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

[NicoV]

I always love comparing charging. Let's just pretend that there actually is a 175kW CCS v2 (not v1) charging network where you're going.

E-Tron is nominally 150kW to 80%, but in practice appears to be 150kW to ~60%, and under 120kW to 80%, and further slowing above that. So, say, starting a charge with 40 miles remaining as a safety buffer, and adding 140 miles, that's 20% to 90%, so probably an average of 125kW or so, due to the slowdown near the end. At around 240Wh/km WLTP, that's 520kph WLTP.

40 miles on a Model Y LR is 13%, and 180 miles is 60%. On a newly-updated 145kW V2 Supercharger, that'll be an average of, say, 135kW. Model 3 WLTP Wh/km is 140, so let's say 155 for Model Y. 870 kph WLTP. Now let's redo for Supercharger V3, with an average of, say, 155kW over that range (probably too pessimistic). 1000 kph WLTP.

And E-Tron is only a 5-seater with 40% as much cargo space as Model Y Much closer to Model 3 in interior size than Model Y (despite its bulky exterior dimensions; it's poorly packaged with a massive hood). The above charging figures for Model 3 instead of Model Y become 12% to 55%, ~140kW, 1000 kph WLTP on V2; and ~165kW, 1179 kph WLTP on V3.

And E-Tron is the fastest-charging of the "competitors" released thusfar

Www.abetterrouteplanner.com now supports other EV’s, in particular the i-pace and e-tron. It will also determine the optimal charging duration using ccs chargers, just as it does for Tesla with supercharging.
Pro tip: if somebody talks to you that they are interested in a non-Tesla EV, let them use ABBR to calculate how long their favorite road trip takes, and compare that to a long range Model 3. Take e.g. 1000km trip from Brussels to the south of France. The results are sobering.

 

[voip-ninja]

That's nonsense, it's not actually true, Tesla has much better cash generation metrics and gross margins than BMW:

BMW last quarter:

• revenue: $24.7b
• cash from opeations: +$1.3b
• free cash flow: -$296.9m

TSLA last quarter:

• revenue: $7.2b
• cash from operations: +$2.1b
• free cash flow: +$880m

So if we only measure cash earned and ignore the much higher growth rate of Tesla, then Tesla is already generating 60% more cash than BMW, and Tesla actually has positive free cash flow, and does this from a third of a revenue.

I.e. cash generated per unit of revenue is just around 5% for BMW, while 29% for Tesla: 5.5x larger.

If BMW is valued $55b then by this metric Tesla should be valued about $300b, or over $1,500 per share, without a growth premium.

The fact is, Tesla is massively undervalued compared to its automotive peers. I have no idea how you came up with the 'enormous market cap compared to peers' nonsense.

You are looking at a single quarter that was not totally terrible for Tesla. Let's compare again for Q1 2019 and see how things look.

I don't have a dog in this fight, other than owning and being slightly disappointed in Tesla products and owning and being generally satisfied with BMW products.

It is in my financial best interest for Tesla to succeed, since I have a decent chunk of change tied up in one of their rapidly depreciating assets.

 

[Doggydogworld]

Your friend probably got fooled by the bashers.
Suggest him to take a look of these two pages:
Privacy & Legal | Tesla (Patent Pledge)
Privacy & Legal | Tesla (Patent List)

Any one can use these Tesla patents for free, they don't even need to notify Tesla. They don't need to join a "share all EV patents" club, there is no such a thing. If your friend still sticks to his view after reading Tesla's pledge and patent list, I see no point to keep arguing.

The "good faith" clause requires that they not have any part of any IP lawsuit against Tesla or any 3rd party EV company. How is that different from a "share all EV patents" club?

 

[sundaymorning]

I think this means your $2500 Pre-Order fee is forfeited if you return your delivered Model Y within 7 days. You can get a full refund on the pre-order fee if you cancel prior to delivery. After delivery you can get a full refund on the vehicle payment, but not on the pre-order fee. That is how I am reading this. Do others have a different interpretation?

BTW, I do think that this is perfectly reasonable, as Tesla does in fact incur a lot of cost for fulfilling a delivery and has a valid need to recover that cost. Without this sort of provision, they'd simply have to sell the Model Y at a higher price, forcing actual buyers to cross-subsidize a post-delivery refund of the pre-order fee.

