2017 Investor Roundtable:General Discussion

[22522]

The model 3 screen said "work" and "home" in icon language.

Are those physical destinations, or screen only navigation symbols?

I see that as the extent of self driving for the first year - learned routes to build trust.

After trust is built is the time to merge segments.

The people time constant will be a year, mass adoption is usually 5.

 

[wnorris]

I personally think Tesla Network will be launched in 2Q18 so that's what I'm presenting, but I would encourage everyone to run their own DCF analysis.

Wow...2Q18, that is a pretty aggressive timeline. I do not see how that is achievable in less than a year. I would speculate that 2Q20 is more likely. Revenues will likely not be meaningful for the first full year after launch as well.

 

[ValueAnalyst]

Wow...2Q18, that is a pretty aggressive timeline. I do not see how that is achievable in less than a year. I would speculate that 2Q20 is more likely. Revenues will likely not be meaningful for the first full year after launch as well.

Again, this assumption is inconsequential to the intrinsic value.

 

[D-egg-O]

Am I the only one who keeps checking their email constantly today hoping to see a notification of Q2 deliveries?

 

[ValueAnalyst]

Thank you.

This is about error bars and driving gradients and maybe the need for a graph (like a stock price graph) that shows events that trigger rapid increases in behavior changes. For example, when Model 3 new car goes away after 3 years, the number of real participants goes up, as someone mentioned.

Also, error bars are traditionally on the Y axis, but for this stuff ambiguity in time (x axis) is important. Some say, take any schedule and multiply by Pi if you want to know when it will happen.

For this stuff, does it make sense to add 3 years and then say +/- 3 years on the x - axis?

I understand where you're coming from, but as much as I "come across as a promoter," I have to keep in mind that Tesla has continuously beat my timeline expectations in the last two years. This is an important consideration.

Also I made it clear at the top, bolded, in all caps that numbers presented are future estimates that will definitely be wrong....

 

[Alketi]

There are ~91 days in a quarter. Weekends and holidays are included.

Ok, thanks for the chart. Here's my full feedback --

1. As already stated, I would start the chart in 2020 and assume only new cars built that year qualify.

2. 25% revenue to Tesla is likely correct, based on Elon's previous comments and other industry norms.

3. You're assuming ~150,000 miles per year per car. (7 miles per paid trip + 7 miles return at no revenue) * 2.5 trips/hour * 12 hours * 365 days. This is also probably in the ballpark.

4. However, assuming 12 hours/day every day of the year means these are dedicated taxi cars not owners renting them out.

I do believe 3rd party taxi companies will form around the Tesla network. 2% may be about the right number for a dedicated service. HOWEVER -- you're assuming an additional 2% increase every quarter IN ADDITION TO the new cars built that quarter. So, your chart shows a geometric increase (from day 1) in the number of wholly dedicated "taxi" cars every quarter. It's not going to happen like that. Technology adoption follows an S-curve. It takes a time for people to accept something radically new, then it ramps linearly then it ultimately levels off.

Further, keep in mind that the Model 3 is backordered -- not by taxi companies but by people. This backorder will not be depleted by this time next year.

So you're projecting that 2% of regular people (mostly wealthy already), geometrically increasing every quarter, will fully dedicate their $60-100K vehicles to pick up strangers 12 hours every day of the year. Does that sound realistic?

How many automated superchargers do you think will be in place by this time next year? Enough to cover 2% of the fleet for 12 hours/day everywhere in the world? If not, then these cars must be charged manually -- which means only taxi companies with rented warehouse space and 60A chargers can run this sort of operation, not owners pressing a button on their app and letting their $60-100K car drive automatically all day.

In my opinion, I think some of your assumptions are correct, but the timeframe and the participation rate in the model are wildly optimistic.

 

[22522]

Again, this assumption is inconsequential to the intrinsic value.

Hi,

Not the most experienced when it comes to investing, just trying to fund the Model 3 here, but DCF means Discounted Cash Flow.

If money goes out a long time before money comes in, you run out of money.

So ambiguity about the timing of a return could have a huge impact.

It is really important to show the effect of schedule slips on the adoption of behaviors. I think 5 years? is the accepted number from technology demonstration 2018 to adoption 2023.

The Pace of Technology Adoption is Speeding Up

 

[22522]

I understand where you're coming from, but as much as I "come across as a promoter," I have to keep in mind that Tesla has continuously beat my timeline expectations in the last two years. This is an important consideration.

Also I made it clear at the top, bolded, in all caps that numbers presented are future estimates that will definitely be wrong....

Yes, Tesla does run faster. But your audience wants to make a choice between 3 scenarios with supporting facts presented.

Right now, the support is good, but they are not allowed to select from what you provide. They have one choice, feel a little uncomfortable, and reject that choice.

