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

[Papafox]

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.

Yes, that's how I read it. As someone who hung in there for over a year, waiting for my 2013 Model S 40, I was amply rewarded with a 60kwh battery (software limited) and a great car at a great price. Resale value was amazingly good. Those who placed their orders for SR and hung in their will be similarly rewarded. They will be driving true $35,000 Tesla Model 3s (plus options), but with the better interior, electric seats, seat heaters, etc.

The SR will have to be priced at $37,000 with autopilot because if it was $35,000 it would draw too many orders away from the SR+.

I concur with Neroden that Tesla has likely had too much downtime changing the production line to accommodate variants of the Model 3. It's time to reduce the variations and allow the Model 3 line to produce higher quantities of vehicles.

 

[Pezpunk]

Agree. If they want to maintain the $35k car, offer it with AP disabled.

disabling autopilot saves them $0 in manufacturing costs.

 

[Alphacrux]

Tesla may be able to achieve FSD in less than 3 years, but that doens't mean that regulators will approve the current sensor suite for that. I actually think it's likely that only 8 cameras with no redundancy will not be able to get approval, no matter the neural network advancements.

Musk said that the NN chip will have redundancy. Ie current NN software is 5% utilization for Hw 3 and 10% utilization for switch over redundancy.

I think if something were to go wrong with a camera, it would be the equivalent of a “check engine” light, and the computer would attempt to pull over to the side of the road in a safe manner using the remaining resources.

Remember that Musk said something like: if we can show that FSD is 10X safer than human drivers, then regulators should approve it to save lives. In other words, FSD has just have to be an order of magnitude or two better than human drivers to be approved.

 

[Artful Dodger]

With the Standard Range Grohmann Machine not coming online until ~March they were consuming ~78 kWh of cells for every unit made

L3MUR < LR

 

[erthquake]

L3MUR < LR

I believe they stopped producing MR packs in December.

 

[kengchang]

So, there is currently a serious threat to my investment thesis for Tesla. (And that for anyone else with a similar model.)

It doesn't depend on any of this autonomy stuff. It doesn't depend on high-trim sales. It doesn't depend on good customer service. It doesn't depend on competent communications. And I am definitely not worried about demand.

It depends on one thing: they have to get to 10k/week production with minimal capex. Having to build the Chinese factory to get to 10k/week was already a setback. Having Fremont stuck at 5k/week is a *serious* setback.

We need to get questions asked at the conference call about production rates and bottlenecks.

I believe 10K was originally designed to be built via two body lines though

 

[Anstandswauwau]

No idea how people here a trying to spin this into a positive news?!

The optics of this whole back paddling again, killing SR, and enabling SR+ overseas without any fanfare is not just bad, it's effing catastrophic.

Good luck, my friends - you'll need it.

 

[Artful Dodger]

I concur with Neroden that Tesla has likely had too much downtime changing the production line to accommodate variants of the Model 3. It's time to reduce the variations and allow the Model 3 line to produce higher quantities of vehicles.

Yeah, I don't agree that it was switching time that cause the delay. Elon himself said it was due to delayed supply of European spec parts.

Again (I have said this here before), Elon is not one to blame his suppliers, but, the SUPPLIERS are to blame. Same as when Telsa trusted the robot makers for the original bty pack assemby, which turned out to be useless.

Look for Tesla to buy a Supplier or two, and add vertical integration. This issue is transient, if its not already fixed.

Barnacles must be removed.

Finally, 10K/wk is NOT required for Model 3 to be profitable. Tesla made the conscious choice to build the next 3K capacity in China due to more efficient use of capital (they only have to buy the robots, China is providing the facilities). Also, China's steady state demand for Model 3 SR is probably > 10K/wk and the Model Y line will go up next door. Although they might need two.

Cheers!

 

[neroden]

Who cares about "optics"? Tesla certainly doesn't (which is typical for a company which can't meet demand).

My only question is production. And no, it's not good news that they are killing two variants; it implies that they need to do so in order to get production rates up. (LR RWD was popular. There are only two reasons to kill it: one, it has worse margin than AWD, but in that case, why not raise the price; and two, having more variants is a problem. This tells me that having more variants is a problem.)

 

[Singer3000]

Hey guys, i just saw the full response from Tesla:

“Both Tesla and Panasonic continue to invest substantial funds into Gigafactory. That said, we believe there is far more output to be gained from improving existing production equipment than was previously estimated. We are seeing significant gains from upgrading existing lines to increase output, which allows Tesla and Panasonic to achieve the same output with less spent on new equipment purchases. However, we will of course continue to make new investments in Gigafactory 1, as needed. Most importantly, contrary to what is implied in this report, our demand for cells continues to outpace supply. It remains the fundamental constraint on Tesla vehicle and Powerwall/Powerpack production.”

