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

[VValleyEV]

Finally, let's note that the ceiling for Tesla's organic demand is huge, it's much farther away than Apple was from the ceiling of the premium smartphone market back in 2012:

• There's over 100,000 car purchases over $35k ASPs in the U.S. alone, every single week.
• There's over 100,000 similar car purchases in the EU as well over €35k, every single week.
• There's over 100,000 such purchases in China as well, every single week.

Even 10,000/week would only be scratching the surface of global automotive organic demand in the price range and form factors that Tesla is offering.

THIS.

 

[StarFoxisDown!]

Yes, but production is not sales. It's sales that's really critical.

What we really want to see from Tesla Energy is to start getting revenue from those really big powerpack / megapack projects. Those will be devouring cells en masse.

In addition to elon saying TE could triple this year on the Q4 earnings, he again emphasized that 2019 will be the year of Tesla Energy at the Model Y event. Would love to see the TE ramp starts to accelerating

 

[jerry33]

Elon blew the whole take private fiasco in our faces and also dragged us into a fight with the SEC. I don’t want to deal with that crap again. Yes the media has treated him unfairly; but a lot of it was also brought upon himself. I don’t want any more talks of Saudis bailing him out with a take private deal. Another take private tweet and the stock will plummet.

Although Elon's tweet is what's getting the most attention, I thought that the story had already broken before Elon tweeted, in which case Elon's tweet was not material because it was already public knowledge.

 

[bdy0627]

There’s a dangerous tendency on this forum for any questioning of demand to be treated as a thought crime. We know that Tesla are targeting steady state production of 10k a week. And we know there’s a long standing internal assumption that steady state ASP will be $42k. Which means there’s some steady state cap on demand for premium models that is well below 10k per week.

Q4 had an artificially elevated demand curve in North America due to tax credit pull forward, Q1 the opposite effect. European demand for premium models in Q1 (and possible Q2 also) had a pent-up demand effect that that will fade over the coming months. This can be mitigated somewhat by opening up to untapped markets but there will also be a pent up demand effect in those markets too that will fade in time.

It’s perfectly reasonable to speculate that 5k-ish per week is as much demand for LR Model 3s as we’re likely to see.

I'm with you. I don't understand all the disagrees to this. Model 3 ASP is dropping and will continue to drop as the initial demand for the much higher priced premium options is exhausted. Intentional or not, production does not appear to have increased substantially over the last 4 months or so. Manufacturing efficiencies are likely similar to Q4. Model 3 ASP is decreasing because it has to in order to match demand. Sure, Tesla could focus on only selling the higher margin models worldwide but that would almost certainly limit sales to less than current production. It would also limit sales in the U.S. to a rather small percentage due to exhaustion of the backlog interest in the higher margin trims. Margins are generally best in the U.S. due to far lower shipping costs. Tesla wants to continue to supply to the U.S. and international, which means they absolutely must provide lower priced variants, particularly in the U.S. It's a crazy juggling act that did not go particularly well in Q1.

 

[Compton]

EM mentioned during the Model Y unveil that Tesla is building a gigawatt hour scale energy storage system in California. The only project of this scale that I was aware of was with PG&E. However, I thought that the project got cancelled because of PG&E's bankruptcy. Any more info on this?

 

[seldon]

In addition to elon saying TE could triple this year on the Q4 earnings, he again emphasized that 2019 will be the year of Tesla Energy at the Model Y event. Would love to see the TE ramp starts to accelerating

I also noted Musk mention 2019 will be the year of Tesla Energy. Anybody want to guess what that means in terms of revenue for Q1? Seems like it could be quite significant. Assuming that Tesla Energy has been supply constrained due to limited battery pack production and given that Tesla produced about 10k fewer cars in Q1 vs Q4, how much revenue would that generate if all that excess battery/pack production go into energy products? Can anyone do an estimate of that? It seems like there is potential for significant unexpected Energy revenue.

 

[aubreymcfato]

That’s valid. But here’s the thing, would the EU be more efficient with the money or would Tesla? Which entity does more with less on a regular basis? That answer should ease your mind about who would do better receiving the money.

Regarding climate change, I have little doubt about who is more efficient. But 2B are a lot of money, so I think that a crucial factor is the amount of the Tesla fee. If FCA got a 10x discount that's too much.

I also wonder if VW and Peugeot are gonna pay the fine, that would be awesome.

 

[colettimj]

Based on the attached EU chart from the tweet, it looks like FCA is also partnering with Tesla in the US, possibly for CARB ZEV credits. There's another large pile of cash right there, since it includes Dodge brand minivans.

View attachment 394577

Could that be for US-made vehicles sold in the EU? Are there any?

 

[bdy0627]

I disagree. Demand can be increased by lowering price or improving value....true for any product with high substitutes in market, I.e. mass market cars.

Tesla is just optimizing production capacity to realize savings to offer more lower end variants. So a 3% cost saving and hence price reduction, for example, can increase huge demand.

The true demand peak can’t be known yet as we haven’t seen all the variants rolled out to all the regions. Also by that time you will have Shanghai factory online, which I assume will allow further price reduction kicking in further demand. Too early to say this whole story.

