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

[KarenRei]

Tesla Model Y Pricing Predicted To Start At $45,000, Top Out At $85,000

In regards to market potential, the J.D. Power report states:

Tesla’s latest SUV, the Model Y, presents one of the most compelling opportunities yet for the brand to increase the sales volume. The segment is big: SUVs currently account for 49% of the U.S. market. More than half (52%) of those who bought a vehicle in the $30,000-$50,000 price range purchased an SUV.​

Moving on to pricing, J.D Power predicts the following:

Pricing for the smaller Model Y is unknown, but J.D. Power estimates a starting price of $45,000 before tax rebates, rising to $85,000. In 2018, 1.4 million SUVs were sold in the $40,000-$90,000 range. This means if Tesla captures only a modest portion of this segment, it will deliver significant sales growth.​

$45,000 is a bit above the previously speculated figure of $40,000, but it’s in line with our expectations.

Will the Model Y take sales away from the Model 3? J.D. Power doesn’t really seem to think so, stating:

While some have speculated that the Model Y may cannibalize demand for the Model 3, expanding into the SUV segment opens more sales potential with just one model than sales of all three of Tesla’s models offered in 2018 combined.​

A $45k starting price is way more than Musk's stated "10% more than Model 3" statement. I think J.D. Power is way off. But I hope that most people are similarly way off in their expectations at present

 

[Fact Checking]

A $45k starting price is way more than Musk's stated "10% more than Model 3" statement. I think J.D. Power is way off. But I hope that most people are similarly way off in their expectations at present

I think it's in line if the announced base model is AWD-only and SR+-ish. There is no RWD version of the Model X.

Tesla should IMHO avoid the $35k situation: they could have announced a $39k Model 3 and kept $35k an internal price target.

OTOH "patience" is not one of the strongest traits of Elon.

 

[jerry33]

No: Obama's hand picked NASA administrator saved SpaceX via the first CRS contract, and the Obama administration's stimulus loan to Tesla helped too.

I thought the stimulus loan was started during the Bush administration to save Ford (they received $5B, which they never paid back, compared to Tesla's $500M, which was paid back). The money, both Ford and Tesla, was actually disbursed during the Obama administration.

 

[Pras]

I think it's in line if the announced base model is AWD-only and SR+-ish. There is no RWD version of the Model X.

Tesla should IMHO avoid the $35k situation: they could have announced a $39k Model 3 and kept $35k an internal price target.

OTOH "patience" is not one of the strongest traits of Elon.

I think announcing the lowest price point upfront is better in the long run. Agree that you can ‘bait’ a few by announcing higher price and then reduce, it has long term negative impact. First, the brand takes a hit from shifting customer expectation (a little bit of what we saw with model 3). Second, you may be losing potential customers permanently over the next year (till you announce lower price). Third, the perception of mass market car will be lost (better to catch the attention up front).

I even think that Tesla should start by a broad mix of price points for model Y (eg. have at least some SR+ or MR available from the begining). Of course it depends on production readiness.

 

[Silent Ludicrosy]

I can't believe today is finally here.

Yesterday a nice older couple out walking their dog stopped to ask me about the S. We talked about reliability & charging briefly, and I was expecting to have to dispel some FUD. Instead they surprised me by saying how excited they are for the Model Y reveal tonight. Bullish AF.

 

[AndyH]

Agree!
EVs are like electric watches, they just runs and it is cheaper than mechanical watches now, after a few years only people who loves ICE as an art piece would buy them to show off. Just like no one buys a mechanical watch to keep time.

When the transition is done, only brands like Ferrari or Koenigsegg would survive without fully Electrifying their fleet, I mean all BEV, not hybrids.

Yes, the newly released Koenigsegg Jesko should be seen as the last hurrah of pure ICE with 1600hp on biofuel, 1400kg weight and 300mph top speed. When you look into all the details like the bespoke in house gearbox then the Jesko truly is a marvel. Much like a mechanical watch with lots of complications.

