2017 Investor Roundtable: TSLA Market Action

[bambam4171]

The amount of power these Semi's will consume over potentially a few million miles is huge - perhaps greater than the cost of the Semi. So if they sell a $180g Semi for 25% margin but then sell another $180g in electricity for 0% margin, the overall economics aren't great. Especially if that's a -10% margin on the electricity. Perhaps this is a long term play on the assumption that electricity costs will also make the megacharger network profitable eventually, but Tesla can't afford too many long term plays at the same time.

I agree with Service not being a profit center so there's incentive to minimize this, but I think Tesla should be going for 25% margin on charging on all their charging networks. It's a very useful service Tesla is providing and I'd happily pay a 25% margin on power during road trips (if I owned one).

Agree that this might be a slight risk at the beginning. But lets look at some important factors here:
1. Solar Energy cost is constantly dropping
2. Battery cost is constantly dropping
3. At the current cost, given the promise of readily available Megachargers, who could buy anything else?

The third point is really to get as many trucks on the road because only then you can finance the buildout of such a network, Now imagine if Daimler or Volvo were to offer 5cents in 5 years: They would have to build the whole network financed (Billions of money I guess) by themselves whereas Teslas was financed by trucks sold and charging, even if it were at 0% Margin. So I don't think this is a big issue.

 

[MitchJi]

The question is : did they make this target?

In short, I do not believe at all that Tesla managed to materialize 30% cost saving19. in 2017 for battery packs sourced from the gigafactory.

The current question is do they believe that their prices are on s trajectory to reach about $75 per kWh by about 2019? I believe that they do.

Wether you believe that they know what they are doing or not is not relevant.

 

[schonelucht]

The current question is do they believe that their prices are on s trajectory to reach about $75 per kWh by about 2019? I believe that they do.

Wether you believe that they know what they are doing or not is not relevant.

I really dislike this line of thinking where there is barely any accountability on all the lofty ambitions and targets Tesla sets. At some point, you need to take stock and take into account current performance to evaluate the likelihood that future performance goals will be met. Isn't it weird to essentially avoid the question on current performance but still 'believe' that Tesla is on trajectory to meet a future price? Because current performance is exactly part of that trajectory. IF they are behind now, we need to additionally show where Tesla will speed up its planned trajectory in the future to catch up. For me, your analysis completely overlooks that question and therefore less and less usefull as Tesla continues to miss targets.

 

[Bet TSLA]

Model 3 production ramp now seems to be moving along, but from now on, I'll add six months to all timelines and double all expense guidance, until proven otherwise, and "place bets accordingly."

So are you buying end of 1Q18 for 5000 Model 3 per week? Or are you pushing that out?

 

[Bet TSLA]

Weekend's over! All this talk about Gigafactory production and such should move to the General thread.

Now, what about Friday? I think it's going back up and made a $7000 bet on 315 calls expiring today. I paid 70 cents, so maybe I'll make a bit of pocket change if I'm right. Losing it is the most likely outcome I suppose. Anybody else betting on today?

 

[HG Wells]

I have some 330 calls expiring today. Don't expect them to be in the money but you never know.

My Ryan Airline puts for March will do nicely if that Volcano in Iceland blows.
NOTE: I was stuck in England for a week the last time a volcano in Iceland blew (April 2010).

 

[ValueAnalyst]

So are you buying end of 1Q18 for 5000 Model 3 per week? Or are you pushing that out?

5k/w by June and 10k/w by next June.

 

[Mike Smith]

Both Bloomberg and Electrek have great articles out this morning suggesting major battery breakthroughs for Tesla. Maybe today Wall Street will figure it out.

Tesla’s Newest Promises Break the Laws of Batteries
Tesla Semi and Roadster innovations that could make it to Tesla’s other vehicles

“I don't think they're lying,” Jaffe said. “I just think they left something out of the public reveal that would have explained how these numbers work.”
-Sam Jaffe, Cairn Energy Research Analyst

 

[landis]

I really dislike this line of thinking where there is barely any accountability on all the lofty ambitions and targets Tesla sets. At some point, you need to take stock and take into account current performance to evaluate the likelihood that future performance goals will be met. Isn't it weird to essentially avoid the question on current performance but still 'believe' that Tesla is on trajectory to meet a future price? Because current performance is exactly part of that trajectory. IF they are behind now, we need to additionally show where Tesla will speed up its planned trajectory in the future to catch up. For me, your analysis completely overlooks that question and therefore less and less usefull as Tesla continues to miss targets.

