2017 Investor Roundtable:General Discussion

[Starno]

you think for some reason that TSLA will continue to trade at fan-boy ratios of 2x P/S and some ridiculous book value?... you think Tesla will somehow get 10% net when the highest in the scaled out auto sector is 7.5%?... why, because they use robots?

GM Hooking 30,000 Robots to Internet to Keep Factories Humming

how about another outcome... it's late 2018... Tesla spits out 120k M3s and 80k MS/MX... prices are reduced because tax incentives are no longer available... raw material prices rise... GMs are nowhere near 25% to 30% as promised... cash flows are not substantial enough to expand rapidly... Freemont factory is limited to ~500k/year... Chinese plant expected to come online in 2022 allowing for 1m... difficulties of being an auto manufacturer materialize... and...

TSLA trades w/ a P/S of 0.7 by 2019... which is high for an auto company... resulting in an SP of approximately $120.

remember... first Elon says it's ahead of schedule... then he says making cars is hard... first they say they don't need another cap raise... then they do that once or twice a year every year... first they say 100k to 200k in 2017... then they deliver less than 5k for the year...

my assumptions are realistic... yours are fantastic.

Let me explain you one of the reasons why GM is gonna die, and Tesla thrive.

Here's how decisions are made at GM :
* Someone has an idea
- First he's afraid to tell the idea, because it's a traditional corporate culture that doesn't foster innovation
- If the person still has the courage to tell it : he'll need to prepare his idea in a good corporate way : EXCEL + POWER POINT + whatever.
- Now he needs to talk to his superior
- His superior is busy and doesn't really want to talk about changing things, he wants to retire in peace not take risks.
- The person still insists, the superior give him an appointment in 2 weeks.
- 2 weeks later the person explain to the superior his idea, the superior might think it's a good idea but he's a bit afraid, he wants to think about it.
- 2 weeks later the superior tells the person that it might be a good idea, he gives the person an other appointment 2 weeks later
- This time the superior is with a team to analyze well the idea
- The team thinks it's a good idea but the need to think about it, they give an other appointment 2 weeks later
- 2 weeks later the team talks with the person about how it might be a good idea but the issue is, right now there is an other project that is in development and they can't really focus on something else. Idea is reported to an unknown date
- 2 months later ...
....
Time : 6 months - unknown

Here's how decisions are made at Tesla :
* Someone has an idea
- He think about his idea in a way that is practical and can be implemented
- He send an email to Elon
- Elon gives him an appointment 3 days later
- Elon meets with the person and think it's great idea, he assign him to a team that might be able to implement the idea.
- Person meets with the team and works on implementing it.
Time : 3 days - 1 week

 

[myusername]

Let me explain you one of the reasons why GM is gonna die, and Tesla thrive.

Here's how decisions are made at GM :
* Someone has an idea
- First he's afraid to tell the idea, because it's a traditional corporate culture that doesn't foster innovation
- If the person still has the courage to tell it : he'll need to prepare his idea in a good corporate way : EXCEL + POWER POINT + whatever.
- Now he needs to talk to his superior
- His superior is busy and doesn't really want to talk about changing things, he wants to retire in peace not take risks.
- The person still insists, the superior give him an appointment in 2 weeks.
- 2 weeks later the person explain to the superior his idea, the superior might think it's a good idea but he's a bit afraid, he wants to think about it.
- 2 weeks later the superior tells the person that it might be a good idea, he gives the person an other appointment 2 weeks later
- This time the superior is with a team to analyze well the idea
- The team thinks it's a good idea but the need to think about it, they give an other appointment 2 weeks later
- 2 weeks later the team talks with the person about how it might be a good idea but the issue is, right now there is an other project that is in development and they can't really focus on something else. Idea is reported to an unknown date
- 2 months later ...
....
Time : 6 months - unknown

Here's how decisions are made at Tesla :
* Someone has an idea
- He think about his idea in a way that is practical and can be implemented
- He send an email to Elon
- Elon gives him an appointment 3 days later
- Elon meets with the person and think it's great idea, he assign him to a team that might be able to implement the idea.
- Person meets with the team and works on implementing it.
Time : 3 days - 1 week

you missed the last section there:

"- Person meets with the team and works on implementing it."
- Team makes a prototype
- 6 weeks later Elon tweets a new revenue stream

think i'm being argumentative?... @anticitizen13.7 asks me why I don't include TE... it's because this is exactly what happened 2 years ago when Elon announced billions of revenue in 2016/2017... and he's taking advantage of your belief in him to elevate the stock.

