Ooh! Ooh! Dibs!
I'll be putting down my deposit for a 3 in store because I want to be able to say I was part of things when transportation changed forever.
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Ooh! Ooh! Dibs!
I'll be putting down my deposit for a 3 in store because I want to be able to say I was part of things when transportation changed forever.
Just imagine the number of shareholders all putting down deposits!
We are having a get together at the store bringing three Roadsters and a couple Model S to park out front. I think we have 6 people putting down deposits at the Ohio - Easton location. Great time to get together with fellow Tesla friends.
sub
Active Member
Julian and Jesse have been going at each other constantly for the last ~month like a couple of 2 yearolds, yet you hang on Jesse's every word. That being said, I take in what each of them has to say, both "appear" to know what they are talking about. Welcome to the party by the way, some of us have been here a while.
With shorts increasing their positions and institutional investors buying shares up to the Model 3 reveal, the near term can only be described as a "powder keg". April Fools Day will bring fireworks. Another month may pass before TSLA stock price settles into a discernible pattern. If you are a gambler, this might be the time to make a short-term option bet. The longs (like me) have to "strap in" and hold on.
Gerardf
Active Member
I for one, am very happy to see some moderation to keep this thread about content, and not about persons.
Actually I am trying to ignore all the "personal references' as much as I can, but it is not an easy job. Using Ignore is not an option, as I highly value the content in (often the same) postings of these same people.
I have the feeling it has already scared away some other posters that I valued highly and learned a lot form. I hope to see them back when this thread returns to being more about creative TSLA investment ideas and the latest TSLA news that someone found on the internet, and less about 'who is / was right and who was wrong'. Actually, as we all know, one can often learn the most from things that went wrong.
Actually I am trying to ignore all the "personal references' as much as I can, but it is not an easy job. Using Ignore is not an option, as I highly value the content in (often the same) postings of these same people.
I have the feeling it has already scared away some other posters that I valued highly and learned a lot form. I hope to see them back when this thread returns to being more about creative TSLA investment ideas and the latest TSLA news that someone found on the internet, and less about 'who is / was right and who was wrong'. Actually, as we all know, one can often learn the most from things that went wrong.
I'm not sure I'm completely following your math (I probably just didn't catch a step, though).
However, I do think you're missing a key differentiator between Tesla and BMW. If you want to back into costs, you can't look at BMW's MSRP to compare it to Tesla. MSRP has dealer profit+expenses built into it and it's difficult to know what manufacturer margin looks like compounded with dealers' margin+expenses. Tesla obviously also has "dealer" expenses, but that hides in SG&A.
Instead, I think you should start with BMW dealer cost and then apply BMW automotive margin.
Going backward on BMW:
1. MSRP: $34,000 (including destination, according to Edmunds)
2. Dealer Cost: ~$30,000 (That's based on Edmund's true market value pricing of $31.3 - dealer has to get something).
3. BMW Margin: 15% (that's admittedly average-ish, and could be lower on a 320i).
4. BMW Cost: 25,500
5. BMW Drivetrain: 7,500 (your assumption)
6. BMW Everything else: 18,000
Now the same exercise for Tesla:
1. M3 Price: 35,000
2. "Dealer" Cost: 35,000
3. Tesla automotive margin: 25% (or 8,750)
4. Tesla cost: 26,250
5. Tesla drivetrain (my bet is 50-55 kWh):
6. Tesla everything else: 12,750 - 18,250.
I happen to disagree on 2017 battery cost (I think they are 150-ish/kWh today before GF, but that's another conversation) and think they will be $100-ish by 2017.
So, given my example above and $100,kWh, if base M3 uses a 50 kWh pack, Tesla has $250 more to produce the same car as BMW. Tesla probably does have somewhat higher supplier costs, but Tesla might be more vertically integrated. More importantly, labor costs are likely cheaper in Northern California than Germany.
And, most importantly to this thread, my back-of-the-napkin math still leaves room for 25% automotive margin at $35,000 sales price -- not selling at cost.
If Tesla wants to sacrifice some margin (remember, it has $8,750 to work with), it should even be able to produce a higher content* car than a 320i for $35,000.
