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

[Fact Checking]

So just for argument's sake, let's assume Tesla is lying here. Let's assume this is nothing but a geofenced, pre-planned route that they mapped out ahead of time.

BTW., I realize that you are only playing the devil's advocate here, but didn't some of the investor demo trips feature different routes?

Elon also stated that if you are geo-mapped then you don't have real FSD, so you'd not only have to assume a colossal lie and deception and that Tesla did nothing since their November 2016 geo-mapped FSD demo trip and developed a revolutionary new NN chip and uses it for absolutely nothing.

I.e. even the worst-case scenario has been falsified to pretty much everyone but the TSLA-Q-Anon cult.

 

[elliott82]

I believe this was intentional, to show that the current FSD milestones are a continuation of their 2017, 2018 and 2019 FSD efforts which they did a very early geo-mapped demo of in November 2016.

Yes, but very little people understand that unfortunately. What most see is: "erm ok, so no progress being made...". That's what I notice my co-workers saying by watching the video. argh.

 

[wnorris]

Prediction

First regulatory approval: Dubai Q3 2020

I was going to post the same thing. The UAE already has a fleet of Tesla taxi and they have a desire to be at the cutting edge. This would be a great place to test and generate data on the Tesla Network.

 

[dww12]

I thought the exchange was interesting between Elon and the guy who asked why he couldn't just buy 10 Model 3s and make that his business. Elon seemed to miss the gist of the question.

At the IRRs Elon was putting out there for a Model 3 on the Tesla Network, it would be ridiculously dumb of ANYONE not to mortgage all their assets to do buy as many as they could. It's also far more efficient that way rather than sole owners for cleaning, service arrangements etc.. .

The logical consequence of this is that it would be ridiculously dumb of Tesla not to raise a few billion of cheap debt themselves to earn 100% of the Tesla Network revenue (less a small interest cost), rather than the mere 20-30% quoted. Tesla must be thinking this way and perhaps that's why there were such on the fly answers to questions about Tesla's cut from the platform, the insurance liability for Robotaxi accidents etc... and the slightly cryptic comment that when it comes to finance, "we'll do all the things you'd expect".

Yeah, but there is a lot of value in gaining a new group of “investors” who buy 10 cars. 1) less money for Tesla up front. 2) Lots of small business now linked to Tesla, think Tesla’s own “dealer” lobby. 3) The point is getting the most EVs on the road, not making ALL the money in the world. Tesla can share on this.

 

[Spacemanspliff]

BTW., I realize that you are only playing the devil's advocate here, but didn't some of the investor demo trips feature different routes?

Where did you see this stated?

 

[bdy0627]

It’s actually a nice presentation IMO, it’s quite technical but it just shows us what they have to overcome.

I will wait for the earning to come out and if everything goes according to plan, the stock will tank and I will buy in then.

Sure, you and everyone else is counting on that. How likely is that then to happen?

 

[schonelucht]

So what exactly was the purpose of this 'investor day'? It did not feel like it was targeted at investors at all.

 

[bdy0627]

I guess we will be seeing Tesla report FSD testing disengagements on the next CA report...

They don't have to go that way unless they want to. It's still a hands-on tech right now.

 

[Remus]

Elon liked a tweet with this video, where Former Google/Waymo/Uber star self-driving engineer Andrew Levandowski said: the reason he is not using LiDAR anymore is because “not that there is any restrictions on LiDAR (from Google), but I do have restriction, personally, of not doing things that I know that aren’t gonna work”.

It only have 500 views so I guess it’s not shared here yet.

I have long suspected that Elon's dissing of lidar comes from his super big ego.

I was wrong then.

 

[Singer3000]

LIDAR QUESTION
We’ve heard in detail why Tesla think this is a dead end, a useless, expensive, power hungry appendix.

What’s the counter? What do Uber, Waymo, Cruise and the rest say in response?

And the same for real world versus simulated data?

 

[Spacemanspliff]

So what exactly was the purpose of this 'investor day'? It did not feel like it was targeted at investors at all.

