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

[Papafox]

There are lots of questions about my note from a friend post. Here's a bit of perspective.

* My friend did not mention strike price or expiration date. I would guess that omission was intentional. I'm not going to ask.

* The note made it very clear that Blackrock wanted to buy the calls written by my friend. I find it somewhat strange that a deeply funded organization such as BlackRock would be asking wealthy individuals to write call options to them and since $10M worth of TSLA is really a drop in the bucket to such a company I also feel that many individuals were solicited simultaneously. Clearly, BR wouldn't be buying call options if they weren't expecting TSLA to run higher.

* Market makers are in a unique position to see the efforts being employed by themselves, other MMs, and hedge funds to keep a volatile stock such as TSLA from rising considerably higher. When those efforts are proving unsuccessful at keeping TSLA below a key resistance point such as 200, they get nervous.

* Part of the dilemma of market makers is that as TSLA moves higher, there's more call options purchased, which requires more delta-hedge buying by the market makers, which in turn pushes TSLA up even higher. It's hard to get ahead of the game when TSLA is heading higher because acquiring options or shares when you're that big just pushes TSLA higher.

* We have seen rallies of TSLA that take on a character of their own, where rising stock prices lead to massive call option buying, which in turn requires massive delta-hedge buying but it's really hard to keep fully hedged when the stock price is moving upward very quickly and new call option requests keep pouring in. That's a nightmare scenario for a market maker and a reason why MMs might want to be long TSLA, to be ahead of the game just in case another such rally gets going.

So, in a nutshell, a big organization which knows the inner workings of the market such as BlackRock wanting to increase their TSLA long position is itself bullish. For a market maker to be concerned enough to avoid the usual market channels to buy call options is unusual. I see nothing wildly bullish about the note in itself, but I do think the scenario is reasonably bullish and should be considered with all the other information out there when considering what is possible in the not-so-distant future.

 

[Buckminster]

https://twitter.com/x/status/1664028239424114693

 

[WattsHappening]

https://twitter.com/x/status/1664149860197494784

What a sincere, respectful message. You just know the Shanghai team loved having Elon there.

 

[Dan Detweiler]

Unless they also upgrade the range of the S that would cut into S sales. Same reason I don't see a Plaid 3 coming anytime soon.

Unpopular opinion here but I have thought this for years.

Model S and Model X are high end niche vehicles that have little impact on the company's bottom line. Their relevance to the company will continue to decline for the forseeable future. S and X may be thr flashy flagships, but Y and 3 are the financial workhorses doing all work pushing Tesla.

Just my $.02

Dan

 

[SebastienBonny]

Unpopular opinion here but I have thought this for years.

Model S and Model X are high end niche vehicles that have little impact on the company's bottom line. Their relevance to the company will continue to decline for the forseeable future. S and X may be thr flashy flagships, but Y and 3 are the financial workhorses doing all work pushing Tesla.

Just my $.02

Dan

Which is completely understandable IMO.

 

[Right_Said_Fred]

Seems like people might want to put the brakes on any Highland reveal. Seeing reports that Elon is departing Shanghai at 10 am (like 5 mins from now) to head back to Austin

I’m glad Elon left and took Mrs Osbourne with him. It would have been a terrible idea to reveal a Highland ‘prototype’ (wording by Bloomberg) and kill sales of the current Model 3.

 

[CYBRTRK420]

I think either the publishers or the readers have misunderstood the topic about M3 Highland being shown. It never was about a public unveil for people to start odering, it was the factory workers and overseers showing the new production line and processes to Elon.

With all the rumors dating back to last year talking about Q3 23 and new M3 LR AWD orders are set to be delivered in Jun - Jul, I think it is likely that prototype production is now running, finalizing the last steps of the new production line as shown to Elon and a public reveal happening in the next few weeks.

It most likely won't be a big event, more like a website update like they did in early 2021 with Model S and X refresh. Website and configurator was updated, followed by some marketing on Twitter but as always with Tesla, the word spreads itself.

Just my 2 cents.

 

[Todd Burch]

Unpopular opinion here but I have thought this for years.

Model S and Model X are high end niche vehicles that have little impact on the company's bottom line. Their relevance to the company will continue to decline for the forseeable future. S and X may be thr flashy flagships, but Y and 3 are the financial workhorses doing all work pushing Tesla.

