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

[jerry33]

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.

That was the primary reason for me six years ago. The first BEV that could be used as a real car. Now that I have it I really like the extra cargo room for trips, but had both been available at the time, M3 would be a no-brainer.

 

[JRP3]

They lure you in with an incredibly cheap car, and then once you are in the store...

Oops.

 

[ggies07]

People are in too much of a hurry. A hurry to go nowhere. Many people are relearning how to enjoy life by being ‘forced’ to slow down a bit in an EV.

Reminds me of this:

 

[anthonyj]

Seems like technical bounce on weekly trendline and shorts fomo covering

 

[Remus]

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.).

I think it definitely is a factor. But cut by that much?

Back in the days I worked at Microsoft as an engineer in 2012 I got an earful from our sales team on how impossibly hard to compete with AWS due to their low price, we lose *sugar* load of money on that price.

Hate Steve Ballmer all you want, he was the guy insisted on throwing billions of good money after bad into the fire pit later known as Azure.

I don't see no Steve Ballmer in auto builders.

 

[KarenRei]

Seems like technical bounce on weekly trendline and shorts fomo covering

I don't want them covering and taking profits now. I want them to ride on through at least Q1 deliveries. Which the market is grossly underestimating at present. Coming on the heels of the Y unveiling, aka an hour-long TSLA infomercial.

 

[TradingInvest]

Eh, I think the general assumption is that most of SR+ vs. SR is pure profit. I really don't think they would have gone forward unless SR+ was profitable on a GAAP basis. And almost everyone is ordering SR+. SR is to meet a promise.

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).

The production cost for SR+ and SR should be very similar. The SR+ has more range, 12-way power seats, better sound system, LED fog lamps. The SR+ is a much better deal than the SR. Most SR buyers should buy the SR+ ($37k). Some of them will also upgrade color, some will order autopilot and FSD. I estimate the ASP for SR and SR+ will be $40k. The ASP for non SR/SR+ will be $48k. Overall Model 3 ASP $43k, all-in cost $35k. If Tesla sell 400k Model 3 this year, the gross margin should be around $3.2B.

Next year, when Shanghai factory produces in volume, the cost for SR will drop at least $3k. FSD take rate will go higher after the car can handle traffic lights and stop signs. I estimate in 2020 Model 3 ASP $45k, cost $33k. If Tesla sell 500k Model 3 in 2020, the gross margin should be around $6B.

 

[Fact Checking]

Seems like technical bounce on weekly trendline and shorts fomo covering

LOL, at 150% daily volume half into the session?? I don't think so.

Institutional dip-buying after obvious FUD bottom and oversold conditions I'd say, but not advice.

 

[printf42]

Just saw 3 Tesla haulers heading east on i-40. First ones seen on daily drive since January 11. Reminds me of December when this was a daily observation. Are there still ships loading. I would like to think they have decided to sacrifice Q1 to fill the pipeline rather than maximize deliveries

Edit oops just saw 1 more

Are you driving?

 

[gringotuanis]

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!

Those are fans. It's not a resemblance, those are literal cooling fans for the hardware. Just like my graphics card has...go look at Nvidia graphics cards, they look the same.

 

[EVNow]

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

Since Tesla is tight lipped about orders and shipments, we'll have to wait till Q1 (and perhaps Q2) numbers are released before this is settled and market figures out what is happening.

I hope Tesla doesn't wait till end of March to give some indication.

 

[Cosmacelf]

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.

You don’t need a chat bot. Hire $15/hour workers, TRAIN them, and you’re good to go for both chat and telephone sales.

 

[anthonyj]

LOL, at 150% daily volume half into the session?? I don't think so.

Institutional dip-buying after obvious FUD bottom and oversold conditions I'd say, but not advice.

I really hope you’re Larry

 

[jhm]

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

Look, if Model S and X were getting cannibalized by the Model 3, guess what is happening to the competitors who were already getting cannibalized by the Model S and X. It ain't pretty.

This is also why Tesla should never worry about cannibalizing its own products. It just means that they are eating the competition live. This is why we need the Model Y ASAP. This is how Tesla eats the competition.

 

[Dan Detweiler]

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

Well, with every syllable he utters being scrutinized by the SEC it's no wonder he is silent at this point.

Dan

 

[gringotuanis]

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.

Or just have call center representative chatting with 5 customers at once. It's easy and more cost effective. Bots are still super dumb.

 

[gringotuanis]

Well, with every syllable he utters being scrutinized by the SEC it's no wonder he is silent at this point.

Dan

Just get a demand tweet approved then. Easy.

 

[KarenRei]

The production cost for SR+ and SR should be very similar. The SR+ has more range, 12-way power seats, better sound system, LED fog lamps. The SR+ is a much better deal than the SR. Most SR buyers should buy the SR+ ($37k). Some of them will also upgrade color, some will order autopilot and FSD. I estimate the ASP for SR and SR+ will be $40k. The ASP for non SR/SR+ will be $48k. Overall Model 3 ASP $43k, all-in cost $35k. If Tesla sell 400k Model 3 this year, the gross margin should be around $3.2B.

Next year, when Shanghai factory produce in volume, the cost for SR will drop at least $3k. FSD take rate will go higher after the car can handle traffic light and stop signs. I estimate in 2020 Model 3 ASP $45k, cost $33k. If Tesla sell 500k Model 3 in 2020, the gross margin should be around $6B.

A big question as to how much more profitable SR+ is than SR is, "is the website correct?" The site lists SR and SR+ as having the same weight. If they're truly the same number of cells, then it's just power seats, extra speakers, and fog lamps. Not that expensive at all, that upgrade would be overwhelmingly profit.

And yeah, all anecdotal evidence I'm seeing is that SR+ is a lot more popular than SR.

 

[Nuclear Fusion]

But to actually make this relevant, one has to look at the income available for buying a car, categorized as either left or right hand side driving. Then India counts for much less.

Btw, keep in mind that the dash of the Model 3 is left-right symmetric, so making the RHD version is less overhead.

Not sure what the comparative middle classes are of India cf. China.

 

[Papafox]

I suspect the shorts are worried about this morning recovery and will try to push in the afternoon once volume subsides. If we hit the red/green line, they'll play a game of "whack the mole". This is the manipulation Olympics, sports fans, and the referee (SEC) is only watching one side for fouls.