General Discussion: 2018 Investor Roundtable

[ValueAnalyst]

In a particular ER report it was specified that if you didn’t like the way Tesla did business, that you were welcome to take your money and invest it else place. True story. Still true and perhaps something you should consider - so as to ease your troubled mind.

You don’t understand the severity of the situation. Not only has Tesla lost out on several billions of dollars of Model 3 revenue (remember the “100,000 to 200,000 units in 2H17?”), but the two-quarter delay also pushes back ALL of Tesla’s upcoming products: Semi, Y, Solar Roof, Powerwall, Powerpack, new Gigafactories, and other. Did you catch the part about Solar Roof in the letter? Musk’s preoccupation with SpaceX in the last six months will have cost TSLA shareholders tens of billions of dollars in lost opportunity, as potential customers buy other cars, crossovers, trucks, non-solar roofs etc., while hundreds of thousands of Model 3 reservations holders will lose out on the $7,500 federal tax credit.

Any other CEO would have been fired over this, but we are about to award him with a handsome comp plan...

 

[Reciprocity]

Putting miles on New inventory so they can sell them at a substantial discount to make quarterly numbers.

Lol mark BS level of fud creativity there. How does one have demo, loaner and cars for test drives with putting miles on said cars?

 

[Ulmo]

What are the chances the upcoming South Australia elections on March 17 throw a wrecking ball in the agreements between Tesla and SA?

Depends how many of the voters trust one way broadcast media in Australia, and how many get their information from elsewhere, and how well that information is spread, and how often that $14/kWh is passed on to people's bills, and a bunch of other things.

 

[Reciprocity]

You don’t understand the severity of the situation. Not only has Tesla lost out on several billions of dollars of Model 3 revenue (remember the “100,000 to 200,000 units in 2H17?”), but the two-quarter delay also pushes back ALL of Tesla’s upcoming products: Semi, Y, Solar Roof, Powerwall, Powerpack, new Gigafactories, and other. Did you catch the part about Solar Roof in the letter? Musk’s preoccupation with SpaceX in the last six months will have cost shareholders tens of billions of dollars in lost opportunity, as potential customers buy other cars, crossovers, trucks, non-solar roofs etc.

Any other CEO would have been fired over this, but we are about to award him with a handsome comp plan...

Musk doesn't build cars. He is one man. The problem isn't that the one man failed, it's that the problem was bigger then the company could solve without errors. This errors compounded to ~6 months in delays on product ramp that was impossible to do on the schedule given. If you recall, Elon even said the dates where given to suppliers where not real, but they where to be considered real by suppliers. You quibble on the dates given by musk as mistakes when the fact is that if the dates were the real proper dates, the suppliers would have slacked as would the Tesla employees. You can't have it both ways. Either you push hard and do the impossible or you don't push hard and have real dates that suck. Elon's h gamble is that his method is better at motivation. Could get be wrong? Maybe. We will never know.

 

[bambam4171]

Any other CEO would have been fired over this, but we are about to award him with a handsome comp plan...

Not sure any other CEO would agree to that compensation plan. Zero income and bonus only if you multiply the value of the company?

 

[Reciprocity]

Battery prices will go down another 70% ....

Sticker price of an EV will be at that time lower than an ICE car!

Nope, Cobalt's Not A Problem For The EV Revolution Or Tesla (#CleanTechnica Exclusive) | CleanTechnica

This is a good analogy for battery supply as well. The market will respond and supply the traditional autos with batteries. The problem for traditional autos is that it won't happen fast enough and Tesla will always have an edge with vertical integration. Imagine a Chinese factory where raw materials go in one side and cars drive out the other and compare that to traditional autos where extremely dense finished cells are shipped from hundreds of miles away to battery pack factory, then finished packs are shipped out to various car plants.

The market will react and supply, nay over supply, the raw materials. The market will supply batteries. But the market is 5 years behind and Tesla is buying into lithium mines today to secure supplies.

What happens when all those 2020 models have demand that outstripes supply by 10:1 ratio? Lost opportunity. At least for 5 years while they ramp up battery supplies. This will happen, but only Tesla has laid the groundwork for success in the near term. In addition, this effort today will pay dividends in the future are they iterate gigafactory design and equipment. It's hard to build the perfect machine the first time, there is always v2 and v3 and so on. Software as well. Hard to have machine learning if you have no machines running. Tesla will have a 5 year lead on the only solution that drives the most costs out of the process.

