General Discussion: 2018 Investor Roundtable

[DragonWatch]

Can anyone please provide a supporting source/link for or against the following two assumptions:

50% for PUP
10% for Performance

My assumption is two things. First, TSLA stock almost always does this same dance of what was drilled into our heads by the bear philosophy for the last two months. Only to wake up one day about a week after the facts, and the stock takes off like a scared rabbit. The second, if I have read the charts correctly, Nissan Leaf has just bit the bullet as the saying goes. The M3 reservations blew out the light of life for them. While InsideEVs charts do not accurately reflect actual deliveries for Tesla on a monthly wink, they do on the quarterly and annual reflection of US deliveries.

Now, I liked the Leaf and almost bought one in the very beginning, but it lacked the desired range. So, like many humans like me they have been holding out. Pent up demand. The old wants and needs coming to grips with costs to achieve the goal So, who’s next in the eat my dust ~ says the M3 owner

 

[DragonWatch]

The real obvious tipping point will be the slowing of fossil fuel car sales; rapid decrease in used fossil fuel car values; and decline in the buying of used fossil fuel cars. Just sayin’

 

[Paracelsus]

SpaceX news:

SpaceX Launches Secret Zuma Mission for US Government, Lands Rocket

 

[Reciprocity]

I think Model Y's price will open eyes. I would expect the same $35,000 base, but cheaper options, and maybe even EAP/FSD included.

So Model Y at low $40k's ASP by 2020/21 vs. Byton's electric SUV may not even be competition.

I thought originally the same thing, but you are contradicting your self from last week when you noted Tesla is leaving money on the table by not ebaying all the cars. I think the pricing will actually be closer to $39-40k range with the exact same feature/prices. Very similar to how S/X are priced today with a $5k difference. Elon wants that 30% GM, not because he is greedy, but because they know they need that money to accelerate growth and thus the mission. Y and Pickup are going to crush the competition. Model 3 is not a super popular size/type of car, the model Y and Pickup are both probably 2x as popular each or more. So Model Y ASP should be closer to $55 to $60 as the timing will mean that FSD should be available and the take rate of the $8000-$9000 (when EAP is included) option will be high.

Edit: To be clear; People will be able to get a $39k Y, and it will be competitive TCO with many smaller SUVs in the market like CRV and Rogue.

 

[DragonWatch]

For over a month now some, okay several of you have bad mouthed Elon for his overly ambitious projections of the M3 production ramp up. Yes, if I were a gambler and chose to play this game of bopping the mole, I would have sold out back when the stock reached its peak, but I neither gamble and money is not my game. Then of course I would have bought it all back plus a few shares around $318 like when I added more shares a few weeks back.

I am not giving up based on a superior marketing guru

Yes John-boy, this could evaporate as early as this afternoon, but then I will bask in the sun generating solar power while I can. Speaking of which, this should be a good year for those of us in the northwest

 

[ValueAnalyst]

I thought originally the same thing, but you are contradicting your self from last week when you noted Tesla is leaving money on the table by not ebaying all the cars. I think the pricing will actually be closer to $39-40k range with the exact same feature/prices. Very similar to how S/X are priced today with a $5k difference. Elon wants that 30% GM, not because he is greedy, but because they know they need that money to accelerate growth and thus the mission. Y and Pickup are going to crush the competition. Model 3 is not a super popular size/type of car, the model Y and Pickup are both probably 2x as popular each or more. So Model Y ASP should be closer to $55 to $60 as the timing will mean that FSD should be available and the take rate of the $8000-$9000 (when EAP is included) option will be high.

Edit: To be clear; People will be able to get a $39k Y, and it will be competitive TCO with many smaller SUVs in the market like CRV and Rogue.

No contradiction. I say Tesla SHOULD up prices, but they WILL keep ASP low and go for volume in the name of passing savings to customers.

Sigh...

 

[schonelucht]

I don't see how SR becomes available before mid-18 with the ramp being slashed by a factor of four (optimistically) for the first six months.

That's certainly possible!

I read your link, which was a Business Insider article, which cited a Reuters article. Neither are acceptable sources as far as I'm concerned.

How about electrek.co then?

The way I remember it: $100/kWh was provided in earlier days of GF1, which assumed 35/50 GWh (cell/pack-level) for 2020, which is now targeted for 2018, so it'd make sense for Tesla to get down to that level by exit-18. This will probably depend on the uptime of the GF1 production lines, which as we know, has been shaky lately, but I think (hope) Tesla will figure it out by late 2018.

I think you misremember this, given the remarks by Elon on the Gigafactory reveal event in July 2016.

 

[ValueAnalyst]

How about electrek.co then?

