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

[EVNow]

No, it was not just for backwards compatibility that Tesla imposed the 100 W power design limitation

I didn't say it was "just" for that - but it was a primary design constraint. This was mentioned in the autonomy day in one of the answers.

 

[EVNow]

I thought the same (vicki s). And I’m also hoping every email sent to employees about leaks was slightly different so they’ll know who leaked this one to the media.

Do we know they are not doing it …

 

[Fact Checking]

Try to run a car with no driver at all, and you run into a brick wall of human psychology. One crash will get you shut down, unless you can prove that you're better than the best human.

By that logic the following car safety automated technologies wouldn't exist:

• ABS-brakes are actually braking worse than the best human driver: in slippery conditions a professional driver can just stay at the edge of wheel slip, without waiting for the wheel to actually slip. To make matters worse ABS typically cannot even be turned off by the human driver, it's an all-or-nothing feature included by manufacturers. This means that braking distance with ABS is actually longer than with the "best human" driver, hence by your logic ABS technologies would have been "shut down" already.
  
• Airbags will sometimes kill people too, because they are generally calibrated for average height and average weight, so too small people can get hurt. Sometimes even ordinary size people with a medical condition can be hurt by airbags, badly - and the outcome can be worse than a seatbelts-only mild collision that usually deploys them. Airbags generally cannot be turned off either - they are a mandatory safety feature. By your logic airbags would have been "shut down" already, because they can make things worse.

You are also making the invalid assumption that all markets that Tesla is active in are unpredictably litigious as the western world. If for example Chinese regulators allow robotaxis based on scientific data and under common-sense oversight, then the litigation risk is a lot lower than say in the U.S. or in Germany. Not every high-tech economy in the world is run by lawyers.

 

[JusRelax]

By that logic the following car safety automated technologies wouldn't exist:

• ABS-brakes are actually braking worse than the best human driver: in slippery conditions a professional driver can just stay at the edge of wheel slip, without waiting for the wheel to actually slip. To make matters worse ABS typically cannot even be turned off by the human driver, it's an all-or-nothing feature included by manufacturers. This means that braking distance with ABS is actually longer than with the "best human" driver, hence by your logic ABS technologies would have been "shut down" already.
  
• Airbags will sometimes kill people too, because they are generally calibrated for average height and average weight, so too small people can get hurt. Sometimes even ordinary size people with a medical condition can be hurt by airbags, badly - and the outcome can be worse than a seatbelts-only mild collision that usually deploys them. Airbags generally cannot be turned off either - they are a mandatory safety feature. By your logic airbags would have been "shut down" already, because they can make things worse.

You are also making the invalid assumption that all markets that Tesla is active in are unpredictably litigious as the western world. If for example Chinese regulators allow robotaxis based on scientific data and under common-sense oversight, then the litigation risk is a lot lower than say in the U.S. or in Germany. Not every high-tech economy in the world is run by lawyers.

I'm a pretty large proponent of FSD and Robotaxis, and 99% of the time agree with you, FC, but this is that 1% where I don't agree. @neroden 's point still stands because in the case of ABS brakes and airbags, the driver is still at fault. Humans are all for technology to ASSIST... but not TAKE OVER.

That said, I am still undecided at how the public will respond when the first FSD accident takes place. I think a large factor in that will be how many miles FSD drives without an accident before that first accident occurs.

 

[mongo]

Exactly! Elon hinted that Tesla is working on this during the Q&A session on 'Autonomy Day' when he said that the automated snake charger is doable now with robotic vision.

Not a big difference between inserting a charging cable in a randomly parked car to doing repetitive assembly line work.

Cheers!

I'd say the snake is actually a lot different than the assembly line because the robot is the cable. There is no loose floppy unconstrained harness to find, grab, rotate, align, and then install. Instead, the robosnake needs to sink its fangs into a charge port that is fairly constrained in terms of location with well defined visual cues.

Sort of like a Crew Dragon docking.

 

[Fact Checking]

in the case of ABS brakes and airbags, the driver is still at fault. Humans are all for technology to ASSIST... but not TAKE OVER.

In the case of ABS the technology takes over unconditionally: the overwhelming majority of ABS in passenger cars is unconditional, there's no way for regular drivers to turn it off. ABS doesn't just assist, it unconditionally takes over braking when it thinks the wheel is slipping.

This can and has harmed people. A typical example where ABS fails are icy roads:

Note how ABS increases stopping distance on ice by 60%? This property of ABS has killed people and will kill people in the future too. Yet this automation is allowed and wasn't stopped, because it improves the average human driver's braking performance so much, and it also keeps much more steering control authority while the driver does 'hard ABS braking'.

