General Discussion: 2018 Investor Roundtable

[replicant]

Since shorting a lot more at 379 after Elon's big "going private" nonsense, mine is doing VERY well.

Why are body shops a good business for Tesla to be in? Why invest in those rather than something like the Semi, or Solar Roof?

Besides the good reasons presented before me, perhaps having customers go to Tesla to repair their car, and one hour later, have them leave the place with a reservation for a solar roof and a powerwall isn't such a bad thing after all.

Some people go to the Apple store to have their computer fixed, and get out with a new smartphone and some earpods. They could have gone to an Apple-certified repair shop instead.

 

[schonelucht]

Normal stocking practices would replace the "order and wait for production and delivery" cycle.

That's exactly my point. In house body repairs would be great if the above came to be. In reality, Tesla isn't even able to keep up with normal stocking practices in one centralised warehouse (otherwise it would never take weeks/months for parts to arrive : next day delivery is a thing) It's not incidental, it's endemic with Tesla. Here is thread with 100 posts or so over the last 3 months, full of screencaps of owners complaining about parts availability. And supposedly the solution is replicate that -failing- effort in every single in house body shop location? Not seeing it.

PS: we (ex-) moderators love @schonelucht. I wish I had listened more closely to him on some past occasions.

Thanks for the endorsement. The assumption about me being short doesn't really bother me but for the record to all those that want to hear it : I have never been short Tesla, and certainly am not now. The bank that I use to hold my Tesla investment doesn't even allow me to go short (they have some structured products that allow an investor to express a negative position but I am not even sure if they offer them for Tesla) I have bought, sold and re-entered many times all on fully owned shares or leveraged positive structured products, sometimes for my complete position, sometimes partially. I am currently at a low level of holdings after having taking profits when the stock ran up after the quarterly report, so in a way I am 'negative' on Tesla.

For those that don't understand why I am so adamant about trying to figure out and following up on what Tesla is doing badly : that's because how you lose money. Making money while investing is easy, the hard part is figuring out how not to lose the winnings.

 

[FirebirdAlpha]

You think long wait times are acceptable for customers?

No, I don't, but are the body shops really the problem?

I got hit in the parking lot in my Honda Civic in July. Took the body shop 3 days to fix.

Meanwhile, Tesla owners are waiting months for the body shops to get parts.

Seems like Tesla's parts supply chain is the problem, not the physical store.

 

[KarenRei]

No, I don't, but are the body shops really the problem?

I got hit in the parking lot in my Honda Civic in July. Took the body shop 3 days to fix.

Meanwhile, Tesla owners are waiting months for the body shops to get parts.

Seems like Tesla's parts supply chain is the problem, not the physical store.

And the whole point is that each body shop would have a stock of all parts on-hand - something that can't be done at independent repair shops. So your point?

 

[FirebirdAlpha]

And the whole point is that each body shop would have a stock of all parts on-hand - something that can't be done at independent repair shops. So your point?

So instead of Tesla buying cheap land and hiring cheap employees to distribute the parts to local body shops (the model of every other automaker)...

You want them to buy expensive land and hire expensive employees to both hold the parts inventory AND fix the cars?

 

[KarenRei]

So instead of Tesla buying cheap land and hiring cheap employees to distribute the parts to local body shops (the model of every other automaker)...

You want them to buy expensive land and hire expensive employees to both hold the parts inventory AND fix the cars?

Apparently land and employees are more expensive to Tesla than to everyone else?

And yes, parts & inventory for 3 models != parts & inventory for thousands of models. An independent body shop simply cannot maintain local inventory for all vehicles it will serve.

 

[FirebirdAlpha]

Apparently land and employees are more expensive to Tesla than to everyone else?

And yes, parts & inventory for 3 models != parts & inventory for thousands of models. An independent body shop simply cannot maintain local inventory for all vehicles it will serve.

No, but I'll be more explicit now.

First, the body shop business sucks. It's a low margin business with no economies of scale. It's also a business with random demand - car crashes are unpredictable for any one particular make/model.

This is why you see so many independent auto mechanics. They generate value by offsetting variability in demand by repairing a broad array of cars.

