2017 Investor Roundtable:General Discussion

[SwTslaGrl]

It looks like the Tesla website is updated with a new Energy menu item (storage and solar).

 

[winfield100]

Yeah, I don't even hear DCF valuation or P / projected E valuation bear arguments very often.

I see comparative valution arguments, but they're jokes -- reasoning by analogy and not from first principles. As one article pointed out, Ford and GM are *penalized* by the market for their reputation for horrible strategic mistakes and execution failure, so comparing to them says more about them than about Tesla.

re: Ford and GM. i may be naive, but i was surprised to have it pointed out that they have over 90 day inventory, 1.64 million vehicles, unsold as of March 31, 2017, probably a valuation of average $25,000/vehicle so $41 Billion, just sitting there, hoping someone will buy them This may be a simplistic view, but it gives a glimpse to me of, ALL Tesla's are presold, paid for by the purchaser immediately with deposits and final (OK, most) vs "pretty faces on a lot, wallflowers hoping to get chosen
Is this a correct view? will a large % of those vehicles be recycled and rendered for parts? Is traditional auto manufacturing "makework"?

 

[winfield100]

To those who think the German possible labor issue is similar to the typical adversarial relation in the US, I have reservations.....This is not a $$ issue as much as it is a national loyalty issue it seems to me. My Son-in-law is German and despite my efforts to convince him of the positives of Tesla he is determined to support BMW. ....To me this would be like asking Harley Davidson employees to make Vespas.

But what if it was asking them to make race bikes similar to the "killacycle" or the "killajoule" 0-60 mph in less than 1 second, the 1/4 mile at over 168mph. or better than the Electric street bikes, Zero S ZF6.5 , 91 mile range or Victory Empulse TT 94mile range "a race to the top"

 

[racer26]

re: Ford and GM. i may be naive, but i was surprised to have it pointed out that they have over 90 day inventory, 1.64 million vehicles, unsold as of March 31, 2017, probably a valuation of average $25,000/vehicle so $41 Billion, just sitting there, hoping someone will buy them This may be a simplistic view, but it gives a glimpse to me of, ALL Tesla's are presold, paid for by the purchaser immediately with deposits and final (OK, most) vs "pretty faces on a lot, wallflowers hoping to get chosen
Is this a correct view? will a large % of those vehicles be recycled and rendered for parts? Is traditional auto manufacturing "makework"?

Think about that - the majors have unsold inventory sitting on their lots with a value rivalling their market cap.

Why do people even wonder why TSLA is similarly valued despite making a fraction of the vehicle count? The notion of the US majors being valued as low as they are for how many cars and how much revenue they make is the metric that's out of whack there, not TSLAs valuation.

 

[Sancho]

I was thinking the exact same thing. I wouldn't mind investing in Lilium. They have the best concept for a "flying car"-type vehicle I've ever seen.

Best not to think of Lilium as a "flying car". I have created a new thread to discuss, before our beloved moderator does this for us.

 

[Bobfitz1]

re: Ford and GM. i may be naive, but i was surprised to have it pointed out that they have over 90 day inventory, 1.64 million vehicles, unsold as of March 31, 2017, probably a valuation of average $25,000/vehicle so $41 Billion, just sitting there, hoping someone will buy them This may be a simplistic view, but it gives a glimpse to me of, ALL Tesla's are presold, paid for by the purchaser immediately with deposits and final (OK, most) vs "pretty faces on a lot, wallflowers hoping to get chosen
Is this a correct view? will a large % of those vehicles be recycled and rendered for parts? Is traditional auto manufacturing "makework"?

Interesting questions. I see that GM's record sales in 2016 were driven by sales in China, while US sales were falling off somewhat.
It would be good to know how much worse Ford and GM 90 day inventory is now versus previous points when sales took a down turn.

 

[Bobfitz1]

I am uneasy about the service center situation as well. These recalls (e.g. airbag, parking brake) do not help the situation. Even though they are not Tesla's "fault" and are paid for by the vendor, they still increase the workload on the service centers which is a bad thing.