The ability to choose between options 1, 2 and 3 is the only way I have seen a high closing percentage with an analytical customer.

 

[ValueAnalyst]

Ok, thanks for the chart. Here's my full feedback --

1. As already stated, I would start the chart in 2020 and assume only new cars built that year qualify.

2. 25% revenue to Tesla is likely correct, based on Elon's previous comments and other industry norms.

3. You're assuming ~150,000 miles per year per car. (7 miles per paid trip + 7 miles return at no revenue) * 2.5 trips/hour * 12 hours * 365 days. This is also probably in the ballpark.

4. However, assuming 12 hours/day every day of the year means these are dedicated taxi cars not owners renting them out.

I do believe 3rd party taxi companies will form around the Tesla network. 2% may be about the right number for a dedicated service. HOWEVER -- you're assuming an additional 2% increase every quarter IN ADDITION TO the new cars built that quarter. So, your chart shows a geometric increase (from day 1) in the number of wholly dedicated "taxi" cars every quarter. It's not going to happen like that. Technology adoption follows an S-curve. It takes a time for people to accept something radically new, then it ramps linearly then it ultimately levels off.

Further, keep in mind that the Model 3 is backordered -- not by taxi companies but by people. This backorder will not be depleted by this time next year.

So you're projecting that 2% of regular people (mostly wealthy already), geometrically increasing every quarter, will fully dedicate their $60-100K vehicles to pick up strangers 12 hours every day of the year. Does that sound realistic?

How many automated superchargers do you think will be in place by this time next year? Enough to cover 2% of the fleet for 12 hours/day everywhere in the world? If not, then these cars must be charged manually -- which means only taxi companies with rented warehouse space and 60A chargers can run this sort of operation, not owners pressing a button on their app and letting their $60-100K car drive automatically all day.

In my opinion, I think some of your assumptions are correct, but the timeframe and the participation rate in the model are wildly optimistic.

Thank you for these very insightful comments. I'll wait to hear from more people before I make any necessary changes to the projection.

Yes, Tesla does run faster. But your audience wants to make a choice between 3 scenarios with supporting facts presented.

Right now, the support is good, but they are not allowed to select from what you provide. They have one choice, feel a little uncomfortable, and reject that choice.

The ability to choose between options 1, 2 and 3 is the only way I have seen a high closing percentage with an analytical customer.

Fair enough. I'll create three scenarios.

 

[NicoV]

Am I the only one who keeps checking their email constantly today hoping to see a notification of Q2 deliveries?

Last time the mail arrived in my mailbox at 9:25 pm, that's still 2.5 hours from now.

 

[Intl Professor]

If you understand the attacks better, they bother you less.

One person is concerned about the credibility of the group, and outlandish statements destroying the credibility of the group. Self policing has benefits since external correction is a blunt instrument. It is almost always better to self police.

The other person comes across as more of a promoter than analyst. They are showing more of their work, and the more clearly they show how they got their answers, and present 3 different possible scenarios for the reader to choose from, the better things will get. For example: Slow (probable), Medium (maybe), and Fast (motivated/driven).

And, importantly for me, they both seem good-hearted which is why the occasional snippiness seems an anomaly. And here we are, gossiping about each other on a thread. Reminds me of the opening scene in Marty, the movie, when two little old ladies change the subject when one says, "now, who else has died?"

 

[LargeHamCollider]

Before anyone else takes off on this (the bolded sentence above), it makes essentially no difference to my intrinsic value estimate if FSD/regulation comes about next year or in 2020/21. I believe most here agree with me that Level 4/5 autonomy (Level 4 would be enough to launch Tesla Network) will be achieved by 2020/21; three years after Elon's estimate of late-2017, which he made just a few weeks ago. And also, before anyone says "but that's only on one route from LA to NY," no, he also said during the TED talk that the software will be able to handle dynamic routing and said "no controls will be touched at any point during the trip."

SO LET'S BE CLEAR: Elon Musk predicts FSD capability (hardware/software) by the end of this year.

No, he doesn't. "No controls touched at any point... dynamic routing" etc. does not imply FSD, this is a demonstration. That said I'm quite bullish on present value of future FSD.

 

[22522]

And, importantly for me, they both seem good-hearted which is why the occasional snippiness seems an anomaly.

Snippiness goes up when the stakes are high. (I have every dime, not locked up in CDs, TIPS, or maintaining a minimum in Vanguard products, invested in Tesla stock. It was funny in that the last buy limit price was set based on even lot size and commission, as the market price at that time for an even lot was more than I had.)

Some think the credibility of this group, and what is said here, effects the stock price (blunt instrument).

I am motivated that the voices be credible. And think that everyone else is, too.

