2017 Investor Roundtable:General Discussion

[MXWing]

I think there's a myth that all other auto manufacturers have done nothing... does that seem rational?... you bought Tesla in 2011 "when bankruptcy may have been more likely than solvency"... congrats... the stock success stories in Tesla are abundant... no doubt... but how does that contribute in reality to the fact that exactly today, in the year 2017, Tesla just announced another round of capital needs?... the story continues to propagate... and will continue into the foreseeable future... quite fankly... this stock is a freak of nature driven on this idea that Nissan and the entire rest of the auto industry is irrelevant.

you request that I "Come play on our side of the ball"... I AM on your side of the ball... but I refuse to accept this preposterous notion that there will only be one auto company in the future... there will ALWAYS be a dozen or more major auto manufacturers... ALWAYS... in 2020... 2021...2022.. 2030...etc... it's the nature of the business. Tesla will not destroy capitalism... and to consider this as a possibility while it's literally one of the smallest is absurd.

and THEN... to the point... discredit companies that are today dedicating resources to the same outcome that Tesla's primary objectives are... is self defeating... if you continue this line of thinking, Tesla will completely fail. If you accept the reality of basically all hardware industries... in that there will always be competition... then Tesla will succeed... but only to fraction of the utopia it's being elevated to...

why will I eventually be proven right on this notion?... because that is simply how it works... Tesla does not hold any patents that eliminates competition... the industry will equalize one way or another... it will not result in a monopoly.

so why not promote those companies that are also providing resources to the same objective?

I can't speak for everyone, but I *believe* I speak for the many:

On an level playing field:

Bring the Bolt, Bring the Leaf, Bring the Model 3. - May the best car win. BTW - Model 3 wins the "looks" contest by anyone that has any taste at all. Ceteris Paribus, you'd buy the 3. Heck I'm still buying the 3 even though Chevy would give me 9.5k off the Bolt RIGHT NOW if I wanted it.

In exchange, legacy auto should stop messing with Tesla like hiring lobbyist and government to prevent them from making sales in a particular state.

1.) It violates interstate commerce. 2.) It's weak and pathetic.

 

[sundaymorning]

I was at a charger yesterday when I bumped into a leaf owner who bought a preowned Nissan Leaf last year when the car had 25,000 miles on it. The price she paid was $9,000. The car was in great condition and it was just 2 years old. Think about that, msrp was about $35k, in just two years the price dropped to $9,000. The Nissan Leaf in fact losses more value than an ICE Honda Civic, how embarrassing is that?

The Nissan salesman told her that their battery needed to be changed every 5 years and would cost her $5k. She plans on selling the Leaf next year before her warranty expires. Nissan's tech is basically irrelevant when compared to a Tesla, who's battery can last up to 1million miles. There is no comparison, own the car then you can talk. @mysuername, keep doing as you're told, by being a paid basher.

 

[GoTslaGo]

There is also the timing. We have the Fremont/Gigafactory 1 ramp for the Model III that soaks up a good portion of the existing $3.0 Billion on hand. We have Gigafactory 2 in Buffalo, with Panasonic providing a significant amount of equipment for Solar panels and Solar roof. We have an announcement in 30 - 45 days for Tesla Semi.

Would Tesla announce Tesla Semi in September and end with "Production To Be Determined....". Or will Tesla announce Tesla Semi in partnership with Panasonic for battery technology and __________ (place your bets - Wal Mart, Amazon, Foxconn, Google, TenCent, UPS, Fedex.....) with a plant located in Michigan (Gov. Rick Snyder signs incentives for big business job creators), likely the Project TIM site. Foxconn CEO has said he is interested in Autonomous driving, AI and deep learning technology. While this could lead to a partnership with Google or Apple, neither have large scale manufacturing experience, electric vehicle production experience & technology or "big data" that Tesla has.

People I know in Michigan working in trucking have been working with Tesla on Tesla Semi for over a year.

Total speculation, but let's play a game of Clue...., but instead of the suspect, weapon and the room, name the partners and the location and the product.

I Guess Tesla partners with Panasonic, Foxconn and Wal Mart, in Michigan for Gigafactory 3 to produce Tesla Semi.

What say you Colonel Mustard?

I admit guilt for introducing the Wal-Mart trucking idea (especially after that horrific crash with the comedian it made sense to me--autonomy vs a sleepy driver), BUT...

I found their corporate notice about their truck development. They've listed a bunch of partners... Tesla is not listed :

Walmart Debuts Futuristic Truck

You never know, but I doubt Wal-Mart is going to suddenly pull the rug out of their other partners.

 

[Skryll]

Project Tim = tim cook = apple ?