Just my $.02

Dan

Why do you think that’s an unpopular opinion? I’d suspect most agree with you—it’s just fact that they are relatively small contributors to the bottom line.

They do have value in being flagships, bringing awareness to the brand, and filling that niche though.

 

[Christine69420]

Norway's largest newspaper with this headline:

The Tesla-boom never ends: New knockout in May​

Tesla delivered 12,328 cars so far in 2023. Compare that to 17,356 cars for all of 2022.

For May over 70% are LR, 25% RWD and 3.3% Performance models.

"That one single model has a quarter of the total car market has never been seen before" says director Øyvind Solberg in OFV - the organization behind these stats.

In May Tesla sold 2691 Model Y's. The runner up was VW ID.4 with 738 cars. And 594 BMW iX1 in third place.

Over 80% of the cars sold in Norway was pure EVs. 16% hybrids and 3.3% fossils.

There is a growing trend where popular fossil cars are no longer available - so people buy more used cars in these segments.

Source: Tesla-boomen vil ingen ende ta: Ny knockout i mai - Tek.no

 

[cliff harris]

Tesla has to keep the S and the X. For starters, the doors on the X are iconic, and synonymous with the brand. I think a lot of people who dont know friends with a Tesla think that they all have those doors. They are also the cars that establish it as 'common knowledge' that Teslas are extremely fast.
Fast and Cool.
Its also helpful, apart from the brand issues, for Tesla to have some low-volume cars that they can try out new tech on. If you only have super-mass-market products, you will be way more conservative with experimentation. I like the idea that Tesla can put some cool new widgets into the S or X without a potential catastrophe if they turn out to be a super bad idea.

Living in a RHD country means I am sad to be abandoned here by Tesla for their top range cars, but as in investor I am not *too* bothered, but would like to see them always keep the S and the X in production, even if its not sold everywhere.

Lastly, they are taking orders for the roadster. If the roadster makes any sense, then the S and the X clearly do.

 

[JRP3]

The average American only drives 10-30 miles a day depending if you use mean or median... the practical difference between these ranges, especially with superchargers existing, is not a major thing to hardly anybody.

The average person still asks two main questions: "how much does it cost and how far does it go?" A Model 3 at lower cost and the same or more range than an S would definitely take some number of sales away from the S, which are low to begin with.

 

[scaesare]

InductEV claims to have support for 450kW and 99% transmission efficiency. And they have a small installed base already.

I wonder if Tesla has partnered with an existing player for their eventual wireless charging option, or if it is built fully in-house. This is another case where we really need a good standard for interoperability.

Hmmm... they have this on the graphic about the benefits of wireless charging:

I don't understand how the power delivery mechanism would affect battery life... the energy ultimately arrives at the cells via wires, so unless there's some benefit they are claiming about some other aspect of their charging system (charge curve, reduced power delivery, multiple charging locations to keep the battery SOC in a narrow range thus avoiding extremes such as for busses, etc..) then this seems like a dubious claim. Actually "8x" is a pretty grand claim, regardless...

 

[FastEddieB]

Doesn't explain Apple falling off a cliff at the same time, taking the entire index with it.

I’m sorry, did I miss something?

 

[Tony73]

Unpopular opinion here but I have thought this for years.

Model S and Model X are high end niche vehicles that have little impact on the company's bottom line. Their relevance to the company will continue to decline for the forseeable future. S and X may be thr flashy flagships, but Y and 3 are the financial workhorses doing all work pushing Tesla.

Just my $.02

Dan

All luxury brands have flagships that contribute relatively little to the bottom line but are very important to brand positioning. Even the iconic Porsche 911 contributes much less to Porsche’s bottom line than it used to as Porsche is morphing into an suv and EV company.
That said, one should never confuse financial contribution with relevance. Without the S/X, Tesla is no longer a luxury brand and the 3/Y will lose their appeal to a significant proportion of buyers.

 

[Singuy]

I’m glad Elon left and took Mrs Osbourne with him. It would have been a terrible idea to reveal a Highland ‘prototype’ (wording by Bloomberg) and kill sales of the current Model 3.

If only Elon can take all the Tesla Bulls who won't shut up about this prototype word that was found a year ago in some document that probably doesn't even exist.

 

[Knightshade]

The average person still asks two main questions: "how much does it cost and how far does it go?" A Model 3 at lower cost and the same or more range than an S would definitely take some number of sales away from the S, which are low to begin with.

