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'Tesla shares sink as car deliveries drop'

Discussion in 'TSLA Investor Discussions' started by rooter, May 3, 2019.

  1. Dr. J

    Dr. J Member

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    I think what Elon has missed with his $250K appreciating asset claim is...economics. His math is based on some possibly dubious assumptions, but it's probably solid math and he may even believe it. The problem is (as someone pointed out above), if a new Robotaxi TM sells for $50K, there is no way a used one will sell for more than that. The flaw in Elon's math is that as more and more and more $50K Robotaxis hit the streets, the revenue available for each will decline so that there's no longer a free lunch in buying $50K Robotaxis. At this point (and at every earlier point), a used Robotaxi will sell for less than a new one. And it will no longer be an appreciating asset, assuming there's no enforced scarcity of new Robotaxis.

    The guy that benefits (the most) in this scenario is the guy building Robotaxis. Thus, it's possible that Elon's math is, first and foremost, self-serving.

    An interesting corollary, if Elon pulls off the Robotaxi idea, is what happens to the value of ordinary cars that aren't Robotaxis. One would expect them to fall in value.
     
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  2. Big Toys

    Big Toys Member

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    It's all just raving nonsense. Elon didn't fail math. His loyal customer base failed Critical Thinking.
     
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  3. wdolson

    wdolson Supporting Member

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    Elon is also skipping past a huge regulatory hurdle. Once FSD without drivers is possible, then comes a big legislative sell to get it approved. Until then all those robotaxis need a driver, which is no cost savings.

    And when robotaxis become a legal thing, just about every ride sharing company in the world is planning on buying massive fleets of robotaxis and letting all the humans go. For those who buy self driving cars with the intent of renting them out will be competing with large companies with large fleets and certain standards of cleanliness.

    The robotaxi market is going to be cornered by whoever is best at keeping their fleet in uniform good condition. People will do all sorts of messy things in those cars and quick, efficient customer service to clean them up quickly will keep customers coming back. It will be very tough for independent contractors to compete because while some will be very conscientious, others won't.

    I don't see robotaxis being much of a thing for at least a decade. Even when the cars with software and hardware come together, the number of cars with those capabilities will be small for some time. And it will take years to convince legislatures that they are safe enough to do away with the drivers. Tesla might be first to FSD capability, but the competition will be doing catch up while the regulators debate the issue and companies with big production capacities will probably be able to match Tesla's tech and capabilities by the time the laws do change in enough jurisdictions to matter and those companies will be pitching hard to the ride sharing companies. GM already owns their own ride sharing company.

    I just don't see things playing out like Elon predicts. The tech might be there very soon, but even then I think there are going to be a lot more software issues than Elon thinks, but we're still looking at 10+ years before it's more than a pilot program to do driverless cars in more than a handful of places.
     
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  4. mongo

    mongo Well-Known Member

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    Did he said cars would sell for $250,000? Or did he say they would become appreciating assets with a value (worth) of $250k?
    Huge difference.
    A car that can make you money (with minimal effort on your part) is worth more than a car that cannot. Could Tesla also raise the sales price? Sure. However, raising the price to the projected income/ worth level (break even for purchaser) is not a realistic future to argue against.

    As for used ones selling for more than new, that is a common effect for scarce resources (concert tickets, new Tesla models, real estate). Production rate implies scarcity.
    Even as it is now, Tesla can take non FSD trade in Teslas, unlock FSD and sell then for more. Increase in value.


    A $250K Tesla? Three Factors That Support Elon Musk's Spectacular Claim | Inverse
    Sure, eventually, the market will saturate and the addition of more robo-taxis (rt) will reduce income per rt. However, as long as a vehicle makes money for the owner, it is an advantage over a non-rt. That tipping point will favor Tesla as the owner of the rt fleet (over someone with, say, 10 rts) due to full revenue recognition, self-insurance, at cost maintenance, and intial vehicle cost. So a full time rt may very well have the capability to earn Tesla $250k over its life span.
     