Or one of the Tims involved in https://www.lw.com/thoughtLeadershi...n-projects-benefit-from-enhanced-oil-recovery because http://www.durandnow.com/Project_Tim_Highlights-page-002.jpg mentions EOR.

Enhanced Oil Recovery does not smell like Apple nor Tesla though... Maybe it is the fossil fuel industry with Softbank's $100b fonds and Toyota and Honda creating some anti-EV bastard together with Chevron ?

I sure hope its tesla instead...

 

[Oil4AsphaultOnly]

I was at a charger yesterday when I bumped into a leaf owner who bought a preowned Nissan Leaf last year when the car had 25,000 miles on it. The price she paid was $9,000. The car was in great condition and it was just 2 years old. Think about that, msrp was about $35k, in just two years the price dropped to $9,000. The Nissan Leaf in fact losses more value than an ICE Honda Civic, how embarrassing is that?

In Nissan's defense, 2 years ago, the leaf would've already been discounted by $5k, so it's "only" lost 4k of value in 2 years.

Used leaf values have actually stabilized now as more people are finding it to be the perfect 2nd or 3rd car for a household - that's the leaf's niche.

 

[sundaymorning]

In Nissan's defense, 2 years ago, the leaf would've already been discounted by $5k, so it's "only" lost 4k of value in 2 years.

Used leaf values have actually stabilized now as more people are finding it to be the perfect 2nd or 3rd car for a household - that's the leaf's niche.

I think you misread my post. According to the person I spoke with, she paid $9k for a preowned Leaf with 25,000 miles on it. The price didn't drop $4-5k, but rather dropped $26k, or about 75% of its value within 2 years and 25,000 miles. That is indefensible in terms of value proposition. You can go on craigslist and check for the price on these leafs, many are selling at $6-8k, preowned everywhere across the nation.

 

[Spidy]

State environmental minister visited Grohmann Automation.

Should have been a great opportunity for Tesla to promote themselves with the whole Diesel scandal going on and the Model 3 launch. But somehow the PR department really managed to screw that up. So the report of the public TV stations starts out how Tesla was not interested in any interview and that the press relations officer even followed them around outside company grounds. Honestly have no idea what they were thinking, I mean they probably just wanted a short snipped for their 2 minute segment... Looks like they got a hold of charimen of the work council, which had good things to say, but not sure that's the best impression.

input-aktuell.de

Lohnstruktur bei Tesla-Grohmann in Prüm: Gewerkschaft rechnet mit langem Prozess | Trier | SWR Aktuell

SWR-Wirtschaftsredakteur Marco Koch: "Mit Tesla auf der Überholspur" | Rheinland-Pfalz | SWR Aktuell

 

[schonelucht]

"I don't think [Musk] is going to be back to the market for quite a while, if he's ever going to be back to market for equity again"
-Ron Baron, June 2016

Looks like he knew what he was talking about. Since that time they've issued just $250M in equity this past march, and it looks like that's going to be the last of it aside from converted debt. The shorts were betting on much more dilution continuing well into the future, but they were wrong.

Regardless of the question on exactly how much dilution shorts are betting, both you and Ron Baron are objectively wrong.

In March 2017, we completed a public offering of our common stock and issued a total of 1,536,259 shares for total cash proceeds of $399.6 million (including 95,420 shares purchased by our Chief Executive Officer for $25.0 million), net of underwriting discounts and offering costs.

On April 18, 2017, our Chief Executive Officer exercised his right under the indenture to convert all of his zero-coupon convertible senior notes due in 2020, which had an aggregate principal amount of $10.0 million. As a result, on April 26, 2017, we issued 33,333 shares of our common stock to our Chief Executive Officer in accordance with the specified conversion rate, and we recorded an increase to additional paid-in capital of $10.3 million (see Note 11, Convertible and Long-Term Debt Obligations ).

In June 2017, we issued 1,163,442 shares of our common stock pursuant to exchange agreements entered into with holders of $144.8 million in aggregate principal amount of the 2018 Notes (see Note 11, Convertible and Long-Term Debt Obligations ).

And then there is the question how much the purchase of the lower-quality Solarcity dilutes higher-quality Tesla share holders of course. But that's obviously a more subjective assesment that may show my bias.

 

[PaulRocket]

Quick question, I'm not sure if this has been discussed before, but can I as a small investor from Germany participate in the latest $1.5B bond offering or is this just for institutional investors?

 

[Mike Smith]

So who is buying those bonds? The road show just got underway today.

They're only being sold to institutions, not the public.

 

[Mike Smith]

Project Tim = tim cook = apple ?

Or one of the Tims involved in https://www.lw.com/thoughtLeadershi...n-projects-benefit-from-enhanced-oil-recovery because http://www.durandnow.com/Project_Tim_Highlights-page-002.jpg mentions EOR.

Enhanced Oil Recovery does not smell like Apple nor Tesla though... Maybe it is the fossil fuel industry with Softbank's $100b fonds and Toyota and Honda creating some anti-EV bastard together with Chevron ?

I sure hope its tesla instead...

There is absolutely no way Tim Cook would call a secret (or any) Apple project 'Project Tim'. I mean come on.

 

[ValueAnalyst]

Mazda announces breakthrough in long-coveted engine technology Executive Vice President Akira Marumoto called Mazda's engine technology the automaker's "heart". It has called its engine SKYACTIV-X, and said it would be 20 to 30 percent more efficient than its current SKYACTIV-G.

Mazda to put autonomous-driving technology in all models by 2025 Mazda said it would launch a new engine in 2019 that would be the first commercial gasoline engine to use compression ignition, improving fuel efficiency. Mazda said autonomous-driving technology would be standard on all its models by 2025.
----------

Bye Bye Mazda.

 

[Reciprocity]

If corruption means an even better sweetheart deal than Tesla got on (a) the Fremont factory (b) the Gigafactory and (c) the Buffalo factory, bring it on.

(Chicago was built on corruption. Way back at the beginning, the city fathers bribed all the railroads to come to Chicago. The railroads were all going to take the direct route around the lake, through Gary. But the city fathers of Gary were squeaky-clean, good government types. This determined the fate of the two cities. Bribery pays off.)

I'm not sure if there's a good location for a Gigafactory in Chicago. One with full access to multiple rail routes and multiple expressways would be ideal. Honestly one of the riverside steel mill sites in Gary would be perfect but they're mostly still in use and very contaminated. Detroit has the space, but Michigan is hostile to Tesla so it shouldn't be rewarded. I'd probably look at Toledo, actually.

Indiana is only 50 miles or less from Chicago. Less corruption, less taxes for Tesla employees. Anyone who can is fleeing Illinois.

 

[Reciprocity]

I was looking at the link below on worldwide sales in 2016. The Model 3 breaking over 700,000 as Elon apparently considered on today's call with potential bond investors, would put it at #9 (of course, sales on the other vehicles will fluctuate from the 2016 numbers and when Tesla can get to 700K, etc). Over 1 million, would be just enough to get the M3 to number 2, ahead of the Ford F Series truck. Number 1 spot would mean passing the Toyota Corolla, which had 1.3 million registrations last year. I think we can do it for both the 3 and Y. Next stop, 5+ million between these two scenario suggested here on TMC in 2014 ; )

Revealed: the world’s best-selling cars of 2016

Corolla might be a stretch as competition for Tesla and of course the trucks, but I get your point. There is a lot of potential where Model 3 fits economically while completely destroying the competition in therms of performance. Where the Model 3 doesn't fit, the Model Y would. You can certainly see why Tesla would be trying to accelerate the Model Y when you see how popular that format is world wide.

 

[Reciprocity]

There is also the timing. We have the Fremont/Gigafactory 1 ramp for the Model III that soaks up a good portion of the existing $3.0 Billion on hand. We have Gigafactory 2 in Buffalo, with Panasonic providing a significant amount of equipment for Solar panels and Solar roof. We have an announcement in 30 - 45 days for Tesla Semi.

Would Tesla announce Tesla Semi in September and end with "Production To Be Determined....". Or will Tesla announce Tesla Semi in partnership with Panasonic for battery technology and __________ (place your bets - Wal Mart, Amazon, Foxconn, Google, TenCent, UPS, Fedex.....) with a plant located in Michigan (Gov. Rick Snyder signs incentives for big business job creators), likely the Project TIM site. Foxconn CEO has said he is interested in Autonomous driving, AI and deep learning technology. While this could lead to a partnership with Google or Apple, neither have large scale manufacturing experience, electric vehicle production experience & technology or "big data" that Tesla has.

People I know in Michigan working in trucking have been working with Tesla on Tesla Semi for over a year.

Total speculation, but let's play a game of Clue...., but instead of the suspect, weapon and the room, name the partners and the location and the product.

I Guess Tesla partners with Panasonic, Foxconn and Wal Mart, in Michigan for Gigafactory 3 to produce Tesla Semi.

What say you Colonel Mustard?

UPS has a super hub in Louisville KY which they chose because its logistically located at the center of about 80% of the US population. It is mostly an overnight hub (planes) but I am sure they sort a large volume of ground packages being transported between the 80%. You are aprox. 1000 miles to Boston, Miami and Dallas/Houston.

 

[ValueAnalyst]

Tesla Model 3 battery packs have capacities of ~50 kWh and ~75 kWh, says Elon Musk

During the call, Musk also expressed concerns over battery cell supply potentially creating a bottleneck for Model 3 production and even suggested that Tesla could push customers toward the smaller battery pack option, which require significantly fewer cells.

Looks like TMC members' original estimates were correct.

 

[scaesare]

it's not passive by any means... and it's not targeted at @Cattledog ... it's a general refute to the notion that Nissan is simply pure evil and the Leaf is just another form of Satan.

As long as you hyperbolize and insert words in to other people's mouths to this extent:

1) You will continue to be largely dismissed here, as your words don't clearly represent you understand/respect the opinions of those you are conversing with

2) You yourself will be blind to the points being made

 

[scaesare]

Tesla Model 3 battery packs have capacities of ~50 kWh and ~75 kWh, says Elon Musk

During the call, Musk also expressed concerns over battery cell supply potentially creating a bottleneck for Model 3 production and even suggested that Tesla could push customers toward the smaller battery pack option, which require significantly fewer cells.

Looks like TMC members' original estimates were correct.

It will be interesting to see if that's total or usable.

 

[jbcarioca]

We can speculate as much as we want but one thing is clear: Tesla will choose the next Gigafactory location where the economic benefits will be the highest. Many of those benefits are likely to be tax abatements, various easements, transportation infrastructure and access to skilled labor.

Two US States have another carrot; either Michigan or Texas could choose to allow Tesla direct sales in exchange fro a Gigafactory. Were Texas to do so they'd have a huge advantage since they're the second largest motor vehicle sales State. Either Texas or Michigan have easy transportation access to the rest of NA.

Then there is China, which offers the largest auto market in the world as well as the largest BEV market in the world. In addition China has direct and indirect access to the majority of are earth production in the world. This could well be enough to trump (pun intended) any US location, partly because of semi-hostile US Federal attitudes at the moment.

Of course there is also Europe with several EU members vying with each other to get the next Tesla GF. There are lots of potential good reasons for EU locations.

My personal guess is that the next two GF locations to be announced will be one in the EU and the other in China.

If there are to be three announced the third one could be somewhere in NA, I'd bet on Texas or Michigan if they could neutralize the car dealer lobby in either of those two States. Texas would be preferable to Michigan by most metrics, in my view. Were it to be Texas It is most likely to be somewhere around the DFW metro area. In Michigan there are more obvious options but almost all of them have serious infrastructure and skill challenges today, sad to say.

Overall I think Tesla will probably announce three new GF locations this year with all of them having an incremental buildout analogous to their now-established practice in Fremont, Reno and Buffalo. They are becoming highly skilled with modular factory construction and flexible production line relocation; examples include Solar Roof and Model 3 powertrain both of which have been moved. As Fremont continues to be overstressed more and more components will move elsewhere to reduce stress.

In sum, I think we're maybe being a bit shortsighted in this thread. If Tesla is to continue to grow as most of us expect it will, they need those three GF's beginning right now and ned to move component manufacturing out of Fremont as soon as they possibly can.

If this post has merit, perhaps we should be thinking about how Tesla will resolve the enormous logistical issues all this presents. It seems to me they'll face massive pressure for highly reliable logistical solutions as well as quite substantial sea and air freight capabilities. Given past global manufacturing challenges I can easily image a sweetheart deal for a nice fleet of either B747-8 or A380 freighters plus some substantial sea arrangements that would provide for components in one direction and completed products in other directions. Depending on how the logistics equations are being evaluated and planned the GF locations and content could change from what otherwise would be logical.

Finally raw materials sourcing will complete the picture, which might tip the scales depending on which raw materials are most consequential for Tesla future demands. Just has has already been evident with, among other things, Tesla deals for Nevada lithium production, there will be more and more deals for other raw materials. In that respect we can only expect that BEV technological evolution will be a major influence that few, if any, of us are presently equipped to predict.

 

[22522]

We can speculate as much as we want but one thing is clear: Tesla will choose the next Gigafactory location where the economic benefits will be the highest. Many of those benefits are likely to be tax abatements, various easements, transportation infrastructure and access to skilled labor.

Two US States have another carrot; either Michigan or Texas could choose to allow Tesla direct sales in exchange fro a Gigafactory. Were Texas to do so they'd have a huge advantage since they're the second largest motor vehicle sales State. Either Texas or Michigan have easy transportation access to the rest of NA.

For obvious reasons, Texas has sun and wind (my electricity is 100% wind, I may have mentioned) which destroy the long tailpipe argument.

Tesla also has an AI office in Austin ( A recent UT grad turned down an interview there (leaving interview spots for others) for graduate work at Stanford).

SpaceX has some McAllen engine test facilities. And there needs to be a hyperloop from Dallas to Austin.

In short, Texas should win because Texas is more like Mars.