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

[Lycanthrope]

So on the subject of shipping cars from Shanghai to Europe... The Model 3 is still inexplicably expensive over here. The SR+ starts at 40.000 EUR net (so before VAT/sales tax or any state incentives) which is about 47.000 USD. That is 9k more expensive than in the US. Sure, the EU has a 10% tariff on US cars and there is some transportation cost as well, but still it is much.more expensive than in the States.

So if they can decrease the SR+ price because of Chinese LFP batteries and Shanghai production costs - assuming tariffs and transportation stays the same - it would really boost sales.

And GF4 can't come soon enough..

 

[ammulder]

Certainly I'd expect stuff like interstate exits consolidating to 1 or 2 gas stations instead of 8 or 10...

But as you point out, EVs will still be a tiny fraction of TOTAL cars on the road at that point.

Let's consider just the US for a second... ~18 million new sales a year... but a fleet of ~280 million vehicles.

So you're talking 15.5 years to turn over the whole fleet on average, and that's if -100 percent- of new car sales were EVs ever year for 15.5 years.

In 2020 they're estimated to be what 3% maybe?

Sure, but this is how the disruption thing manifests. Right now, in my little suburb, there are at least 20 gas stations within ~10 minutes of me. Wherever you are, north, south, east, or west of my house, there's gas a moment away. You can pick the station that's super-close but expensive because it's not on a main road. You can pick the one with better breakfast sandwiches, or the one with Syrian food, or the one with cheapest propane exchange, or whatever.

So let's take 3% of the consumers away, because they bought EVs. Maybe a couple stations on the edge get desperate, or close. Food and propane is safe, but the impulse purchases just dropped. The ones with a 10'x10' convenience area and a cashier behind 1" plexiglass maybe have to raise prices substantially or go under, but the ones with expansive deli counters are safe. Now it's not quite so convenient for some people to get gas -- maybe they have to go 5 minutes out of their way or pay more.

Then take 5% of the consumers away.

I don't think you have to go very far before half the gas stations close. As an owner, why do you want to be in a market with 20 options to service a declining number of customers? If your convenience revenue drops, you have to raise gas prices, and then people will happily go 5 minutes out of their way to the "Super WaWa" (it's a Northeast US thing) with better food AND cheaper gas.

So who cares if there are only 10 convenient stations instead of 20? Well, there are already occasionally waiting lines for gas at the Super WaWa. Not much, one car waiting per pump at peak times. But take half the competition away, and then what? Now lines are bigger. They don't have a big enough lot for 3 cars waiting per pump. There could be overflow onto the main road, like there sometimes is for the big/cheap Car Wash line after bad weather.

It's not like everyone loved filling up with gas before. Now you have to wait extra long, or pay 10 cents more per gallon. It's not a lot, but it's galling to have to pay more just because you don't have the time or patience to wait at the good station. Plus, wherever you go for a shorter line, the food isn't as good. Even at the Super WaWa, if you shop while you fill the tank and don't get back by the time it finishes, you may take some crap from the 3 people waiting for your pump. Who needs to go through all of this only to be abused by strangers too?

So sure, it won't hurt much if the highway stops have 1-2 stations instead of 3-5. But I don't think that's where the ICE pain will be.

Goes back a bit to who is supplying the other 10 million EVs.... If Ford manages to get a successful, profitable, electric F-150 out there they can probably still keep kicking out $15,000 fiestas to undercut 25k EVs too.

If GM has a successful and profitable EV Hummer maybe they can do the same.

Maybe... except the US OEMs can't bail out of the small-car market fast enough. It's not good for them to subsidize small-car losses with pickup profits, and small cars aren't going to be getting more profitable if they need higher efficiency and better tech and all the rest. The OEMs will just dump the small cars and stick with the pickup profits, maybe offset by a handful of compliance EVs as usual. Or they'll make their stand on large SUV profits, if EV pickups turn out to be a thing.