But note that it's even worse: the 'without ABS' figures above are measured with 'hard braking' of dumb/panicked drivers, where the wheels will slip.

Note that a trained driver can get better braking distance than ABS on ALL road conditions by braking smartly/expertly just at the edge of wheel slip. Racing cars frequently don't have ABS for this reason.

So this example of ABS brakes directly refutes the point @neroden made, that FSD has to be better than the best possible human driver.

In terms of FSD, I agree that the safety bar will be and should be set high - but not impossibly high like the mythological "best human driver" who doesn't exist. Product liability claims will probably also have to go through the 'gross negligence' filter in most jurisdictions.

 

[Artful Dodger]

I'd say the snake is actually a lot different than the assembly line because the robot is the cable. There is no loose floppy unconstrained harness to find, grab, rotate, align, and then install...

Isn't that the issue addressed in Tesla's new wiring patent? Model Y likely to be the 1st use, possibly with retrofit to the Model 3 shortly thereafter.

Tesla's 'Alien Dreadnought' factory takes a step forward with structural cable patent

Nevertheless, robotic vision is the core technology, along with the infrastructure to train the NN deployed to each individual task.

Cheers!

 

[mrmage]

Most people here have roughly the same outlook, incentive, and eschatology -- Tesla will be an astounding megacap 20x return. I find it interesting that most of the conversations here miss the mark on what would be most useful because they tend to be either 'who can out-optimist who' or 'who can detect infiltrating shorts better than who' (kruggerand is getting hungry)

The real optimal strategy should be to outline the moderately pessimistic outcome and demonstrate why even that is sufficient for a bull case. It's an inequality. We can handle >= 'a fairly bad case'. That's the path to confidence. I'll avoid bring Taleb into the discussion but you get the gist. Otherwise you get the reek of insecurity that most people coming here probably experience. i.e. a band of cultists underperforming a market for 5 years yet still following their lord of light.

Here is a premise. Tesla will probably post negative GAAP earnings every quarter for the rest of the year. Why is that ok?

I became a huge Tesla long a couple weeks before tech day, because my rough analysis went like this in terms of Tesla execution. Value of company is a multiple of today in 3 - 5 years. Probabilities are (pessimistic - realistic IMO).

-------------------
1. Very poor (20% - 10%): Elon Musk speaks only in tongues, Tesla loses their edge in AI, FSD never works, AP becomes worse than competitors. Bankruptcy, sells assets for $5B. Value .1x

2. Poor (40% - 20%): Tesla loses their edge in AI, FSD is done better by someone else, electric cars are nice but so are others. Market cap / or acquired for $20B. Value .5x

3. Fair (20%: Tesla maintains edge in AI, but FSD in the general case is not achievable. However, FSD works with supervision or in limited locations in 3 years. Value 2x

Why? Tesla will have a car that proactively prevents accidents, and NoAP will ease the entire daily commutes instead of just highways. By using cameras instead of LIDAR, Tesla achieves this at a lower cost or higher margin than competitors. Limited FSD has good commercial use cases, so Tesla monopolizes these. Achieving $100B market cap in 3-5 years seems reasonable given these advantages.

4. Good (10% - 30%): Safe but granny style FSD in 3 years (e.g. timid merging, very cautious navigation, creeps in parking lots, etc). Polished FSD comes in 5 years. Value 5x

People may not find granny-style driving acceptable for robotaxis, but granny style FSD is good enough for a semi-robotaxi where car delivers itself and the customer drives it or monitors driving like NoAP.

5. Great (10% - 20%): Like the good case, except safe and and polished FSD arrives in 3 years. Value 7x
-------------------

Pessimistic: 1.8x = (.2 x .1) + (.4 x .5) + (.2 x 2) + (.10 x 5) + (.10 x 7)
Realistic: 3.4x = (.1 x .1) + (.2 x .5) + (.2 x 2) + (.3 x 5) + (.2 x 7)

In the pessimistic case which gives Tesla an 80% chance of failure or doing not much more than what they've already demonstrated today, the weighted return from the success cases makes it worthwhile.

Elon's assessment that selling cars and solar is just a backstop to Tesla's real value is dead on. Compare Apple before and after the smart phone. Some level of FSD (even if supervised) is where the true smart car begins.

My realistic case is probably somewhat conservative, but a surprise to the upside never bothered anyone. Here are some business cases for fair and good execution cases. I think Tesla can become very large with only modest execution.

Tesla passengerless FSD could be bigger and come sooner than robotaxis. Thoughts? : teslamotors

 

[stef]

I'd say the snake is actually a lot different than the assembly line because the robot is the cable. There is no loose floppy unconstrained harness to find, grab, rotate, align, and then install. Instead, the robosnake needs to sink its fangs into a charge port that is fairly constrained in terms of location with well defined visual cues.

