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

[betstarship]

is reminds me of the Uber I took recently in a Model 3. Great experience, but the driver was using a phone and the Tesla screen for navigation. Clearly, Tesla needs a curated/white-listed app store for all of on-screen experiences for drivers not to be distracted by their smartphones with Uber/Lyft/Hertz of the world and their cars.

For example, I asked the guy how often he has to charge and if there's a sync between his charging intervals and the Uber app...nothing. He goes based on an ad-hoc decision if he has enough charge to take a rider or not based on his own decision-making, experience, and intuition. It seems sub-optimal.

Edit: I would think this is the same for food delivery and logistics apps too.

This API is a lot more elaborate than what I’ve seen in the reverse engineered API docs. The focus is on fleet management. Notable additions are calls to let Tesla accounts bring their account settings and app usage to a car they don’t own (e.g. rental cars).

I'm guessing there's going to be a lot of happy Uber drivers soon too!

 

[ItsNotAboutTheMoney]

I mean, the incentive would be to drive Q4 sales to hit the 1.8M guidance for this year and to encourage folks who were otherwise waiting on the rebate to become POS to act now... somewhat like last Q4 when they offered actual-discounts-on-cars of $7500 to discourage people from waiting for January and the IRA to kick in.

If you lack the liability to use the credit now, threats of losing half the credit don't move you anyway- those folks will wait in either case... but if you DO have enough liability the threat of losing half of it Jan 1 might well motivate you to "sacrifice" getting it at POS Jan 1 rather on your tax return in mid-late Jan in exchange for getting an extra $3750 in your pocket net.

$3,751 to $7,499 liability would gain by waiting unless the credit reduces.

Realistically, waiting until January is overall the low risk option.

Tesla gains from pushing FOMO and we know they don't care about misleading people. Come January when the RWD credit is reduced they can say that they didn't say it would drop on all vehicles. And it comes up on the RWD by default, so obviously they meant it applied to the RWD.

 

[Knightshade]

Sorry, I have never seen a Tesla ad anywhere and I’m in a prime demographic in a west coast city.

Given that's the highest market penetration already that seems like the least prime demographic?

The places with fewer owners will be the places with the least awareness.

 

[SOULPEDL]

I'm guessing there's going to be a lot of happy Uber drivers soon too!

I was thinking about the one's who just got a lease recently. Can they just walk away or is there a penalty? That's a big difference in monthly payments!

 

[Singuy]

I've been seeing advertising for Tesla online for a while now. Below is an example seen on Facebook a few minutes ago.

I think too many people are stuck believing advertising means TV and radio. I haven't had cable TV since 2011. I haven't been a radio listener in my car since 2015. Tesla may be targeting a demographic younger than the people that still watch TV ads

View attachment 981627

Who needs these lame ads when Luke Cooper is gaining millions of views per adult scene in a Tesla using AP.

 

[Artful Dodger]

When Tesla is having to resort to price reductions to move product is Tesla at that point?

You totally misunderstand Tesla's mission. EVs for the masses, Master Plan part 1:

1. Start with an expensive car,
2. Use profits from that to build a mid-price car, and
3. Use THOSE profits to build a low-price car.

Did you really think that each rung on this price ladder would wait for the introduction of a new product? Economies of scale don't work that way. That's why Model Y RWD is the new product that is cheaper, made possible by the profits earned by more expensive AWD versions that preceded it.

Advertizing has NOTHING to do with this business plan. It's all about creating a compelling EV entry for all the main market segments. And as we've seen year-in and year-out, once Tesla moves into a new market, they DOMINATE that market.

Cybertruck isn't late; it wasn't possible to build CT at a profit until now (4680s). Tesla doesn't build non-profitable products. Now that CT is about to launch, Ford F-series is in real danger of being displaced over the next 2-3 years as the market king. Really, who would want a rust-bucket oily buckboard when you could have a shiny, rust-proof, envy-of-all CYBERTRUCK!

 

[SOULPEDL]

Has anyone considered that Tesla is trying to drive down their prices?
1. China - Hybrids still too popular
2. Big 3 Choke-off
3. The Planet

 

[AndrewZ]

Has anyone considered that Tesla is trying to drive down their prices?
1. China - Hybrids still too popular
2. Big 3 Choke-off
3. The Planet

The real question is why all these stopped being considerations during the COVID craziness when prices skyrocketed, suddenly the planet didn't matter anymore!

