Long-Term Fundamentals of Tesla Motors (TSLA)

[UkNorthampton]

Is there any evidence of this? If it does exist, is there a way within EU rules and regulations that it is legal? It would seem to me that an otherwise disinterested shareholder in such a company has an extremely strong case of having been harmed by such action as inequal payments; that doing so is the end result of a company not having acted with obvious foresight to taking the steps needed to avoid having to pay anything to a competitor, let alone less to such competitor, who also is playing by the rules the EU had set forth, than to the EU.

Am I missing something here?

You have to be in an emissions pool with other companies who have surplus credits (er, Tesla?) to cancel out. So that's down to voluntary contractual stuff & if Tesla is already spoken for (FCA & later Honda) & all credits used up, VW & others can't get hold of credits for love nor money. They COULD have ASKED to join the pool earlier, but didn't & VW have their own pool. From Q420 coverage, it seems that Tesla sell credits/FCA/Honda buy in ad-hoc ways & hard to predict.

So from a 'sue VW management' point of view, I think it can't be won. It was a decision. They could also argue that helping a competitor is worse than fines (their argument, not mine).

Links saying (probably) more or less the same thing, VW will be paying fines.

More EVs Needed! VW Fined For Missing Emissions Targets - EV News Daily

Volkswagen faces EU fine for missing 2020 emissions targets | Financial Post

Yahoo is now a part of Verizon Media

When googling for OEMs other than Tesla having credits, I'm finding too many irrelevant articles, but off the top of my head, only Tesla, MG will have credits. Other big EV OEMs also have more ICE (Peugeot, Renault, Nissan, Volvo/Polestar).

Tesla much bigger than MG (at present). I think NIO is launching in Norway/Europe soon.

 

[AudubonB]

That I understand. I’m referring specifically to your observation- or was it a point or a surmise? - that some would prefer to pay the higher penalty to the EU than the lower amount to Tesla.

The suggestion that a judge would say “Why didn’t you sell your shares?” to a plaintiff violates a fundamental principle of the capital markets. Whether I own 0.000001% or 99% of a company, its officers have a fiduciary responsibility to use its capital appropriately, not vindictively, with its Board of Directors having the burden of oversight as proxies for the shareholders’ interests.

There are, of course, myriad ways to spend a corporation’s money and almost all the time, it is impossible to demonstrate malfeasance.
This would not be one of them: it is a Manichaean, cut-and-dried, binary choice.

I am not, of course, fluent in European commerce law. But I do know the capital markets.

 

[petit_bateau]

That I understand. I’m referring specifically to your observation- or was it a point or a surmise? - that some would prefer to pay the higher penalty to the EU than the lower amount to Tesla.

The suggestion that a judge would say “Why didn’t you sell your shares?” to a plaintiff violates a fundamental principle of the capital markets. Whether I own 0.000001% or 99% of a company, its officers have a fiduciary responsibility to use its capital appropriately, not vindictively, with its Board of Directors having the burden of oversight as proxies for the shareholders’ interests.

There are, of course, myriad ways to spend a corporation’s money and almost all the time, it is impossible to demonstrate malfeasance.
This would not be one of them: it is a Manichaean, cut-and-dried, binary choice.

I am not, of course, fluent in European commerce law. But I do know the capital markets.

No. The C-suite would say, 1) the long run interests of the shareholders were best served .... non-dominant competition .... consultants reports, .... yada yada; and 2) when we took the decision to not engage we were expecting the FUD-buster-BEV-godmaster to launch on dd-mm-yyyy and we wouldn't need the credits and ..... shucks we got it wrong; and 3) other stuff (yawn). By the time they'd finished the judge would be drowning in FUD and BS and loath to rule as you think. If you think otherwise go ahead and start up a class action, they are now all the rage in EU these days (see VAG dieselgate et al for further info).

 

[Doggydogworld]

Dan Levy from Credit Suisse ask about regulatory credits: he thinks it is $2 billion in 2020?

Absent some surprise US regulations 2 billion seems unlikely to me. FCA was the big bonanza, but it was front-loaded. I don't know why Dan Levy thinks 2021 will be even bigger in Europe. PSA was in good shape and says Stellantis will be.

-the only deal they struck in Q4 that I know of was the Honda deal .

They built up a ton (700-800k?) NEV credits in China and prices rose from ~$50 to several hundred near yearend. I could see 100m or even 200m of NEV credit revenue from new Q4 deals. I have absolutely no idea what will happen to NEV credit prices this year. Companies are making and selling tons of EVs, but perhaps hoarding credits? Or using them to meet CAFC deficits? It's a mystery. If Levy had said China would boost reg credit revenue I'd defer. But he attributed the big rise to Europe, which makes no sense to me.

 

[AudubonB]

Do we know that the FCA deal was front-loaded? I don't remember one way or the other.

 

[tmp131]

Absent some surprise US regulations 2 billion seems unlikely to me. FCA was the big bonanza, but it was front-loaded. I don't know why Dan Levy thinks 2021 will be even bigger in Europe. PSA was in good shape and says Stellantis will be.

