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

[GeoX750]

Tesla cracks me up. Does anyone really think the Tesla Network will be up and running in the next 3 years?

I'm really curious about the Autonomy day, but I feel like it's going to be a disappointment, i.e. "we stop at stoplights and stop signs!"

Neural nets aren't good enough percentage-wise to be dependable for FSD yet and getting an extra 5% in accuracy may not be possible...

What's funnier is they specifically tied the fact that you can't buy your car at the end of the lease because they need cars for the non-existent Tesla ride-sharing network. I can't even imagine writing that.

 

[Fact Checking]

Honestly the whole $35k proclamation thing is an embarrassment that should have never happened.

You can still order the SR, but until Tesla can sell higher value units why should they make it easy for the $35k model to crowd out production capacity for the rest?

They should have just stopped at the SR+, which to me, is better than the base 35K (in terms of value).

No, the "broken promise" whining would have reached a crescendo.

Also, as time goes on we'll see how the product mix and production capacity evolves.

Where's the problem? Tesla wants to maximize income to maximize growth, so selling the SR+ before the SR is basic business sense.

 

[tinm]

Sorry, bad logic, the more plausible reason is that SR+ is 85%+ of the orders:

"Since then, Standard Plus has sold at more than six times the rate of Standard, far exceeding our expectations."​

They also have more orders than they can fulfill, so they don't want lower margin SR sales to crowd out higher margin SR+ sales.

That’s being generous. Tesla already discouraged people from getting the SR by a) pushing out the availability date and b) offering the slightly more expensive SR+. It’s no wonder lots of SR people decided not to wait and ordered SR+. Question is, if availability of SR had been identical to SR+ from the start, would outcomes have been different?

 

[Yuri_G]

Tesla cracks me up. Does anyone really think the Tesla Network will be up and running in the next 3 years?

I'm really curious about the Autonomy day, but I feel like it's going to be a disappointment, i.e. "we stop at stoplights and stop signs!"

Neural nets aren't good enough percentage-wise to be dependable for FSD yet and getting an extra 5% in accuracy may not be possible...

It seems ridiculous until it happens. They're obviously much more confident this year and I'm interested to see what the 22nd brings.

 

[Pras]

Honestly the whole $35k proclamation thing is an embarrassment that should have never happened.

And why is that? The 35k was available to order to everyone in the US. Now they are updating price. It wasn’t a promise that they will always sell at 35k. It was just posted at the launch as starting at 35k...not a plan forever.

The problem was that until recently US reservation holders didn’t get to order $35k car for which they’d put the deposit. That issue isn’t there anymore.

 

[Carl Raymond]

That's one of the main perks of leasing: getting a new car every 2-3 years, while the monthly payments are mostly constant - and not having to bother with the "old" car at the end.

IIRC ~80% of BMW's North American sales are leased?

But this is a different fish. A car that goes from user driven to self driven, mid lease, is a car that appreciated rather than depreciated. This clause will encourage people to buy rather than lease, if they believe FSD will arrive.

Noteworthy that it doesn’t have to arrive everywhere, or even in the USA. It just has to arrive *somewhere* where there’s a FSD friendly road system and transport authority, with a population to support the ex-lease fleet. “Robotistan”.

 

[DaveT]

Unlikely, plus they'll have the SR+ upgrade stream of income. They want to sell more SR+'s until take rate is so high, without taking the $35k option completely away.

Well, let's check back in 2 months. Let's say on June 11th and see if the $35k option is still available then.

 

[Doggydogworld]

I suspect part of the current PowerWall pricing is the high corporate overhead the low scale has to cover: they are still selling an order of magnitude fewer cells than automotive and overall margins are below target.

Corporate overhead is SG&A, not COGS.

If there was a $500 million Powerwall assembly line sitting idle most of the time while Model 3 hogged all the cells, then I could see an argument for COGS falling rapidly with scale. But there isn't. Nor do they have a bunch of manufacturing employees playing gin rummy waiting on cells. I just don't see any low hanging fruit here.

I don't fully understand the high energy storage COGS. I suspect it simply costs a lot more to make 4000 cycle energy storage cells than 800 cycle automotive cells. If storage is 50/50, that's ~40k Powerwalls and ~2500 Powerpacks last year. Will going to 80k and 5000 really move the needle?

 

[Navin]

Poor Fred. He’s probably checking himself into a mental institution with this latest price change. I can see him somewhere shaking his fists at the sky

 

[MarcusMaximus]

It seems ridiculous until it happens. They're obviously much more confident this year and I'm interested to see what the 22nd brings.

Using the latest NoA, and seeing their labeled outputs posted by verygreen, I can see why they are. Their detection, classification and control capabilities are amazing. I’ve never seen such consistent perfect 3d bounding boxes from 2d video.

