Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[mongo]

Note how closely new car purchase transaction price distribution is tracking income distribution.

Maybe it's too early for me to think/ read, but isn't that graph two independent data sets overlayed? The fact that median (modal?) values line up does not indicate which income level bought which price car.
It does show that the 35k region is the sweet spot though (at least in 2013)...

 

[ReflexFunds]

"200 KW is faster at 400v than 350 KW at 800v" <= this guy does not know what he's talking about. What else did he misinterpret?

Totally unreliable source. Dubious claim discounted.

Is anyone actually reading these claims? No Tesla battery supercharges below 250v DC. Thats the absolute rock bottom of the pack's (SOC near 0%) It's simple math 96 cells in series at min 2.6 volts.

At the top, 500 volts DC would be 5.2 volts per cell. The max allowable is 4.2 volts before damage occures and is recommended to be used only seldomly.

This is a bad joke by some tech-head. Critical thinking? absent.

I agree on on the 200kw vs 350kw comment, they are obviously confused somehow, i guess that are focussing on amps for some reason, but doesn't sound like they have a great understanding of the topic.
However, I don't think that necessarily discounts the factual information they quote. In fact, their relatively low understanding would seem to make it less likely that they just made up such thorough technical details.

I don't think the 180-500v range is necessarily an issue though. If all current Tesla vehicles are limited to 2.6 to 4.2 volts, that doesn't mean all future chemistries will be. Its also possible future vehicles have more/less cells in series. Even if they release a supercharger V4, I would presume Tesla wants supercharger V3 to be robust for the next 4-5 years at least, and it might not be too much of an added cost to give more voltage flexibility. Also makes it easier to bring in partners to join the network.

 

[Fact Checking]

Maybe it's too early for me to think/ read, but isn't that graph two independent data sets overlayed? The fact that median (modal?) values line up does not indicate which income level bought which price car.

Correct, the two data sets are independent, and the linkage doesn't follow automatically, but the inference is pretty common-sense IMO: car purchase prices are broadly tracking income levels, with a steep fall at below $20k new car prices and hard cutoff at around $13k for the poorest population who cannot afford a new car. (Again this is UK data - I'd expect the lower parts of the distributions to look differently in the U.S.)

But yeah, I presented that argument in a sloppy fashion.

 

[Pezpunk]

I take away that (a) a Model S refresh, or (b) a P110D/P120D is in the pipeline,

first of all, i think it'll be P130D minimum, and second, i don't think it's in the pipeline -- i think it's imminent. probably the "oh, and one more thing..." at the Model Y launch.

 

[schonelucht]

The figures in your post were false for the (many....) reasons @ReflexFunds outlined in the other thread which you didn't want to quote here:

Despite the other corrections, which I acknowledged, his original 'correction' was totally wrong and that got the number of informatives. etc...

Yeah, the only thing @ReflexFunds "acknowledged" that I can see is that your (bad) math adds up to the $1.1b figure, but he also pointed out gross sign errors and several methodological flaws. Why again didn't you post your corrected numbers?

I did actually but made a silly typo in doing it. Sorry about that. (#20700).

I.e. if we assume that after the seasonally slowest month of the year (January) Tesla delivered the same 11.5k units in February then they delivered around ~23k units in the U.S. alone, and at minimum a few thousand in Europe - which gives a total January/February global deliveries of around 30k units where customers already paid in full, generating about 2 billion dollars in cash - while the payables for the first 2 months of the year were not due to be paid yet. (And while solar and storage sales are slow seasonally, there's some trickle of income from there as well.)

Look, you clearly don't understand my method of working with the payables. Please review the conversation between @ReflexFunds and myself on the topic in the quarterly thread.

For Europe we start to have a good picture how many M3s were already delivered through official numbers. We stand at 1.5k with Norway and the Netherlands already accounted for. Let's say it's going to be 4k. But there are already 4 carriers unloaded in Zeebrugge carrying 1400 + 3x3k Model 3s. This means there are still at least 7400 Model 3s in transit within continental Europe. Wrt to Model 3 delivery numbers. 30k delivered plus 7 car carriers on route each carrying 3k cars (I believe you speculation is closer to 4k per carrier) plus the 7400 from above in transit. Subtract the 1000 or so cars in transit at EOY and that's 57400 Model 3s that had to be produced in the first two months, or better than year end guidance. Quite implausible.

