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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Dealers are struggling right now. Their funding for inventory is really drying up. Read a few articles on this and talked to a buddy who works in the business. Apparently the usual line of credit is around 6 months with no interest for dealers. Without that they will be pressed to keep up inventories which will dampen sales by legacy.
Capital One exits floorplan lending business
Capital One decided to exit floorplan lending on March 29, but will stay in the auto finance business.
www.autonews.com
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That does work, for both loans and leases. However the further upscale one goes the better the odds they'll really understand. Maybe 1% of qualified buyers understand how leases really work, much less the arcane residual value, Capitalized cost, money factor and use limitations issues. The benefit of the low rates invariably benefits loans but only when it is clear that they're special. For cars even high end buyers understand the principal of subvention, even if they do not understand the term. They also expect dealers to sell 'adds' at F&I time.
Properly packaged That can be a good thing. Tesla has often done that, rarely understood to be doing it because Tesla never has severed nor publicized the rates. It's a bit tricky for Tesla, but good.
There is a specific product that has been used to excellent results by BMW in the US, by VAG companies in various markets and historically has been used in agricultural equipment finance.. That product has high appeal for very credit worthy customers who are payment sensitive. It is essentially a ballon loan. Small business owners often like these since they can, in many jurisdictions, expense the depreciation immediately as in any capital item as well as the payment. In the auto case it works thusly:
An auto purchase is sought, with an established residual value, as in a lease. The payments are to cover interest and a partial amortization. At end of period the buyer can buy the car or return it. In low interest rate scenarios this can drastically reduce payment and with a low interest rate it works very well.
I do think the time has come for Tesla to deploy innovative financing options, especially as volumes increase. Improving affordability among highly creditworthy buyers is invariably a good idea, particularly when the actual rice does not need to decrease. From Tesla's perspective the chief issue to to avoid the necessity for lease financing accounting. There are solutions to that issue, far beyond the scope of this thread.
Article from Autonews about Toyota's new EV plan. Sounds eerily familiar.
New Toyota CEO Sato Touts Three-step Plan To Big EV Profitability: ‘We've Just Started' - WorldNewsEra
TOKYO – For Toyota Motor Corp. raking in big profits from electric vehicles is as easy as 1, 2, 3.
worldnewsera.com
At the time seat belts were viewed negatively as government reach and "they kill more people than they save". There are countless wrecks Tesla could point to with sentiment from 1st responders as to no other car would have saved the occupants.
I gave a bevy of talking points and as a person with two small children, crash safety/avoidance, and charging are the two functions that gave me no pause in my wife going on a 1K mile journey alone with two sub 7 year olds....well that and iPads, but I digress.
This time of year is the Superbowl for accountants. You typically don't hear from them until a month after the deadline...
SunCatcher
Member
I was actually just thinking this (although I know you were kidding in this case). Remember the signs of old days saying "Eat Here and get Gas"? Well, the convenience store/gas stations of today could post a new one: "Eat Here and get Charged". No, really.
Tesla has always, to my eye anyway, maintained a subdued, subtle approach to their presence (goes with the minimalist interiors of their cars). I'll bet many people driving ICE vehicles don't even notice the Supercharger stalls at the back of the gas station. Wouldn't be hard or cost much to add some bling to that corner of the lot. "Hey, lookie here! We're Tesla, and our juice is cheaper than their gas!"
Okay, maybe a bit tacky, but ya'll get the idea...
Or, how about a billboard sign placed right behind the Superchargers? Avatar credit to @Carl Raymond
WTF was that plan?Article from Autonews about Toyota's new EV plan. Sounds eerily familiar.
New Toyota CEO Sato Touts Three-step Plan To Big EV Profitability: ‘We've Just Started' - WorldNewsEra
TOKYO – For Toyota Motor Corp. raking in big profits from electric vehicles is as easy as 1, 2, 3.worldnewsera.com
Presumably people who are purchasing an X (or S) aren't that concerned about inflation.
The Accountant said that Q4 would be his last post on the matter and moved to the social media realm - then stopped posting there as well in February.
@StealthP3D is still active on the forum in other places but doesn't visit us much anymore - and @Papafox has his own thread to talk in about things.
For more discourse on earnings the Near term thread is a pretty good place to ask questions.
Sometimes great posters come to the thread and sometimes they leave all have different reasons and the only thing we can do is value them as much as possible while they are here.
Understand that the amount of people who have disposable time or interest in discussing topics on a very specific topic (I.E. TSLA and Tesla) as big as we think it is, is no comparison for the rigors of daily life and adventures - both good and bad.
I feel very blessed to see and try and understand some of the great people that contribute and thank them for their time.
