Articles/megaposts by DaveT

[AlMc]

Which was complete manipulation and mischaracterization of what really happened. It was all "blah blah blah....said someone familiar with, with knowledge of, in contact with...etc." If you or anyone else was taken in by the manipulation that's not Elon's fault.

I agree that most of us (bulls) were not taken in by the NYT article by itself. But other potential investors could be. In addition, the NYT article helps frame a picture of EM having a problem controlling himself when put in context with his tweets and other behavior.

Let's just hope that with the reorganization at Tesla that he can get some rest/recharge. He has been his own worst enemy in the recent past and that does reflect negatively on Tesla/TSLA.

Munster: Wish he had held off for another quarter or two on his piece and give the reorganization some time to show whether it is enough to right the ship. Shame that he did not.

 

[JRP3]

I agree that most of us (bulls) were not taken in by the NYT article by itself. But other potential investors could be. In addition, the NYT article helps frame a picture of EM having a problem controlling himself when put in contact with his tweets and other behavior.

I guess if you want to blame Elon for giving the NYT an interview and expecting them to be fair that may be a valid criticism. That's why the unedited Rogan interview was so much better.

 

[The Blue Owl]

As for Joe Rogan's show, I think it's terrible that Joe let Elon smoke weed at his offering. Joe knew that Elon shouldn't. He even said so. Doesn't take much to know that if Elon smokes weed on an interview that millions will see, that it will blow up in his face. Shame on Joe. I think it was a mean thing for him to do. It's so obviously a foolish thing to do, even Elon's friend sent an emergency text to him... probably saying, "Elon, WTF are you doing smoking weed on this show!?!?! Stop!!!"

Dave, come on. Joe didn't offer the blunt to Elon, and said why ('because of the stockholders'). Elon was the one extending his hand towards Joe and his gesture clearly expressed that he wanted to hold it. What was Rogan going to do, tell Musk 'dude, I have your best interests at heart so I can't give this to you?' Musk is an adult. Infantilizing him would have been really offensive.

 

[The Blue Owl]

That is what I am disagreeing with.

I think some of Elon's behavior is childish and irrational, he needs to grow up.

Not on this instance. I personally think you are asking too much from the man who spend most of his time solving problems instead of worrying about his appearance.

I have worked in tech consulting and interacted with many senior executive from state farm, chase, Chevron... Most of those people spend most of their time protecting their job, watching over his or her back all the time. You don't want Elon to be like that!

The big fund manager can be conservative, but if he or she is naïve at the same time and wants to sell tsla because of this, then so be it.

I fully agree. This weed thing is ridiculous. Nobody leaves money on the table because Musk smoked weed.

Not to mention, anyone who watched the scene knows he did not actually smoke it.

 

[DaveT]

Dave, come on. Joe didn't offer the blunt to Elon, and said why ('because of the stockholders'). Elon was the one extending his hand towards Joe and his gesture clearly expressed that he wanted to hold it. What was Rogan going to do, tell Musk 'dude, I have your best interests at heart so I can't give this to you?' Musk is an adult. Infantilizing him would have been really offensive.

You should watch the video again. The angle makes it difficult to see Rogan’s hand but it seems to me that Rogan reached out his hand with the blunt after Elon asked if it was legal.

Nevertheless.

 

[The Blue Owl]

You should watch the video again. The angle makes it difficult to see Rogan’s hand but it seems to me that Rogan reached out his hand with the blunt after Elon asked if it was legal.

Nevertheless.

Hm. I watched it again and you are right.

Rogan takes the first hit, hands it to Jamie on his right (you can see Musk's gaze following it), then Jamie probably hesitates before sharing with Musk, Rogan confirms 'yeah, probably not because of stockholders', then Musk says 'I mean, it's legal, right?', and at that point Rogan offers it.

I am still strongly of the opinion that Rogan didn't do anything wrong, nor did Musk, but I can see how others may see it differently (and there are many).

 

[SPadival]

As for Joe Rogan's show, I think it's terrible that Joe let Elon smoke weed at his offering. Joe knew that Elon shouldn't. He even said so. Doesn't take much to know that if Elon smokes weed on an interview that millions will see, that it will blow up in his face. Shame on Joe. I think it was a mean thing for him to do. It's so obviously a foolish thing to do, even Elon's friend sent an emergency text to him... probably saying, "Elon, WTF are you doing smoking weed on this show!?!?! Stop!!!"

LOL. This is another form of victim blaming. Joe can do whatever the hell he wants on his show as long as it is legal and the same goes for Elon in his private time as Gwynne Shotwell said:

“Look at the work that Elon’s companies do and focus on that. Not on what he does” in his own time, she said.

For those who have been watching/listening to Joe, they would know that he spends a lot of time talking about marijuana and mushrooms on his show. Including the one recorded right after Elon's show with US Congresswoman Tulsi Gabbard, for crying out loud. And wasn't it Elon who actually found the pot in the pot (no pun intended).

 

[DaveT]

LOL. This is another form of victim blaming.

Victim blaming? Are you sure you're using that word correctly?

