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2017 Investor Roundtable:General Discussion

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The Bear Thesis:

Perhaps Musk has the same difficulty about estimation as my ex described to counter Larry Summers. When Larry was president of Harvard she explained his alt-fact on women’s difficulty in mathematics: “Well that’s because we’ve been told by men all our lives that (and she separated her index fingers to show 3”) to be (and then she signed 8”)."

It is quite clear Musk falls short on timelines, but is he also deficient in other measures? For example, take the phrase “mouse nuts” which many members here celebrate as though well calibrated, including myself, without actual measurement and thus its empirical value. It might be an alt-fact, I don’t know and frankly, my dears, I don’t care/give a damn.

But what about the relative size of these publicly shared gonads compared to the rest of the body? Is it just another alt-fact slur? What about their relative mass? What about their relative effectiveness? (I’m reminded about comparisons of sperm count per animal “service,” to use a family friendly term for this site, by an ancient Scientific American article. I’m not clear on exact numbers, but the order of magnitude is likely correct: pigs produce ten times as much as humans, while ant males effect 1/60,000 of ours—I guess not all of us are designed to marry queens.)

The Bull Argument:

But there is an argument in Musk’s favor. I read somewhere the weight of a sperm whale male gonad is three tons. That would put it at over 4.6% of its mass, say 65 tons. In terms of his ambition, intelligence, drive, and importance to saving the life of the planet this Earth Day Elon Musk has whale nuts. No wonder MSNBC thinks he wobbles as he walks, or talks—I can't remember which!

Sorry, I was raised on Rabelais.
 
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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 see this happening as servicing an all-electric vehicle is different than an ICE car. It's also very much a consumer-facing part of the business, so I don't see Elon giving that part up to a 3rd party. Brand is very important to Tesla.
 
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Yes, exactly the same was pointed out by me on Oct 13th. It is wrt Bertel's article that said, Tesla needs billions to build the service network. Alas! We can make the blind see. But no one can make those who keep their eyes closed willfully see the light. While Elon has been dropping bombastic statements about machines making machines, raw materials converting into cars by magic at the other end of the factory, 150 GWh battery with some magic physics on packing in factory floor, real people in the auto industry have been telling the reality. Alas. We can make the deaf hear with medical help. but no one can... Oh well. :)
Tesla's Billion-Dollar Problem: Who Will Sell And Service All Those Cars?

Short-Term TSLA Price Movements - 2016



And again!


And here is @mmd on upcoming AP fiasco 6 months ago.
Short-Term TSLA Price Movements - 2016




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.

mmd may be the same troll known as MontanaSkeptic on SeekingAlpha. Writing styles are very similar.
 
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7. Insurance policy holders must be insured up to a minimum of $500,000. Drop one of these things in a home in California and that's the average home price. This does not even include injury liabilities. Drop one of these things on a public mall, and we're talking millions in liability.

8. Licensing: required minimum of 40 hours (similar to helicopter pilots) through an accredited flight school.

Agree with almost everything - couple of specific comments.

#7 Wow, what kind of insurance system you have in US? It's usual to have $1-$2M liability insurance in Canada. Bare minimum is $200K, but no-one gets that one

#8 40 hours in school is requirement to get car driving license in most of the Europe
 
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The service center situation is slightly worrisome. The number of service centers required rises almost linearly with the number of Teslas out there, except Model 3's probably only need something like half as much time as the service centers. So, you need a lot more service centers, but maybe not quite as many as one might think.

Say you have this number of Teslas on the road:

End of 2016: 200,000 (200k S/X)
End of 2017: 350,000 (300k S/X, 50k 3)
End of 2018: 800,000 (400k S/X, 400k 3)
End of 2019: 1,550,000 (525k S/X, 900k 3, 125k Y)
End of 2020: 2,550,000 (650k S/X, 1400k 3, 350k Y, 150k Pickup)

While you have this progression, if you translate Model 3/Y/Pickup to Model S/X equivalents:

End of 2016: 200,000
End of 2017: 325,000
End of 2018: 625,000
End of 2019: 1,062,500
End of 2020: 1,600,000

And the number of service centers needed are:

End of 2016: 131
End of 2017: 213 (+62%)
End of 2018: 409 (+92%)
End of 2019: 696 (+70%)
End of 2020: 1048 (+51%)

2018 looks like it's going to be a tough year, but after that, the needed growth should start to subside. Of course, a lot of the needed growth can also be taken out in increased capacity at each service center. And it's not unlikely that the improvements to reliability will continue.

