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

[Fact Checking]

Permission to copy/paste bits of your summary to update my original post,

Sure, feel free.

 

[neroden]

Much credit should be given JB. In 2008 Smart-For-Twos had yet to be homologated for sale in the USA. JB smuggled one over the southern border and replaced its drive train with a battery and AC Propulsion set-up. It's performance (instant torque) wowed the Daimler exec's who were looking for EV opportunities. This led not just to the last minute cash infusion, but also a four year Daimler-Tesla joint development agreement. Battery pack and drive train sales to Daimler besides the cash infusion greatly assisted the IPO

JB has been relatively silent lately. Has someone put him in "time out"?

Hmm. I suspect he's working on secret projects. I'd expect him to be heavily involved in the Maxwell acquisition, and they probably want to say absolutely nothing about that until it closes. They don't want to admit exactly what they're doing with battery development, and he probably knows in detail.

 

[Artful Dodger]

If Tesla had better credit terms, they could be building the Y assembly in Q2 or 3 2019 in Sparks and start production by Q1 2020.

What do you mean? Tesla just secured an additional $500B line of credit with Deutsche Bank at LIBOR+1% through to 2023. That's likely enough right there to setup the first Model Y line at GF1.

And there's no indication that Tesla's credit is limited in any way. Last year's Moody credit rating didn't seem to affect DB's decision on March 1st, but the new loan came the day after Elon's private call with analysts on Feb 28.

 

[neroden]

I wasn’t joking - check out the international English language testing programs IELTS & PTE. They analyse essays by computer program & mark the student accordingly

May work for assessing low-level proficiency. Won't work for telling whether someone's a native speaker or for really understanding what they're saying when there are multiple agendas at work. I guess this is why they all stop at the bottom of the CEFR C2 proficiency level. That's really when actual ability to understand what you're reading properly *begins*. You can have the top score for comprehension on those programs and totally misunderstand what you're reading, particularly if it's propaganda or otherwise deliberately manipulative.

With billion$ invested these news article analysis programs would be much more complex

True. Doesn't mean they'd actually be any better at it. It's an arms race problem in this case. The people who are manipulating the news by planting fake articles (the offense) are well ahead of the people trying to write bots to trade on the news (the defense), and probably will be for a long time unless there's a breakthrough.

 

[electracity]

I'm skeptical about that. Initially the Shanghai GF will be making low-end TM3 only,

Shanghai may make base model 3 for export to the U.S. to free up capacity to make the model Y in Fremont. Not sure about Tariffs, but there is likely not a cost disadvantage to this approach.

They would also not need to put the battery in a car exported to the U.S.

 

[neroden]

I think you need to look at the adoption curves to replace the existing FF-powered fleet. Even with 100% production share, EVs can only replace ~7% of the fleet annually, call it 15 yrs to replace 80% of the fleet (AFTER production rampup) with a long tail. That's 2040ish, if things go well.

FSD shifts the curve left significantly. 20% of FSD cars can replace 80% of FF cars due to their 5x use factor,

Sure, if you can actually get it working at level 5.

Which you can't.

But due to production restraints, FSD EVs displace the existing fleet with only 20% the total no. of cars 10 YEARS EARLIER

Yeah, but add 20 years for development time, and you're behind. Bluntly, this is the same problem with all "new unproven tech" ideas for fighting climate change. They're all too slow due to the R&D time. All of them. No exceptions. Even the ones which are good ideas. And this is one of those.

than trying to replace all FF cars on a 1-to-1 basis.

If you really want to go faster than replacing ICE cars on a 1-to-1 basis, build electrified rail. Like China is doing. It's out of the box -- a competent country can have an entire network up and running, and removing cars from the road, well before the first level 5 full self-driving car even exists.

At the moment Tesla is implementing level 3 features and may *eventually* get a good level 4 system. Like, in 5-10 years. Here's the thing, though: level 4 is great in many many ways, saves lives, makes everyone happier, but *it doesn't reduce the number of cars needed, not even slightly*. For that you need absolutely full 100% level 5, and that's still a long long way away.

 

[VValleyEV]

Yes, I've got my eye on a retired '67 Camaro RS convertible. I just need my neighbor to get too old to enjoy it. Not sure I'll drive it though, just sit in my home theatre/drive-in. But I hear there's some cool EV conversions coming for classic muscle cars, so maybe it'll get driven some after that old 327 gives up the ghost.

P.S. hilda's yer aunt*.

EV conversions for classic muscle cars make lots of sense.

My neighbor had a 65 Mustang that he kept under a car cover for decades, then had to get it worked on to start it, then sold it.

Another variation: Jack’s a doughnut.

 

[Tenable]

The stores here in California are packed with employees, especially on weekends. I never understood why Tesla would do this. Although there are a good amount of customers in and out of the Tesla store, having two is enough.