If every car could sell for $500k, that's what they would be sold for. None of this is altruistic, it's supply-demand dynamics and interest rates playing a role as rates were increased specifically to reduce demand for stuff like homes and cars that are most often financed and at the mercy of the Fed.

 

[Nocturnal]

The real question is why all these stopped being considerations during the COVID craziness when prices skyrocketed, suddenly the planet didn't matter anymore!

If every car could sell for $500k, that's what they would be sold for. None of this is altruistic, it's supply-demand dynamics and interest rates playing a role as rates were increased specifically to reduce demand for stuff like homes and cars that are most often financed and at the mercy of the Fed.

Maximizing profits at maximum production helps the mission. I don't know what Tesla can do to do that, or if we are already there given the economy of course.

I have a few ideas and it's fun to discuss as fans and investors, but mostly I have to trust management.

 

[AndrewZ]

Maximizing profits at maximum production helps the mission. I don't know what Tesla can do to do that, or if we are already there given the economy of course.

I have a few ideas and it's fun to discuss as fans and investors, but mostly I have to trust management.

Executives, boards of directors, etc in corporations also have fiduciary obligations to their shareholders. They are obligated to act in shareholder's best interests, controls costs to the best of their abilities, and maximize revenue to the best of their abilities.

We can question strategy and all that, and I think prudent shareholders should always have opinions on that stuff, but the idea that Tesla isn't trying to make as much money as possible -- that would be a breach of their obligations to investors.

 

[Usain]

Thanks for posting this.

Considering that Hertz has just begun allowing Tesla owners to use their own Tesla app in a Hertz car for individual settings, vehicle access and Supercharging it seems probable that much of this effort was directly for renal car support, maybe driven by some ancillary interest from Turo and other intermediaries.

I am not an expert but this does seem to portend much increased support for fleet support for every case, including municipal and commercial ones. That seems very significant.

Am I overstating the potential? Is there a plausible way to estimate the probable financial impact?

The financial impact comes with the possibilities a developer API represents. Software developers will dream up all kinds of applications for this API. Don't think of it in terms of an app store for programs that run on your Tesla. That's not what this API allows. But it does allow developers to create applications for managing one or more vehicles. And you can do it in interesting ways.

Fleet management is the most straightforward type of application. If this API opens the door to functionality that other automakers can't match, then Tesla becomes the preferred vendor for fleets.

I haven't analyzed the power of this API relative to others, but I suspect that the nature of Tesla's information-rich ecosystem will indeed give Tesla a distinct advantage.

There are a lot of creative developers out there who will love playing around with this API. And somebody is going to create the "killer app". In the software world, a killer app is the one that nobody saw coming but everyone suddenly has to have. And such an app will probably only work with Tesla vehicles. That's when the real financial impact of an API like this is felt.

 

[unk45]

Sorry, I have never seen a Tesla ad anywhere and I’m in a prime demographic in a west coast city. I’ve also never met anyone who is not a total nerd like me who is aware of the value argument for Tesla.

And I don’t buy the “they’re already selling every car they make” argument either. If that was true, why have prices dropped so much?

We can table this tired debate, but us pro-consumer education folks are not conceding the point.

There are several issues bundled together here:
1. Is general consumer education likely to provide positive economic benefit?;
2. Is conventional advertising a cost effective way to accomplish that is the answer to '1' is yes?;
3. Are product placements, targeted promotions, direct response, or other such techniques more effective than (2);
4. Is the argument that price reductions have been taken to stimulate demand or modify timing or something else?;
5. Depending on (4)Is there any evidence that Tesla has reduced actual transaction prices in materially different net effect than have OEM's which practices included disclosed and concealed consumer, fleet and dealer incentives?

There are other issues also, but these five seem to encapsulate the present continuing debate. Much of the debate from those not familiar with present day media practices as well as automotive pricing and promotion practices seems to be that the only way to generate actual buyer BEV intentions is to provide general advertising.

That assumption can be tested and has been tested in numerous rapidly changing industries.

One example is fintechs, some of which do zero general advertising and some of which use general advertising exclusively. Their economics are instructive.
Hint: YMMV

In many industries general advertising is conducted even though the buyers of their products are not influenced by their advertising. Those almost always direct advertising where political, shareholder or executives/directors are found. In those cases the money is spent to influence people who imagine the target si someone else. Defense and industrial producers such as Boeing, Airbus, Lockheed Martin etc are typical of this category.

