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

[Chunky Jr.]

I wonder how much of the store experience they could recreate with a good chat bot on tesla's website. The bot could answer the most common questions and allow the user to schedule a test drive with either another owner, or going to a service center.

The stores must have seemed like a good idea, but once they looked at the data they realized it wasn't worth the cost. I can't imagine they would do this without some data backing up the decision. They really botched the communication of the closings though - they could have made it sound like a feature rather than a bug.

 

[SOULPEDL]

I do believe that Tesla's mission is focussing them on killing traditional Dealers and demonstrating they can make a profit with the Model 3.

I see it slightly differently... the Dealerships represent an additional cost that must be overcome to shake the status quo in general (to your main point). Nothing against Dealers, it's just a cost thing. If they could make it cost-effective, hey... keep the dealers. I like test drives.

I'm not sure I would buy any other car without a test drive (although I've bought plenty of boats on looks). And THAT stems from trust in the brand. However, I could see someone buying an Ford F150 on new features since they already love the one that needs replacing (and because it has boat launch technology for those clueless to handle such a task).

Fun fact, I just learned that 96% of drivers think they are better than the average driver. Another fun fact, my buddy just sold TSLA today after holding it for only 2 months. Wow, maybe I'll buy his shares...

 

[Nocturnal]

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.).

It's possible that demand hasn't dropped at all but that they are trying to increase demand further because they are able to produce so many more.

 

[kyzhk]

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.

Perhaps long range AWD shares the same hardware as performance, only software locked?

 

[ZachF]

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.

Lets not forget that the vast majority of these analysts cant even beat the S&P, and it gets even worse when you factor in the management fees.

The entire financial system needed an enema in 2009. Instead it's bloat was papered over with public funds and printed money... It's probably 2-3x as large as it needs to be. They do less and less every day to aid in price discovery, and and do little but add costs.

 

[Hank Moody]

Maybe I'm too optimistic but I do not think the price reduction was about demand at all. It seems to me that it was all about model Y.

Unveiling MY without a 35k version of M3 being available would get enormous backlash in media that would overshadow everything positive about MY itself. So they had to * start * producing 35K M3 even though they still can comfortably sell only higher priced version. And with 35k M3 version available and 40-60k MY coming soon it's logical to cut the price of SX which would be more than twice as expensive without that much additional value.

This also fits perfectly with Elon's "will not reach volume production until mid year" tweet.

 

[elasalle]

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.).

EM - "People love our cars, but they cannot afford our cars" ...
How they made the car more affordable (in this case by closing stores) ... will be irrelevant in long term.

This also means that all the Engg/Productions efficiencies that still need to be tuned are still in play ...

 

[dw4ngg]

Barely anyone will buy a stripped down $35k car. Most will at least add a paint option or go for SR plus

People would if Tesla made EA and FSD a subscription-based serviced vs one-time high fixed cost for customers. That’s a multi billion dollar market cap idea right there.

 

[capster]

Here's one explanation:

1. Demand for the SR Model 3 is off the charts at $35,000 base price, but SGA and manufacturing costs are currently too high, so:

...

5. The decision was made (reluctantly, I expect) to close most of the stores as a means of achieving the necessary cost savings.

...
This too shall pass.

No reason to believe they are not still on their targeted cost curve for SR. We shareholders would expect Tesla to seek big cost reductions elsewhere, too.

There are three Tesla stores within a 15 minute drive from my house where I also have my start-up, yet I ordered on-line with no test drive. Then, I wondered why Tesla delivered my car to my house last August instead of having me come to them which I indicated to them that I was more than willing to do.

Now, I’d be surprised if they had not been A/B testing brick vs click so to speak for some time and are confident of the results. First principles and all, you know.

Yes, this too shall pass. I’m not going to part with a single one of my golden tickets.

 

[neroden]

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.

Ding ding. Screwed up the Monroney sticker! Like they did in the US before.

