General Discussion: 2018 Investor Roundtable

[Dennisj00]

Just saw a Cadillac commercial that passes a white Model S and implies their auto drive is better. . .

Has anyone tried it? Last review I read a few months ago said it was sloppy and I have no inclination to even test drive one.

 

[Intl Professor]

Just needed to vent a bit after a tough day at work. Again, I'm sorry.

I know its a courtesy. What do you have to be sorry about? (Talk to your dog about it. Others here predict the time of the next crash from consulting their dog, so they say, when I consult my bellwether colleague with a Ph.D. in economics.)

My favorite teacher in math said in 1953, "too bad perspective comes late in life." I thought that stupid at 17 since how would one ever get perspective without living it? I think I was smarter then. Sorry, maybe I past my prime too early.

 

[RobStark]

Just saw a Cadillac commercial that passes a white Model S and implies their auto drive is better. . .

Has anyone tried it? Last review I read a few months ago said it was sloppy and I have no inclination to even test drive one.

From what I can tell it is pretty good.

It only works on highways that have been mapped by GM. Which is all major US highways.

It is not good for city streets. It can't automatically change lanes. Even under emergency situations where driver is incapacitated and the car needs to stop on the side of the road.

It is hands free. I think this is the major selling point. It monitors the drivers eyes to make sure the driver is paying attention.

It is only available in the two highest trims of the most expensive Cadillac sedan, the CT6. The plug-in hybrid CT6 is not offered in the two highest trim levels.

 

[SPadival]

Right! Exactly!

It's like Wall Street has forgotten what the point of "capital" was in "capitalism." You take capital from investors, plow it in infrastructure to accelerate growth, look for a rate of return higher than sitting in treasuries, and rinse and repeat as more opportunities to accelerate growth show up.

When did they stop teaching this at B school??

The problem is exactly the opposite in case of Tesla - they want Tesla to raise capital when they don’t need any. Where else will they get the commission from otherwise? And they will use every dirty trick in the book to make them raise capital. Nobody here seems to have noticed the curious case of Adam Jonas turning against Tesla as soon as Elon gave him an emphatic NO in the ER call even as his masters at MS bought Tesla shares.

 

[Anstandswauwau]

The lad doesn't understand or does not put a high value on safety.

He said there were panels he found and had no idea why they were there.

Tesla spokesman specifically cited safety as the top concern when engineering the platform.

Hint: Those panels were there for reinforcement to increase passenger safety.

We regularly hear about how a legacy automaker compromised safety to save a few pennies or a few dollars on a part. Tesla does not do that. In the long run that is good for Tesla's bottom line.

Lad appears like he has some profound understanding of batteries, so I'll give him the benefit of the doubt.

BTW I was referring to the part where he said the battery looks like something an engineer straight out of Stanford could have designed. Not the part about the reinforcement panels.

No doubt it's amazing, safe, the absolute pinnacle of current battery tech – but the true art of mass production lies in shedding weight, cost and reduce complexity WHILE retaining all of its positive properties. But I don't think TSLA quite at this point of optimization, yet.

Probably the contrary is true as of now: TSLA is Overengineered – The company. EM said so himself many times, if you read between the lines.

 

[xhawk101]

The problem is exactly the opposite in case of Tesla - they want Tesla to raise capital when they don’t need any. Where else will they get the commission from otherwise? And they will use every dirty trick in the book to make them raise capital. Nobody here seems to have noticed the curious case of Adam Jonas turning against Tesla as soon as Elon gave him an emphatic NO in the ER call even as his masters at MS bought Tesla shares.

Exactly what I was thinking

 

[RobStark]

Lad appears like he has some profound understanding of batteries, so I'll give him the benefit of the doubt.

BTW I was referring to the part where he said the battery looks like something an engineer straight out of Stanford could have designed. Not the part about the reinforcement panels.

No doubt it's amazing, safe, the absolute pinnacle of current battery tech – but the true art of mass production lies in shedding weight, cost and reduce complexity WHILE retaining all of its positive properties. But I don't think TSLA quite at this point of optimization, yet.

Probably the contrary is true as of now: TSLA is Overengineered – The company. EM said so himself many times, if you read between the lines.

I will give Elon the benefit of the doubt.

You don't know if something is overengineered until you look back on it.

