General Discussion: 2018 Investor Roundtable

[mongo]

Report: US biodiesel fueling deforestation

The food and Tesla discussion has lead me to see what Kimbal Musk has been up to. Notably he takes a dim view of ethanol on grounds of poor land use. This concern easily extends to biodiesel as the article above points out that biodiesel is contributing to deforestation. This is a very poor tradeoff given that about 1/3 of GHG emission stem from agriculture. I suspect that Elon may share these concerns about biofuels.

So here's the nexus. Tesla Semi will help reduce consumption of both diesel and biodiesel. On one hand this avoids direct emission of CO2 and other pollutants, while on the other, it avoids deforestation and other GHG emissions in agriculture.

Kimbal's cry against "industrial food" could become a theme that resonates with Tesla, especially if Tesla places "real food" restaurants at Supercharger stations.

Speaking of food and robots and Tesla:
Jack in the Box CEO talking about robots for fast food.

 

[bdy0627]

This is the episode I was referring to.

01.05.18 – Q1 Delivery & Production Estimates - Tesla Daily: Tesla News & Analysis

Just listened to that on my drive this morning. Thanks again. That's a really informative podcast. I'll be listening to more of those. Very highly recommended for TSLA investors.

 

[Waiting4M3]

This was his projection in May, 2017 that turned out to be pretty accurate actually:
A major Tesla bull just downgraded the stock, and shares are sliding
"He retained his target price of $305. Jonas said he thought Tesla would struggle to deliver its Model 3 mass-market vehicle in 2017. Jonas said he thought Tesla would deliver only 2,000 vehicles in 2017 and sell 90,000 in 2018."

Keep in mind, that was in May when many of us believed Tesla would be producing thousands per week by October/November.

The 2K in 2017 part turns out to be accurate but I'm chalking that up to luck. Otherwise I'm selling based on his 90K in 2018 prediction.

 

[neroden]

I'm going to throw in some comparative data from the cost side, courtesy of Lazard's yearly "Insights":

Levelized Cost of Energy 2017

Have a look at utility scale and rooftop residential PV costs. If the aim is to accelerate renewables, it's no contest.

Residential competes against utility scale PLUS transmission/distribution costs, however. Transmission costs charged to the customer are typically 6 cents per kwh ($60/MWh), though it varies by location.

More informed analysts pinpoint the particularly elevated price of US rooftop residential as being due to stupid local factors related to advertising and permitting. If you only use data from countries with high residential penetration and low advertising costs like Australia, you get residential prices which are about equal to the utility scale price plus transmission/distribution costs, which makes rooftop roughly competitive with utility. I hope the US residential overpricing stops soon.

 

[neroden]

Apparently now informative posts can get removed simply because they mention another member's user name

In case anyone missed it Tesla's New York Gigafactory Kicks Off Solar Roof Production

This factory has been eating up R&D and SG&A money for many quarters. In a few months it should be generating some gross profit to defray those costs which are already present on the P&L statement.

And hey, they might even call me about my reservation at some point (no news yet though).

 

[ValueAnalyst]

@schonelucht I had time to reflect on our earlier conversation. I know agree with you that there is no evidence to support pack-level $100/kWh earlier than 2020. My assumptions for gross margin now incorporate $125/kWh for 2018, $110/kWh for 2019, and $100/kWh for 2020. Thanks for taking the time to play devil's advocate.

 

[bdy0627]

The 2K in 2017 part turns out to be accurate but I'm chalking that up to luck. Otherwise I'm selling based on his 90K in 2018 prediction.

I think his overall 2018 prediction is very low but I thought the same thing about 2017 and look how that turned out. It's just a data point that's worth considering given how accurate he turned out to be for 2017. For Q1, here are several Model 3 production predictions to consider:

Jonas: 8,000
Gene Munster: 14,000
Rob Maurer (Tesla Daily): 12,000

I personally think Jonas' is very low, Munster's may be a little high, and Maurer's is very realistic. Using a 13 week quarter, this gives average production per week numbers of: 616 (Jonas), 1,100 (Munster), 965 (Maurer). These all seemed low to me at first, if we think Tesla ended Q4 2017 producing nearly 1,000/week, and will continue from that point into 2018. However, they didn't. They actually probably ended the quarter producing about 700/week in an end of quarter max boost. Backing off of that a bit, Maurer argues Tesla will likely be around 500/week to start Q1. That seems reasonable to me. Perhaps it's 600/week, but it's not 1000/week in January. The production in January isn't likely to quickly ramp up from there.

Now, predicting market reaction to these numbers is a whole other matter, particularly given the tendency for the market to be irrational. Regardless, I've reset my expectations so that a production of under 12,000 for Q1 would be disappointing, over 12,000 would be good, and over 14,000 would be great.