Traditional automakers have a parts supply chain. They hold the parts in distribution centers and then quickly send them to independent mechanics when they place an order.

Now, as an investor with at least 10B+ in future projects, where do you want that money going?

Body shops? A low-value business with no scale benefits?

The Model Y? The Semi? Etc.

 

[KarenRei]

crashes are unpredictable for any one particular make/model.

Bingo.

Body shops? A low-value business with no scale benefits?

I want them to be able to do repairs with inventory on-hand, with the ability to do repairs same-day, and thus decrease loaner inventory and increase consumer satisfaction.

I have a Ford truck in an "independent garage" right now. It's waiting on parts (a bearing that connects to the transmission). And has been for two weeks. Don't tell me that this is just a Tesla thing. Perhaps I'm in a worse situation because I'm in Iceland, but guess what? Getting parts here won't be any easier for Tesla.

 

[TradingInvest]

So instead of Tesla buying cheap land and hiring cheap employees to distribute the parts to local body shops (the model of every other automaker)...

You want them to buy expensive land and hire expensive employees to both hold the parts inventory AND fix the cars?

Firebird, I don't know if you really don't understand business, or you are trying to mislead people.

Tesla couldn't do body shops in early years because there were not enough business. Now they have enough cars on the street. It makes perfect sense to start this business now.

Tesla's body shops have several advantages.
1. They only deal with Tesla cars, so the workers can get really good at it.
2. Faster time to fix means lower cost and also happy customers.
3. They can store all the parts with the right colors on site. Shops deal with hundreds of models can't do this.
4. During slow time, they can use the same shops to do certain warrantee work, or prep new cars.

They only need one shop in each major city to make a huge impact. Then they expand only when demand goes up.

The cost of starting a body shop is not that big for Tesla, they can either buy a shop or lease a place. The amount of spare parts is limited because Tesla doesn't have so many models and colors. Shorts think the body shops will be a burden for Tesla, that view is wrong.

 

[Krugerrand]

Call me cynical., but well known Tesla vlogger happens to get backed into, just in time to receive flawless service from the shiny brand new Tesla repair shop. This has Tesla marketing written all over it.

When it slaps you in the face, pretend it didn’t happen.

 

[JRP3]

Firebird, I don't know if you really don't understand business, or you are trying to mislead people.

Obviously the latter.

 

[Intl Professor]

Firebird, I don't know if you really don't understand business, or you are trying to mislead people.

Tesla couldn't do body shops in early years because there were not enough business. Now they have enough cars on the street. It makes perfect sense to start this business now.

Tesla's body shops have several advantages.
1. They only deal with Tesla cars, so the workers can get really good at it.
2. Faster time to fix means lower cost and also happy customers.
3. They can store all the parts with the right colors on site. Shops deal with hundreds of models can't do this.
4. During slow time, they can use the same shops to do certain warrantee work, or prep new cars.

They only need one shop in each major city to make a huge impact. Then they expand only when demand goes up.

The cost of starting a body shop is not that big for Tesla, they can either buy a shop or lease a place. The amount of spare parts is limited because Tesla doesn't have so many models and colors. Shorts think the body shops will be a burden for Tesla, that view is wrong.

Clear answer along with others. This is last post on Firebird's current fixation I will let stand. Next will be deleted by my ham-hand.

 

[NicoV]

Nieuwe Brusselse e-Audi raakt minder ver dan gepland

Audi e-tron turns out to have less range than promised, still above 400km WLTP, but less than the i-pace. Instead of accellerating 0-100 in 4.6s, it is ‘less than 6s’.

 

[EVMeister]

But the VW group always keeps their promises and never lies about anything...

 

[Oil4AsphaultOnly]

No, but I'll be more explicit now.

First, the body shop business sucks. It's a low margin business with no economies of scale. It's also a business with random demand - car crashes are unpredictable for any one particular make/model.

This is why you see so many independent auto mechanics. They generate value by offsetting variability in demand by repairing a broad array of cars.

Traditional automakers have a parts supply chain. They hold the parts in distribution centers and then quickly send them to independent mechanics when they place an order.

Now, as an investor with at least 10B+ in future projects, where do you want that money going?

Body shops? A low-value business with no scale benefits?

