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

[Nocturnal]

I actually agree with much of this. I don't view the S/X as integral to Tesla's future success as you seem to, but I agree that, in their current form, you need very particular reasons to choose an S/X over a 3. Once the Y is out, those reasons narrow even further(the main one being storage/passenger capacity).

Integral? Maybe not, but why would they let it wither? BMW makes 2 series, 3 series, 5, 7 series, X series etc. You wouldn't see BMW letting the 7 series die in favor of the 3 series. It's a different market, some want the bigger car, some want the extra luxury, some just want a more exclusive vehicle.

 

[Chickenlittle]

Are you saying - people who bought a $100k car will drive around others for $20 ?

There is no 100,000 model3. A fully optioned AWD is a little more than half that

 

[Chickenlittle]

Why? As you can see, Tesla never thought they would always focus on the Model S/X. We are at the third generation level now, the mass production. Model S/X did it's job, time to become smaller sales vs. 3/Y.

I would much rather see semis on the road earlier than refreshed model S and X

 

[Doggydogworld]

Was that ever more than a rumour?

I saw it in the Japanese business press. It was not an official company statement, but it dovetailed with the official October 2018 claim they would increase GF1 to 35 GWh/hear by 3/31/19 which otherwise made no sense.

(NOTE: Panasonic early this year later pushed back the 3/31 date without giving a new date.)

 

[Tenable]

There is no 100,000 model3. A fully optioned AWD is a little more than half that

I assumed at 100k they were referring to owners of S/X. A fully loaded 3 does come in at 71k. Not exactly low rent.

 

[Chickenlittle]

I have to feel for Panasonic. Their most profitable division is car batteries. Their largest client is buying a new battery tech company and doing a major expansion in China without using them. The chemistry belongs to Tesla. They are in a precarious position. They are carrying a lot of equipment at giga factory that could require major renovation. Tesla has vertically integrated most of the cars, could battery cells be next? If I remember correctly Panasonic profit was derived from car batteries

 

[EVNow]

There is no 100,000 model3. A fully optioned AWD is a little more than half that

I've seen the idea floated that somehow if only Tesla created ride-share people with premium cars (whether 100k or 50k) would be very eager to become taxi drivers. May be we should create a poll here - but I find it very unlikely that more than a handful of people want to do something like that.

 

[Vitold]

True, but we can't ignore where the vast majority of its revenue comes from. As of Q4, auto revenue represents about 90% of total revenue. That may change in the future, but with the aggressive production plans for the 3 and Y, it probably won't change much over the next few years.

My point is that Tesla cars are not comparable to cars from established automakers and should not be treated as such. For that reason, Tesla’s market share is only going to expand while ICE’s shrink.

 

[Rarity]

The acquisition of MXWL is not yet done. Once/if it is, the expectation it will show up meaningfully in Tesla's products anytime soon simply doesn't gel with anything that we are seeing. If they had a plug and play product that was useful today MXWL would not have been in the position to be acquired so cheaply. Tesla is very capital efficient. I have little doubt this acquisition is an intelligent one. But any expectation that its moving the needle in the near future doesnt seem realistic to me.

The one item that casts doubt on your take is that Tesla told Maxwell that they needed to do a deal fast because related significant capital expenditure decisions were imminent.

I looked for that discussion in the SEC filings where these negotiations were detailed, but can't find it readily.

 

[jerry33]

I've seen the idea floated that somehow if only Tesla created a ride-share people with premium cars (whether 100k or 50k) would be very eager to become taxi drivers. May be we should create a poll here - but I find it very unlikely that more than a handful of people want to do something like that.

Depends upon what the income would be. $60-$80K per year clear after paying for the X, insurance, and electricity would be worth it.

 

[Tenable]

The one item that casts doubt on your take is that Tesla told Maxwell that they needed to do a deal fast because related significant capital expenditure decisions were imminent.

I looked for that discussion in the SEC filings where these negotiations were detailed, but can't find it readily.

I seem to recall reading that MXWL needed significant capital for their product development cycles and they were working to find avenues of funding that would not dilute their current investors. However, I could be remembering incorrectly or have simply missed something you read. If you come across it, I'd love to read whatever you find.

 

[MarcusMaximus]

Integral? Maybe not, but why would they let it wither? BMW makes 2 series, 3 series, 5, 7 series, X series etc. You wouldn't see BMW letting the 7 series die in favor of the 3 series. It's a different market, some want the bigger car, some want the extra luxury, some just want a more exclusive vehicle.

I did say I agree. I just don’t see the death of the company if S/X production/sales slow.

Also, worth pointing out: a “refresh” may not come as a one-hit thing. They may update the charging capability silently(or may have already), then, later, release a longer range version alongside the current one, then(or sometime in between) silently update the motors to “Raven”.