I feel the opposite, less about regular joes watching live-streams and more about educating larger investors on where they are at with autonomy.

 

[Fact Checking]

Then there's the lease situation. Tesla gets other people to eat the "new car depreciation" for them, then gets cheap robotaxis. Meanwhile, if "Elon-Time" turns out to be much longer than real-world time and Tesla needs the cash, they can always just sell the used cars. The lease basis accounts for some fairly aggressive depreciation, to Tesla's favour.

Note that the 3 years delay for Tesla to start building their fleet is not cast into stone:

• Tesla has a historic 'lease lever' they have pulled in the past: the regular lease period is 3 years, but occasionally they've allowed people to exit their leases if they take delivery of new car. They did this in September 2018 for example. This means that starting in April 2021 Tesla has a low capex pathway to receive Model 3's from owners.
• Tesla has a constant stream of S/X units coming off lease, and a lot of owners opt for a new car and return the leased car - it's one of the primary perks of leasing a new car over owning. I.e. Tesla has a current stream of about ~2,000 units per quarter coming off the lease, which will start being HW2 units starting at around November 2019. (All cars build after ~November 2016 are HW2 capable and are trivially upgrade-able to HW3.)
  
• Trade-ins of Teslas is a significant percentage - I'd guess between 5-10%. This will create a third stream of immediately available units for the Tesla Network, starting today.
• Also note that right now Tesla is writing off any fleet depreciation immediately, based on market rates of used cars. By re-classifying used units into the Tesla Network Tesla can save quite a bit of opex: they can depreciate those cars on 5-10 year schedules instead, which spreads out the write-off cost to a much longer period of time.

I.e. Tesla can start building their fleet with off-lease S/X units and traded in S/X/3 units this year already, and can accelerate the growth rate in 2 years with Model 3 units let out of their leases early, and can go into a full speed low capex fleet-building mode in 3 years.

This is one of the major advantages of being a car maker - vertical integration of the whole production-leasing-ownership-used-car business is a big advantage in gaining low cost pathways to building a Tesla Network fleet.

TL;DR: the 3 years lease delay has been widely misinterpreted I believe, Tesla can start building the Tesla Network fleet much earlier than that.

 

[RoadsterPlease]

259 back to 260, I think the bottom is in, I bought 39 more shares before close yesterday, my believe that Tesla has the best solution for full self driving is stronger than ever

 

[jerry33]

Thanks for the answers! Amazon comparison makes a lot of sense, especially that they have a huge market share. While I can see that the latest reported gross profit in 2018 Q4 was higher than 20%, I just can't see how they can keep this level when they have to enter the cheaper segment of the market to gain market share.

Regarding Point 2: I still don't really understand. The product is Full Self Driving and tesla car sharing. The chip is a hardware component of the full product, but not the full product. Most of the self driving companies claim that they have the right mix of hardware components already and working on the software part. This is exactly what Tesla said during this event. Why should I think that they are ahead if they don't even show a public demo?

The M3 and MY are not exactly in the cheaper segment of the market. I doubt Tesla will ever make cars equivalent to the Neon or Civic. I'd suggest that with the robo network the demand for those cheaper cars will be dramatically reduced because it will be much easier and far cheaper to just use the robo service, and because of the large number of available robe cars it will be very close to the convenience of having your own car. This will be a real boon to lower income families.

The difference between Tesla and the other FSDs, is that the other FSD contenders are not using visual, they are using LIDAR and geofencing which doesn't, and can't, take into account all the visual items that a human driver can see. It's the difference between a wire frame approximation and a fully rendered visual, so it's going to be very hard to distinguish between a plastic bag and a gas can using LIDAR. I don't know if any others are working on visual, but if they don't have a large fleet of actual drivers going about their daily drives to collect data, they aren't going to get there. The large fleet that Tesla already has puts them far ahead of the other contenders.

 

[Toumal]

The guy clearly says the FSD demo today was developed within the last 3 months.
Contrary to your belief, I'm very knowledgeable about Tesla/Elon and what they've said and demonstrated in the past.