How feasible would it be to partner with some 3rd party to offload some of these service requirements, especially with Model 3 coming soon? Do you think this is likely or unlikely? Could a company like Midas, for example, and Tesla come to a mutually beneficial agreement that would be in the best interests of customers? If not Midas, is there some "high-end" service company that could fill in the gaps?

I don't know feasibility but I'd suggest partnering with Pep Boys rather than Midas! They have 800 locations across 35 states. The one near me has 12 or more bays and seems to manage the daily flow of business professionally.

 

[Bobfitz1]

What you guys see post factum, I see in advance Till Tesla invests heavily in their service center and supercharger expansion, I do not believe Tesla has any plan to do a volume launch of Model 3 anytime soon. It will just be some pixel leaks and such, to keep fooling investors. May be a few beta cars, for which Elon already got his options vested.

"Elon should start realizing that doing things take time, resources and hard work. A tweet is not the same as an actual product."

You are too funny. A troll - who produces nothing but tweets and easily disproved hot air - wants to teach Elon Musk the virtues of hard work! News flash. Unlike you, Musk has actually produced physical objects that are real. Rockets that can be reused. World class EVs you can test drive. Have you ever bothered to test drive a Model S to leaven your hubris with a little reality?

 

[JRP3]

What you guys see post factum, I see in advance

You really think you knew about the weakness in service centers before the Tesla owners and fanatics on this forum? Really? You think too highly of yourself if you think you've ever brought up an issue which most of us haven't already considered. As others have said there is no problem here with opposing viewpoints but you should assume most of us know more about Tesla than you do so you need to bring your A game and not clutter up the board with the same things we've been hearing for years. Weak bear arguments belong on Seeking Alpha, not here.

 

[kenliles]

Some interesting M3 production line updates over at electrek
Tesla Model 3: new building permits show production line under construction, hints at automated Supercharger
"
Over the months of February and March alone, Tesla was issued 26 building permits to make modifications to its factory at 45,500 Fremont Blvd in Fremont, California, according to Electrek’s search of permits on Buildzoom.

Several of the permits have to do with the production of the Model 3.

Here are a few examples:

• reference to adding “ga3 sub-assembly conveyors and lifts” – “ga3” presumably means “general assembly 3” for “Model 3”
• there are also references to adding equipment to “biw3”, which presumably means “body in white 3” for “Model 3”
• they are also working on the “body line 3”: “body line 3 robot anchorage foundation and anchorage and egress”

They have also obtained permits to anchor a new stamping press line.
[...]
There’s another permit obtained last month that caught my eye. It made a reference to “Tesla automated parking Superchargers”:

When introducing the second generation Autopilot that Tesla thinks will enable them to reach fully autonomous driving, Musk said that Tesla would need to update its Superchargers so that they would work with autonomous parking.
"

 

[dc_h]

It looks like the Tesla website is updated with a new Energy menu item (storage and solar).

A nice looking product, but not the integrated roof tiles. These look a lot like what you see in Germany and not some of the klunkier roof systems I have seen here in the US. I wonder if the roof tiles are still coming out this year? Anyone have any insight?

 

[schonelucht]

Over the months of February and March alone, Tesla was issued 26 building permits to make modifications to its factory at 45,500 Fremont Blvd in Fremont, California, according to Electrek’s search of permits on Buildzoom.

Question for those more familiar with the building permit regulation in Fremont : can the company start work before the permit date? Or is the permit date as mentioned the earliest day to start for a particular item? I am trying to reconcile these permits with the release candidates produced early February 'almost entirely built on production tooling'.

 

[ValueAnalyst]

Does anyone have revenue estimates for Tesla Energy (or just the stationary battery segment) for the next three to five years?

I would highly appreciate any input on this. What we know so far about the stationary battery business is anecdotal evidence of surprising demand and statements from both Elon and JB that stationary storage business will grow multiple times as fast as the car business, which has so far grown faster than pretty much any business ever has. The CAGR for Tesla's car business from 2014 to 2018 will be faster than Apple, Facebook, Amazon, or Google ever grew post their respective $10 billion market-cap mark, and I don't expect Tesla's CAGR to slow down until 2020/21. It's beyond my human brain power to imagine how something can grow multiples times as fast as something that has shattered records.

