General Discussion: 2018 Investor Roundtable

[NicoV]

Model-3 will be very succesful here in NL as a company car, it will decimate the A4 / BMW-3 sales here.
IMHO virtually all of these cars will be Long-Range.

About a year ago I did some calculations of the cost difference and analysis of the market opportunity here, it is both hughe. Very few employees will be choosing an ICE or even PHEV alternative as their company car (unless it has to be a car in a much lower price class), the private tax advantage is simply to big to ignore, and also the employer saves money.

The same is true for Belgium (where more than 50% of the sales of new cars are company cars). The largest financial newspaper in Belgium already forecast two years ago that Model 3 would be a hit in the company car sector.

 

[ValueAnalyst]

My guess on the Model 3 reservation mix:
LR RWD 10% | LR AWD 40% | Standard RWD 5% | Standard AWD 40% | P 5%

You must be living in a cold state...

... ah, yes, Chicago Light snow creates slick roads; deep freeze continues

 

[SebastianR]

One thought on the eBay listings: I don't think a lot of private individuals will pay a huge mark-up. As I see it, the current trim selection of Tesla is pretty smart: LR+RWD+only one interior will pretty quickly result in a situation where US based buyers can get a car without too long a wait pretty soon. I.e. you will wait for P / AWD / SR / White Interior if you can wait and get one of the existing trims today if you can't wait.

So the "only" target audience for these kinds of auctions today I see in other (legacy) car makers: they would obviously want to have their tear-down / reverse engineering samples of the Model 3 ASAP and then colors etc. don't really matter. But I would be really amazed if this market is going via a public eBay listing...

 

[sundaymorning]

Looks like Tesla is on the list. Will this affect the share price?

Takata adds 3.3 million air bag inflators to massive recall

 

[ValueAnalyst]

Looks like Tesla is on the list. Will this affect the share price?

Takata adds 3.3 million air bag inflators to massive recall

"The latest recalls cover frontal air bags in certain 2009, 2010 and 2013 vehicles"

Should be less than 15,000 vehicles for Tesla.

 

[Waiting4M3]

Looks like Tesla is on the list. Will this affect the share price?

Takata adds 3.3 million air bag inflators to massive recall

I suspect this kind of announcements will keep on coming, and most industry people (automakers) should all have been anticipating this, just assume that if you used Takata airbags from back then, there is a good chance that eventually they will be recalled. It's also possible that as the chemicals age in the airbags, they become less viable, and Takata is just making these announcement on the batches of airbags that are crossing that threshold, so they only have to replace a smaller # of airbags this year, and next year they will announce recall on the next batch.

 

[GoTslaGo]

Looks like Tesla is on the list. Will this affect the share price?

Takata adds 3.3 million air bag inflators to massive recall

Sad part of this whole thing is that this recall is “the norm” now. When I sold my BMW X5 (to Carmax) the buyer asked if there were any outstanding recalls... I mentioned Takata... he said, “Oh yeah, like everyone and their brother...” and we moved on. Didn’t affect anything. When there’s a defect for everyone, no one pays attention anymore.

So short answer: IMHO, No it will not affect the share price.

 

[Dennisj00]

Elon needs to announce a GF for air bags for the industry!

 

[Dennisj00]

Don’t know if it means anything but on the manage page for the M3, the delivery estimate line is gone and it says it was reserved on 1/07/2018. No email yet.

 

[kbM3]

Don’t know if it means anything but on the manage page for the M3, the delivery estimate line is gone and it says it was reserved on 1/07/2018. No email yet.

Mine still says Jan-Mar.

 

[anticitizen13.7]

"The latest recalls cover frontal air bags in certain 2009, 2010 and 2013 vehicles"

Should be less than 15,000 vehicles for Tesla.

I suspect this kind of announcements will keep on coming, and most industry people (automakers) should all have been anticipating this, just assume that if you used Takata airbags from back then, there is a good chance that eventually they will be recalled. It's also possible that as the chemicals age in the airbags, they become less viable, and Takata is just making these announcement on the batches of airbags that are crossing that threshold, so they only have to replace a smaller # of airbags this year, and next year they will announce recall on the next batch.

This is exactly what is happening.

I believe that around 2-3 years ago, a coalition of automakers asked Orbital ATK (yes, the rocket company, which also has substantial expertise in explosives and military ordnance) to study the degradation of the Ammonium Nitrate propellant used in Takata airbag inflators.

Orbital's study concluded that the Ammonium Nitrate propellant degraded to the point of danger in 6-7 years under hot/humid climates typically found in the southern United States, 10 years in middle latitude states, and 15 years in far north states.

Because of this, airbags containing the dangerous propellant are being recalled based on both Age and Registration Location of the vehicle. So, for example, a Model Year 2009 Honda first registered in Maryland (now 9 years old) might be added to the recall list, while the same type of 2009 Honda registered in Maine might not be added for awhile.

Bottom line: this doesn't expand the ultimate number of airbags that have to be recalled. No automakers stock should be affected by this.

 

[DurandalAI]

Really interesting analysis. In light of it, why do you think Elon and Tesla decided to build the 3 before the Y?

