2017 Investor Roundtable:General Discussion

[anticitizen13.7]

I doubt anyone is going to have the ability to make 500k plus long rage compact CUV pure BEVs in 2020.

Dipping your toes in the market with capacity to make 10k-50k is not competing with Tesla.

Battery supply certainly will be an issue, but I am keeping an eye out for signs of other Gigafactory scale projects from competing companies. So far there aren't any as far as I can tell.

BMW has committed to an X3 EV by 2020, but it is unclear whether this is going to be built on an EV-only platform or compromised by having EV parts stuffed into an ICE platform.

I am fairly sure that the CR-Vs and Foresters of the world won't get there soon. The CR-V just received full Model change in Dec. 2016 and this particular generation will be in production through the end of 2021. This means that the corresponding Acura RDX based on the same platform will be sold through 2022. The trend for mainstream crossovers seems to be hybridization... evolutionary dead end.

 

[electracity]

Agreed. I don't quite even understand how they'll transition off 12V; the entire automotive parts system is built on 12V, right? Lights, switches, audio systems, etc. I'm pumped.

With larger volume all the 12v electronics are custom. There are probably a few items like wiper and window motors that will cost them a few dollars more. But net cost there should be savings.

For electrical engineers working on an EV using 12v must seem silly.

 

[Garlan Garner]

I doubt anyone is going to have the ability to make 500k plus long rage compact CUV pure BEVs in 2020.

Dipping your toes in the market with capacity to make 10k-50k is not competing with Tesla.

It depends on the profit margin. A company can certainly compete with Tesla making 10K EV's a year if they get a profit margin that beats Tesla's. That's exactly how Tesla got into the market.
If I can sell 10K cars at a million dollars each with a $795K profit per car.....I will blow Tesla and everyone else out of the window because my profit margin would be over 75%. That would be unheard of.

That's what is making the Model 3 such a challenge. The profit margin is not going to be nearly as large as it is for the S/X.

Its going to be interesting to see if Tesla's valuation slips because the Model 3 will be their largest production product with a much smaller profit margin. Sure.....they will be making more cash, however they will be spending more of the cash they are making to make a copy of the same car.

In other words:

If it costs Tesla $5 to make the S/X and they sell them for $10 then their profit margin would be 50% ( That's what investors would want to see going forward ). Lets say Tesla after a year of sales would have $1million in the bank due to profits.

Now lets say they add the model 3.

If it costs Tesla $3 to make the Model 3 and they sell it for $5 then that profit margin is only 40% ( That would produce a much lower valuation. We would have to hope that investors would understand that dip) Even though Tesla might have $4 million in the bank at this point....we all know money in the bank does not value a company on the stock market or on wall street ( investors ).

The reason that Tesla just passed up Ford and GM as the best company is because Tesla's profit margins are higher.....even though Ford and GM made hands over fist more money than Tesla - it cost GM and Ford more money to make all of their money per dollar than it cost Tesla. I would definitely invest in a company that can do more with a dollar than the other company - no matter how much money either has in the bank.

 

[techmaven]

Agreed. I don't quite even understand how they'll transition off 12V; the entire automotive parts system is built on 12V, right? Lights, switches, audio systems, etc. I'm pumped.

However, on your last line, the Mazda CX-5 actually looks kind of what I expected the Model Y to look like (but sans grill and maybe taller):

I believe there is a movement for 48 volt systems.

 

[tinm]

Maybe @DaveT could somehow pass this sentiment on to Andrea James?

I've already passed on multiple suggestions to Tesla's Investor Relations director. He knows it's a problem. But still he has done nothing.

 

[TMSE]

I believe there is a movement for 48 volt systems.

What are the advantages of a higher voltage system? Energy efficiency? Why stop at 48V, why not go all the way up to 110V or even 240V?

 

[Garlan Garner]

Actually, Elon just said they are building them fast enough.

25k per quarter.