  5. winfield100

    winfield100 Active Member

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    @Big Toys @Donn Bailey
    hey there big guy. hows it hanging? See you have a new "nome de plume"
    howz it going on "Sleeze Kinky Ralphing Alfalfa"
    You guyz still talking on the porceline throne?
     
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  6. ggr

    ggr Roadster R80 537, SigS P85 29, M3P 80k

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    Maybe a bit of both. Look at the price of Taxi Shields in New York City a decade ago (that is, pre-Uber).
     
  7. Dr. J

    Dr. J Member

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    That is a distinction without a difference. If something is worth $250K, and it changes hands, absent extraneous factors (information asymmetry, etc.), it will sell for $250K. I don't get your point.
     
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  8. mongo

    mongo Well-Known Member

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    If the cost of the item at purchase equals the max return you may get from it (over its useful life), then your net gain will be zero or less. That is a bad investment since there is no upside for you.

    If there was an item with a 10 year life that would net you $25k a year, you would not pay $250k for it since you would never see a positive return. Sales price must be lower than total return to be worth buying (see also business franchises).

    The price of normal cars did not increase due to the ability to use them as taxis/ uber/ lyft. Buying a qualifying Uber black vehicle could allow you to make $90k a year in NYC (at 40 hours a week). Double that across 2 drivers, and having that car is 'worth' $180k a year (offset by $60k of minimum wage alternative job). But cars do not cost $120k × 3 years.

    Further, insurance would be untenable if GAP had to cover all future earnings of a vehicle.
     
  9. googlepeakoil

    googlepeakoil Member

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    I don't / haven't used an Uber / Lyft. But I recall on a conference call 3 years ago Elon and co giggling about "something" coming in the future - and hinting at it being their own "Uber" with lots of "no comment", and something about Tesla not allowing Uber drivers to buy their cars? Presumably because they had their own system planned. This was a bit before master plan v2 if I recall. Back then FSD was only 1-2 years away also ;-)
     
  10. googlepeakoil

    googlepeakoil Member

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    Self-driving is hardest to achieve in towns and cities - I think that's a given.
    Yet to achieve a robo-taxi fleet you need to do towns and cities, not just highways! That means coping with lots of things it can't cope with:
    roundabouts - but maybe less common in the US.
    lanes merging and disapearing
    people
    roadworks
    vandalism and theft
    giving way to ambulance and police cars
    pedestrians waving you out
    oh, and legislation, and being so perfect that you can defeat all the $100m lawsuits where a Model 3 runs over someone's dog or worse. I imagine the oil industry will do a lot to block automation of electric self-driving cars with lots of lobbyists.
    Also the public are not ready to believe in self-driving cars. They barely trust Elon. In the UK he's just that bloke who accused that hero caver of being a pedo! He dug himself a hell of a hole with those comments. The caver has been knighted!

    Elon's been seeing the behind-the-scenes stuff on Tesla automation and not really thought about legislation.
     
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  11. wdolson

    wdolson Supporting Member

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    Roundabouts aren't common in the US, but the local area has become enamored with them. They put in 4 when rebuilding the access to the highway and now they want to put in a couple of roundabouts on the highway further down.

    Tesla has combined the idea of electric cars and self driving cars, but the two are separate things. A lot of the legacy car makers are working on self driving ICE, though the economics of self driving ICE for robo-taxis and such get eaten alive by electric cars. I don't see the oil industry fighting automated cars all that much, but anybody who drives for a living will be fighting and in the US the Teamsters (truck drivers) are one of the last strong unions.

    I feel the most for ride sharing drivers. They are trying to make ends meet by driving part time, but the company they work for is actively trying to make them unemployed. It's part of their business plan. It would be like YouTube trying to put all their video makers out of work.

    Another thing automated cars will have to deal with more is human mischief. People being people, they will do things with automated cars they wouldn't do with human driven cars. Passengers in robo-taxis will be bigger slobs. And on the street people will do things to bully the cars or try to mess with their sensors. Messing with them will range from just trying to do things the car isn't programmed to expect to actual counter measures to mess up the cars.

