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

[Zaxxon]

This year's income tax deadline is Monday. If the bill becomes law, it would first apply to credits on tax forms filed early next year for cars purchased this year, unless their is a retroactive provision. So timing of a purchase this year should not affect the tax credit for prospective buyers. Nevertheless, you could be right that many may wait for the ultimate fate of the bill to become known.

The timing wouldn't matter, but some folks might (will) make the decision to buy at all based on that extra ~$3k pulled in if this passes.

 

[Etna]

Just for the record, CNBC now has a -0.53c EPS consensus for Q1 - was +0.21 a week or so ago

I noticed that, and this morning it went down even further at -0.66c EPS. We're on the right track to engineer a beat.

 

[Pras]

..

The timing wouldn't matter, but some folks might (will) make the decision to buy at all based on that extra ~$3k pulled in if this passes.

Tesla can state that the prices will go up starting when the tax benefit kick in.

 

[Zaxxon]

..

Tesla can state that the prices will go up starting when the tax benefit kick in.

Highly unlikely, since not everyone qualifies for the credit.

 

[Nocturnal]

..

Tesla can state that the prices will go up starting when the tax benefit kick in.

More likely they will just not reduce prices further I think. But if the tax break really boosts demand then a price increase is definitely not impossible.

 

[palmer_md]

....
So the proposed tax credit would end after 600,000 EVs per manufacturer.

In any event, I have suggested to Congress that there be a single sunset date for the tax credits rather than a set number of EVs per manufacturer.

I've always thought that this should be the way it is written. The current design hurts the early adopters. If they simply had a 1 million (or some other number) vehicle limit across all manufacturers then it would encourage early adoption instead of hindering it.

 

[Nocturnal]

I've always thought that this should be the way it is written. The current design hurts the early adopters. If they simply had a 1 million (or some other number) vehicle limit across all manufacturers then it would encourage early adoption instead of hindering it.

Yup. It gives a HUGE benefit to the companies that sit on the sidelines until the EV market is solid/stable. It really defeats some of the intent of the law to begin with.

 

[EVNow]

From Reuters: The bill dubbed the “Driving America Forward Act” would grant each automaker a $7,000 tax credit for an additional 400,000 vehicles on top of the existing 200,000 vehicles eligible for $7,500 tax credits.

So the proposed tax credit would end after 600,000 EVs per manufacturer.

In any event, I have suggested to Congress that there be a single sunset date for the tax credits rather than a set number of EVs per manufacturer.

A set date is difficult because then the cost of the bill is not certain - instead we should have a set total number of vehicles that will get the credit without a per manufacturer block. Per manufacturer is inherently regressive and punishes first movers.

So, if the idea is to restrict to about 200k per manufacturer - like it is now - instead there should be a 2M total limit.

 

[Dan Detweiler]

Tesla's greatest Achilles' heel is achieving growth. They cant get the growth they need from the investments made.
First, profit was to fund growth. Then, loans were taken. Then, losses anyway. Then, still <5,000/wk Model 3 from three lines after nearly two years when two lines were to make 5,000/wk after 6 months by late 2017.

Tesla may forever build superior-in-every-way-cars, they will never take too much business out of the market at large. Some brands may see that especially Tesla is making them look bad, others will have customers that are barely aware of Tesla.

The innovation cards used to be very real, and Model 3 is a leap ahead of everything considering it was built in 2017 to current specs. Model Y however will follow 3 years later without any innovation we're currently aware of. Model S and X are still stuck in 2016, only rumors of an update now bringing demand down to levels not seen in several years.

You can say they eventually get there even if they suffer hick-ups/f-ups but when a monopoly on premium BEVs ends, that argument suddenly loses validity.
Tesla will survive just like GM and Opel did. World domination will require some more first time right management that we've not seen for years.

Even if we assume you are right (and I vehemently think you are not) regarding never taking significant business from the legacy manufacturers, they are being forced, through customer expectation into a realm they are completely and utterly unable to compete in. Just look at the real world specs on the IPace and other "Tesla Killers" they are desperately trying to throw into the market. Yes, eventually they will figure it out...but when? And the most important question will be where is Tesla at that point? You think they are going to be static in their drive to lower cost and increase technological advancement? One thing that is universally accepted regarding the legacy manufacturers is that while they have gotten very good at making cars, they absolutely, positively SUCK at software. How are they going to catch up in a field that they know virtually nothing about? They can't make a competitive alternative to a Tesla for a profit now. How are they going to do it when Tesla keeps driving down their own battery costs and advancing software features (like autopilot) that the others have absolutely no clue how to replicate...let alone for a profit?

They are on a sinking ship, and I think they know it. Some will be able to scrape by perhaps but many will not. There is such a gap between them and Tesla, and the buying public is consistently showing that what Tesla has is what they want. I just don't see them realistically ever catching up. But...I guess we'll see.

Dan

 

[EVNow]

Generally true due to his oil leanings, but as the law stands right now, it will benefit mostly foreign OEMS (and maybe Ford). GM and Tesla will be at a disadvantage. The other side of Trump is the pro American populism, made in America etc. This side of Trump may lean in favor of the bill.

