Articles/megaposts by DaveT

[aubreymcfato]

What I've observed is a shift in lib/progressive media about Elon.
When he went against media with the Pravduh thing he actually alienated a lot of young journalists who, right or wrong, started writing against him, regarding unionization, his billionaire hubris, etc.
I thought (and tried to argue on this forum) that that was unnecessary, you never need more enemies.
That was before the whole Thai situation, the pedo tweet, the "leak" about the donation to Republicans.
I do think that Elon could learn from someone who understand better than him how social media works, the reaction of the masses, the mechanisms inside newsrooms, etc.

I do think that Tesla, as a company, is one of the few shots we have as a species to tame climate change.
People don't see this. They see toys for rich people.

Few things will/would change that:
* 35k Model 3: this is what he promised, this he must deliver. When you put a car like that in the hands of the customer, thing changes. With thousands of cars like those also in Europe, you can win people just by word of mouth, and enemies will have an *hard* time fighting that.
* Tesla Energy, in a *serious* way. Nobody knows about South Australia, we need 10 projects like that, in US, and we need media coverage on the ramp up. We need TE to make a dent, and people to talk about this.
JB Straubel has seems really nice, also as a person, and he could be much more present reagarding Tesla PR and narrative.

 

[replicant]

Few things will/would change that:
* 35k Model 3: this is what he promised, this he must deliver. When you put a car like that in the hands of the customer, thing changes. With thousands of cars like those also in Europe, you can win people just by word of mouth, and enemies will have an *hard* time fighting that.
* Tesla Energy, in a *serious* way. Nobody knows about South Australia, we need 10 projects like that, in US, and we need media coverage on the ramp up. We need TE to make a dent, and people to talk about this.
JB Straubel has seems really nice, also as a person, and he could be much more present reagarding Tesla PR and narrative.

This kind of changes won't suffice. IMO, it's not just a change in product, business, marking or technology that will give Tesla the *social* breakthrough we're hoping for.

The % of the world population who believes in climate change and who knows that the energy transition is already late is large enough for the company to impose its current narrative. IMO, the problem is that most people can't believe that the company can succeed while playing the rich people's game.

$35k cars aren't for the middle class. Investors can believe that Tesla will go down market thanks to the cash flow generated by premium products, but the middle class has many reasons not to believe it. We aren't talking about sub-$1000 products à la iPhone. The middle class ended up paying premium because thousands of apps and services were becoming accessible every year and justified spending more phone to access things that changed life (ecommerce, mobile payment, on-demand mobility, video streaming, electronic health service, social networking, etc). Half the US population can't just upgrade to a $35k car only to take part in the energy transition. It might feel good to save the world but I wouldn't not expect most consumers to pay twice the price of their current car with the 2008 crisis in mind and precarious employment.

Besides, you can't expect Tesla to be free to disrupt Wall Street and billionaires if they still need $$$ from them.

IMO, for Tesla to be backed *against the FUD* (and the 2 trillion dollars interests of the fossil fuel industry, which knows very well how to influence the public while appearing open to "the challenge that represents Tesla and the inevitable transition"), Tesla must prove that it's doing its best to actually change the paradigm for the middle class (not just for Elon's whims and TSLA investors). That's it's not naively believing that the industrial revolution required for the energy transition will come from trickle-down economics

Elon Musk keeps referring to Ford's early success with the Model T. The thing is Tesla's products are good enough to disrupt the auto market. What's lacking is a revolution in the way the company can scale without being dependent on the powers that be.

Henry Ford - Wikipedia

 

[aubreymcfato]

I'm talking about products that are already here, or will be soon: I'd love for Tesla to produce a sub-35k car, but I don't see it before 2022 or similar.
What's already here is Model 3, Powerwall and Powerpacks, solar panels and solar roofs.
Also, I think that they could easily produce enough Semi to disrupt that market in few years, or even months (how many trucks are sold each year?).

 

[farzyness]

I think we may be discounting the number of people that are willing up go "up market" on a vehicle. The folks that are your usual Camry and Accord buyers that are making the responsible decision of not spending on too much car will shift over to Model 3 due to its cost of ownership and convenience. Imagine telling a very savvy buyer in a Camry owner that his total running expense of a Model 3 will be the same (or lower depending on $ spent on gas) with greater convenience (never have to visit a gas station - fill up at home) and superior safety (Tesla safety).

I'll leave you with this - what's the intersection of Camry/Accord buyers and people who own a garage? That intersection is Model 3's current market size at the current price. A downmarket car is not needed to take over the auto industry.

