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

[Fact Checking]

On a cash basis, I certainly think it's profitable and ramping up revenue is good for cash cycle and so on... it's just that cash flow on this basis isn't a very good proxy for the strength of the business so it is a strange thing to optimize for.

They are optimizing for 20-25% GAAP profit, which is ~30% cash margin.

Talking about the cash margin of the SR still makes a lot of sense:

• If what is pulling down SR margins is say a fixed depreciation cost of the new Grohmann Machine of $50m distributed among 10,000 Q1 units - that's per unit depreciation of $5,000 which makes the GAAP margin a useless metric.
• Once they are up to 50,000 SR units per quarter the depreciation cost drops to $1,000.

All the while GAAP margin with only depreciation backed out is probably the best metric to judge Model 3 SR profitability. I'd also back out stock comp.

 

[mongo]

OT

Fact checking says that Tesla has "reliably liquid cooled thermal environment which helps a lot" and he says they are drop-in replacements on the S, X and 3.

Seems that Mongo is saying that the present S and X do not have liquid cooling at the board even though the 3 does. I don't know about the S and X but I do think the board is the same among the present S, X and 3 so whatever today's board requires seems like the new NN chip set should support.

I would like to have confirmation that the S and X do not have liquid cooling in the present board and if that is correct then the term "drop-in" may be overly optimistic for the S and X.... unless the liquid cooling is not required or there can be some other clock speed adjustment that tempers the need for liquid cooling or something else (ie a fan).

To expand on this a bit. It is my expectation that every new design will have a better future model to build toward. Each new design builds on assumptions and they are better in every iteration. S & X may be able to fully support this new NN board but if it becomes 4 NN chips then that probably won't be supported.... probably not even the present 3 but perhaps in the Y (it's a newer design with a better set of assumptions).

You can look yourself at https://epc.teslamotors.com
No coolant line in the cabin, and here is the AP computer:

 

[neroden]

Granted, I am not a particularly bright man, but I can still tie my own shoes...I've got that going for me at least. lol

That said, could the lowering of the top end flagship Model S and X prices be simply to put tons of pressure on the legacy manufacturers where it hurts the most? In their cash cow high end vehicles. Seems to me this amounts to a 1-2 punch with the attack on their low end models by Model 3 and now undercutting the top end. Seems like a potential knock out blow to me.

Enlighten me...like I said, I ain't too bright.

Dan

My girlfriend thinks you're right. After a decade of trying to convince the other carmakers to mass-produce EVs, she thinks Musk has gotten mad at them -- he sounded mad at them in the Q3 conference call -- and just decided to kill them. They simply cannot produce comparable EVs at the price point he's producing; they cannot make money on gasoline cars above the price point if Model S & X are cheaper. Peak ICE car sales have already arrived. This puts the incumbents in an invidious position, and it looks like he's going in for a death blow.

 

[avoigt]

US cars are now #1 in Germany by growth. Quite impressive.

Its a YoY comparison of Jan-Feb. Note that the 3 is in delivery only since Feb 13th and this are likely not Mustangs that made the difference.

People will soon realize what is happening here....

 

[Barklikeadog]

Granted, I am not a particularly bright man, but I can still tie my own shoes...I've got that going for me at least. lol

That said, could the lowering of the top end flagship Model S and X prices be simply to put tons of pressure on the legacy manufacturers where it hurts the most? In their cash cow high end vehicles. Seems to me this amounts to a 1-2 punch with the attack on their low end models by Model 3 and now undercutting the top end. Seems like a potential knock out blow to me.

Enlighten me...like I said, I ain't too bright.

Dan

If the CEO would answer a simple question about demand, you could be enlightened.

 

[j6Lpi429@3j]

It really doesn't matter even if TSLA lose money on the SR model. Its classic inverse decoy pricing. They lure you in with an incredibly cheap car, and then once you are in the store they encourage you to buy something better. As long as the profit from people who buy SR+ or even higher exceeds the losses from total bare-bones SR sales, its a financial win.
And super-long term, those people who buy SR might have a better job/more income in future, and are very likely to stick with the brand. How many people will buy an SR in the first job/2nd job and an S/X/P3 a decade later?

 

[Remus]

Amazon promised "guaranteed two day delivery" and then shipped product to me in four days. Recently. Apparently companies can blow this sort of stuff off for a very long time.

That said, yes of course Tesla should fix it.

Only recently?
It happened to me in the last four years, quite often actually For three times the goods didn't arrive after a week and I have to call them to find out what's wrong. Twice they corrected by making another shipment to me overnight. One time they can't even do that anymore just refunded my money.