Edit. The next to last sentence does make it clear that the pre-order fee will be credit to the purchase of the vehicle upon delivery. So this does not add to the price. But it does seem a little ambiguous to me how that credit is treated in the event that the buyer returns the vehicle within 7 days.

Standard operating procedure for returning big ticket items such as furniture, electronics, appliances from online orders are a minimum of 10% restocking fee. Sometimes the restocking fee runs up to 30% or 1/3 of your order. Tesla is quite nice for allowing returns, you won’t be able to do this at the car dealership. I believe the moment you drive the car off the deslership’s lot at Ford the value of that car will drop $5k.

 

[VValleyEV]

Your friend probably got fooled by the bashers.
Suggest him to take a look of these two pages:
Privacy & Legal | Tesla (Patent Pledge)
Privacy & Legal | Tesla (Patent List)

Any one can use these Tesla patents for free, they don't even need to notify Tesla. They don't need to join a "share all EV patents" club, there is no such a thing. If your friend still sticks to his view after reading Tesla's pledge and patent list, I see no point to keep arguing.

I beg to differ. Please read through the following deep dive, which makes the point that agreeing to the pledge requires you to share all your EV patents also (which seems fair to me):
A Closer Look at Tesla’s Open-Source Patent Pledge - Lexology

EDIT: THIS is the question I was asking, not the above piece. My anti-Tesla friend sent me this about his criticism of Tesla’s patent sharing, and I posted it it asking for someone to decode:

“ANSI/ISO/IEC/ITU IPR and Statement of Participation agreements are precise. They do not allow for anyone's IP to be "free". RAND terms where the royalty is zero is OK, but that does not EQ "free". If you won't sign a Statement of Participation agreement you are basically disallowed from making any contributions and perhaps even participating in those standards making bodies. If TSLA was serious they would do same (SoP), but I do not believe that they are.”

 

[MarcusMaximus]

That's not my point. Will AP fatalities affect Tesla's bottom line? How will BMW fires affect their bottom line? Which company can absorb millions in lawsuit payouts better?

All of this snark about BMWs catching on fire when Teslas are self-driving under trucks and decapitating the driver are ridiculous, boorish and people just need to stop with it.

You'll note that the original "ha ha ha ha BMW catch fire HA" comment was simply a complete non-sequitur response to the comment that BMW has similar market cap to Tesla but has enormous profitability and delivers over 10X as many vehicles as Tesla does.

I did miss the context of what you were replying to. That said, I think you’re missing some of the context on the BMW fires angle as well. People are poking at that(and broader issues with ICE vehicle fires across brands recently), due to the enormously over-emphasized few Tesla’s that have caught fire(almost always after a high-speed crash) in the media and amongst critics.

I do think BMW’s issues with fires are MUCH larger than supposed issues with Autopilot(I’ll note again: exactly 2 confirmed AP fatalities *ever*. The latest accident in FL hasn’t been confirmed to involve AP at all). Both in sheer quantity of cars involved and financially for the company.

 

[Curt Renz]

It's Triple Witching Day, the quarterly expiration of large numbers of stock index futures, stock index options and individual stock options.

TSLA Max Pain based on yesterday's close was $295. Based on today's share and options prices that should no longer apply. A glance at today's options open interest and volume for the March 15 expiration, makes it appear that $280 would be the most likely target to harm the greatest number of both put and call buyers, and benefit option writers which are largely hedge funds and market makers.

 

[EVNow]

So one question I want the analysts to ask on the ER conference call is. How much similarity is there on Model Y's production line vs Model 3's. Does it require a complete new line to be installed and how much is the capital cost on that.

Why can't they be built on the same line ? That's what other companies do. Nissan can build Leaf and other ICE cars on the same line - infact they can build any of the models in any arbitrary sequence.

Doesn't Tesla build S& X on the same line ?

 

[sundaymorning]

Tony Sacconaghi of Bernstein maintains $325 TSLA price target, while explaining that the market is reacting to concerns about current demand.

He would prefer to see more emphasis by Tesla on long-term growth rather than near-term profitability. Meaning he would like to see the company raising funds to accelerate growth.

CNBC - this morning: Market nervous over Tesla Model 3 demand, says expert

smh wasn’t he the same guy that just last year wanted Tesla to focus on near term profits and not long term growth?

 

[Bobfitz1]

So one question I want the analysts to ask on the ER conference call is. How much similarity is there on Model Y's production line vs Model 3's. Does it require a complete new line to be installed and how much is the capital cost on that.

