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

[Cloxxki]

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.

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For European manufacturing to be worth the billions investment (debt or shares at this point, realistically), car designs may need to be tweaked a bit to get access to mass markets. Europeans are spoiled, they don't like standing in line for a one size fits all appliance. Tesla quirks such as missing screens and tow hitches really impact demand over here.
Polestar is producing in China, to Swedish design. It takes a lot of economy of scale to compete with that with a European GF. Europeans who are not climate hippies want value for their money and don't like needless discomfort.

The ban on emission vehicles is approaching, but not fas enough for consumers to pay extra for a car that is not all that. For now Tesla has no competition to speak of, that will change. Especially as smaller BEVs become a thing and brands need flagships to feed their design language of off.

 

[Cloxxki]

On the ignore list you go, Cloaca. What utter drivel - completely false. Just because you type a lot doesn't make you right.

You behave disrespectfully and that can only hurt your reputation more than mine. Block away.

Full disclosure: post reported as such behavior cannot benefit this community in any way.

 

[EVMeister]

You behave disrespectfully and that can only hurt your reputation more than mine. Block away.

The only disrespect I feel is that coming from your keyboard. You might have to justify what you're saying rather than just saying it. Especially when you suggest people don't want Tesla vehicles. Is that seriously what you're trying to say - because you literally just did.

P.S. I removed the insulting element of my post. I agree that wasn't constructive.

 

[Curt Renz]

Indeed. This is what I wrote this morning to those who represent me in Congress:

I am quite supportive of the intent of the Senate bill announced today to extend the EV (electric vehicle) tax credit. However, rather than having it apply to a specific number of vehicles per manufacturer, I would recommend a single sunset date be set for all manufacturers. This would encourage the laggards and not relatively penalize those automakers that were early to introduce electrification. I would suggest a date around 2025.

Others here may also want to write Congress.

Meanwhile, one problem is that while this bill is being debated and Trump's reaction remains uncertain, some potential buyers may wait.

After reading and accepting comments from others here regarding the tax credit extension bill, I rewrote my Congress people with an amendment to my earlier recommendation of a common sunset date. I suggested to them that if the long-term budgetary costs are a concern, then a better solution may be a cap on the total number of EVs from all manufacturers, or a cutoff after a certain percentage of new cars produced in a year are EVs.

Let's all write Congress with our thoughts about this proposed extension of EV tax credits.

 

[StarFoxisDown!]

Maybe it's just me but unless a new electric bill is set up like - no production caps, expires end of 2022(or whatever date) and expires for everyone at the same time...……..then I want them to just kill the EV credit at the end of 2019. I hate how other auto makers are now pushing for slightly larger production caps. The system is capping the rewards for the companies that took the risk and letting the laggards more time to catch up. The EV credit should be killed(at end of 2019) and a fine system put in place nationwide similar to EU for CO2 emissions.

 

[Dan Detweiler]

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.

Could reply to many aspects of your post but I am short on time so I will just respond to one. You want an App Store? You think that is what I am talking about when I say software is separating Tesla from the rest? I am talking about the functionality of the car itself. My car has significantly improved in the way that it drives at least 4 times since I bought it in October. Not little widgets you can get off the internet or party tricks. I'm talking about significant improvements to the braking, steering, handling, acceleration, etc. Let alone the autopilot functionality. Fart mode and Romance mode are party tricks that are meant for entertainment and are humorous, but I am talking about my car getting better...A LOT better over time. There is not one manufacturer...not one, that can boast that ability, free of charge, just as a courtesy to their owners. They are changing the level of expectation of what a car can, and should be. They have no answer for this and show no real interest in trying. It really is sad to see but with Tesla continuing to improve, innovate, get cheaper, etc. etc. etc. how are they going to catch up to that?

Dan

 

[humbaba]

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.

"Tesla is only making money because of tax incentives which are expiring."
I don't feel like looking up ASPs, but M3 was over $45k last year because it only went up from there. IIRC, Tesla guided for >20% gross margin which, at that point, is $9k -- greater than the $7.5k incentive then in place. Of course, the ASP was greater and even with ~15% gross margin they clearly and obviously made profit above and beyond the $7.5k. For this year including price cuts Tesla guided for > 20% gross margin. Of course, this hasn't been proven yet but the burden of proof should be on those who counter the guidance. Not just "Elon's a liar" -- which has not been shown yet despite many filing opportunities.

"BEVs are being sold at a $12k loss, citing MKR."
As you elaborated, the citation was relating to "comparable" ICE. While that may be true for Bolt or Leaf, it is clearly not true for the M3, and after price cuts I don't see how it is even remotely supportable for S/X. In other words, this is a problem for other manufacturers, not Tesla.