The best case scenario is that the bill is part of larger package with much bigger issues that matter to Trump, and that he wouldn't really care one way or another about the EV credit as long as he gets his more important legislation passed. Hard to put an odds on this now, but I'd say it's still under 50% right now (but that could change quickly).

Yes, they have to make it a part of a bigger bill (even the CR ?) to ensure passage. Forget Trump, otherwise McConnel won't even consider it.

 

[Tslynk67]

Ok but that’s not what I said. I said almost no one knows Joe Rogan outside the US. Tesla is known outside of the US, hence about half its sales being international.

Actually he's very popular overseas too as he has a wide rage of guests in his show. I know someone who listens primarily for the MMA stuff, but listens to his other podcasts too, my wife picked up on him due to having guests like Chris Kresser (functional medicine), I started listening when he had Dr Shawn Baker (carnivore) on one episode. So he covers a lot of bases.

 

[EVNow]

Sorry, if it was not clear, what I meant is the way the law stands now (assuming this bill doesn't get passed), then GM and Tesla remain at a disadvantage to other OEMs (including foreign ones).

True ... but ...

U.S. bill to boost electric car tax credits could rev GM, Tesla

The bill is backed by major automakers including GM, Tesla, Toyota Motor Corp, Ford Motor Co, Fiat Chrysler Automobiles NV, Honda Motor Co, BMW AG, Nissan Motor Co, Volkswagen AG and utilities.

 

[Tslynk67]

Ross Gerber on Twitter
"These are the people that own Tesla. What an amazing group of investors. These are the firms betting on teslas success!"

View attachment 395454

As usual, Goldman adding stock while their analyst downgrades... Yeah, yeah, they'll tell you they're completely separate parts of the company, nada, nada, nada...

 

[EVNow]

As usual, Goldman adding stock while their analyst downgrades... Yeah, yeah, they'll tell you they're completely separate parts of the company, nada, nada, nada...

Even Morgan Stanley.

Unless there is a higher level corporate mandate - the way corporations work - I'm sure the investment side only has disdain for the analyst side. I talk to a personal financial advisor at Morgan Stanley. He is very bullish on Tesla and recommends it to all his customers (he even told me to keep my long TSLA and not diversify it).

 

[larmor]

As usual, Goldman adding stock while their analyst downgrades... Yeah, yeah, they'll tell you they're completely separate parts of the company, nada, nada, nada...

I guess not surprising, the product that an investment firm is crafting is an investment, so the company can most certainly downgrade the equity and buy it, its the mission of the investment firm and what they do, just as short sellers goal is to craft a profit by manipulation of an equity's valuation based spurious and false news cycle.

 

[AndyH]

I don't mind Tesla taking their time with European Giga. Better to complete the Shanghai Giga production lines first and make next factory even more efficient. Elon replying about Shanghai Giga: Vincent on twittter.

 

[VValleyEV]

Awful hit piece in WSJ today by Holman Jenkins:
Opinion | Get Ready for a Pileup, Tesla
“Get Ready for a Pileup, Tesla”

I have WSJ subscription so am willing to add a comment with your help on some specifics, have 2 days before they close comments. Might be marginally useful because existing comments are largely uninformed or off-topic, including the few that are pro-BEV.

I will summarize here bcuz paywall, esp what data I think I need for a comment:

Basis for article data is cited as this one from McKinsey: Improving electric vehicle economics | McKinsey

Let’s call that report “MKR” for reference.

Pitch of the article (NOT my pitch)

• Tesla is only making money because of tax incentives which are expiring, and “Morgan Stanley says Tesla sales will be 344k below its low end last predicted range”. Comment: WTF source and context missing for this number out of the blue.
• BEVs are being sold at a $12k loss, citing MKR. What MKR actually says if you follow the link is:
  • However, there is a problem: today, most OEMs do not make a profit from the sale of EVs. In fact, these vehicles often cost $12,000 more to produce than comparable vehicles powered by internal-combustion engines (ICEs) in the small- to midsize-car segment and the small-utility-vehicle segment (Exhibit 1). What is more, carmakers often struggle to recoup those costs through pricing alone. The result: apart from a few premium models, OEMs stand to lose money on almost every EV sold, which is clearly unsustainable.
  • Comment: Since there are so few BEVs being manufactured, sounds to me like this is really “Chevy Bolt is being sold at a $10k loss before tax incentive”. I think we knew that.
• A whole pile of new BEVs are coming to the US market this year, all by committing $300B to manufacture money-losing cars, but they can break even because of tax breaks.
• Tesla is losing the tax breaks this year, so it is totally screwed because:
  • It’s sales are declining and it only makes money because of tax breaks
  • All these new cars coming get the tax break.
• Comment: can we point to Tesla margins that exceed the original $7500 tax break, certainly exceeded the $3750 incentive level during Q1 which I believe exceeded Q4 in M3 sales, despite FUD we have all seen; also
• Jenkins goes on to claim that BEV successes elsewhere in the world are a sham because of government subsidies.
  • Punchline at end of article: “The kicker is that Norway can afford its electric car habit partly because it’s one of the world’s biggest oil and gas exporters. Pretty much the same basic model now has been adopted by green regulators everywhere. The world is ruthlessly promoting an electric-car industry that is a hothouse flower and will need massive and continuing subsidies from buyers and users of gasoline-powered cars.”
  • Comment: easy to refute that last?