We know that they will need to buy and install a complete new line(s) at GF1 for MY. The question should be, how much less engineering cost and less time to install will MY take compared to M3 given how much they have in common. And roughly how much less capital that translates into.

 

[SO16]

You are looking at a single quarter that was not totally terrible for Tesla. Let's compare again for Q1 2019 and see how things look.

I don't have a dog in this fight, other than owning and being slightly disappointed in Tesla products and owning and being generally satisfied with BMW products.

It is in my financial best interest for Tesla to succeed, since I have a decent chunk of change tied up in one of their rapidly depreciating assets.

One company has been around many decades longer. Let’s hope that older company has had more successful quarters.

And let’s be sure to do the same for the rest of 2019 and 2020.

 

[InDaClub]

Well if you're going to go down that road how many millions will Tesla have to shell out for fatalities where AP was engaged? I mean come on, BMW has peanuts worth of fires same as every major auto maker.

Peanuts? Far from it - BMW recalls 1 million vehicles for fire risk

 

[Causalien]

We know that they will need to buy and install a complete new line(s) at GF1 for MY. The question should be, how much less engineering cost and less time to install will MY take compared to M3 given how much they have in common. And roughly how much less capital that translates into.

This might depend on how much pre-order they get. If it is on the magnitude of the Model 3, we might need a new line. If it is lackluster, then combine it with the model 3 is a good idea.

Why can't they be built on the same line ? That's what other companies do. Nissan can build Leaf and other ICE cars on the same line - infact they can build any of the models in any arbitrary sequence.

Doesn't Tesla build S& X on the same line ?

Building on the same line implies that Model Y demand volume is not high enough. Which mean that total production rate of Model 3 + Y will be less than 7000 a week for the year 2019. As shareholders, we do not want this outcome.

 

[shlokavica22]

You are looking at a single quarter that was not totally terrible for Tesla. Let's compare again for Q1 2019 and see how things look.

I don't have a dog in this fight, other than owning and being slightly disappointed in Tesla products and owning and being generally satisfied with BMW products.

It is in my financial best interest for Tesla to succeed, since I have a decent chunk of change tied up in one of their rapidly depreciating assets.

Look for yourself in the BMW's reports (from Q4/2017-Q4/2018). There is a trend there. And then there are TSLA's reports showing the exact opposite trend.
Do you think it's a coincidence? Q1 results will help you answer that.

 

[PhaseWhite]

The car has an entirely new unit body and will require all new press equipment to do the panels, etc., unless they are outsourcing it. Fabrication investment is still going to cost a ton for this car.

I'm not going to dispute that it should be easier... but we have to consider Tesla's reality. Elon appears to be in the mode of hoarding cash in order to pay for the line expansion needed for Model Y using Tesla capital instead of financing. This, in my opinion, is a risky move, guess we'll see. I say it's risky because any delay to Tesla increasing the # of products they have on offer is risky. CUV is #1 selling car class in America and it is gaining market share in every market I am aware of.

I understand how pissed he is being beholden to financiers in order to get his plans executed but right now Tesla needs to accelerate even more rapidly than they are, think about how fast they could have Y out if they had a massive cash infusion NOW.

Think about where Amazon would be today if 10 years ago Bezos had stopped taking cash infusions.

^This 100%. And in my opinion (which I know is unpopular here) a lot of the drama we are seeing recently is all related to Tesla, err Musk's decision that he wants Tesla to be self funding from here on out vs raising additional capital.

Tesla knew a rough patch was coming with the demand in Q1 which is their slowest season and that it would be made worse with the step down of the federal EV tax credit. At the same time that they would need a large capital outlay for inventory in the international delivery pipeline AND they knew they had $920M debt payment to make. A responsible executive and board faced with all these events would have probably raised capital.

Instead of having the capital on the books to give them some flexibility and to accelerate the product launches in the pipeline, I see a lot of circumstantial evidence that Tesla was forced into rash action like the store closing announcement and Model 3 35k announcement. One can also draw a relationship to the Autopilot pricing shenanigans and the Model Y announcement.

What do all these dramatic events have in common you might ask? They are all things that drove new order deposits and existing customers to fork over money for Autopilot upgrades. It seems obvious to me that these things were done in order to raise cash.

Instead of telling the Saudi's to buy TSLA on the open market, Musk could have taken 2.5B in new capital. In my estimation an announcement of a capital raise would have been positive for the stock price. And if he had taken a deal (or some other deal for equity capital), it probably would have avoided the whole going private/staying public drama and trouble with the SEC.