The Model Y? The Semi? Etc.

I think the difference is in the POV. You see the move as Tesla entering a low-margin cut-throat business, and thus a waste of resources. Everyone else is pointing out that Tesla is NOT entering the "body-shop" business, but rather solving a parts-supply and installation issue.

Whereas the traditional automakers ONLY supply the parts, Tesla is simply taking it one step further and both supplying the parts and installing them into the customer's cars, thereby saving the customer the additional wait/transaction time of waiting for body-shops to inspect-damage --> order-part --> deliver-part --> install part.

It's a cost and time-savings on the customer's end without incurring significantly more cost on Tesla's end.

 

[Oil4AsphaultOnly]

But how does creating body shops solve the parts-supply issue?

Why is Tesla going to be better at shipping parts to their own body shops versus independent body shops?

I mean, just look at the complaints in this thread. People get it.. the problem isn't the body shops - it's Tesla.

Even if I buy into the "Tesla can do it better" argument, why waste resources in this area? Are the cost savings from having your own body shops really so great that this is a worthwhile pursuit?

For every $1 Tesla has free to invest in scale and the future, body shops? Not the Semi? Not the Model Y, but body shops?

Seems like a much better path to scale is leverage all of the existing body shops already operating instead of trying to build your own.

That has been answered infinitum. You need to pull your head away from the "Tesla's going into the body shop business" mentality.

A) Tesla needs to stock more parts in order to better serve body-shop repairs. They need to spend money here. Are they spending it by buying new locations or expanding existing service centers?
B) If the parts are being stocked in an expanded service center, why not just install it themselves instead of sending them away? There's ZERO additional cost in doing this.
C) Tesla never said they won't ship those parts to the independent body shops. YOU are conflating this.

 

[RobStark]

Nieuwe Brusselse e-Audi raakt minder ver dan gepland

Audi e-tron turns out to have less range than promised, still above 400km WLTP, but less than the i-pace. Instead of accellerating 0-100 in 4.6s, it is ‘less than 6s’.

So 240-250 EPA miles?

 

[NicoV]

So 240-250 EPA miles?

Too early to tell, the article just says that Audi is lowering the range expectations.

 

[Ulmo]

I got this email at 11:40AM:

Lucid Signs $1bn+ Investment Agreement with Public Investment Fund of Saudi Arabia

Email version:

Lucid Motors Signs $1bn+ Investment Agreement with Public Investment Fund of Saudi Arabia

They’re staying in Silicon Valley according to the press release. Factory will be in Arizona (see the link for the town name which I forgot).

—

My subjective comments (not very revealing):

My interpretation is what KSA has already said in past months, which is consistent with their comments in the release: that KSA wants to shift their economy to new energy. This is a synergy investment. KSA Princes and Kings like luxury cars, and it’s time to let the sun shine to our future.

KSA already signed 200GW solar with a Japanese company; now, whose batteries will the Japanese and other involved companies buy? Probably whatever is available at the time. I wonder if Elon has the interest and capacity to sell in that sunny region. Batteries are still ramping up too.

The cars will spread worldwide, and it will be interesting to see how much of the whole sun to transport drive train the KSA manufactures inside their borders or outside, and how much they sell inside their borders vs. outside. I have a feeling they want to sell worldwide like they do oil, and keep enough access to either IP or commitments from those with the IP to maintain their market capability in those areas.

 

[dhrivnak]

I think the difference is in the POV. You see the move as Tesla entering a low-margin cut-throat business, and thus a waste of resources. Everyone else is pointing out that Tesla is NOT entering the "body-shop" business, but rather solving a parts-supply and installation issue.

Whereas the traditional automakers ONLY supply the parts, Tesla is simply taking it one step further and both supplying the parts and installing them into the customer's cars, thereby saving the customer the additional wait/transaction time of waiting for body-shops to inspect-damage --> order-part --> deliver-part --> install part.

It's a cost and time-savings on the customer's end without incurring significantly more cost on Tesla's end.

I really think it would be far easier and cheaper to make the parts available to independent garages. Tesla will have to supply the same number of parts. So if they will make them available to Tesla they can make them available to “pro body”. Let’s focus on the core mission here.