 

[ValueAnalyst]

Let me explain you one of the reasons why GM is gonna die, and Tesla thrive.

Here's how decisions are made at GM :
* Someone has an idea
- First he's afraid to tell the idea, because it's a traditional corporate culture that doesn't foster innovation
- If the person still has the courage to tell it : he'll need to prepare his idea in a good corporate way : EXCEL + POWER POINT + whatever.
- Now he needs to talk to his superior
- His superior is busy and doesn't really want to talk about changing things, he wants to retire in peace not take risks.
- The person still insists, the superior give him an appointment in 2 weeks.
- 2 weeks later the person explain to the superior his idea, the superior might think it's a good idea but he's a bit afraid, he wants to think about it.
- 2 weeks later the superior tells the person that it might be a good idea, he gives the person an other appointment 2 weeks later
- This time the superior is with a team to analyze well the idea
- The team thinks it's a good idea but the need to think about it, they give an other appointment 2 weeks later
- 2 weeks later the team talks with the person about how it might be a good idea but the issue is, right now there is an other project that is in development and they can't really focus on something else. Idea is reported to an unknown date
- 2 months later ...
....
Time : 6 months - unknown

Here's how decisions are made at Tesla :
* Someone has an idea
- He think about his idea in a way that is practical and can be implemented
- He send an email to Elon
- Elon gives him an appointment 3 days later
- Elon meets with the person and think it's great idea, he assign him to a team that might be able to implement the idea.
- Person meets with the team and works on implementing it.
Time : 3 days - 1 week

you missed the last section there:

"- Person meets with the team and works on implementing it."
- Team makes a prototype
- 6 weeks later Elon tweets a new revenue stream

think i'm being argumentative?... @anticitizen13.7 asks me why I don't include TE... it's because this is exactly what happened 2 years ago when Elon announced billions of revenue in 2016/2017... and he's taking advantage of your belief in him to elevate the stock.

I've actually also repeatedly read/heard about GM's deep cultural problem that @Starno mentioned, and I agree with @Starno that this will be the key reason why GM fails to catch up to Tesla, by a long shot.

 

[1101011]

until you finally get it... when Tesla scales... the financials will finally reflect a traditional auto company... and TSLA will then trade as such. because Tesla is an auto company.

Today, it is...

 

[dalalsid]

you missed the last section there:

"- Person meets with the team and works on implementing it."
- Team makes a prototype
- 6 weeks later Elon tweets a new revenue stream

think i'm being argumentative?... @anticitizen13.7 asks me why I don't include TE... it's because this is exactly what happened 2 years ago when Elon announced billions of revenue in 2016/2017... and he's taking advantage of your belief in him to elevate the stock.

"- Person meets with the team and works on implementing it."
- Team makes a prototype
- 6 weeks later Elon tweets a new revenue stream
.........
- 3-5 years later, matches/outsells all the competition
Model S -> BMW 7 (you posted BMW sales up thread)
Model X -> BMW x6
in 3-5 years Model 3 -> 3 series
in 5-7 years Model Y -> x3

What is BMW going to do?

You complaint (including for TE) boils down to Tesla is often late to meet their projections. Let's see some projections from the competition and how they met them? Do you know the projections of the original Leaf? the Volt? the i3? r8 eTron? Infiniti LE? Or the future q6 eTron? Mission E? What is their volume projection and for when?

 

[electracity]

Let me explain you one of the reasons why GM is gonna die, and Tesla thrive.......