All that would actually better fit how they’ve done things thus far.

 

[Rarity]

I seem to recall reading that MXWL needed significant capital for their product development cycles and they were working to find avenues of funding that would not dilute their current investors. However, I could be remembering incorrectly or have simply missed something you read. If you come across it, I'd love to read whatever you find.

While perhaps true, Maxwell alone does not have resources that Tesla does. For instance, an internal automation group that specializes in bringing new technology to mass production.

 

[EVNow]

Depends upon what the income would be. $60-$80K per year clear after paying for the X, insurance, and electricity would be worth it.

That would need about $400 a day.

Uber drivers make an avg of $20/hr. So, someone has to work 20 hours a day to make $400 or if you think, because its a Tesla, you can make double the avg (not sure how this could be true) - still need to work 10 hrs a day, assuming 100% occupation level.

How Much Money Does An Uber Driver Make? Pay & Salary Review

 

[X Fan]

I guess this Panasonic relationship is more contentuous than I estimated! FUD originating with a partner is a new one.

(We’re Tesla biased but....)

I suppose looking at it from Panasonic’s POV, losing money ($180m) selling batteries to Tesla doesn’t work for them.

Thus, they would naturally look to renegotiate and/or scale back investment until there was more certainty.

 

[Nocturnal]

I did say I agree. I just don’t see the death of the company if S/X production/sales slow.

Also, worth pointing out: a “refresh” may not come as a one-hit thing. They may update the charging capability silently(or may have already), then, later, release a longer range version alongside the current one, then(or sometime in between) silently update the motors to “Raven”.

All that would actually better fit how they’ve done things thus far.

I see quite a few handwringing about the S/X sales drop, but until they bother to look at comparable model mixes for other makers I think it's a bunch of nonsense. We would need to start by looking at the ratio of large to mid sized sedans for Tesla competitors. I doubt that even the current dip in S/X sales is far out of line.

 

[Tenable]

While perhaps true, Maxwell alone does not have resources that Tesla does. For instance, an internal automation group that specializes in bringing new technology to mass production.

I of course agree. I think its clear now that when MXWL told its shareholders it was in discussions for non dilutive funding they were referring to Tesla. The synergies seem to be clear. It just feels unrealistic to expect any results from the acquisition to be delivered in the near term.

 

[CorneliusXX]

In the original Nikkei article:
テスラ、米EV電池工場の拡張投資凍結（写真＝AP）
It shows no source, but quoted Tesla PR person's comments: "we will keep investing into GF1 as necessary".
So if I read the article at face value, Panasonic is the source of the article and Tesla is kind of disapproving.

Also it is a bit concerning that their Tesla production graph only shows 2017 Q4 2018 Q1Q2Q3Q4 2019 Q1, giving impression that Tesla's production is stalling. I got screenshot of the article in PDF. Will see.

To me it sounds like Tesla is saying "If Panasonic won't keep up with cell production, we'll find another manufacturer to go above 35GWh".

We could see Pana with 35 and Samsung or CATL with another chunk of production.

Does anyone know if GF1 is specifically restricted from having another cell manufacturer?

 

[VValleyEV]

Here is a WSJ comment that I would like to reply to before the comments close.

Anyone have any quick data with source links on carbon footprint of Tesla battery manufacturing?

Here is the comment I wish to respond to:
>>>>>
I have a keen interest in electric cars because they appear to be the next big thing. Simpler design and mechanics and the prospect of reducing the pollution produced by ICE automobiles.

My research suggest that any differential in carbon emissions from the production process occurs from the batteries of the electric cars. That means that electric cars start out at a surplus with respect to carbon emissions produced before any driving is done.

How quickly that is made up by the superior performance of electric cars on the emissions front depends on the source of the electricity. If the electricity comes from coal fired plants it could take 5 years or more to make up differential in emissions coming from production.
>>>>>

 

[bdy0627]

Yeah, Model X and S pricing is brutal right now. The numbers of cars being produced and sold is fairly ugly. Tbh, I don't know where to look for a silver lining. At this point I feel like we need a hail mary of some sort. Be it in the self driving investors day, something surprising and amazing in the refresh, etc. As an investor thats deeply underwater, hoping for some kind of miracle isnt a position I am happy to be in.

Unfortunately, I'm feeling the same way. I'm not feeling very bullish about Tesla right now. It's making me a little depressed to be honest. There is the possibility it's just a Q1 blip and everything returns to looking optimistic this quarter, but that feels wishful. It kind of feels to me like the stock should be trading about where it is based upon what has come to light in Q1. Who would have guessed things would turn sour so quickly after the financials from Q3 and Q4? I really really hope things start looking better this quarter.