 

[AlMc]

LOL. This is another form of victim blaming. Joe can do whatever the hell he wants on his show as long as it is legal and the same goes for Elon in his private time as Gwynne Shotwell said:



For those who have been watching/listening to Joe, they would know that he spends a lot of time talking about marijuana and mushrooms on his show. Including the one recorded right after Elon's show with US Congresswoman Tulsi Gabbard, for crying out loud. And wasn't it Elon who actually found the pot in the pot (no pun intended).

Victim blaming? Are you sure you're using that word correctly?

Really? We are thinking EM was a victim on Rogan?

 

[JRP3]

Really? We are thinking EM was a victim on Rogan?

As for Joe Rogan's show, I think it's terrible that Joe let Elon smoke weed at his offering. Joe knew that Elon shouldn't. He even said so. Doesn't take much to know that if Elon smokes weed on an interview that millions will see, that it will blow up in his face. Shame on Joe. I think it was a mean thing for him to do.

Sort of sounds as if Dave thinks Elon was a victim of Joe's manipulations.

 

[SPadival]

Victim blaming? Are you sure you're using that word correctly?

Yes. If some sections of society thinks Joe did not do the right thing, that's society's problem, not Joe's.

Similar to cases where girls are blamed for wearing skimpy dresses that "attract" men.

 

[Zaxxon]

for example Doug Fields.

Ugh.

It's not that Elon smoked weed. That's not the issue. It's that he did so in a manner that shows he lacks judgment, at least in the eyes of many people.

Forget 'many people.' They'll get over it. He's doing a lot of things in a manner that shows he lacks judgment in the eyes of many people--for example, investing his fortune into startup rocket and EV companies. We invest in Musk because he does things his way, not in spite of it. The pedo comments are a worthwhile criticism. This is just not.

I don't really know if I'd consider Fields...

Not again...

I think you are asking too much from the man who spend most of his time solving problems instead of worrying about his appearance.

I have worked in tech consulting and interacted with many senior executive from state farm, chase, Chevron... Most of those people spend most of their time protecting their job, watching over his or her back all the time. You don't want Elon to be like that!

Amen.

Doug Fields

Seriously, folks: learn the names of key executives of the companies in which you invest.

 

[DaveT]

Here's some thoughts regarding Model 3 ramp, margins and standard range Model 3.

Due to challenges in Model 3 ramp, Tesla decided to forgo some automation. This has increased manual labor, more than what was originally expected. Thus, costs are higher than expected as well. Tesla had no choice since certain automation was causing problems, so they were forced to replace with manual labor.

The result, is that margins will be lower than expected until Tesla can regain more automation and reduce manual labor significantly. Tesla is already reducing manual labor on the Model 3, but that's to be expected because it's still in the ramp phase. Ultimately, to drive high margins they'll need more automation.

The increase manual labor also had another side effect. It made the standard range Model 3 with no options not profitable. This is my conjecture. As a result, Tesla has had to push out production of the standard range Model 3 until they can find a way to lower costs so that they can make a decent margin on the standard range no option model. One of the areas to cut cost is the battery module design. It's currently too difficult and costly to put together. They're needing a new design which they're working on that is cheaper... and supposedly lighter as well. The result will be a savings in cost, and that will help in eventually launching the standard range Model 3. But there are probably a few other major areas that Tesla needs to bring down costs before the standard range no option Model 3 can be made with decent margin. And to drive down those costs will take time.

That's why it makes sense for Tesla to push off the standard range no option Model 3 for as long as possible, or at least until they can drive down costs sufficiently enough to make a decent margin off the product.

In the market action thread, @neroden mentioned that the U.S. will be in an expiring tax credit situation next year, so Tesla has catered to that in the past. In other words, perhaps Tesla does push U.S. sales prior to the expiration of the $3750 tax credit which will expire end of June next year. The other option is Tesla can push deliveries overseas. They can start with Performance vehicles which will give them the highest margin, and then work down to long-range with premium package. By doing this, they will ensure that all these cars are sold with good margin, and this will allow profitability in quarters but also give time for Tesla to drive down costs in the necessary areas to prepare for the launch of the standard range model 3.

My guess is that we'll start to see the Model 3 standard range in Q2 next year, perhaps in time for people to take advantage of the expiring $3750 tax credit.

 

[DaveT]

Got this in my email from Tesla, “As a reminder, our Referral Program benefit of free unlimited Supercharging for Model S, Model X and Model 3 Performance will be expiring on Sunday, September 16, 2018. From that point on, orders placed with an eligible referral code will receive a $100 Supercharging credit instead of unlimited.”

$100 Supercharging credit doesn’t sound that appealing. I wonder if they’re going to have to offer something else or reinstate free supercharging if the referral demand drops enough.

Anyway, I’m needing one more referral to get a free Powerwall. If anyone can help out, PM me for my code.

 

[neroden]

The increase manual labor also had another side effect. It made the standard range Model 3 with no options not profitable. This is my conjecture.

Based on the German and Munro teardowns, which do *not* assume unproven automation techniques, I assume the SR model 3 would be profitable. Given that Tesla has achieved a few breakthroughs in automation, they will be more profitable than Munro assumed.

