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

[Cosmacelf]

That'll be the day I start shopping for a bomb shelter and non-perishable food rations. Unless I already have my own personal Teslabot security platoon.

Ah, but we will, won’t we? In all seriousness, think about how many people would buy a Teslabot for housekeeping etc., but in the back of their mind, be thinking of the positive personal security possibilities. It will be a selling feature…

 

[Tim S]

@singguy I disagree, Troy has a chart showing the backlog in the USA. Q3 and Q4 has pretty much removed the backlog. The majority of cars delivered in Q3 2022 were not paid for in 2021, they were 2022 pricing. Think about it, the lead times are very low and inventory is building up. They have realised the new prices. There isn't a batch of 100k orders lying around that haven't taken delivery yet that paid in 2022.

...

My wife took delivery of her Y on September 15, 2022 (late Q3). She paid the price listed when she ordered it in August 2021.

 

[ThisStockGood]

Recovering nicely with the macros. Nothing to see here.

I say: give it three days and we will rocket.

Cheers!

 

[Webeevdrivers]

“Other manufacturers” will become endangered species.

Ah yes. .

 

[scaesare]

1) In a lot of countries the bulk of the relevant housing stock (i.e. pitched roof low-rise) is already built out and has a considerable outstanding economic lifetime. Therefore the newbuild market is quite a small fraction of the total residential on-roof market. We will (we must) go through the majority of the solar adoption curve during the next twenty years. We must do that for climate change reasons, but we will do that for economic reasons, and history also shows us that most of these S-curves are 20-year affairs (and so does the theoretical modelling). So Tesla cannot afford to hang around and take a seventy-year view on that. Besides which the worst customer to have is a property developer's buying team.

2) If you go look at pitched roof low-rise roofs around the world you'll rapidly come to appreciate that most of them don't look like US-style fake (or real) shingles. So going after a fake-shingle market that is only a small subset of the overall global roof style market is boxing oneself unnecessarily into a small corner. But the sheer complexity of trying to develop tile-sets to cater for all the global markets seems unlikely, especially as some have geometrical challenges that don't exist on fake shingles to anywhere near the same extent. (There were US/French/Swiss/etc experiments along these lines one or two decades ago : now I'm showing my age go look at the sheeting bonding/encapsulation experiements for single and triple junction by variously UniSolar and Flexcell back in history. There is a long line of "printed solar" experimentation which continues to this day, I noted recently that MIT are still going after it).

3) And in any case doing roof-integrated solar (BIPV) is an added complexity in terms of function-sharing that most home-owners have concluded that they would rather not have. The purpose of an external roof layer is to provide weather/sun protection; retain heat/cold; keep out varmints; and be a firebreak (it may also be a structural element in some roof types). Adding into this the functions of energy capture & transformation & delivery is - as the uptake data shows - a step too far. Hence the prevalence of above-roof modules on mounting bars and brackets. These days typically in the 400-700W range, i.e. the amount of field-install wiring and fixing is minimal and most of the system manufacture stages are conducted in a factory environment where economies of scale come into play; plus higher quality outcomes. (The one exception is carport-style roofs where there are very interesting solutions, but these always go down the module pathway, not the shingle pathway). Even where subsidy schemes and permitting constraints have hugely tilted the playing field towards roof-integrated the uptake results have been a fail (examples of these schemes/constraints are evident in various histories in UK, France, and some US permitting areas).

4) Then of course residential solar on low-rise pitched roofs is of course only a small subset of the overall solar market. There is residential solar that is ground mounted, i.e. no interest in shingles, will always go modules. Or they are flat roofs, again using modules on stands, and again no interest in shingle-style. But even if all residential installs were to be amenable to shingle style, they would still only be a fraction of the overall global solar market which is dominated by utility scale and commercial/industrial scale. The residential market is only 28% of the overall on an annual basis, or 16% on a cumulative basis.

View attachment 895197

So if you add all this together the maximum accessible market for a shingle-style tile is only a very small fraction of the overall market; and that fraction is still a minority even in the countries where the demand is primarily located.

