2017 Investor Roundtable:General Discussion

[Ugliest1]

@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.

I think your described chain reaction is too early -- it will take more time for the press to get to last rights realization, and likewise for the collective public to figure out what's in front of their face.

Therefore, I think your list might come true in 2019 or 2020, but in 2018 all we'll see with your described scenario is bland comments about the 10% reduction in 3-series and A4, whereas many reports of "See! Tesla failed again!" for missing their hopeful 400k-500k target and only producing 250k.

Ok the above is slightly tongue in cheek but only slightly; the rest of it was written out of fear. However I *really do* think this will happen: those Tesla failed articles will include an addendum: "In other news, Audi announced their newest EV to be produced in 2021 and it looks way better than even a Model S!".

 

[Krugerrand]

Waiting for feedback from @Krugerrand, who "disagreed" with my post, and hopefully others as well, before I publish my article on this topic.

I disagreed with the entire idea that there's been any strategic mistake concerning the Model 3. Had you said they made a strategic mistake with the X; putting too much new tech into it, not having folding seats right from the start, even sticking to FWD - I wouldn't have disagreed, but I also wouldn't care one way or another since that's long since past and rectified.

YOU might not be angry with higher option pricing over longer wait period, but there's plenty of people over in the Model 3 threads that are in a tither over the lousy $1000 upcharge for colors other than black. Money matters to a lot of people. It's a great motivator good or bad. Good people will do bad things because of money, etc., etc., etc... You upcharge for options such that it becomes obvious to all that you're gouging the customer and that's a quick way to anger people. Nobody likes to get ripped off, especially when you do it to their face. Good to great value for money goes to brand loyalty and line ups out the door and around the block. You don't like the length of the line, go buy something else - but you won't, because there isn't anything else comparable. So, you'll wait in line if and until you can't wait longer and are forced to do something else. That's how a vast majority of people think. We are all taught as children to stand in line and wait our turn. A few impatient sorts will step out of the line, it happens. But you don't get a line up at all if you're not offering something that a lot of people want and feel is a good value for their hard earned dollar.

If you want to call strategic 'money' mistake then you MIGHT have an argument against Tesla for discounting the Model X base price and including more options in the S and X at no additional charge. Now that's giving away money right there. Nobody had to know they'd improved production efficiencies and thus were passing those savings onto the customers. I'd still have disagreed with you though. Doing that, along with the not upcharging in foreign markets etc... adds immeasurable brand trust, value and loyalty.

Never forget the ultimate goal of Tesla; accelerate the advent of sustainable energy and transport. If Tesla could offer the 3 for 25k, you bet your butt they'd do it. They want everyone on the planet driving electric yesterday, but not just driving. Enjoying the experience. And telling all their friends. Quite simply there are still a lot of people who won't be able to afford a base Model 3 at 35k.

 

[mongo]

So...
Elon's goal is to get EVs out there as fast as possible, so helping others build compelling vehicles may be as important as building Tesla branded ones (thus the open patent portfolio).

Long term, will Tesla become not just the leader in EV of all types, but also, once their own vehicle plants are maxed out, the leading supplier of motors, batteries, and charging infrastructure to the remaining OEMs?

edit: of course Tesla's vehicles will be lower cost and better, but you can only buy the car/ truck/ suv that is available.

 

[AudubonB]

I just posted an update that I believe all will perceive as important and interesting, regarding an horrific and catastrophic crash involving a Model X in the pre-dawn hours of 21 July. Link here: Model X in fatal wrong way driver crash today in Phoenix?

 

[kenliles]

Interesting Elon tweet referencing
@elonmusk: Except for complaining. That has remained constant throughout history at 100/100. Sam Altman on Twitter

m.twitter.com/elonmusk

 

[vgrinshpun]

Model X involved in Phoenix head-on crash had it's AEB system activated before the collision: Model X in fatal wrong way driver crash today in Phoenix?

 

[AudubonB]

{chuckle....}

 

[vgrinshpun]

{chuckle....}

Just trying to help with proper dissemination of information.

 

[MitchJi]

The Model 3 looks an awful lot like Tesla's iPhone moment

There's one other important similarity, however: The Model 3, like the first iPhones, is a product for which the whole feels like much more than the sum of its parts. In other words, for which the pairing of well-engineered and well-designed hardware with innovative software and services provides both an air of no-frills luxury that comparably-priced rival products can't match, and also delivers unique features with practical value.

It took years for Apple's high-end smartphone rivals to -- with the help of Alphabet Inc./Google's (GOOGL) software and cloud services -- deliver hardware that was competitive with the iPhone. And in the eyes of many iPhone loyalists, they still haven't fully eliminated the gap. Judging by where the competition stands today, the Model 3, whose base model costs $35,000, is opening up a similar lead.

To start, the Model 3 looks and feels like a luxury car. Whereas its primary electric-car rival, General Motors Co.'s (GM) Chevy Bolt ($37,500 starting price), has a design that brings to mind low-cost subcompact cars such as the Honda Fit or Kia Rio, the Model 3's styling is closer to that of a BMW 3-series sedan. And on the inside, initial reviewers note that features such as premium upholstery materials and a lack of traditional air conditioning vents -- air is pumped through a long vent built into the dashboard, with users able to control the angle at which air flows via the Model 3's touchscreen -- add to its sense of luxury.

 

[generalenthu]

Google wants in on energy storage. Their approach seems totally crazy though.