Edit:

Assuming 10% reduction in service center need per year, 2016 S/X equivalents:

End of 2016: 200,000
End of 2017: 292,500
End of 2018: 506,250
End of 2019: 774,562
End of 2020: 1,049,760

The number of service centers needed are:

End of 2016: 131
End of 2017: 191 (+46%)
End of 2018: 331 (+73%)
End of 2019: 507 (+53%)
End of 2020: 688 (+36%)
 
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The service center situation is slightly worrisome. The number of service centers required rises almost linearly with the number of Teslas out there, except Model 3's probably only need something like half as much time as the service centers. So, you need a lot more service centers, but maybe not quite as many as one might think.

Say you have this number of Teslas on the road:

End of 2016: 200,000 (200k S/X)
End of 2017: 350,000 (300k S/X, 50k 3)
End of 2018: 800,000 (400k S/X, 400k 3)
End of 2019: 1,550,000 (525k S/X, 900k 3, 125k Y)
End of 2020: 2,550,000 (650k S/X, 1400k 3, 350k Y, 150k Pickup)

While you have this progression, if you translate Model 3/Y/Pickup to Model S/X equivalents:

End of 2016: 200,000
End of 2017: 325,000
End of 2018: 625,000
End of 2019: 1,062,500
End of 2020: 1,600,000

And the number of service centers needed are:

End of 2016: 131
End of 2017: 213 (+62%)
End of 2018: 409 (+92%)
End of 2019: 696 (+70%)
End of 2020: 1048 (+51%)

2018 looks like it's going to be a tough year, but after that, the needed growth should start to subside. Of course, a lot of the needed growth can also be taken out in increased capacity at each service center. And it's not unlikely that the improvements to reliability will continue.

Edit:

Assuming 10% reduction in service center need per year, 2016 S/X equivalents:

End of 2016: 200,000
End of 2017: 292,500
End of 2018: 506,250
End of 2019: 774,562
End of 2020: 1,049,760

The number of service centers needed are:

End of 2016: 131
End of 2017: 191 (+46%)
End of 2018: 331 (+73%)
End of 2019: 507 (+53%)
End of 2020: 688 (+36%)

I think we may find that the relationship between fleet and number of service centers is much less than linear as initial service center expansion might be more about geographic coverage than supporting number of cars. They may just add more people to existing service centers going forward and add new centers at a relatively slower rate vs. number of cars added to fleet. I could've worded that better but hope that makes sense.
 
Just read Trump's claim that he will reveal a plan for sensible comprehensive tax reform on Wednesday. I suppose this "plan" will be just as viable as the half baked "alternative" to Obamacare, that Trump touted and continues to tout as a brilliantly thought out idea, that in reality was a disaster.

In fact, Trump claimed as early as March 2016 (if not earlier) that he had a plan for repealing and replacing Obamacare, that he claimed could be done on the same day. I believe he also said he would implement this plan during his first week? Still waiting to see a viable strategy. :rolleyes:

Here's How Trump Would Replace Obamacare

I guess we should also believe that Trump has found a way to turn lead into gold, cure Cancer, and manage the $20 trillion problem by next Friday?

Come on Trump! If you've found a way to pull off any of these things in under one year, I hope you can reveal a real plan of action instead of vague promises.

Who knows? Maybe Trump will eliminate income tax, introduce a value added tax and a carbon tax, and use the funds from these taxes to massively overhaul the US infrastructure, and invest in clean technology? Maybe raise the gasoline tax while he's at it?

Should probably note that if the words "import duties on imports from China" or "money will be invested in the Mexico border wall" are mentioned, all bets are off.

I'd really love to know how Trump plans to introduce a plan for comprehensive tax reform, tackle the debt ceiling, and get a budget passed in about 4 days.

I'd love to be proven wrong. Really! However, I've yet to see sufficient evidence to convince me that a government shutdown can be prevented.
 
The service center situation is slightly worrisome. The number of service centers required rises almost linearly with the number of Teslas out there, except Model 3's probably only need something like half as much time as the service centers. So, you need a lot more service centers, but maybe not quite as many as one might think.

Say you have this number of Teslas on the road:

End of 2016: 200,000 (200k S/X)
End of 2017: 350,000 (300k S/X, 50k 3)
End of 2018: 800,000 (400k S/X, 400k 3)
End of 2019: 1,550,000 (525k S/X, 900k 3, 125k Y)
End of 2020: 2,550,000 (650k S/X, 1400k 3, 350k Y, 150k Pickup)

While you have this progression, if you translate Model 3/Y/Pickup to Model S/X equivalents:

End of 2016: 200,000
End of 2017: 325,000
End of 2018: 625,000
End of 2019: 1,062,500
End of 2020: 1,600,000

And the number of service centers needed are:

End of 2016: 131
End of 2017: 213 (+62%)
End of 2018: 409 (+92%)
End of 2019: 696 (+70%)
End of 2020: 1048 (+51%)

2018 looks like it's going to be a tough year, but after that, the needed growth should start to subside. Of course, a lot of the needed growth can also be taken out in increased capacity at each service center. And it's not unlikely that the improvements to reliability will continue.