    Some hacker is going to figure out how to jam the lidar/radar on automated cars causing them to get confused. Other tricks would be to generate rogue ultrasonic signals to confuse the car into thinking there are objects near that aren't there. Less sophisticated attacks will be doing things like throwing balloons full of something opaque like paint on the windshields. Those are just the things I could think of off the top of my head. In the real world I'm sure the mischief makers will think of far more than I did.

    These navigation systems are going to rely almost exclusively on GPS. What happens if that network is hacked or goes down for some other reason? Some people have raised the warning that a solar flare that hits Earth could disable a significant number of satellites. A severe solar flare in the 1800s affected the telegraph network. That's how we know what a solar flare can do to communication. We haven't had one as big since, but it happened before and will probably happen again.

    A moderate solar flare with a direct hit on Earth may not affect many systems on the ground, but could blow out quite a few satellites. Satellites' electronics are hardened to deal with the harsh environments of space, but there are limits to what they can manage.

    I remember when a single satellite that processed credit card transactions went down in the 1990s. That was annoying, but for a few weeks using some credit cards was hit or miss. If GPS was disabled or working at reduced capacity, it would be difficult to navigate for those who use GPS systems every day, but with humans driving vehicles, we'd manage to get from point A to point B. With automated vehicles, there is no plan B other than put drivers back in them. Cities would be paralyzed and essentials like food would get to be a problem after a few days.

    A large satellite outage would last months if not years.

    What becomes a problem is either the thing you never considered or the thing your unprepared for. With the planned, sudden change to the entire transportation network, there are lots of things we need to think through.
     
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  12. sixela

    sixela Member

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    Not all of his loyal customer base fail to see the difference between facts (and the driving experience) and marketing hyperbole. I used to work for a Silicon Valley computer manufacturer, and that also trained me ;-).
     
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  13. Orbit

    Orbit Member

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    Elon's whole point is scarcity.
    Why would you assume no scarcity on a revolutionary and lucrative product that is difficult to scale up in production, and would be replacing a global fleet of over a billion units?

    You can't buy a new one for 50k if there is a multi year long waiting list.

    I think you are underestimating how revolutionary an actual Robotaxi would be.
     
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  14. Orbit

    Orbit Member

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    You go to the casino, walk to the roulette table, and you place $10K on number 5. Your return will be up to $350K (ie. could be as high as 35x).
    Don't want to play? Don't you trust the newspaper when they reported that an analyst reported that the casino said that every round, your chips value will go up by up to 35x as you land on winning numbers? Are you not a true believer?


    You want someone to invest based on what Elon said?
    Ok, so what exactly did Elon say? What qualifiers did he use? Did he qualify it based on his prediction with a particular degree of confidence that within 2 years Tesla alone would have Robotaxis on the road with regulatory approval?
    The exact details matter.
    Based on your link, you are expecting people to invest based on what an article said about what an analyst said about what Elon said.

    You are asking people to be a true believer in the article, not in Elon.
     
  15. Dr. J

    Dr. J Member

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    But a Robotaxi is not a special car model--it's a Tesla, and they're making, what, a couple hundred thousand a year, and more if they can sell them? The only scarcity issue will arise if people don't add their cars to the robotaxi fleet. Even then, if it's really lucrative, more people will add their cars to the fleet, and the premium will disappear. That's how markets work.
     
  16. Orbit

    Orbit Member

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    I doubt you are taking into account how valuable a fully self driving car could be.

    What percentage of the world's cars are Teslas? About 0.02%.

    There are a billion vehicles in the global fleet, with over 500 million in USA and EU alone.
    Even with annual production of 1 million Teslas, what if Robotaxis / self driving cars are lucrative enough so that every year there is global demand to replace more than 1 in every 1000 vehicles?

    Long term it will balance out.
    Tesla builds more factories to ramp up supply.
    Competition catches up.
    That's what markets do. But that takes time. In the meanwhile, if demand is high enough, there will be a multi year transition period where the supply of cars is not enough to meet demand, even if all hardware capable Teslas are used as Robotaxis.
     
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  17. Dr. J

    Dr. J Member

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    I suspect the fully self-driving car (Level 5 robotaxi) will take a long, long time. The premium won't be there until it does. But it's the future, and no one knows what will happen.
     

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