General Discussion: 2018 Investor Roundtable

[Words of HABIT]

NY Times - 14 minutes ago: Trump Slaps Steep Tariffs on Imported Washing Machines and Solar Products

This will not bode well for countries outside of US. How will this 33% tariff affect sales? As a Canadian, I may have to reconsider my TSLA reservation for solar shingles and source standard panels locally, a cost based decision.
Daniel

 

[smak]

Damn! I'll vote for that. I wonder how this will be spun as negative.

Dateline 2028: Tesla market cap 950 billion, Elon Musk' 1 Trillion prediction way off like usual.

 

[Curt Renz]

This will not bode well for countries outside of US. How will this 33% tariff affect sales? As a Canadian, I may have to reconsider my TSLA reservation for solar shingles and source standard panels locally, a cost based decision.
Daniel

Are you implying that Canada will impose a similar tariff on solar products imported from the United States?

 

[ValueAnalyst]

This is huge!

It means in a nutshell that Elon will only receive compensation if he grows the company up to 13 fold... Its a commitment to compensate employees beside investors and puts him with no fixed salary at 100% risk. Again a very strong signal how convinced he is that they will deliver.

I don't recall a CEO who did something similar. Expecting that investors will vote in favor by a big margin.

That are great news for all of us!

My understanding is that he will get billions even if he never "grows the company up to 13 fold," but not the full grant.

So I disagree with your characterization.

 

[myusername]

They sure miss a lot of small goals, but one of Tesla's big goal was to make 500K cars in 2020 but later revised in 2016 after M3 reservation #s, they might just be early on that 2020 target. I think big picture-wise, Tesla is exactly on target.

on target to what exactly? this is a genuine question... because at this point I'm totally confused as to what the company's goals are. are you suggesting the goal is 500k in 2020 again and that's acceptable? or are you suggesting 1m in 2020 is still the target that they're "exactly on target" for?

just to be clear, 500k/yr in 2020 makes them 1/4th the size of BMW today. 1m in 2020 makes them 1/2 the size of BMW today. so, how exactly does this company justify massive market cap expansion from here?

 

[Brando]

My understanding is that he will get billions even if he never "grows the company up to 13 fold," but not the full grant.

So I disagree with your characterization.

You could at least READ the document.
Tesla - Current Report

I have no idea what you mean by "grant" - but Elon could get ZERO if he doesn't meet goals. READ for yourself.

PS- Elon currently gets paid California min. wage. So far he has never cashed any of "his checks".
But he has plenty of money, so don't worry.
Unlike Jeff Bezos's Amazon, Tesla pays enough that their employees they don't qualify for food stamps.

 

[RobStark]

Are you implying that Canada will impose a similar tariff on solar products imported from the United States?

Does the US import solar panels from Canada? Causing retaliation?

Mexico has complained about tariffs on Mexican made washing machines but not solar panels. I have not heard of complaints from Canada about tariffs on solar panels.

 

[ValueAnalyst]

You could at least READ the document.
Tesla - Current Report

I have no idea what you mean by "grant" - but Elon could get ZERO if he doesn't meet goals. READ for yourself.

PS- Elon currently gets paid California min. wage. So far he has never cashed any of "his checks".
But he has plenty of money, so don't worry.
Unlike Jeff Bezos's Amazon, Tesla pays enough that their employees they don't qualify for food stamps.

Maybe I didn’t make my post clear, so let me try again...

EM gets paid 3.4m shares if the company’s market cap grows to $150B and stops, right? So it’s not correct to say he either grows the company 13x or doesn’t get paid anything.

Does that help?

 

[jhm]

Is 2.6 Gw a lot of solar panels?

Yes, it is worth about $1.3B. It could supply enough power to keep 1 million cars charged up.

 

[Brando]

Does the US import solar panels from Canada? Causing retaliation?

Mexico has complained about tariffs on Mexican made washing machines but not solar panels. I have not heard of complaints from Canada about tariffs on solar panels.

I believe Tesla is partnering again with Panasonic for PV cell to put into their glass roofing.
Elon Musk’s Solar Partnership Strategy Doesn't Look So Crazy Anymore
The PV cells vs modules (panels) Solar Panel (module) makers buy the cells and assemble panels & electronics and then installers purchase and install at homes (some add storage - (Power Wall type products). (Utility scale projects?) See below to get some idea of how large and complex this industry is. Seems most panels are assembled in China - where are most cells made?
Here is wikipedia, but some of the data is from 2011 to about 2015. But does show complexity of suppliers world wide.
List of photovoltaics companies - Wikipedia

Top-10 solar module suppliers in 2016

So Canadians might well worry about US module maker cost going up because of Trump Tariffs. AND if Canadian module maker use Chineses parts their export to US would be charged these tariffs, right?

