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

[brian45011]

None whatsoever that I'm aware of.

There's other, less reliable types of information:

• Unverified hearsay:
  • @luckyruby: "They also recently signed an agreement with Panasonic."
    
  • @dondy: "2) X and S prices. [Elon] mentioned only reduction due to the simplification of the sell process. But it is not the only action they did. Tesla reduced head count on S/X conveyor greatly simultaneously reducing number of batch variants. More of it, if I understand correct Panasonic contract is renewed, with obviously new prices which are ~30% less. I expect new car prices come from recalculating standard profit margins on new operational costs."
  • @dondy: "I suppose you have asked about Panasonic. current commercial prices Panasonic offers are around 30% (>) less then in 2014. I heard about renewing contract with 18650 from acquaintances working in american Panasonic. Consider that a wild rumor."
  • @Cosmacelf: "Rumor is that Tesla has renegotiated Panasonic cell supply at a 30% price cut. Anyone have a solid source for this? Might be disclosed in a 10Q at some point..."
  • (Some of these rumors might be relying on each other. )
• Circumstantial: I'm wondering whether one of the sealed contracts is the new agreement with Panasonic.
• Circumstantial: We do know that the 18,650 cell contract did run out last year. Agreeing on an extension would be expected. We also know that Elon negotiates hard.
  
• Circumstantial: We know it from the Q4 ER CC that Elon had a phone talk with the Panasonic CEO. One topic was Panasonic's JV with Toyota - which might have been Panasonic's entry to the 18,650 contract negotiations.
• Circumstantial: Tesla's 10-K mentioned that they are working with other cell suppliers (I'd say that means Samsung or LG?) to qualify them for automotive use.

To recap, here are Tesla's entries to the 18,650 contract re-negotiation poker game:

• Model S/X Fremont shift reduction from 3 to 2,
• Model S/X removal of the most popular model (75D),
• Model S/X lowered guidance,
• Model S/X supplier reduction leak of 50% order reduction,
• Tesla hinting that they are working with Samsung to qualify cells,
• Tesla dangling the Shanghai GF3 cell contract and not committing to a partner,
• Panasonic has 8 GWh 18,650 cell output per year to sell, and no other carmaker but Tesla is using or is planning to use the 18,650 form factor.
• Tesla probably holds significant 18,650 related IP, such as cathode geometry, but also chemistry.

Speculation: Panasonic understandably blinked first.

So I'd consider it a "solid" rumor supported by a robust body of circumstantial evidence.

(Maybe not 30% but 20% cost savings - although 5 years since the 2014 contract is a lot of time, so 30% cheaper sounds plausible to me.)

Maybe Mr. Ito fell (or was pushed) on his sword:

"A Tesla proponent at Panasonic, Yoshio Ito, the Japanese company's executive vice president of automotive, recently resigned, the company disclosed at the end of February. When Tesla and Panasonic established their Gigafactory partnership in 2014, their agreement said the two companies would have to mutually agree on how to manage "the land, building and utilities" at the facility."
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Tesla doesn't know where it will build the Model Y as it rolls out more layoffs and cost cuts

 

[SteveG3]

For those concerned, I'm pretty sure Tesla won't eliminate test drives. I think what will happen, at the very least, is they will be offered at service centers. I have a feeling they may implement a system where they will come to your house for a test drive.

If I were Elon, that's what I'd do. Still no need to pay for the brick and mortar of a store, but you can still offer test drives at service centers with minimal additional expense. And scheduling a test drive at one's home would be a very good way to get cars sold.

Tesla can still do all of this even without physical stores.

Yes, and in a few years, when the car drives itself to you to do the test drive (release form on the touch screen waiting for your approval to drive), it will be the best sales opening pitch in history.

 

[hacer]

...
They may also be willing to wager that not many customers will charge at 350 KW often enough that it invokes their warranty.
...

Yeah, it's unlikely anyone will often drive a route that passes either or both of those charging stations. /s

 

[KarenRei]

Note: Today's price action is against negative macros

 

[Chocochip]

Sorry have to disagree. Listen carefully,
He said he drove one years ago but was NOT impressed at first.

Test drive is useless for a significant portion of the population.

