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

[JohnDinger]

Tesla can show this improves safety, there will be hard questions asked about any regulation that slows down this tech adoption.

Tell that to the Tobacco companies. Or Boeing/FAA.

Regulators don't use data to make decisions.

The first use of power is to retain power. The only thing regulators act on is what helps them get reelected.

That's why lobbyists are so powerful.

They don't donate money, but they introduce you to people who do.

They don't (typically) write the laws, but they do fund and surface research that frames the discussion.

They don't bring data, they bring voters via PR campaigns.

That's why I used my example. It basically frames "yeah, but how do you know that the car is safer?"

Waymo/Google and GM/Cruise would push for "you know it's safer because our professional drivers rarely disengage."

That framing hurts Tesla and it's already written into laws.

Tesla needs to start their own framing, and it starts with things like letting local news sit inside a car driving around the city, enabling YouTubers to create viral videos of "beta" builds, etc.

They need to frame autonomous vehicles around their core strength: incremental safety.

Every year, Tesla cars get safer. That's the complete opposite of all other cars. Stop operating behind a giant curtain; don't tweet "testing a cool autopilot that stops at stoplights" and show us instead.

The "grand reveal" approach won't work when lobbyists will shut it down before you get there.

 

[EVNow]

This is true but at the same time there's a strong tailwind. People are pretty sensitive to "safety" these days, and if Tesla can show this improves safety, there will be hard questions asked about any regulation that slows down this tech adoption. Some country somewhere will allow it, if it is indeed safer the numbers will come out, and it will be very hard to defend a flawed regulation that doesn't allow the same tech in a different regulatory zone.

Its not even a country thing. This can be negotiated at city level - so no way GM/Google can block Tesla.

While GM may try to do this - Google won't. Gives them bad PR.

 

[bdy0627]

I mean c'mon guys. No comments on this??? I know there are doubters, including me, as Musk has been full of it on FSD before. But he is so confident in FSD coming soon now that he is either:

1. completely lost all common sense and is highly delusional and off the rails, or
2. he has enough direct evidence of their current FSD capabilities the ensure these statements are true beyond a doubt within a reasonable time frame to what he is stating.

Is there any better idea to sell to investors of Tesla? This is the big one, so why not focus on it? Makes sense to me.

 

[kbM3]

Every ICE car benefits from a $100k-200k lifetime subsidy (mostly uncharged health and environmental costs). So I'm happy for Tesla to keep benefiting from a few $k per car from credits until we choose to stop our fossil fuel subsidies. EVs produced by ICE manufacturers also have much higher regulatory help than Tesla - often closer to $10k per car in avoided fleet emissions penalties.

I should have stated that in an ideal world, regulatory help would just be cherries on top of the ice cream I’m not against regulation, though I personally agree with Elon that carbon taxes would be a superior approach. Let the market work, and directly penalize those spewing garbage in our oceans and atmosphere.

 

[Wnuk]

BTW, I found out the off-menu LR RWD does not include AP, so it is effectively $8k more than SR+ and only $2k less than Dual Motor. After learning that, I upgraded my order to Dual Motor.

I spoke with Devon, PA just last week and was told that LR RWD does come with AP at $44,500. Add $5K for FSD. Not sure why it would be different.

 

[Dutchie]

My own hearing is quite poor (in terms of interpreting consonants) with background noise or multiple people speaking at the same time. However, the voice recognition from my steering wheel (although it usually works flawlessly) repeatedly fails on some words, even with my care in enunciation on multiple attempts.

The voice recognition in the steering wheel doesn't work at all for me due to my accent. Perhaps it needs some kind on NN programming too

 

[Pras]

Tell that to the Tobacco companies. Or Boeing/FAA.

Regulators don't use data to make decisions.

The first use of power is to retain power. The only thing regulators act on is what helps them get reelected.

That's why lobbyists are so powerful.

They don't donate money, but they introduce you to people who do.

They don't (typically) write the laws, but they do fund and surface research that frames the discussion.

They don't bring data, they bring voters via PR campaigns.

That's why I used my example. It basically frames "yeah, but how do you know that the car is safer?"

Waymo/Google and GM/Cruise would push for "you know it's safer because our professional drivers rarely disengage."

That framing hurts Tesla and it's already written into laws.

Tesla needs to start their own framing, and it starts with things like letting local news sit inside a car driving around the city, enabling YouTubers to create viral videos of "beta" builds, etc.

The "grand reveal" approach won't work when lobbyists will shut it down before you get there.

Regulators are not fools. I have worked with regulator ( not auto but other industry) and rarely found them asking stupid questions. They can be picky and too detailed but not stupid and misled. They may have biases but they are not stupid to be fooled by obvious things like disengagement by a regular driver vs. expert driving in a controlled environment.

