2017 Investor Roundtable: TSLA Market Action

[Reciprocity]

Not that I think Tesla will make such profits in the near future (3 years). But you forgot the profit splitting between the joint venture partner and Tesla. The partner won't be putting up investments for nothing. The batteries still need to be imported, unless M3, MS and MX built in China will use China made LiFePO4 cells.

IMO, the China plan is hastened because of China curbing excess EV production. With current low volume of production for Tesla, there is very little benefit in setting up another factory in China. The factory cost has to be amortized over the low volume sales in China. Model 3 will face steep competition in China, where it will need to compete on value, not just status as in the case of Model S&X. I don't expect more than 2k per month M3 sales in China for many years.

China's New Rules: Tesla Must Stay Home, Used Car Factories Go Up In Price

Have you even seen a Chinese made car? Competition won't be an issue. You so realize Tesla makes batteries right? You help saying they will have to import them, why wouldn't they make them there? Is it against a Chinese law?

Elon met with the vice primere of China. I am about 100000% sure that the Chinese get that Tesla isn't going to give them a 50% ownership, Tesla would rather make there cars on the border and pay the taxes. Is Tesla goes to China it will be because China was willing to make up new rules just for Tesla, kinda of like they do here in America with the franchise dealership rules only in the opposite direction. China needs Tesla to help it save it's life blood, it's people, who are choking to death in their cities and that is with most people riding bicycles. It's a real issue that will only be magnified by 24 million more cars per year and unlike the US, many of those are first time car owners. In a sense, whether China lives or dies is on the back of Tesla.

I predict that they will announce a deal to build a factory in China and the terms will anger many who didn't get the kind of deal Tesla did. This thought that Tesla needs China more then China needs Tesla is silly. Tesla can sell 10 million cars per year without any factories in China and with countries throwing themselves at Tesla like a teenage girl at a Justin Beeber concert.

But hey, good FUD man, hope lots of shorts buy into that dribble.

 

[neroden]

You think there's demand for 500,000 S and X per year? Really?

Worldwide? Actually, yes, long-term, I do, once Tesla is really present worldwide. I don't think Tesla has sufficient worldwide distribution to make that possible yet, though.

This is why the next production expansion for S or X will happen in conjunction with one of the overseas Gigafactories, I think.

 

[jhm]

Too old school for you? Do I need to break it down?

 

[neroden]

So FWIW it looks to me like a triangle on the weekly charts. If I'm right we should trade tighter and tighter and then break out. Probably upwards IMO.

Disclaimer: I do not understand technicals. At all. Just learning.

 

[tander]

We hit 383 on the initial Bloomberg rumor. In my head 385 would be reasonable. But if it really does close at 385, roaming to 390 might be in the cards.

I'm curious if you would expect 383 again or +$10 from a Chinese factory announcement

I think you guys might be underestimating a formal China announcement, it's the largest auto market and any half favorable deal is like opening the front doors wide instead of letting tesla creep through a sidedoor. I guess maybe the the market wouldn't understand how big a step it is until after deliveries start there etc., but getting both feet through the door in China is basically the same or BETTER than being in the US market depending on the partner and terms, and 3 or 5% bump doesn't seem to justify it.

 

[geneclean55]

South Australia budget is delivered later today. More details on the $500 million dollar renewable energy plan are expected.

 

[Ameliorate]

South Australia budget is delivered later today. More details on the $500 million dollar renewable energy plan are expected.

Oh, tomorrow could be fun!

 

[dc_h]

Have you even seen a Chinese made car? Competition won't be an issue. You so realize Tesla makes batteries right? You help saying they will have to import them, why wouldn't they make them there? Is it against a Chinese law?

Elon met with the vice primere of China. I am about 100000% sure that the Chinese get that Tesla isn't going to give them a 50% ownership, Tesla would rather make there cars on the border and pay the taxes. Is Tesla goes to China it will be because China was willing to make up new rules just for Tesla, kinda of like they do here in America with the franchise dealership rules only in the opposite direction. China needs Tesla to help it save it's life blood, it's people, who are choking to death in their cities and that is with most people riding bicycles. It's a real issue that will only be magnified by 24 million more cars per year and unlike the US, many of those are first time car owners. In a sense, whether China lives or dies is on the back of Tesla.

I predict that they will announce a deal to build a factory in China and the terms will anger many who didn't get the kind of deal Tesla did. This thought that Tesla needs China more then China needs Tesla is silly. Tesla can sell 10 million cars per year without any factories in China and with countries throwing themselves at Tesla like a teenage girl at a Justin Beeber concert.

But hey, good FUD man, hope lots of shorts buy into that dribble.

I am thinking the Tencent investment might have been the first part of the plan to get the plant in china. They could lay the groundwork socially, and help fund the plant as the junior partner. Tencent help enable govt policy, Tesla gets a new plant with minimal upfront cost and everyone wins. Unless you're short, in which case the grundie tightens.