*Remember, it is very likely Tesla can already produce a higher content car than a 320i with some features that don't cost it much of anything. A lot of Tesla's higher content is simply software (with low marginal cost) -- center screen, navigation, maps, internet connectivity will almost certainly be included with a base model M3. The equivalent "technology" package for a 320i has a $2,500 invoice cost.
However, I do think you're missing a key differentiator between Tesla and BMW. If you want to back into costs, you can't look at BMW's MSRP to compare it to Tesla. MSRP has dealer profit+expenses built into it and it's difficult to know what manufacturer margin looks like compounded with dealers' margin+expenses. Tesla obviously also has "dealer" expenses, but that hides in SG&A.
Instead, I think you should start with BMW dealer cost and then apply BMW automotive margin.
Going backward on BMW:
1. MSRP: $34,000 (including destination, according to Edmunds)
2. Dealer Cost: ~$30,000 (That's based on Edmund's true market value pricing of $31.3 - dealer has to get something).
3. BMW Margin: 15% (that's admittedly average-ish, and could be lower on a 320i).
4. BMW Cost: 25,500
5. BMW Drivetrain: 7,500 (your assumption)
6. BMW Everything else: 18,000
Now the same exercise for Tesla:
1. M3 Price: 35,000
2. "Dealer" Cost: 35,000
3. Tesla automotive margin: 25% (or 8,750)
4. Tesla cost: 26,250
5. Tesla drivetrain (my bet is 50-55 kWh):
- 8,000 for 50 kWh ($100/kWh)
- 10,500 for 50kWh ($150/kWh)
- 10,000 for 70kWh ($100/kWh)
- 13,500 for 70kWh ($150/kWh)
6. Tesla everything else: 12,750 - 18,250.
I happen to disagree on 2017 battery cost (I think they are 150-ish/kWh today before GF, but that's another conversation) and think they will be $100-ish by 2017.
So, given my example above and $100,kWh, if base M3 uses a 50 kWh pack, Tesla has $250 more to produce the same car as BMW. Tesla probably does have somewhat higher supplier costs, but Tesla might be more vertically integrated. More importantly, labor costs are likely cheaper in Northern California than Germany.
And, most importantly to this thread, my back-of-the-napkin math still leaves room for 25% automotive margin at $35,000 sales price -- not selling at cost.
If Tesla wants to sacrifice some margin (remember, it has $8,750 to work with), it should even be able to produce a higher content* car than a 320i for $35,000.
*Remember, it is very likely Tesla can already produce a higher content car than a 320i with some features that don't cost it much of anything. A lot of Tesla's higher content is simply software (with low marginal cost) -- center screen, navigation, maps, internet connectivity will almost certainly be included with a base model M3. The equivalent "technology" package for a 320i has a $2,500 invoice cost.
I'll repost this for those who didn't see it a few months back. Only a few weeks until the Model 3 reveal. :smile:
Suvereno - TESLA (prod. Jeso) /OFFICIAL VIDEO/ + ENG subtitles - YouTube
The critical thing to remember about a $30,000 - $50,000 Tesla is it will be exempt from sales tax and import duties in many countries. I expect Tesla to see demand for at least 500,000 Model 3 sedans by January 2017. Tesla won't be able to produce enough vehicles to satisfy demand unless Panasonic and other Tesla partners significantly increase their investment in Tesla's supply chain. Also, 500,000 X $1,000 = $500 million that can be invested in increasing production.
Suvereno - TESLA (prod. Jeso) /OFFICIAL VIDEO/ + ENG subtitles - YouTube
The critical thing to remember about a $30,000 - $50,000 Tesla is it will be exempt from sales tax and import duties in many countries. I expect Tesla to see demand for at least 500,000 Model 3 sedans by January 2017. Tesla won't be able to produce enough vehicles to satisfy demand unless Panasonic and other Tesla partners significantly increase their investment in Tesla's supply chain. Also, 500,000 X $1,000 = $500 million that can be invested in increasing production.
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Gerardf
Active Member
Agree. It will be interesting.