Regarding Boeing, they were too dependent on a tried and tested company and sector. In new technology, they will be more curious.

 

[neroden]

For people in Elon's peer group, interest on $500M a loan is less than taxes would be to support the same lifestyle. #AMERIKA

This isn't really true. The interest accumulates yearly and compounds; the taxes on the profits only happen once. If you have your money in a stock which is flat, it takes about 5 or 6 years before you would have been better off financially just paying the taxes on the sale. Less at higher interest rates. If you expect the stock to go *up* faster than the interest rate you're paying on the loans, then of course it makes more financial sense to borrow the money, but it's just like margin loans...

More important is that Musk wants to invest as much money as possible in his companies, and keep as much control as possible, which means he never wants to sell any of the stock; his attitude points him towards margin loans. This makes sense.

 

[bdy0627]

If you are driving at 48 mph and you slow to 41mph does that mean you'll never accelerate again? Ugh indeed.

But really, the point is valid. If you really want to get to 80 mph, why slow down one quarter only to speed up the next? Seems like part of the reason is the hubris not to do a capital raise in 2018. Had they done one, they would not have needed, or probably wanted, to fire a bunch of employees only to hire a bunch of employees a couple of months later. Unless of course all of these employees were terrible, which seems unlikely.

 

[EVNow]

Kids these days.

AMD turned 50 - not @Singuy. Unless they did too - and would be an amazing coincidence.

 

[dakh]

Waymo/Google and GM/Cruise would push for "you know it's safer because our professional drivers rarely disengage."

That framing hurts Tesla and it's already written into laws.

Tesla needs to start their own framing, and it starts with things like letting local news sit inside a car driving around the city, enabling YouTubers to create viral videos of "beta" builds, etc.

Do you have any specifics you can refer to here? I quickly looked over some resources I found and they were phrased in ways that made me think it is all quite a wild west, regulations-wise. There's some Federal level guidelines and there's individual state laws which are all a hodgepodge of various approaches. Hard to tell what's what but I remember Tesla said it is explicitly working with regulators on those standards. In California it probably will be a bit harder to get lobbyists to block Tesla.

They need to frame autonomous vehicles around their core strength: incremental safety.

Every year, Tesla cars get safer. That's the complete opposite of all other cars. Stop operating behind a giant curtain; don't tweet "testing a cool autopilot that stops at stoplights" and show us instead.

The "grand reveal" approach won't work when lobbyists will shut it down before you get there.

But they ARE doing this. For example, Navigate on Autopilot is projected to stop requiring hands on wheel test to pass when it is proven beyond any doubt with N miles of driving that it is X times safer than average human driver.

 

[EVNow]

I should have stated that in an ideal world, regulatory help would just be cherries on top of the ice cream I’m not against regulation, though I personally agree with Elon that carbon taxes would be a superior approach. Let the market work, and directly penalize those spewing garbage in our oceans and atmosphere.

Market will not solve "tragedy of the commons".

Easy way to solve this issue is to pull out all the troops and stop selling arms to OPEC. But that will probably cause a lot more havoc than good regulation.

 

[Krugerrand]

the knee jerk reaction, at this point, is to discount his statements/claims

on one hand, is he diverting attention from the production problems? panasonic, s/x changeover, 3 delivery overseas, jockeying for position with a board and proxy vote coming up, with stipulations that could jeopardize his control over the direction of the company (not immediately but over time)...

i don’t know.

is this one of those times when the sheep cried wolf so much that we ignore the elephant in the room? doubtful, but
what am i missing?

all the other bs from the last 16 months aside, because that’s really what it’s about...the delay of 3, the meltdown on journalists (warranted), the pedo guy (probably not warranted, but he was kinda pricky), ‘secured’, 420, etc etc the whole ron burgundy 50% of the time i’m right all the time spiel...

is he throwing a fat pitch down the pipe that we aren’t seeing because we’ve been blinded by his nonsense, compounded by the shitstorm of media bias surrounding him?

why would he be so adamant about this? why did he say they’re committing all of their resources to FSD towards the end of autonomy day? was that a misstatement? or did he really mean what he said, catching even the analyst asking the question off guard.

maybe we’re thinking about this wrong, as in the car must drive itself and deal with every single drivers scenario right off the bat in order for it to generate value

i dunno. i’m perplexed. this is really crazy that he’s doubling, tripling down on this, when to the regular joe, we know that car isn’t driving me from my garage to my work garage any time soon, especially enduring assholish behavior by other drivers the whole time... where i live, it’s epidemic

what the hell are we missing here? why is he this confident about it? why didn’t they show a demonstration video, aside from just the people there experiencing it? that was disappointing to me. is it some sort of surprise? did he not want to give away prop secrets until they had a better handle on it? then why squeeze it in before earnings?

maybe i’m overthinking.
it’s either evil genius the way he’s playing this hand, or desperation. and that scares the hell out of me, honestly. or maybe he’s just trying to pump it a bit due to the cap raise?? and all the other stream of consciousness thoughts i typed out are just nonsense haha.


just a thought. still long and strong.

