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

[neroden]

Lease cost $22000 for 36 months on a 40K car

Soooo that would be an implied residual value of $18K, but standard depreciation would have the car worth $23.2K at that point, and Tesla depreciation (which is slightly better) would have it worth $27.7K. Seems financially sound for Tesla.

If Tesla Network doesn't work out they can sell them used at a profit.

 

[Antares Nebula]

Not so:

"Given the popularity of the Standard Plus relative to the Standard, we have made the decision to simplify our production operations to better optimize cost, minimize complexity and streamline operations. As a result, Model 3 Standard will now be a software-limited version of the Standard Plus, and we are taking it off the online ordering menu, which just means that to get it, customers will need to call us or visit any one of the several hundred Tesla stores. Deliveries of Model 3 Standard will begin this weekend."​

I think what is unclear is whether Autopilot will also be standard on the 35k model (meaning it will sell for 37k minimum). I would assume it would be if Tesla is to be consistent.

 

[neroden]

- Autopilot is now standard, but the cost of the vehicles is only going up by $2000 instead of the $3000 cost of the autopilot upgrade. a combination upsell / discount move. it makes sense since every car has this hardware anyway, and it's such a huge part of the Tesla experience. (does this mean the $35k Model 3 is gone for good? RIP, you were so young...)

Accounting for inflation from the announcement date, the $35K should have been nearly $38K by now. Of course they've added all the Autopilot hardware. They had to meet the promised number, but they were swimming against a current. I'm not surprised they dropped it. They dropped the S40 under similar circumstances.

- Model 3 LR RWD is also going "off-menu". What's the reason for this one? is it also a low-margin offering? I love Tesla, but I'm not buying their stated reason of "simplifying our website", haha.

They're getting rid of hardware variants.

I am absolutely sure at this point that switching between variants is losing a massive amount of production uptime. All the clues are pointing to the current production bottleneck being *variant switching*.

Don't be surprised if they delete color options. I think the white interior is way too popular to delete, or they would. (Maybe the black interior will be deleted instead.) Might go the full Model T and have only one paint color each year.

I think they wish they could have a universal chargeport, but that's probably sadly impossible thanks to stupid national governments.

 

[Carl Raymond]

I know I needle some of the superbulls on here but tbh the overpromising on autonomy is my only long term concern with Tesla.

I think the whole fully autonomous taxi network idea is like at least 6+ years out.

I think there’s a path where they can maybe do it sooner with having one licensed rider always getting in the driver seat, but true autonomy is something that I just don’t see happening that soon. Simply way too many edge cases and regulatory hurdles.

In the USA, you may be right, but think “Robotistan”. Some place with good roads and signage willing to take a chance to be a world leader. Likely with oil money. Likely in control of the media so they don’t fear backlash from the first casualty. Casualties will happen, though less frequently than with humans in control whom we tend to forgive if they were not being reckless.

The cars are easily shipped. Autonomous cars will be worth more than their owners paid for them, back when they lacked the capability.

Next market session will be a measure of investor intelligence. This *is* a catalyst. Market may or may not work it out immediately.

 

[neroden]

Couple of thoughts

• They couldn’t make SR work financially. The sunk costs in robots could never be recouped to make it viable.

I think if it had been the only trim with huge demand, they could have eventually made it work. But when the percentage of people buying it was similar to the S40? No way -- it wouldn't justify setting up the supply chain for the cloth seats. Let alone the downtime from production switching...

• It’s essentially only available now because Elon promised. SR+ is still an amazing end result however, same msrp as a 3 series
• Dropping LR RWD and SR probably helps streamline production. That’s potentially one of the reasons production was down in Q1.

I am now absolutely certain of this. I believe that switching betweeen variants was killing production rates. They haven't admitted it but I think every piece of evidence indicates this.

Unfortunately, they haven't solved their problems with production downtime due to variant switching; so they're using the brute-force method of reducing options. That's definitely unfortunate; it means they really don't know how to make a lot of variants on a single production line without major downtime. That's simply something where they are worse at it than the old-line auto companies.

 

[Krugerrand]

Sounds like SR is still not profitable so they’re all but burying it? Seems pretty drastic for them to remove SR from the website after telling the world just weeks ago the company’s switching to online-only sales. Bears and scare-media are going to have a field day with this latest news.

Except that given the opportunity, hardly anyone wanted the SR. So not drastic to remove it.

 

[Alphacrux]

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...

I disagree. Some convolution neural nets CNNs now exceed humans in pure classification performance (ImageNet). With additional context and training through “shadow mode” it is entirely conceivable that FSD will be running in 3 years.