I'm sure if someone will please allow the deal maker in on the solar deal he will happily veto any taxes on solar. Well, I'm not really sure.

 

[Brando]

Maybe I didn’t make my post clear, so let me try again...

EM gets paid 3.4m shares if the company’s market cap grows to $150B and stops, right? So it’s not correct to say he either grows the company 13x or doesn’t get paid anything.

Does that help?

From SEC filing Tesla - Current Report
===========================
CEO Performance Award Details

The performance award consists of a 10-year grant of stock options that vests in 12 tranches. Each of the 12 tranches vests only if a pair of milestones are both met.



• Market Cap Milestones: To meet the first market cap milestone, Tesla’s current market cap must increase to $100 billion. For each of the remaining 11 milestones, Tesla’s market cap must continue to increase in additional $50 billion increments. Thus, for Elon to fully vest in the award, Tesla’s market cap must increase to $650 billion.


• Operational Milestones: To meet the operational milestones, Tesla must meet a set of escalating Revenue and Adjusted EBITDA targets (the only adjustment to EBITDA is for stock-based compensation). These milestones are even more directly aligned with shareholder value creation than those used in Elon’s 2012 performance award. They are designed to ensure that as Tesla’s market cap grows, the company is also executing well on both a top-line and bottom-line basis.
For each of the 12 tranches that is achieved, Elon will vest in stock options that correspond to 1% of Tesla’s current total outstanding shares (1% of that amount is approximately 1.69 million shares). If none of the 12 tranches is achieved, Elon will not receive any compensation.
============================
I have nothing to add.

 

[Brando]

Maybe I didn’t make my post clear, so let me try again...

EM gets paid 3.4m shares if the company’s market cap grows to $150B and stops, right? So it’s not correct to say he either grows the company 13x or doesn’t get paid anything.

Does that help?

As the SEC filing says
========
Elon will receive no guaranteed compensation of any kind – no salary, no cash bonuses, and no equity that vests simply by the passage of time. Instead, Elon’s only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of its shareholders do extraordinarily well. Because all Tesla employees are provided equity, this also means that Elon’s compensation is tied to the success of everyone at Tesla.
========
Does that help?

 

[mrdoubleb]

For general entertainment purposes. You're welcome!

 

[schonelucht]

Didn't read the article, but I suppose the shorts are focusing on the low earnings requirements? They are indeed quite low but I don't see how Tesla can become a trillion dollar company without ebidta going through the roof anyway, so it is a non-issue. At most it signals that Elon is anticipating to take on enormous debt if that's what it takes to get Tesla growing as fast as possible. But we know that already of course.

 

[RobStark]

So Canadians might well worry about US module maker cost going up because of Trump Tariffs. AND if Canadian module maker use Chineses parts their export to US would be charged these tariffs, right?

AFAIK there are no exceptions to the 30% solar tariff.

Canadian Solar has ~9k employees worldwide and 200 workers at its Ontario manufacturing facility which has a capacity of 500 MW of Canadian Solar's 4.4 GW global manufacturing capacity.Most of its employees are on the project management and installation side.

I think the reason Trudeau is not making a stink is that he has bigger fish to fry.

KW11 | Samsung, Canadian Solar open solar PV module factory in Ontario - SolarServer

It is expected demand for solar panel imports in the US will fall 10%. As far as global retail cost go there will be more supply chasing non-American customers. Canadian prices should fall. Panels need not come from the US. They can come from Asia.

 

[Brando]

AFAIK there are no exceptions to the 30% solar tariff.

Canadian Solar has ~9k employees worldwide and 200 workers at its Ontario manufacturing facility which has a capacity of 500 MW of Canadian Solar's 4.4 GW global manufacturing capacity.Most of its employees are on the project management and installation side.

I think the reason Trudeau is not making a stink is that he has bigger fish to fry.

KW11 | Samsung, Canadian Solar open solar PV module factory in Ontario - SolarServer

It is expected demand for solar panel imports in the US will fall 10%. As far as global retail cost go there will be more supply chasing non-American customers. Canadian prices should fall. Panels need not come from the US. They can come from Asia.