Edit:

Assuming 10% reduction in service center need per year, 2016 S/X equivalents:

End of 2016: 200,000
End of 2017: 292,500
End of 2018: 506,250
End of 2019: 774,562
End of 2020: 1,049,760

The number of service centers needed are:

End of 2016: 131
End of 2017: 191 (+46%)
End of 2018: 331 (+73%)
End of 2019: 507 (+53%)
End of 2020: 688 (+36%)

This ponzi scheme is getting completely out of control!

PS: But seriously: You show the pickup with Model 3/Y, but I think the initial pickup with be associated with the S/X. I'd love to see both. The cost of an S class pickup should be about the same as a Model S, but by next year the S/X battery lineup will be 75/100/125, after the 2170 is rolled out. That would be Model S class sales up to 150,000 (Model S/X & P for pickup), along with Model 3 & Y cranking up close to 1 million. Maybe I'm too optimistic, I think ValueAnalyst is ahead of his skis, but with Nevada listed as building 500,000 cars in 2020, they do seem to be planning on over 1 million cars in 2020.

I have not seen much comment on the plans for GF1 to be producing 500,000 cars in 2020. With Fremont on track for close to 500,000 in 2018 and plans to double the size of the plant, and adding Sparks in with 500,000, we really could see over 1mm cars annually without a foreign plant.

The secondary question is who will they be taking market share from. Early losers have been Mercedes, Porsche and Audi. With Model 3 I have to think this is going to cut into Toyota, Suburu and BMW and to a lesser degree American brands. I have a Cadillac and have an order for a Model 3. I'm not sure how many American car owners are into leading edge tech, or are for electric based on environmental or national security grounds (all 3 are critical factors for me). A pickup truck though, that could cut into GM & Ford. How do they take on the manly hunting/construction make America great image of the American pickup truck (Tundra has done this). Having a 125KWh battery that can tow 2000 pounds 300 miles would be pretty big. I'm not sure there is a market for 50,000 $100,000 pickups, but I'll be interesting what kind of innovation they bring to the table.
 
I think we may find that the relationship between fleet and number of service centers is much less than linear as initial service center expansion might be more about geographic coverage than supporting number of cars. They may just add more people to existing service centers going forward and add new centers at a relatively slower rate vs. number of cars added to fleet. I could've worded that better but hope that makes sense.
I started thinking about this after I posted. I do think there is a significant unused capacity at many service centers. Not least of all in Europe, except Norway. If the 131 service centers can actually support 300k 2016 Model S/X, the numbers might actually be more like this:

End of 2016: 131
End of 2017: 131 (+0%)
End of 2018: 221 (+69%)
End of 2019: 338 (+53%)
End of 2020: 458 (+36%)

They wouldn't really need to add more capacity this year, except in pressure areas like California. Also, to keep adding service centers this year would make it easier to keep up with demand next year. Each one they set up this year is one they won't have to set up next year.
 
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This ponzi scheme is getting completely out of control!

PS: But seriously: You show the pickup with Model 3/Y, but I think the initial pickup with be associated with the S/X. I'd love to see both. The cost of an S class pickup should be about the same as a Model S, but by next year the S/X battery lineup will be 75/100/125, after the 2170 is rolled out. That would be Model S class sales up to 150,000 (Model S/X & P for pickup), along with Model 3 & Y cranking up close to 1 million. Maybe I'm too optimistic, I think ValueAnalyst is ahead of his skis, but with Nevada listed as building 500,000 cars in 2020, they do seem to be planning on over 1 million cars in 2020.

I have not seen much comment on the plans for GF1 to be producing 500,000 cars in 2020. With Fremont on track for close to 500,000 in 2018 and plans to double the size of the plant, and adding Sparks in with 500,000, we really could see over 1mm cars annually without a foreign plant.

The secondary question is who will they be taking market share from. Early losers have been Mercedes, Porsche and Audi. With Model 3 I have to think this is going to cut into Toyota, Suburu and BMW and to a lesser degree American brands. I have a Cadillac and have an order for a Model 3. I'm not sure how many American car owners are into leading edge tech, or are for electric based on environmental or national security grounds (all 3 are critical factors for me). A pickup truck though, that could cut into GM & Ford. How do they take on the manly hunting/construction make America great image of the American pickup truck (Tundra has done this). Having a 125KWh battery that can tow 2000 pounds 300 miles would be pretty big. I'm not sure there is a market for 50,000 $100,000 pickups, but I'll be interesting what kind of innovation they bring to the table.