I'm sorry but I just don't think this is true at all, and I think the evidence is pretty clear.

The range gap from the SR 3 to the old LR is even larger than from the old LR to the S...while the price gap is 4-5 times larger from LR3->S than SR3->LR3.

And yet Tesla still sold plenty of SR 3s.

So I think what evidence we do have shows to a close approximation, about 0 people are willing to pay for an S over a 3 strictly or even primarily because they can bump the range from ~350 to ~400. Especially given both are more than 10x how many miles the average American drives in a day anyway, so there's no real world difference between those ranges other than a few minutes differences per day on the occasional road trip.

All the other factors (air suspension, larger vehicle, option for significantly higher performance, having a hatch rear, front-of-driver dash display, etc) seem much more relevant to why someone might spend roughly double the vehicle price on an S compared to a 3.... (as of this post an LR3 is about 44k after tax credit- an S is 88.5k base model)


None of which is to say I expect a 400 mile 3... Not because it'd hurt S sales (it wouldn't), but because as the above also shows, there's no real business case to offer one- nobody is going to buy one for the extra 50 miles of range that wouldn't have bought one anyway, and then you're just using up cells that could be more useful elsewhere....

 

[jerry33]

Living in the southern US I have no great desire for a less efficient charging method. But I could see inductive charging being a better option in colder climates. The waste is turned into heat so it's background resistant heat of the bottom of the car / surroundings of the car (a plus if in a garage that's wanting to retain heat when it's cold outside).

If you live in a cold enough place that you have a heated garage, then I'm saying induction charging would fit right in.

If you live in a warm enough place that people use air conditioning to cool a garage then this wouldn't excite you as much.

I'd also say this would be a plus for the day when energy prices go negative. Who cares about efficiency if the power is free? And if the economics go that way you won't mind your heat pump cooling the garage to offset the waste heat from the less efficient charging.

If you have more energy than you know what to do with you might as well go for the convenience.

The 3% difference isn't going to do much for heating.

 

[jerry33]

I'm sorry but I just don't think this is true at all, and I think the evidence is pretty clear.

The range gap from the SR 3 to the old LR is even larger than from the old LR to the S...while the price gap is 4-5 times larger from LR3->S than SR3->LR3.

And yet Tesla still sold plenty of SR 3s.

So I think what evidence we do have shows to a close approximation, about 0 people are willing to pay for an S over a 3 strictly or even primarily because they can bump the range from ~350 to ~400. Especially given both are more than 10x how many miles the average American drives in a day anyway, so there's no real world difference between those ranges other than a few minutes differences per day on the occasional road trip.

All the other factors (air suspension, larger vehicle, option for significantly higher performance, having a hatch rear, front-of-driver dash display, etc) seem much more relevant to why someone might spend roughly double the vehicle price on an S compared to a 3.... (as of this post an LR3 is about 44k after tax credit- an S is 88.5k base model)


None of which is to say I expect a 400 mile 3... Not because it'd hurt S sales (it wouldn't), but because as the above also shows, there's no real business case to offer one- nobody is going to buy one for the extra 50 miles of range that wouldn't have bought one anyway, and then you're just using up cells that could be more useful elsewhere....

I don't even look at cars without a hatchback. When Superchargers can be 200 miles apart 400 miles range (more like 300 at actual highway speeds) is a real incentive for those living in the central U.S. or Canada. I can see where on the East and West coasts where Superchargers are every other block it wouldn't be much of an incentive.

 

[jerry33]

Unpopular opinion here but I have thought this for years.

Model S and Model X are high end niche vehicles that have little impact on the company's bottom line. Their relevance to the company will continue to decline for the forseeable future. S and X may be thr flashy flagships, but Y and 3 are the financial workhorses doing all work pushing Tesla.

Just my $.02

Dan

This is correct, but without them there would be fewer 3 and Y sales. Also they fill a need for travel. Cybertruck might beat them out if the entry and exiting of passengers is sufficient and the road noise is mostly gone.

 

[EVNow]

Without the S/X, Tesla is no longer a luxury brand and the 3/Y will lose their appeal to a significant proportion of buyers.

Brand image doesn't come just from having expensive niche models. Nissan GT-R doesn't contribute to Versa sales. Most BMW buyers will not know the top most BMW model.

BTW, S &X contribute significantly to margins even now.