Snapped up a baker's dozen today.I'm personally not worried about Tesla dropping in SP in the near future since I'm still accumulating. Luckily, I'm an investor and not a speculator! Probably picking up about a share/month if you add up Tesla in the S&P index funds I buy in both our 401k's every week, IRA's every month, and brokerage every week or two. I don't mind buying it on sale.
Saving some dry powder for the coming weeks.
Still not planning to re-evaluate regarding any selling until 2025. Quite interested to see how the landscape looks at that time.
Somebody wake me up then, please! Let's say, April 2025 so I don't miss the whole Spring.
(For those like me who have the time/runway, hang in there!)
Krugerrand
Meow
I let a very shy 7 yr old experience my Tesla a few days ago. The door handle was a puzzle, fart mode was a giggle, santa mode was a look of awe, romance mode was ‘can we make s’mores?’, the arcade was overwhelming, but sketch pad was intriguing.Even in rural Scotland little boys point excitedly at passing Teslas. The younger generation already know. They just need the money (and to become driving age
The next day that shy kid approached me and asked if they could have another ride. This time they were all over the center screen exploring with confidence. Then I launched the car, introduced ‘open glovebox’ voice command, talk and text to mom’s phone as well as receiving mom’s texts that made the car ‘talk’, the vent controls, and Mars.
Got a text from mom later; the kid won’t shut up about the car. I told her, ‘sorry, not sorry but there’s still cat mode, and rainbow road, and light show, and FSD Beta, and, and, and. Tesla.com is where you order online.’
Alas, the company is doing it all wrong because they’ve chosen the mission over a few percentage points of GM.
Despite the assertion that is rarely, if ever, true. Floor planning is a quite well documented art and here is the most recent Automotive News article:Dealers are struggling right now. Their funding for inventory is really drying up. Read a few articles on this and talked to a buddy who works in the business. Apparently the usual line of credit is around 6 months with no interest for dealers. Without that they will be pressed to keep up inventories which will dampen sales by legacy.
Capital One exits floorplan lending business
Capital One decided to exit floorplan lending on March 29, but will stay in the auto finance business.
Floorplan revenue expected to dive after years as a profit source
After years as profit source, floorplan revenue is expected to dive in 2023 as interest rates rise.
www.autonews.com
Despite that when OEM's have serious problems they usually begin to 'subvene' floor planning to keep dealers stocking vehicles they do not want. Normally dealer and/or consumer incentives are offered then also.
Nearly all such arrangements are easily visible publicly every week in Automotive News. Details require a subscription but much information is also free.
I have never heard of a six month free floor plan for anything at all. That does not mean such has no happened, I'd sure it has. Quite often floor plans are extended, sometimes free, for least years models long after model change, such as 2022 models now. That is arranged from the OEM and is usually not offered through non-captive lenders.
Agreed. More Teslas will be sold by owners than will ever be sold by advertising.
Knightshade
Well-Known Member
Preston Tucker would like a word with you
Isn't that basically EAP, which was reintroduced to Europe back in '21 exactly in hopes of addressing lack of FSD take? Or do you mean you want a version of city streets, specifically?
There are 3 reasons Tesla would sell cars at zero margins:
1) The invisible hand
The selling price of a good is dictated by market demand. If you want to sell something at $50 but the market is only willing to pay $40, you must sell at $40, regardless of how much it costs you to produce the product, unless you choose to cut production. Interest rates and the expectation of a recession have severely impacted demand for premium-priced vehicles such as all Tesla models. And Tesla will not cut production because of
2) Scalability
Tesla's long-term goal is to cut production cost by 50%, and in order to achieve this target or even get anywhere near it, Tesla needs to constantly expand production. Even if they didn't make any money on the cars being produced, they'll make up for it when the economy rebounds and Tesla has the most favorable cost structure.
3) Propagation of platform
Tesla's end game is to sell software, i.e. FSD, to Tesla vehicle owners. Scaling production as fast as possible and selling everything is the prerequisite for this strategy. Classic printer & ink business model, just at a much larger scale.
1) The invisible hand
The selling price of a good is dictated by market demand. If you want to sell something at $50 but the market is only willing to pay $40, you must sell at $40, regardless of how much it costs you to produce the product, unless you choose to cut production. Interest rates and the expectation of a recession have severely impacted demand for premium-priced vehicles such as all Tesla models. And Tesla will not cut production because of
2) Scalability
Tesla's long-term goal is to cut production cost by 50%, and in order to achieve this target or even get anywhere near it, Tesla needs to constantly expand production. Even if they didn't make any money on the cars being produced, they'll make up for it when the economy rebounds and Tesla has the most favorable cost structure.
3) Propagation of platform
Tesla's end game is to sell software, i.e. FSD, to Tesla vehicle owners. Scaling production as fast as possible and selling everything is the prerequisite for this strategy. Classic printer & ink business model, just at a much larger scale.
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