Hi, I’m a short seller

[bhzmark]

After the deposits rolled in, its suddenly not $35K anymore.

Funny how merchants respond to increased demand for their goods. Imagine that. There must be a theory for that . . .

 

[K_Dizzle]

the entire short thesis

Tesla requires a capital infusion, if they totally stack the deck and sell every single one of their backlogged high margin 68k model 3's in Q3 2018, then MAYBE they can be cash flow positive for 1 quarter (paying zero suppliers that quarter obv).


But that isnt sustainable, i mean even your Lord Elon said the 35k car cant be made at a profit. Which is what bears said a long time ago and you guys fought it then. A company burning 2-3B a year and producing a product that both sucks and isnt profitable.


Quite the company the worship

The high margin Model 3P costs $78k plus $5k for EAP( 100% take up rate on the high end model) plus FSD(15% take up rate) so in reality the highest margin Model 3 will generate around $84k in revenue not $68k. But you already knew that

 

[Mobius484]

You mean the fully refundable deposits?

 

[bambam4171]

6 months at 5k per week = 130,000 cars
Have you done any research on how big the mid-size luxury car market is? I say mid size because thats what 50k+ gets you.
It seems like every bull case just assumes unlimited demand.

Not unlimited but remember, this car has 450 000 preorders. Something no other car manufaturer ever achieved. So 1.5 years just to fulfill the existing pre-orders. By then the car is on the street, there is zero advertising for it so word of mouth is all it gets. Where I live I can fill the LR up for less than 10$. My Lexus RX400h already Hybrid will take 80$ out of my pocket for the same distance. Now imagine if the word gets round that you can fill up your car at home for next to nothing instead of paying top dollar for it. Got that picture in your mind? Ok, now you tell me there is no demand

 

[bambam4171]

Good questions. First, GM reportedly loses money on each one, but that’s OK because they earn billions from the rest of the cars they sell. Tesla doesn’t have that luxury. I have not really dove into it since I have no position in GM. I will say that if you absolutely must have a BEV and $50K is out of your budget, you would probably be looking at the Bolt or the Leaf. On the 3rd point, Elon made a whole presentation on the M3 starting at $35K then accepted hundreds of millions in deposits. After the deposits rolled in, its suddenly not $35K anymore. GM didn’t do this.

Yes, GM does lose 10k on every car they sell, and yes Tesla would lose money if they would sell the 35k variant now. BUT! Demand for SR is not terribly high. only 1/3th-1/4th of the deferrals was because of SR. By the time the 35k car is sold it will be probably with minimal margin, but not negative.
Comparing the M3 with the Bolt is daft though. The Bolt is a small, cheap compact car, the M3 a luxury sedan. Very, very different market segments. Is is clearly supported by the way Model 3 is eating into BMW, Mercedes and Audi sales.

 

[bambam4171]

The entire short thesis is 95% rubbish and we have proved that in this thread already. Then you throw together very unrelated things and claim they are reality. That is not the way you can get to the bottom of an argument.

State your assumption clearly then we can discuss.

@Reality : as you were unable to do so I must assume that you are but the usual short parroting the well known and thousand times defeated short topics. If I'm wrong please state your arguments

 

[RAVAGESofTIME]

the entire short thesis

Tesla requires a capital infusion, if they totally stack the deck and sell every single one of their backlogged high margin 68k model 3's in Q3 2018, then MAYBE they can be cash flow positive for 1 quarter (paying zero suppliers that quarter obv).


But that isnt sustainable, i mean even your Lord Elon said the 35k car cant be made at a profit. Which is what bears said a long time ago and you guys fought it then. A company burning 2-3B a year and producing a product that both sucks and isnt profitable.


Quite the company the worship

So you're answering for ShortSeller now?

Who cares if they're the same person or not? It has no material effect on the discussion. Besides, what incentive would somebody have to take two personas in this case?

Obviously I care, or I wouldn't have posted what I did. To me it proves what a joke this guy is. Not that most of his posts aren't proof enough, but you know what I mean.

 

[ShortSeller]

Yes, GM does lose 10k on every car they sell, and yes Tesla would lose money if they would sell the 35k variant now. BUT! Demand for SR is not terribly high. only 1/3th-1/4th of the deferrals was because of SR. By the time the 35k car is sold it will be probably with minimal margin, but not negative.
Comparing the M3 with the Bolt is daft though. The Bolt is a small, cheap compact car, the M3 a luxury sedan. Very, very different market segments. Is is clearly supported by the way Model 3 is eating into BMW, Mercedes and Audi sales.

Model 3 is a luxury sedan? Usually luxury sedans don’t include features like vanity mirrors installed with 2 sided tape and misaligned body panels and other things that legacy automakers figured out by 1980 or so.

 

[Reality]

Funny how merchants respond to increased demand for their goods. Imagine that. There must be a theory for that . . .

Honest question

does anyone feel like you were bait and switched?

I mean people put down 1k and were told a 35k car is coming, now its like 'nevermind, maybe we will build it, but for now here is a 70k version you can buy'

 

[JoaoD]

Honest question

does anyone feel like you were bait and switched?