 

[Richgoogol]

Seems like SP won't go anywhere today..capped at 335 basically

 

[theschnell]

I think his overall 2018 prediction is very low but I thought the same thing about 2017 and look how that turned out. It's just a data point that's worth considering given how accurate he turned out to be for 2017. For Q1, here are several Model 3 production predictions to consider:

Jonas: 8,000
Gene Munster: 14,000
Rob Maurer (Tesla Daily): 12,000

I personally think Jonas' is very low, Munster's may be a little high, and Maurer's is very realistic. Using a 13 week quarter, this gives average production per week numbers of: 616 (Jonas), 1,100 (Munster), 965 (Maurer). These all seemed low to me at first, if we think Tesla ended Q4 2017 producing nearly 1,000/week, and will continue from that point into 2018. However, they didn't. They actually probably ended the quarter producing about 700/week in an end of quarter max boost. Backing off of that a bit, Maurer argues Tesla will likely be around 500/week to start Q1. That seems reasonable to me. Perhaps it's 600/week, but it's not 1000/week in January. The production in January isn't likely to quickly ramp up from there.

Now, predicting market reaction to these numbers is a whole other matter, particularly given the tendency for the market to be irrational. Regardless, I've reset my expectations so that a production of under 12,000 for Q1 would be disappointing, over 12,000 would be good, and over 14,000 would be great.

I think Jonas will be the closest of those three again. My guess is around 10K. Hope both he and I are too low.

 

[DurandalAI]

Groundbreaking achievement: 2018 Kia Soul EV gets bigger battery, range boost from 93 to 111 miles http://dlvr.it/Q9Wnmy

Sometimes I ask myself in what world this guys are living....

I liked my Kia Soul as far as gas powered vehicles go. My wife would like one of the Soul EVs if they had 200+ mile range as she likes the body style and practicality. More reason why we need a Model Y available. But I have conveyed that the only vehicle I will help pay for is a Tesla, so we wait for our Model 3 for now.

 

[Paracelsus]

While I admit I am reluctant to do so, I feel I must give Jonas some credit regarding his perspective that there is perhaps much more at play regarding the Model 3 ramp rate and the time frame necessary for it to dominate the BMW 3. This 2 minute video discussion between him and Chamath Palihapitaya discussing the Model 3 and the BMW 3 is very telling of his perspective in my opinion. While we have seen Chamath come out of every interview as the intellectual giant and victor he deserves to be, I find Jonas' response to Chamath's claim that the battle of the 3 versions isn't about 'political shenanigans' to be a little chilling. Jonas' reply - ".....there is a reality check to that that does involve geopolitical and national security issues that is relative to the debate as well". I would appreciate others sharing their perspective on this clip. Perhaps Jonas has more information than we often give him credit for:

Tesla's Model 3 will decimate BMW's 3 Series, says Social Capital CEO

 

[Richgoogol]

I liked my Kia Soul as far as gas powered vehicles go. My wife would like one of the Soul EVs if they had 200+ mile range as she likes the body style and practicality. More reason why we need a Model Y available. But I have conveyed that the only vehicle I will help pay for is a Tesla, so we wait for our Model 3 for now.

Wow I guess you have put your foot down eh? Damn

 

[Curt Renz]

Business Insider - yesterday evening: New rechargeable batteries that use iron instead of cobalt could be a game changer for electric cars

 

[Sean Wagner]

I would appreciate others sharing their perspective on this clip. Perhaps Jonas has more information than we often give him credit for:

Tesla's Model 3 will decimate BMW's 3 Series, says Social Capital CEO

Jonas is solidly grounded in reality.

In which parallel universe does one product ever take over a market, and when it comes to vehicles, individual motivations can be surprisingly fickle. Some of the constraints or obstacles are production capacity, [crucial] market experience, engineering, distribution, manufacturing, and national resources.

The Germans are demonstrably not shy to do what it takes in defense of their foremost industry [see political machinations regarding EU regulations].

VW experienced a near death experience a generation ago, and everyone participated in getting through the crisis. Same thing across the industry during the last financial crisis - very flexible arrangements were found.

I'd also advise taking into account Germany's foremost independent automotive authority, the eponymous Prof. Dr. Ferdinand Dudenhöffer [titles are a big thing there]. He was the first serious industry luminary over there to point to Tesla as a formidable future challenge, and is now saying the most dangerous threat to domestic industry will come from China.

Compare China's electric bus industry - and government support - with anything else in the world. Not really remotely possible.

Summa summarum: sure, the Model 3 will take a big bite out of BMW's US market share. But that's more like the end of the beginning.

 

[adiggs]

Business Insider - yesterday evening: New rechargeable batteries that use iron instead of cobalt could be a game changer for electric cars

Exciting potential. But my read of the article, is that it's based on a press release about a computer simulation of the chemistry of substituting iron into the battery. The press release also talks about a physical battery that plans to be (or has been built, at lab scale), but doesn't talk about experimental results or any of the beginning of the testing that would go into establishing efficiency / reliability / operating range / density / discharge rates / ....

