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I think earnings will be the thing. Tomorrow, whatever it is, will be a "meh" from the market. Elon could announce a software update that reduced tire wear by 90% and the market wouldn't care. Similarly I think this will be Mr. Market's take:
- HUD/Glass features: just a product feature. Doesn't make money right now, who cares.
- A/P 2 HW, or productized A/P: Just a product feature. Doesn't make money right now. If A/P is being productized it will be valued at zero, just like TE is now.
- New vehicle? Just more talk of future dreams.
Again, not my opinions, just cynical short term market takes. I do NOT think there will be a "sell the news" event because there is no run up on the anticipation and we are already at the lower bound of range bound trading. Plus earnings next week is exerting it's more powerful gravity up or down.
So far, I can't find any better information than that article re: ZEV pricing. It's notable that the article was published on 9/1, after the reporting period ending 8/31 showing Tesla sold 80,000 credits and well after the reduced standards Fallenone noted. Since Tesla is one of the few (or the only?) manufacturer in a position to sell credits, I have to assume the 3-4k figure cited in the article's source is inclusive of the massive amount of Tesla selling credit that occurred prior to the date of the article. Assume a volume discount and I'm inclined to stick with my 2500 estimate.
Back to the pennies on the dollar thing. I think it was hyperbole for purposes of arguing his position bc Elon was clearly trying to make a statement to CARB that would get in articles (which they did). If I used to be able to sell something for 5k and suddenly they were worth 2500 (a 50% reduction) due to my competitors lobbying to be allowed to pollute more with fewer consequences, I'd be pretty pissed off too.
If I wanted to dust off the old tinfoil hat I could also craft an argument where Elon is trying to hide the Q3 effect of the ZEV credit sales (which he knew would be published before earnings) by overstating the worthlessness of the credits. After all, we know he's been engineering this monster quarter for quite some time. I think the prior hyperbole point is much much more likely, though.
What a day! It will pale in comparison to tomorrow and earnings.
Agreed on the non-routine matters piece.
One thing on 401(k)s just because I have done a lot of work in this area - it's fairly common for companies to now offer a self-directed brokerage option for the 401(k). In short, this means you can invest your 401(k) in individual stocks rather than the typical mutual funds. In my experience, most employees view this as "too risky" and very few take the opportunity to use the SDA option. I assume that's the situation they are referring to here with Fidelity.
Again this does not specify whether the transfer happened before mid 2016 or after. That time point is critical and failing to address this won't contribute to the discussion. This would be something like saying "John bought 10k shares of TSLA in 2013". I'm arguing John's average cost could be $150 while you insisting it is $50. The new regulation is like the take off, totally two different things before and after. And the data you present does not tell us this info.$1500 / $5000 = 0.3, i.e. 30 pennies on the dollar.
Once again, neither your rationale nor the numbers work:
Zero Emission Vehicle Credits
View attachment 199064
Seems like Tesla has restarted opening Superchargers in China after some pause.
supercharge.info added 13 new ones on Oct 13th.
Maybe they waited for the new standard and are now ready ?
Or could it signal increased succes in China (model -x ?).
Spot on!
I really badly hope AP is not productised and sold to others. That's like giving away 100s of billions of dollars per year future revenue.
Different types of low emission vehicles aside, the data indicate OEMs are sitting on 16% of ZEV, while the requirement is being slashed to 4.5%. How would different types of low emission vehicles impact this?I suspect you are misinterpreting the ZEV regulations. Prior to 2018, the ZEV percentage could be met by a combination of low emission vehicle types:, PZEVs, AT PZEVs, TZEVs, Type 0s, or NEVs and ZEVs. While the 2017 "Total ZEV Percent Requirement was indeed 14%, the minimum "pure" ZEV type was 3%, and the rest could be made up of credits from other types low emission vehicles. Read carefully paragraph D on page 5 on your first link above.
In 2018, the minimum (floor) "pure" ZEV type drops from 3% to 2%, but several of the other types of low emission vehicles can no longer be used to meet the "Total ZEV Percent Requirement", just TZEVs (Yes the Total % dropped from 14% to 4.5%) As your second link above illustrates that minimum "pure" ZEV type percent rises dramatically from 2% in 2018 to 16% in 2025, while the ratio of TZEVs allowed to meet the Total drops.
Everything is in the "eye of the beholder", but IMO ZEV credits are becoming increasingly valuable--which explains why OEMs are increasingly offering "compliance cars" in jurisdictions that follow the California's regime (~12 other states). Look at where the Bolt is being offered.