We don't know the sustainable global model 3 demand or the trim mix, but we have pretty good info now from U.S. sales. Backlogged U.S,. interest in higher margin variants has been exhausted. The mix we see now in the U.S. is still skewed up since the lower margin variants are minimally available. Once those become more available, we will see a surge in sales of those due to the backlog interest. However, Tesla can and should control availability of the SR/SR+ to keep margins up until the production level is high enough to unleash a high percentage of those lower margin trims. My guess is that we should start to see that in about 1 year, when the China GF is hitting some solid production numbers.

 

[BornToFly]

Me tomorrow if we gap back to 290+ in pre-market on FCA news.....

 

[Krugerrand]

The fact that so many disagree with your post reminds me that yeah, TMC has some cult-like qualities.

No, it just means a number of people don’t agree with that particular thought process, strongly enough to push the disagree button.

 

[jerry33]

If there was an upfront payment from FCA for Tesla to enter the pool and commit themselves to the pool for a few years then easily so: it's a contractual obligation entered, a right traded, for immediate money and future money. Tesla cannot enter into a similar agreement with other manufacturers anymore - so Tesla performed and FCA benefited.

Another way to put this is "Who is least likely to harm Tesla in the long run". Likely that's FCA. So the others will have to spend a bundle of money to meet the standards, which will hurt their bottom lines. FCA gets a minimum cost ride, but are not likely to be in a position to substantially harm Tesla.

 

[hacer]

... plus I don't seem to be able to trade options at all outside regular market hours. I find it somewhat unfair - not a level playing-field...

I'm pretty sure nobody gets to trade equity options AH, at least not on any exchanges.

 

[seldon]

Tesla produced about 10K fewer cars in Q1 vs Q4. So they had at least 500K kw excess battery pack production capacity or additional capacity for 100,000 Powerwalls at around $6.7K/each * 20% margin and we get $134M in potential additional revenue that is not showing up in most projections. Of course there are variables such as actual demand, capacity to put the packs into TE products, and type of TE products (power walls vs power packs etc) but still this points to potential to significant revenue from TE in Q1.

 

[JBRR]

For those looking to read the rules from the source:

REGULATION (EC) No 443/2009 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 443/2009

 

[Krugerrand]

Exposed site? I don't generally associate California with thunderstorms; I lived in Texas back when I had to care about lightning. In Iceland, lightning it's so rare that it often makes the news It's one of the few natural disasters that's not on our problem-list (blizzards, avalanches, hail, earthquakes, volcanoes, tsunamis, landslides, rogue waves, floods (including glacial outburst superfloods), toxic gas clouds... heck, we even get the extratropical remnants of Atlantic hurricanes, and even the normal extratropical cyclones can reach "major hurricane"-strength winds - had 70+m/s gusts clocked just across the fjörd from my land :Þ)

Not a California property.

It’s an unusual locale situated close to a large body of water on one side and a decent mountain range on another side and in a dead Internet zone, in a bit of a bowl, and a large open area surrounded by a good amount of bush.

It’s also a very windy area and highly changeable wind direction spot. You can literally have no wind, two minutes later have a westerly breeze, five minutes later have an easterly gusting wind and then suddenly a cooler northern rush, only to instantly go air movement dead.

Basically it boils down to the fact that different weather fronts regularly smash into each other right above it. Despite that it’s an amazing piece of property with very fertile land. It’s where I’ll be self sustaining and hunker down when the zombie apocalypse hits.

 

[lascavarian]

The FCA deal also potentially resolves another mystery: why was Tesla setting European Model 3 prices about ~$2k-$3k lower than 25% margins would suggest? Maybe they already included the FCA deal benefit in their margin calculations?

This gets to my wonderings. Is there a way to amplify the FCA dollars into more deliveries.

Rather than just recognize the revenue, use it to create an incentive to move more product/vehicles thereby building an increasing longer term revenue stream that exceeds the simple "recognize the revenue". If done well, the SP "might" offer a reward.

 

[seldon]

Tesla produced about 10K fewer cars in Q1 vs Q4. So they had at least 500K kw excess battery pack production capacity or additional capacity for 100,000 Powerwalls at around $6.7K/each * 20% margin and we get $134M in potential additional revenue that is not showing up in most projections. Of course there are variables such as actual demand, capacity to put the packs into TE products, and type of TE products (power walls vs power packs etc) but still this points to potential to significant revenue from TE in Q1.

I meant $670M in revenue $134M in profit

 

[Krugerrand]

CARB doesn't fix the value of ZEV credits in private sales. When there is a sale of credits between companies they just claim to know the credit amount, not the dollar amount.

Yes, of course. Early, coffeeless, not thinking straight. Squirrel! But you know what I meant. Tesla doesn’t decide the terms of that agreement. The government body does. That’s why I questioned about the negotiation aspect of the FCA deal. How much power does Tesla actually have? Some are suggesting quite a lot.

 

[Prunesquallor]

Fred has picked up the story. No new info, though.

https://electrek.co/2019/04/07/tesla-deal-fiat-chrysler-fleet-eu-emission/