It's like someone telling you, "This sprinter can run the 100-meter multiple times as fast as Usain Bolt."

I would just stare at them.

 

[PaulRocket]

Does anyone have revenue estimates for Tesla Energy (or just the stationary battery segment) for the next three to five years?

I would highly appreciate any input on this. What we know so far about the stationary battery business is anecdotal evidence of surprising demand and statements from both Elon and JB that stationary storage business will grow multiple times as fast as the car business, which has so far grown faster than pretty much any business ever has. The CAGR for Tesla's car business from 2014 to 2018 will be faster than Apple, Facebook, Amazon, or Google ever grew post their respective $10 billion market-cap mark, and I don't expect Tesla's CAGR to slow down until 2020/21. It's beyond my human brain power to imagine how something can grow multiples times as fast as something that has shattered records.

It's like someone telling you, "This sprinter can run the 100-meter multiple times as fast as Usain Bolt."

I would just stare at them.

In my current conservative revenue model I expect Tesla Energy to contribute $600M and my optimistic model forecasts $1.7B of TE revenue although that is probably a bit too optimistic.
Powerwall production is ramping up and I think Elon once said that he expects Powerwall unit sales to match or exceed vehicle unit sales. Long term, I think that every vehicle Tesla sells is a potential solar customer and also a potential Powerwall customer so Tesla might offer an integrated package.

A Tesla representative called me two times this week about the Powerwall so I'm guessing we're getting fairly close to the first installations happening(at least in Germany).

The problem with the Powerpack is that although it will make up 70-80% of TE revenue, it's a lot harder to predict.
I think that in 2018 Tesla might sell as something like 150.000 Powerwalls which equals about $825M in revenue and Powerpacks worth $3B or 8.5GWh.
One thing to remember is that the longer you look into the future, the lower the prices will go, so it's not like revenue will just go higher and higher the more GWh they sell.

Hope it helps, these are just my expectations which are probably really wrong...

 

[Cattledog]

Question for those more familiar with the building permit regulation in Fremont : can the company start work before the permit date? Or is the permit date as mentioned the earliest day to start for a particular item? I am trying to reconcile these permits with the release candidates produced early February 'almost entirely built on production tooling'.

In theory they should not start the work without the permit. In practice, they may get a running start - their call on what level of risk they want their contractor to assume.

 

[JBRR]

 

[ValueAnalyst]

In my current conservative revenue model I expect Tesla Energy to contribute $600M and my optimistic model forecasts $1.7B of TE revenue although that is probably a bit too optimistic.
Powerwall production is ramping up and I think Elon once said that he expects Powerwall unit sales to match or exceed vehicle unit sales. Long term, I think that every vehicle Tesla sells is a potential solar customer and also a potential Powerwall customer so Tesla might offer an integrated package.

A Tesla representative called me two times this week about the Powerwall so I'm guessing we're getting fairly close to the first installations happening(at least in Germany).

The problem with the Powerpack is that although it will make up 70-80% of TE revenue, it's a lot harder to predict.
I think that in 2018 Tesla might sell as something like 150.000 Powerwalls which equals about $825M in revenue and Powerpacks worth $3B or 8.5GWh.
One thing to remember is that the longer you look into the future, the lower the prices will go, so it's not like revenue will just go higher and higher the more GWh they sell.

Hope it helps, these are just my expectations which are probably really wrong...

This was extremely helpful. Thank you so much.

I like the way you approached it: Estimate Powerwall revenue, and using management guidance, multiply by 4x for Powerpack revenue. As simple as that sounds and despite its heavy reliance on management guidance, given management's accuracy with previous key estimates over the years, this may be the best possible way to project stationary storage revenue until we get more data later this year and into 2018.