 

[neroden]

Maybe I'm too optimistic but I do not think the price reduction was about demand at all. It seems to me that it was all about model Y.

Unveiling MY without a 35k version of M3 being available would get enormous backlash in media

This is absolutely true.

that would overshadow everything positive about MY itself. So they had to * start * producing 35K M3 even though they still can comfortably sell only higher priced version. And with 35k M3 version available and 40-60k MY coming soon it's logical to cut the price of SX which would be more than twice as expensive without that much additional value.

We are finally seeing some loss of S/X demand to Model 3, I think you're right about that.

 

[SOULPEDL]

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

This is what you should do with that cash...

 

[neroden]

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.

Silicon Valley, I assume. Silicone Valley is NSFW.

 

[sundaymorning]

I'm actually astounded at the amount of panic over the store closures -- and I think it is mostly over the store closures, after reviewing all the chatter. (Some over the cuts to car prices, but mostly over the store closures.)

To me this reminds me of the "SolarCity is an albatross which will destroy Tesla" period, when even bulls were panicking. It wasn't and it didn't (it required some serious financial analysis to figure that out).

The stores were just not producing results, and I've thought Tesla had too many for a long time, which is why I haven't been reacting the same way. One set of calculations suggests that they were adding *$2500* to the cost of every car sold through a store. I mean, seriously!

Investors should ask themselves if they were a customer, would you rather get to sit in the car at a boutique, or save yourself $2,500 by ordering online?

For me it’s a no brainer, I can use that $2,500 to upgrade to Autopilot.

 

[lascavarian]

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

Thanks, that does have an uncanny resemblance to a couple fans. Not a particular fan of fans as it turns out. If they do mod in a liquid cooling solution, it might be an improvement in reliability as well as performance! Thanks!

 

[Zaxxon]

We are finally seeing some loss of S/X demand to Model 3, I think you're right about that.

Sure seems like we should be. Nothing against the S/X--they're great cars. But it seems unquestionably true to me that some significant subset of S/X buyers bought them not because they specifically required a giant sedan or an SUV, but because they wanted an EV that didn't suck. Today, if you're not tied to the form factor or ludicrous speeds, the Model 3 at half the cost is tough to ignore.

 

[EVDRVN]

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.

Women are not cheap when it comes to colors....

 

[jhm]

Still hearing lots of swirl about how the price drops must mean a lack of demand. Well, that's one possibility. The other possibility, and the one that I am leaning towards, is that Tesla is shifting their supply curve.

Tesla is at a stage where economies of scale are still very important, and where gaining and holding market share is critical. Cutting costs and then having a corresponding round of price cuts is a classic example of shifting your supply curve to the right. Lower price, higher quantity of units sold and at a margin somewhere similar to previous levels.

View attachment 383199

Yes, when price falls as quantity increased, it means the supply is increasing. Tesla is simply willing to accept a lower price to sell more. That is a very concrete increase in the supply curve.

To make this clear, if both price and quantity fall, this would be indicative of loss of demand. This seems to be happening with ICE sales. As ICE demand decreases we should expect to see a decline in the price of ICE vehicles to accompany declining ICE sales. By contrast EV sales are growing double digits just about everywhere, and Tesla is a key contributor to the expanding supply of EVs.

 

[SOULPEDL]

If the number one issue with closing stores is lack of test drives, there are other ways to solve that. As several people have mentioned, there could be an Uber like test drive request app where a local owner can give you a test drive and the owner gets compensated in some way with service credits or something. They can also turn service centers into a place where test drives can be scheduled.

FFW 2 years. Country divided by cars. F150 faithful giving test rides to their tribe. Chevy campouts, Nissan protesters... I can see it all now.

 

[KarenRei]

There breaks $280.
SO glad I got an 18 Apr $300 back when the stock was in the $273-274 range.

Just hope we don't hit $310 by the end of the week, as I've capped myself with short-term spreads