"Ahead of his skis"

I snowboard.

Also, it's not unusual for people to call my 3-5 year projections crazy, then gradually come around, and finally tell me the future was obvious all along.

What I have noticed since I started writing about Tesla about a year ago, however, is that this company beats even my so-called crazy projections.
 
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What I have noticed since I started writing about Tesla about a year ago, however, is that this company beats even my so-called crazy projections.
Doherty's replacement for Andrea James basically said the same thing, dropping the price target from $500 to $375 (IIRC, can't be bothered checking). Funnily enough, Andrea's claim to fame was that she was the one who least underestimated what actually happened.
 
Doherty's replacement for Andrea James basically said the same thing, dropping the price target from $500 to $375 (IIRC, can't be bothered checking). Funnily enough, Andrea's claim to fame was that she was the one who least underestimated what actually happened.

That's pretty funny.

On a related note - I was surprised to see Andrea's replacement lower the price target. Then I read his reasoning and it seemed to be more about price targets being 12-month targets vs. lower expectations. I don't know... It'll be interesting if he ends up boosting it back up to or above $500 in 2017.

On a side note - Andrea has been my favorite Wall Street analyst for about a year now (although I've never met her). Her boldness and diligence on TSLA was eye-opening for me, and her interview with @DaveT must be watched by every retail investor. When she "followed" me on Twitter about a month ago, honestly almost cried.
 
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Agree with almost everything - couple of specific comments.

#7 Wow, what kind of insurance system you have in US? It's usual to have $1-$2M liability insurance in Canada. Bare minimum is $200K, but no-one gets that one

#8 40 hours in school is requirement to get car driving license in most of the Europe

I didn't know Canada hasn't such good liability insurance. The bare minimum for the US is about $25k in liability and many people, as you can imagine, would take advantage of this. While the majority of "average American" with property such as a home to their name often opt for the $100-$300k liability claim.
 
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Looks like Wall Street analysts are starting to come around to Tesla's new $500 billion valuation, that number was penned by Elon to his employee in a recent email this weekend!

Tesla to be most valuable company?

Here's the context to Elon's email, he thinks Tesla can be a $500 billion company in the "next 5-10 years."

Could Tesla Really Become a $500 Billion Company?

I'll take the middle ground and say 7 years..
 
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Looks like Wall Street analysts are starting to come around to Tesla's new $500 billion valuation, that number was penned by Elon to his employee in a recent email this weekend!

Tesla to be most valuable company?

Here's the context to Elon's email, he thinks Tesla can be a $500 billion company in the "next 5-10 years."

Could Tesla Really Become a $500 Billion Company?

I'll take the middle ground and say 7 years..

It was a letter to Grohmann employees; here's the related paragraph:

“Unlike other automotive manufacturers, each Tesla employee receives Tesla shares in addition to salary. These shares can be easily sold for money, but they also open up the possibility of earning much more through stock appreciation. The tenfold increase in our share price over the past five years has made shareholding exceptionally profitable for our Tesla employees. I firmly believe that we have the potential for a further ten-fold increase over the next five to ten years. That would make a total value of € 100,000 from the € 10,000 in stock.”

I don't think Elon would've put this projection in writing if he didn't give it a very high probability AND thought it would be closer to 5 years than 10. I think the 10 is there for CYA purposes.

My base case predicts 2021/22 for $500B market cap and we may get there sooner if the 2013 squeeze makes a cameo.
 
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I made an edit to my post. One of the main regulation or requirement for operating such a vehicle should also include a huge insurance policy for liability purposes. For example, if this thing drops from the sky onto someone's home, they must pay for the damages done to the value of the home plus personal injury. In a place like California, an average home is $500k. If you're the average Joe and plow one into a mall and happen to burn down a large portion of the area, you're on the hook for a multimillion dollar lawsuit. Personally, it's too much of a risk for me.. the insurance policy alone would prevent the average middle class from maintaining such vehicle. The reason why airplanes are safe is because they have airports that regulate and direct landing/takeoff. Without a special landing or takeoff operator or zone, flying cars will be too impractical. Unless AI totally takes over.
Airliners generally (but surprisingly, not always) operate as you suggest: from controlled airports where takeoff and landing operations are "regulated" by air traffic control. However, most airports in the US are uncontrolled. It is still possible to fly coast to coast and never touch a radio, much less heed ATC's helpful instructions (which are not always helpful, at least, not to you). And insurance for a 4-passenger light airplane is not terribly expensive. The desirable "million dollar smooth" liability policy costs (depending on pilot experience, ratings and currency) about $1500 per year. Hull alone for a $75,000 airplane is just a few hundred.
Robin
 
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