 

[Mike Smith]

New rules just announced for the Shanghai Pilot Free Trade Zone where Tesla is rumored to be locating:

'In manufacturing, foreign companies are allowed to produce their own rail transport facilities, instead of having to set up joint ventures with local firms. Rules were also eased for foreign companies manufacturing electric vehicles and related products.'

Free trade zone restrictions loosened | China (Shanghai) Pilot Free Trade Zone

 

[neroden]

New rules just announced for the Shanghai Pilot Free Trade Zone where Tesla is rumored to be locating:

'In manufacturing, foreign companies are allowed to produce their own rail transport facilities, instead of having to set up joint ventures with local firms. Rules were also eased for foreign companies manufacturing electric vehicles and related products.'

Free trade zone restrictions loosened | China (Shanghai) Pilot Free Trade Zone

Boy, I really wish we had the details on this. If Tesla doesn't have to set up a joint venture for electric car production... they're golden. It was made clear that Siemens, Alstom, etc. can now set up wholly owned train manufacturing firms, but I simply haven't found out yet whether this is true for electric car manufacturers. Does anyone read Chinese who can look at the original list?!?

 

[TradingInvest]

Recently Elon said China changed the rules (for EV production?) at a perfect time for Tesla. Sorry can't find the link.

 

[neroden]

On tangential news... I'm shaking my head at the price action on Whole Foods. Talk about lack of merger arbitrage. The current price assumes the merger will fail *and* a higher bid will be made, which is a crazy risky bet to take. Quite a contrast to the SolarCity pricing (or the Trina Solar pricing).

There is so much mispricing around mergers; sometimes you can make a mint on it, sometimes you just have to stay well away.

 

[geneclean55]

Solar wall along the border. Would Musk even want in on that?

 

[Doit]

Boy, I really wish we had the details on this. If Tesla doesn't have to set up a joint venture for electric car production... they're golden. It was made clear that Siemens, Alstom, etc. can now set up wholly owned train manufacturing firms, but I simply haven't found out yet whether this is true for electric car manufacturers. Does anyone read Chinese who can look at the original list?!?

No, it still requires a joint venture for auto manufacturers with at least 50% stake from a Chinese partner.
From here (in Chinese): 国务院办公厅关于印发自由贸易试验区外商投资准入特别管理措施（负面清单）（2017年版）的通知（国办发〔2017〕51号）_政府信息公开专栏

 

[EnergyMax]

From Doit's link above, I wonder what this Google translation means:


Free Trade Pilot Area Foreign Investment Access
Special management measures (negative list) ( 2017 edition)
Less than the previous version of the measures

7. New pure electric passenger car production enterprises to produce their own products, with independent intellectual property rights and authorized patents related to the invention.

 

[everman]

From Doit's link above, I wonder what this Google translation means:


Free Trade Pilot Area Foreign Investment Access
Special management measures (negative list) ( 2017 edition)
Less than the previous version of the measures

7. New pure electric passenger car production enterprises to produce their own products, with independent intellectual property rights and authorized patents related to the invention.

I think you've hit on it... I believe that section details the exclusion of the 50% JV requirement for pure electric manufacturers, it seems to me. Add that to the comment from the article linked above in post #11500 by Mike Smith.

Edit: Looking like there are still JV requirements from other discussions, but sounding like Tesla has rejected SAIC and working with a "port" company.

 

[everman]

Look at that entry #7 in context:

Aviation manufacturing

3. 3 tons and above civilian helicopter design and manufacture of Chinese holding.

4. 6 tons of the following nine general aircraft design, manufacture and maintenance limited to joint ventures, cooperation.

Shipbuilding

5. Marine low, medium speed diesel engine and crankshaft manufacturing, shall be controlled by the Chinese side.

6. Manufacture and repair of marine engineering equipment (including modules) shall be controlled by the Chinese side.

Car manufacturer

7. New pure electric passenger car production enterprises to produce their own products, with independent intellectual property rights and authorized patents related to the invention.

I think #7 details a distinct difference in rights between the entries listed above it. I think this bodes well!

 

[justdoit]

*It depends*. Best scenario: (won't happen, but one can hope): EM/Darmuid have worked out a deal: No partner and some enticement from the government; next best: Tencent is the partner and no money worries.

Either of these cause 3-5% spike tomorrow.

The past couple of years has really scarred us all and made us more conservative. What happened to the days of 7-10% moves

I'm hopeful we'll have a 10% move at least once this year!

 

[erthquake]

Uhh...ladies and gentleman? I just saw the photo of the Model 3 charging screen. It implies a range of ~305 miles. If this is true, and it turns out Tesla is able to build in China, partner-free, it could be a really explosive day Thursday. Forget stormy weather. Shortsville might get a rain bomb.

 

[Geneman7]

Uhh...ladies and gentleman? I just saw the photo of the Model 3 charging screen. It implies a range of ~305 miles. If this is true, and it turns out Tesla is able to build in China, partner-free, it could be a really explosive day Thursday. Forget stormy weather. Shortsville might get a rain bomb.

My calculation gets me to 235 Mi range on full charge.

But yes. Longs should be getting pretty hyped about now. TSLA is ready for launch.