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

[schonelucht]

For those more familiar with the American political process (NO POLITICAL DISCUSSION PLEASE, JUST STATE YOUR ANSWERS)

1. what is the time frame we should be looking for getting this bill to pass
2. if it does pass, will it be retroactively applied to current sales
3. how likely is this bill to pass

 

[Rarity]

1. Probably around the end of 2019, when it is tucked into a must-pass bill.
2. Yes, it would be retroactive, in that people who file their 2019 taxes would get the credit.
3. On its own, it is unlikely to pass, because in the end it could be vetoed by Trump. Fair chances, if tucked into a must-pass bill.

 

[keydiver]

Please don't make me explain that here.

What is there to explain? You made 2 very facetious remarks:
1) That Tesla does not test drive every car.
2) If they would test drive every car, they would have discovered the braking flaw that CR uncovered.

 

[Curt Renz]

For those more familiar with the American political process (NO POLITICAL DISCUSSION PLEASE, JUST STATE YOUR ANSWERS)

1. what is the time frame we should be looking for getting this bill to pass
2. if it does pass, will it be retroactively applied to current sales
3. how likely is this bill to pass

1 & 3 are difficult to assess.

2. This year's American income tax filing deadline is Monday. If the bill becomes law, it would likely first apply to credits claimed on tax forms filed early next year for cars purchased this year. So the timing of a purchase this year should not affect whether a prospective buyer gets the proposed new tax credit. In other words, the law if passed would likely be retroactive to the beginning of 2019 for Tesla car buyers.

 

[ZachF]

1. Probably around the end of 2019, when it is tucked into a must-pass bill.
2. Yes, it would be retroactive, in that people who file their 2019 taxes would get the credit.
3. On its own, it is unlikely to pass, because in the end it could be vetoed by Trump. Fair chances, if tucked into a must-pass bill.

I doubt Trump cares enough to specifically veto it, but if it could be framed as tax breaks for foreign EV manufacturers to the detriment of domestic manufacturers (which it is at this point) he would probably sign it.

As for a few more details, something like this could probably easily pass in the house, but would be harder in the senate.

 

[ggr]

We know because we actually read the CT's (I suppose @brian45011 does to).

Sorry, but I read them before I made my post. They say that certain parts of certain filings, including some appendices to the 10Q, were not published. That's all they say. We don't know what was in those appendices. So I asked Brian what made him believe that Tesla was withholding material information. One of those might have mentioned a pending deal with a large auto manufacturer... we don't know, either way.

 

[ggies07]

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.

ha! point taken, though I've been an investor since 2012.

 

[MarcusMaximus]

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

An interesting idea. I, personally, like it, though I doubt it'd be able to pass.

 

[ReflexFunds]

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.

You are very correct that ICE OEMs are not currently incentivised to sell EVs and we have very little reason to expect them to try to sell any more EVs than needed to meet average emissions mandates (which they have lobbied to be far too lenient and insufficient). This means ICE OEMs will not want to build great EVs and will not want to properly market them.

But you massively underestimate how difficult it will be for ICE OEMs to suddenly build a mass produced competitive and profitable EV when the time comes for them to fully commit to the EV transition. EVs really are a completely different product to ICEs - they only share 10%-20% of components and production process. There are hundreds of factories in the world which can mass assemble cars, paint cars, build car bodies etc (this isn't easy but it is not a great competitive advantage), but currently only one which can affordably mass produce high quality EV powertrain components and batteries. Aside from the missing powertrain, electronics and battery design and manufacturing expertise, EV performance and tuning is driven by software, not by fixed physical components and ICE OEMs have no expertise in how to do this.

ICE OEMs have a 50 year+ culture of working towards minimal annual incremental improvements rather than rapid innovation. They are not suited to the rapid change needed to follow the EV/battery & motor experience curves. You cannot just suddenly utterly change a company's practices and culture from a conservative slow moving oligarchy to fast paced technological progress.

ICE OEMs are also heavily handicapped by their existing infrastructure and business models which are tuned to ICEs. Their transition will be heavily handicapped by huge over reliance on outsourcing, unionised workforce, short term loans backed by ICE car fleets, reliance on dealerships dis-incentivised to sell EVs, service networks with no EV expertise, conservative shareholders and boards etc.

Overall I think EV startups and tech companies like Amazon and Apple are far better placed to quickly develop a competitive high quality EV than most of the existing ICE OEMs.

 

[capster]

For those more familiar with the American political process (NO POLITICAL DISCUSSION PLEASE, JUST STATE YOUR ANSWERS)

1. what is the time frame we should be looking for getting this bill to pass

After Tesla has sold 600K vehicles in the US

2. if it does pass, will it be retroactively applied to current sales

Sure, but not to vehicles that received any current rebate.

3. how likely is this bill to pass

Somewhere between toss-up and NFW. May matter how tariff negotiations go with the Europeans.