Every time we drive substantially west, we go past that monstrous abandoned Cruze factory. I mean, it's supposed to be the Lordstown Motors EV factory now, but the last time we went by there were still Cruze signs. It's kind of sad, really -- you can tell from the massive, colorful signs out front, on the side of the building, and everywhere how proud of that factory the town and the company both were. And now it's dead and gone... and those signs are the gravestone for US small car manufacturing.

 

[mrdoubleb]

And GF4 can't come soon enough..

Yeah, but they will start with Y, so that's not going to help Model 3 much. Not sure when phase 2 goes live, but in China that took an additional year.

 

[jerry33]

Just because they exist doesn’t mean they’re not obsolete. I’m a fire fighter and we still have Nokia flip phones in the fire engine. They’re completely obsolete but they’re still around because for some purposes they don’t need replacing.

True, but flip phones don't harm anything either.

 

[jerry33]

Oh, the sad part is their R&D budget has been so misspent over the past few years, maybe last few decades...

GM and Tesla Research and Development (R&D) Spending Comparison

"As seen from the chart above, GM spent quite consistently on R&D, averaging around $7.4 billion per year over the past 7 years. On the other hand, Tesla’s spending on R&D had been steadily increasing during the same period and reached record high at $1.5 billion in 2018 before declining slightly to $1.3 billion in 2019."

You can't just throw money at a problem, there has to be some intelligence.

 

[jerry33]

People don’t want cars with 500,000 mile exteriors and interiors was my point even if the car still works. Car sales will go down some, but not that much because cars last longer.

Sure they do. Even if they don't keep the car a 500K mile interior and exterior means more resale value. I kept the first new vehicle I purchased for twenty years (no idea how many miles as the odometer stopped working around 150K). You shouldn't have to purchase a new car every few years. I would not have traded in the 2013 S this year were it not for the additional safety features and ease of entry in the X.

 

[UCF3]

So let's take 3% of the consumers away, because they bought EVs. Maybe a couple stations on the edge get desperate, or close.

Then take 5% of the consumers away. I don't think you have to go very far before half the gas stations close.
.

I appreciate your comment but hasn’t Covid taken away 25% or more of consumers at gas stations? That’s six months straight of less people driving to work or vacations. I’m not sure about your area but we haven’t lost a single gas station because of that 25% drop.

 

[jerry33]

Maybe... except the US OEMs can't bail out of the small-car market fast enough. It's not good for them to subsidize small-car losses with pickup profits, and small cars aren't going to be getting more profitable if they need higher efficiency and better tech and all the rest. The OEMs will just dump the small cars and stick with the pickup profits, maybe offset by a handful of compliance EVs as usual. Or they'll make their stand on large SUV profits, if EV pickups turn out to be a thing.

The Cybertruck will almost certainly remove the profits from F150 size pickups, which constitute the majority of pickup sales.

 

[jerry33]

I appreciate your comment but hasn’t Covid taken away 25% or more of consumers at gas stations? That’s six months straight of less people driving to work or vacations. I’m not sure about your area but we haven’t lost a single gas station because of that 25% drop.

Yet. Remember many of them have received some stimulus money and are just barely hanging in there.

 

[kbM3]

Yeah, but they will start with Y, so that's not going to help Model 3 much. Not sure when phase 2 goes live, but in China that took an additional year.

They said Berlin will start with Y, but you can bet 3 won’t be far behind. They have to be careful about the Osborne effect.

 

[ammulder]

The Cybertruck will almost certainly remove the profits from F150 size pickups, which constitute the majority of pickup sales.

I'm hopeful, but I don't think that's a given. There's a lot of brand loyalty in the pickup space, and the "F150-killers" have done about as well as the Tesla-killers. I think EVs in general and Tesla in particular still have a lot to prove in the pickup space, and it's not out of the question that EV pickup range would be severely affected by a heavy load or towing, which might leave them a lot less competitive than they appear on paper -- especially if they compensate with bigger batteries that come with longer charge times. But I'm sure Tesla is aware of this, so... as I said, I'm hopeful.

