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

[PANN]

My understanding is Tesla was forced to close all stores (not that Tesla prefer to do it) because Elon kept his promise to release a very desirable but loss-making 35k Model 3 to help the mission.

But after the 35k Model 3 release, it turns out most buyers go for higher ASP variants such as SR Plus and likely also high take rate of Autopilot, so the actual ASPs are much higher than originally expected. With this turn of events, Tesla figured they only have to close half of the stores and raise price 3% on higher price variants to stay profitable.

So it's not a reverse of strategy because close all stores was never the desired strategy. I remember Elon emphasize on the call that they were forced to take this path and there's no other way (as they think in worse case scenario most buyers may go for the bare 35k Model 3).

Edit: add raise price 3% on higher price variants, left out unintentionally.

 

[KarenRei]

Nafnlaus on Twitter

 

[schonelucht]

The deal apparently closed in October and Tesla wanted to secure Q4 profits?

It's a Q1 transaction. From the filing :

WHEREAS, pursuant to that certain Truck Sale and Purchase Agreement, dated as of January 7, 2019 (as the same may be amended from time to time, the “Purchase Agreement”), by and among Buyer and Seller, Buyer shall acquire certain assets from Seller (the “Purchase”).​

Was there any other angle you were alluding to? Does it start with "bank" and does it end with "wuptcy" perhaps?

Mouse nuts when it comes to impact on the balance sheet. Inconsequential in every sense, even in a cash tight situation of early Q1.

The seller insisted on a shares-only or shares-partly deal for tax purposes, or just because he could and Tesla had no other sellers of trucking businesses?

Car trailers are the new rare earth metal? Nah, it's a commodity, you can get them on any auction house or website to fill such a small deal. A $15M supplier doesn't have the leverage to get Elon Musk to eat his own words. This deal is structured this way because Tesla wanted it structered that way.

 

[dmvevguy]

We better be profitable this quarter...I think the issue with stores is you can't just close them down without paying hefty fines in a lease agreement, so it's more of a slow process.

 

[KarenRei]

We better be profitable this quarter...I think the issue with stores is you can't just close them down without paying hefty fines in a lease agreement, so it's more of a slow process.

The worst case is that you just shutter the store and keep paying rent (aka, not a one-time cost). The best case is that since neither you nor the landlord like the property being empty, both usually work toward finding a new tenant as soon as possible.

There may be some early-termination agreements that you can trigger that involve big one-time fees, but Tesla has no obligation to trigger them if it doesn't want to.

 

[Chop110]

This may be premature, but I think the market will treat the news of keeping the stores open as a positive as I don’t think there was a lot enthusiasm in the investor community for shutting most of them down. Selling cars online with no physical storefronts may be a bit too drastic of a change than what Wall Street was ready for.

In the short term, there will be a rush bargain hunters ordering before March 18.

 

[dmvevguy]

The worst case is that you just shutter the store and keep paying rent (aka, not a one-time cost). The best case is that since neither you nor the landlord like the property being empty, both usually work toward finding a new tenant as soon as possible.

There may be some early-termination agreements that you can trigger that involve big one-time fees, but Tesla has no obligation to trigger them if it doesn't want to.

Hopefully, they're working on the best case for all the closures then! I just want us to be profitable this quarter and now they've clarified the store closure debacle just sit still and execute on China factory and deliveries esp with 35k standard M3 now!

 

[AlexS]

I really like that they keep the stores. But probably a lot of sales staff will change, because current sales staff feels very uncertain about the future I assume.

 

[KarenRei]

I really like that they keep the stores. But probably a lot of sales staff will change, because current sales staff feels very uncertain about the future I assume.

While it's not nice to point this out, that's beneficial to Tesla. The loss of commissions (since they've reiterated moving to an online-only sales approach) will lead to a number of them searching for new jobs elsewhere, and thus aiding Tesla in downsizing the stores without having to pay severance for said workers.

 

[voip-ninja]

This may be premature, but I think the market will treat the news of keeping the stores open as a positive as I don’t think there was a lot enthusiasm in the investor community for shutting most of them down. Selling cars online with no physical storefronts may be a bit too drastic of a change than what Wall Street was ready for.

In the short term, there will be a rush bargain hunters ordering before March 18.

The market hates uncertainty and that is what Tesla is generating with this yo-yo thing they've got going on right now.

 

[Artful Dodger]

More discussion on SR bty pack production by well-known GF1 'camp follower carsonight on Mar 10 (19 hours ago)

"If my speculation is correct the new Grohmann machine's purpose is the SR battery pack. Nobody has told me this, but I connected the dots. Pack production exceeded 6k per week from November, completion of this machine and SR pack production seem to coincide, and employees have told me since November the production goal is 7k packs per week, which exceeds Panasonic's cell production capacity for the LR Model and MR Model 3. It all makes sense."
​

TL;dr GF1 is now producing more bty packs total each week than would be allowed simply for LR/MR production. He concludes the new Grohmann machine is producing SR packs.

Cheers!

 

[LoveTSLA]

The market hates uncertainty and that is what Tesla is generating with this yo-yo thing they've got going on right now.

One thing is sure that the Y is coming Cheers!

 

[schonelucht]

There may be some early-termination agreements that you can trigger that involve big one-time fees, but Tesla has no obligation to trigger them if it doesn't want to.

Not sure about the states, but here it is not unheard of that lease contracts in high traffic malls contain clauses on mandatory opening hours of the store, levels of upkeep etc.

 

[printf42]

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.

Tesla (might have accidentally) did a great job to make sure the news will be covered by both pro and anti Tesla media.

It’s really hard for CNBC and alike to cover Tesla closing stores without mentioning 35k car is out.

Did you see the other day (Feb 27th) TSLA stock went up 7% and financial media all went silent, and whenever it went down 3%, it’s all over headlines.

I suspect if Tesla announced 35k car without some “bad news” it would have got the same silent treatment.

 

[TradingInvest]

Sorry if this has been posted. Sandy Munro interview. It's pretty good after the first few minutes. It seems his mind works right. He predicts $35k Model 3 built in China can have 25% margin. I remember Elon said the same thing during Q4 conference call.

 

[KarenRei]

Tesla whistleblower says report backs his claims of drug investigation at Gigafactory

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“There is nothing to substantiate there was a drug deal in Tesla,” he said. “An anonymous report over an anonymous method is not evidence.”

Antinoro said the tip went to both the Drug Enforcement Agency and the sheriff's department.

Antinoro also criticized Meissner for accusing the sheriff’s department for “dropping the ball” with regard to Tesla.

“We have never even had any contact with his client, this Hansen guy,” Antinoro said. “If (Meissner’s) client Hansen has any information regarding it, I invite him to give it to us. I can’t pull this stuff out of thin air.”
-----

 

[elasalle]

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[brian45011]

Hard to know what has driven this updated strategy; it could be positive or negative reasons.

Might also provide an end run around WARN Act requirements.

 

[Artful Dodger]

10:20 EDT check-in:

NASDAQ-100 +1.23%
TSLA: +1.19%​

"It's good" -- Morgan Freeman

 

[tinm]

Ok just slogged through the last 20 pages of this thread. Sort of amazed* that there has been not even a single mention (could be wrong but was looking carefully) of “CFO” or the name “Zach Kirkhorn” in those 20 pages.

Would love to know what his contribution was to this overnight debacle, if any. It all feels like an Elon thing but I wonder if this was Zach’s first big move as CFO. If he’s no longer with the company come April I guess we’ll have our answer.

*I confess I had to go google his name