are coming, this time to rural Wisconsin — The Washington Post

"The robots were coming in not to replace humans, and not just as a way to modernize, but also because reliable humans had become so hard to find."

Also of note: