2017 Investor Roundtable:General Discussion

[mmd]

Saw this in WSJ print version today. Reading TMC too much, I thought old Caddy was dead What will Supercruise do to Cadillac sales?

Cadillac, After Years of Struggle, Has Found Its Sweet Spot: China

Free reading from gm site:
Cadillac Global Sales Up 23.1 Percent Year-to-Date

* 14 consecutive months of global sales growt

• * 75,659 XT5’s delivered worldwide

Cadillac globally sold 25,231 units in July 2017, maintaining a 14 month run of year over year growth. China sales were up by 37.1 percent, accompanied by significant gains in Canada and South Korea.

The XT5 luxury crossover continues to lead sales for the brand with 75,659 units delivered worldwide in 2017 and achieved its second-best month in the United States with 5,504 sold. Globally, sales of the CT6 model grew 62.6 percent for the month, driven by market share gains in the USA and China, while ATS rose 7.9 percent for the month.

In July, the brand’s average U.S. transaction price remained above $54,000, maintaining the second-highest U.S. average transaction price among major luxury automotive brands.

“Cadillac is attracting youthful and affluent buyers that have never experienced the brand. This resulted in fourteen consecutive months of global sales growth,” said Cadillac President Johan de Nysschen.

 

[ValueAnalyst]

Thanks for the input! Here are my thoughts/reactions:

1. I used the number here. 2017 Average Cost of Solar Panels in the U.S. | EnergySage Your thoughts on why it should be higher with the solar roof?
2. You could be right. With a new product like this I expect they will find ways to slash prices quickly -- how far that takes them is not clear. I'll stick with a more conservative $40K for now.
3. I don't think Tesla would bother developing a major new product with less than a 25% GM target. They haven't said so I can see going with a more conservative estimate. But I will stick with 25% since I think it is more likely. I think this could be a repeat of the Model 3 -- most of the GM estimates were way too low, including mine (early 2016 I assumed 15% GM until Elon disclosed the 25% target in ~Fall 2016).

1. I wanted to be conservative, as the lower this number is the higher your projection of number of Solar Roofs will be, and I also assumed people who can afford Solar Roofs for the next few years will be more affluent crowd with larger homes.

2. Okie dokie.

3. My primary concern is this is a labor intensive product, and it's relatively more difficult to gain "an order of magnitude" type of efficiency.

 

[ValueAnalyst]

Sorry I edited my post to add : a 9 figure could manage to meet Ron Baron over dinner to discuss Tesla for example.

Yes the level of knowledge here is top notch, but users here don't have first hand infos (friend of Elon Musk or his brother, friend of CEO of large shareholder of Tesla...) . A 9 figures could have those first hand infos easily I think.

But maybe I'm wrong

I think you may be overestimating the value of "inside information," willingness of insiders to share information, and the need for such information for successful long-term investing.

My personal preference has been to stay away from managements to protect impartiality and independence. I don't think I need Elon to answer the question, "how important is the Gigafactory to Tesla's competitive advantage?"

And what's the fun in winning the game if the odds are stacked for you? I'd rather play a game where there are many FUDsters who are financed by big pockets to stack the game against me, and win.

 

[jbcarioca]

Given your level of knowledge, I thought you were an eight or nine-figure player. You know so much.

So I'll guess that TSLA doesn't make up more than 20% of your liquid portfolio.

Pretty low percentage, less than you guess. Most of my portfolio is in less volatile assets.

 

[ValueAnalyst]

I believe that the odd are almost 90% that it will be successfully developed and that is the technology that he was talking about. But I wouldn't say obviously they can do that. I'm hoping to get more information from Austin before I put together a post. IMO if both of those things are correct it's going onto make a huge impact on both Tesla and the transition to sustainable energy. I believe at the end of the day reducing or eliminating cobalt is gnats nuts.

Three things to consider are:
1. Tesla will be able to at least double the current capacity of the Gigafactory. The goodenaugh cells have 2-3x the capacity of conventional cells, which means that if they produce the same number of cells that those facts alone would yield 2-3x output.


2. That will trigger a substantial increase in "competition". A lot of oem's will jump on that. They will probably be behind Tesla, if not in developing the technology, in the time and scale of their response. Even then I don't believe for a second that they will,pose any type of threat to Tesla.

3. Tesla wil probably be extremely secretive about that. There were people saying that they were going to hold off on their MS-MX purchases because they thought that the 2170 cells might be superior. That's just the form factor, how would buyers respond if they knew that game changing cells were imminent?

We probably need a new thread on this specific type of battery chemistry. Competition will be difficult to analyze with this.

 

[pGo]

Federal labor officials are going after Tesla over alleged workers' rights violations

Tesla response is embedded in the link.

 

[ggies07]

Federal labor officials are going after Tesla over alleged workers' rights violations

Tesla response is embedded in the link.

 

[TMSE]

Federal labor officials are going after Tesla over alleged workers' rights violations

Tesla response is embedded in the link.

Well.. no doubt, it is bad news. However, it will be a long drawn process one way or the other. Hopefully, Alien dreadnaught is fully functional by the time this issue gets resolved.

 

[EinSV]

1. I wanted to be conservative, as the lower this number is the higher your projection of number of Solar Roofs will be, and I also assumed people who can afford Solar Roofs for the next few years will be more affluent crowd with larger homes.

2. Okie dokie.

3. My primary concern is this is a labor intensive product, and it's relatively more difficult to gain "an order of magnitude" type of efficiency.

Since you estimate a higher price per roof but also higher production in kw, those to some extent cancel each other out, so our estimates are actually pretty close on those two items taken together. I suspect the main differences (other than margin) are capacity estimates (I estimated only half the factory would be used for roofs, conservatively assuming the other half is still used for panels), and you may have used a higher P/E, which could be reasonable in light of the expected growth rate.

 

[Snapdragon III]

Sorry I edited my post to add : a 9 figure could manage to meet Ron Baron over dinner to discuss Tesla for example.

Yes the level of knowledge here is top notch, but users here don't have first hand infos (friend of Elon Musk or his brother, friend of CEO of large shareholder of Tesla...) . A 9 figures could have those first hand infos easily I think.

But maybe I'm wrong

I think you are totally wrong on this. If this were the case, the vast majority of hedge funds would not underperform the indexes. I think Warren Buffet has commented that one of the reasons he is so successful, is that he is in Omaha away from all the dinner parties with important people, and inside "tips". I don't think super rich people have nearly the information advantage that you assume, and the extra information that they do have access to, often turns out to be wrong, or unhelpful.

Edit- On the other hand, Jbcarioca seems to be very rich, and very well informed, and I appreciate his insights greatly. So much so that I will encourage him again to get going on an autobiography. I would read the sugar our of it. He seems like a fascinating character.

 

[ValueAnalyst]

Since you estimate a higher price per roof but also higher production in kw, those to some extent cancel each other out, so our estimates are actually pretty close on those two items taken together. I suspect the main differences (other than margin) are capacity estimates (I estimated only half the factory would be used for roofs, conservatively assuming the other half is still used for panels), and you may have used a higher P/E, which could be reasonable in light of the expected growth rate.

Sorry I just saw this. Ever listen to a song and feel like you can sing it better? Me, neither. But that hasn't kept me from trying for the last three hours...

Yes; your summary sounds about right. To be honest, regardless of what Elon said a couple of earnings calls ago, I think Tesla will move away from solar panels and almost completely to Solar Roofs, so I don't even have the legacy SolarCity business in my model, which is why my revenue estimate for 2Q17 was embarrassingly conservative.

 

[EinSV]

Sorry I just saw this. Ever listen to a song and feel like you can sing it better? Me, neither. But that hasn't kept me from trying for the last three hours...

Yes; your summary sounds about right. To be honest, regardless of what Elon said a couple of earnings calls ago, I think Tesla will move away from solar panels and almost completely to Solar Roofs, so I don't even have the legacy SolarCity business in my model, which is why my revenue estimate for 2Q17 was embarrassingly conservative.

To the extent solar cell production capacity is a constraint it is tempting to think that eventually the whole GF2 will produce roofs. But I don't like to get ahead of company guidance, especially since we don't have much info on what is involved in ramping the roof production and demand is still not established (I think it will be). Also they may need panel production to be able to offer customers a range of solar options, and also support other parts of their business, like Semi charging. But I would not be at all surprised if assigning 1/2 of the factory to solar roofs is too conservative.