If the test drive is not useless for more than 0% of the population, then the test drive gets people to buy the car. All you need is a nonzero percentage of potential buyers who will change from being indifferent to being at least intrigued or at most completely hooked, to increase sales. It's difficult to expect significant market expansion by relying exclusively on customers who buy the car just on what they heard or read from others. We are not talking about true believers and early adopters here, but the general population. And as long as test drives are able to move the needle on sales numbers, even if they're not 100% successful, they're worth doing.

As to the potential argument that the test drive is the first 7 days of ownership... I think for most people the complication of possibly deciding to return the car after that interval is really off-putting, and so they will decide to not take that step.

 

[omarsultan]

Are we sure now service center can't offer test drive?

The stated reason for closing stores was to reduce costs of sales, so this seems counter to that as you are now back to staffing CEs and stocking test drive vehicles. Expecting the service staff to handle test drives is a non-starter.

Even if they don't do it now, how hard it is for Tesla to change that in the future? And why is that a big deal?

It is reversible--the penalty is time to re-aquire physical locations then hire and train new staff and leadership.

Is it a big deal? I am not sure anyone knows. Could be a brilliant move, could be an utter disaster. We'll probably not know until July at the earliest when we get a look at Q2 numbers. Even then, I think there is a lot of pent-up demand for Model 3 and Model Y which might mask any softness. IMO, the thing to watch is Model S and Model X orders.

 

[EVNow]

And VW fakes their emssions, but i get it, tesla is a (insert latest FUD) here...

Yes - its so ironic.

The Tesla shorts keep talking about fraud in Tesla & Musk going to prison while completely missing
- massive emissions fraud in VW for which multiple execs are (or should) go to jail
- One Auto company CEO actually in jail - Ghosn

Eerily reminds me of some of the "lock her up" crowd actually ending up in jail.

 

[Cosmacelf]

Here’s an investment idea for you guys, but it might appear a little bit staid for you option players.

The next big bond repayment Tesla has to repay is a Solarcity convertible due Nov 1, $566M. It is SC/Tesla 1.625% due 11/1/19. The bond is currently priced at 95, meaning you can get 9.6% annualized, 6.4% to maturity if you bought it today. For a 7 month bond. Assuming you believe Tesla isn’t going to go bankrupt in 7 months, it is a screaming deal.

If you have part of your portfolio in ultra safe investments like munis or treasuries, then this would be nice addition, again, assuming you are comfortable with Tesla’s finances.

I originally bought a chunk of this bond after Tesla announced the Solarcity acquisition, but before the deal has closed. I bought it at 79. I then bought some more after the deal closure at something like 84. And very recently, I bought a much bigger chunk since I deem it to be as safe as a muni at this point. But YMMV.

 

[mongo]

If the test drive is not useless for more than 0% of the population, then the test drive gets people to buy the car. All you need is a nonzero percentage of potential buyers who will change from being indifferent to being at least intrigued or at most completely hooked, to increase sales.

Increase sales, sure. but you need to increase sale enough to pay for the stores, employees, and test cars.

 

[EVNow]

The stated reason for closing stores was to reduce costs of sales, so this seems counter to that as you are now back to staffing CEs and stocking test drive vehicles. Expecting the service staff to handle test drives is a non-starter.

There should be absolutely no issue getting one extra person in the service center to help with test drives. Won't need separate retail space etc. BTW, I think the biggest saving is in not paying sales bonuses for all the sales staff. Nothing to do with test drives.

 

[elasalle]

.

Maybe Mr. Ito fell (or was pushed) on his sword:

"A Tesla proponent at Panasonic, Yoshio Ito, the Japanese company's executive vice president of automotive, recently resigned, the company disclosed at the end of February. When Tesla and Panasonic established their Gigafactory partnership in 2014, their agreement said the two companies would have to mutually agree on how to manage "the land, building and utilities" at the facility."
​

Tesla doesn't know where it will build the Model Y as it rolls out more layoffs and cost cuts

With 70% shared resources with M3, wouldn't it make sense to co-locate M3 and MY?