I rather Tesla go for it the first pass around then simplify later. Or scrub the barnacles off later.

 

[Waiting4M3]

It is. Kinda. Hope dies last, after all. At least it appears like EM is now listening to the advice of the board.

Anyway.

In hindsight, the Roadster reveal was a bit of wasted gun powder – wish they would have waited another year or so to counter the Mission E production start / preorder / release with that. Don't get me wrong, it created quite a bit of buzz in the car enthusiasm scene, but not so much in the mainstream media, were it was mere sidenote in the Semi coverage.

The communication concerning MY, so far, worries me a bit, due to the repeated backpedaling:

• Platform: Going from an original chassis to M3 platform (which I really welcome, but, uh, why wasn't this the plan in the first place?)
  
  
• Production line: Going from full alien dreadnought to, what sounds like M3 1.5 with a shorter cable harness. (Sidenote: I'm still a bit shocked how complex the M3 turned out to be. I was secretly hoping for way smaller part-count. Battery is a thing of a beauty but also quite overengineered, according lad who did the teardown.)
  
  
• Production location: Going from "we know where we want to build it" to "we're still figuring out where to build it" 17 month prior planned production start. This is not exactly a signal you want to send. Hope he's bluffing on this one.

My interpretation of the lack of communication regarding MY is because Tesla has a good idea of the demand, cost, and production volume, and they don't need the M3-like reservations to convince suppliers to get on board, so they're more than happy to stay mum about it until they're much closer to producing it, compared with the M3.

The semi OTOH is less proven/known, and they want to get the excitement out there to gauge demand.

Roadster seemed to me did over-shadow the semi, but maybe I don't have enough exposure to non-enthusiasts crowd.

 

[Esme Es Mejor]

Any thoughts on Tesla spinning off its autonomous driving unit? It seems like it should be worth at least the $15.3 billion Intel paid for MobilEye, if not more.

It would be trading away some of the future value of the company (maybe it has a ceiling of $800 billion market cap instead of $1 trillion), but it would put the cash crisis FUD to bed while enabling rapid building of China GF and production lines for Model Y, Semi, and Roadster. It would dramatically improve the balance sheet without a cap raise, without slowing down growth, and without threatening Musk’s control of the company.

I don’t get any sense that this option is being explored— which is fine with me— but it seems like an almost perfect solution to Tesla’s needs.

 

[mongo]

Any thoughts on Tesla spinning off its autonomous driving unit? It seems like it should be worth at least the $15.3 billion Intel paid for MobilEye, if not more.

It would be trading away some of the future value of the company (maybe it has a ceiling of $800 billion market cap instead of $1 trillion), but it would put the cash crisis FUD to bed while enabling rapid building of China GF and production lines for Model Y, Semi, and Roadster. It would dramatically improve the balance sheet without a cap raise, without slowing down growth, and without threatening Musk’s control of the company.

I don’t get any sense that this option is being explored— which is fine with me— but it seems like an almost perfect solution to Tesla’s needs.

Wouldn't that make the EAP upgrade cost a royalty payment instead of profit? 200k cars a year × 6k is 1.2 billion on it's own.

Seems like a bad trade.

 

[Waiting4M3]

Any thoughts on Tesla spinning off its autonomous driving unit? It seems like it should be worth at least the $15.3 billion Intel paid for MobilEye, if not more.

It would be trading away some of the future value of the company (maybe it has a ceiling of $800 billion market cap instead of $1 trillion), but it would put the cash crisis FUD to bed while enabling rapid building of China GF and production lines for Model Y, Semi, and Roadster. It would dramatically improve the balance sheet without a cap raise, without slowing down growth, and without threatening Musk’s control of the company.

I don’t get any sense that this option is being explored— which is fine with me— but it seems like an almost perfect solution to Tesla’s needs.

I think it will just give shorts more ammunition for their FUD that Tesla is in crisis.

 

[sundaymorning]

Everyone is chasing Tesla

The CEO of the world's largest car company flexes on Tesla, touts best-selling electric cars, and says range anxiety is no longer an issue

From article: A longer-range Leaf version that gets 225 miles of range is expected in 2019.

DOA. From what I know Leaf prices and value are dropping fast.

 

[Esme Es Mejor]

I think it will just give shorts more ammunition for their FUD that Tesla is in crisis.

