2017 Investor Roundtable:General Discussion

[RobStark]

Even here, a number of people have tried to figure out how old I am, where I live, where I'm from etc. I find this human tendency extremely interesting, because it literally makes zero logical sense.

It literally makes 100% sense.

How old you are,where you live and where you are from tells us about your experiences and colors your perspective.

A 70 year old New Yorker will likely have a different perspective than a Chinese millennial living in Tibet.

 

[ValueAnalyst]

Context matters. My experience, and therefore knowledge, in Wisconsin is much different than a person's experience in California. A woman's experience is much different than a man's experience. A parent's experience is much different than a college student's experience. I find it helpful to have and provide context. I don't wish anyone to provide details they aren't comfortable sharing, but to say that seeking context is illogical is wrong.

I agree that all of the factors I mentioned, and more, affect each person's experience, and therefore knowledge.

I disagree that the fact that they do is reason enough to seek context, as context more often than not, leads to misleading prejudice.

 

[AlMc]

One's frame of reference is important when it comes to context.

 

[22522]

Thank you for this extremely helpful and informative post. It changed my whole understanding of Tesla...........

Would you like to expand further than telling me I'm wrong?

It seems to me that material costs and energy density limits put a floor under how much further li-ion batteries can decline below $100/kWh.

This link has further info to expand our collective understanding. Feel free to respond constructively.

Thank you for the link. There was a lot of energy density information there, but I missed the cost data.

I think on costs, particularly with a vertically integrated company like Tesla (driven by Elon's obsession with cost), it can be very difficult to set a "can never be lower than" threshold. You have seen the River Rouge video:

Here is one on recycling:

I expect the model T price was less than the cost of many competing manufacturers.

In the link it said something about NMC being less expensive. If the model 3 uses NMC instead of NCA is the minimum cost different?

 

[Intl Professor]

One's frame of reference is important when it comes to context.

There is nothing without context. There is no meaning without relationships. Trump's secret is relating to those who also have contempt for relationships. Nihilism light. ISIS: Nihilism heavy. (Sorry, weekend.)

 

[ValueAnalyst]

Thank you for the link. There was a lot of energy density information there, but I missed the cost data.

I think on costs, particularly with a vertically integrated company like Tesla (driven by Elon's obsession with cost), it can be very difficult to set a "can never be lower than" threshold. You have seen the River Rouge video:

Here is one on recycling:

I expect the model T price was less than the cost of many competing manufacturers.

In the link it said something about NMC being less expensive. If the model 3 uses NMC instead of NCA is the minimum cost different?

Thank you for the videos. Battery chemistry/cost etc. are not my areas of expertise, so I rely on my reading of expert opinions here and elsewhere for this. So I encourage others to chime in. I think @techmaven has pretty good info on this.

For future reference: if my sentence/post starts with "my understanding is..." that means I'm less than 90% confident on the rest of the sentence, but confident/curious enough to share and start a discussion.

Because of limits to my understanding on this subject, I'm inclined to be conservative on how much cheaper Tesla's battery pack cost can get (i.e. not much further below $100/kWh) as well as how many years before competition catches up to Tesla's cost per kWh (~3-5 years as others will need to build gigafactories). Even with this, investing heavily in TSLA makes sense for me, as more data becomes available and I expand my knowledge on this matter.

Keys to my thinking on this:

1. Tesla/Panasonic partnership has led to leading technology (combo of lower cost and better energy density) that is not easily replicable
2. Gigafactory-level scale is necessary to compete with Tesla on battery cost per kWh
3. Battery cost per kWh is a primary component of gross margin
4. Tesla is at the forefront of research, via its leading team of engineers as partnerships with Jeff Dahn and others, that may lead to better tech

I would encourage anyone to argue against any of the above.

 

[MXWing]

You'd have to ask that question to SeekingAlpha, but my guess is a lot fewer people would write if SeekingAlpha were to monitor writers' brokerage records... Also, a contributor could still short one day, write the article, and cover next day etc...

And honestly, I don't know if someone's position is necessarily a useful piece of info anyway. Are you more likely to put more credence into an article if the author has skin in the game or independent? If they're young or old? White or purple? Straight or transexual? Born on earth or mars? It's stunning to me how much importance people put into things that shouldn't matter (both with respect to investing, but also in life: does someone's height or cloths really matter?) ... Even here, a number of people have tried to figure out how old I am, where I live, where I'm from etc. I find this human tendency extremely interesting, because it literally makes zero logical sense.

The best ideas have to win. The rest just muddy the waters.

I would pay Seeking Alpha a considerable sum if I could see the real time portfolios and trade history of the article writers. I share my trades in an investment group and vice versa so we develop credibility amongst one another - particularly the concept of putting your money where your mouth is.