 

[aubreymcfato]

I think we may be discounting the number of people that are willing up go "up market" on a vehicle. The folks that are your usual Camry and Accord buyers that are making the responsible decision of not spending on too much car will shift over to Model 3 due to its cost of ownership and convenience. Imagine telling a very savvy buyer in a Camry owner that his total running expense of a Model 3 will be the same (or lower depending on $ spent on gas) with greater convenience (never have to visit a gas station - fill up at home) and superior safety (Tesla safety).

I'll leave you with this - what's the intersection of Camry/Accord buyers and people who own a garage? That intersection is Model 3's current market size at the current price. A downmarket car is not needed to take over the auto industry.

I follow a Facebook group of Italian Leaf owners: yesterday one said he was buying one at 31000€ and everyone agreed was a very good deal...

If Tesla comes in Europe with a 35k Model 3, a lot people would buy them. I'd love to buy one too: as I *never* purchased a car in my life, and driving one of the ugliest car in the world, that would be the definition of "up market".

 

[DaveT]

(posted from my weekly newsletter)

This morning Elon Musk announced that he is planning on taking Tesla private.

While this may be a shock to many, Elon’s rationale is quite clear and compelling. He would like to see less distractions and less short-term thinking for Tesla and he thinks that removing Tesla from the public stock market will accomplish this.

To understand Elon’s rationale, one must understand the plethora of propaganda attack that Tesla has been under over the past year. It’s been evident to many that there’s been a coordinated and efficient plan for those wishing to see Tesla fail to tarnish Tesla’s image and to hurt their chances of success. (Read this post about short sellers by jesselivenomore on TMC, Elon Musk vs. Short sellers).

Over the past several months, I’ve been suggesting that Tesla has been losing the narrative around their company and story.
Articles/megaposts by DaveT
Articles/megaposts by DaveT
Articles/megaposts by DaveT
Articles/megaposts by DaveT

It turns out Elon has another plan to turn the narrative around. And his plan is if he takes Tesla private, then the negative propaganda around Tesla fed by short sellers will stop and this will ultimately benefit Tesla and their mission. Further, Tesla will be able to return to the public stock market at a future date, if needed.

I understand Elon’s plan and the reasoning behind it. In my opinion, Elon just wants to make amazing cars and change the world. He doesn’t have much interest in constantly defending Tesla in the media against a propaganda war. To Elon, all of that is just distraction. And Elon further isn’t seeing a lot of benefit of needing to deal with the fluctuating stock price, testy analysts, and quarterly expectations. Simply put, in Elon’s thinking if Tesla were to be free of all those pressures, they would be better in executing toward their mission.

And so, starting today we start the journey of Tesla possibly going private.

Going private is not a done deal since it needs to have shareholder vote for approval. However, with Elon holding 20% of the shares (thus 20% of the vote), he may only need another 31% or so, which would be fairly easy to obtain (in my opinion), unless he chooses to recuse himself from the vote.

According to Elon, in the event that Tesla goes private, all current shareholders would be transfer their shares to ownership in the new company. Elon tweeted, “My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.”

It’s going to be interesting to see TSLA stock price over the next weeks. As the proposal to take Tesla private goes to shareholder vote, those who’ve sold the stock short (35 millions shares) will need to cover (or buy back the shares). We might yet see the “short burn of the century” that Elon alluded to several weeks ago.

All in all, Elon’s announcement today was one of the biggest he has ever announced and will have major ramifications for Tesla and TSLA investors going forward.

 

[SteveG3]

spot on Dave.

as to this point,

"It’s been evident to many that there’s been a coordinated and efficient plan for those wishing to see Tesla fail to tarnish Tesla’s image"

I'd add that this approach was also targeted at Elon, and the products, including AP.

Elon put up with a lot of it directed at himself for years, but, when it got this concentrated, while he was working tremendous hours under tremendous stress, I think his patience wore quite thin.

As to the tarnishing aimed at the products, the vehicles and developing AP/FSD, Elon has never had much patience... not only because he does not want to see Tesla's financial prospects stunted by false consumer fears seeded by widespread misinformation, he also doesn't want to see the broader potential of the adoption of these technologies that can save lives and our environment stunted by such false fears and the misinformation stoking them.

 

[DaveT]

spot on Dave.

as to this point,

"It’s been evident to many that there’s been a coordinated and efficient plan for those wishing to see Tesla fail to tarnish Tesla’s image"

I'd add that this approach was also targeted at Elon, and the products, including AP.

Elon put up with a lot of it directed at himself for years, but, when it got this concentrated, while he was working tremendous hours under tremendous stress, I think his patience wore quite thin.

As to the tarnishing aimed at the products, the vehicles and developing AP/FSD, Elon has never had much patience... not only because he does not want to see Tesla's financial prospects stunted by false consumer fears seeded by widespread misinformation, he also doesn't want to see the broader potential of the adoption of these technologies that can save lives and our environment stunted by such false fears and the misinformation stoking them.

