Short-Term TSLA Price Movements - 2016

[Julian Cox]

With the current hardware suite, there's absolutely no way it is ready for full autonomous. This is fact and I can say with 90% confidence the hardware suite won't reach full autonomy capability by the time Model 3 rolls around.

You are treating the vehicle like an appreciating asset when you mean to say it's a cash flow generator due to it autonomously working for you. This won't happen for a while in the way that you are describing. Not even Musk himself is that optimistic.

I'd buy it if you said an owner became a lyft / uber driver where the low operating costs would pay for the car itself eventually, but regardless of the fact there is still opportunity cost there. A driver will still need to be present. The car isn't going to make money on its own.

I wasn't questioning how awesome the car is or the brand for that matter. I own a Model S and I have a deposit on Model 3. What I was questioning is how you get to the 1M reservation holder figure by this time next year.

I see a steady climb in reservations to about ~550-600K by this time next year organically net of cancellations and I think that'll move the SP in the short term

No. The Model 3 will have hardware straight out of the gate ready for full autonomy. For certain.

It does not matter in what way an autonomous EV is worth more than a non-autonomous one. Its market value is measured in miles served. so for example $1 - $2 per mile x 500,000 miles or something of remaining service life. And you bought it for $35K + options + the cost of a software update and you got the chance to secure it for $1000.

Competition from new Autonomous EVs will cap the value to some extent and the price Tesla charges for the full autonomy update and the % it takes on its OTA fleet hailing service will limit the profit available to you as the owner but you get the idea. $35K or even $60 to get your hands on this is peanuts and all upside.

 

[Julian Cox]

man I love your vision, added with a spice of sarcasm. Hopefully this pans out.

It will pan out this way. No question about it.

Judging by the disbelief here on TMC I think when they explain this on the Model 3 Part 2 unveil a million additional reservation holders is a gross underestimate of the predictable response.

 

[surfside]

This is super optimistic. A lot of people want to test drive their car before buying it. $1,000 "loaned" to Tesla at 0% interest is not for everybody. And I wouldn't go in expecting the Model 3 or any vehicle for that matter to be fully autonomous by 2018. Where we stand now we're still a ways out.

I also doubt the car will be an asset for that fact. Seldom do cars appreciate. Model 3 won't. Maybe you'll profit due to the supply and demand in the first couple of months a la iPhone style, but this car will not appreciate. Thinking otherwise is just plain silly.

if tesla is able to create a shared mobility platform, it is certainly conceivable that the model 3 could become an income generating asset. not saying that is definitely how it is going to play out, but it is possible.

surfside

EDIT: i see julian beat me to it.

 

[Johan]

It will pan out this way. No question about it.

Judging by the disbelief here on TMC I think when they explain this on the Model 3 Part 2 unveil a million additional reservation holders is a gross underestimate of the predictable response.

I feel a sock eating bet is slowly forming.

 

[Crowded Mind]

No. The Model 3 will have hardware straight out of the gate ready for full autonomy. For certain.

It does not matter in what way an autonomous EV is worth more than a non-autonomous one. Its market value is measured in miles served. so for example $1 - $2 per mile x 500,000 miles or something of remaining service life. And you bought it for $35K + options + the cost of a software update and you got the chance to secure it for $1000.

Competition from new Autonomous EVs will cap the value to some extent and the price Tesla charges for the full autonomy update and the % it takes on its OTA fleet hailing service will limit the profit available to you as the owner but you get the idea. $35K or even $60 to get your hands on this is peanuts and all upside.

Then Tesla capitalizes by having a massive fleet of vehicles that they have already produced/delivered that they can make insane margins on by charging for a software update (pure profit) and taking a percentage of the revenue from any transportation services rendered by the owner. And this massive profit stream begins with a flip of a switch overnight. Theoretically possible, and it would likely be the most interesting business maneuver of all time. I know this is the point you have been making, Julian. For myself, I am just working through clarifying the value proposition for Tesla to ship such a vehicle to a customer rather than retain ownership themselves. The time difference between readiness of hardware and software is where the value lies in shipping to a customer.

 

[surfside]

given recent moderator requests to keep this thread cleaner, i think it is worth mentioning that i've been posting about the potential for fully autonomous hardware on the model 3 in the thread i created called Model 3 Reveal - "Cards Close to the Chest"...

surfside

 

[Julian Cox]

I feel a sock eating bet is slowly forming.

Not really. This is public information that is so shocking that it is just difficult to accept it.

Musk has said that general autonomy is essentially a solved problem for implementation within 2-ish years and that some period of time after that would be required for regulatory adoption based on proven safety benefits. Basically they can sue on behalf of their customers to pass it into law after proving that X many deaths are on the hands of legislators for preventing the AI avoiding accidents it would definitely have averted.

The MobilEye sensors and image processing for it seem to be ready and they are already having to software limit features of these chipsets pending regulatory approval.

@Crowded Mind is pretty close and makes a key point. The AI switch on (once legal to use) will be a windfall to Tesla in software licenses and service fees.