And I really dislike constant negativity disguised as realism. But I won't go so far as to name those on this forum that might fit this profile...

Tesla is now claiming 35% battery cost reduction at ‘Gigafactory 1’ – hinting at breakthrough cost below $125/kWh

It seems to me your position only makes sense, if one dismisses the validity/evidence of this quote from nine months ago, which was embedded in the very same (April 1) message you seem to complaining about. In other words there IS evidence of cost reductions in 2017, so it IS reasonable that further expected cost reductions by 2019 are realistic.

Missing a planed ramp for M3 module production says very little about the pace of the cells or even PowerPack and PowerWall production. Your position seems to be generalizing from one well contained step of the overall enterprise to the entire entity. That in my view is unreasonable. Besides, I expect most of the evidence you seek to be closely guarded business secrets.

We have had many other discussions about vertical integration and co-location. I will pile on again and say that for GFs, it is the co-location that is more relevant than vertical integration, though both are in play.

Edit: fixed typo in 'nine'

 

[PaulusdB]

Gigantic difference between last SP and Max Pain at $ 352.50

With the expected low volume today, the MMs should have a field day (and the longs as well).

EDIT: maximum-pain.com just recalculated. Now max pain is $ 312.50
Move on people. Nothing to see here...

 

[dalalsid]

Even for Apple buybacks are signaling the slowdown of growth. Apple lost a huge opportunity in cloud and service till today they can not compete with google amazon, yet they had a head start and a decisive competitive advantage. Other areas Apple could expanded to include material science for screens and other components.

Apple is a design company. They are losing a major opportunity in home appliances. Modern home appliances suck. Things get in the door glass in ovens, grime collects in dishwashers, front load washers often stink and have poor drainage solutions, humidifiers get moldy, refrigerators have water drainage located inside freezers which can cause all kinds of problems. And appliance makers are adding screens onto devices instead of solving fundamental problems.

 

[dalalsid]

Anyone else a bit worried that Tesla might have decent margins on the Semi, but still a poor ROI on the entire Semi project?

I'm a bit worried that a lot of other investment is needed in areas that will not be profit centers, thus making the ROI on the broader project not that great.

With the Model S/X, one selling point is that Tesla operates their service centers to be break even, whereas with an ICE you'll get charged a lot for service. To a small degree, this makes buying an S/X more attractive, so the absence of margins on service enables higher margins on the cars. Similarly with the Supercharger network. Huge capitol is being deployed on a non-profit aspect of the business, so the car margin is good but the margin in these other areas is zero, so the overall margin is somewhere in between.

With the Semi, it seems that Tesla is taking this up a level. The megacharger network will be quite expensive to build and instead of promising to price it at break even, Tesla is guaranteeing ($0.07/kWh) which might be below cost for a while. At $0.07, it's hard to imagine they'll have good margins on this anytime soon - remember Tesla needs to cover not just the cost of the power, but also the cost of the chargers and batteries.

The amount of power these Semi's will consume over potentially a few million miles is huge - perhaps greater than the cost of the Semi. So if they sell a $180g Semi for 25% margin but then sell another $180g in electricity for 0% margin, the overall economics aren't great. Especially if that's a -10% margin on the electricity. Perhaps this is a long term play on the assumption that electricity costs will also make the megacharger network profitable eventually, but Tesla can't afford too many long term plays at the same time.

I agree with Service not being a profit center so there's incentive to minimize this, but I think Tesla should be going for 25% margin on charging on all their charging networks. It's a very useful service Tesla is providing and I'd happily pay a 25% margin on power during road trips (if I owned one).

I'm thinking the 7c is probably at cost for the power and like gas stations, the money will come from the attached store, grid services etc.

 

[1kEE]

Weekend's over! All this talk about Gigafactory production and such should move to the General thread.

Now, what about Friday? I think it's going back up and made a $7000 bet on 315 calls expiring today. I paid 70 cents, so maybe I'll make a bit of pocket change if I'm right. Losing it is the most likely outcome I suppose. Anybody else betting on today?