Seasonally the "accounts receivable" peak from end of December which stood at almost a billion dollars would generate about ~$500m of excess cash in the first two months of the year, if we go by past seasonal patterns.

No, accounts receivable increased 30% in Q1 2018.

Plus there's 1-2 billion dollars in high value cars in transit with 99%+ historic delivery acceptance rates, i.e. which are close to cash equivalents, which can be used as collateral for deep short term credit lines to draw on to finance manufacturing output.

No, they are already encumbered as collateral for the ABL ('Credit agreement')

What matters to supplies, production and the delivery pipeline is net cash, not "unrestricted cash". Why you think that even a hypothetical $1.1b in unrestricted cash for a company that improved its balance sheet by billions of dollars since mid-2018 and which has another 0.5-1.0 billion dollars worth of already sold inventory value not on the balance sheet would be 'within weeks of bankwuptcy' is a mystery to me.

Please look up bank convenants.

 

[mongo]

I agree on on the 200kw vs 350kw comment, they are obviously confused somehow, i guess that are focussing on amps for some reason, but doesn't sound like they have a great understanding of the topic.

Based on full quote

A. No, I was told just a flat 200. That said, 200 at 400v is faster than the Taycans 350 at 800v

It seems more like a vehicle limitation comment. Sure I can connect a Bolt to my 320Amp mains, but that won't get me a 76kW charge rate

 

[UncaNed]

But note that in terms of air resistance more length is almost for "free" (a bit more parasitic drag), so making the Y longer would be desirable, cheap and increase utility (potential 3rd row) immensely.

That no auto manufacturer takes advantage of this possibility for "free" volume increase seems ludicrous to me. As I've posted before, why not give more leg/luggage room between rows, an extra 18" of trunk/cargo room, or add a 4th row?

Edit - IMHO, why even bother for only 10% bigger that model 3?

 

[mongo]

Correct, the two data sets are independent, and the linkage doesn't follow automatically, but the inference is pretty common-sense IMO: car purchase prices are broadly tracking income levels, with a steep fall at below $20k new car prices and hard cutoff at around $13k for the poorest population who cannot afford a new car.

But yeah, I presented that argument in a sloppy fashion.

Yah, gives good insight into distribution, however there is no good linkage. Based on the percentages, car sales can be caused by anyone in income bands to the right (higher than) of the vehicle price.
With a guide of 10% max monthly gross income to car cost (including taxes and insurance), it works out to a car that is about 33% to 40% of ones gross income (0 down). However, people can, and do, borrow much more...

Which all supports you original thesis

The problem is the many buyers who can normally only afford a $25k-$30k car and who are already straining their finances to get a $35k Tesla. For them a $40k car is simply not an option - and they possibly wouldn't get the loan to begin with.

People with a gross income less than the car price have a hard time getting that car (and perhaps shouldn't, but total cost of ownership is better with Tesla which changes the equation some). However, people can also save a little longer to get the extra 2k for the larger battery...

Thanks for following my side track!

 

[Fact Checking]

Look, you clearly don't understand my method of working with the payables. Please review the conversation between @ReflexFunds and myself on the topic in the quarterly thread.

I'll let @ReflexFunds speak for himself whether he agrees with your "$1.1b restricted cash flow with several hundreds of millions of dollars downside" conclusion.

Subtract the 1000 or so cars in transit at EOY and that's 57400 Model 3s that had to be produced in the first two months, or better than year end guidance. Quite implausible.

You are missing the following pieces of data:

• 56k production is broadly consistent with Carsonight's comments that Model 3 battery production at the Gigafactory was well above 6k/week in January and that it was 'flirting' with 7k/week at the end of January. That was back at the time of the Superbowl, i.e. February 3.
  