Yes, I definitely agree the negative propaganda was getting aimed not just at Tesla but at their products and at Elon. In other words, it got very personal and damaging too.

My hope was that Tesla would up their game in terms of defending against the negative propaganda, but I realize this is something that Elon might not want to do. He probably just wants to build great products and in doing so change the world.

I also think Tesla has had some weakness with operations. I've advocated for Tesla to hire a COO for many years, and I think an outstanding COO could have helped Tesla manage quarterly expectations and even fight against FUD more effectively. Elon is just so busy with so many things, that he does a great job on the things he does but he can't do everything always.

Overall, I have missed feelings about Tesla going private.

I think Tesla will be valued higher as a private company than as a public one because there will be less FUD and involvement from shorts. And it will be a calculated and gradual rise in value.

But there are definite negatives with Tesla going private. There will be less transparency and we'll know a lot less. There will be less answers, less reports, less numbers, less everything. This means we'll likely be more in the dark at times. Also, there will be less liquidity, which I think is a really big deal. If there is less liquidity (which is likely), then our shares no longer act as a liquid asset like cash. Rather, they become somewhat illiquid in that we'll need to wait for a liquidity even to liquidate. And we'd have to follow the guidelines and protocol of that event, which might or might not be favorable to us. Overall, we have a lot less control over how we sell shares... and who knows if and how we can ever buy more shares.

Also, folks won't be able to borrow as easily against their holdings, which I think is a big deal also (at least to me). Some of us have asset-backed line of credits using our TSLA holdings and I'm not sure how this would work with private shares. Also, with my TSLA holdings I'm able to access various benefits like lower mortgage/loan rates and terms from my bank, something I probably wouldn't have access to with private shares.

Overall, it's a lot less control for investors like us.

When I invested in TSLA, I signed up for shares in a public company. So, to have these shares convert to shares in a private company is something I'm not that excited about. I realize it might be good for Tesla overall but the pros/cons are definitely not easy to digest.

 

[SteveG3]

Yes, I definitely agree the negative propaganda was getting aimed not just at Tesla but at their products and at Elon. In other words, it got very personal and damaging too.

My hope was that Tesla would up their game in terms of defending against the negative propaganda, but I realize this is something that Elon might not want to do. He probably just wants to build great products and in doing so change the world.

I also think Tesla has had some weakness with operations. I've advocated for Tesla to hire a COO for many years, and I think an outstanding COO could have helped Tesla manage quarterly expectations and even fight against FUD more effectively. Elon is just so busy with so many things, that he does a great job on the things he does but he can't do everything always.

Overall, I have missed feelings about Tesla going private.

I think Tesla will be valued higher as a private company than as a public one because there will be less FUD and involvement from shorts. And it will be a calculated and gradual rise in value.

But there are definite negatives with Tesla going private. There will be less transparency and we'll know a lot less. There will be less answers, less reports, less numbers, less everything. This means we'll likely be more in the dark at times. Also, there will be less liquidity, which I think is a really big deal. If there is less liquidity (which is likely), then our shares no longer act as a liquid asset like cash. Rather, they become somewhat illiquid in that we'll need to wait for a liquidity even to liquidate. And we'd have to follow the guidelines and protocol of that event, which might or might not be favorable to us. Overall, we have a lot less control over how we sell shares... and who knows if and how we can ever buy more shares.

Also, folks won't be able to borrow as easily against their holdings, which I think is a big deal also (at least to me). Some of us have asset-backed line of credits using our TSLA holdings and I'm not sure how this would work with private shares. Also, with my TSLA holdings I'm able to access various benefits like lower mortgage/loan rates and terms from my bank, something I probably wouldn't have access to with private shares.

Overall, it's a lot less control for investors like us.

When I invested in TSLA, I signed up for shares in a public company. So, to have these shares convert to shares in a private company is something I'm not that excited about. I realize it might be good for Tesla overall but the pros/cons are definitely not easy to digest.

Agree re your points here Dave.

Less transparency, very real issue. Makes resources with powerful crowd sourcing of info that is available, like TMC, even more valuable. I have some cautious optimism that Elon/Tesla will do some things voluntarily to retain some aspects of what we've gotten in terms of transparency as a public company. I could see him creating some form of regular Q&A with investors. I may be mistaken about this of course.

As to liquidity, I hear you. fwiw, it could also have the benefit of helping us stay more focused re our ownership in a portion of a business and not overthink/overtrade vs. buy and hold (thinking of one of Buffett's basic tenets re thinking about stock ownership). Not dismissing the concerns re liquidity you brought up, but, just suggesting an at least partial mitigation.

I was pleased to see that Elon is inclined to take the company public again down the road.