Lastly, an example of how fast capacity can come online. There are thousands of mines that are abandoned because the cost to get at the minerals is just a bit too high to make them viable. As costs rise, those mines open back up and once they are running at a high level again, they can remain open longer. There is less near term need to make new discoveries. There are also a lot of mines that are focused on one mineral but find other minerals and leave them because the value is not there. The only material they do get is the stuff they need to move to get to the more valuable minerals. This leaves easy to access minerals that might be useful if prices rise. So the industry doesn't believe a lot of new discoveries to start to spin up production
Long term they will, but demand is clearly rising to justify that. The fact is that demand is just now going up beyond supply so this activity is just starting.

 

[Reciprocity]

Model 3 is supposed to take direct aim at BMW 3 Series

BMW 320i 180 hp 0-60 in 7.1 seconds starts at $34.9k
BMW 330i 248 hp 0-60 in 5.5 seconds starts at $40.3k
BMW 340i 320 hp 0-60 in 4.6 seconds starts at $49k
BMW M3 425 hp 0-60 in 3.9 seconds Starts at $65k tops out at $85k

The quicker the car the fatter the profit.

More profit equals more Gigafactories at a faster pace. More conquest sales from current M3 owners and M3 intenders means more pressure on BMW to make BEVs. This means quickening the pace of the EV revolution and decarbonizing the world economy.

*No, targeting BMW does not mean Tesla will only sell cars to current BMW owners. Tesla will sell to Toyota owners, Ford owners or anyone else with the credit or cash. It just means the car and price where benchmarked against the globally best selling compact sedan in the $35k-$85k price range.

Agreed excepted that last 5 words, should read $23k - $85k due to residual value and TCO. Adding solar can bring that down to $17k if you plan on owning the car for 10 years.

 

[hobbes]

New 13G (Statement of acquisition of beneficial ownership by individuals) filed for tencent and two other investors (via reddit):

Tesla - Amended Statement of Beneficial Ownership
Edgar link: EDGAR Filing Documents for 0000950103-18-001851

9.
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,347,094

...

11.
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)
4.97%

Are those numbers total after the reported transaction or its delta?

 

[ValueAnalyst]

New 13G (Statement of acquisition of beneficial ownership by individuals) filed for tencent and two other investors (via reddit):

Tesla - Amended Statement of Beneficial Ownership
Edgar link: EDGAR Filing Documents for 0000950103-18-001851

Are those numbers total after the reported transaction or its delta?

Total after the reported transaction, so they increased their position incrementally.

 

[DurandalAI]

You don’t understand the severity of the situation. Not only has Tesla lost out on several billions of dollars of Model 3 revenue (remember the “100,000 to 200,000 units in 2H17?”), but the two-quarter delay also pushes back ALL of Tesla’s upcoming products: Semi, Y, Solar Roof, Powerwall, Powerpack, new Gigafactories, and other. Did you catch the part about Solar Roof in the letter? Musk’s preoccupation with SpaceX in the last six months will have cost TSLA shareholders tens of billions of dollars in lost opportunity, as potential customers buy other cars, crossovers, trucks, non-solar roofs etc., while hundreds of thousands of Model 3 reservations holders will lose out on the $7,500 federal tax credit.

Any other CEO would have been fired over this, but we are about to award him with a handsome comp plan...

Your tone sure has changed over the past 6 to 9 months, from super cheerleader to quite irate. I don’t blame you for being upset. I’m upset too. If I were to cash out now, I wouldn’t be very happy with my ROI. I’m looking at a 2020 cash out at the earliest. Sure, things really suck, but if you’re that angry, you may need to just step away from the stock for a bit. Emotion leads to bad decisions, including the realm of investing.

Just a few weeks ago I boosted my portfolio in TSLA 25% when it was at 342. I’m upset at myself, not because I don’t think it isn’t worth 342, but that I missed this current sale price on the stock. Investors at large will forgive Tesla when the Model 3 is rolling out in volume and seeing them on the streets. I know people who really want one but haven’t put down a deposit, people who have never previously considered a BEV. BMW 3 series owners, not surprising.