Koenigsegg will only be releasing hybrids and full EVs from now on. The founder and CEO Christian Von Koenigsegg has a Model S as his daily driver and is a big fan. He admitted publicly that the reveal of Roadster 2 forced Koenigsegg to change their plans.

 

[Fact Checking]

I thought the stimulus loan was started during the Bush administration to save Ford (they received $5B, which they never paid back, compared to Tesla's $500M, which was paid back). The money, both Ford and Tesla, was actually disbursed during the Obama administration.

So:

Tesla gets loan approval from US Department of Energy

April 20, 2010

SAN CARLOS, Calif.--(BUSINESS WIRE) —

Tesla Motors has received approval for about $465 million in low-interest loans from the US Department of Energy to accelerate the production of affordable, fuel-efficient electric vehicles.

Tesla will use $365 million for production engineering and assembly of the Model S, an all-electric family sedan that carries seven people and travels up to 300 miles per charge.​

While the DoE funds might originate from before, I don't think the DoE was required to grant the loan to Tesla, it was a discretionary/political decision by the Obama administration.

This was shortly before Tesla's IPO.

 

[jerry33]

Are there any limitations on using the advertisements created by owners for the contest a while back? I would love to see those plastered all over social media. They were really well done.

Dan

You'd have to ask each owner for permission. I'm not sure what Tesla's corporate policy is. At a minimum there would have to be a disclaimer that the material was not created or approved by Tesla in any way, and does not reflect Tesla's policies or forward looking statements.

 

[KarenRei]

I think it's in line if the announced base model is AWD-only and SR+-ish. There is no RWD version of the Model X.

I don't find Model X relevant. It's not just an entirely different market with respect to price, and a vehicle designed many years ago under a different calculus, but it also doesn't share 75% of the hardware with the Model S.

Model Y is targeting 700k/year sales, vs. 500k/year for Model 3. That will only happen if there's cheap versions available.

Also, there's no need for AWD-only. It's a crossover, not a SUV. It's not designed for offroading. The vast majority of crossovers have only one driven axle.

 

[jerry33]

So:

Tesla gets loan approval from US Department of Energy

April 20, 2010

SAN CARLOS, Calif.--(BUSINESS WIRE) —

Tesla Motors has received approval for about $465 million in low-interest loans from the US Department of Energy to accelerate the production of affordable, fuel-efficient electric vehicles.

Tesla will use $365 million for production engineering and assembly of the Model S, an all-electric family sedan that carries seven people and travels up to 300 miles per charge.​

While the DoE funds might originate from before, I don't think the DoE was required to grant the loan to Tesla, it was a discretionary/political decision by the Obama administration.

This was shortly before Tesla's IPO.

Thanks for the clarification. Re-reading what I wrote, I should have said the "loan application" was started during the Bush administration, even though the approvals were done during Obama's.

 

[jbcarioca]

While I agree in principle, note that the two key declarations in the case already go way beyond the question of the legality of the "about 500k" tweet:

• Elon's affidavit carefully lays out the "chilling effect" of the SEC's censorship of Elon's speech and the "prior restraint" it applies even to speech that is not covered by the settlement. (They also argue that Elon didn't agree to the SEC's reading of the settlement, and even if he agreed to it it's an impermissibly broad construction of the settlement - backed by strong citations.)
• MIT accounting professor's expert opinion carefully lays out the economic harm the SEC's clearly erroneous interpretation of the settlement inflicted on Tesla, Elon and Tesla shareholders in general.

See this longer comment where I outline the lines of attack Elon's lawyers appear to be preparing:



Also note that the judge could have limited Elon's broadening of the argument already by calling a contempt hearing straight away - instead she allowed the SEC another round of reply and signaled willingness to hold an evidentiary hearing to cross-examine the broader evidence and testimony.

I fully expect the SEC's rebuttal brief to argue against the broadening.