It may be that such advertising for Tesla might be worthwhile if shareholder sentiment can be positively effected by so doing, in effect mimicking the aerospace industry. Thus far it seems that is a stretch, but...the regulatory influence might be worthwhile. The tricks to make these approaches cost-effective are he ability to ensure that the parties one wants to influence will actually notice. These days things like Cable TV, careful social media and product placements tend to allow highly precise targeting. Lo and behold, Tesla has done such things successfully and has paid next to nothing for them.

The core problem is to ensure that Tesla will not begin to act like Procter and Gamble, whose products are typically consumed by everyone. General advertising is ver cost effective when the target market is "everyone".

As for general awareness, there are problems. The actual new automobile purchasers are actually less than 6/10th of one percent of the active automobile fleet in the US ( US fleet about 282 million, highest annual sales 17.5 million in 2016.)
General awareness will only be relevant for that 6/10th of one percent of the fleet. Of course that ignores multi-vehicle owners, fleet owners and obsessive vehicle buyers, so in reality the actual buying population is much, much smaller.
That is a nightmare for any responsible automotive marketers unless, perhaps, they can qualify a specific audience so as to not waste time and money on non-buyers. That is the core problem for every new product category which si in early stages of adoption and for every product category that has a clearly defined subset of the population as qualified prospects.

The problem for Tesla is how to cope with all that. Thus far their highly targeted approach has worked well. Are they now at the point where they should spend money on general awareness among non-prospects? That is really the core question.

Personally I'll argue it is time to make targeted general advertising to shareholders. They are the ones who do not understand the fundamentals but are the ones who buy shares. Oddly, there are several ways to solve that specific problem not to mention some really excellent demographic, psychographic and geographic resources to help do that. That would enable placements of ostensibly educational advertising directed prickly to those communities where the need si perceived thusly.
Luckily today it is possible to do precisely that and save tons of resource wasting, while enhancing shareholder perceptions.

In several cases I personally know that has been done with excellent results. Done properly the people advocating that general solicitation can have materials they can forward to others they want to influence. That works! That approach requires finesse but it does work.

It is clearly time to institutionalize the TSLA shareholder/owner community influence process!!
This works for Porsche, Ferrari, Gulfstream and even for several LVMH brands. It works for high-end real property and even for some classes of tourism. Why not TSLA?

note: Tesla does this, but not quite so systematically

 

[Knightshade]

Cybertruck isn't late; it wasn't possible to build CT at a profit until now (4680s). Tesla doesn't build non-profitable products.

You denied it's late (which it objectively is, see below) by...explaining to us why it's late...


Tesla stated Cybertruck was scheduled to be released in late 2021 for the dual-motor AWD version when they announced the product in 2019... and when that slipped Elon said "If we get lucky, we’ll be able to do a few deliveries toward the end of this year (2021), but I expect volume productions to begin in 2022." and they're also late for that.

 

[FreqFlyer]

You totally misunderstand Tesla's mission. EVs for the masses, Master Plan part 1:

1. Start with an expensive car,
2. Use profits from that to build a mid-price car, and
3. Use THOSE profits to build a low-price car.

Did you really think that each rung on this price ladder would wait for the introduction of a new product? Economies of scale don't work that way. That's why Model Y RWD is the new product that is cheaper, made possible by the profits earned by more expensive AWD versions that preceded it.

Advertizing has NOTHING to do with this business plan. It's all about creating a compelling EV entry for all the main market segments. And as we've seen year-in and year-out, once Tesla moves into a new market, they DOMINATE that market.

Cybertruck isn't late; it wasn't possible to build CT at a profit until now (4680s). Tesla doesn't build non-profitable products. Now that CT is about to launch, Ford F-series is in real danger of being displaced over the next 2-3 years as the market king. Really, who would want a rust-bucket oily buckboard when you could have a shiny, rust-proof, envy-of-all CYBERTRUCK!

This is not about some mission statement. This is about advertising to move product. Its what Mr. Zhu worries about. The OP opined its not time to advertise "yet" because demand outstrips supply. My point was if Tesla is lowering prices to move "the most compelling EVs", have we reached the point of even supply and demand? Though present factories supplying new markets can tilt this equation.