Even I think MY will be GF1, but what if it will actually be built in Fremont? (& its S/X lines that get moved.. lower volume lines)....
S/X lines production already reduced.
S/X needs a refresh. The refresh cannot be just optics, must be able to beat M3, e.g. charging rates (200 for M3/MY, but 250 max for S/X)

.. moats don't matter, but the pace of innovation does.... cheers!!

 

[Cosmacelf]

Joe Rogan talking about his Tesla again:

"It doesn’t even make sense. Regular cars are stupid, they’re stupid, they just don’t work as good. That thing is way better than any car I’ve ever driven, and it’s just going to get better. "

"I really did not expect to like it as much as I do. And then once I got it I was like oh ok now I get it."

And people thought Elon smoking weed was a bad PR move

(Let me spell it out for you. Elon scratches Joe’s back by doing something outrageous and newsworthy on his podcast garnering him tons of new viewers. Joe reciprocates by buying a Tesla and gushing about it on his show to his huge, and now bigger, audience).

 

[anthonyj]

Sorry have to disagree. Listen carefully,
He said he drove one years ago but was NOT impressed at first.

Test drive is useless for a significant portion of the population.

...test drives are very important. They sell the car.

 

[hacer]

I am the founder of uppladdning.nu and and we had some reports that the 350kW chargers are not equipped to charge with 350kW. They need to be updated with new cables that would be able to handle the high power. Also 350kW is a theoretical number. In reality the battery pack in the car has a nominal voltage that limits the charging rate.

See a photo of a plate on one of the ionity chargers:

The rating of the Ionity chargers is: 200VDC to 920VDC at max 500A.
This theoretically 100kW (@200VDC) and 460kW (@920VDC)...

Impressive that they deliver up to 460kW output while only having a 360kW capable input!

 

[jerry33]

Impressive that they deliver up to 460kW output while only having a 360kW capable input!

Any charger can be struck by lighting.

 

[EVNow]

.


With 70% shared resources with M3, wouldn't it make sense to co-locate M3 and MY?

Even I think MY will be GF1, but what if it will actually be built in Fremont? (& its S/X lines that get moved.. lower volume lines)....
S/X lines production already reduced.
S/X needs a refresh. The refresh cannot be just optics, must be able to beat M3, e.g. charging rates (200 for M3/MY, but 250 max for S/X)

.. moats don't matter, but the pace of innovation does.... cheers!!

Yes - it makes sense to share the assembly lines between 3 & Y - just as they do with S & X.

They should build ew lines in GF1 for S&X - but if that is too much extra Capex (and they would rather reuse existing assembly line for S&X) then it would be difficult to move to GF1.

 

[Fact Checking]

The stated reason for closing stores was to reduce costs of sales, so this seems counter to that as you are now back to staffing CEs and stocking test drive vehicles. Expecting the service staff to handle test drives is a non-starter.

Also, I think another thing that might be happening is that Tesla is strengthening their legal position in the inevitable lawsuits the dealership associations are going to launch against them.

It would only take a single mystery shopper on such a test drive being helpfully referred to the Tesla store to create a legal link between Service Centers and Tesla's sales activities.

It is a very good defense that a Service Center is not performing any sales if they don't even offer test drives, under any circumstance.

So I agree that it's good that they are not moving test drives to service centers, at least in the U.S.

 

[Remus]

...test drives are very important. They sell the car.

I don't think we have enough evidence of that due to lack of control. All you have is everyone does it so it must work. Well, following that logic gas is the best fuel, and nobody wants EV.

Short test drive ruined Tesla for Rogen, my wife hated the model S after a short test drive, and there are others not impressed by the test drive but later loves the car after got used to it.

 

[Bobfitz1]

.

IMHO it already does that. I think it's called "marketing" ie., reveals, tweets and stuff. Very high value, VERY efficient.

And they reach the same people who have been consuming them for years. Why ignore forever another tool to educate and interest other groups?
Advertising a breakthrough product is just another available demand lever. It's not free, so don't go there until it makes sense. Try a modest effort and see what results are. It seems like some believe not advertising is extra virtuous. It's just another means to a desirable end.

 

[phigment]

Any charger can be struck by lighting.

I thought a lightning strike provides 1.21 GW