They built up a ton (700-800k?) NEV credits in China and prices rose from ~$50 to several hundred near yearend. I could see 100m or even 200m of NEV credit revenue from new Q4 deals. I have absolutely no idea what will happen to NEV credit prices this year. Companies are making and selling tons of EVs, but perhaps hoarding credits? Or using them to meet CAFC deficits? It's a mystery. If Levy had said China would boost reg credit revenue I'd defer. But he attributed the big rise to Europe, which makes no sense to me.

I should've clarified: the deal struck with Honda: I meant the only deal I knew as far as the pools are concern. The Chinese NEV credits: I don't know much about. So far I have only seen Dan Levy who thinks Tesla will get $2 billion in reg. credits.

 

[Doggydogworld]

Do we know that the FCA deal was front-loaded? I don't remember one way or the other.

Tesla refused comment, but FCA said it was mostly for 2020. Their estimates of amount to be paid (for all deals, but believed to be almost all Tesla) dropped a lot over the last year.

 

[ByeByeJohnny]

Tesla refused comment, but FCA said it was mostly for 2020. Their estimates of amount to be paid (for all deals, but believed to be almost all Tesla) dropped a lot over the last year.

From the earnings call:

Question:
For 2021. Any expectations for what we should see on regulatory credit sales?

Zach:
Sure. On the regulatory and credit sales side, this is always an area that’s extremely difficult for us to forecast. 2020 regulatory credit sales ended up being higher than expectations. And it’s difficult to give guidance on that. I mean, what I’ve said before is that in the long-term, regulatory credit sales will not be a material part of the business, and we don’t plan the business around that.

It’s possible that for the handful of additional quarters, it remains strong. It’s also possible that it’s not. Most of our regulatory credit revenue from Q4 was not lined up prior to the beginning of the quarter, in these sort of discrete deals that were struck over the course of the quarter. So, I wish I could give you more on this, Dan, but it’s a space that’s extraordinarily difficult for us to forecast.

 

[Knightshade]

Tesla reintroduces Enhanced Autopilot with some FSD features in Europe and China - Electrek


Seems smart given what was said on Q4 call about low take rates on FSD in China and EU (and can't really blame em if it's as crippled there as some have suggested)- lets Tesla pick up at least some "free" revenue from those places where FSD has a lot less value

 

[tmp131]

Tesla reintroduces Enhanced Autopilot with some FSD features in Europe and China - Electrek


Seems smart given what was said on Q4 call about low take rates on FSD in China and EU (and can't really blame em if it's as crippled there as some have suggested)- lets Tesla pick up at least some "free" revenue from those places where FSD has a lot less value

I don't know what the take rate for FSD in Europe is; but from what I read: in China it was around 1 to 2% in Q4. So $5K may entice more; I don't how much more, but anything more than 1 or 2% is better (unless it cannibalizes that 1-2%...and remain 1 to 2%). I understand why folks in China wouldn't buy FSD: The price for Model 3 SR Plus is about ¥249.9K so about $38.6K (current exchange rate). $10K would be an extra 25.9% to cost...but $5K would be "only" an extra 12.95%: so it would be a little more palatable.

 

[heltok]

I don't know what the take rate for FSD in Europe is; but from what I read: in China it was around 1 to 2% in Q4. So $5K may entice more; I don't how much more, but anything more than 1 or 2% is better (unless it cannibalizes that 1-2%...and remain 1 to 2%). I understand why folks in China wouldn't buy FSD: The price for Model 3 SR Plus is about ¥249.9K so about $38.6K (current exchange rate). $10K would be an extra 25.9% to cost...but $5K would be "only" an extra 12.95%: so it would be a little more palatable.

I got FSD in EU. I think it’s not that low, lots of my friends got FSD. However there are probably a lot of bitter customers. Some have leased their vehicles, paid for FSD and never got to see any functionality before their lease expired. Some are buying a newer Tesla and never got to use the FSD they paid for in their old vehicle. Imo Tesla should allow European customers who have paid for 36months of FSD to reuse it if they lease another vehicle or transfer it if they have bought it. And they should really push out some more beta features so at least we have something.

 

[tmp131]

when do everyone think TSLA will have a net income of $5 billion/quarter? and how many vehicles they would have to sell per quarter to achieve this?

 

[petit_bateau]

when do everyone think TSLA will have a net income of $5 billion/quarter? and how many vehicles they would have to sell per quarter to achieve this?

Maybe in Q4 2023, otherwise perhaps Q3 2024. About 1m/qtr.

 

[wdolson]

when do everyone think TSLA will have a net income of $5 billion/quarter? and how many vehicles they would have to sell per quarter to achieve this?

For gross income, with an average cost of $50K, they need to sell 100K a quarter. I agree that for a profit of $5 billion would probably require closer to 1 million a quarter.

 

[30seconds]

Non GAAP net income in Q3 was $2B. Looks like margins are getting better so we may not need to see 1.5x volume increase to get to $5B. My guess is Q2 2023