2017 Investor Roundtable: TSLA Market Action

[Reciprocity]

Yeah I am skeptical that Tesla has autonomy magic. I am sure their CEO is putting the most pressure on them however, and that counts for something. Tesla doesn't really need to necessarily be the tops forever. Its not really a critical thing. There ARE points for second place. If BMW gets to 99.99 while Tesla is only 99.9 and then Tesla gets their a year later, that is not an existential crisis, IMO.

I also wonder about the "fleet learning data" that is such a religion around here. I certainly hope and pray they have some great tech that allows ghost data to form autonomy... it's theoretically possible. It just sounds like a seriously hard problem.

No one is even proclaiming full autonomy as a realistic idea until 2021 or later. Only Elon has made the bold proclamation that it is he considers it solved and they only need time to complete the machine learning software. Only Elon says you will be able to go coast to coast and parking lot to parking lot by Dec. Only Elon says you will be able to feel comfortable sleeping while your car drives you to a destination in 2 years, which would be mid 2019. I agree that Tesla will release something before anyone else and it will be 99.9% and will save half the lives of a system that is 99.99% but that will be good enough. Now the question that I have is whether that will be in 1 year or 5. I believe they have chosen the right path, meaning GPS + Vision + Radar and no Lidar. I dont think its anymore complicated to do this without Lidar then it would be to do it with a Lidar, that btw does not exist yet. Meaning there isn't a lidar you could put in a car that you could sell a half a million of, the costs would be to high and the lidar not good enough. I am certain that Waymo and the others will get lidar to work and will shrink it down and cut the costs, but it wont happen before Tesla has a half million cars on the road.

The data advantage is real. Its real because how machines learn. We learn by having an instructor show you how to do it. Machines learn by millions of iterations where they can see a picture of a stop sign from every angle and every situation, snow, rain, dusk, dawn.. You and I can see a stop sign and our parents can say.. that means stop. And we can recognize that sign in the future. Machines need to see millions of examples and not just signs, but the context with which they are in so that it can ignore a stop sign on someones t-shirt or a stop sign that is tiny in a picture on a billboard. This is impossible to do if you do not have billions of miles of real world data. You cannot find enough pictures of stop signs in any database. That is one tiny example of why the data is so critical and why its harder for others to get. Mobileye has some of that, but they dont have a currently large volume of 8+ camera cars, only a ton of single, front facing camera cars, like AP1.

Last. BMW wont be developing this, they will have to buy something that has been developed like GM and Cruise automation. They are not a machine learning tech company. They dont have 50 engineers that are focused on deep learning neural nets, vision systems and machine learning AIs. They are an old world company and they will move very carefully and slowly.

 

[D-egg-O]

I think the M3 launch is closer to the 2nd phase of MS launch where they expand the sales to past just the insiders and early adopters, and they need to slim down the options to speed up production ramp. What is not clear to me is whether they will produce just one pack size or do 2, and if they do just 1 pack size, whether it will be the large or smaller one. My guess they will do the large pack size 1st, and sell it as a large pack size, but opinion seems to vary a lot on this. I'm looking for evidence from early MS days for any sign that Tesla would go with the small pack 1st, or do a large pack but software limit it and sell it as a base model, so far I haven't seen any past evidence that Tesla would do this.

The early Model S had a 40kWh pack that sold for $50k. It was a software limited 60kWh pack.

 

[erthquake]

Yeah I am skeptical that Tesla has autonomy magic. I am sure their CEO is putting the most pressure on them however, and that counts for something. Tesla doesn't really need to necessarily be the tops forever. Its not really a critical thing. There ARE points for second place. If BMW gets to 99.99 while Tesla is only 99.9 and then Tesla gets their a year later, that is not an existential crisis, IMO.

I also wonder about the "fleet learning data" that is such a religion around here. I certainly hope and pray they have some great tech that allows ghost data to form autonomy... it's theoretically possible. It just sounds like a seriously hard problem.

One (perhaps minor) data point in the importance of fleet learning: Google's reCaptcha. Asking humans to identify photo tiles containing images of street signs or cars is fleet learning for all intents and purposes.

 

[Drax7]

So this morning, we have another third-rate "journalist" at one of the "little B" clickbait factories (Benziga, Buzzfeed, Business Insider) making several glaring errors in her article in an attempt to manufacture controversy:

Elon Musk was the reason one of Apple's most famous developers left Tesla after only 6 months



Jim Keller was hired in January 2016, 18 months ago. He is an extremely capable microprocessor hardware and software engineer, and I imagine he has been a steady hand at Tesla since his hire. Chris Lattner was hired 6 months ago, did some good work establishing development processes that were probably helpful, but didn't mesh with Elon, like many execs before him. It's no secret that Elon is a super-demanding boss, and if he wasn't we wouldn't be here talking about Tesla's successes today. But few people go to work for Tesla to have a nice, comfy work-life balance with a fat paycheck and infinite time to produce deliverables. If that's what you need, you need to work elsewhere, and that's totally fine, no hard feelings.