$20 billion in cash/equivalents would be an air strike on shorts’ ammunition depot.

 

[Waiting4M3]

$20 billion in cash/equivalents would be an air strike on shorts’ ammunition depot.

On each car this could mean a few thousands $ of license fee, could add to $1b/yr now, and could grow quickly, maybe double by 2020/2021 when MY hits. Long term I think it's a bad deal, and losing ownership to the technology and more importantly, development roadmap is not worth it.

 

[RobStark]

 

[Esme Es Mejor]

Wouldn't that make the EAP upgrade cost a royalty payment instead of profit? 200k cars a year × 6k is 1.2 billion on it's own.

Seems like a bad trade.

I assume, like most options, the cost to Tesla would be substantially lower than the selling price. So, I’d think more like 2-3k royalty out of $5k sales price. More like 400-600 million per year (growing as sales grow), in exchange for $20 billion now. That looks like 2-3% interest rate without dilution or the risks of debt. And if it permits faster rollout of Y, Semi, and Roadster (and eventually, Pickup), it seems like Tesla easily makes back that money. Personally, I see the Semi (and commercial transportation in general) as Tesla’s biggest opportunity, and want them to disrupt this market as soon as possible.

It’s certainly a trade-off, and I prefer a world with no trade-offs, but that isn’t the world we live in. The alternatives are debt, dilution, or slower growth. I’m fine with Tesla choosing dilution or slower growth, and I assume they will, but this could be better.

 

[Waiting4M3]

I assume, like most options, the cost to Tesla would be substantially lower than the selling price. So, I’d think more like 2-3k royalty out of $5k sales price. More like 400-600 million per year (growing as sales grow), in exchange for $20 billion now. That looks like 2-3% interest rate without dilution or the risks of debt. And if it permits faster rollout of Y, Semi, and Roadster (and eventually, Pickup), it seems like Tesla easily makes back that money. Personally, I see the Semi (and commercial transportation in general) as Tesla’s biggest opportunity, and want them to disrupt this market as soon as possible.

It’s certainly a trade-off, and I prefer a world with no trade-offs, but that isn’t the world we live in. The alternatives are debt, dilution, or slower growth. I’m fine with Tesla choosing dilution or slower growth, and I assume they will, but this could be better.

I think you're underestimating the royalty. With 5k/wk M3 and 2k/wk MS/MX they are at 350k cars/yr, at $2-3k royalty per car that's $700m - $1.1b.

 

[Esme Es Mejor]

I think you're underestimating the royalty. With 5k/wk M3 and 2k/wk MS/MX they are at 350k cars/yr, at $2-3k royalty per car that's $700m - $1.1b.

I was just using Mongo’s numbers (200k car), and noting that they would grow as sales grow. Frankly, the higher the expected future sales (which could be contractually agreed to in the sale of the unit), the higher the value of the sale should be. Having it in someone else’s hands (Apple? Amazon?) should make it more valuable, since it could be licensed to other carmakers as well.

 

[Waiting4M3]

I was just using Mongo’s numbers (200k car), and noting that they would grow as sales grow. Frankly, the higher the expected future sales (which could be contractually agreed to in the sale of the unit), the higher the value of the sale should be. Having it in someone else’s hands (Apple? Amazon?) should make it more valuable, since it could be licensed to other carmakers as well.

I think the only cars with autonomous driving HW currently out there are already outfitted with MobileEye SW or in-house SW. Other in R&D all use lidar. I'm not sure which car/companies would shift to AP on their existing models, or implement new HW that works with AP on new cars at high volume.

To add,

I think the value of AP to Tesla is not if they can license to other carmakers and collect royalty, but it saves them the cost they had to pay to MobileEye, and it lets them control their own roadmap and HW design (think lower cost chip that's 10x more power efficient). Spinning it off defeats both purposes.

 

[JRP3]

No doubt it's amazing, safe, the absolute pinnacle of current battery tech – but the true art of mass production lies in shedding weight, cost and reduce complexity WHILE retaining all of its positive properties. But I don't think TSLA quite at this point of optimization, yet.

Tesla has the most energy dense battery pack compared to other OEM's. They've been optimizing it's design for over 10 years now. It's as complex as it needs to be.