 

[jerry33]

I'm hopeful, but I don't think that's a given. There's a lot of brand loyalty in the pickup space, and the "F150-killers" have done about as well as the Tesla-killers. I think EVs in general and Tesla in particular still have a lot to prove in the pickup space, and it's not out of the question that EV pickup range would be severely affected by a heavy load or towing, which might leave them a lot less competitive than they appear on paper -- especially if they compensate with bigger batteries that come with longer charge times. But I'm sure Tesla is aware of this, so... as I said, I'm hopeful.

It's only going to take one or two percent reduction to eliminate the profits.

 

[Artful Dodger]

Why the S&P 500 Can’t Afford to Keep Tesla Out | Barron's (20 min ago)

"Tesla (ticker: TSLA) qualified for inclusion in the S&P 500 when it reported a GAAP (generally accepted accounting principles) profit for the second quarter of 2020."​

Cheers!

 

[UkNorthampton]

I appreciate your comment but hasn’t Covid taken away 25% or more of consumers at gas stations? That’s six months straight of less people driving to work or vacations. I’m not sure about your area but we haven’t lost a single gas station because of that 25% drop.

Hope of a return to normality. Post rise of EVs, that won't be rational. Drip, drip, drip and no light at end of the tunnel for ICE services

 

[JohnnyEnglish]

They said Berlin will start with Y, but you can bet 3 won’t be far behind. They have to be careful about the Osborne effect.

Not sure there is any urgency for producing 3 in Berlin. The 3 production capacity in Fremont and Shanghai is probably sufficient for the world market. If the $25k smaller car (better suited to the European market) is only 2 years after Berlin starts model Y production then it seems likely that the focus will be on that as the second mass market vehicle produced in Berlin. It would be nice if some Semi production (and possibly the European version of Cybertruck) came prior to that.

 

[Beltsbear]

Sure they do. Even if they don't keep the car a 500K mile interior and exterior means more resale value. I kept the first new vehicle I purchased for twenty years (no idea how many miles as the odometer c c c c c stopped working around 150K). You shouldn't have to purchase a new car every few years. I would not have traded in the 2013 S this year were it not for the additional safety features and ease of entry in the X.

Wut? If I own a car that is 10 years old but has a crazy high resale value it means it is easier and more likely for me to buy a new car. On top of that more cars at 15 years will be disassembled for batteries. In the extreme, conversation companies may source 15 year old cars in mass. There may be a market to actually refurbish cars as well, especially for popular cars like the 3 and Y will become.

TLDR: long battery life will only reduce new car sales a bit , not nearly as much as the lifespan would indicate. FSD is a very different story and that might hurt new car sales.

 

[mrdoubleb]

They said Berlin will start with Y, but you can bet 3 won’t be far behind. They have to be careful about the Osborne effect.

Sure, but they haven't even started building the buildings for phase 2 they just started clearing the trees for that. So far they said phase 1 is for Model Y. That may or may not be true.

 

[mrdoubleb]

Not sure there is any urgency for producing 3 in Berlin. The 3 production capacity in Fremont and Shanghai is probably sufficient for the world market. If the $25k smaller car (better suited to the European market) is only 2 years after Berlin starts model Y production then it seems likely that the focus will be on that as the second mass market vehicle produced in Berlin. It would be nice if some Semi production (and possibly the European version of Cybertruck) came prior to that.

I for one would love to buy a Model 3 for as much as the Americans do (plus our beautiful 27% VAT) but right now would be paying net 9k USD extra on top of the US price. This also means the car falls outside the upper limit of our EV incentives... So a Model 3 SR+ costs exactly 2x the VW ID3 base (smaller battery) here.

 

[Jackl1956]

The Tesla trade is the best way to invest in a solution to global warming

Overcoming climate change.

 

[gabeincal]

Good Morning from a Bay Area Supercharger!

Notice the closed retail mall store behind. Their name was Last Call. Ironic...