It is a bit like wearing the lucky shirt on game day. What really matters is what the folks on the field are doing.

On that note: The latest videos show better damping of the shocks as the car goes over bumps. So it seems that they are making progress on sorting out the ride quality. That is more important than an infinitesimally small percentage owner wearing the right shirt.

 

[techmaven]

Hmmm... waited until the end of quarter to reveal new features. I'm thinking they aren't worried about making Q2 numbers (which is guided low anyways).

Most curious thing about the new S75 and S75D is whether or not they are using Model 3 derived technology. In other words, did they just put in the same 90D/100D 2nd gen drive units, including inverter to allow the 75's to have near matching performance, or did they choose to incorporate the 3rd gen, built for Model 3 drive units with new inverters. Electrek wrote about this earlier:

Tesla Model 3 exclusive leaked specs: 300kW+ inverter architecture putting its power capacity near Model S

From the article:

According to the source, the strategy paid off and the inverter architecture for the Model 3 will have a capacity of “over 300kW”, comparable to the Model S’ RWD system even though the S is a much higher-end and bigger vehicle.

The system is also geared toward manufacturing with ~25% fewer unique parts and they managed to significantly increase both the volumetric and gravimetric current density. The Model 3 inverter is also expected to be much cheaper on a dollar per power capacity basis than even Tesla’s most recent dual motor inverter system.

It would be just like Tesla to incorporate this into the S/X on the eve of the 3 launch.

 

[Ovulation]

Hi,

Not the most experienced when it comes to investing, just trying to fund the Model 3 here, but DCF means Discounted Cash Flow.

If money goes out a long time before money comes in, you run out of money.

So ambiguity about the timing of a return could have a huge impact.

It is really important to show the effect of schedule slips on the adoption of behaviors. I think 5 years? is the accepted number from technology demonstration 2018 to adoption 2023.

The Pace of Technology Adoption is Speeding Up

View attachment 233722

It's kind of cool that a lot of innovations on this slide have merged into one device.

It will be interesting to see how fast the e-car industry will be able to scale when everyone wants to buy an electric vehicle ... you have to move so much (much, much) more stuff around the world to build a car compare to say an iPhone. The nice thing is that Tesla is in a good position to outgrow the competition, thanks to the early investments in the gigafactory in Nevada and the lack of investment in the fossil fuel game (no fear of stranded assets).

btw. The boldness to commit to the gigafactory in 2013 still blows my mind and maybe even more impressive was to lure Panasonic into it.

 

[ValueAnalyst]

He's literally trolling us with all these non-M3 tweets

 

[geneclean55]

He's literally trolling us with all these non-M3 tweets

"Coming later today" he just wrote

 

[Krugerrand]

Kind of an interesting (to me) thing I ran across today that could fit into Tesla Network. I grabbed a little breakfast snack at Mickey D's today and noticed on the bag an advert for Uber Eats (APP UberEATS)). Apparently Uber will deliver Mickey D's to your door?! So what if a business owner (pizza, car parts, whathaveyou) purchased a couple of M3's, put them on the Tesla Network and you could order from these businesses, they put your food/product in the car and then simply sent it to your door for delivery? Then the car goes back to the business. Or what if a small entrepreneur fixed chainsaws and other small devices and sent the car out to pick up items to be fixed and dropped off other items that were already fixed...you get the idea.

 

[Ovulation]

Kind of an interesting (to me) thing I ran across today that could fit into Tesla Network. I grabbed a little breakfast snack at Mickey D's today and noticed on the bag an advert for Uber Eats (APP UberEATS)). Apparently Uber will deliver Mickey D's to your door?! So what if a business owner (pizza, car parts, whathaveyou) purchased a couple of M3's, put them on the Tesla Network and you could order from these businesses, they put your food/product in the car and then simply sent it to your door for delivery? Then the car goes back to the business. Or what if a small entrepreneur fixed chainsaws and other small devices and sent the car out to pick up items to be fixed and dropped off other items that were already fixed...you get the idea.

I can't wait for the reactions when the first one sends his self driving car 50 miles back and forth to bring him a six pack

 

[neroden]

That's interesting. This fits with the Benner-Fibonacci Cycle Chart. Except, what screws the prediction up on the chart is the 2008-2009 deep recession (arguably depression), which pulled the deep recession/depression portion of the chart forward by 13 years (supposed to be 18 years after the previous point, predicted to be 2003). So not sure how this fits the picture anymore. But originally 2021 is where the next point in the chart lands.

The people who think these things happen on cycles of predictable length are wrong. Better to pay attention to those who watch the funadmentals. 2008 was brought on by a "Minsky moment" deflating a particular "Minsky" type of financial bubble; watch for a "Minsky" bubble if you're watching for a repeat.