Here we have the cartoon version of business.

 

[dhrivnak]

Can you share your total installed cost of your system and the details of your calculation of the pay back period. TIA

You may want to check out this thread Driving on Sunshine as over 300 Tesla owners have made the jump to solar. My payback was better than a CD or any bond fund and certainly better than buying a Tesla.

 

[Reciprocity]

You may want to check out this thread Driving on Sunshine as over 300 Tesla owners have made the jump to solar. My payback was better than a CD or any bond fund and certainly better than buying a Tesla.

Exactly. The math becomes dramatically better when you convert hundreds of dollars in Gas to 1/2 the cost in Electricity. When your solar loan is only $150, it does not take much gas converted to electricity to pay that loan. The added benefit of course is that you lower your electricity bill for the rest of your needs as well. There were situations where the payback was not that appealing, but when you add one more more EVs and a commute or two and it gets very appealing very fast. My payback on 9.57KW system is 4-5 years and it should produce at 80%+ for up to 25-30 years sot hat is a very nice payback.

 

[Starno]

Here we have the cartoon version of business.

Yes I wanted to be nice with GM.

The truth is : the person has an idea. The person just shut the f*** up, because anything he says will be ridiculed. End of story.

______

You want a real cartoon story ? Read the VW emissions scandal story. The CEO didn't even know what is up in his company lol Ex-VW CEO Says He Didn't Know About Cheating | Industrial Equipment News

 

[avoigt]

I've actually also repeatedly read/heard about GM's deep cultural problem that @Starno mentioned, and I agree with @Starno that this will be the key reason why GM fails to catch up to Tesla, by a long shot.

The cultural aspect is a strongly underestimated factor that may determine who survives. "...not to see the forest because of all the trees" has already led to a strong misinterpretation what consumers expect from automakers in the next decade. I heard here in Germany for years the same song from them:

"people want EVs just for the short distance in the city and as a 2nd car in addition to their long distance ICE for holiday trips" .

Such a nonsense! Quite some surveys came to that conclusion years ago because this people has been paid by the auto industry and they did ask questions than led to the results the customer did somehow expect.

VW is a good example of having strong problems with culture but Daimler, BMW and Audi are not much better.

As of today I am not convinced that they profoundly understand what is happening and what they need to do. But even if some of them gets it its such a huge tanker to change direction with and will required much more than the guy at the steering wheel turning ....

 

[Krugerrand]

The cultural aspect is a strongly underestimated factor that may determine who survives. "...not to see the forest because of all the trees" has already led to a strong misinterpretation what consumers expect from automakers in the next decade. I heard here in Germany for years the same song from them:

"people want EVs just for the short distance in the city and as a 2nd car in addition to their long distance ICE for holiday trips" .

Such a nonsense! Quite some surveys came to that conclusion years ago because this people has been paid by the auto industry and they did ask questions than led to the results the customer did somehow expect.

VW is a good example of having strong problems with culture but Daimler, BMW and Audi are not much better.

As of today I am not convinced that they profoundly understand what is happening and what they need to do. But even if some of them gets it its such a huge tanker to change direction with and will required much more than the guy at the steering wheel turning ....

To be fair, there are many examples of the market (general people) not knowing what it wants or needs until someone comes along to show them.

I don’t doubt a slanted survey in this case, I’m merely saying that even a well designed survey may yield the ‘wrong’ answer.

Let’s be honest, outside the enthusiasts’ circle, the EV educated circle and a few other closed circles, the market (general people) don’t know they want or need a long range BEV like the Model 3 or that three models of such now exist. They just don’t because you can’t know what you don’t know. But they’ll know soon enough. As will the OEMs.

 

[RiverCard]

My payback on 9.57KW system is 4-5 years and it should produce at 80%+ for up to 25-30 years sot hat is a very nice payback.

Thanks. That's impressive for a system at your latitude. What is your avoided cost of a kwh?

 

[ValueAnalyst]

nope.