I humbly disagree. For weekends/peak times at busy locations, you need to have one or two people doing test drives and one or two people in store assisting with answering questions, placing orders, helping to track down demo/inventory/used cars. Also, people are not always 100% reliable, in the event someone is sick, quits, wants vacation time you need to have the ability to rotate employees in and out.

 

[mongo]

At the moment Tesla is implementing level 3 features and may *eventually* get a good level 4 system. Like, in 5-10 years. Heres' the thing, though: level 4 is great in many many ways, saves lives, makes everyone happier, but *it doesn't reduce the number of cars needed, not even slightly*. For that you need absolutely full 100% level 5, and that's still a long long way away.

Level 4 (geo-fenced, or sub 45 MPH) is fine for a metro area. One could even make localized NNs.

I humbly disagree. For weekends/peak times at busy locations, you need to have one or two people doing test drives and one or two people in store assisting with answering questions, placing orders, helping to track down demo/inventory/used cars. Also, people are not always 100% reliable, in the event someone is sick, quits, wants vacation time you need to have the ability to rotate employees in and out.

Indeed, and if the store is open more than 8 hours a day 5 days a week, you need more shifts of people to avoid overtime.

 

[neroden]

Well I look forward to the time when I need some gas for my chainsaw and can only get it in a one gallon can. At the hardware store.

Why would you be buying gasoline for your electric chainsaw? To clean the blade or something? :looks puzzled:

 

[neroden]

THANKS!

I totally missed the critical “TTM” abbreviation for “Trailing Twelve Month”. My education continues.

Here is the article that included this graph:
Tesla Shareholders Must Separate Ideology From The Investment - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

The theme of the article seems perfectly reasonable, that investment decisions should be based on financial analysis not ideology, which suckered me into reading it. Then the cash flow chart was included with no explanation, along with claims that the $35k M3 has negative margin, again no references quoted, and EM is rude to investors and a flake and criminal, SEC bla bla FUD. Author is “Quoth The Raven”.

He hangs out with the market manipulating criminals who the SEC should be investigating. Real name Christopher Irons. Seems to just be a dedicated short-seller; doesn't seem to know much of anything about finance, markets, or anything, so I'll give him the benefit of the doubt and assume he doesn't know that he's peddling nonsense.

 

[brian45011]

Used inventory write down only if the car was bought before price reduction - but still not sold. Also, the cars they did sell have gone down in value compared to what they bought them at. I don't think it'd be a big line item.

Using ev-cpo used US inventory counts, average asking price, and 6% write-off, maybe a $3.0 to $3.5 million write down in 1Q19 so perhaps $4 million including ROW? If so, less than a ~3% to 4Q18's reported net profit level.

 

[Artful Dodger]

EV conversions for classic muscle cars make lots of sense.

My neighbor had a 65 Mustang that he kept under a car cover for decades, then had to get it worked on to start it, then sold it.

OT

Yeah, the Mustang will be the next classic muscle car to get new life as an EV:

Charge reveals EV conversion for classic Mustangs

Neil Young's LincVolt was the first:

Another variation: Jack’s a doughnut.

EDIT:

The English are very good at thinking up silly names. Here are some actual stations on the London underground: Marylebone, Tooting Broadway, Piccadilly Circus, Cockfosters, Frognal, Goodge Street, Mudchute, Barking and East Ham.

Cheers!

 

[neroden]

Typical usage for a privately owned vehicle is 5%. It sits at work all day then at home all night per Fortune.com - Mar 13, 2016

So FSD EVs only needs to get to 50% usage factor for half the EVs produced to give the new fleet a 5x load factor improvement overall vs ICE. Have ur cake / eat it too.

Yeah, but if you'd bothered to do your research (or use your common sense) you'd realize that that's impossible, because almost everyone goes to work and comes home at the same time. The self-driving cars are gonna do the same damn thing.

People have tried to push staggered shifts since the 1950s; it's never caught on.

Work-from-home is finally becoming a thing and it does help.

Self-driving cars do absolutely jack *sugar* for this problem. They are subject to the same rush hour problem as all other transportation.

Sorry about the rudeness, I get extremely impatient with dumbassery which was debunked before you were born. (Musk has committed some of this sort of dumbassery himself, on this specific topic. I'm just glad he has a record of being able to change his mind and reverse course quickly, because he'll have to.)

 

[Beltsbear]

OT


Yes I follow them and it would be nice to see them have use of the Supercharger network, otherwise useless for any travel.

Same here. Ditto for the inferior Nissan Leaf plus. It’s dirt cheap after incentives but the idea of one hour stops (minimum) on trips a 3sr could do with 20 minutes stops is the reason Tesla is the choice. The B1 would rock with Superchargers.