And obviously any Canadian panels/modules that have Chinese content/parts will pay 30% tariff when exported into US, right?
Costs go up (+30% tariffs) and prices go up and perhaps sales/demand will/may go down. We shall see.

can you explain what AFAIK means? never mind a quick google search explains
"It is used to convey uncertainty when answering a question in online texting or email: "As far as I know." You will see this acronym both in uppercase AFAIK and lowercase afaik form, both meaning the same thing.Sep 19, 2017"

and this tariff NOT just against Chinese content, but ANY product imported to US?
sorry about my confusion, I thought just Chinese content. color me a little slow.

THANKS ROB.

 

[RobStark]

I was thinking about the meeting between Norwegian PM Solberg and Trump the other day at the White House. She mentioned Norway buys lots of American made Teslas. Historically the US has had large trade deficits in goods with Norway relative to the amount of trade. It switched to a trade surplus in 2017 for the USA. The trade seems bumpy. Kinda like Tesla exports to Norway. Hmmmm

2017 : U.S. trade in goods with Norway
NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade.

Month.......... Exports.......... Imports......... Balance
January........ 289.1 ..............343.9............... -54.8
February....... 338.9 .............411.1............... -72.2
March............ 433.4............ 360.9................ 72.4
April .............. 297.1............. 403.4.............. -106.3
May................ 571.1............. 400.6............... 170.5
June............... 419.2............. 479.1............... -60.0
July................. 605.4............. 375.8............... 229.6
August............ 721.4..............617.0............... 104.3
September..... 370.7..............474.5............... -103.8
October.......... 502.7..............420.7.................81.9
November .......537.6............ 417.5.................120.2
TOTAL.......... 5,086.4........... 4,704.5............. 381.9

Foreign Trade - U.S. Trade with Norway

 

[avoigt]

My understanding is that he will get billions even if he never "grows the company up to 13 fold," but not the full grant.

So I disagree with your characterization.

Its seems to me that the larger picture is the more important one here.

Frankly I don't care very much how many billions EM gets if he can make the growth plan laid out. This is not about if it is easy for him to achieve those, if the objectives are set too low, if he will be the richest person on earth and how large his share is in 2028.

IMHO growth and profitability is key as we all know. If that plans helps to achieve it I am all for it.

 

[avoigt]

worth reading: Bob Lutz And Tesla: The Difference Between The Old Economy And The New

 

[ValueAnalyst]

From SEC filing Tesla - Current Report
===========================
CEO Performance Award Details

The performance award consists of a 10-year grant of stock options that vests in 12 tranches. Each of the 12 tranches vests only if a pair of milestones are both met.



• Market Cap Milestones: To meet the first market cap milestone, Tesla’s current market cap must increase to $100 billion. For each of the remaining 11 milestones, Tesla’s market cap must continue to increase in additional $50 billion increments. Thus, for Elon to fully vest in the award, Tesla’s market cap must increase to $650 billion.


• Operational Milestones: To meet the operational milestones, Tesla must meet a set of escalating Revenue and Adjusted EBITDA targets (the only adjustment to EBITDA is for stock-based compensation). These milestones are even more directly aligned with shareholder value creation than those used in Elon’s 2012 performance award. They are designed to ensure that as Tesla’s market cap grows, the company is also executing well on both a top-line and bottom-line basis.
For each of the 12 tranches that is achieved, Elon will vest in stock options that correspond to 1% of Tesla’s current total outstanding shares (1% of that amount is approximately 1.69 million shares). If none of the 12 tranches is achieved, Elon will not receive any compensation.
============================
I have nothing to add.

As the SEC filing says
========
Elon will receive no guaranteed compensation of any kind – no salary, no cash bonuses, and no equity that vests simply by the passage of time. Instead, Elon’s only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of its shareholders do extraordinarily well. Because all Tesla employees are provided equity, this also means that Elon’s compensation is tied to the success of everyone at Tesla.
========
Does that help?

Thank you for posting the relevant sections. The OP to which I responded indicated that EM would not get paid anything if he does not grow the company up to 13 fold. This is not correct.

As the sections you referenced note, “If none of the 12 tranches is achieved, Elon will not receive any compensation.” This is not the same statement as, “Elon will not get paid anything if he does not grow the company up to 13 fold.” There is a spectrum of outcomes between the two extremes.

On a separate note, I generally like sarcasm and use it in casual friendly conversations, but it can be harmful if not handled with care in correct settings. You may read about this further here: Think Sarcasm is Funny? Think Again Just my 2c as I had to learn this the hard way...