Answers inserted.

Hope it turns out better than that though.

 

[Doggydogworld]

Thanks @Prunesquallor !

I did some digging into this, and was surprised at the conclusion. I posted this on the quarterly results discussion thread, but probably should be elsewhere, or its own thread. I am x-posting here as the feedback is quicker.
_____________________
Did a deep-dive into what FCA would have paid for pooling with Tesla, and the issue here is pretty involved relative to anything I read on MSM.

To set the stage, here are the targets that automakers have to hit in 2019, and where they are, as of 2017. The targets for 2019 are the same as 2015. They effectively go up in 2020 (ignoring worst 5%), and full compliance by 2021

Source: https://www.theicct.org/sites/default/files/publications/EU-LCV-CO2-2030_ICCTupdate_20190123.pdf

On the surface, 2019 doesn't seem like an issue as everyone is below target. But the devil is in the footnotes. Beginning 1/1/2019, EU mandated WLTP to replace NEDC, which is more realistic. This caused about a 25% increase in CO2 g/km of emissions on paper. So the bureaucrats came up with a NEDC-Correlated (NEDC-c) measure that converts back the WLTP numbers to NEDC-c. There is a good bit to read here, but effectively, the NEDC-c numbers are about 8% (10g/km) more than the old NEDC numbers.

Source: JATO Warns of Widening Disparity between WLTP Correlated NEDC Values and existing NEDC Data - JATO


So, this delta pushes FCA over the edge. Assuming the 10 g/km penalty, FCA ends up at 130 against a target of 124. Assuming some optimizations, they probably can optimize to 5 g/km in the hole. Now they sell around 900k per year in EU, which translates to roughly 95 Euro per g/km times 900k vehicles. That is 95*5*900,000 which is roughly 430 million Euro in fines for 2019.

This market gets pretty tight for everyone in 2019, except for Toyota. That doesn't leave a lot of options for FCA, leaving Tesla in a fairly decent negotiating position. Given this, I think ARK's $0.5B estimate is unlikely. I'd reckon they went roughly 50-50 for about a 200-250 million Euro deal. Interestingly, Tesla only needs about 45K deliveries to pull FCA into compliance. This explains them leaving the pool open, potentially for Ford. Ford probably decided to pass purely for reputational reasons or didn't want to help Tesla.

The real fun starts in 2020 though, where these 0 g/km EVs are pure gold. EU is on track to levy 95*30*15million (95Euro/g * 30 g/km shortfall * 15 million sales) in fines - Or a mindboggling 40 Billion every year. An EV at 0 g/km is worth 9k Euro (95*95) in avoided fines. Tesla could easily sell these credits for a small 10% haircut until it gets to 15-20% market share. And it gets progressively worse for the legacy manufacturers as the limits keep going down. No wonder the likes of LG Chem are playing hardball because next year, the European manufacturers don't have an option to not try building EVs.

Where the eff is the European Gigafactory?

This is great work. Did you attempt any adjustment for the "loopholes" identified in the Teslarati article posted by Mars Emporer?
Tesla gives Fiat a wake up call: ‘fake’ electric cars can still manipulate EU emissions standards​

 

[MarcusMaximus]

It's not a best effort.

I don't think you can definitively say that. Certainly, we've seen from the likes of Audi that they were caught flat-footed by the engineering/design of the Model 3. The fact is that we don't know whether anyone else can do better than they are now. All we can say for sure is that they haven't, and there isn't much evidence that they will any time soon.

 

[Cloxxki]

What is there to explain? You made 2 very facetious remarks:
1) That Tesla does not test drive every car.
2) If they would test drive every car, they would have discovered the braking flaw that CR uncovered.

1) is putting words into my mouth. I'm not a native English speaker but I would would phrase it differently if I wanted to imply they didn't. I did mean to imply that testing is utter rubbish if thousands of tests didn't bring up that 100% consistent deficiency once. That's enough cars to get into the statistics of someone REALLY needing the brakes to be as intended. Not just "sufficient" by industry standards. That's not why you by a brand that says they make the safest cars. Testing that actually brings up issues is the only form of testing that should be called testing. Just do away with the test then. I'm sure CR will find the next flaw before someone needs their Tesla to be as safe as designed.
2) What about implementing ONE stringent test drive every day? That's up to 1,000 cars being tested very superficially, 1 to see whether all the updates interact with the latest units as intended. Since it took a good while before CR made it public, we have to assume 1,000s of cars ALL were not tested stringently enough to find a flaw that affected them all.

Please toss a cube or common sense into your cup of brand loyalty. Tesla deserves fans who keep them honest, not defend its honor no matter what.

 

[ggr]

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.

I have to totally disagree with this statement. It's safe so that you can drive on surface streets and freeways, not racetracks.

 

[Curt Renz]

Answers inserted.

