General Discussion: 2018 Investor Roundtable

[jhm]

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.

Model3 SR 220 mile range 258hp 0-60 5.6s $35k
Model3 LR 310 mile range 271hp 0-60 5.1s $44k.

It seems these two versions are aimed to compete directly with BMW 320i and 330i respectively with clearly superior performance at roughly the same price points. A performance version os Model 3 would take on 340i, while Model S already challenges the BMW M3.

So I think BMW pulling M3 from certain markets may be more of a response to the proven Model S than the upcoming Model 3. Of course, a strong performance Model 3 or lower priced Model S also threatens the M3 even more than what Tesla currently offers.

What I like about this kind of comparison is that it makes clear that at a given price point Tesla is already offering higher performance. Much of the discussion about the future of EVs is focused on price parity, the time when it is cheaper to build an EV than ICE. For example, BNEF has a fixation with battery pack prices reaching $100/kWh, which is where the magic is supposed to happen all of a sudden. What is missing from this view is that consumers are more oriented to seek out the maximum value vehicle within their price range. This means analysts should be more focused on performance at given price points than and the achievement of some magic price point. In other words, the Model 3 is already on the winning side of price/performance parity. The binding constrain is quite literally the supply of battery pack, not the cost of those packs. Filling the roads with $25k EVs will have to wait until there is enough battery pack production to satisfy the market for higher performance $35k vehicles.

The OEMs have been willfully blind on this issue. They've been holding out for cheap batteries with which to build cheap cars because they want to preserve higher profit performance for their ICE portfolio. But this is precisely where they are most vulnerable to Tesla. BMW pulling the M3 is symptomatic of this strategic miscalculation. They still don't have an answer to the Model S, and now the M3 is not worth the homologation cost for certain markets. BMW is not self-amputating for lack of cheap batteries, but for an inability to compete in higher performance markets where batteries are already cheap enough to deliver the high performance goods.

 

[myusername]

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.

Record Year At BMW With 2.08M Deliveries In 2017

"BMW alone delivered 2,088,283 vehicles, up 4.2 percent compared to 2016"

or a growth of 87.7k cars... another way to put that is, BMW ***GREW*** by just 15k fewer cars than Tesla produced entirely for the year 2017.

now... to the point...

BMW Group U.S. Reports January 2018 Sales

12,000 passenger cars vs 7,000 SUVs for US Jan sales for a total of 19,000 cars/trucks... 3 series sold 4,500... which means 23% of US sales were 3-series. extrapolating that to global sales (because for some reason it's difficult to find 3-series broken out globally)...

that's 2m * 23% = 473k

so, this "direct aim" you speak of is roughly equal to what people were hoping Tesla M3 would sell in 2018... triple that number to include Mercedes and various other companies that sell into this price/market... that's 1.5m/yr.

that's roughly the size of the market the Tesla M3 is targeting... and you guys expect 500k/yr or 1m/yr of M3 within 12 to 24 months?... which means, you think the vast majority of the entire luxury car industry would be replaced by Tesla Model 3... like next year.

tell me again... where's the market for M3 that supports these wild claims?

 

[hobbes]

SpaceX is launching two prototype communication sattelites for their starlink programs NET next Saturday. This article says that one ground station will be located at Tesla Fremont (via reddit):

SpaceX gets set to launch prototype Starlink internet satellites – GeekWire

Was this known before?! Might save them some money on data connections to the customer cars! The link in the article to the filing where the info comes from unfortunately doesn´t seem to work for me.

 

[wnorris]

SpaceX is launching two prototype communication sattelites for their starlink programs NET next Saturday. This article says that one ground station will be located at Tesla Fremont (via reddit):

SpaceX gets set to launch prototype Starlink internet satellites – GeekWire

Was this known before?! Might save them some money on data connections to the customer cars! The link in the article to the filing where the info comes from unfortunately doesn´t seem to work for me.

Here are two good links:

SpaceX on track to launch four rockets next month despite Falcon Heavy delays

Will SpaceX become the world’s biggest telecoms provider? Probably.