Absolutely I would want to know the authors angle. On CNBC they disclose the traders positions. Of course they are bullish on what they own but they can sell me, makes me feel better they have skin in the game. If they are bearish and take a verified short position I take note.

It also makes complete logical sense to know as much about the writer as possible. Not always a rule but those skilled at meta analysis or reading people can figure out a ton of information based on location and age.

Take the Tesla bear Bill Maurer who writes on SA as an example. Based on a review of his LinkedIn and age I have concluded with reasonable confidence that he lives with his mom and does not have the bankroll to take any Tesla short position worth mentioning. Him throwing a hundred bucks on some Put position so far out of the money it's on Mars does not show me much conviction.

He probably uses the platform as purely a resume builder cv inflation tool to vy for an internship with Einhorn or Chanos.

 

[ValueAnalyst]

I believe this is the most important input in my DCF:

How many cars do you estimate will be participating in Tesla Network in 2025?

Of course this input incorporates a slew of other ones that will play crucial roles until 2025.

 

[MitchJi]

Thank you for this extremely helpful and informative post. It changed my whole understanding of Tesla...........

Would you like to expand further than telling me I'm wrong?

It seems to me that material costs and energy density limits put a floor under how much further li-ion batteries can decline below $100/kWh.

I apologize for my lack of diplomacy!

I agree that (obviously) that there are (multiple) floors, depending on the specific cell chemistry and the energy density. What I disagreed with is your claim that the limit is $80 kWh. How can you even make a statement like that?

Thank you for the videos. Battery chemistry/cost etc. are not my areas of expertise, so I rely on my reading of expert opinions here and elsewhere for this. So I encourage others to chime in. I think @techmaven has pretty good info on this.

For future reference: if my sentence/post starts with "my understanding is..." that means I'm less than 90% confident on the rest of the sentence, but confident/curious enough to share and start a discussion.

Because of limits to my understanding on this subject, I'm inclined to be conservative on how much cheaper Tesla's battery pack cost can get (i.e. not much further below $100/kWh) as well as how many years before competition catches up to Tesla's cost per kWh (~3-5 years as others will need to build gigafactories). Even with this, investing heavily in TSLA makes sense for me, as more data becomes available and I expand my knowledge on this matter.

Keys to my thinking on this:

1. Tesla/Panasonic partnership has led to leading technology (combo of lower cost and better energy density) that is not easily replicable
2. Gigafactory-level scale is necessary to compete with Tesla on battery cost per kWh
3. Battery cost per kWh is a primary component of gross margin
4. Tesla is at the forefront of research, via its leading team of engineers as partnerships with Jeff Dahn and others, that may lead to better tech

I would encourage anyone to argue against any of the above.

Gigafactory scale and understanding the advantages of scaling the cell manufacturing equipment. Nobody will match that until they understand the advantages of doing that.

 

[snellenr]

It's not about share price as much as the shorts' ability to close their positions. If the free float becomes significantly lower than the short interest and a sudden piece of great news causes many shorts to close their positions, the price will spike and more shorts will be forced to buy to cover due to margin requirements. It's not as simple as a short squeeze getting triggered by a piece of news.

Just curious - does anyone report a number like an "aggregate shorted price" for the stock? It's fine to know the absolute number of shares shorted, but think it might also be informative or useful to see how closely (or if) the shorts track the actual stock price - e.g., if the aggregate short price started moving closer to the actual price, would it indicate that the shorts are seeing a momentum shift if some kind...

 

[MXWing]

It literally makes 100% sense.

How old you are,where you live and where you are from tells us about your experiences and colors your perspective.

A 70 year old New Yorker will likely have a different perspective than a Chinese millennial living in Tibet.

Whether you have actually driven a Tesla or not matters as well. Yet many investors have not. Mind boggling.

Would be same as having 50k in Apple yet not owning an iPhone.

 

[Reciprocity]

Whether you have actually driven a Tesla or not matters as well. Yet many investors have not. Mind boggling.

Would be same as having 50k in Apple yet not owning an iPhone.

I hate the iPhone and never really owned one, but love there business. I use a OnePlus and have since oneplus 1. I tend to buy them used on swappa or Amazon about a model behind the newest. I don't like wasting money. But I'm fine with 100 million other people wasting money and making a nice profit from that. As far as individual stocks, Tesla replaced Apple for me.

 

[Starno]

I believe this is the most important input in my DCF:

How many cars do you estimate will be participating in Tesla Network in 2025?

Of course this input incorporates a slew of other ones that will play crucial roles until 2025.

Uber made 6,5 billion in revenues and 20 billion dollars in booking revenues in 2016.

By 2025 I suspect Tesla Network will have at least 5x the activity that Uber had in 2016.