Note that broader evidence only matters under the broad issues Elon's filing rises - under the SEC's theory the whole matter could be decided just based on the undisputed literal contents of the tweets, Tesla's prior guidance and the wording of the consent degree. Neither the expert testimony not Elon's state of mind would matter under the SEC's theory.

To me this strongly suggests that the judge is not only taking the constitutional arguments seriously but agrees that they are relevant - which is not unsurprising from a judge who clerked for Justice Stevens on the Supreme Court ...

While I agree in principle, note that the two key declarations in the case already go way beyond the question of the legality of the "about 500k" tweet:

• Elon's affidavit carefully lays out the "chilling effect" of the SEC's censorship of Elon's speech and the "prior restraint" it applies even to speech that is not covered by the settlement. (They also argue that Elon didn't agree to the SEC's reading of the settlement, and even if he agreed to it it's an impermissibly broad construction of the settlement - backed by strong citations.)
• MIT accounting professor's expert opinion carefully lays out the economic harm the SEC's clearly erroneous interpretation of the settlement inflicted on Tesla, Elon and Tesla shareholders in general.

See this longer comment where I outline the lines of attack Elon's lawyers appear to be preparing:



Also note that the judge could have limited Elon's broadening of the argument already by calling a contempt hearing straight away - instead she allowed the SEC another round of reply and signaled willingness to hold an evidentiary hearing to cross-examine the broader evidence and testimony.
...

Discovery on a motion for contempt is very unlikely. The parties will use declarations and if there is a factual dispute an evidentiary hearing. This is not going to expand past the issue of whether the tweet violated the consent decree.

Note that broader evidence only matters under the broad issues Elon's filing rises - under the SEC's theory the whole matter could be decided just based on the undisputed literal contents of the tweets, Tesla's prior guidance and the wording of the consent degree. Neither the expert testimony not Elon's state of mind would matter under the SEC's theory.

To me this strongly suggests that the judge is not only taking the constitutional arguments seriously but agrees that they are relevant - which is not unsurprising from a judge who clerked for Justice Stevens on the Supreme Court ...

This is more precisely stating the views I hold on this subject. I did, in my earlier post, conflate ‘evidentiary hearing’ with ‘discovery’, but the net effect is negligible if the evidence brought forth shows unlawful actions by the SEC. The question of whether the court considers the highly unusual nature of the SEC action and the Noe data as evidence of government malfeasance is important. If the court decides that the SEC acted through ineptness rather than malicious intent the resulting might differ.

Anyone who understands the difference between civil and criminal procedure also understands that when a given civil case presents larger questions the judge becomes crucial. As Fact Checking points out this judge is fully prepared to deal with potential constitutional issues as well as matters of specific statutes. Very broadly, civil actions that present Executive Branch overreach issues coupled with potential misconduct in prosecution of a defendant are just the sort of seemingly arcane issue that stimulates precedent-setting decisions. We all should be well aware that this is almost certainly the approach followed by the Tesla response. Remember ‘Sunday...immediate response”. That was absolutely an appeal for recognition of malfeasance by the SEC.

Note: I am not a graduate of a law school nor am I admitted to any bar. I have had a few law school courses, mostly contracts and international trade related. My views on this subject are therefore demonstrably incompetent from a purely legal perspective. However, during my career I spent many years searching for tiny legal and/or regulatory advantages. Some of those were rather successful so I may well have hubris on these issues.

 

[Dan Detweiler]

You'd have to ask each owner for permission. I'm not sure what Tesla's corporate policy is. At a minimum there would have to be a disclaimer that the material was not created or approved by Tesla in any way, and does not reflect Tesla's policies or forward looking statements.

Even if they do reflect Tesla's policies and forward looking statements?

Dan

 

[Cobbler]

Tonight:
Elon appears on an empty stage... Audience goes wild and shouting 'Elon! Elon! Elon!'
Elon grabs his phone and uses advance summon to get the model Y on stage.
Rock music playing in the background and fireworks appear. Crowd goes crazy!
Car creeps in from the backstage, no driver behind steeringwheel and parks in front Elon
Smiling Elon presents the model Y

After all the slides showing all the specs/options/pricing/... audience is hyperexcited and is invited for test rides.