Pretty silly, but I'm in exactly the same boat. 315 calls, and the same amount. Only reason I did it is they were cheap towards the end of Wed.

Are you planning on selling at open or riding it out for a few hours? Will be a short trading session....

 

[Richgoogol]

Let's keep it between 311.5 and 312.5 today ok?

 

[Reciprocity]

If the $150g 300 mile Semi had a 25% margin, then it would have a $112.5g cost. If Tesla decided to offer the 500 mile upgrade at cost, then it would have a $142.5g cost ($112.5g + $30g) for a 20.8% margin. So merely offering the upgrade at cost has a huge impact on margins. So I really doubt they expect their cost to be over $30g for the upgrade because the margins would tank rapidly.


The M3 opened for non-employees on Monday.....and TSLA went up 3%.

They will make margin on charging. Even at 7c. I pay residential retail rates of 10c. I'm probably closer to 4c with my solar and net metering/srec sales. My guess is that they will have 30% margins on charging as well. Roughly <2c solar and <3c batteries, where needed. Not all will require batteries because of net metering. I'm really shocked that people on this forum don't understand solar better then me as a smart newby. And stop referencing Kauai as an example because they charge 13.9c because they are charging what they can, not what it costs them, they are in business to make money. By 2020 solar will commonly be at 1c/KWh and Tesla will pay cost for their own panels. Batteries will be sub $100/KWh maybe even as low as $75 for stationary. Lastly, all charging for model 3 and every Tesla sold beyond this year will be a profit center at 15c/KWh on average. Blended margins could be well above 40%.

Remember, net metering means no batteries required, only half the locations will need batteries. Tesla doesn't have to put mega solar farms at each charger, they can swap with utilities and place solar where it's most effective and cost efficient. Don't forget there are also fed incentives and local incentives.. see srectrade.com. utilities are required but law to buy these Zev like credits. This is but the same as buying generation, they literally have to pay someone to generate and consumer clean energy. Meaning they will pay Tesla per MW, to use their own green energy. About $50/MW per year for utility grade.

 

[Mike Smith]

Shorts typically attack TSLA on holiday shortened days.. looks like buyers are showing up though so this could be a big reversal day if they give up.

 

[Drax7]

So are you buying end of 1Q18 for 5000 Model 3 per week? Or are you pushing that out?

Better yet buy when the slope of the exponential ramp exceeds 30 degrees.
Accelerating production is the key especially after say 1000 units per week.

 

[Zhelko Dimic]

And I really dislike constant negativity disguised as realism. But I won't go so far as to name those on this forum that might fit this profile...



It seems to me your position only makes sense, if one dismisses the validity/evidence of this quote from nine months ago, which was embedded in the very same (April 1) message you seem to complaining about. In other words there IS evidence of cost reductions in 2017, so it IS reasonable that further expected cost reductions by 2019 are realistic.

Missing a planed ramp for M3 module production says very little about the pace of the cells or even PowerPack and PowerWall production. Your position seems to be generalizing from one well contained step of the overall enterprise to the entire entity. That in my view is unreasonable. Besides, I expect most of the evidence you seek to be closely guarded business secrets.

We have had many other discussions about vertical integration and co-location. I will pile on again and say that for GFs, it is the co-location that is more relevant than vertical integration, though both are in play.

Edit: fixed typo in 'nine'

I don't know why would you mention this to schoneluch, who is one of the most balanced and valuable contributors here...

 

[Bet TSLA]

Pretty silly, but I'm in exactly the same boat. 315 calls, and the same amount. Only reason I did it is they were cheap towards the end of Wed.

Are you planning on selling at open or riding it out for a few hours? Will be a short trading session....

I'm watching the action. Not particularly impressed with what I'm seeing so far. I'll watch a little longer and get out if it can't stay over 315 with some consistency. At $0.90 at the moment with TSLA at 315 even, but I'm still think I'm likely to take a loss by the time this trade is done.

Actually, if I don't see 316 in the next 15 minutes I'm out.

Edit: can't!
Edit: Actually, ...

 

[1kEE]

I sold the 315 calls averaging a hair under $1. Not worth the risk.... short term is a tough game! We get positive semi pricing news, positive Australia news and good macros and SP hardly does anything. Oh well, could be worse.