I posted something on the situation in The Netherlands in the EU thread, explaining why I would not at all be surprised to see Fleet leasing companies reserving 10.000's of Model-3's. For The Netherlands that is !
EU Market Situation and Outlook - Page 191
Thanks for the input. I am not familiar with the dealer cost indeed. This definitely leaves a sizable room for "everything else".
My major point was in 2017 the base version is unlikely equipped with a 70 kWh battery pack as MitchJ indicated earlier. And I agree Tesla doesn't need to sacrifice the center screen and the software within. But AP is another thing. In the current environment, with no competitors offering AP at Tesla's level without additional cost to the consumer, it doesn't make business sense to not have it as an option, especially with AP being a very high margin one. Tesla's mission is certainly accelerate of electric transportation. But they are a for profit company. Plus, if AP is included in base version without additional money required, how will the S and X owners who paid $2.5k for it feel?
As for battery pack cost, I have to disagree. If they really can achieve $150/kWh today, what can be the reason for them being almost selling Powerwall at cost in 2015 Q4 (in the shareholder letter they said "Even during this initial product launch, Tesla Energy achieved positive gross margin for the quarter", doesn't sound like they are making a lot)? Even assuming 10% gross margin on the Powerwall and another 10% COGS for transportation, that still leaves the price for the Powerwall pack at around $350/kWh. I don't think the packs in their cars cost this much. But $150/kWh as of today seems optimistic to me.
My major point was in 2017 the base version is unlikely equipped with a 70 kWh battery pack as MitchJ indicated earlier. And I agree Tesla doesn't need to sacrifice the center screen and the software within. But AP is another thing. In the current environment, with no competitors offering AP at Tesla's level without additional cost to the consumer, it doesn't make business sense to not have it as an option, especially with AP being a very high margin one. Tesla's mission is certainly accelerate of electric transportation. But they are a for profit company. Plus, if AP is included in base version without additional money required, how will the S and X owners who paid $2.5k for it feel?
As for battery pack cost, I have to disagree. If they really can achieve $150/kWh today, what can be the reason for them being almost selling Powerwall at cost in 2015 Q4 (in the shareholder letter they said "Even during this initial product launch, Tesla Energy achieved positive gross margin for the quarter", doesn't sound like they are making a lot)? Even assuming 10% gross margin on the Powerwall and another 10% COGS for transportation, that still leaves the price for the Powerwall pack at around $350/kWh. I don't think the packs in their cars cost this much. But $150/kWh as of today seems optimistic to me.
chickensevil
Active Member
Anecdotal information about the Model 3 that surprised me. So I was pulled into a meeting yesturday at the office for some other stuff, but as soon as we sat down, my boss said to me that he had something super important to talk about unrelated to business.
Me: uhhh, sure, go on.
Boss: what is this Model 3 I heard about and deposits going at the end of March? Is it really only 1,000$?
Me: Yeah! And-
Boss: And this thing will get 200 miles of range?
Me: Yeah It's great, And-
Boss: And starting price of 35k?
Me: Yeah, but-
Boss: Well I can totally do this! I'll get the 7,500 Tax credit, plus I'll keep this thing for 100k miles like I do all my cars, which will save me another 9k, dropping the price down to right around 20k!
Me: *skeptical* I tried to tell you about this coming up around a month ago, and you said you wouldn't ever buy a car for over 20k...
Boss: Well, yeah but with the savings it will be the same thing as buying a 20k car.
Other Person overhearing this: Wait, what's all this?
Me: Oh yeah! There is a cheaper Tesla coming out. Here is what we know. 35k. At least 200 miles of range. Similar size, performance, and luxury of a BMW 3 series or an Audi A4.
Other Person: Oh yeah! That sounds awesome... And you were saying they only want 1k for a deposit?
Me: Yeah! Totally.
Boss: Yeah, I think I'm going to camp outside the store so I can make sure I get as close to the first in line!
Me: That's a good point, because it should be noted that if you want the Federal Tax credit it will run out when they sell 200k cars, and they are likely to be quite close to that amount as it stand before the release of the Model 3.