At first I was worried that when Tesla ran out of reservation holders that they would saturate the potential market of buyers. I’m now convinced that potential market will explode once people see these in person. You’ll still be a bit disappointed 6 months from now, but I think you’re going to be feeling a LOT more upbeat about Tesla than you are now.

 

[hobbes]

Total after the reported transaction, so they increased their position incrementally.

Thanks. The SEC page says:

When a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a company’s equity securities registered under Section 12 of the Securities Exchange Act of 1934, they are required to file a Schedule 13D with the SEC.

So they now have 4.97%, which is below 5% - why are they still reporting? Or did they just drop below 5% and have to report that, too?

 

[pyromatter]

From this article - http://www.thepaper.cn/newsDetail_forward_1650022 - Huang River Investment LTD - 8,167,544 shares.
Increased to 8,337,594 shares.
New investment Tencent Holdings Limited holds 8,347,094 shares.
New investment THL E Limited holds 9,500 shares.
All from Lau Chi Ping Martin President of Tencent.

 

[FredLambert]

Question regarding the new ownership report from Tencent.

To me, it looks like they are reporting owning 5% with two differenr holding entities, which means they control 10%.

Did Tencent doubled its stake in Tesla?

 

[ValueAnalyst]

Thanks. The SEC page says:

So they now have 4.97%, which is below 5% - why are they still reporting? Or did they just drop below 5% and have to report that, too?

I'm not sure, but if I had to guess, maybe because they are a non-US owner? Again, I do not know for sure.

Question regarding the new ownership report from Tencent.

To me, it looks like they are reporting owning 5% with two differenr holding entities, which means they control 10%.

Did Tencent doubled its stake in Tesla?

Maybe, but how do you know Tencent didn't just change the name of the holding entity?

I feel like the stock would have experienced significant upward pressure in recent weeks if Tencent was acquiring another 5%.

 

[Drax7]

You don’t understand the severity of the situation. Not only has Tesla lost out on several billions of dollars of Model 3 revenue (remember the “100,000 to 200,000 units in 2H17?”), but the two-quarter delay also pushes back ALL of Tesla’s upcoming products: Semi, Y, Solar Roof, Powerwall, Powerpack, new Gigafactories, and other. Did you catch the part about Solar Roof in the letter? Musk’s preoccupation with SpaceX in the last six months will have cost TSLA shareholders tens of billions of dollars in lost opportunity, as potential customers buy other cars, crossovers, trucks, non-solar roofs etc., while hundreds of thousands of Model 3 reservations holders will lose out on the $7,500 federal tax credit.

Any other CEO would have been fired over this, but we are about to award him with a handsome comp plan...

There is some truth to the above , space x certainly takes away Elon’s mind share from tesla,
Though it’s not clear that the battery packing problem might not have occurred anyways.

On the other hand , space x engineering apparently contributes in design etc..

 

[etmax]

Won't happen. GM has a sizable investment in Lyft, and plenty of cash to move forward on self driving taxi's.

GM, VW Volvo Audi and BMW are all talking about massive EV manufacturing. Where is their Gigafactory? I don't think anyone in the world can compete with Tesla at the moment on high range EV's

 

[ValueAnalyst]

There is some truth to the above , space x certainly takes away Elon’s mind share from tesla,
Though it’s not clear that the battery packing problem might not have occurred anyways.

Agreed.

On the other hand , space x engineering apparently contributes in design etc..

While there may be some of that, it's not clear to me if the benefits outweigh the costs, especially in the last six to nine months. I'm trying to be as positive as I can about this, but we were also told there are synergies to the SolarCity transaction, which... I don't know. The last Update Letter pushes back any meaningful Solar Roof revenue/profit contribution to 2020, at the earliest, in my opinion:

As Solar Roof is truly the first-of-its-kind and there is significant complexity in both its manufacturing and installation, we are deliberately ramping production at a gradual pace. When fully scaled, Gigafactory 2 will be able to produce enough solar cells to add more than 150,000 new residential solar installations every year. As we ramp production, a portion of the output will be dedicated for Solar Roof tiles with the balance used in our proprietary high-efficiency retrofit solar panels. With demand outpacing production, we expect our backlog to remain in excess of one year for the next several quarters.

