2017 Investor Roundtable:General Discussion

[luvb2b]

anyone remember what time the letter gets posted?

update on algn, which is a likely s&p 500 index addition candidate after its eps: all that bought you so far is a sharp stick in the eye.

 

[Zaxxon]

anyone remember what time the letter gets posted?

Generally within a few minutes of market closing.

 

[kenliles]

Delphi to spin off powertrain unit, eyes developing tech; stock rises

Not sure if this has been posted, but it seems like a pretty significant move for GM.

The significant move for GM would have been doing this with the EV company-
sometimes the parent can only live vicariously through it's children--

 

[aznt1217]

anyone remember what time the letter gets posted?

update on algn, which is a likely s&p 500 index addition candidate after its eps: all that bought you so far is a sharp stick in the eye.

After market close. Sometimes on the dot, sometimes 10 minutes later.

 

[SteveG3]

Glad we agree on 2020 production numbers, on which even many bulls had called me crazy/stupid/etc. when I first made the prediction.

Note this: I think the reason why Elon said "2-4, probably 4" is because the interviewer included the number "2" in his question. Had the question been an open question (i.e. "how many do you plan to announce this year?"), I think Elon might have skipped 2, and said "3-4, probably 4." It's difficult to explain this in writing, but sometimes people in general try to be agreeable with the person with whom they are speaking, as a first step, then gently nudge the other person in the direction of their thinking in a more emotionally intelligent way rather than, "not 2, probably 4." Hope that made sense.




I agree that the scenarios you mentioned are possible scenarios, but I do not think they are likely:

1. I agree that one of the additional four Gigafactories is likely to be solar, maybe even two. 3 Gigafactories is what I assumed for my "4 million cars in 2020" prediction. Also note that Tesla can further increase the number of Gigafactories to be announced this year following the Model 3 final reveal in July if the demand for the car surges, as I expect. Finally note that the next-gen Gigafactories can arguably have a greater-than-one million cars/year production rate, which I ignored in my 4 million cars estimate in 2020.

2. I don't think distance from Fremont is an important determinant factor in how long it will take to bring the additional Gigafactories online, as they will likely include both battery production and assembly. The issues (and experience handling those issues) you mentioned that Tesla ran into in previous years is a reason to be more optimistic, not less, going forward when thinking about the time it would take to build additional Gigafactories.



I see where you are coming from on this, and you may be right. Note, however, that it just isn't in Elon's history to "wait" to execute on plans.

I would also point you to the mission statement: Tesla wants to accelerate the world's transition to sustainable energy, and the way to do this is build as many Gigafactories as they possibly can. With a successful (i.e. on time and profitable) ramp-up of the Model 3, Tesla will be generating more than $8-10 billion in gross profits starting in 2018. This is more than enough to start 4 Gigafactories simultaneously, and cash flows in 2019/20 can be used to cover tooling costs, which seem to be the majority of total Gigafactory build cost.

More importantly, however, following the Model 3 ramp-up in 2H17 and a potential short squeeze, Tesla will be able to issue tens of billions in non-convertible debt without substantially levering up their balance sheet (i.e. net debt to market value of equity). This is a major major change in the fundamental picture that is often missed when considering how long it took to build Gigafactory 1 and extrapolating that timeline to additional Gigafactories.



Let me know when you're selling at $1,000 this year or next, and I'll be there to buy them from you.

VA, I do think you have a considerable point that is little discussed re Tesla moving towards having better financing options. Thanks for bringing attention to this significant very very likely development.

More to discuss re your response here when I have a little more time to write, but for now, I just would ask that you please resist the urge to respond in a way that implies I've said something I haven't. Yesterday you incorrectly implied that I had said your volume projection for 2020/21 could not happen (which was probably the reason another member wrote a post dedicated to declaring me irrational for something I had never said, but your response implied I had). Today, you've said I agree with your 2020/21 volumes. fwiw, the whole time my position has been and remains that your volumes are possible, but, without more explicit information from Tesla, they are not my base case.

I do enjoy reading your posts, and I'm sure we'll all have plenty more to discuss in a couple of hours. Here's to a great Q1 report : )

Steve

 

[MitchJi]

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.

 

[ValueAnalyst]

VA, I do think you have a considerable point that is little discussed re Tesla moving towards having better financing options. Thanks for bringing attention to this significant very very likely development.

More to discuss re your response here when I have a little more time to write, but for now, I just would ask that you please resist the urge to respond in a way that implies I've said something I haven't. Yesterday you incorrectly implied that I had said your volume projection for 2020/21 could not happen (which was probably the reason another member wrote a post dedicated to declaring me irrational for something I had never said, but your response implied I had). Today, you've said I agree with your 2020/21 volumes. fwiw, the whole time my position has been and remains that your volumes are possible, but, without more explicit information from Tesla, they are not my base case.

I do enjoy reading your posts, and I'm sure we'll all have plenty more to discuss in a couple of hours. Here's to a great Q1 report : )

Steve

I will be more careful going forward. @MitchJi gave me similar feedback last week, so clearly this is an issue I need to focus on. Thank you.

 

[SteveG3]

I will be more careful going forward. Thank you.

If we still had reputation points, I'd give you whatever I could for that. Now, onto earnings : )

 

[jhm]

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.

I think this signals a transition from compliance car mentality to EV maker. GM is choosing to become an EV maker and divest ICE.

 

[Mich]

Generally within a few minutes of market closing.

My mail notification for the Q416 results is from 13 minutes after close.

 

[SteveG3]

I think this signals a transition from compliance car mentality to EV maker. GM is choosing to become an EV maker and divest ICE.

Jim, that would be nice, but, I think we need more of a wait and see on this. The very same executive said in the same interview,

“We know the customers would like to drive electric cars but are unwilling to pay any more for them. That’s why we’re going to be the first company to sell electric vehicles that people can afford at a profit.”

Of course, that implies the Model 3 is either not an affordable vehicle (which contradicts GM's claims about the more expensive Bolt), or that the Model 3 will not make a profit. I'm not convinced that GM has gone from posturing to commitment on long range EVs.

 

[DurandalAI]

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.

 

[Zaxxon]

I bit on a few lottery calls just prior to close--5/5 $350s and 5/12 $360s. Expecting them to expire worthless but couldn't resist just a little non-core share exposure for what I expect to be an interesting letter/call.

 

[Oil4AsphaultOnly]

The entire "SpaceX IPO" email seems to be a low quality manipulation. Either trying to push up TSLA, or trying to get more money from customers.

First of all, there is no reason to IPO SpaceX at this time. Second, IPO only to a subset of investors will undermine the current SpaceX shareholders' rights (less buyer so lower potential price). The chance for this to happen is extremely low.

I identified the three fund mangers and added their names to my "avoid" list.

Care to share the names of those fund "mangers"? I'd like to add them to my avoid list as well!

 

[techmaven]

Any hangout tonight? Anyone interested?

 

[Gerasimental]

Are we there yet? .... Are we there yet? .... Are we there yet? ... How much longer? .... Are we there yet?

 

[erthquake]

GAAP and non-GAAP losses

 

[jhm]

You do know GM spun off Delphi in 1999?

Yes, that's right. My mistake conflating the two.

In any case, divestment of ICE is important.

 

[erthquake]

$2.04 net loss per share.

 

[erthquake]

Big jump on gross profit, record revenue of $2.7B