Hardware and software at the cutting edge of consumer use are constantly changing and iterating, and those changes and iterations mean that developers rotate in and out of companies and projects much more rapidly than in slow, plodding companies like legacy automakers. This just does not compute for most of the analyst community covering Tesla, with a few notable exceptions like Ben "baritone" Kallo and Adam "I make up business models for Elon!" Jonas. And it clearly doesn't compute for wannabe journalistic hacks at the "little b" clickbait farms. The bots pick this stuff up and run with it, and so we human fund managers are forced to pay attention to these idiots, but it sure is tiring.

Regardless, I don't think this is very market-moving. Just had to chime in.

/endrant

Software mastery and AI applied to autonomous driving are not one and the same.
Lattner's field of competency is nowhere near Ai/ autonomous driving. The results
speak for themselves. The new hire, Prof. Karpathy is scientifically knowledgeable to handle
the problem.

Checkout this presentation:

 

[mejojo]

On this light uptick, low-volume day, is anyone else smelling an afternoon attack?

Max Pain is around 377 I believe.

 

[FluxCap]

Software mastery and AI applied to autonomous driving are not one and the same.
Lattner's field of competency is nowhere near Ai/ autonomous driving. The results
speak for themselves. The new hire, Prof. Karpathy is scientifically knowledgeable to handle
the problem.

Checkout this presentation:

Indeed. A solid complement to Jim Keller, I think. But as I've posted before, Tesla absolutely has to have people able to wring amazing amounts of performance out of highly customized hardware and software for super-low cost. Jim Keller is a proven veteran at price/performance value creation. Keller + Karpathy = good team, I should think. Apparently, so did Elon.

 

[geneclean55]

On this light uptick, low-volume day, is anyone else smelling an afternoon attack?

Max Pain is around 377 I believe.

Define low-volume? Outside of the first hour, we are going at a faster clip than yesterday.

 

[generalenthu]

The biggest long term strategic threat to Tesla is not another Auto firm, but Google. This is one of the 2 things that worries me about Tesla. Hypothetically, Waymo could roll out the self-driving capabilities like how it s doing in Phoenix. People would then sour on buying cars and instead just hail rides in these fleets, for a fraction of the cost of what Uber / Lyft charges. There is an emerging trend of kids coming of age, not caring for owning or driving cars. That said there will still be a very very strong appetite for owning and driving cars in the US for a long time to come. And being second to the finish line doesn't mean Tesla will not be the winner, just like Apple and iPod.

Before someone asks the second one is Elon's health causing him to move away from Tesla. Both are very unlikely in my opinion.

Edit: wrong thread, but leaving it here.

 

[mejojo]

Define low-volume? Outside of the first hour, we are going at a faster clip than yesterday.

Average volume over last 10 days is 9.6M. I'd be surprised if we break 5M the way things are going today.

But aside from that, how do you see the afternoon playing out?

 

[geneclean55]

Average volume over last 10 days is 9.6M. I'd be surprised if we break 5M the way things are going today.

But aside from that, how do you see the afternoon playing out?

Well, we will be close to 4 million shares by 1pm, so I doubt that. Also, the past 10 days included some insane volume that probably revolved around institutional distribution, so I personally wouldn't use that as a typical benchmark.

I am sure the market makers will try their moves over the lunch time period, but as always the last 30 minutes will be key on a Friday.

 

[rallykeeper]

I'm not very familiar with the early days of MS, could you elaborate why Tesla didn't configure every MS as a top of line model if there was enough demand for them to do so?

They did configure every early MS as a top-of-the-line model. The options where there on the configurator, but selecting fewer options impacted your delivery timing.

You could only buy a fully-loaded Model S 85 throughout 2012 (from June, they produced approx. 3000 cars). The only choice was to get the P model (and to get the kids rear jump seats -- which were a due bill item and didn't even ship until late Q1 2013).

If you wanted fewer options (not just the smaller battery), you were bumped down the reservation line. (If you wanted all the options, you got to skip ahead -- I know since I jumped up quite a few spots).

 

[racer26]

SpaceX launch in T-70 minutes or so. One of the only times in recent memory we'll have had a SpaceX launch while the market was open.

 

[T3slaTulips]

SpaceX launch in T-70 minutes or so. One of the only times in recent memory we'll have had a SpaceX launch while the market was open.

Delayed to 3:10EDT

 

[Skryll]

As big as Autonomy will be for EVs, I think EVs will dot he same thing to solar. Once you shift $400-500 in gas and maintenance fees to $150-250 in electricity, solar becomes almost insane not to do. [...]