Alphabet Wants to Fix Renewable Energy’s Storage Problem — With Salt

 

[GoTslaGo]

Sorry, OT, but thought this was just cool:

The post/thread:

100D vs P100D Track Runs to Charge Time

The embedded video and article. Pretty cool!

Watch a Tesla Model S assist one of the US's most well-known spy planes during takeoff

 

[scaesare]

I believe that there's a good chance that they will decide (or have already decided) to use FWD's on the MY. If that's correct that will test the market's confidence in Tesla's manufacturing competence.

And note that analysts confidence is still very low.

Given the Y will be based on the Model 3, I give this virtually no chance.

 

[EinSV]

Given the Y will be based on the Model 3, I give this virtually no chance.

You could be right -- I'm not sure it matters.

I am probably in the very small minority of potential Y owners and investors who doesn't care whether the Model Y (or whatever it will be called) has FWDs or not. I don't think they will add them unless they have gotten production/maintenance/QC issues nailed for high volume production and ease of service. If they decide not to use them to keep things simple that's fine by me too. Their approach to both the 3 and Y seems to be very thoughtful and practical with a focus on building a great vehicles that can ramp to high volumes quickly and seamlessly. I trust them to do the right thing and at the end of the day don't think it is going to matter one way or another .... Just one person's opinion (actually, non-opinion).

Edit: I do actually care a bit (I personally like the FWDs) but their presence or absence wouldn't affect my decisions as potential purchaser or investor.

 

[MP3Mike]

Given the Y will be based on the Model 3, I give this virtually no chance.

Why? The X is based on the S that has normal doors and it has FWDs. So why couldn't a Y if it is based on the 3?

 

[GoTslaGo]

I'm going to add to the Model Y speculation. I think Tesla is going to name it the Model 4.... follows the Model 3.

Keeps the numerical naming and 4 follows 3 .

And if write the number 4 with an open top it can look like a Y:

About that Model Y (official name) teaser

Thanks @TEG for the pics!

 

[RobStark]

Why? The X is based on the S that has normal doors and it has FWDs. So why couldn't a Y if it is based on the 3?

Production Hell for months

Quality Hell for months

Ongoing reengineering for months to get quality and ease of manufacture under control.

In the end Tesla said they ended up modifying 70% of the Model S platform. That is why Elon originally said a sedan platform should be designed for a sedan and an SUV platform should be designed for an SUV.

Originally one of the main raison d'être for the FWD is access to the third row. Model Y will have no 3rd row.

Now, in order to get Model Y to market as quickly as possible with good quality and easy ramp up maximum transfer is the order of the day. Meaning use as much of Model 3 in Model Y. FWD don't fit those marching orders.

 

[Reciprocity]

Given the Y will be based on the Model 3, I give this virtually no chance.

The original mockups for the 3 had falcon wing doors BTW. I'm taking the mockups from before the S went into production.

 

[kbM3]

What is everyone's cost estimate of building a 50 GWh Gigafactory?

I think many of us (incl. myself) used to think $5B, in-line with original announcement, and shared by Tesla and Panasonic (halvsies?).

Tesla, however, has been trending under that estimate, and I doubt they will really have to spend $2B in 2H17.

Further, it is unlikely to cost 2x-3x to double or triple Gigafactory 1 production by 2020.

Finally, advancements from Tesla Automation (formerly Grohmann) and the experience of having built the first gigafactory will likely lead to a lower cost per kWh of output for building subsequent Gigafactories.

So, what is your cost estimate of building a 50 GWh Gigafactory?

Mine is $3B, shared equally between Tesla and its partners, to bring the first 50 GWh online (which took four years from 2014 to 2018).

Another $3B, shared equally between Tesla and its partners, to increase output to 100-150 GWh (2018 to 2020).

With Tesla Automation advancements ("our best engineers are working on automating production"), as well as further imporevements in energy density, I would expect significant improvements on cost per GWh for subsequent Gigafactories.

So I very roughly estimate that $5B, shared equally between Tesla and its partners, will be the approximate cost of building subsequent Gigafactories assuming each will produce 100-150 GWh at the pack level.

This would mean the cost of the all-important 100 Gigafactories can be $500B, which Apple and Tesla alone will likely be able to do by 2035.

It sounds like you are talking about the GFs as big battery production factories. However as I understand it, Tesla is heading in the direction of complete vehicle factories.

A future GF will produce a complete vehicle. Maybe even several vehicles (considering the importance they assign geographical proximity to customers) .

Also, since the GFs will be producing complete vehicles, how much sense does it make to talk about the GFs in terms of GWh/yr production?

I don't think we know enough at this time to be able to make any kind of informed guesses.

We can not compare to GF1. Maybe to GF1 + Fremont combined.

I love all of your posts, so maybe I am just missing something, or I have a fundamental misunderstanding?

 

[MXWing]

Given the Y will be based on the Model 3, I give this virtually no chance.

Why? The X is based on the S that has normal doors and it has FWDs. So why couldn't a Y if it is based on the 3?

This.

I haven't formulated an opinion yet on how/if FWD would work on a Model Y but I do know if you almost sunk the company trying to get it right on the Model X - why not leverage that if feasible?

 

[Reciprocity]

The original mockups for the 3 had falcon wing doors BTW. I'm taking the mockups from before the S went into production.

This statement might be 100% false, can't find them image from my brain on the inter webs. Where is neural lace when you need it!