This has the potential to be very big. SpaceX has been extremely cautious about revealing details on this.

Edit: Elon now has to find a way to compete with Big Pharma, Finance, and Retail to ensure he disrupts all existing industry.

 

[Starno]

If they're at 1000/w now.
= 142 per day
Assuming it's working 8 hours a day = 143/8 = 18 cars an hour. Or about 1 car every 3 minutes.
That's where they are now.

They need to to go from 1 car every 3 minutes, to 2-3 car every 3 minutes in 7 weeks if they want to achieve guidance.

 

[Krugerrand]

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...

Tesla hasn’t lost billions of dollars. They’ve INVESTED billions of dollars. Different.

All their product launches have been pushed back from original hopeful dates and yet they are still way ahead of schedule in the big picture while they lay the groundwork for what is now clearly going to be an empire.

If you’re now just realizing that Elon splits his time between multiple companies and that SpaceX is his heart, you didn’t do your job very well to start. Many of us here have known that for a decade or more.

If the Federal tax credit meant that much to some people it’s not like they didn’t and still do have other purchase choices. Rock on.

Could have been, would have been are energy wasting exercises. Tesla will sell every car they can make from here on out to the foreseeable future and have done so since they made their first Roadster.

Elon is not any other CEO, he has saved Tesla multiple times. He’s taken on all the risk time and time again. Nobody works harder.

You’re concerned about compensation he’ll get that’s linked directly to market cap, yet you’re implying the situation is so dire that Tesla will never get to that value because he sucks as a CEO, they’ve lost billions, customers will not get the golden egg tax credit and go buy some other fabled comparative product that does not exist etc... That makes NO sense. Either Tesla makes it and grows to 600+B and Elon gets his just reward or Tesla flops and doesn’t get there and Elon gets his just reward. Me, I’m okay with it either way though I obviously have a preference. More so I want to see how the plot of history progresses. Best ride ever!

All hail the Norwegians and Elon Musk!

Seriously, if you don’t like what’s going on, tell your clients to exit their TSLA positions and move on. That’s fair and perfectly doable. I assure you that what you think about Elon and what he’s doing has no bearing on him or Tesla moving forward, sideways or backward. You have no control over the matter, stop thinking you do - it’ll lower your blood pressure and give you better perspective allowing you to make better decisions on the matter. I also assure you the vote will pass. He’s the captain of this ship and will remain so until he decides otherwise, leaves for Mars, or dies.

 

[ggies07]

Although I have expressed frustration on here over the last several days, I have not and will not give up my shares or my Model 3 reservation, as I believe in what Tesla is achieving. This is one of the reasons I want Tesla to fix the ramp-up ASAP and get the cars into the hands of the public. Our politicians were being called out in public form and could not take it. There is a short video of what happened inside the link:

Woman Dragged Out of West Virginia House Hearing For Listing Oil and Gas Contributions to Members

Lissa Lucas traveled the 100 miles from her home in Cairo, West Virginia to the state capitol in Charleston Friday to testify against an oil and gas industry sponsored bill (HB 4268) that would allow companies to drill on minority mineral owners’ land without their consent.

Lucas took to the podium and began by pointing out that “the people who are going to be speaking in favor of this bill are all going to be paid by the industry.”

 

[ValueAnalyst]

Tesla hasn’t lost billions of dollars. They’ve INVESTED billions of dollars. Different.

All their product launches have been pushed back from original hopeful dates and yet they are still way ahead of schedule in the big picture while they lay the groundwork for what is now clearly going to be an empire.

If you’re now just realizing that Elon splits his time between multiple companies and that SpaceX is his heart, you didn’t do your job very well to start. Many of us here have known that for a decade or more.

If the Federal tax credit meant that much to some people it’s not like they didn’t and still do have other purchase choices. Rock on.

Could have been, would have been are energy wasting exercises. Tesla will sell every car they can make from here on out to the foreseeable future and have done so since they made their first Roadster.

Elon is not any other CEO, he has saved Tesla multiple times. He’s taken on all the risk time and time again. Nobody works harder.