"A whole pile of new BEVs are coming to the US market this year"
What is this "whole pile" they are talking about? The practically DOA iPace? the not-ready-yet EQC? the over-priced-and-uncompetitive e-tron? the not-really-here polestar 2? Just nonsensical noise.

"Tesla is losing the tax breaks this year,"
The whole "demand" complaint when Tesla had 110% YOY growth. While that could be considered disappointing relative to the second half of last year, it is absurd to spin "slowing growth" into "declining sales" -- and that is without even bringing up the push for overseas and preparing production for the SR. The picture won't really be clear until at least Q3 in my opinion.

"Jenkins goes on to claim that BEV"
Ah, yes, Norway is a real thorn in the side of the bear case for Tesla and so is either ignored or undermined. I think there is no doubt that the government incentives have vastly speed up the adoption of EVs in Norway -- the real question is why other governments aren't doing the same. In other words, they are false framing the narrative.

 

[Vitold]

Tesla Semi may not need to be modified for EU market anymore.

Tesla Semi-like aerodynamic trucks will be mandated in Europe to make roads safer

Although extended length is quoted to be 80-90cm I could not find any regulation defining that. Only that design is not supposed increase load carrying, and if over .5m it needs approval.

Law is supposed to take effect Sept 1 2020

 

[TheTalkingMule]

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.

Sounds easy? Who in the right mind(on any side of this conversation) thinks this will be easy for Porsche? I mean......investors shorting TSLA want people to think the transition could be easy if Porsche simplt wanted to do it, but certainly no one remotely familiar with what it takes would think that.

 

[Cloxxki]

Could reply to many aspects of your post but I am short on time so I will just respond to one. You want an App Store? You think that is what I am talking about when I say software is separating Tesla from the rest? I am talking about the functionality of the car itself. My car has significantly improved in the way that it drives at least 4 times since I bought it in October. Not little widgets you can get off the internet or party tricks. I'm talking about significant improvements to the braking, steering, handling, acceleration, etc. Let alone the autopilot functionality. Fart mode and Romance mode are party tricks that are meant for entertainment and are humorous, but I am talking about my car getting better...A LOT better over time. There is not one manufacturer...not one, that can boast that ability, free of charge, just as a courtesy to their owners. They are changing the level of expectation of what a car can, and should be. They have no answer for this and show no real interest in trying. It really is sad to see but with Tesla continuing to improve, innovate, get cheaper, etc. etc. etc. how are they going to catch up to that?

Dan

I hear you, it's good that you get the same stuff as often through software updates, it's the best way to go. Still. the first 2012 Model S is a good car today, without all those updates. All it needs it a price that suits 2019 (little reason it should cost more than Model 3) and it could go back on sale without AP hardware, without all the incremental improvements over 7 years.
Some people get a bit too hot on Tesla's software based architecture. It's a choice, other can and do make it, to varying degrees. A key example was the fixing of inadequate braking performance on Model 3. Big praises for making an OTA update for that in stead of a recall. I ask, weren't they supposed to test drive each and every car? How hard is it to develop software to verify that measured performance is within parameters?
Showing the world this architecture is not the win right there, forever. It needs to be earned by making the most of it. Improvements such as you state are amazing to have, but you were fine with the car as you drove it from the delivery center, right? Yes, many or all brands will eventually follow this approach to car making. But they will also take it to the next level where Tesla just sat on 90% of its potential. Especially commercially. And for investors, this should matter. Little point in getting your vision right and then letting it just sit there for the most part.

 

[ZachF]

Indeed. This is what I wrote this morning to those who represent me in Congress:

I am quite supportive of the intent of the Senate bill announced today to extend the EV (electric vehicle) tax credit. However, rather than having it apply to a specific number of vehicles per manufacturer, I would recommend a single sunset date be set for all manufacturers. This would encourage the laggards and not relatively penalize those automakers that were early to introduce electrification. I would suggest a date around 2025.

Others here may also want to write Congress.

Meanwhile, one problem is that while this bill is being debated and Trump's reaction remains uncertain, some potential buyers may wait.

This, and don't have a hard cutoff date, just have it slowly phase out. i.e. have a $5,000 credit that will drop by $500 per year over the next decade.

EDIT, or even better have the phaseout be a dependent on the percentage of total sales, i.e.if EVs are under 5% of last years total sales, then the credit is $5,000, then when EVs hit 5-10% it drops to $4,500, then $4,000 when it hits 10-15%, etc, until it phases out completely when EVs hit >50%.

 

[jerry33]

II ask, weren't they supposed to test drive each and every car? How hard is it to develop software to verify that measured performance is within parameters?

I'd suggest it's very hard to measure every possible braking scenario in a short test drive.

 

[MarcusMaximus]

This, and don't have a hard cutoff date, just have it slowly phase out. i.e. have a $5,000 credit that will drop by $500 per year over the next decade.