You are incorrect. Watch the timeline, it starts in 2016:

(1:13:00 in the video)

 

[ZachF]

Prediction

First regulatory approval: Dubai Q3 2020

Fire Away

Irony is that if Robotaxi EVs come, Middle East petrostate economies' are going to get utterly rekt.

 

[Fact Checking]

So what exactly was the purpose of this 'investor day'? It did not feel like it was targeted at investors at all.

It was targeted at investors and analysts present at the event, and effectively established the FSD lead that Tesla has achieved.

That effort is already bearing some fruits already, the following Macquarie analyst opinion has just been released today, based on the investor day:

Tesla (TSLA) Investor Day Shows Why The Company Deserves A Tech Multiple - Macquarie

"Macquarie analyst Maynard Um reiterated an Outperform rating and $400 price target on Tesla after attending the company's analyst event focused on Autonomous Driving And Robotaxis."

'The analyst stated "Tesla is a technology company at its core and should be valued as one: if it wasn’t clear before, we think it should be clear now. We believe very few traditional OEMs have the capability to design their own chipset. High-tech companies such as Apple, Google, and Facebook have." From a valuation perspective he believes "Tesla’s autonomous technology is worth at least as much GM Cruise ($11.6 billion), if not higher (potentially 1-2x the valuation at $15-$25 billion), in our opinion".'​

A lot of the bearish under-valuation of Tesla comes from the fact that analysts put Tesla into the automotive sector and use the very low financial multiples of that stagnant industry, which results in low corporate value estimates.

Debunking the "Tesla is only automotive" perception and establishing that Tesla is a major high-tech player is a key PR and education effort IMO - but I'd expect this week's trading to be about anxiety and pessimism regarding the Q1 results tomorrow.

 

[davecolene0606]

Where did you see this stated?

Gali mentioned that at least one guest was driven to the airport via FSD in his post event breakdown.

Fire Away!

 

[Dan Detweiler]

BTW., I realize that you are only playing the devil's advocate here, but didn't some of the investor demo trips feature different routes?

Elon also stated that if you are geo-mapped then you don't have real FSD, so you'd not only have to assume a colossal lie and deception and that Tesla did nothing since their November 2016 geo-mapped FSD demo trip and developed a revolutionary new NN chip and uses it for absolutely nothing.

I.e. even the worst-case scenario has been falsified to pretty much everyone but the TSLA-Q-Anon cult.

Yes, different cars went different routes. And yes, I am playing devil's advocate for sure here! I know my NOA works the same whether I am in the middle of the North Georgia mountains or in downtown Atlanta. This is truly game, set match as Elon put it. The market just doesn't know it, nor will they accept it yet.

Dan

 

[jbcarioca]

That's a very naive way of thinking. No way a real effort from the automobile and AI industry get their fleet ready for robotaxis will result in coming to a marketable product 10 years later than Tesla does it. The world doesn't work that way.

If the world doesn’t work that way:
AMZN would not be what it is;
TSLA would have been supplanted by ~2014;
Huawei would nit dominate 5G (ok, China mid-range frequency availability vs US high-range has been a bug factor);
Motorola would dominate cellular phones;
Xerox, Polaroid, Kodak- all we’re insurmountable for decades.
TSLA will continue to thrive so long as leadership has the willingness to constantly press for better ways to do things and has no fear with adopting new solutions even if they make their own prior choices obsolete.

The lessons of past innovators show they often achieve massive leadership as did quite a few of the names I listed, but ignore the creeping obsolescence of their own solutions. With Elon there is not much risk of that.

And so on.

Public securities markets will never be visionary. Market makers and short sellers simply do not care about intrinsic merit. Thus, TSLA will be undervalued until clear broad market dominance is obvious, innovation stagnates and (r)evolution stalls.

I, for one, believe that. So I am buying more TSLA and liquidating some more popular holdings to fund those purchases. I’m patient.