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

[Fact Checking]

It’s kind of like an Island, except bound by desert instead of water. It will be a long time before east and west coasts are joined to form a single supercharger Network. It’s much cheaper to fly, and there’s not a lot between.

Flying from Perth to Melbourne is not just cheaper, according to Google Maps the road trip is also a grueling, 36 hour, 3,500 km drive, with not much to see but a desert with an extremely hostile biome that wants to kill you 24/7?

 

[Antares Nebula]

People, I don't care about this news. Can we get to Thursday already?

 

[Fact Checking]

Or they didn't see the lost foot traffic from closed stores convert into online sales.

As evidenced by their increase of the delivery estimates for the Model 3, and the extra VIN registrations?

Seriously, I don't think Tesla is able to disambiguate the effects of the recent product and pricing announcements from the store closure announcements: we'd expect a bump in interest just from the $35,000 base model introduction, a bump in interest from the 6% price reductions - any retail->online conversion stats are probably lost in the noise of these much stronger trends.

 

[Sancho]

The worst part about this store closing debacle is that if they had thought through it and never done it, they wouldn’t have detracted from the momentous announcement of the $35k car.

It must be nice to have a product that is so unique and desirable that you can make big mistakes like this, and it doesn’t really matter.

It must be miserable to have a company that is so uniquely under the spotlight, with so many vocal detractors, that every mistake you make becomes page one headlines.

It’s the best of times and worst of times.

 

[UncaNed]

Oooff, why didn't they evaluate the store situation properly BEFORE announcing drastical changes?

I support their change of mind but it doesn't look professional at all. Completely unnecessary drama.

But lots of free marketing/publicity.

 

[Fact Checking]

As these are only P and Dual LR demand in europe seems really good!

I'd expect this demand to increase progressively: spring is the strongest new car season in all parts of Europe where winter comes with snow, ice, dirty and slippery roads and fender-benders.

 

[Singer3000]

Flying from Perth to Melbourne is not just cheaper, according to Google Maps it's also a grueling 36 hour, 3,500 km drive, with not much to see but a desert with an extremely hostile biome that wants to kill you 24/7?

I haven't done Melbourne to Perth but I have done Melbourne to Alice Springs. Great experience to see the landscape slowly changing over many days.

However the priority for superchargers in Oz shouldn't be continent crossing adventures. It should be enabling the fairly long distance there-and-back day trips that Ozzies do for fun because of their distorted interpretation of geographically close!

So Perth to Margaret River, Sydney to Hunter Valley etc... The same applies to Canada actually. I find it bizarre that there is still no plan to link Edmonton (population 1.8m) to Jasper National Park but there is a plan to link Nova Scotia with Vancouver.

 

[Leo9]

I'm very surprised by Trip Chowdhry numbers... 30k Model 3 during Q1? That seems very unlikely, especially coming from one of the most bullish analysts.
I'm happy to see Tesla taking a less radical approach with the stores, but honestly Tesla looks quite a bit amateurish here.
The stock is up a lot in premarket trading.

 

[Fact Checking]

The worst part about this store closing debacle is that if they had thought through it and never done it, they wouldn’t have detracted from the momentous announcement of the $35k car.

There's a silver lining, this way even the media outlets that would otherwise have chosen to stay 100% silent about positive Tesla news covered it via negative news - and web traffic to Tesla.com did explode:

Elon Musk and Tesla Going All-In on Online Sales: Let’s See What the Data Has to Say About It - Similarweb Blog
​

We'll never know how the alternative history scenario of not announcing the store closure would have played out - but Tesla winding down stores and removing the retail sales commission model in quiet would certainly have started a new round of Tesla truthers.

 

[Anstandswauwau]

Elon doesn't operate by focus group/consultants.

Firstly, how do you evaluate customer reaction, without telling customers?

Secondly, Tesla isn't the NSA, they are a high-tech meritocracy with a flat management hierarchy and an explicit policy to break the "chain of command" whenever necessary. A planned decision affecting thousands of employees would leak almost immediately, unless it's planned just by a very small group - but the risk of a small group getting it wrong is higher.

"We're currently reviewing our store network and plan to close underperforming stores within the next 6-12 months."

Adjust price accordingly AFTER you know how many stores will be closed.

Methodologies with focus groups and backwards looking statistics to estimate purchase behavior for high value products are not very reliable. There could be a lot of people waiting on the sidelines who've discovered they really wanted to book a test drive, after the store closures were announced.

This in itself would/did skew the statistics in a way to make it useless for store traffic evaluation – in contrast to a longer evaluation period (see above).

Tesla is now pivoting/backtracking towards an Apple Stores showroom model - where sales staff doesn't earn a sales commissions.

Good. Hope their pay is adequate.

Elon makes a move and waits for pushback.

But lots of free marketing/publicity.

Don't we agree that Tesla has its fair share of "any publicity is good publicity" (ugh) already?