My one and only reaction: I still do not own enough shares.

 

[Singer3000]

Elon has said the Model 3 was the last bet the company challenge. It now sounds like autonomous driving is the new bet the company challenge.

Sorry to be blunt but this statement is silly. We don’t know how much Tesla earned from EAP options. But we do know that FSD is now charged at $5k per buyer and some non trivial percentage of customers are buying this.

Let’s say Tesla misses its deliveries guidance and only delivers 350k cars this year. And that only a third buy FSD (anecdotal evidence it is likely higher). That’s $500m of revenue in 2019 directly attributable to the autonomous driving programme. And that is excluding the higher margins from forced bundling of Autopilot (COGS impact from the FSD computer and sensor suite is relatively minimal).

Tesla’s entire R&D budget is only $1.4bn a year, covering the development cost of the entire breadth of its future product suite. Looks to me that even if Tesla has quite a disappointing year in terms of deliveries and FSD take rate, this project is already likely to be roughly self funding or thereabouts. Increase deliveries by 40-50% in 2020 and it morphs into being a not insignificant cash generator already, even if Neroden is right and we’re decades away from the fall-asleep-without-a-wheel standard.

 

[Singuy]

AMD turned 50 - not @Singuy. Unless they did too - and would be an amazing coincidence.

Ha, nah I'm only 36.

 

[goinfraftw]

Well, I don’t want to be a part of crazy town (i.e. this is starting to turn into the movie Rat Race from my perspective) over the next 1-2 years while we all figure out how to value this stock with the absurdity surrounding it as a software/tech company or whatever the hell it is.

I’m long because I believe in fighting climate change and innovating towards a brighter future that this company represents. I’m staying in with my investment. Definitely going to soften my coverage of the stock and just say: Elon is gonna be Elon.

 

[ReflexFunds]

I don't get why people seem to think Robotaxis is a new strategy for Tesla. Model 3 was designed towards Robotaxi capability from the start of the design process in early 2015. This business model was also laid out clearly in Master Plan Part Deux in mid 2016.

If they get the error rate on the software low enough to get regulatory approval, Tesla Network was always going to be by far the most valuable part of the business. But failing that, they still get the best automatic safety features and the best driver assist system on the market, and both of these outcomes still more than justify the investment alone.

Elon has started talking about Robotaxis more regularly recently because his confidence has increased and because he sees that the market is attaching far more value to ride hailing companies like Waymo and Uber than it is to EV companies. I don't think this means Tesla's direct investment in Autopilot/FSD has suddenly increased - I would guess this is a c.$0.5bn annual R&D/SG&A cost base, more than covered by gross profit from AP/FSD options. On another definition, Tesla's Robotaxi investment is actually higher than its Auto revenue, given every car bought + sales tax + car opex + driver's time is investment into Tesla's R&D fleet. This compares to c.$1bn annual AV investment/losses at most competitors like Waymo, Cruise & Uber.

 

[EVNow]

My own hearing is quite poor (in terms of interpreting consonants) with background noise or multiple people speaking at the same time. However, the voice recognition from my steering wheel (although it usually works flawlessly) repeatedly fails on some words, even with my care in enunciation on multiple attempts.

Alexa ! Tesla should get Alexa - best I've seen (in terms of ability to make out whats being said with a fairly noisy background).

 

[neroden]

They went from 48.8k employees to 40.8k in Q1 and now they "accelerate hiring"? Ugh.

They're staffing up the new service centers.

I see Buffalo hiring but not Rochester or Syracuse. :-( Hope this doesn't mean they've been silly enough to open Albany and Buffalo and nothing in between.

 

[EVCollies]

The roof is for the life of the house.
The solar is guaranteed to generate for 30 years.

It was never the solar would generate for the life of the house... altho most likely it will.

Once the product actually comes out we will get the true warranty info.

If the roof portion does hold up for the life of the house then it is worth the cost for a lot of houses, with or without the solar part. No one is going to touch a roof with only a 30 year warranty.

I live in the "hail belt" where asphalt shingle roofs last 3-6y. I wonder if insurance companies would give a discount with a Tesla roof, even if they are only the blanks?