 

[neroden]

There are enough downsides of going private -- particularly for stock which is not owned outright, but wrapped up in IRAs and the like -- and $420 is a crummy enough price to be bought out at -- that I'm currently planning to vote no (although I still expect it'll go through). I'm hoping they'll at least raise the buyout bid to something more reasonable.

 

[SteveG3]

There are enough downsides of going private -- particularly for stock which is not owned outright, but wrapped up in IRAs and the like -- and $420 is a crummy enough price to be bought out at -- that I'm currently planning to vote no (although I still expect it'll go through). I'm hoping they'll at least raise the buyout bid to something more reasonable.

agree, $420 is a low price. I'll be voting yes and keeping most of my shares. Cautiously optimistic we see $450 or higher when the dust settles on the terms.

 

[AudubonB]

Re “Less transparency, fewer answers, fewer reports, fewer numbers”.

No - you do NOT know that. Yes, it certainly is the case that the SEC requirements are far less stringent for private companies; however, there is no restriction for Tesla to shut up. It may be the case; it may not. To bolster the greater transparency argument, it seems to me all you have to do is consider Mr Musk’s Twitter feed - gawd, that man loves to let it out. Why should that change were Tesla to become private?

Re “Lower liquidity for continued investors”.

Yes, I see that as a significant concern - it is for me. I had exactly one question to my investment firm today: “What will happen to my line of credit?” As I expected, an answer was not immediately forthcoming. Grrrr.

 

[schonelucht]

@AudubonB the problem with voluntarism is that Elon has a tendency to focus on getting out the good news...only... Has he ever told us : sorry I promised you this timeline but we will not make it because of this and this reason? No, he only acknowledges missed timelines long after the fact and then onky a rare few of them.

 

[mrdoubleb]

So an additional concern for us outside the US is if we can even stay on as investors. @hobbes started a great thread on this and many of us are contacting our brokerages and will be posting the answers there.

Must say i am pretty bummed about 420 as well. If I end up having to sell and can`t stay on even if i want to, that seems like a forced exit at a super low price from what i was planning to be my long term investment. If they show profit and strong M3 demand/ramp in Q3 and Q4 (not sure how long before TSLA is de-listed) i expected the stock to go way above 420 already. At that point they would have had to offer a lot bigger number. I understand why he didn`t wait for that, but i still feel like i am being forced out on the cheap.

Let`s hope they have some sort of a plan. He did tweet how important it was for him to reward the longs. (Paraphrasing)

 

[Gwgan]

an outstanding COO could have helped Tesla manage quarterly expectations and even fight against FUD more effectively

While I highly respect your opinion, and think The full time focus of a COO might have smoothed out the early release of X and 3 though, I disagree with this summation since the big money at risk when Tesla succeeds is not just a short stock story. FUD would have continued, and will once private, since by definition the arguments do not make sense and the goal is to mitigate disruption.

 

[palmer_md]

@AudubonB the problem with voluntarism is that Elon has a tendency to focus on getting out the good news...only... Has he ever told us : sorry I promised you this timeline but we will not make it because of this and this reason? No, he only acknowledges missed timelines long after the fact and then onky a rare few of them.

And how much is the reason for that, the expected backlash from the shorts . Without the fear of this backlash he may be more open to readjusting timelines openly .

 

[AudubonB]

@AudubonB the problem with voluntarism is that Elon has a tendency to focus on getting out the good news...only... Has he ever told us : sorry I promised you this timeline but we will not make it because of this and this reason? No, he only acknowledges missed timelines long after the fact and then onky a rare few of them.

Waaallll...it’s been a problem for you. You certainly have been very diligent in expressing your concerns over the years. And I appreciate it - I really do. But long-term investors have less of a problem with missed timelines than short-termers do.

 

[DaveT]

Re “Less transparency, fewer answers, fewer reports, fewer numbers”.

No - you do NOT know that. Yes, it certainly is the case that the SEC requirements are far less stringent for private companies; however, there is no restriction for Tesla to shut up. It may be the case; it may not. To bolster the greater transparency argument, it seems to me all you have to do is consider Mr Musk’s Twitter feed - gawd, that man loves to let it out. Why should that change were Tesla to become private?

I’m referring largely to financial information. It’s close to certain that Tesla as a private company will disclose less financial information than when it was a public company. That’s the nature of private companies, that is they are more private regarding their financial info.

 

[DaveT]

What if going private doesn’t stop the FUD attacks on Tesla?

 

[palmer_md]

What if going private doesn’t stop the FUD attacks on Tesla?

It won't stop them, but they will have much less effect, and fewer people will care. Their only angle of attack is to convince owners that there car is not any good (good luck) and new buyers that owners don't know what they are talking about regarding the car (good luck).