As far as Elon's complaint on the CC, I think it had more to do with FCEL vehicles and "fast refueling" extra credits. Initially, no car had to be actually "re-ranged" within the time criterion to claim extra fast refueling credits; all that was required was for the manufacturer to assert the car was capable of meeting the criterion. Protests about the actual environmental benefits of that caused modifications to the criteria. Now extra credits for BEVs are going away. Tesla's opportunity to earn extra fast refueling credits by running the same car through the Harris Ranch battery swap station multiple times in order to earn several extra credits on 25 other cars goes away at year end.https://www.arb.ca.gov/regact/2015/zev2015/zev15notice.pdf
What's the right estimate for how much is added to the bottom line in 3Q16? Dunno, but 2 observations:
The 80,227 credits sold in FY2015 was through 8/31/2016. September 2016 was Tesla's highest delivery month ever. How many additional ZEV credits were sold in September?
GHG/CAFE revenue reported has been:
1Q13 $17.1 million
2Q13 $17.9 million
3Q13 $14.8 million
4Q13 $14.8 million
1Q14 $11.6 million
2Q14 $15.8 million
3Q14 $17.0 million
4Q14 $20.0 million
1Q15 $15.0 million
2Q15 $13.0 million
3Q15 $16.0 million
4Q15 $12.7 million
1Q16 Not Reported
2Q16 Not Reported
3Q16 ?????
Different types of low emission vehicles aside, the data indicate OEMs are sitting on 16% of ZEV, while the requirement is being slashed to 4.5%. How would different types of low emission vehicles impact this?
Also I think the revenue you're citing is not the ZEV revenue. ZEV revenue has been around 30-40M per quarter in 2015 (except for Q4, as they said in Q3 letter they intend to hoard it), and Q1 2016 it was 57M.
Again this does not specify whether the transfer happened before mid 2016 or after. That time point is critical and failing to address this won't contribute to the discussion. This would be something like saying "John bought 10k shares of TSLA in 2013". I'm arguing John's average cost could be $150 while you insisting it is $50. The new regulation is like the take off, totally two different things before and after. And the data you present does not tell us this info.
Here's some more evidence that Brian's explanation is correct and the requirements haven't been slashed: What Will Replace Gasoline—Electricity or Hydrogen?Different types of low emission vehicles aside, the data indicate OEMs are sitting on 16% of ZEV, while the requirement is being slashed to 4.5%. How would different types of low emission vehicles impact this?
Also I think the revenue you're citing is not the ZEV revenue. ZEV revenue has been around 30-40M per quarter in 2015 (except for Q4, as they said in Q3 letter they intend to hoard it), and Q1 2016 it was 57M.
As long as it's not autopilot related. For whatever reason the Street is sick of this amazing tech. If it's anything but autopilot, watch out fellas!As others mentioned, I wouldn't expect too much bump for TSLA regarding tomorrow's event. Typically, these product events don't have much impact.
That being said, earning call is around the corner...
Its pretty easy to match up the buyers and sellers there and figure out that it was Tesla selling to FCA, Ford, and Honda
Here's some more evidence that Brian's explanation is correct and the requirements haven't been slashed: What Will Replace Gasoline—Electricity or Hydrogen?
"Through 2017, the largest automakers—Fiat-Chrysler, Ford, General Motors, Honda, Nissan, Toyota, and anyone else who sells more than 60,000 vehicles per year in the state—must earn ZEV credits equal to 3 percent of their California sales, with requirements for plug-ins, hybrids, and low-emission vehicles equal to another 11 percent of sales, for a 14 percent total. ZEV credits become real money when CARB starts its annual accounting of credits and manufacturer obligations.
To make up for a shortfall or to cash in on an abundance of credits, carmakers can buy or sell them from and to each other. If they fail to come up with the necessary credits, they face a $5000 penalty for every one they’re short. So far, no company has paid a penalty—unlike the federal government, which has levied fines against a number of automakers for failing to meet its Corporate Average Fuel Economy (CAFE) rules.
Now the industry is bracing for a ZEV midterm rules change. For 2018, it will drop the annual volume threshold to 20,000 California sales (verified with a special calculation using multiple model years), while the yearly ZEV requirement—for most automakers, a mix of advanced-technology vehicles—must add up to 16 percent of sales."
I'm back to thinking this ZEV credit sales dump will be massive for the ER.