Tesla are building them fast enough for their goals, but they haven't reached saturation yet. Tesla's goal was 25K per quarter. That's what they told investors.

In other words as long as they have more than a 25K order backlog each quarter, they haven't reached saturation. Saturation is when 1 customer orders a car and you produce 1 car. Then you wait for another order. Saturation = stock becomes dormant to its market class and is no longer pulling its class up. ( like GM and Ford ) . GM and Ford really aren't concerned as Tesla isn't yet making enough cars to impact their market share, but they certainly should be concerned.

 

[Garlan Garner]

What are the advantages of a higher voltage system? Energy efficiency? Why stop at 48V, why not go all the way up to 110V or even 240V?

I don't think its so much what the voltage is as much as it is the opportunity to use voltage from the onboard power batteries.

The problem has been that Tesla has needed to use all of the propulsion batteries for propulsion. I believe they now have enough battery density to both propel their cars 1. The needed distance 2. Enough physical real estate for accessories and startup.

 

[22522]

What are the advantages of a higher voltage system? Energy efficiency? Why stop at 48V, why not go all the way up to 110V or even 240V?

There is a safe voltage threshold at 60 Volts written into safety agency standards and in the physics of arcing at standard temperature and pressure.

 

[Buddyroe]

(3) Make your own decisions. If you truly believe this company is going nowhere, sell all your shares and move on. With TSLA over 300 for awhile now, my guess is that you've probably made some gains if you hold shares.

I've always been long and will continue to be. But, the "we're on the verge of great things" story is really getting old.

I still stand by my assertion that Musk's single biggest mistake since starting Tesla was the X (the doors and other complexities). I wondered 2 years ago if Tesla could actually recover from that mistake and given how rosey things looked going into this ER, I thought they had. But, the truth is, it's just more of the same. How in the world does a luxury SUV not outsell your luxury sedan? Every other company's SUVs are crushing the sedan market (in ALL classes). And sadly, not only is the X not outselling the S, it's now losing sales year over year (based on the projected April sales). Thank God the Model S is carrying the company. But sadly, one great product simply does NOT make a great company. I SO wish we could go back in time and get the 2 extra years and a few hundred million bucks back that Tesla spent on designing, engineering, and producing the X. The company would probably have $500M more in cash (think cost of design, engineering, production nightmare, and most importantly, the warranty costs since the X's release), the X would have started in production 2 years earlier, it would be selling twice as many, and the M3 would be on the street right now - IF ONLY MUSK HAD LISTENED AND NIXED THE DAMN FALCON DOORS!!! GRRRRRRRR!

How much goodwill has Tesla lost because people can't get a damn appointment to get that crappy car fixed? Go read the X and S forum. People can't even get the service centers to call them back. The SCs are overloaded with those Xs.

You can look at all the charts and read all the ERs you want. But when a company's reputation for being great is lost, it's DAMN hard to get it back. And almost always, the end will come. God I hate that damn X.

 

[Buddyroe]

i updated the table in the 2017q1 thread to show actual results vs. the various analyst estimates. i'm sure tamberrino is somewhere saying "who's the muppet now!!!"

considering results are worse than most analysts estimates on most measures, i'm shocked the stock has not moved much.

Just wait til tomorrow morning. Gonna be BAD! $275 is my guess.

 

[Garlan Garner]

Just wait til tomorrow morning. Gonna be BAD! $275 is my guess.

Yeah, I agree. Its already down over 2% in after market trading. Around 303.

I know Tesla is proud of what it's doing, but they need to shave down some of those goal and profit projections.

 

[TMSE]

A key message from Elon not brought up yet here is that Tesla semi will be cheaper on a cost per ton per mile traveled metric. Looking forward to the specifics in September.

 

[techmaven]

What are the advantages of a higher voltage system? Energy efficiency? Why stop at 48V, why not go all the way up to 110V or even 240V?

Automotive 48-volt Technology

Energy efficiency, especially for higher power subsystems is a major item. Lower wiring costs is also major.