 

[jerry33]

If you really want to go faster than replacing ICE cars on a 1-to-1 basis, build electrified rail. Like China is doing. It's out of the box -- a competent country can have an entire network up and running

Well, that lets us out.

Rail works well in densely populated areas where the politicians let it. (Many politicians vote against or poison pill transit lines because they believe it will cause undesirables (lower income) to purchase homes in their city.) It also doesn't work all that well areas where the population is spread out. You can't build enough railroad lines in places like DFW to be usable by more than a small fraction of the population.

 

[MarcusMaximus]

May work for assessing low-level proficiency. Won't work for telling whether someone's a native speaker or for really understanding what they're saying when there are multiple agendas at work. I guess this is why they all stop at the bottom of the CEFR C2 proficiency level. That's really when actual ability to understand what you're reading properly *begins*. You can have the top score for comprehension on those programs and totally misunderstand what you're reading, particularly if it's propaganda or otherwise deliberately manipulative.


True. Doesn't mean they'd actually be any better at it. It's an arms race problem in this case. The people who are manipulating the news by planting fake articles (the offense) are well ahead of the people trying to write bots to trade on the news (the defense), and probably will be for a long time unless there's a breakthrough.

Now, from OpenAI, we even have the bot that can convincingly write bogus articles, though they aren’t actually releasing it.

 

[capster]

None of this is sitting well with me. We were supposed to use our existing sales channels to sell other products such as solar. This does not appear to be happening in a big way, but I'm waiting and hoping for the solar roof to scale giving us a differentiated product. So fingers crossed. We are meant to be closing stores in order to use the cost reduction to fuel the price reduction on vehicles. Ok, I love the idea if we can continue selling like gangbusters. Every entrenched automaker is stuck with the bloat, we are not. Wonderful. However, without my local Tesla gallery and the test drive it offered my wife and I would never have purchased a Tesla. Perhaps this was a different time years ago and its less necessary. I like this idea. Now, it appears Tesla may not have well thought out plans to efficiently close these bloat causing locations.. but the price cut is already in effect. If closing stores is meant to facilitate selling cars at the current prices and the closures arent happening.. what does this mean for the cars we are selling? There appears to be something amiss.

I really have no idea what to make of everything thats going on. Even through my darkly rose colored lenses I'm struggling to spin everything positively. I have a service I pay for and they had some speculative thoughts. If Tesla was in fact having demand issues at the prior price points they would still have obligations to its suppliers. Rather than stockpile inventory which would cause a significant drag on Tesla's balance sheet, they decided they were better served pushing out volume at little to no margin on the base models. If demand is indeed an issue this makes some sense to me.

I suppose I'm just an old blind TSLA bull, but I almost can not wrap my mind around the idea that Tesla is demand constrained. I'm not 100% certain what I'm looking for with this post. I suppose in an ideal world some well informed members to provide evidence to make me feel better about this troubling period. I've held through massive fluctuations for years.. somehow this feels different.

Tesla is crossing the chasm.

Those who oppose them know this and are fighting now to dent interest by the early majority/pragmatists.

However, Tesla’s opponents also face enemies. Big Oil’s effects on politics and geopolitics has long since become pernicious. The moral stench from some of the Big Banks is a fug that gags. Big Auto’s collective feet dragging and active opposition to anything that might reduce carbon and stay the turbulence and risk that climate change presents is beyond knavish.

Some just question the soundness of providing further subsidies and bailouts to legacy players who are using their heft to thwart the continued evolution of the competitiveness of the West.

There are many who know the score around the globe who are in Tesla’s corner. They will buy the cars and hold the stock (without playing games with it). I like to count myself amongst them. Yeah, I sometimes feel I’m out on a limb with TSLA, but most of the time I feel it’s the safest bet I can make because of these people as well as Elon and everyone at Tesla.

Tesla will cross safely and successfully. I think they have passed Max Q already.

 

[EVNow]

The closest thing to that with Tesla is the obsession with "full self driving". I *think* it hasn't gotten out of control yet --but I hope the company remembers their mission statement, which does not have anything to do with "full self driving" and is all about eliminating fossil fuels.

I don't know how much money Tesla spends on FSD R&D - but my guess is its very small compared to their annual capex and r&d. It is a much needed investment given more and more automated driving features and scenarios that will hit the market in the next few years. In this case it is all about incremental progress and lots of incremental, very high margin, revenue.

 

[mrdoubleb]

Are we only delivering performance model 3s to Europe/China currently? Does anyone know the answer to this question?

Here is the near real time Norwegian data. Ignore the 2 MR, those are from 2018 and is either an error in the dataset or could be private import. As I was looking at this earlier, the split was more like 60-40 between LR-P, but now it is 75-25. I'm thinking the first ship probably mostly had P3Ds.