Even this Model Y announcement felt rushed and feels to me like a wasted opportunity. I watched it live and let's be honest, it was underwhelming. Invites were sent at the last minute and the setting kind of small and cramped and had poor lighting. At the event Musk barely showed or even talked about the Y. The live stream cut out almost immediately afterwards and before Musk mentioned any details about preordering the car. It would have been better to have more time spent on the Y (Like a comparison with other CUVs in the segment) and less on all the achievements Tesla has made. Yes I know Musk had originally given a date of 3/15/19, but this event did not have the proper preparation, there's no other reason I can think of as to why it was such a weak presentation.

 

[jerry33]

Why can't they be built on the same line ?

Because they are selling all they can build, so they need an additional line to produce more.

 

[StarFoxisDown!]

I agree with TE being a wild card, but I think FSD is a larger one (in the short run).

To be honest, at this point I don't know how the market will respond to FSD demonstration at the end of the year. There's clear Wall St manipulation going on and they'll just used the narrative of "it doesn't matter that they showed FSD, it'll be years before it'll get approved". It boggles my mind how Waymo can be valued at 170 billion yet have huge hurdles that Tesla will not. Even if Waymo beats Tesla to release of FSD which I don't think it will, but let's say just for hypotheticals. They have to retrofit a ton of vehicles with the hardware in order to start generating any revenue. They have to try and get other auto makers to include the hardware in their own cars. They have to give auto makers a cut of the revenue. If/when Tesla hits FSD...….they simply flip a switch. For the Tesla's that don't have the CPU that's needed, a mobile service van comes out and swaps it in 15 mins. Tesla get's all of the revenue of the FSD upgrades and all of the revenue from their Taxi fleet while splitting it with tesla owners that want to use the taxi service.....yet Tesla doesn't have any costs associated with it.

The thing I like about TE is that it's a factor that Wall St is clueless on and being clueless means the opportunity for big shocks/surprises that could cause a re-evaluation of Tesla's value. Right now, Wall st can just make up false narratives about demand, margins, etc...They have no clue how to determine Energy demand and supply and that means they are kept in the dark

 

[Fact Checking]

Note that I updated the numbers - embarrassingly I typo-ed two key figures ...

Tesla is still 2x undervalued compared to BMW based on cash metrics, without a growth premium, and conclusions are still very similar.

You are looking at a single quarter that was not totally terrible for Tesla.

We can repeat it for Tesla's Q3'18 as well, which was even better. I picked the worse of the last 2 quarters of Tesla, which was after the initial Model 3 ramp-up already.

Let's compare again for Q1 2019 and see how things look.

We can repeat it with Q1'19 which will be similar in terms of cash generation as Q4'18, and we can certainly repeat it with Q2'19 which will probably be a record quarter.

I don't have a dog in this fight,

You repeated the "Tesla is overvalued compared to their peers" false narrative - I corrected you, because it's not true.

 

[Driver Dave]

The reaction to the Model Y is nuts.

It looks totally great and from an investor point of view, exactly what I wanted:
A compact SUV built on M3 design that they stamp out like candies.

They now have 4 cars hitting multiple price points built on the pretty much the same tech, motor, battery platform.

And a huge network of superchargers to charge them, locking people into the Tesla ecosystem.

And it's happening now, while the other car guys fiddle about with concepts, like deer in headlights.

It is amazing how people who have never even driven one of these cars are commenting. They have no idea what's going on.

Also Elon was not subdued, he was relaxed, confident and joking with audience. He was a guy who knows they made it and future is very bright indeed.

Most people just don't get what's happening.

It's so obvious Tesla is right on track, ahead of all others, with lots of room to grow huge.

So, so obvious...

 

[Nathan]

I have an entire thread documenting my problems, which are painful and which Tesla seems unable so far to fix. One possibility for at least one of the problems is that the suspension might not be properly bolted to the chassis, something which Tesla have a TSB on but which nobody checked on my car when I brought it in complaining of it making unusual noises when going over small bumps.

My Tesla ownership experience to date has been painful enough that it's doubtful at this point if I will own another one.

Sorry to hear that. I have had the opposite experience. Couldn't be happier. I guess the question I have is did you just get a "lemon" or are there more people out there like you? Have you had other people say they have similar problems?