Big picture: EV + Autonomy will push people away from ICE in a big way and will also push them towards Solar in an almost bigger way.

The only issue that I see with solar is the incentives are very good today, but those will be dialed back in next 4-5 years. The efficiency and or/value of the cells must become 30% better in that time. I dont see that as impossible by any means, but the math needs to work.

I am not too worried about that, because as you point out, residential rooftop solar is the logical consequence of electric driving.

For our home, $2400/year in electrical bills meant even before switching the gas cars to electric a rooftop solar would pay for itself in 7 years with incentives, in 10 years without incentives. A nobrainer in either case. Now after we replaced both gas cars with electric, which I anticipated and sized the rooftop solar accordingly, it looks even better.

If you see only the 30% federal tax credit subsidy, that one I loved but would have done it without as well.

If you see netmetering as a subsidy, things are different, should that go away then it means we do have to add more home batteries to make it work. Tesla will enable us in either case.

With california going towards renewable energy and having to balance the grid load by incentivizing shifts of demand with time of use plans, I see net metering to stay and more powerwalls being deployed to naturally help out distribute the load.

 

[geneclean55]

Delayed to 3:10EDT

Maybe Elon did that on purpose to coincide with power hour?

 

[Starno]

There are no competitors today, that are where Tesla was in October of 2014 (31 months ago).

Mercedes has a sort of driver assist. But it’s really only good for some minor corrections of a fatigued driver, or for picking up your sunglasses off the floor the last time the brake assist misfired and threw everything forward.

Truly, there’s nothing that performs the way the Tesla Autopilot Version 1 performs. And there are no other purchasable cars that are even years away from being what the Tesla Autopilot Version 2 is today.

One of the main hurdles that 20th century car makers have to overcome is something called “fleet-learning”. Tesla requires all AP users to understand and agree that the data the cars collect, will be uploaded to Tesla without owner information, compiled as a fleet, and that data will be used to improve the systems for all drivers. Updates using fleet data is then pushed back to the cars in periodic software updates.

The legacy and history of 20th century car makers, makes that kind of effort nearly impossible in my opinion. Mercedes drivers would bristle at the thought of their cars uploading data to the mother ship. Tesla owners, by their early-adopter-nature, seem to be largely undeterred. Me personally, for instance, I could not care less that my car uploads my driving data including radar images, camera images, acceleration, deceleration, route, road markings, ultrasonic data etc.

No other car company has that data. No other car company is anywhere near beginning to capture that data. And that data is part of a workable AutoPilot system.

It’s a big problem for 20th century car makers. They are not, today, where Tesla was 31 months ago. In the world of Tech, 31 months is a lifetime or more. It’s going to be an interesting thing, this transition to tech-based companies building cars, rather than car based companies trying to use tech.

Drax7 and VA, could you maybe give me some infos on what you disagree so I can either extend my argument or change it, or calibrate it..? thanx.

 

[Reciprocity]

I am not too worried about that, because as you point out, residential rooftop solar is the logical consequence of electric driving.

For our home, $2400/year in electrical bills meant even before switching the gas cars to electric a rooftop solar would pay for itself in 7 years with incentives, in 10 years without incentives. A nobrainer in either case. Now after we replaced both gas cars with electric, which I anticipated and sized the rooftop solar accordingly, it looks even better.

If you see only the 30% federal tax credit subsidy, that one I loved but would have done it without as well.

If you see netmetering as a subsidy, things are different, should that go away then it means we do have to add more home batteries to make it work. Tesla will enable us in either case.

With california going towards renewable energy and having to balance the grid load by incentivizing shifts of demand with time of use plans, I see net metering to stay and more powerwalls being deployed to naturally help out distribute the load.

Thanks, but I was referring to those that are not in sunny California and sunny Florida, Nevada or Arizona. We who reside in the great white North need 30% tax incentives to make it work though I still believe that won't be an issue as the incentives should more then cover the time period needed to innovate and bring costs down.

 

[Starno]

I don't think full autonomy will be a sustainable competitive advantage for any company.

I do think that Tesla is ahead of anyone else, but I do not have the same confidence in this as the OP.

So I'm just wondering what is driving his extreme confidence level.

Being way ahead concerning full autonomy is a big advantage

First Mover

 

[ValueAnalyst]

Being way ahead concerning full autonomy is a big advantage

First Mover

Agreed, but this does not refute my conclusion that FSD will not be a sustainable competitive advantage.

 

[Starno]

Agreed, but this does not refute my conclusion that FSD will not be a sustainable competitive advantage.

Yes I don't think it will be sustainable either.

Once everyone will have the tech, it will become trivial.