The deal here is that Tesla sells a bunch of cars at car market prices and the early Model 3 customers (current early reservation holders) get the lion's share of the benefit of the value uplift to full fleet autonomy in return for proving the case for the AI switch on to the legislators and being the class that basically sues for it to happen as their Constitutional right to life over the heads of wails of objections from the legacy auto industry that will by then know it means the death of the internal combustion engine.

For sure this will get added to S and X first between now and the Model 3 production launch but what I have sought to point to is the public disbelief at discovering that this is what you get at some point during your ownership of a Model 3 and you can buy a ticket to be on that ride for $1000 right now. That's Model 3 Part 2 unveil previewed for this here investment community. Enjoy.

 

[Svetlin]

Not really. This is public information that is so shocking that it is just difficult to accept it.

Musk has said that general autonomy is essentially a solved problem within 2-ish years ...

Yes, Musk has also said that Falcon Heavy would launch in 2014 and Model 3 would ship in 2015 (ok, he said that back in 2009, but still).

I don't doubt that Model 3 will have the next generation autonomous hardware, at least as an option. But I am again having trouble with your "No question about it" and "For certain" proclamations about that hardware being enough for full autonomy and being included in the base price. Tesla flipping a software switch to make existing cars fully autonomous sounds reasonable, I just don't know if those cars will be all Model 3s ever sold.

 

[BobSk]

This is super optimistic. A lot of people want to test drive their car before buying it. $1,000 "loaned" to Tesla at 0% interest is not for everybody. And I wouldn't go in expecting the Model 3 or any vehicle for that matter to be fully autonomous by 2018. Where we stand now we're still a ways out.

I also doubt the car will be an asset for that fact. Seldom do cars appreciate. Model 3 won't. Maybe you'll profit due to the supply and demand in the first couple of months a la iPhone style, but this car will not appreciate. Thinking otherwise is just plain silly.

This is not something super optimistic. It's logical and has decent possibility to happen. Elon said several times he considers autonomous driving a solved problem, just need some work. "In 2 years you can summon your car from anywhere in the US." What does that mean? If Tesla is the only company that has a working autonomous driving, the demand/supply will be completely out of balance. When Elon said "we don't have it fully baked" (referring to Tesla's shared services), people assume Tesla is not going to do it. That's wrong assumption. Elon will do things that make sense, and he will do it in a way nobody has done before. Just watch this play out. I saw a short saying his borrowing rate is only 6.5%, not 8%... It seems he is quite comfortable with his short position. I guess he is still thinking GM produces more cars in a week than Tesla in a year.

 

[Julian Cox]

Yes, Musk has also said that Falcon Heavy would launch in 2014 and Model 3 would ship in 2015 (ok, he said that back in 2009, but still).

I don't doubt that Model 3 will have the next generation autonomous hardware, at least as an option. But I am again having trouble with your "No question about it" and "For certain" proclamations about that hardware being enough for full autonomy and being included in the base price. Tesla flipping a software switch to make existing cars fully autonomous sounds reasonable, I just don't know if those cars will be all Model 3s ever sold.

Of course they will. Your're thinking like a car salesman and Tesla is not selling cars any more than car salesmen are - ultimately they are selling a service - in this case a useful one and not just fixing cars to keep your warranty going.

Why would they produce a single car that was not upgrade able in software to attach to a hailing network? The chance of capturing a % each car's fleet service value is 100%. Or as near as makes no difference - it's Tesla's OTA network that makes the thing function!

I don't mean to be insulting except to jog a mind-shift. If your main product is really gasoline you don't sell a bottom of the range car that can't run on it. Tesla's main product is going to be the Internet of Things - the OTA network that bills for mileage like flipping iTunes and the App Store bills for music and Apps.

Believe it or not they are already trialing it with Model S with OTA - API licensed fleet operators. I met one when I was doing presentations in Berlin for Cleantechnica last weekend.

 

[MitchJi]

Approaching 400k M3 reservations: Tesla Vice President says Model 3 reservations are ‘approaching 400,000’, real success will be delivery

Thank you for posting that! The video is worth watching. Two things that stood out for me, the implications is the 400k orders for the industry and the segment on storage. He said that they are currently working on a grid scale project in Hawaii. I couldn't read all of the text on the slide, but it states 400 powerpacks. If Fred can chime in with the missing text (behind Daramuid I'd appreciate it

 

[vgrinshpun]

It is a project to make 12MW solar farm on island Kauai into a peaker plant of sorts, making solar power generated by it fully dispatchable using 52MWh of Tesla Powerpacks.

 

[vgrinshpun]

Speaking about autonomous shared mobility, Tesla introducing Tesla Social series, with this month's topic of discussion - Summon

 

[Julian Cox]

Julian. For myself, I am just working through clarifying the value proposition for Tesla to ship such a vehicle to a customer rather than retain ownership themselves. The time difference between readiness of hardware and software is where the value lies in shipping to a customer.

