2017 Investor Roundtable: TSLA Market Action

[ValueAnalyst]

A couple of things it seems a lot of people miss about the value of the solar roof vs other roofs and why the opportunity cost of financing vs investing else where are silly arguments:

1. I don't know why people think a roof is optional and that having a roof is critical part of a home. The fact is that the solar tiles are for homes that need a new roof or new construction and that don't have solar. Homes with roofs that don't need replacing should go with solar panels.

2. All the arguments you mention fail to take into account the fact that you get a roof that is far superior to the one you are replacing and any other roof you would put on. This has a value that is conveniently left out of many people's calculations to life time return on investment. For instance, no one compares the solar roof to asphalt + solar and includes the fact that the asphalt will need to be redone every 15 years or so or more often with weather damage. Also they ignore the fact that the solar will more then likely need to be reinstalled each time. They concurrently leave off every downside to asphalt + solar when making the comparison.

3. If you put a $10,000 roof on your house that's going to last 15 years, the value it adds to your home goes down 1/15th every year, or worse as it goes down on terms of future replacement cost which will be higher then the cost today. If you put a $60,000 then subtract the solar portion to make it equivalent to the asphalt example you end up with a $40,000 value that declines in value over 100 years. This is because you can replace both solar probs of both solutions every 20 years at roughly the same cost. Assuming the panels don't get damaged by storms that do not impact the solar tiles. Every calculation I have seen outright ignores the fact that a better roof is more valuable to the owner and future buyers and more then makes up for the difference in price with longevity and flat out higher value for better looks.

Lastly, the solar roof is not for everyone. It's for everyone else. Meaning, it you need a new roof and/or you can't put panels on the front of your house and you have few to no other options then the solar tiles are for you. Solar tiles are not for you if you love on an $80,000 house, just tear off your old roof and get asphalt and traditional solar.

People need to stop comparing apples to oranges and then ignoring the benefits and value a superior roof would bring.

I appreciate your math and logic, and I agree with you that there will be demand for the Solar Roof. On the other hand, however, I believe price will have to drop another $20k+ for subsequent versions before the Solar Roof is a mass-market product. The vast majority of consumers simply don't make the logical calculations you presented.

Given your optimism, how many do you expect Tesla will install in 2017, 2018, and 2019? I've estimated 25k, 50k, and 100k, respectively.

 

[EinSV]

@mulder1231 -- thanks for the update.

Out of curiosity, does Jonas add any color on why they haven't updated their production estimates since he says others in the market have (although the market is still forecasting well below Tesla's estimates, according to him). How does he justify his estimate of only 90,000 Model 3s in 2018, for example?

"Model 3 expectations appear to have recovered substantially over the last 4 months. Earlier this year investor expectations for Model 3 hit a trough with most investors we spoke with at that time expecting zero deliveries of the model during 2017 A series of subsequent reiterations from management and the spotting of release candidates testing on public roads have increased expectations of timing and volume significantly. Although we cannot quantify what the market expectation is at this point, we believe our forecast of 2k Model 3 deliveries this year is substantially below current market expectations. Looking to 2018, we believe our 90k volume forecast is also far below Street expectations, possibly one-half or one-third market expectations for Model 3 volume next year."​

 

[Starno]

I think the Solar Roof thing is going to see a slow growth, a slow user adoption at the beginning. Only early adopters are going on it. Until this early adopters reaches a critical mass, then the growth is going to explode.

 

[maxlength888]

I'm seeing $315.80
31.2k volume

 

[ValueAnalyst]

Given several other developments in the last few days and today on both Tesla and macro fronts, I do not expect the pre-market drop to last.

 

[Reciprocity]

I appreciate your math and logic, and I agree with you that there will be demand for the Solar Roof. On the other hand, however, I believe price will have to drop another $20k+ for subsequent versions before the Solar Roof is a mass-market product. The vast majority of consumers simply don't make the logical calculations you presented.

Given your optimism, how many do you expect Tesla will install in 2017, 2018, and 2019? I've estimated 25k, 50k, and 100k, respectively.

It's funny that we are on a Tesla forum taking about half a million 3s being sold and can't see the what's happening right before our eyes.