You always present such strong arguments. Could you illustrate with lines?

 

[avoigt]

GM increased the price for the Opel Ampera in Norway by $7,200 earlier this Month.

Is that a price adjustment to avoid reported losses per car sold given that by the takeover from Opel the manufacturer is not a part of GM any more?

 

[neroden]

True, but the value Tesla got from the purchase of solarcity was minimal. The solar business is just "treading water" until Tesla has well differentiated product to sell.

A crappy business model is a crappy business model, even with cousin Elon as chairman.

Think of the merger as a capital raise (existing leases could be, and were, monetized) combined with an option on the Buffalo factory, and the acquisition of fast Powerwall / solar installation teams. IMNSHO, it was worth it, but the value is not obvious to the casual surface-level viewer. Partly because they had to unwind the existing business model, fire the salespeople, and get out of zero-money-down leasing (something they are still in the process of doing).

 

[anticitizen13.7]

you missed the last section there:

"- Person meets with the team and works on implementing it."
- Team makes a prototype
- 6 weeks later Elon tweets a new revenue stream

think i'm being argumentative?... @anticitizen13.7 asks me why I don't include TE... it's because this is exactly what happened 2 years ago when Elon announced billions of revenue in 2016/2017... and he's taking advantage of your belief in him to elevate the stock.

I interpret this differently, because Elon Musk has a long history of over optimistic timelines, but eventual delivery.

SpaceX was supposed to orbit a satellite in 2004, only 18 months after announcement in 2003. After 3 accidents and 5 years, they delivered in 2008 on the 4th attempt. Today, SpaceX is having a record year with 16 successful commercial launches so far in 2017.

Tesla Model S was supposed to deliver in 2010, with projected worldwide volume of 20k/year. It was 2 years late, but eventually launched in 2012, with worldwide sales eventually reaching over 50k/year.

Tesla Energy is not delivering in huge volumes yet, but projects are happening and revenue is growing. Tesla Powerpack deployments in Hawaii and ongoing installation in Australia and elsewhere are real.

If Elon never delivered, you might have a point. But he usually actually does accomplish what he says he wants to accomplish, even if he is very late. This is why my projections include Tesla Energy for 2+ years from now and not today.

 

[anticitizen13.7]

Half the posts on this page are from myusername or responses to him. He is derailing the thread from valid discussion topics. Please try not to engage with him to such a degree.

I wanted to get to the true reason myusername is so bearish on TSLA. It’s very clear to me now that they think this way because (1) their thought pattern is programmatic like software and discrete, and (2) intolerance for uncertainty. Note that I acknowledge the possibility of bad outcomes for Tesla as a company, while myusername completely discounts any possiblility of a good outcome.

Basically, they follow rigid rules like a software problem. Input X must result in output Y, like a Finite State Machine taking input from a tape. The problem with thinking like this is the rules can change.

In 1997, how many people thought that Internet mail order from Amazon could compete against Walmart?

 

[neroden]

Until those “old dogs” secure battery supplies in excess of 50-100 GWh / yr, Tesla will be the only automaker on earth capable of building EV’s in significant volume. Factories are not built overnight.

And the first automakers to secure such supplies, other than Tesla, are all Chinese. BYD and some of the others (I'm still not sure which of the others are in the lead). The old-line (non-Chinese) car makers are in a really poor position though I'm sure some will survive.

 

[elasalle]

East is East and West is West
And never the twain shall meet.

I'm long and strong till 2020 (& will reevaluate after that)

 

[neroden]

TSLA trades w/ a P/S of 0.7 by 2019... which is high for an auto company... resulting in an SP of approximately $120.

Myusername, haven't you figured out yet that the other auto companies are trading at unusually low P/E ratios because they suck? Use a normal market P/E ratio, not a depressed auto company P/E ratio. (Not an optimistic high-flyer tech ratio either) You find that TSLA will be worth... probably around what it's trading for. I'm OK with that, it means I keep my money. Any successful expansions by Tesla mean gains.