 

[Intl Professor]

I don't think super rich people have nearly the information advantage that you assume, and the extra information that they do have access to, often turns out to be wrong, or unhelpful.

Also, I would think the Tesla principals and the investors are quite aware of insider trading laws.

 

[JBRR]

The Tesla Show on Twitter

 

[RobStark]

Fatal Jeep Crash Renews Criticism of Recall Fix to Prevent Fires

 

[EinSV]

The Tesla Show on Twitter

View attachment 245003

I love a good mystery. Any chance the Semi reveal will be in Australia and connected with the Powerpack install? This is a bit of a puzzle.

I doubt it will be 28th. Elon has a talk to finish by 5pm Sep. 29 Adelaide, South Australia time, which is 12:30am PST, Sep. 29th, according to the schedule of www.iac2017.org. Unless Elon rides a rocket from somewhere in CA to Adelaide or does the reveal on 8am instead of his favorite 8pm or later on 28th, he's not going to make it in time for his IAC talk.

Hmm, that's a bit of a head scratcher. Assuming the IAC date sticks it does seem like the options are a (1) morning Semi reveal on 9/28, which would be unusual; (2) reveal in Adelaide or somewhere closer than the continental US (also unusual); or (3) reschedule. Since the Sept. 28 Semi reveal date was announced in May rescheduling now seems unlikely but I guess you never know ....

 

[RobStark]

Europe's last Stalinist dictator is a BEV fan in general and a Tesla fan in particular.

Lukashenko wants Belarusian electric cars on par with Tesla

The Belarusian head of state was able to test-drive a Tesla car and spoke in glowing terms about its technical parameters and dynamics. “It accelerates so fast as to leave all the German combustion engine cars we've tested way behind. They couldn't catch up. The Tesla car goes off like a space rocket and even harder. 100kmph within 2.5 seconds. I was curious about traction. It turns out its traction is ideal,” noted Alexander Lukashenko.

The president also gave several practical recommendations after getting familiar with the Tesla electric car. “Battery is a core component. There is no need to put it in the trunk. As you can see, Tesla's battery is located at the bottom of the car. As far as I can see, it keeps the vehicle balanced even at a high speed. This is why we should adopt the same approach,” concluded the head of state. “Creating a good motor is the key thing. You have the base for it. My demonstration of this car to you is the purpose of today's conversation. Study it. It is as good as it gets.” “It is the future. We should not fall behind. We should not lag behind with our competences and scientific standards,” stressed the Belarusian leader. “In the near future nobody will want to buy combustion engine vehicles like hot cakes the way it was in the past. Compare this car to what we have created and aspire for these standards.”

 

[erthquake]

Federal labor officials are going after Tesla over alleged workers' rights violations

Tesla response is embedded in the link.

Maybe this time will be different, but I've noted that the market seems to react indifferently to this kind of labor news. FUDsters love it, but Wall Street is probably anti-union anyway.

 

[Bgarret]

I love a good mystery. Any chance the Semi reveal will be in Australia and connected with the Powerpack install? This is a bit of a puzzle.

I'm going to stand by my Shanghai guess for the Semi reveal.

6pm, July 28th: Semi reveal event and gigafactory announcement in Shanghai
(Would be handy for a 6am EST start, just before US market open.)

10pm, July 28th: Wheels up for Adelaide

1pm, July 29th: Arrive Adelaide (13.5 hours + 1.5 hrs time zone)

4pm, July 29: Speak at IAC

8pm, July 29: Tesla Powerpack Project unveil (about 130mi from Adelaide)

Not sure the travel times if Elon "Suits Up" and goes all Iron Man on us.

Edit: Thank you to S. Benson....please revise dates in your mind to read September..

 

[Mike Smith]

Tesla takes a swipe at UAW after union filed a complaint with U.S. labor board

'They are now about 10,000 employees working for Tesla in Fremont and after having talked to some of them, it looks like the effort for the unionization is done by an extremely small minority.

Last month, they did a “march” to deliver their letter of demands and I was told that there were only about a dozen employees in the “march”.'