• The current VIN count for the quarter is at 109.2k, which suggests a Q1 production target of 92.8k units, which would map to about ~60k units made in the first two months assuming a bit of a ramp-up in January.
• Tesla significantly updated their year-2019 guidance. (I speculate it's for the following three reasons: they apparently managed to close a new long term contract with Panasonic for 18,650 cells, China tariff risks are receding, U.S. recession risks are much lower as well, they decided they can pull the trigger on the SR sooner.)
• Also note that the units made would be significantly higher ASP than the December production which primarily made RWD MR's and which closed with an end of year factory shutdown - i.e. the payables expansion would be larger than the pure unit count increase would suggest.

So 50k+ Model 3 production in the first two months of Q1 is quite plausible from two independent sources of data, and is not inconsistent with their updated guidance.

 

[mongo]

That no auto manufacturer takes advantage of this possibility for "free" volume increase seems ludicrous to me. As I've posted before, why not give more leg/luggage room between rows, an extra 18" of trunk/cargo room, or add a 4th row?

Length impacts turning radius, along with total mass which impacts both fuel economy and material cost. It also messes up the weight distribution especially on a front wheel drive vehicle with only the driver. For rear wheel, a longer wheelbase can require a 2 part driveshaft.

Fortunately for Tesla (and electrics),there is no driveshaft and the pack lives near the middle, so weight distribution can still be good. Turning radius, cost, and mass (thus range) are still impacted though...

 

[Fact Checking]

Yah, gives good insight into distribution, however there is no good linkage. Based on the percentages, car sales can be caused by anyone in income bands to the right (higher than) of the vehicle price.

I'll follow Occam's Razor there, barring any contrary data or plausible channel that would cause people with lower income levels to buy expensive cars disproportionately, or people with higher income levels buy much cheaper cars in a more skewed fashion than buying more expensive cars. I.e. my claim is not that people are precisely buying the car they can afford, but that their price decisions are broadly averaged around their perceived affordability levels and hence the two histograms can be lined up - like the authors of the original paper obviously thought they could do.

I'll grant that there's probably some age related skew though, independent of income levels.

 

[UncaNed]

Length impacts turning radius, along with total mass which impacts both fuel economy and material cost. It also messes up the weight distribution especially on a front wheel drive vehicle with only the driver. For rear wheel, a longer wheelbase can require a 2 part driveshaft.

Fortunately for Tesla (and electrics),there is no driveshaft and the pack lives near the middle, so weight distribution can still be good. Turning radius, cost, and mass (thus range) are still impacted though...

Last I checked, turning radius didn't discourage F-150 sales. Length hardly affects these things at all relative to benefits. Why bring up obsolete drive shafts? Longer cars are mostly win-win, little extra cost.

 

[jerry33]

The "prairie states" and neighboring sparsely populated areas have a population of about ~10 million people, which is less than 5% of the U.S. population.

True, but I believe you'll find that many have more disposable income due to the lower cost of living and more already-paid-for assets, so perhaps they are actually closer to 10% of the total disposable income. I could be wrong about this, but based on my frequent visits there (and the stereotype joke: "The average stereotypical Nebraskan makes the average stereotypical Scotsman look as if they were a spendthrift"), I don't believe I am far off. Also folks from there, such as myself, really, really hate purchasing things where all you get is a receipt (such as gas and electricity).

 

[mongo]

Last I checked, turning radius didn't discourage F-150 sales. Length hardly affects these things at all relative to benefits. Why bring up obsolete drive shafts? Longer cars are mostly win-win, little extra cost.

I'm sorry, was your question rhetorical?

You asked why they haven't done this, I gave you valid reasons (I've worked on new vehicles). Not everyone wants the turning radius of a truck. Length impacts ease of parking and fitting in a garage.

Driveshafts have been an issue to previous production.

That no auto manufacturer takes advantage of this possibility for "free" volume increase seems ludicrous to me

Mass and cost are still concerns.

Additionally, CUVs tend to share platforms which limit the size.

 

[Fact Checking]

Read the bloody story again. She didn't say "if" such and such, she said "Tesla will". That's demonstratively false.