When people get there car and start charging at home they will find what I did. Your electric bill goes up as your gas bill goes down. This was my experience and I went from 15 year payback to 5 year literally over night. I went from no intentions to buy solar to getting quotes in less then 5 months. To now debating whether I'm going to tear off my roof or put solar on top.

Just some background, I'm not a tree hugging climate alarmist. The math will make sense for a lot more people then it did before the 3 was mass produced. It's just like Elon said when explaining why solar City acquisition was critical and that it would be obvious soon enough.

Soar roof is only party of the equation, not the end all. It's for a certain and not trivial segment.

I don't get how do many are turning there noses up this revolutionary product. No one knows how much it cost to produce or the volumes. I am going by what Elon said. Glass is cheap and easy to work with, which screams to me "tiles coming out of the machine faster then bullets from a machine gun."

I could be wrong, but I don't see Tesla doing it at all unless it meant to mass produced and automated production for great gross margins. There is really no point for them to do it unless those things are true. To much risk for little to no gain doesn't fit the Tesla way. To much risk for massive gains does.

 

[ValueAnalyst]

It's funny that we are on a Tesla forum taking about half a million 3s being sold and can't see the what's happening right before our eyes.

When people get there car and start charging at home they will find what I did. Your electric bill goes up as your gas bill goes down. This was my experience and I went from 15 year payback to 5 year literally over night. I went from no intentions to buy solar to getting quotes in less then 5 months. To now debating whether I'm going to tear off my roof or put solar on top.

Just some background, I'm not a tree hugging climate alarmist. The math will make sense for a lot more people then it did before the 3 was mass produced. It's just like Elon said when explaining why solar City acquisition was critical and that it would be obvious soon enough.

Soar roof is only party of the equation, not the end all. It's for a certain and not trivial segment.

I don't get how do many are turning there noses up this revolutionary product. No one knows how much it cost to produce or the volumes. I am going by what Elon said. Glass is cheap and easy to work with, which screams to me "tiles coming out of the machine faster then bullets from a machine gun."

I could be wrong, but I don't see Tesla doing it at all unless it meant to mass produced and automated production for great gross margins. There is really no point for them to do it unless those things are true. To much risk for little to no gain doesn't fit the Tesla way. To much risk for massive gains does.

The points you make, bolded above, are very important. Thank you for sharing your personal experience with us.

Sanity check: if per-kWh cost of electricity is 15 cents in California, an average Tesla consumer drives 15,000 miles per year, Model 3 has a range of 250 miles with a 55 kWh battery, then: 60 cycles x 55 x $0.15 = $500 per year increase in electricity bill for an all-electric vehicle consumer. I'm not sure if this is a "15-year to 5-year payback" type of transformation, but it sure makes a difference in breakeven calculation.

I've been asking several posters about their Solar Roof unit/profitability projections for the next three years, but no one so far has been willing to distill their thoughts into specific numbers. I would appreciate your thoughts around my 25k, 50k, 100k unit at 20% gross margin projection for the next three years.

 

[AlMc]

Today show about to report on the Boring Company

 

[ValueAnalyst]

FYI - Two bearish articles (here and here) were just published simultaneously on SeekingAlpha closely following today's downgrade. In the meantime, my articles on the bull side continue to get rejected... who knows why.

 

[Drax7]

Jonas glows with self importance, I doubt he can even change the oil in his car.

 

[TrendTrader007]

Thank you MS for the buying opp that i was looking for

 

[Starno]

FYI - Two bearish articles (here and here) were just published simultaneously on SeekingAlpha closely following today's downgrade. In the meantime, my articles on the bull side continue to get rejected... who knows why.

317,78

 

[TrendTrader007]

having said that I'm not rushing out to buy at the open I'll give the stock a couple of days to settle down before I buy
Anywhere from $310 to $305 or even $300 would be a great price for me
Stock may not go that low but I'll wait and see for a few days
Infact if the SP proves resilient then I'd absolutely love to pay up for my stock
Most realistic scenario is $315 or so at 10 day SMA
After that $310

 

[aznt1217]

having said that I'm not rushing out to buy at the open I'll give the stock a couple of days to settle down before I buy
Anywhere from $310 to $305 or even $300 would be a great price for me
Stock may not go that low but I'll wait and see for a few days
Infact if the SP proves resilient then I'd absolutely love to pay up for my stock
Most realistic scenario is $315 or so at 10 day SMA
After that $310

I pulled the trigger too early. Ugh.