So much for getting actual work done during that meeting. But I presented the back and forth because I am the only Model S owner in the office, and I have gotten less aggressive about talking about the car unless someone else brings it up, so it was rather surprising that he brought it up in this way, and was jumping all over this deposit thing very similar to how people have been talking on the forums... without being someone who ever visits these forums... So I think I might need to readjust my internal calculations here on just how big this reservation thing is going to be. I was skeptical of the 100k+ numbers being thrown around, but if people are catching on to this while being someone who would have *never* bought in this price category, and has always balked at me every time I had talked with him about it, how they were too expensive, and he never buys above 20k, to see someone like this jumping in with such fervor, it makes me rather excited for this reveal. I really hope Tesla gives an update a few weeks after on how many deposits they had taken in.
Me: uhhh, sure, go on.
Boss: what is this Model 3 I heard about and deposits going at the end of March? Is it really only 1,000$?
Me: Yeah! And-
Boss: And this thing will get 200 miles of range?
Me: Yeah It's great, And-
Boss: And starting price of 35k?
Me: Yeah, but-
Boss: Well I can totally do this! I'll get the 7,500 Tax credit, plus I'll keep this thing for 100k miles like I do all my cars, which will save me another 9k, dropping the price down to right around 20k!
Me: *skeptical* I tried to tell you about this coming up around a month ago, and you said you wouldn't ever buy a car for over 20k...
Boss: Well, yeah but with the savings it will be the same thing as buying a 20k car.
Other Person overhearing this: Wait, what's all this?
Me: Oh yeah! There is a cheaper Tesla coming out. Here is what we know. 35k. At least 200 miles of range. Similar size, performance, and luxury of a BMW 3 series or an Audi A4.
Other Person: Oh yeah! That sounds awesome... And you were saying they only want 1k for a deposit?
Me: Yeah! Totally.
Boss: Yeah, I think I'm going to camp outside the store so I can make sure I get as close to the first in line!
Me: That's a good point, because it should be noted that if you want the Federal Tax credit it will run out when they sell 200k cars, and they are likely to be quite close to that amount as it stand before the release of the Model 3.
So much for getting actual work done during that meeting. But I presented the back and forth because I am the only Model S owner in the office, and I have gotten less aggressive about talking about the car unless someone else brings it up, so it was rather surprising that he brought it up in this way, and was jumping all over this deposit thing very similar to how people have been talking on the forums... without being someone who ever visits these forums... So I think I might need to readjust my internal calculations here on just how big this reservation thing is going to be. I was skeptical of the 100k+ numbers being thrown around, but if people are catching on to this while being someone who would have *never* bought in this price category, and has always balked at me every time I had talked with him about it, how they were too expensive, and he never buys above 20k, to see someone like this jumping in with such fervor, it makes me rather excited for this reveal. I really hope Tesla gives an update a few weeks after on how many deposits they had taken in.
At the very least your calculation shows that Tesla does not have the luxury to include Autopilot nor Supercharging in the base model 3, which is my assumption as well.
I've thought about it, and if the numbers are good enough, that might be Elon's punchline to end the night after gauging the reaction to the reveal. Remember, by the end of the reveal in California, the world would have had a chance to place deposits sight unseen. This could be one hell of an April fools the very next day. Myself, I intend to go after work with my dad to go place deposits on March 31, then we will get the popcorn ready.
SW2Fiddler
We Are Cognitive Dissidents
I don't know, maybe something like those of us feel who paid for Parcel Shelf, Fog Lamps, Parking Sensors, and a $450 "Early Adopter Tax" for our HPWC, and no AP Hardware, compared to what you would get by buying later?
(Answer, FINE actually!)
edited: I do agree 100% that "AP Activation" will be an option at a price, and hardware will be included. Simple and profitable.
Happy Friday everyone.
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Panasonic is probably waiting to see initial reservation demand before deciding how much additional capital to invest in Tesla. Any potential partners are probably doing the same thing.
1) Tesla will need to keep a close eye on scalpers. My bet is Tesla is going to place some sort of controls to prevent people from placing an absurd amount of reservations. My bet is Tesla will receive reservations equal to or in excess of its present expected first year production in 1 day. If this happens, the media attention this will receive will get the attention of every newspaper and magazine in the world.