That one says "below" $100/kWh by 2020, which supports my position if anything.

 

[bdy0627]

My assumption is two things. First, TSLA stock almost always does this same dance of what was drilled into our heads by the bear philosophy for the last two months. Only to wake up one day about a week after the facts, and the stock takes off like a scared rabbit. The second, if I have read the charts correctly, Nissan Leaf has just bit the bullet as the saying goes. The M3 reservations blew out the light of life for them. While InsideEVs charts do not accurately reflect actual deliveries for Tesla on a monthly wink, they do on the quarterly and annual reflection of US deliveries.

Now, I liked the Leaf and almost bought one in the very beginning, but it lacked the desired range. So, like many humans like me they have been holding out. Pent up demand. The old wants and needs coming to grips with costs to achieve the goal So, who’s next in the eat my dust ~ says the M3 owner

My impression is that people are holding off on the current LEAF given the specs of the next one. Based on the specs, I expect it to do well.

 

[jhm]

No contradiction. I say Tesla SHOULD up prices, but they WILL keep ASP low and go for volume in the name of passing savings to customers.

Sigh...

I think of it as a market share play. Perhaps Tesla could be profitable in the 2020s and command a 10% share of just EV market. Or it could go after a 20% to 30% market share of all vehicles (cuz it's all EV by 2030).

Also the key to forcing other OEMs to build competitive EVs is simply to steal market share from those that won't. This may seem orthogonal to shareholder value, but I think taking serious market share makes Tesla an essential stock to own. If Tesla is on a trajectory to capture 20% share of all new vehicles by 2030, then any investor who wants broad automotive exposure must own Tesla.

So personally, I would prefer Tesla to become a must-own automotive stock than merely one of many profitable stocks. The time for a sensible PE ratio will come after EVs have booted ICE out of the automotive market. Until then, it is much easier for Tesla to steal market share from ICE than to take it from truly competitive EVs (not that they exist just yet).

BTW, growing unit sales from 101k EVs in 2017 to 20M in 2030 is just 50% annualized growth sustained for 13 years! So 20% market share by 2030 is a plausible goal. But as the market becomes saturated with EVs, it will be harder for Tesla to sustain a 50% growth rate. So the faster we grow in the next 5 years, the brighter the prospects for massive market share.

 

[Reciprocity]

Also the key to forcing other OEMs to build competitive EVs is simply to steal market share from those that won't. This may seem orthogonal to shareholder value, but I think taking serious market share makes Tesla an essential stock to own. If Tesla is on a trajectory to capture 20% share of all new vehicles by 2030, then any investor who wants broad automotive exposure must own Tesla.

Pretty much agree with all, but wanted to focus on this. Its not just the 20% of market share Tesla is going for. Its the top part of the market, just bellow the custom super car market down to the loaded Camry or Accord. This is where the margins are the highest. This is a two fold impact on competition. It forces them to compete where they make their most money and they can only possibly take market share from themselves, meaning their EVs will cannibalize their ICE profits. Tesla does not have this problem and they are constantly taking market share from competitors. At some point Tesla will have to compete and some might chose mission E or Ipace, but those sales will hurt Porsche and Jag more then it will hurt Tesla, because every market is basically a virgin market for Tesla, while for traditional companies, every sale lowers their own market share in ICE. I guess it better to lose sales to yourself at a loss then to lose customers outright to Tesla, but honestly, no its not. Actually, its probably best to just BK and reorganize around EV.

 

[schonelucht]

That one says "below" $100/kWh by 2020, which supports my position if anything.

Seriously? Sorry, if you are not willing to take my sources and refuse to come up with any sources that support your argument, and are stretching the meaning of 'by 2020' to actually mean 'by 2018' especially when it comes from Elon directly who'd rather be dead then taking a safety margin of 2 years when presenting his argument, then I can only conclude you are not willing to discuss this honestly.

 

[ValueAnalyst]

Seriously? Sorry, if you are not willing to take my sources and refuse to come up with any sources that support your argument, and are stretching the meaning of 'by 2020' to actually mean 'by 2018' especially when it comes from Elon directly who'd rather be dead then taking a safety margin of 2 years when presenting his argument, then I can only conclude you are not willing to discuss this honestly.

Actually, even though EM has been optimistic on production/autopilot timelines, he's also been conservative on CapEx needs/cost.

There is no source to support. My logic goes: EM predicted $100/kWh by 2020, when GF1 guidance was 35 GWh, which is now for 2018.