 

[SteveG3]

It depends on the profit margin. A company can certainly compete with Tesla making 10K EV's a year if they get a profit margin that beats Tesla's. That's exactly how Tesla got into the market.
If I can sell 10K cars at a million dollars each with a $795K profit per car.....I will blow Tesla and everyone else out of the window because my profit margin would be over 75%. That would be unheard of.

That's what is making the Model 3 such a challenge. The profit margin is not going to be nearly as large as it is for the S/X.

Its going to be interesting to see if Tesla's valuation slips because the Model 3 will be their largest production product with a much smaller profit margin. Sure.....they will be making more cash, however they will be spending more of the cash they are making to make a copy of the same car.

In other words:

If it costs Tesla $5 to make the S/X and they sell them for $10 then their profit margin would be 50% ( That's what investors would want to see going forward ). Lets say Tesla after a year of sales would have $1million in the bank due to profits.

Now lets say they add the model 3.

If it costs Tesla $3 to make the Model 3 and they sell it for $5 then that profit margin is only 40% ( That would produce a much lower valuation. We would have to hope that investors would understand that dip) Even though Tesla might have $4 million in the bank at this point....we all know money in the bank does not value a company on the stock market or on wall street ( investors ).

The reason that Tesla just passed up Ford and GM as the best company is because Tesla's profit margins are higher.....even though Ford and GM made hands over fist more money than Tesla - it cost GM and Ford more money to make all of their money per dollar than it cost Tesla. I would definitely invest in a company that can do more with a dollar than the other company - no matter how much money either has in the bank.

What you are describing is already included in models of Tesla's future earnings. For each vehicle offering, independent assumptions are made for volume, average sales price, and margins.

 

[Garlan Garner]

A key message from Elon not brought up yet here yet is that Tesla semi will be cheaper on a cost per ton per mile traveled metric. Looking forward to the specifics in September.

That is only attractive to buyers. Not to investors. They have to get that stock price back up.

 

[150 kWh]

I believe there is a movement for 48 volt systems.

More like 5V, 3.3V and 1.8V. These are the voltages used to power electronics / chips.

48V is great if you want to power something like an electric supercharger (which is basically an electric motor) or cut cost on your 1 km long electric harnesses (you can use thinner cables). None of this will apply to Model Y.

 

[Garlan Garner]

What you are describing is already included in models of Tesla's future earnings. For each vehicle offering, independent assumptions are made for volume, average sales price, and margins.

I almost agree except for the fact that the future is the only way you make valuations. A companies value is determined by its valuation and current promised/proven profit margins as a whole.

In other words....GM as a company isn't viewed from investors as having a profit margin for its Chevy Impala and a separate on for its Buick Lacrosse and a separate on for the Cadillac XTS.

GM the company has a single valuation and profit margin as Tesla has the same.

 

[MitchJi]

I'll sell you as many shares at $950 as you want immediately (this year). I was going to make the offer for $1k, but I decided, being in a generous mood, to give you a discount.

Let's chat in six hours

My generous offer is still on the table.

GM is focused on making its next electric vehicle profitable, says executive

Now a GM executive admitted that they are not making money on the vehicle, but they say that they are making it a priority for the next generation of electric vehicles.

Duh! That's really unbelievably stupid!

That should have been a priority from the beginning. If I was a shareholder that would definitely cause me to bail. Possibly explore a class action law suite for management incompetence.

Accounting trick of amortization of the project and likely not taking into account the loss offset from not having to buy BEV credits. If they were to include the value of the BEV credits, I have no doubt it is profitable.

Obviously!

My point is that designing and building EV's solely to make a profit on tax credits is extremely short sighted.

 

[SteveG3]

I almost agree except for the fact that the future is the only way you make valuations. A companies value is determined by its valuation and current promised/proven profit margins.

Not clear to me what you are seeing differently than what I wrote.