I mean people put down 1k and were told a 35k car is coming, now its like 'nevermind, maybe we will build it, but for now here is a 70k version you can buy'

No, I was never promised a date when I reserved, and if you feel like you are bait and switched and can't wait just cancel your reservation and get on with your life. Do you even have one?
It's not like they are selling the 35$k Model 3 for 78$k, I don't need the performance version so I don't need to pay that. If I need the performance then I wouldn't feel bait and switched either, because no one in it's perfect mind was expecting a sub 4 second car for 35$k.

 

[Reality]

Model 3 is a luxury sedan? Usually luxury sedans don’t include features like vanity mirrors installed with 2 sided tape and misaligned body panels and other things that legacy automakers figured out by 1980 or so.

well to be fair, when comparing it to other cars you need to compare it to luxury cars since that is what it prices against.

 

[bambam4171]

Model 3 is a luxury sedan? Usually luxury sedans don’t include features like vanity mirrors installed with 2 sided tape and misaligned body panels and other things that legacy automakers figured out by 1980 or so.

Ok so which luxury sedan does come with over the air upgrades?
Which comes with this kind of performance/price ratio?
Which one does have this kind of screen installed?

 

[Zaxxon]

 

[bhzmark]

Honest question

does anyone feel like you were bait and switched?

I mean people put down 1k and were told a 35k car is coming, now its like 'nevermind, maybe we will build it, but for now here is a 70k version you can buy'

Honest Question:

As your production capacity ramps up, you have to decide how to allocate that limited production capacity. Should you allocate current production capacity to lesser or higher margin products?

Wouldn't you be a flaming idiot for allocating limited production capacity, in the face of strong demand for high margin product, to the lesser margin products?

This is such a basic obvious business decision it is laughable that shorts make anything of it.

If this short thesis proves anything it proves the strength of the confirmation bias afflicting the scared bears.

 

[dmckinstry]

Honest question
does anyone feel like you were bait and switched?

I mean people put down 1k and were told a 35k car is coming, now its like 'nevermind, maybe we will build it, but for now here is a 70k version you can buy'

No more than when I made a 5k deposit for my 50k Model S in 2010. It soon became apparent that I would never be satisfied with the 40kWh or 60kWh pack, etc. And keep in mind the first new car I'd ever purchased (after 48 years of driving) was a 27k 2005 Prius.

 

[ShortSeller]

Honest Question:

As your production capacity ramps up, you have to decide how to allocate that limited production capacity. Should you allocate current production capacity to lesser or higher margin products?

Wouldn't you be a flaming idiot for allocating limited production capacity, in the face of strong demand for high margin product, to the lesser margin products?

This is such a basic obvious business decision it is laughable that shorts make anything of it.

If this short thesis proves anything it proves the strength of the confirmation bias afflicting the scared bears.

Ad hominem attacks aside, You’re completely right that I would be allocating resources towards the higher margin products first. Maybe we should be asking why the ramp up is taking so long, why the CEO thinks the originally promised price will now “kill” the company, why the reliability has been so poor, etc?

Mod: "the CEO thinks the originally promised price will now “kill” the company" is clear and deliberate misquoting, and devolved to trolling. --ggr.

 

[bhzmark]

You’re completely right that I would be allocating resources towards the higher margin products first.

I'm glad we agree.

Oh, but you want to change the topic:

Maybe we should be asking why the ramp up is taking so long

What is your frame of reference for "so long" ?

Maybe we should be asking why the Tesla ramp up is so much faster than GM? The Bolt started selling in December of 2016 and what are GM up to now after 18 months? vs Tesla after only 10 months?

Mod -- FWIW I think the forum is better off if we police the falsehoods with factual responses rather than banning. Anyway I think it good sport.

 

[N5329K]

Maybe we should be asking why the ramp up is taking so long,

Because building cars in volume is hard. With a cash burn like Tesla's, speed is life. I think the company has already sacrificed comprehensive testing and some build quality for speed. They're relying on a forgiving initial customer pool. Putting expensive performance versions ahead of the base model keeps them in the shallow, toasty warm part of that pool. But the base model is the deep end, and they'll have to know how to swim for real when and if they get there.
Robin

 

[Electroman]

Maybe we should be asking why the ramp up is taking so long
.

I think you meant to say,

“Maybe we should be asking why the ramp has been so quick 2 years ahead of originally planned 2020?”

 

[Electroman]

ShortSeller mentioned these things as bearish:

1. not yet started $35k Tesla. Deceptive.

Nothing deceptive about it. Smart business decision to utilize all of your production capacity to satisfy high end, high profitability models. At some point as your production capacity increases and your demand for higher models decreases then it makes sense to make the very low profitability (or loss leader) $35k model.

2. very slow production ramp.

Partially true only if you consider the insane revised accelerated schedule. A schedule that no other manufacturer has done for a brand new model. Every keen industry watcher knew that Musk set this schedule more as a message to his team and suppliers to really get going.

3. Elon said, Tesla will die if they make $35k

It is very clear what he meant. At this stage in the production ramp when they have not gained all of the efficiencies of a well oiled production line, a $35k car will hurt their profitability. Once they go humming at 5k/week or more for several weeks then it makes sense to get to the cheapest base model. This is true for any manufacturer.

Also the profitability of 20% (or whatever they are aiming at) is based on an ASP of much higher than $35k. No surprises there.

4. Very poor reliability.

How do you know? Because some early VINs had some teething problems? And remember panel gaps are not ‘reliability’ problems. Long term reliability is still an unknown.