(BIPV may have more traction in the commercial space as curtain walls, often semi-transparent, but they will be modules rather than shingles. Architects love doing these curtain walls and they do make better sense in that context.)

(Someone was asking about the significance of the Chinese shingles. I think they are manufactured almost exclusively for the export market, not the Chinese market. Furthermore my personal opinion is that the technology is more likely to find application in sheet roofing form if it ever becomes competitive, rather than shingle form. ?? Maybe in twenty years time, i.e. after we have done the heavy lift in S-curve terms ?? I was sure I had posted a news item recently re China shingle progress but I can't find it - so if anyone wants to dig further try this for starters : Solar Roof tiles Continue to make slow, steady progress )

- all imho of course



A white paper of this nature is fair and square in the middle of marketing, indeed it is practically advertising, obviously aimed at installers but also aimed at the Federal level. To be honest at this point I think almost the only people who buy Tesla solar in the residential segment are the equivalent of the Mercedes/BMW/Audi buyers. We know (i.e. have very good reasons for believing) that Tesla has been throttling growth of residential solar sales because it was loss-making (i.e. very poor performance), with storage being what was assisting the Tesla Energy division towards profitability. Meanwhile global residential solar sales have been very profitably roaring ahead, and Tesla's repeated headbutting of a dead-end path is quite obvious in the data.

View attachment 895200

That 0.5% of the residential market is of course 0.1% of the total market.

I sincerely hope that folk will look a little bit more carefully at Tesla Energy in the future and demand better quality data be consistently provided in the quarterllies on a level playing field basis for all investors, at a meaningful level of breakdown, so that we may form rational views as to what is going on.

******************

Meanwhile back on the auto side, the really good news is that these significant price moves have come in early enough in January as to make it easier to incorporate the effects in all our many & varied spreadsheets. Analysts and forecasters of the world, celebrate.

Thanks for the detailed reply. While I don't share the same viewpoints, I appreciate a well thought out point of view. There's a lot there, but I think your summary boils it down to the overall issue you have with the solar tile roof:

So if you add all this together the maximum accessible market for a shingle-style tile is only a very small fraction of the overall market; and that fraction is still a minority even in the countries where the demand is primarily located.

I certainly do agree, it's not going to be a product for everyone in all areas. However, in the U.S. alone, there's ~125 million households. Now for the factors you mention even if you assume a minority of that is an addressable market, it's still significant. Let's conservatively say 10% is the take rate.

Currently the average cost for solar panels is about $16,000 per home (not incl. installation). Let's conservatively say $10,000.

That's a $125,000,000,000 (yes billion) market. This excludes, businesses, landlords, costs for inverters and other needed accessories, and anything other than the US. I don't think it's a huge stretch to say this could easily be a half-trillion-dollar market (or way more) over the next decade or two.

So it seems to me that's a very worthy fraction go after. And while immediate market share may be many competitors' goal (and the basis for much of your argument as to why Tesla has failed), I suspect that a well thought-out and superior product that becomes the standard-bearer for performance, ease of use, reliability, and style will do quite well, and perhaps expand that 10% market to well beyond that. Witness the Model 3 versus the Bolt. Or the iPhone versus the Blackberry 15 yrs ago.

We are sooo early in the solar adoption phase, I think spending deliberate time to get it right trumps rushing to market with substandard solutions.

 

[TN Mtn Man]

What a mess they made of this bill. The amount of overhead that will be required to track every manufacturer and decide "ok car produced on X date qualifies, but X plus 2 days doesn't, but X date + 60 days does qualify because of a material switch" will be massive.

I'd be happy to quote Barack Obama...but don't need the time out.

 

[Artful Dodger]

As with almost all Tesla moves, in hindsight it was so obvious.