Hope it turns out better than that though.

Regarding your inserted comment: Sure, but not to vehicles that received any current rebate.

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.

Credits for cars bought this year would not be claimed until taxes are filed early next year. So under the proposed law as summarized by Reuters, it appears that the $7000 credit would be retroactive to the beginning of this year for Tesla car buyers, and the $3750 credit would no longer apply.

 

[Cloxxki]

You are very correct that ICE OEMs are not currently incentivised to sell EVs and we have very little reason to expect them to try to sell any more EVs than needed to meet average emissions mandates (which they have lobbied to be far too lenient and insufficient). This means ICE OEMs will not want to build great EVs and will not want to properly market them.

But you massively underestimate how difficult it will be for ICE OEMs to suddenly build a mass produced competitive and profitable EV when the time comes for them to fully commit to the EV transition. EVs really are a completely different product to ICEs - they only share 10%-20% of components and production process. There are hundreds of factories in the world which can mass assemble cars, paint cars, build car bodies etc (this isn't easy but it is not a great competitive advantage), but currently only one which can affordably mass produce high quality EV powertrain components and batteries. Aside from the missing powertrain, electronics and battery design and manufacturing expertise, EV performance and tuning is driven by software, not by fixed physical components and ICE OEMs have no expertise in how to do this.

ICE OEMs have a 50 year+ culture of working towards minimal annual incremental improvements rather than rapid innovation. They are not suited to the rapid change needed to follow the EV/battery & motor experience curves. You cannot just suddenly utterly change a company's practices and culture from a conservative slow moving oligarchy to fast paced technological progress.

ICE OEMs are also heavily handicapped by their existing infrastructure and business models which are tuned to ICEs. Their transition will be heavily handicapped by huge over reliance on outsourcing, unionised workforce, short term loans backed by ICE car fleets, reliance on dealerships dis-incentivised to sell EVs, service networks with no EV expertise, conservative shareholders and boards etc.

Overall I think EV startups and tech companies like Amazon and Apple are far better placed to quickly develop a competitive high quality EV than most of the existing ICE OEMs.

Fair comments.
Still, "copy cat" China seems to be getting the hang of it. Why? Policy.

Right now legacy brands are not exactly challenged to make any car to Model 3 like numbers. And that's a premium car, most cars sold are priced lower and built in larger numbers.
Just a few popular car models going BEV would require doubling of global battery capacity and then some. Even Tesla got cell deprived on Model 3 while they had their own factory making cells, even when they were half a year behind schedule in terms of production rate, even more in terms of accumulated production. Imagine how it would be for a car brand finding their compliance cars started selling well. "Oh, let's convert a few production lines to make more" only to find they next additional battery volume has a 3-year lead time.
It's organized chaos to legacy brands. Worst nightmare imaginable. So they hope too gradually ease into BEVs while matching emission standards and just beating the dead lines for zero emission car sales in the various countries.

 

[SO16]

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.

Vote? Yes.

Write articles to inform others while coming across as “experts” on said candidates? No

 

[Cloxxki]

I have to totally disagree with this statement. It's safe so that you can drive on surface streets and freeways, not racetracks.

What is it about emergency braking and the importance for vehicle and occupant safety that you do not understand?

 

[MarcusMaximus]

1) is putting words into my mouth. I'm not a native English speaker but I would would phrase it differently if I wanted to imply they didn't. I did mean to imply that testing is utter rubbish if thousands of tests didn't bring up that 100% consistent deficiency once. That's enough cars to get into the statistics of someone REALLY needing the brakes to be as intended. Not just "sufficient" by industry standards. That's not why you by a brand that says they make the safest cars. Testing that actually brings up issues is the only form of testing that should be called testing. Just do away with the test then. I'm sure CR will find the next flaw before someone needs their Tesla to be as safe as designed.
2) What about implementing ONE stringent test drive every day? That's up to 1,000 cars being tested very superficially, 1 to see whether all the updates interact with the latest units as intended. Since it took a good while before CR made it public, we have to assume 1,000s of cars ALL were not tested stringently enough to find a flaw that affected them all.

Please toss a cube or common sense into your cup of brand loyalty. Tesla deserves fans who keep them honest, not defend its honor no matter what.

No finite amount of testing can possibly catch every possible potential software issue in all possible conditions. "Safest" is not synonymous with "Perfect". Expecting Tesla(and, I suppose, only Tesla?) to be absolutely perfect in all things is an unrealistic standard. While, of course, I would have preferred if that bug was never present in the first place, I feel just fine knowing that it was able to be fixed within days of discovery by an OTA software update. Check the NHTSA crash test results or the Euro NCAP testing(including 2018 automated driving tests) for all the areas where there weren't bugs.

 

[Chickenlittle]

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...

How would you enforce? Writers of FUD could not be trusted to self enforce