Elon grabs his phone and summons the model S 2.0.... Internet explodes!

Headlines tomorrow: "Tesla rushes model Y and refreshed S to overcome fallen demand"

 

[ReflexFunds]

1,800 Teslas are due to be delivered by ship directly to central Oslo today. In context, that is equivalent to 1.2% of Norway annual car sales, in one day, from one brand.

"The 1,800 Teslas arriving in Oslo on Thursday will be offloaded starting early Friday morning, before being transported to the nearby town of Lillestrom. The cars will then be readied for delivery to customers, a process that includes fitting them with winter tires."

The cars are on Glovis Courage which arrived at Pier 80 in San Francisco on February 8th, departed on February 12th and offloaded cars in Zeebrugge on March 6th.

Have any other ships offloaded cars in Europe outside of Zeebrugge?

Bloomberg - Are you a robot?

 

[jerry33]

Even if they do reflect Tesla's policies and forward looking statements?

Dan

Yes, because Tesla will want to be completely divorced from any liability that the ad may pose.

 

[mrdoubleb]

1,800 Tesla's are due to be delivered by ship directly to central Oslo today. In context, that is equivalent to 1.2% of Norway annual car sales, in one day, from one brand.

"The 1,800 Teslas arriving in Oslo on Thursday will be offloaded starting early Friday morning, before being transported to the nearby town of Lillestrom. The cars will then be readied for delivery to customers, a process that includes fitting them with winter tires."

Bloomberg - Are you a robot?

Wow. yeah, they`ve been doing 150 cars per day on average for the past days/weeks. there is a good chance we`ll get another 2k to customers over the next 2 weeks.

 

[Pras]

I don't find Model X relevant. It's not just an entirely different market with respect to price, and a vehicle designed many years ago under a different calculus, but it also doesn't share 75% of the hardware with the Model S.

Model Y is targeting 700k/year sales, vs. 500k/year for Model 3. That will only happen if there's cheap versions available.

Also, there's no need for AWD-only. It's a crossover, not a SUV. It's not designed for offroading. The vast majority of crossovers have only one driven axle.

Agree. In CA the largest Tesla market, most people would want to get more range and save money with RWD.

PS: I have just started to comment on this board, so my intro is overdue. I am an enthusiast since the first I came to know of Tesla. I am a mechanical engineer turned banker and I believe the Tesla/EV story is only beginning . During my undergrad and post grad, I have worked on ICE engines, control systems (a strength of Tesla) and even gas turbine engine (PW scaled down models). So from my personal point of view EVs are just fundamentally superior to ICE and whoever owns the battery expertise wins the EV race. I have also done some face recognition work in my master project (a minor area for me) and I cringe when people don’t get the point what Elon makes about NN and vision being better than a lidar based system.

So nothing new that you experts don’t know already or appreciate but just the point that it is not all about messaging and arguments in press, ultimately people who know, know Tesla’s advantage.

Oh BTW, I own a model 3 LR AWD, and heavily invested in Tesla stocks. I live in NJ.

Good to be hear from you experts. Without you I would have lost my strength and sold my shares in panic, so many times. With you I feel solidarity and constant reassurance that we will get to where we think we should be.

 

[Fobble]

On CNBC just now:
Baron touts SpaceX as "disruptive" and still positive on Tesla.

 

[Pezpunk]

Also, there's no need for AWD-only. It's a crossover, not a SUV. It's not designed for offroading.

neither is the X, haha.

but generally i think you're right -- if the Y is going to sell 700k units a year eventually, it needs to have a RWD version, and start closer to $39k if possible.

 

[Fact Checking]

One of the best Model Y front view mockups I've seen so far:

Spoiler: Model Y mockup

Source: Reddit.