Forget about human timescales. Think of performance gains due to Moore’s Law. Read up on AlexNet and the ImageNet Challenge:
The data that transformed AI research—and possibly the world

 

[Prunesquallor]

Some serious dark skies you have there..
Canon 5D IV 16mm SIO 2500 30 sec It was very light here so not typical settings..
It was a full Moon and an Eclipse, so quite the special night.

Special indeed!

Mine was just pure luck. We were renting a house about 3000’ up the mountain from Lahaina. There were only going to be a few nights before the moon started rising, so I drove up to Haleakala to try to get some shots. I never could get any I liked (climbed all over the crater but couldn’t get to a location with the observatory silhouetted against the Milky Way) and absolutely froze my a$$ off.

The next night it was incredibly clear at the house. The shot I posted was from the back yard while I was sipping a margarita.

 

[neroden]

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

Should have said "in 2014 dollars" or otherwise announced that the target price was going to go up with inflation, anyway.

 

[Alphacrux]

I disagree. Some convolution neural nets CNNs now exceed humans in pure classification performance (ImageNet). With addition context and trading through “shadow mode” it is entirely conceivable that FSD will be running in 3 years.

Forget about human timescales. Think of performance gains due to Moore’s Law. Read up on AlexNet and the ImageNet Challenge:
The data that transformed AI research—and possibly the world

Read the article and then think about the huge lead Tesla has in image data sets under real world conditions with hundreds of thousands of cars driving millions of miles.

 

[neroden]

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.

There's some actual evidence that exactly that was happening. Remember that several TE cell lines were converted to automotive to meet Model 3 demand. (Then, more recently, converted back.)

Presumably they had built the TE pack line to be fed by all the TE cell lines... before converting some of them to automotive... so it would have been underutilized during the period when all the cells were going to Model 3.

 

[Artful Dodger]

Looks like Standard range plus is available in Europe now

Great move! With FCA pooled carbon credits, each Model 3 they can sell in Europe is worth an extra 5K Euros, and goes up each year.

+5K is already +12.5% gross margin for each SR+ sold. This is gonna get big, fast.

Cheers!

 

[neroden]

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

Europe is the evidence of that.

 

[Fact Checking]

We'll see, but chances are Tesla will never sell a $35k car, at least for the foreseeable future. The SR will likely have AP bundled, making it $37k.

Actually, that's a great deal: $37k happens to be $35k inflation adjusted 2016 dollars.

 

[Bladerskb]

They didn't say that. There's a wide spectrum of technological solutions that are not "100% autonomous all the time", which are still economically superior to "taxi driver" based service:

• A fleet dispatch center with "remote drivers" who are trained to take over when there's an FSD disengagement event.
• Speed limits for when the car is driving unattended.
• Geofencing and geomapping based on fleet feedback.
• A quick response fleet technicians who can recover malfunctioning or stuck cars.

Tesla Network doesn't have to be all or nothing, it has to generate money and can grow constantly.

Here's how they will pull it off if anyone is wondering.

Here's How Tesla will launch the 'Tesla Network' as L2 ADAS!

 

[neroden]

Leases do not operate on Elon time.



Based on today's blog post, it's gone now. *All vehicles* are now bundled with Autopilot, meaning $35k is no longer an option.

Granted, they have muddled their messaging by not updating the S/X/Y configurators yet, but the intent is clear. So either $35k is gone or they didn't proof their blog post very well.

I'm pretty sure anyone who already ordered will get their $35K car, as otherwise people will be suing. Anyone ordering now, you snooze, you lose.

 

[Mo City]

Not being able to buy the car at the end of a lease because of the Tesla Network launch is nothing more than a gimmick. Tesla will "change their mind" because autonomous ride-sharing won't be ready any time soon. They will blame regulatory bodies.

I am a Tesla cheerleader, shareholder and own a Model 3, but I'm tempted to sell all my stock. Something just isn't right with this company.

EDIT: Just to clarify, I hope I am wrong. DEAD wrong.

 

[Carl Raymond]

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

Yes, I think it is almost certain that one or more nations will approve driverless Teslas for their roads within 3 years. They will pay handsomely for the cars too, easily shipped. More than today’s new price for 3 year old cars. i.e. Buy a Tesla today, sell in three years at a profit.

 

[neroden]

They wouldn’t be offering leasing if they were production constrained.

We know for a fact that they're either production constrained or delivery constrained for Europe. Plenty of people who don't have their 2016 first-day reservations yet.

There is stuff going on behind the scenes we're not seeing. For some reason Tesla can make more US cars than they can European cars right now. Maybe there's still a bottleneck on Euro-spec parts.

Chaotic price and product switching every couple of weeks looks like poor execution even if it’s not.

That's true!

 

[Krugerrand]

Uh. Sounds you're the most horrible individual I'd like to be around.

Good thing you always have the choice in RL and on the Internet to stay or leave.