Ok, this is rather surreal, are we even talking about the same story?

Here's the article that Dana Hull wrote for Bloomberg News on December 6:

"Tesla Plans to Use Stock-Cash Mix to Pay Off March Debt"

By Dana Hull and Molly Smith

"Tesla Inc. has notified holders of bonds due in March that if they elect to convert the debt, they’ll be paid with a 50-50 mix of cash and stock, according to a copy of the settlement notice seen by Bloomberg News."
​

The story clearly said "if they elect to convert"...

Also note that:

• The "settlement notice seen by Bloomberg News" wording means this is not only the word of Molly Smith and Dana Hull, but also that of at least one higher level Bloomberg editor having seen documentary evidence of that settlement notice.
• Tesla declined to comment, while if the story was false, they could have made a big fuss about Bloomberg News lying to investors, and they could have produced the real settlement notice.
• But neither Tesla, not any of the numerous institutional bond traders who were notified found it newsworthy to refute an easy to falsify lie about material non-public news by Bloomberg News.

And it's disingenuous to continue this while ignoring my (and others) comments that Elon said they will pay the bond in cash both before and after the Dec story by Hull.

Also note that Elon didn't refute it either, this is what he said in the Q4 conference call:

"This means we have enough cash to settle our convertible bond that will mature in March."​

Note that Elon didn't reiterate that they will settle it all in cash. He only stated that they have $920m in cash, which is not the same claim.

While I caught Dana lying before and wouldn't trust her with a 10 foot pole, for now I see no evidence that she made a false statement in this story, and I can very much see Tesla's board preferring a small $460m-ish equity sale at $400 TSLA levels with maybe $3 of dilution to every common stock, which that 50%/50% conversion decision would probably have amounted to.

Anyway, this is now moot that the conversion price was well below the ~$360 default conversion rate, but it's rather weird that you'd accuse me of not reading the article.

 

[Fact Checking]

True, but I believe you'll find that many have more disposable income due to the lower cost of living and more already-paid-for assets, so perhaps they are actually closer to 10% of the total disposable income. I could be wrong about this, but based on my frequent visits there (and the stereotype joke: "The average stereotypical Nebraskan makes the average stereotypical Scotsman look as if they were a spendthrift"), I don't believe I am far off. Also folks from there, such as myself, really, really hate purchasing things where all you get is a receipt (such as gas and electricity).

Found this interactive per U.S. county disposable income map:

Interactive: Visualizing Median Income For All 3,000+ U.S. Counties​

There's definitely islands of prosperity such as a few lucky counties in Nevada that got a Gigafactory built next to them , yet around half of the rural counties by area are what I'd call relative poverty, even if we adjust by living expenses.

But it's not black and white, I stand corrected there.

I'd also say that Tesla probably wouldn't have to build too many Superchargers to be able to claim: "there's a Supercharger within 150 miles public road driving distance from every point in the contiguous U.S."?

 

[Bobfitz1]

Elon new girlfriend ! Duhhh

Puh lease. She prefers to be called the Artist Y!

 

[Fact Checking]

Mass and cost are still concerns.

Additionally, CUVs tend to share platforms which limit the size.

I'd also say that for Tesla there's probably also an aesthetics argument: height and width define a "maximum length" that is still visually pleasing, and I don't see Franz von Holzhausen ever compromising on such constraints, nor do I see Elon risking Franz's early departure by overruling him.

TL;DR: I think we can count on the Model Y looking drop dead gorgeous.

 

[Earlian]

We can be happy, that the Tesla Model Y - event is long known* for being placed in the middle of March 19, so it can’t be associated with this event (and luckily Tesla didn’t chose 15-17):

March, 15th Global Strike for Future
FridaysForFuture



This time the youth will make a lot more noise. You’ll believe it when it’s there!

Following “Plant a seed day” on March 20th, I’d say some parents may think about a less polluting car.

*May, 24th, 2018, Elon Musk Twitter:

 

[TheTalkingMule]

I'd like to see us touch $275 at some point prior to Model Y announcement. Now seems unlikely.