This is really an awful stinker of a piece, would like to provide some focused reply, even without expectation that it will make much difference.

Thanks for your help.

 

[Cloxxki]

Even if we assume you are right (and I vehemently think you are not) regarding never taking significant business from the legacy manufacturers, they are being forced, through customer expectation into a realm they are completely and utterly unable to compete in. Just look at the real world specs on the IPace and other "Tesla Killers" they are desperately trying to throw into the market. Yes, eventually they will figure it out...but when? And the most important question will be where is Tesla at that point? You think they are going to be static in their drive to lower cost and increase technological advancement? One thing that is universally accepted regarding the legacy manufacturers is that while they have gotten very good at making cars, they absolutely, positively SUCK at software. How are they going to catch up in a field that they know virtually nothing about? They can't make a competitive alternative to a Tesla for a profit now. How are they going to do it when Tesla keeps driving down their own battery costs and advancing software features (like autopilot) that the others have absolutely no clue how to replicate...let alone for a profit?

They are on a sinking ship, and I think they know it. Some will be able to scrape by perhaps but many will not. There is such a gap between them and Tesla, and the buying public is consistently showing that what Tesla has is what they want. I just don't see them realistically ever catching up. But...I guess we'll see.

Dan

You seem the operate on the assumption that cars such as I-Pace are supposed to be the absolute best the legacy car makers can achieve. It's not a best effort. Maybe for Jaguar, but they are not exactly tech leaders (anymore).
It's simply not in the best interest for the industry for any BEV to be made that's ultimately appealing to consumers TODAY. Not even if all brands merged and focused on making that one desirable vehicle, they would never be able to make enough of them as they need to build new tooling and source batteries. It takes investment and/or sacrificing production lines needed for other cars that already sell and keep jobs covered.
Had I-Pace been 25% less energy thirty, charging at 250 kW and costing $50K, they'd only had a long waiting line, no extra income. Selling the design to other brands would still not have saved anyone from losing business. The way Model S and X buyers are not sitting on their money waiting for an upgrade, the whole market would crawl to a halt limited by BEV supply. That would cost hundreds of thousands of jobs, basically overnight.
And if legacy car makers were so foolish to make that compelling one car, losing so much business, would Tesla pick up that business? No. They can't make Model 3 any faster than they did now 10 months ago.

The still petrol based industry is trying to get a gradual transition going. Not exposing BEVs greatness too quickly. Not building too many hyper fast chargers. Not because they could never build a compelling BEV, but because it would be like jumping a meter up from joy right into noose.

Tesla is making the others look foolish, but only to that small group of hippies and some really open and clear minded car nerds who can also see Tesla's deficiencies and view the world a bit differently than the average readership on BEV sites.

I have good hopes Porsche Taycan will hold fewer punches. It's been a long time coming and they are readying themselves to replace a good amount of petrol car sales to be lost, or even grow overall. Sounds easy, but it's really hard, even for a smaller premium brand like Porsche.

The software thing... Tesla showed promise, but in my opinion didn't quite deliver, especially on its own promises, let alone based on the architecture effected. What would have been a good year to launch an app store, allow external designers come up with new screen interfaces to sell to the public over the Tesla App Store? I think 2016 would have been acceptable. Now, we get some Easter eggs and seeing charge speed in both kW and mph is still too much to ask. Where is Nerd Mode, huh?
Vital difference between legacy car makers and Tesla is that other brands make a car that their customers want to buy. Tesla seems to change as much to that as they can get away with. Maybe too much. It's seen in the smallest details that are blatantly obvious, cost 10.000's if not 100.000's of sales, but for which Tesla happily takes out 7-8 years to fix. Towing, Estate, how much would that cost now, really? That's what many people who don't have a Tesla yet but could swing that, actually want. Soon there will be a whole generation that could buy 3 or Y but just prefers an instrument cluster and gets themselves on a reservation list for Polestar, Volvo, BMW, etc.

 

[brian45011]

There were three orders approved on the 25th, but how do you know that the FCA agreement wasn't disclosed in the appendices to the 10Q form?

The orders list the individual Exhibits for which Confidential treatment is granted/extended. The most recent 10Q was filed on Nov. 2, 2018. The 10k was filed Feb. 19, 2019. Pages 141 through 171 of that 10k lists every Exhibit ever filed and when filed. No Exhibit in that list with Fiat-Chrysler as a counter-party.

When do you think that FCA agreement was executed?

 

[EVMeister]

Vital difference between legacy car makers and Tesla is that other brands make a car that their customers want to buy.

Are you saying that Tesla doesn't make cars that people want? Seriously? I don't even know where to start with that. I think the sales figures and the fact other manufacturers are constantly comparing themselves to Tesla and talking about Tesla should give you a little hint.