I think the primary boost to SP in 2017 will be surprising demand for the Model 3 in July (as I discussed here) and relatively smooth ramp-up later this year (vs. Model X which is the most recent memory), but I expect 2018 SP boost to be primarily from Tesla Energy's "superexponential" growth.

If Tesla delivers 500,000 cars in 2018, which would mean exiting 2018 at a run-rate production of 600,000+ cars, Tesla will have nearly 1 million early-adopters driving its cars in not too distant future from now. Therefore, I think your 150,000 Powerwall estimate may prove too conservative for 2018, and this conservatism may extend exponentially to Powerpack because of your methodology.

Just the Australia project alone can add $500M (incl. inverters, installation etc) if the project gets up to 10x100MWh as Mike Cannon-Brookes's later tweets indicated! And that's in 2H17 if not 2Q17! In 100 days! Just one project! So yea, I think your estimate of ~$4-5B in full year 2018 is a bit too conservative. My base case assumes ~$10B in 2018 from Tesla Energy (incl. Powerwall, Powerpack, and Solar Roof) for a total revenue of ~$40B.

Note that the ultimate market for Tesla Energy is greater than that of Tesla Automotive, because (i) Powerwall has an order of magnitude smaller price tag, (ii) not everyone drives but everyone has a home upon which they can get a Solar Roof if the economics are right, (iii) some users of Powerwall will buy two or more of them vs. one car per consumer, and (iv) demand for Powerpacks already seem incredible (Australia, Hawaii, California etc) and it seems to be scaling more quickly.

 

[FredTMC]

I am uneasy about the service center situation as well. These recalls (e.g. airbag, parking brake) do not help the situation. Even though they are not Tesla's "fault" and are paid for by the vendor, they still increase the workload on the service centers which is a bad thing.

How feasible would it be to partner with some 3rd party to offload some of these service requirements, especially with Model 3 coming soon? Do you think this is likely or unlikely? Could a company like Midas, for example, and Tesla come to a mutually beneficial agreement that would be in the best interests of customers? If not Midas, is there some "high-end" service company that could fill in the gaps?

I'm not worried at all about the parking brake fix overwhelming tesla service.
Some of these cars won't get fixed anytime soon. Many customers will simply get this fixed the next time they are in for service ANYWAY. It's not a big deal that needs fixing immediately

In general, tesla cars are getting much more reliable than when first launched.
After general initial quality issues, tesla's don't need to go to service centers more than once a year. Tires, etc.

I've got over 80K on my ODO. At this point, what is a service center?
I just get in it and drive. Day after day. There's zero heavy maintenance needed.
Ranger service can handle a lot of issues too. No need to clog service center.

I've done annual service a couple times "just because" it's fun. Except for tires, there ain't much to do
I imagine I'll need brakes after 100k and maybe some control arms. BFD.

 

[moe.salih]

Does anyone have revenue estimates for Tesla Energy (or just the stationary battery segment) for the next three to five years?

I have a rough revenue forecast based on various hints from Tesla/Elon, I would like to know what you guys think about those numbers.

Spreadsheet: Tesla

 

[pz1975]

I'm not worried at all about the parking brake fix overwhelming tesla service.
Some of these cars won't get fixed anytime soon. Many customers will simply get this fixed the next time they are in for service ANYWAY. It's not a big deal that needs fixing immediately

In general, tesla cars are getting much more reliable than when first launched.
After general initial quality issues, tesla's don't need to go to service centers more than once a year. Tires, etc.

I've got over 80K on my ODO. At this point, what is a service center?
I just get in it and drive. Day after day. There's zero heavy maintenance needed.
Ranger service can handle a lot of issues too. No need to clog service center.

I've done annual service a couple times "just because" it's fun. Except for tires, there ain't much to do
I imagine I'll need brakes after 100k and maybe some control arms. BFD.

Agree. They will just do the recall fix when the person brings the car in for the annual service visit. Probably add 10 minutes to the already-scheduled visit. All cars fixed over 1 year. Overall impact to Tesla service will be negligible. Not a safety issue so no hurry to get it done right away.