You’re concerned about compensation he’ll get that’s linked directly to market cap, yet you’re implying the situation is so dire that Tesla will never get to that value because he sucks as a CEO, they’ve lost billions, customers will not get the golden egg tax credit and go buy some other fabled comparative product that does not exist etc... That makes NO sense. Either Tesla makes it and grows to 600+B and Elon gets his just reward or Tesla flops and doesn’t get there and Elon gets his just reward. Me, I’m okay with it either way though I obviously have a preference. More so I want to see how the plot of history progresses. Best ride ever!

All hail the Norwegians and Elon Musk!

Seriously, if you don’t like what’s going on, tell your clients to exit their TSLA positions and move on. That’s fair and perfectly doable. I assure you that what you think about Elon and what he’s doing has no bearing on him or Tesla moving forward, sideways or backward. You have no control over the matter, stop thinking you do - it’ll lower your blood pressure and give you better perspective allowing you to make better decisions on the matter. I also assure you the vote will pass. He’s the captain of this ship and will remain so until he decides otherwise, leaves for Mars, or dies.

I categorically disagree with your characterization of my position. Almost everything you said is wrong, and you have made TMC an echo chamber.

 

[ggr]

Mod: Please all, take deep breaths before responding. --ggr.

 

[30seconds]

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

Please provide examples of publicly traded CEOs who were fired after 50% y/y revenue growth periods

 

[pyromatter]

From this article - 腾讯悄然买入特斯拉5%股权成第五大股东：未来考虑商业合作_10%公司_澎湃新闻-The Paper - 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.

Correction - https://www.sec.gov/Archives/edgar/data/1293451/000095010317002811/dp74362_sc13g.htm - March 24, 2017.
Huang River Investment Limited - 8,167,544 shares. Increased to 8,337,594 shares.
Tencent Holdings Limited - 8,167,544. Increased to 8,347,094 shares.
New investment THL E Limited holds 9,500 shares. All from Lau Chi Ping Martin President of Tencent.

 

[30seconds]

If they're at 1000/w now.
= 142 per day
Assuming it's working 8 hours a day = 143/8 = 18 cars an hour. Or about 1 car every 3 minutes.
That's where they are now.

They need to to go from 1 car every 3 minutes, to 2-3 car every 3 minutes in 7 weeks if they want to achieve guidance.

I am not so sure that they are at 1000 a week at this point. Maybe more like 600-700 based on VIN registrations, assignments and deliveries (with a long list of caveats).

S and X production also went in fits and starts for awhile and did not seem very linear over short timeframes.

 

[ValueAnalyst]

Usually it would be easier for a disgruntled investor to just sell those stocks and invest in something else instead. Have you asked yourself why you're so attached to TSLA?

The two are not the same thing. There are many examples of investors being positive on a company and its stock, while not being satisfied with its management. This is now one of those cases for me. Obviously, this is not sustainable in the longer term, so I will see what changes in the coming months. I hope that Model 3 production gets back on track and the stock performs, but the last nine months have been frustrating.

 

[JRP3]

Almost everything you said is wrong, and you have made TMC an echo chamber.

Right, because there is no dissenting discussion going on here

 

[Krugerrand]

The two are not the same thing. There are many examples of investors being positive on a company and its stock, while not being satisfied with its management. This is now one of those cases for me. Obviously, this is not sustainable in the longer term, so I will see what changes in the coming months. I hope that Model 3 production gets back on track and the stock performs, but the last nine months have been frustrating.

Makes no sense to be disgruntled about management that has grown a company and its market so fast as Tesla, unless someone got ahead of themselves.

 

[RobStark]

Much of the discussion about the future of EVs is focused on price parity, the time when it is cheaper to build an EV than ICE. For example, BNEF has a fixation with battery pack prices reaching $100/kWh, which is where the magic is supposed to happen all of a sudden.

BMW et al need ~$100 per kWh to keep their business model going.

Cut the dealers 6% and advertisers 3% of their business. Tesla eats the dealer's and advertiser's profits. So Tesla may have higher cost battery cells but still higher profitability. And as many have speculated maybe Tesla is already at or below ~$100 per kWh.