I DO believe in the power and importance that computer simulation of chemical / molecular behavior is having on industry, so it's not at all ludicrous to me that they've designed it on a computer and have surprisingly discovered a reasonable path to success with something previously thought to be ludicrous.

It looks like it's a long ways from influencing a buyable product, or an investment decision, in anything other than a pure play startup built around the technology.

 

[Bobfitz1]

.

I was referring to what is, not what could be or what is being limited. Most buyers have no idea about specs other than what Tesla lists on the website. The current stated difference beteeen X75D and X100D is ~.02 seconds.

You posted " The other apparent change with Tesla is the smaller performance differences between battery sizes than previous. X75D basically same as X100D for example. So, bigger battery is much more of a nice to have than a necessity."

The assertion was that there was some change Tesla made to account for smaller performance differences between battery sizes. I took this to mean some battery pack technical change. Difference between X75D and X100D is only .2 seconds, and I explained how that is almost certainly due to Tesla SW limits to incent purchases of more profitable P100D. Having a bigger battery is better on two counts.
Longer range AND higher performance. Higher performance either now or sometime later when Tesla decides to unlock a higher discharge rate to enable faster acceleration. This is exactly what they did only a month or two ago. With Model 3 for next year or two, my bet is they will limit current on the LR version somewhat, so when a P version is available, they can make it much faster than LR M3 and charge lots more for the P. There may be circumstances 2 or more years out that lead them to unlock the current limit and increase LR M3 performance significantly. IMO, if you pay an extra 9K to get the larger battery, you should get a 'twofer'. Longer range and all of the faster acceleration the extra cells can provide. That said, Tesla for now at least is going to fine tune this to benefit better revenue and profit and that is how it should be to permit continued 50% annual growth.

 

[Waiting4M3]

I think his overall 2018 prediction is very low but I thought the same thing about 2017 and look how that turned out. It's just a data point that's worth considering given how accurate he turned out to be for 2017. For Q1, here are several Model 3 production predictions to consider:

Jonas: 8,000
Gene Munster: 14,000
Rob Maurer (Tesla Daily): 12,000

I personally think Jonas' is very low, Munster's may be a little high, and Maurer's is very realistic. Using a 13 week quarter, this gives average production per week numbers of: 616 (Jonas), 1,100 (Munster), 965 (Maurer). These all seemed low to me at first, if we think Tesla ended Q4 2017 producing nearly 1,000/week, and will continue from that point into 2018. However, they didn't. They actually probably ended the quarter producing about 700/week in an end of quarter max boost. Backing off of that a bit, Maurer argues Tesla will likely be around 500/week to start Q1. That seems reasonable to me. Perhaps it's 600/week, but it's not 1000/week in January. The production in January isn't likely to quickly ramp up from there.

Now, predicting market reaction to these numbers is a whole other matter, particularly given the tendency for the market to be irrational. Regardless, I've reset my expectations so that a production of under 12,000 for Q1 would be disappointing, over 12,000 would be good, and over 14,000 would be great.

I can agree with 500/wk to start Q1. At the end of Q1, I assume Tesla hits the 2500wk as a burst rate + EoQ push but in fact only hits 1500/wk sustainable rate, if I linearly ramp from 500/wk to 1500/wk, averaging 1000/wk, I think 13,000 produced in Q1. Jonas's 8K is very pessimistic IMO.

 

[CorneliusXX]

Exciting potential. But my read of the article, is that it's based on a press release about a computer simulation of the chemistry of substituting iron into the battery. The press release also talks about a physical battery that plans to be (or has been built, at lab scale), but doesn't talk about experimental results or any of the beginning of the testing that would go into establishing efficiency / reliability / operating range / density / discharge rates / ....

I DO believe in the power and importance that computer simulation of chemical / molecular behavior is having on industry, so it's not at all ludicrous to me that they've designed it on a computer and have surprisingly discovered a reasonable path to success with something previously thought to be ludicrous.

It looks like it's a long ways from influencing a buyable product, or an investment decision, in anything other than a pure play startup built around the technology.

It may be a long way off, however for anyone wanting to make batteries at scale this must very appealing. The input cost will be tiny.

 

[Drumheller]

90k Model 3 in 2018 seems like a decent level to set expectations. Of course, I'd like to see Tesla do better. However, consider that is a 45X increase over 2017, or 22.5X increase in yearly rate.

As an investor, I would be concerned if competitors were right behind Tesla and a slower than expected rate gave them an opportunity to catch up or surpass Tesla. That's not the case here. No one is even close.

If I set my expectations to match Jonas at 90k, then I can be pleasantly surprised if Tesla surpasses that. If they do hit 90k in 2018, it's 'only' a 5 to 10x increase to get in the 500,000 to 1,000,000 range in 2019.

Long term, Tesla still looks great. That hasn't changed.

 

[Reciprocity]

haha.. the leader of Norway just mentioned Tesla in the Trump presser and how its an american product that they import. Trump also mentioned their sovereign fund invests in the US. You know the one that wants to divest from fossil fuels.