Almost 18 months after the SolarCity acquisition, what do we have to show for it? I thought Solar Roof would have ramped by now, 18 months after unveil... Tesla was supposed to start installations last summer! And now it's telling us it won't ramp to any meaningful level in the next several quarters. We paid 12 million shares for SolarCity, which is nearly $4 billion in today's prices. Do you understand my frustration?

 

[hobbes]

I'm not sure, but if I had to guess, maybe because they are a non-US owner? Again, I do not know for sure.



Maybe, but how do you know Tencent didn't just change the name of the holding entity?

I feel like the stock would have experienced significant upward pressure in recent weeks if Tencent was acquiring another 5%.

In to the owners overview on yahoo, Tencent doesn´t even appear at all:

Top Institutional Holders
Holder Shares Date Reported % Out Value
FMR, LLC 19,518,920 Sep 29, 2017 11.61% 6,655,366,176
Baillie Gifford and Company 13,096,158 Sep 29, 2017 7.79% 4,465,397,009
Vanguard Group, Inc. (The) 6,784,792 Sep 29, 2017 4.04% 2,313,410,536
Blackrock Inc. 5,470,033 Sep 29, 2017 3.25% 1,865,117,158
Price (T.Rowe) Associates Inc 5,077,890 Sep 29, 2017 3.02% 1,731,408,159
Jennison Associates LLC 3,382,553 Dec 30, 2017 2.01% 1,066,721,864
Bank of Montreal/Can/ 3,374,317 Dec 30, 2017 2.01% 1,064,124,559
Capital World Investors 3,022,612 Sep 29, 2017 1.80% 1,030,620,017
State Street Corporation 2,457,582 Sep 29, 2017 1.46% 837,961,737
BAMCO Inc. 1,602,011 Sep 29, 2017 0.95% 546,237,692

Maybe Tencent had sold their 5% share acquired in March 2017 in the meantime and now bought back 4.97%, and the yahoo page hasn´t been updated after the most recent report?

BTW, up 2.27% premarket !

 

[ValueAnalyst]

In to the owners overview on yahoo, Tencent doesn´t even appear at all:

Maybe Tencent had sold their 5% share acquired in March 2017 in the meantime and now bought back 4.97%, and the yahoo page hasn´t been updated after the most recent report?

It never showed up on either Yahoo or NASDAQ, so this is not a change. Again, maybe because they are a non-US owner, and this is not a 13F filing, which is what those two websites may be pulling... I don't know. Not sure if it matters too much as for every buyer, there's a seller.

 

[EinSV]

Question regarding the new ownership report from Tencent.

To me, it looks like they are reporting owning 5% with two differenr holding entities, which means they control 10%.

Did Tencent doubled its stake in Tesla?

I don't think so -- it looks like they increased their stake by 179,550 shares between the initial report (March 24, 2017 effective date) and this December 31, 2017 report.

As of the December 31, 2017 date of the report, since the earlier report Tencent increased its holdings through its subsidiary Huang River from 8,167,544 to 8,337,594 shares. It also acquired another 9500 shares through another subsidiary (THL E Limited) for a total of 8,347,094 shares. The percentage dropped to slightly under 5% due to dilution.

For Tencent, the report states:

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

8,347,094

And the notes state:
Item 4. Ownership.


Provide the following information regarding the aggregate number and percentage of the class of securities of issuer identified in Item 1.

(a) Amount beneficially owned: See row (9) on the cover pages to this Schedule 13G.

Tencent Holdings Limited may be deemed to have beneficial ownership of the 8,337,594 shares of the reported securities directly beneficially owned by Huang River Investment Limited and the 9,500 shares of the reported securities directly beneficially owned by THL E Limited, each of which is a wholly-owned subsidiary of Tencent Holdings Limited.​

Tesla - Amended Statement of Beneficial Ownership

For reference, the March 24, 2017 report showing 8,167,544 shares owned by Tencent through its Huang River subsidiary is here: https://www.sec.gov/Archives/edgar/data/1293451/000095010317002811/dp74362_sc13g.htm

If I missed something perhaps someone with more expertise on the reporting requirements can chime in.

(FYI, I did not scour the records to see if there were any reported purchases between the March 24 and December 31 reports.)