 

[Ellec]

There's a silver lining, this way even the media outlets that would otherwise have chosen to stay 100% silent about positive Tesla news covered it via negative news - and web traffic to Tesla.com did explode:

Elon Musk and Tesla Going All-In on Online Sales: Let’s See What the Data Has to Say About It - Similarweb Blog
​

We'll never know how the alternative history scenario of not announcing the store closure would have played out - but Tesla winding down stores and removing the retail sales commission model in quiet would certainly have started a new round of Tesla truthers.

Maybe Elon has understood this and sends a trojan horse of bad news so the media report it. The downside is a temporary drop in SP but long term millions more are aware of Tesla.

 

[schonelucht]

As evidenced by their increase of the delivery estimates for the Model 3, and the extra VIN registrations?

Delivery estimates are worthless. Or do you think March estimate here in Europe means there is no demand for the Model 3?

Seriously, I don't think Tesla is able to disambiguate the effects of the recent product and pricing announcements from the store closure announcements: we'd expect a bump in interest just from the $35,000 base model introduction, a bump in interest from the 6% price reductions - any retail->online conversion stats are probably lost in the noise of these much stronger trends.

Exactly. Why then suggest that they saw extra foot traffic for which they have to keep the stores open?

Really, Occam's razor applies. The store closure thing was a poor decision without any meaningful consultation in the executive team and they are now walking back from it after realizing the consequences. The announced price increase is a classic from the car sales book. "Buy now to take advantage of these spectacular deals before supply runs out". It's just very poor executive leadership overall. Reminds me of another tweet sent to liven up an otherwise dull commute.

 

[RobStark]

 

[Fact Checking]

Interesting piece of Q1 Tesla sales data from Canada:

Winter weather cools February sales by 2%​

Tesla sold ~4,700 vehicles in Canada in January and February, 10x as many as in the first two months of 2018 - despite the very cold weather that has hurt almost every other car brand's sales.

We need to add this to the 30k North American deliveries of Alpha Hat.

BTW., I found it rather funny how "Automotive News Canada" chose to ignore those 4,700 Tesla sales, but found it newsworthy to talk about increases with much lower unit counts:

KIA SALES UP 11 per cent

Kia Canada saw its sales rise 11 per cent to 4,228 units.

The Forte led car sales with 885 units sold while the Sorento led the way for trucks at 1,355.​

Tesla increasing sales 10x, going from 460 units in 2018 to 4,700 units, in the CAD $50k-$100k price range? Meh, not newsworthy.

But KIA sales up 11%, in the $30k CAD price range? Wow!!!

 

[Fact Checking]

"We're currently reviewing our store network and plan to close underperforming stores within the next 6-12 months."

Adjust price accordingly AFTER you know how many stores will be closed.

Store overhead is only part of the cost: the other part is the sales commission retail employees were earning. I don't think the sales commission is coming back - so a good chunk of the cost savings are implemented even if most stores stay open as showrooms (or stores - depending on data).

Yes, there will probably have to be higher pay to compensate for the sales commission - but @ReflexFunds noted that there were reports of sales staff marking customer records for commissions even when they had no contact with the customer. Depending on how widespread these were it could still be a net cost improvement.

There's also this part:

"A few stores in high visibility locations that were closed due to low throughput will be reopened, but with a smaller Tesla crew."​

Those are cost savings too.

 

[Fact Checking]

People, I don't care about this news. Can we get to Thursday already?

Don't want to miss tomorrow morning, when we get to read Elon's "answer motion" to the SEC filing. It sure will distract from the store closures, and I hope it will be a good distraction.

 

[Fact Checking]

OT: Market Action:

• Tomorrow (March 12) is the BRExit vote in the U.K. over PM May's deal with the EU, which vote is expected to fail catastrophically.
  
• The day after tomorrow (on Wednesday) there's another vote to rule out a no-deal BRExit outcome.
• If that passes there might be a relief rally of unknown magnitude. (Or a relief crash, if too many traders speculated on a relief rally. )

 

[Fact Checking]

Delivery estimates are worthless.

That's wrong, historically Tesla's delivery estimates consistently under-estimated delivery times.

Or do you think March estimate here in Europe means there is no demand for the Model 3?

Tesla's delivery estimates are a lower bound for delivery times: they should be understood in the NET sense: "No Earlier Than".

So when last week Tesla increased SR/SR+ Model 3 delivery times estimates to 6-8 and 4 weeks in the U.S., that's a reliable signal for demand outrunning supply for those products.

 

[CharlesSr]

Maybe it’s just me, but I think Tesla’s backtracking on store closing is a blessing in disguise. Had Tesla said to close half of the stores and reduce price by 3% at the very beginning, I doubt the FUD would have been any different.

Now people feels better because they were presented with a worse outcome first. I expect the media will pat themselves on the back and praise this decision.

Also, now it’s price going up, must be good.

 

[Ellec]

Maybe it’s just me, but I think Tesla’s backtracking on store closing is a blessing in disguise. Had Tesla said to close half of the stores and reduce price by 3% at the very beginning, I doubt the FUD would have been any different.

Now people feels better because they were presented with a worse outcome first. Now I expect the media will pat themselves on the back and praise this decision.

Also, the whole FUD about Tesla closing stored because they are teetering on bankruptcy can be put to bed.