I don’t think it would need to be that slow, so long as it applies to everyone at the same time. If EV’s haven’t found their footing vs. ICE by 2025, I feel like we have bigger problems than the tax credit expiring. Cut it in half the next year and eliminate it entirely the year after that would be fine by me.

 

[ZachF]

I don’t think it would need to be that slow, so long as it applies to everyone at the same time. If EV’s haven’t found their footing vs. ICE by 2025, I feel like we have bigger problems than the tax credit expiring. Cut it in half the next year and eliminate it entirely the year after that would be fine by me.

Check out the edit I threw in, making it dependent on the total sales.

 

[ggies07]

I think there needs to be a rule that if a writer/analysts hasn't test driven a Tesla or been to the factory, they can't write about the company. That would cut down on the BS FUD. Or maybe they just have to acknowledge it at the very top of the article...

 

[Swampgator]

I hear you, it's good that you get the same stuff as often through software updates, it's the best way to go. Still. the first 2012 Model S is a good car today, without all those updates. All it needs it a price that suits 2019 (little reason it should cost more than Model 3) and it could go back on sale without AP hardware, without all the incremental improvements over 7 years.
Some people get a bit too hot on Tesla's software based architecture. It's a choice, other can and do make it, to varying degrees. A key example was the fixing of inadequate braking performance on Model 3. Big praises for making an OTA update for that in stead of a recall. I ask, weren't they supposed to test drive each and every car? How hard is it to develop software to verify that measured performance is within parameters?
Showing the world this architecture is not the win right there, forever. It needs to be earned by making the most of it. Improvements such as you state are amazing to have, but you were fine with the car as you drove it from the delivery center, right? Yes, many or all brands will eventually follow this approach to car making. But they will also take it to the next level where Tesla just sat on 90% of its potential. Especially commercially. And for investors, this should matter. Little point in getting your vision right and then letting it just sit there for the most part.

I would disagree with the idea that Tesla "sat on 90%" of it's potential.
They are growing 50-100% YOY and this is not an easy thing to do. From logistics, resource management, talent acquisition etc. It may lok easy for incumbents to operate, but NONE of them are growing at more than even 10% a year YOY.

 

[Cloxxki]

I'd suggest it's very hard to measure every possible braking scenario in a short test drive.

It was not a small batch of cars. Even when testing one in 1,000 car a bit more thoroughly, Consumer Report would not have had to put Tesla under pressure to fix or recall those car. Such a software error to surface in the form of an "update" is not exactly a unique though and we must accept that the best architecture doesn't automatically bring the best execution and overview. So, if you say "OMG, OTA updates!", I say "do proper testing, software can kill just as well as an ill tightened bolt. Except, the software goes to everyone...

 

[keydiver]

I ask, weren't they supposed to test drive each and every car? How hard is it to develop software to verify that measured performance is within parameters?

Tesla DOES test drive each and every car, so I don't know where you are getting this. Perhaps you mis-remembered, the controversy was actually that they stopped doing certain tests on the assembly line, because those same tests were actually being repeated in the test drive.
Also, if I recall correctly, the flaw in the braking that was found by CR was actually an edge case, which would rarely, if ever, be seen in the real world use. It had to do with 3 repeated 60 to 0 mph brake tests in quick succession, which I have never done in 44 years of driving. Under normal driving conditions no one noticed any issues with the braking distance, including CR.

 

[Cloxxki]

I think there needs to be a rule that if a writer/analysts hasn't test driven a Tesla or been to the factory, they can't write about the company. That would cut down on the BS FUD. Or maybe they just have to acknowledge it at the very top of the article...

Perhaps people who can't name all politicians on the ballot shouldn't vote, then either
May I welcome you to the internet? It's more closely related to reality that you may have signed up for.

This is a TSLA thread. Perhaps one should not post here unless they can declare a portfolio that feature more than one share? I bet most people who write and invest TSLA, never owned another share in their life.

Impressive how you guys gang up though, solidarity can be a good thing. Hope it also manifests when a guy in the street mistreats his wife or kids or pet.

 

[Cloxxki]

Tesla DOES test drive each and every car, so I don't know where you are getting this. Perhaps you mis-remembered, the controversy was actually that they stopped doing certain tests on the assembly line, because those same tests were actually being repeated in the test drive.
Also, if I recall correctly, the flaw in the braking that was found by CR was actually an edge case, which would rarely, if ever, be seen in the real world use. It had to do with 3 repeated 60 to 0 mph brake tests in quick succession, which I have never done in 44 years of driving. Under normal driving conditions no one noticed any issues with the braking distance, including CR.

Most of your facts are correct from my memory.
Thing is, if you make a 5-star safe car, it's not for everyday situations. Please don't make me explain that here.