Does anyone honestly believe Tesla is only going to reveal a picture of the Model 3? People on here mentioned months ago they had seen prototypes of the Model 3.
The in store reservation idea is brilliant.
1) Tesla will need to keep a close eye on scalpers. My bet is Tesla is going to place some sort of controls to prevent people from placing an absurd amount of reservations. My bet is Tesla will receive reservations equal to or in excess of its present expected first year production in 1 day. If this happens, the media attention this will receive will get the attention of every newspaper and magazine in the world.
Does anyone honestly believe Tesla is only going to reveal a picture of the Model 3? People on here mentioned months ago they had seen prototypes of the Model 3.
The in store reservation idea is brilliant.
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jhm
Well-Known Member
This situation has gotten me thinking more about hedging my TSLA position by holding an inverse oil ETF. Here's my thinking about how to do that.
First, I'm looking at SCO which is a -2X oil ETF. When oil rises 1%, SCO is supposed to decline 2%. It is one of the more heavily traded oil bear EFTs.
Second, per my employer, I have 30 day holding rules on my trades. I am not allowed to day trade. So I am going to model 25 trading day returns.
Third, I regress TSLA returns on SCO returns. Over the last 24 months I get an Rsq of 0.13. So this is reasonably informative. That is, the price of oil really does explain about 13% of the variance in Tesla's price.
Fourth, the beta of this regression is -0.1566 over the last 12 months and -0.1556 over the last 24 months. This is the correct sign, since this is an inverse oil EFT. And the betas seem reasonably stable. I have looked at rolling 12 month betas and found that as the volatility has increased the betas shrink, as they should. Otherwise it is fairly stable.
So finally, the hedge ratio can be based on these betas. If we use a rolling 12 month beta, the most recent is -0.1566. This means if I have $10,000 of TSLA, I want to hold $1566 of SCO as well. This cancels out the variance of 25-trading day returns due to oil volatility.
I can back test this to see that the variance of daily returns is decreased by 40% and the returns increase. Over the last 12 months, holding TSLA in hedged had an annual return of 6%, while the hedged portfolio enjoyed a 20% return. Over the last 24 months, unhedged annualized return was -7% while hedged was 22%. So this is pretty impressive.
While many of us here my not see any fundamental correlation with oil (and I don't believe it), the market seems to behave as if there is a correlations. If we've got algorithmic traders reinforcing this correlation, hedging in the manner I have sketched would take advantage of that false correlation. It would also take advantage of any correlation that may stem from other more economically grounded issues. The point of this hedge is to neutralize interference from oil price volatility. The hedged position is meant to be uncorrected with oil, so that the alpha with respect to oil can come through.
There are other ways to hedge, and I'd like to hear what others might try.
Two points:
1. Have you tried to do a co-variance analysis on oil, macro (either SPY or QQQ), and TSLA? I think oil linking to macro then linking with TSLA may leave a lot less for oil specific correlation to TSLA.
2. If possible, I would consider shorting a leveraged oil ETF to hedge. All leveraged ETF has decay when tracking the underlying security by math: 1.3*0.7 = 0.91 < 0.99 = 1.1*0.9. This is most prominent when the underlying security is going sideways. One problem with shorting leveraged is, you need to maintain a sizable cash position in case the underlying security rally a lot in a short time. And your broker needs to be OK with this.
1. Have you tried to do a co-variance analysis on oil, macro (either SPY or QQQ), and TSLA? I think oil linking to macro then linking with TSLA may leave a lot less for oil specific correlation to TSLA.
2. If possible, I would consider shorting a leveraged oil ETF to hedge. All leveraged ETF has decay when tracking the underlying security by math: 1.3*0.7 = 0.91 < 0.99 = 1.1*0.9. This is most prominent when the underlying security is going sideways. One problem with shorting leveraged is, you need to maintain a sizable cash position in case the underlying security rally a lot in a short time. And your broker needs to be OK with this.
FredTMC
Model S VIN #4925
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