What I think is clear is that Tesla is planning a genuine Internet of Things. Not, or not exclusively, a centralized Tesla-owned fleet service.

Curiously this provides a possible role for the dealers - or at least the owners and shareholders of dealerships to switch from buying ICE inventory to Tesla hailing fleet inventory.

That is - for many, many parties from individual consumers to fleet owners small and large around the country and the world to hold the capital value of decentralized fleet assets - basically buy the cars from Tesla - after which both the owners and Tesla will share the benefit from services provided over Tesla's OTA network.

The OTA network is pretty profound when it comes to this. Current Tesla Model S fleet operators with a fleet license to the Tesla OTA network basically have the location, charging and maintenance status of all of their vehicles on a map and can feed the vehicle locations to ride sharing or rental customers and continuously asset-track the entire arrangement like an advanced version of Uber with the obvious potential to just point a car at a customer in future as soon as summoning comes online.

A decentralized network of fleets is significantly more resilient than a single company going around putting everyone else out of business on price so I think it looks pretty good. Better than Apple's prospects anyway which I think would more likely involve a wholly Apple-owned fleet*

* Of course it is entirely possible that all Apple is doing is coming up with an autonomous nav version of CarPlay and hoping to sell it to ICE vehicle makers which would seem like a cunning move but would in fact be a bit of a waste of time in the end considering the cost per mile of gasoline, maintenance and depreciation of an ICE vehicle - even if fully autonomous - simply prices it out of the market when compared with an autonomous EV that has three times the lifespan for amortization, one fifth or less of the energy costs, and some tiny fraction of the routine maintenance requirements - and no overwhelming cost of the driver to mask the difference.

 

[sub]

My concern regarding my two in store model 3 reservations is that I'm going to be pushed back significantly in line due to the 150-200k model S/X sales between now and 2018. I'm guessing I'm in the top 75k. I think there will be a lot of people that buy a model S or X just to move up in the model 3 line, I'm already thinking about it.

This will increase sales of those models and therefore increase TSLA (see what I did there?).

 

[MattD]

@Julian Cox,

I completely agree! There is no question, Telsa will get into the transportation as a service industry and your postulations about using a license upgrade via OTA make perfect sense. The timing of this will obviously be subject to regulation but will be the death blow to ICE automakers. Neither Apple nor Uber will be able to service the market demand due to battery supply constraints, similar to the smartphone industry post iPhone launch. (BTW Uber recently signed a contract with Mercedes Benz for $13B worth of autonomous cars by 2020) This will boost Tesla's valuation by at least a factor of 2X. Uber is currently valued at $68B, $19B more than GM or twice as much as Tesla. The TaS (transportation as a service) is not factored into Tesla's current SP at all.

I have been lurking on TMC for a while now but this is my first post. Thank you all for your insights, glad to be here!

 

[Remus]

From pure business point of view, Tesla would be silly to sell you a fully autonomous vehicle instead of using all of them to start their own uber, or sell all of them to uber for about 100% profit margin.

No. The Model 3 will have hardware straight out of the gate ready for full autonomy. For certain.

It does not matter in what way an autonomous EV is worth more than a non-autonomous one. Its market value is measured in miles served. so for example $1 - $2 per mile x 500,000 miles or something of remaining service life. And you bought it for $35K + options + the cost of a software update and you got the chance to secure it for $1000.

Competition from new Autonomous EVs will cap the value to some extent and the price Tesla charges for the full autonomy update and the % it takes on its OTA fleet hailing service will limit the profit available to you as the owner but you get the idea. $35K or even $60 to get your hands on this is peanuts and all upside.

 

[BobSk]

I think the point Julian is trying to make is that by the time M3 is delivered in a couple years, the hardware for autonomous driving might in fact be available. The contrarian argument is that this hardware will be introduced on S and X before M3, and so there might be an artificial delay on equipping M3 with the autonomous driving hardware.

If the autonomous chip set is available, Elon will have it on model 3. There is no reason why not. Switching on the software is pure profit. Besides, it will give users the best experience.

 

[Krugerrand]

From pure business point of view, Tesla would be silly to sell you a fully autonomous vehicle instead of using all of them to start their own uber, or sell all of them to uber for about 100% profit margin.

Fortunately for all of us, Tesla isn't interested in a pure business point of view. Rather they are interested in a pure what's-best-for-humanity-on-this-planet point of view.

Prime example: SuperCharger Network clearly not set up from a pure business point of view.

 

[BobSk]

From pure business point of view, Tesla would be silly to sell you a fully autonomous vehicle instead of using all of them to start their own uber, or sell all of them to uber for about 100% profit margin.

Elon doesn't look at things purely from profit point of view. Ultimately the goal is to advance the electric transition and do good things for the world. For all these years, Tesla have been saying the goal is to develop affordable (model 3). Now it's finally here, they say sorry, we will keep the cars to make more profit. That, doesn't make sense to anybody, including Elon.
Is it possible that at some point Tesla suspend reservation, to build up their own autonomous fleet? I think that could happen.