 

[Starno]

having said that I'm not rushing out to buy at the open I'll give the stock a couple of days to settle down before I buy
Anywhere from $310 to $305 or even $300 would be a great price for me
Stock may not go that low but I'll wait and see for a few days
Infact if the SP proves resilient then I'd absolutely love to pay up for my stock
Most realistic scenario is $315 or so at 10 day SMA
After that $310

Anywhere under 500 dollars is good enough for me, as I'm extremely long term.

 

[bdy0627]

Having just looked into doing a Tesla solar roof on a large home in the midwest, it is roughly 10x more expensive than doing an asphalt roof with solar panels here. Payoff on the asphalt/solar panels is way way quicker than the Tesla solar tiles. The only real argument for it is that it looks better than a traditional roof with solar panels. Let's see them out in the wild and find out about that, but I'm not sure that many of us will pay 10x more for a better looking roof that provides similar solar energy to an asphalt/solar panels roof. The infinity argument is limited since not many of us actually plan to spend infinity in our homes let alone even 20+ years. Perhaps it will maintain the value of the home better but that remains to be seen as well. I like the product but I wish it was a lot cheaper!

 

[1kEE]

What are the chances of a gap up ?

Based on the MS downgrade and premarket trading at 317.xx I'm guessing the gap will be down...

I'm buying a few shares premarket for fun.

TT007 was looking to buy more this week, looks like he got his chance!

 

[Reciprocity]

The points you make, bolded above, are very important. Thank you for sharing your personal experience with us.

I've been asking several posters about their Solar Roof unit/profitability projections for the next three years, but no one so far has been willing to distill their thoughts into specific numbers. I would appreciate your thoughts around my 25k, 50k, 100k unit at 20% gross margin projection for the next three years.

I think 20% GM would be the absolute floor. Not because I know anything about manufacturing Solar tiles, but because they just wouldnt do it otherwise. I think GMs can be much higher in fully automated production with first principles in mind. Glass is as cheap as any material on the planet and easier to work with then almost every material you could think of for a roof. Elon himself said he was dumbfounded by the fact it wasn't already done. Its not going to get cheaper then asphalt because that product is only made to last 15 years, but it could be cheaper then everything else on the market and that includes the active solar tiles at 50-70%. $11/sq.ft. for the inactive tiles, it is already extremely competitive. The market is absolutely huge but you are right that most will not do the math until after they have an electric car or if they live in places like CA where electricity pricing is ridiculous.

I worry more about 2022 and beyond. The cost of solar has to come down 30% between now and then just to offset Federal incentives. I could definitely see solar roof files come down 30% in that time with a fully automated manufacturing process. The other problem is that solar is the thing hurting solar the most by suppressing the cost of electricity by which we gauge the value of solar. As costs come down, demand should go up so this should resolve itself, but only time will tell. Certainly EVs will cause demand to go up.

In terms of volumes. There are 5 million roofs per year that are replaced or new construction. Most would not fit into the prerequisites that I gave for solar tile, but at least 20% would. I could see volumes of 500,000 per year in 3 years. If you use the model 3,S,X production as a proxy, you could assume that most of those people will get solar at some point, if they don't already have it. What percent would opt for tile? maybe 20%. So if Tesla is producing a million+ cars a year, that is 200,000 solar roofs alone. I think Tesla's brand is so strong that people will opt for Tesla panels or solar tiles if they own a Tesla. It wont hurt that they will be competitive.

Has anyone thought of what might happen if Tesla made an all glass panel, instead of aluminum frame? Maybe they are smaller, which would help fit more on most roofs. Its not that glass is cheaper then aluminium, its that its easier to mold into what you want. Meaning it takes less machinery.

 

[ev-enthusiast]

Based on historical data, do Adam Jonas notes move the SP or not?
IIRC they actually do move the SP and they move it in the direction intended by the corresponding note.

 

[RobStark]

Having just looked into doing a Tesla solar roof on a large home in the midwest, it is roughly 10x more expensive than doing an asphalt roof with solar panels here.

Is a typical 2400 sq ft home reroof in the midwest ~1.96 per sq ft?

Or is that only a new home with a roof over 10,000 sq ft?