Lol, it was obvious in advance, too. I wrote this in a DM yesterday afternoon:

If Tesla doesn't cut prices, they lose sales. If they do cut prices, they lose margins. That's the evil part of the gov't interference with the free market; the others can't sell in volume because they don't have capacity, and Tesla HAS to sell in volume because of the 'S' curve.

Given that Elon has told us in advance that Tesla would favor sales volume over gross margins, this move was obvious in advance,

Cheers!

 

[2daMoon]

Volume only 80M in the first 1.5 hours of trading...

Did somebody not get the memo?

 

[petit_bateau]

I'll comment only on this phrase which proves you do not understand Marketing. The product and placement are directly and explicitly Marketing. Further Positioning and Promotion are other parts. You are thinking, obviously, that Marketing and Advertising are essentially synonymous. They are not.

The various comments about limited market for solar shingles is obvious. It is also obvious to everyone who's traveled that roofing-style solar equipment must be tailored to each specific market. Any manufacturer typically being with the simplest local product and builds from there. The solar roofing market is vestigial in most countries, fairly developed in some others such as parts of South Australia, but present in most places with new construction. You disdain dealing with developers but they are by far the easiest to begin with due to installation and packaging simplicity.

Similarly distributed battery storage is in it's infancy nearly everywhere. Suppliers come and go, enough so that my early 1990's complete off-grid solution was primarily made up from suppliers that no longer exist. This industry is growing quickly in every single category. You should readily agree with that. The primary point you are making is the one most seriously incorrect one, representing large correct data and misunderstanding the conclusions. The problem is this;

In every case through history the first mover sometimes succeeds, sometimes fails entirely and sometimes loses share but thrives anyway, eventually.

In the case of Tesla their approach to cars and that of all of Tesla Energy is different. The two business lines are definitely different businesses. In Tesla Energy there is no reason at all for them to try to be a major player in all markets. They are not even close to doing that with cars.
If we take your stated logic, because Tesla Energy has low penetration today they always will end up in failure. That is the identical argument industry experts use for the inevitable failure of Tesla cars.

As with all their businesses Tesla tests their approaches and quickly evolves. Sometimes they make mistakes, even basic ones (e.g. early Model S motors, main batteries, 12V and on and on, with Model X doors, and announcements of numerous products that have not yet happened).

Yes, without question they have much to learn.

Autobidder works, so others have copied it successfully;
Industrial level power support works well, as first evidenced clearly in South Australia.
All the stationary profits work well where they are installed, even in flooding!

But, you protest, they haven't scaled and they aren't replying where I live and on and on.
True! as supplied and capacity increase will they not be able to sell and support the products?

Where I live most of the time there are no Tesla products available. Of course I live in tiny irrelevant country of no interest to anybody, only the size of continental US. In my market the BYD cars are available as are BYD and CATL stationary storage that is designed to be modular and very scalable. They're successful, as are Huawei, JAC and lots of others unknown in Europe, the UK or North America. And so it is, with different suppliers in other countries. Does that mean Tesla is irrelevant and has already failed? NO! It means nothing of the kind. It means only that the market is just beginning.

In 1977 driving a Hyundai Pony in Kuwait everyone laughed. In 1967 driving a Toyota Crown in Hawaii everyone laughed. And they howled with laughter when I bought a 1967 Honda S600 in Thailand. So, when i converted my island in the Bahamas to 100% solar everyone swore it would never work. I also drove an NSU Ro80, and that one DID fail sending NSU to the smothering arms of VW.

All of those solutions were fairly primitive in modern terms. All the makers were guaranteed to fail. Almost all did not. The huge difference with Tesla is that they generate lots of cash, have very conservative financial management and grow as quickly as they can. They'll get there with excellent storage and solar products. Being vestigial now is precisely analogous to my first Tesla. Look at them now.

I respect your knowledge and experience and am learning from you. Sadly you do not understand the evolutionary, revolutionary process of Tesla. Wait, say, five years. You'll see.

I think we both know that white papers are one part of the very wide range of things that constitute marketing. Sometimes when I listen to marketeers lay claim to stuff I do get to wonder if there is anything in a business that they don't claim as their own. But really that's just the distraction of debating over semantics.