 

[Pras]

But this is a different fish. A car that goes from user driven to self driven, mid lease, is a car that appreciated rather than depreciated. This clause will encourage people to buy rather than lease, if they believe FSD will arrive.

Noteworthy that it doesn’t have to arrive everywhere, or even in the USA. It just has to arrive *somewhere* where there’s a FSD friendly road system and transport authority, with a population to support the ex-lease fleet. “Robotistan”.

I think this is a good point. They can start with Robo cabs on fixed routes. Like a more flexible bus route, with geofencing initially. I mean manhattan could be one? Most streets are straight and are one way.

 

[StarFoxisDown!]

And why is that? The 35k was available to order to everyone in the US. Now they are updating price. It wasn’t a promise that they will always sell at 35k. It was just posted at the launch as starting at 35k...not a plan forever.

The problem was that until recently US reservation holders didn’t get to order $35k car for which they’d put the deposit. That issue isn’t there anymore.

Seriously, if ya wanted a SR you had a month to place your order. No whining now

 

[powertoold]

The Tesla Network may start off with "easy" routes where Tesla knows there's a 99.999% reliability based on AP/user data.

This is where Tesla's advantage with having a fleet of 300K+ cars comes in.

 

[Mars ☰mperor]

I said old LR vs *New* AWD.

My bad.
You mean the initial LR?
The price was $49,000 without Autopilot.
So Oldest LR was $52,000 with Autopilot, which is $2,500 more than Newest AWD's $49,500.

 

[Pezpunk]

The Tesla Network may start off with "easy" routes where Tesla knows there's a 99.999% reliability based on AP/user data.

This is where Tesla's advantage with having a fleet of 300K+ cars comes in.

It will start out with a person in the car.

 

[RobStark]

That’s being generous. Tesla already discouraged people from getting the SR by a) pushing out the availability date and b) offering the slightly more expensive SR+. It’s no wonder lots of SR people decided not to wait and ordered SR+. Question is, if availability of SR had been identical to SR+ from the start, would outcomes have been different?

Are you implying Tesla is morally obligated to not upsell their customers?

IMO Tesla is morally obligated to offer every 2016 reservation holder the opportunity to buy a $35K Model 3 or whatever the advertised base price was in their country.

If they are enticed to spend more that is their choice.

Everyone else who decided later? Tough bananas.

 

[DaveT]

Sorry, bad logic, the more plausible reason is that SR+ is 85%+ of the orders:

"Since then, Standard Plus has sold at more than six times the rate of Standard, far exceeding our expectations."​

They also have more orders than they can fulfill, so they don't want lower margin SR sales to crowd out higher margin SR+ sales.

And where's your evidence that Tesla has more orders than they can fulfill?

 

[Pras]

In terms of revenue, any idea how much cab fare can Tesla generate in a day?

 

[Fact Checking]

Corporate overhead is SG&A, not COGS.

Not all of "fixed overhead" is in SG&A - there's a "fixed" D&A that goes into CoGs as well - as we've seen it during the Model 3 ramp-up.

I don't fully understand the high energy storage COGS. I suspect it simply costs a lot more to make 4000 cycle energy storage cells than 800 cycle automotive cells.

I don't think it's at the cell level: Carsonight reported that switching the Panasonic lines from storage to automotive and back takes about a week. Also, doesn't storage chemistry have less cobalt?

I have the impression it's poor economies of scale - but no real proof until we see a ramp-up.

 

[sundaymorning]

Wow, lots of nice info!

One is the take rate of SR+ orders:

"Last quarter, we introduced two new Model 3 variants with more competitive pricing than ever before – Standard and Standard Plus. Since then, Standard Plus has sold at more than six times the rate of Standard, far exceeding our expectations"​

So SR+ take rate is higher than 85%, which is fantastic. The wording suggests that this is actual order flow level take rate, not impacted by production.

"Tesla vehicles now come with Autopilot bundled as a standard feature for less than the prior cost of the option. For example, Model 3 Standard Plus used to cost $37,500, plus $3,000 for the Autopilot option. It now costs $39,500, with Autopilot included."​

I believe the China AutoPilot bundling offer in February was a trial balloon, and they went for it.

Given that Autopilot take rate was in excess of 80% in surveys this should eliminate the lower margin AP- sales.

It also puts pressure on competitors plus makes it easier to buy the FSD option.

"Please note, customers who choose leasing over owning will not have the option to purchase their car at the end of the lease, because with full autonomy coming in the future via an over-the-air software update, we plan to use those vehicles in the Tesla ride-hailing network."​

Wow - will bearish analysts now add Lyft's valuation to Tesla's now? Just kidding ...

Not only will other auto manufacturers have to spend a fortune developing AP, they will also have to sell their AP at $2k or risk being undersold by Tesla. This is a good move to bring in more revenue (about $60-80 million per quarter if Plus makes up 50-60% of total M3 sales).