 

[Reciprocity]

For the record, I don't care how old any if you are out what sec you are or what you are invested or how much. But I do appreciate all the info shared here. Learning a lot about many different subjects. I think it's refreshing to not really much about the people behind the info. I have come up with my own pictures in my mind got each of you based on the value of the content, which is mostly good. Apparently VA is a teenage girl who is always on her cell phone and walks into things, which makes a lot of sense based on the volume of posts.

 

[D-egg-O]

OT... just a reminder of another SpaceX launch today.

 

[D-egg-O]

I've been thinking what could drive the SP down when Model 3 launches and I am reminded of a NYT piece by Broder claiming the Model S range is cold weather was weak.

And Elon's response.

This is why I pay attention to who (author) is writing about Tesla more than the organization publishing it. I wouldn't put it past anyone like Broder publishing pieces like the one mentioned when Model 3 comes out.

 

[mrdoubleb]

OT... just a reminder of another SpaceX launch today.

So far so good! Stage 1 landed on droneship, Stage 2 at a good orbit - webcast resumes in 40 minutes for final burn & deployment.

 

[Dennisj00]

Why not have quick ads for S and X during the long periods of nothing on the launch stream?

 

[kbM3]

I'm not going to say cost is not important because it is. My issue with most of the completion out there is less to do with cost and more to do with supply. It astounds me that the bolt and LG who supplies the packs is only about to supply 20,000/year and is only recently investing to expand to supply another 10,000/year. That's like a mosquito farting compared to the GF1. So my issue is less about cost and more about where the heck are all these 2019-2020 cars getting there batteries? Are they only making 10,000 cars? So if 20 models are sure out they will make 200,000 total units by 2021? That's really not competition.

I would think that if dozens of car companies had electric cars coming that you would read about giant battery plants breaking ground, but I could only find a handful of $500Mish investments announced for completion in 2018 and beyond. Am I missing something? I mean the biggest bear case is there completion from Daimler, BMW and Audi right? And you can't really include China because those plants are for Chinese cars that are not leaving China. If you remove Chinese production, you get a handful of LG chem and Samsung SDI like competitors. There is one 2.5B investment in a giant 35GW plant in the Netherlands I think, from the guy who used to run supply chain for Tesla that is legit, but I think it is a storage play, though I guess they could make cells for cars.

Something just isn't adding up. Either there is huge demand for BEVs and there should be much more action in the factory building space or maybe the only demand anyone is seeing is Tesla. Tesla's demand seems legit with 100,000 a year and growing sales of S/X eating the lunch if BMW, MB and Audi. With roughly 600,000 reservations or the model 3, which could seriously put those 3 companies in long term Jeopardy, I just don't see the sense of urgency. It makes no sense.

If model 3 can ramp to 5k/week then 10k/week by 2019 and Y be the end of 2019, how long until we start to see massive consolidation and bankruptcies? Is there an easy money play if you are willing to bet big on specific failures? I know could just go long Tesla, but I'm really looking for a bear market play for 18-24 months. I was just going to pile into a double short fund for oil to keep it simple.

Here is my take on the part that doesn't add up (why are there not more massive production plans underway for batteries?).

Imagine the bind in which the traditional auto manufacturers find themselves. They have huge sunken costs in internal combustion engine technology throughout the entire organization. Engineering, research, manufacturing…

If you are a traditional auto manufacturer, what you would like to do is to gradually transition over to electric vehicles. Start with something like plug-in electric where you are still utilizing your internal combustion engines until the manufacturing plants expertise, staff, factories etc. can be gradually moved over.

You also do not want to cannibalize any existing vehicle sales. This is the reason why General Motors comes out with a vehicle like the Bolt. What is it? A CUV, a tall luxury 40k hatchback? It doesn't really threaten any of their existing sales.

Also, to compete with upcoming automated Gigafactories, the incumbents really will need to lay off a ton of staff. This will be a PR nightmare for them.

Absent Tesla, things would look very different.

Also Tesla has Elon. When it came to competing with rockets, Space X analyzed and improved every single aspect of every component. They have been able to cut costs by a factor of two even before considering rocket reuse. Those that think that Tesla's advantage is only in battery technology are in for a huge surprise. In my view, the traditional auto manufacturers may not even be able to produce a competitive electric vehicle at this point.

Tesla seems to be in a uniquely advantaged situation with regards to the incumbent auto manufacturers. I think their future competition may come from LG Chem, or Samsung or a Chinese manufacturer or some new vehicle start up. Although, for a new vehicle start up to overcome the incredible capitilization required will be a very steep hill to climb. Maybe Lucid?

 

[Dennisj00]

Interesting that I would rather watch Stage 2 head over Antarctica than anything else on TV,