My opinion, Tesla achieved this massive scale "without" advertising. Advertising Model 3 or Y sales or price reductions do not nothing for Tesla, IMO. Informational advertising will help however. and only judiciously. I would hope Tesla only advertise during big events, Olympics, Super Bowl, World Series, and World Cup as examples. The advertising would be rare and have bigger impacts in front of the world's biggest audiences. Again, IMO.

 

[SOULPEDL]

The real question is why all these stopped being considerations during the COVID craziness when prices skyrocketed, suddenly the planet didn't matter anymore!

If every car could sell for $500k, that's what they would be sold for. None of this is altruistic, it's supply-demand dynamics and interest rates playing a role as rates were increased specifically to reduce demand for stuff like homes and cars that are most often financed and at the mercy of the Fed.

Mat'l costs went up significantly during COVID, along with new risk with the whole supply chain chaos. Maybe I'm missing your point, but seems justified to raise prices at that time to prevent margin loss. Volume has picked up since (+ cash flow), and mat'l costs are down now.

(Edit: Note the lower earnings during covid)

The key problem is that Hybrids and ICE are still finding plenty of buyers out there, and the manufacturers are not letting up. I seem to recall China total vehicle sales were about 50% Electric already, but a large majority were Hybrids still.

Q. When the price of a BEV is close to the Hybrid, why not get a BEV instead?

Every time Tesla drops the price, a new group of buyers considers the above question. The sooner they can intercept new ICE and Hybrid sales, the better for the mission. China and the others will eventually need to respond with cheaper BEVs. THAT's what we want them to export to America and the world, not the Hybrids.

 

[AndrewZ]

Mat'l costs went up significantly during COVID, along with new risk with the whole supply chain chaos. Maybe I'm missing your point, but seems justified to raise prices at that time to prevent margin loss. Volume has picked up since (+ cash flow), and mat'l costs are down now.

The key problem is that Hybrids and ICE are still finding plenty of buyers out there, and the manufacturers are not letting up. I seem to recall China total vehicle sales were about 50% Electric already, but a large majority were Hybrids still.

Q. When the price of a BEV is close to the Hybrid, why not get a BEV instead?

Every time Tesla drops the price, a new group of buyers considers the above question. The sooner they can intercept new ICE and Hybrid sales, the better for the mission. China and the others will eventually need to respond with cheaper BEVs. THAT's what we want them to export to America and the world, not the Hybrids.

Spot commodity prices went up, Tesla has long-term contracts that insulate them from spot price fluctuations and we've heard about this on recent earnings calls. Material prices going up was a good scapegoat though.

Similarly because of the long-term contracts, spot commodity prices coming down does not just flow through 1:1.

Tesla's EPS more than doubled from 2021 to 2022... And now it's coming back down, largely just driven by the price adjustments. Someone else might have the numbers handy but I'm pretty sure COGS did nothing but come down in 2022 amid all the commodity price increases. That's affected by the ramp of Texas and Berlin and all sorts of stuff, but I had mentioned several times in here before that we have no idea what Tesla's procurement contracts look like.

 

[ggr]

Mod: We have hashed and rehashed the advertising discussion multiple times before, and the mods have outlawed it multiple times before. So stop now, please, before I/we have to take action. --ggr

 

[Usain]

Mod: We have hashed and rehashed the advertising discussion multiple times before, and the mods have outlawed it multiple times before. So stop now, please, before I/we have to take action. --ggr

Apparently some people don't know the discussion is banned. Maybe you should advertise.

 

[Mengy]

Cybertruck isn't late; it wasn't possible to build CT at a profit until now (4680s). Tesla doesn't build non-profitable products. Now that CT is about to launch, Ford F-series is in real danger of being displaced over the next 2-3 years as the market king. Really, who would want a rust-bucket oily buckboard when you could have a shiny, rust-proof, envy-of-all CYBERTRUCK!

I would argue that, since the 4680 ramp is late, this has equated to a late CT launch as well. Elon kept saying CT would launch in Q3 and yet here we are in Q4 and still no launch. Yes I know it is coming "soon", but to say that CT launch is "on time" would be a stretch IMHO.

I'm not saying this is a terrible nor surprising thing as Elon is usually late on his optimistic timelines, all I'm saying is it's difficult to state that both the 4680 and CT are "on schedule".

 

[Unpilot]

Sharp drop across a lot of stocks...news?