 

[goinfraftw]

So, we know Tesla probably won't be make all of the cars necessary to fulfill the entire world's automotive market (hey, just being realistic). With concepts like these by Toyota, it makes the likelihood of Autopilot-as-a-Service to other vehicle manufacturers possible. Best risk v. reward scenario is to move as quickly as possible to a sustainable future without causing too many people to be pissed off at the company and Elon Musk.

These existing vehicle manufacturers focus on what they know well, and survive the incoming tidal wave of innovation. Meanwhile, Tesla continues to be the innovator and integrator in this ecosystem. Makes a lot of sense if you start thinking about their strategy around batteries too. Thoughts?

 

[jhm]

Pretty much agree with all, but wanted to focus on this. Its not just the 20% of market share Tesla is going for. Its the top part of the market, just bellow the custom super car market down to the loaded Camry or Accord. This is where the margins are the highest. This is a two fold impact on competition. It forces them to compete where they make their most money and they can only possibly take market share from themselves, meaning their EVs will cannibalize their ICE profits. Tesla does not have this problem and they are constantly taking market share from competitors. At some point Tesla will have to compete and some might chose mission E or Ipace, but those sales will hurt Porsche and Jag more then it will hurt Tesla, because every market is basically a virgin market for Tesla, while for traditional companies, every sale lowers their own market share in ICE. I guess it better to lose sales to yourself at a loss then to lose customers outright to Tesla, but honestly, no its not. Actually, its probably best to just BK and reorganize around EV.

Hmm, reminds me of the 80/20 rule. If 80% of profit is obtained in 20% of the vehicles sold and Tesla grabs the most profitable 20% of the market, this leaves almost no profit for the rest of automakers to divvy up. I'm not sure it would get that out of balance, but choosing the 20% share you most want is really quite a big deal.

 

[sub]

Agree to disagree on PUP/LR take rate. I think LR's appeal to consumers is under-appreciated, as people forget one of the primary reasons why Model S succeeded in the first place was its superior range on one charge. People will pay up for LR even at $9k premium imho. We'll see about PUP, you may be right on that one with my 50% being too optimistic.

One difference between early model S and early model 3 is the expanded supercharger network that will continue to get better. I could not have made a 60 model S work 4 years ago where I live but our X75D works fine now with only a couple holes needing to be filled. We are still able to detour a little to get where we need to.

 

[immunogold]

Curt Renz: Benzinga - this morning: Baird: Albermarle (NYSE:ALB) Is The Best Lithium Cycle Play

I read a Motley Fool article last week: 3 Lithium Stocks to Buy for 2018

They cite three major lithium players: FMC, ALB, and SQM. All three are internally diversified, with a handful of different business segments. However, Lithium is a significant revenue source for all three. There are, however, some unique features for each.

FMC: the largest lithium producer worldwide, but 88% of its revenue is from pesticides. It is reportedly considering spinning off its lithium segment as a separate entity. If so, this would be the only pure-play lithium stock.

ALB: (Curt cited today in Benzinga) is up 130% since 2016. It currently has a contract with the Chilean government that caps its lithium at 80,000 metric tons for another two decades. With the new government elected, ALB is hoping for a renegotiated contract. (N.B. EM was in Chile last week...).

SQM: This is the Chilean company of the three. It is reportedly capable of 27% of the worlds lithium production. Projected 63,000 metric tons of lithium carbonate in 2018 (up 31%) and 13,500 metric tons of lithium hydroxide in 2018 (up 125%). It has plans to expand operations into Argentina in 2019. Like the other two, it is diversified with 5 business segments. However, Lithium accounts for 64% of rev and 88% of profit.

Summary: if FMC spins off its lithium segment as a pure--play, this could be the best. Currently, multiple analysts place ALB as the best combination of revenue and corporate stability. SQM could become a giant, but with its Chilean home base, some analysts see it as having slightly more risk.

 

[ggr]

Mod: It's easy to be exuberant on a day like today, but you don't get to mock other members even now. Otherwise it's hard to justify moving their posts on down days. 2 posts moved to snippiness. --ggr.

 

[JRP3]

Interesting new interview with Martin Eberhard, especially this quote considering the recent discussion of battery pricing:

Today you can buy batteries for $100 a kilowatt hour; that was the pipe dream of the most enthusiastic EV proponent 10 years ago. We nearly tripled that on the Tesla Roadster — that's a huge deal.

Ex-Tesla CEO's focus: Battery integration

 

[DragonWatch]

My impression is that people are holding off on the current LEAF given the specs of the next one. Based on the specs, I expect it to do well.

Good, I just had not found anything beyond an August 2017 article touting how grate the newer car was to be, plus the sad numbers for Sep, Oct, Nov and Dec17. I hope you are right, and again thanks for the info/ thought.