 

[Cosmacelf]

This is explicitly against SEC regulations, so I repeat, WTF, SEC.

It’s Chinatown, Jake. Regulatory capture. Analysts need an edge so that people pay for their analysis. The SEC isn’t about to upend the very rich financial industry. If they did, where would SEC bureaucrats get their $500K salaries from after leaving the SEC?

Real analysts, of course, get their info from elsewhere. Andrea James would get data from stores, suppliers and other arcane sources that she verified were reliable. I’ve seen other analysts construct very detailed spreadsheets tracking industries which give them 15+ days notice of anticipated earnings surprises. But these kind of analysts are few and far between.

 

[Artful Dodger]

Lol, on daze like these it's helpful to remember:

OT

Breaking: Researchers announce they've cured HIV in a patient using stem cells. Now THAT'S a good day!

Cheers!

 

[Fact Checking]

This has got me to thinking, how much of sales was actually allocated to the cost of the car, rather than to overhead (SG&A). Arguably some of it (commissions/bonuses).

Logistics (transportation) was mostly in CoG already (as per 10-K), and maybe detailing and delivery specialists are there too, if it's easy to bill their time to specific cars.

 

[jerry33]

If the CEO would answer a simple question about demand, you could be enlightened.

Why give away strategic information to your competitors? Tesla doesn't need Wall Street financing at this time, so there's no reason to give out this information.

 

[neroden]

It’s Chinatown, Jake. Regulatory capture. Analysts need an edge so that people pay for their analysis. The SEC isn’t about to upend the very rich financial industry. If they did, where would SEC bureaucrats get their $500K salaries from after leaving the SEC?

Yeah, the thing is... I don't think the judges are in on the scam. This gives an avenue to nail the corrupt people at the SEC.

Real analysts, of course, get their info from elsewhere. Andrea James would get data from stores, suppliers and other arcane sources that she verified were reliable. I’ve seen other analysts construct very detailed spreadsheets tracking industries which give them 15+ days notice of anticipated earnings surprises. But these kind of analysts are few and far between.

 

[M3Rider]

Granted, I am not a particularly bright man, but I can still tie my own shoes...I've got that going for me at least. lol

That said, could the lowering of the top end flagship Model S and X prices be simply to put tons of pressure on the legacy manufacturers where it hurts the most? In their cash cow high end vehicles. Seems to me this amounts to a 1-2 punch with the attack on their low end models by Model 3 and now undercutting the top end. Seems like a potential knock out blow to me.

Enlighten me...like I said, I ain't too bright.

Dan

If they could deliver unlimited number of these then maybe, but everyone's saying they are 18650 cell limited to <100k cars max. If they can't sell more, they can't undercut others.

 

[EVDRVN]

Amazon promised "guaranteed two day delivery" and then shipped product to me in four days. Recently. Apparently companies can blow this sort of stuff off for a very long time.

That said, yes of course Tesla should fix it.

Did you get a refund on your free ship charges?

 

[Fact Checking]

Real analysts, of course, get their info from elsewhere.

Talking to management isn't a bad source of info though, especially if they manage to gain some exclusive information.

 

[AlMc]

No powder so this is ugly to watch

I am heavy cash and it is still painful to watch.

 

[Remus]

My Swiss ex-wife who is the tightest person I have ever known just ordered her Model 3. She got basic SR version (no +) but she blew me away by buying the most expensive paint which is red! I was sure she'd order standard black.

That line of thinking is valid. Here in silicone valley you often seen many model 3s in a parking lot and lots of them black and blue. My car is blue, finding it in the lot is harder now.

 

[Menifeer]

Granted, I am not a particularly bright man, but I can still tie my own shoes...I've got that going for me at least. lol

That said, could the lowering of the top end flagship Model S and X prices be simply to put tons of pressure on the legacy manufacturers where it hurts the most? In their cash cow high end vehicles. Seems to me this amounts to a 1-2 punch with the attack on their low end models by Model 3 and now undercutting the top end. Seems like a potential knock out blow to me.

Enlighten me...like I said, I ain't too bright.

Dan

I think it's fairly straightforward...

Tesla can't sell all the cars it can make at the old price. It's hoping to increase demand by dropping the price.

I don't accept the idea that Tesla would unnecessarily turn away relatively large sums per sale when it needs cash to support lots of things (SuperChargers, Service Center expansion, MY, semi, etc.).

 

[elasalle]

小特叔叔 on Twitter
The incorrect label is the most import one , like car ID which we used for registration . The incorrect part is Model 3 AWD have performance label. Like the mistake made in US before.

 

[Todd Burch]

Um, we're up to $277 now...about $7 above the low of the day and rising.