Every car competes with every other car in the market to a degree but Model S 75D doesn't compete directly with BMW M3. Many customers think Model S is simply too gigantic for condo/co-op life in a big city.

I look forward to a head to head comparison between BMW M3 and Model 3 P75DL.

 

[Gerardf]

Correction - https://www.sec.gov/Archives/edgar/data/1293451/000095010317002811/dp74362_sc13g.htm - March 24, 2017.
Huang River Investment Limited - 8,167,544 shares. Increased to 8,337,594 shares.
Tencent Holdings Limited - 8,167,544. Increased to 8,347,094 shares.
New investment THL E Limited holds 9,500 shares. All from Lau Chi Ping Martin President of Tencent.

Edit :
Huang River is a daughter company of Tencent Holdings

8.337.594 + 9.500 is exactly 8.347.094.
So as I understand 8.347.094 is the total he owns via these companies.

 

[pz1975]

Edit :
Huang River is a daughter company of Tencent Holdings

8.337.594 + 9.500 is exactly 8.347.094.
So as I understand 8.347.094 is the total he owns via these companies.

I find it interesting that they are purposely keeping their total holdings on paper at <5% for each entity. Is that just a reporting issue or is there some other strategy for this?

 

[Reciprocity]

Record Year At BMW With 2.08M Deliveries In 2017

"BMW alone delivered 2,088,283 vehicles, up 4.2 percent compared to 2016"

or a growth of 87.7k cars... another way to put that is, BMW ***GREW*** by just 15k fewer cars than Tesla produced entirely for the year 2017.

now... to the point...

BMW Group U.S. Reports January 2018 Sales

12,000 passenger cars vs 7,000 SUVs for US Jan sales for a total of 19,000 cars/trucks... 3 series sold 4,500... which means 23% of US sales were 3-series. extrapolating that to global sales (because for some reason it's difficult to find 3-series broken out globally)...

that's 2m * 23% = 473k

so, this "direct aim" you speak of is roughly equal to what people were hoping Tesla M3 would sell in 2018... triple that number to include Mercedes and various other companies that sell into this price/market... that's 1.5m/yr.

that's roughly the size of the market the Tesla M3 is targeting... and you guys expect 500k/yr or 1m/yr of M3 within 12 to 24 months?... which means, you think the vast majority of the entire luxury car industry would be replaced by Tesla Model 3... like next year.

tell me again... where's the market for M3 that supports these wild claims?

For a car that no one had seen in person. No had driven. And its an EV where there are people reading things that people like you write online that at the very least biased and I am trying to be nice. The preponderance of negative info in the main stream for Tesla and EVs is off the charts and yet just as many people want Model 3s as want the vaunted ultimate driving machine - 3 Series.

You refuse to answer the question about why Model S does so well against the 7-Series, S class and A8?

Having tens of thousands of model 3s driving around is going to amplify interest, but seriously that is a negative because Tesla cannot build them fast enough. If they can turn the production corner and lower the waiting lists, then BMW is in trouble. The reason is that both the 5-Series and 3-Series are next on the list to decimate like the 7-Series already has been.

 

[Starno]

The two are not the same thing. There are many examples of investors being positive on a company and its stock, while not being satisfied with its management. This is now one of those cases for me. Obviously, this is not sustainable in the longer term, so I will see what changes in the coming months. I hope that Model 3 production gets back on track and the stock performs, but the last nine months have been frustrating.

So you think those delays could have been avoided ?

Personally I think, realistically, they could have not.

-----------

Did you know the iPhone X had almost 2 months delay to normal production rate ? A product from an already proven line of product, with relatively simple difference, made by an already proven world class manufacturer (Foxconn)....

If it's possible that a freaking smartphone made by proven and refined manufacturing methods and machines, from proven companies, has 2 months delays, what kind of delays do you think a new different car made by new manufacturing method ... will have ?

iPhone X reportedly suffers another production delay, now slated to start in mid-October