I do agree with you that due to the increase in labor the base model is not profitable *enough* -- margin uncomfortably low for desired coverage of OpEx/CapEx -- without making further improvements. Hence the battery module improvements.

I think the distinction is important. I'm pretty sure the base model would be profitable, but a <10% profit margin is not what they're going for.

 

[tander]

Based on the German and Munro teardowns, which do *not* assume unproven automation techniques, I assume the SR model 3 would be profitable. Given that Tesla has achieved a few breakthroughs in automation, they will be more profitable than Munro assumed.

I do agree with you that due to the increase in labor the base model is not profitable *enough* -- margin uncomfortably low for desired coverage of OpEx/CapEx -- without making further improvements. Hence the battery module improvements.

I think the distinction is important. I'm pretty sure the base model would be profitable, but a <10% profit margin is not what they're going for.

Yeah something would have to go really wrong for the 3 to be unprofitable, they've been planning it for 15 years.They would have to quit making it or drive them out of business. It's possible they will lower the price of the model 3 every year as production gets more efficient and battery prices are reduced, a la the Model T, so you've got to have decent margins to be able to do that. But who knows, it would be disappointing but maybe they will just sell like a few of the 35k ones and then start raising the price to get the margins they want.

 

[Esme Es Mejor]

Yeah something would have to go really wrong for the 3 to be unprofitable, they've been planning it for 15 years.They would have to quit making it or drive them out of business. It's possible they will lower the price of the model 3 every year as production gets more efficient and battery prices are reduced, a la the Model T, so you've got to have decent margins to be able to do that. But who knows, it would be disappointing but maybe they will just sell like a few of the 35k ones and then start raising the price to get the margins they want.

Not sure why they would ever need to price the 3 below $35k. At that price level, it should be extremely competitive as an Uber/Lyft/taxi, and should have approximately infinite demand.

 

[DaveT]

Based on the German and Munro teardowns, which do *not* assume unproven automation techniques, I assume the SR model 3 would be profitable. Given that Tesla has achieved a few breakthroughs in automation, they will be more profitable than Munro assumed.

I do agree with you that due to the increase in labor the base model is not profitable *enough* -- margin uncomfortably low for desired coverage of OpEx/CapEx -- without making further improvements. Hence the battery module improvements.

I think the distinction is important. I'm pretty sure the base model would be profitable, but a <10% profit margin is not what they're going for.

It's all about timing. Meaning, Tesla is aiming for 15% gross margins on the Model 3 this quarter, and key word is "aiming" so it should be probably a bit lower. But this is a quarter where they've probably averaged 4k cars/week at a steady rate. And it's where most of the cars are either AWD or Performance AWD (which should have a lot of margins), all cars with premium packages. In other words, even with a quarter stacked toward their highest margin cars, they still probably won't reach 15% gross margin this quarter. If they were to produce their standard range Model 3 with no options at $35k next quarter, I would think that car would be negative margin. It's just where Tesla is at right now. Margins will improve each quarter. But I think Tesla needs at least a few more quarters of margin improvement, along with the new battery pack design, in order for the standard range Model 3 with no options to have gross margins of 10%. It will take them a few quarters after the release of the standard range Model 3 with no options, for the gross margins to reach 15%. Of course, this is all my opinion. And this is the reason why Tesla will push the standard range Model 3 with no options to second half of 2019. For the standard range Model 3, they probably will debut it with a required premium package during end of Q1 or during Q2 2019, and then eventually drop the premium package requirement several months later as they can get margins to improve.

 

[neroden]

It's all about timing. Meaning, Tesla is aiming for 15% gross margins on the Model 3 this quarter, and key word is "aiming" so it should be probably a bit lower. But this is a quarter where they've probably averaged 4k cars/week at a steady rate. And it's where most of the cars are either AWD or Performance AWD (which should have a lot of margins), all cars with premium packages. In other words, even with a quarter stacked toward their highest margin cars, they still probably won't reach 15% gross margin this quarter. If they were to produce their standard range Model 3 with no options at $35k next quarter, I would think that car would be negative margin.

I don't think so. I have solid reasons to believe it would be 1% positive gross margin.

This probably seems like a nitpick, since Tesla cannot possibly produce enough cars at 1% gross margin to cover their SG&A and other overhead costs, but I think it's important to be clear about this, because this is the single point about which people bearish on Tesla like to create the most confusion, so it's important to get it right.

Right now I am quite sure Tesla could produce the base model for less than $35K in variable costs, even including depreciation. Without cutting production costs further, I don't think they could cover SG&A just from the gross profits which they'd realize on 250,000 base models per year, but that's a *different statement* and the difference matters. They could cover it from the gross profits on, say, 50 million base models per year (if they had a way to produce that many).

 

[tander]

Not sure why they would ever need to price the 3 below $35k. At that price level, it should be extremely competitive as an Uber/Lyft/taxi, and should have approximately infinite demand.

Yeah it would be pretty hard to do if they stay public, shareholders would get pretty agitated, but it would be a great way to "accelerate the advent of sustainable transport", Ford did that with the model T and that worked out pretty well.