People are lining up in droves for the Model 3. No need to add increased value in terms of utility by making it a crossover, because people will be obsessed on miles per change. Release the Model Y once battery tech is further along. There are people who would buy the Model 3 and then buy the Model Y but wouldn’t buy the Model Y and then buy the Model 3 if it were released later.

 

[Dennisj00]

False alarm! M3 Page is back to original.

 

[Ulmo]

(my post)

I should know better than to try to write posts on a tiny little pocket phone. Here's a corrected version for yesterday's report, with corrections in bold:

Right now, Saturday 1pm, factory parking for employees by freeway looks 35% full.

I saw what appeared to be a repositioning crew repositioning some a few Model 3’s via manual self propulsion by driving them. I didn’t see where they were setting their location coming from or going.

The temporary Model 3 staging area by Thermo has the compression fence used to compress cars into one area of the parking lot in about the same spot (roughly half), and there is only about one half of the side of the fence with cars full of Model 3’s (the rest empty).

Now to look at rear by tracks:

That parking lot is now full of new Teslas, models S, X, and 3, and some used, and half a dozen car carriers in various states of loading. I presume this is a logistics yard where they place all the car carrier staging, so all new and used Teslas to be car carriered go there.

And the delivery center:

The parking area in back where they keep new cars is almost full, about 90%, mixed with S, X, 3, mostly 3. The driveway into the building has about a dozen Model 3’s queued to go in; there’s not enough empty spaces in the back lot to account for that queue, except for one empty parking row by the canal that has more empty spaces than that queue has cars.

It seems as though likely to me that the repositioners were bringing cars here from the factory area.

Within the time to write that paragraph my above delivery center observations, I saw one new owner and his ride drive out. While leaving, I saw one new owner prepping their car; they got ready with another Model 3 owner (new also?).

I don’t know what’s happening, but to me it seems likely a third of the factory workforce can manufacture Model 3’s, or do other factory work, and their logistics network can deliver Tesla cars in bulk. I’ll be interested to see the numbers this year.

 

[ValueAnalyst]

Has this been discussed here, yet?

The above table is from ultra-bear UBS' May 2017 report that estimated Model 3's EBIT breakeven at $41,000 using shoddy assumptions.

UBS' ASP assumption of $41,000 is unreasonably conservative. I estimate it at $55,000, including FSD take-rate rising by the end of 2018.

Note that Level 4/5 is not needed for FSD take rate to rise; one killer FSD-exclusive feature would do it. Highway-only Level 3 anyone?

Pack-level per-kWh $165 cost estimate is also unreasonably conservative. I estimate $100 in 4Q18 once GF1 is producing 25 GWh+ run-rate.

Adjusting for those two assumptions, and average pack size to 65 kWh, I estimate 25% gross margin and $24,000 contribution profit per Model 3.

 

[Ulmo]

Increasing production on Model S and X will probably only make sense once Tesla can cut enough costs out of the production line to cut the sticker price a bit.

Before Tesla Model S & X are redesigned, yes. There is opportunity for Tesla to redesign Tesla Model S & X to capture more market share from those who want higher quality, that is currently lacking in the current design. "Minimalist" is not a high quality high value design for those who want great looking safe enjoyable comfort. I've heard that the Model 3 tries to fix some of these things through more room to fit in the car and better sound support, but it still provides a rough ride according to those same reports. I'm willing to bet that when a bus or motorcycle passes, it's not just a slight background noise, but ear damaging, as is the comparison between other luxury brands and Tesla Model S. I don't know what most luxury buyers want, but I bet there is enough consensus that market share could dramatically change or not depending on the redesign. By then, there may be many more competitors in or near the space (Lucid (no factory), BYD (no factory), Jaguar (maybe), Mercedes (pretending so far), etc.).

 

[Ulmo]

This is only a rhetorical question. My point is that some have based very optimistic production, valuation, revenue and profit projections years into the future, on the premise that building follow on production lines very quickly can be taken for granted.

Elon claimed they're going to continue to redesign the car manufacturing lines to make it faster and more efficient. I would expect a correspondingly slower copy time and slower debugging time than a straight copy, and when fully tuned a correspondingly higher peak and average throughput per some metric (time, cost, whatever). So, basically, expect more S curves than straight copies. I forget if Elon said they will straight copy some successful lines; that might make sense at some points, and so therefore I expect we might get that sometimes.

 

[RobStark]

"Minimalist" is not a high quality high value design for those who want great looking safe enjoyable comfort.

You can chose a minimalist design and have high quality,high value that is great looking,safe,enjoyable,and comfortable.

You don't need "baroque" design for that.

 

[Ulmo]

He has already shown some 'backing down' on some things: He admitted people talked him out of the 'Y' will be built on a new platform vs. why not just make it on an existing platform of the 3 and use '3' components in the semi. If the 'Y' comes with traditional doors vs FWDs I feel that he may be finally listening to his staff regularly.

What about the better cabling? Is that still on the table? If so, will it be a future enhancement to the Model 3, then to be rolled into the Y, or introduced with the Y, or the Model S or X and then the 3 and Y, or new Roadster then everything else, or Tesla Semi then everything else?

 

[Ulmo]

You can chose a minimalist design and have high quality,high value that is great looking,safe,enjoyable,and comfortable.

You don't need "baroque" design for that.

I think you probably know more about that than me, but I've yet to see it.