That bolded line is key.

Thanks for posting this. Absolutely ridiculous that it took so long after the statement was made for THE MOST IMPORTANT sentence to be widely read.

 

[Leo9]

No idea how people here a trying to spin this into a positive news?!

The optics of this whole back paddling again, killing SR, and enabling SR+ overseas without any fanfare is not just bad, it's effing catastrophic.

Good luck, my friends - you'll need it.

Catastrophic is a bit much... We'll see how the market reacts soon enough.

 

[Mars ☰mperor]

Also it’s concerning the lower margin SR+ is already being offered for Europe/China

Like someone else said, you do find every decision Tesla made concerning.

The delivery timeline of SR+ for Europe is not yet shown, and it's end of June for China, so end of Q2 for Europe is likely.

Elon said during Q1 earnings call that the Mid-Range Model 3 would have to be offered to Europe (and China? I don't remember).
Now the MR is gone, theSR+ is the only version besides the other AWD versions.
So it was always part of the plan.

Now are you still concerned?

 

[Prunesquallor]

disabling autopilot saves them $0 in manufacturing costs.

Correct, but they keep the narrative of the ”35k car". As I stated, if that’s not worth it to them (too many orders at too much loss per vehicle), add AP and up the cost as the only option and take the PR hit.

 

[NicoV]

Bears and scare-media are going to have a field day with this latest news.

They have a field day with every kind of news. Just ignore them.

 

[Johann Koeber]

So in Germany standard range plus can be ordered. The other offers show May delivery. No delivery date for standard range plus. But it does require a refundable deposit of EURO 2,000. The shown prices do not include the EURO 980 delivery fee.

This is a VERY attractive offer in the German market.

German market is huge for company cars in this price range. Remember most companies get the VAT refunded (19 % of 45,480 =) 7,261.51plus get the 'Umweltbonus of EURO 2,000. Effective cost is EURO 36,218

The employee is taxed on EURO 222.50 for the privilege of personal use of the vehicle, as opposed to EURO 445 if it were not electric.

Watch out Audi, BMW and Mercedes!

 

[schonelucht]

https://www.sec.gov/Archives/edgar/data/1318605/999999999719000687/filename1.pdf
Clearly lists the date which is for the 10K filed on Feb. 19, 2019. It is likely that Tesla and FCA entered into an agreement that they will form the pool which was formally created 6 days later. In fact it would be surprising if the agreement between the companies to form the pool did not come before the actual forming of the pool. So keep on spinning.

1. We were talking about the filings from Feb 25th
2. The exhibits for which confidentiality was granted are listed in your link :

10.48 is Amendment No. 5 to Amended and Restated Loan and Security Agreement, executed on December 28, 2018, by and among Tesla 2014 Warehouse SPV LLC, Tesla Finance LLC, the Lenders and Group Agents from time to time party thereto, Deutsche Bank AG, New York Branch as Administrative Agent and Deutsche Bank Trust Company Americas, as Paying Agent.

10.54 is Payoff and Termination Letter, executed on December 28, 2018, by and among LML Warehouse SPV, LLC, the Lenders and Group Agents from time to time party thereto, and Deutsche Bank AG, New York Branch, as Administrative Agent, relating to Loan and Security Agreement.

10.55 is Loan and Security Agreement, executed on December 28, 2018, by and among LML 2018 Warehouse SPV, LLC, Tesla Finance LLC, the Lenders and Group Agents from time to time party thereto, Deutsche Bank Trust Company Americas, as Paying Agent, and Deutsche Bank AG, New York Branch, as Administrative Agent.

None are about FCA pooling.

Kind of stupid to accuse me and being so off the mark yourself. Will you and @neroden @Artful Dodger @shootformoon and @RobStark who endorsed your post please admit you were wrong and apologize for framing me as spinning? Thanks.

 

[Artful Dodger]

I believe they stopped producing MR packs in December.

Possibly, depending on how much inventory was built in Q4. But the announcement of the end of L3MUR was close to the SR announcment, so I think it's more reasonable to presume they were building them until then.

Remember, there are no physical differences between the L3MUR/LR. Its just a depopulated LR. with 'slugs' in the place of some cells.

Cheers!

 

[schonelucht]

I think this will back-fire a little. With people now knowing that the SR is a software limited SR+ they are more likely to order a SR for two reasons:

Nah. You'll have to go in a store to order one. More people will be upsold that way then sticking with the lower base model. It's a net positive.

 

[Anstandswauwau]

Who cares about "optics"?

People do. The market and media do, too.

It's a broken promise and some former Tesla fan/sympathizers feel betrayed be that. On an human level, there's nothing good about that news. Absolutely nothing.

 

[schonelucht]

They already have two large projects of similar size on deck, IIRC. California and another large Australian project, in fact.

Implementation for when?