===

On the substance :

On the basis of the limited information disclosed by Tesla since 2015, the division we call Tesla Energy (which incorporated SolarCity from 2016, which would otherwise likely have gone under) has:
- grown storage to be approx 26% of the overall global market;
- grown solar to be approx 0.5% of the residential market, or 0.1% of the overall market;

That is a 6-7 year period during which much has happened in both markets and where nobody in the renewables sector has stood still. Other businesses are also rapidly evolving in the sector, the turmoil is immense, shaking the foundations of entire countries and regions. In one of the energy segments I was active in I think 98% of the businesses went bust. In another related energy segment I've been active in the fundamentals tell me that 90% are going under. It is no longer a vestigial industry, and only the best have survived so far.

Let us see where Tesla Energy is in 5-years time and what has happened. The truth will be in the data.

 

[jerry33]

Ah, but we will, won’t we? In all seriousness, think about how many people would buy a Teslabot for housekeeping etc., but in the back of their mind, be thinking of the positive personal security possibilities. It will be a selling feature…

Would have saved the X's driver side window a few weeks ago. (Grrr)

 

[Cosmacelf]

Would have saved the X's driver side window a few weeks ago. (Grrr)

What happened?

 

[Prunesquallor]

The evolution of my brokerage news feed is pretty telling. At market opening it was “Tesla price cuts due to eroding demand”, now it’s “more Teslas will be eligible for tax credits”.

 

[FSDtester#1]

Can anyone post a live chart of SP of all auto manufacturers?
I don't have them set to see in one chart.
Thanks

 

[Cosmacelf]

The evolution of my brokerage news feed is pretty telling. At market opening it was “Tesla price cuts due to eroding demand”, now it’s “more Teslas will be eligible for tax credits”.

Give ‘em time, they’ll get there eventually. I feel like I’m surrounded by idiots (not you guys, everyone else)!

 

[oldTAVguy]

Max Pain today 120, max pain next week 135. Next week has 3x the outstanding contracts. Interesting battle. I'll get lots of popcorn.

 

[Matias]

But I'm pretty sure that the wheels and paint are "physically attached to the vehicle" at the time of delivery.

Hopefully

 

[ZsoZso]

Max Pain today 120, max pain next week 135. Next week has 3x the outstanding contracts. Interesting battle. I'll get lots of popcorn.

But 120 has significantly more calls than puts open, so MMs will actually want to close just below 120.
So any number 119.xx is perfect for them, which is exactly where we are now, so the day is done as far as they are concerned.

 

[scaesare]

Incidentally, this is kinda fun/cool/interesting.

The Model Y tax credit eligibility showed up on Slickdeals this morning (I actually saw that first and knew when I got here the place would be hoppin' lol).

For those unaware, it's a community site that aggregates sales and deals, usually for home/clothing/electronics items. I can't recall ever seeing a car deal there before... and certainly none of other EV's qualifying for the credit have been posted there.

Ther just might be a little buzz about this out there...

 

[advocate8]

Code red at legacy auto. Code red.

My sister had an AWD 5 seat Y order, placed in March, that was to be delivered Dec 1. She canceled her order bc Tesla refused to lower the price (Dec 1 was the cancel date as she had already delayed with a hold).

Well she just reordered today. N=1. But I suspect this price drop, which is insane, won’t last.

They could have just given everyone a $7500 credit, but instead dropped the price to well under $55k. They are going for the jugular of legacy auto , and poking a stick in the eye of the IRS.

This price drop has little or nothing to do directly with the tax credits. It’s based on Tesla’s internal projections for price elasticity demand.
The evidence? The percentage of the cuts for the S, X and YP, none of which qualify for the credits, are on average about the same as those for the Y.
This is about the macro picture of the economy.

 

[gene]

Added 400 shares. I feel excited just as Rob Mauer did last night. I think Telsa has some great strategy going on here.