Sort of like a Crew Dragon docking.

Oh no, that can’t be done without Lidar!!!!
Shorts are right.... it’s game over

 

[reardencode]

OT ABS

In the case of ABS the technology takes over unconditionally: the overwhelming majority of ABS in passenger cars is unconditional, there's no way for regular drivers to turn it off. ABS doesn't just assist, it unconditionally takes over braking when it thinks the wheel is slipping.

This can and has harmed people. A typical example where ABS fails are icy roads:

Note how ABS increases stopping distance on ice by 60%? This property of ABS has killed people and will kill people in the future too. Yet this automation is allowed and wasn't stopped, because it improves the average human driver's braking performance so much, and it also keeps much more steering control authority while the driver does 'hard ABS braking'.

But note that it's even worse: the 'without ABS' figures above are measured with 'hard braking' of dumb/panicked drivers, where the wheels will slip.

Note that a trained driver can get better braking distance than ABS on ALL road conditions by braking smartly/expertly just at the edge of wheel slip. Racing cars frequently don't have ABS for this reason.

So this example of ABS brakes directly refutes the point @neroden made, that FSD has to be best than the best possible human driver.

In terms of FSD, I agree that the safety bar will be and should be set high - but not impossibly high like the mythological "best human driver" who doesn't exist. Product liability claims will also have to go through the 'gross negligence' filter in most jurisdictions.

Great point! I hadn't considered this side of the FSD picture. It really only has to make the overall system safer, not beat the best.

Sidebar: Motorcycle ABS was slow to be adopted because riders tend to be more skillful than drivers, but eventually the ABS systems got too good to ignore. Even then, professional drivers can still beat the ABS in certain circumstances by anticipating slippery and sticky surfaces, or by deliberately allowing slip in some cases.

 

[traxila]

I became a huge Tesla long a couple weeks before tech day, because my rough analysis went like this in terms of Tesla execution. Value of company is a multiple of today in 3 - 5 years. Probabilities are (pessimistic - realistic IMO).

-------------------
1. Very poor (20% - 10%): Elon Musk speaks only in tongues, Tesla loses their edge in AI, FSD never works, AP becomes worse than competitors. Bankruptcy, sells assets for $5B. Value .1x

2. Poor (40% - 20%): Tesla loses their edge in AI, FSD is done better by someone else, electric cars are nice but so are others. Market cap / or acquired for $20B. Value .5x

3. Fair (20%: Tesla maintains edge in AI, but FSD in the general case is not achievable. However, FSD works with supervision or in limited locations in 3 years. Value 2x

Why? Tesla will have a car that proactively prevents accidents, and NoAP will ease the entire daily commutes instead of just highways. By using cameras instead of LIDAR, Tesla achieves this at a lower cost or higher margin than competitors. Limited FSD has good commercial use cases, so Tesla monopolizes these. Achieving $100B market cap in 3-5 years seems reasonable given these advantages.

4. Good (10% - 30%): Safe but granny style FSD in 3 years (e.g. timid merging, very cautious navigation, creeps in parking lots, etc). Polished FSD comes in 5 years. Value 5x

People may not find granny-style driving acceptable for robotaxis, but granny style FSD is good enough for a semi-robotaxi where car delivers itself and the customer drives it or monitors driving like NoAP.

5. Great (10% - 20%): Like the good case, except safe and and polished FSD arrives in 3 years. Value 7x
-------------------

Pessimistic: 1.8x = (.2 x .1) + (.4 x .5) + (.2 x 2) + (.10 x 5) + (.10 x 7)
Realistic: 3.4x = (.1 x .1) + (.2 x .5) + (.2 x 2) + (.3 x 5) + (.2 x 7)

In the pessimistic case which gives Tesla an 80% chance of failure or doing not much more than what they've already demonstrated today, the weighted return from the success cases makes it worthwhile.

Elon's assessment that selling cars and solar is just a backstop to Tesla's real value is dead on. Compare Apple before and after the smart phone. Some level of FSD (even if supervised) is where the true smart car begins.

My realistic case is probably somewhat conservative, but a surprise to the upside never bothered anyone. Here are some business cases for fair and good execution cases. I think Tesla can become very large with only modest execution.

Tesla passengerless FSD could be bigger and come sooner than robotaxis. Thoughts? : teslamotors

Nice analysis, but if best case scenarios come true then your valuation models seem really low. If we have safe and polished FSD from Tesla in five years a trillion dollar valuation is a slam dunk. Honestly, the overshoot in the buying frenzy would probably take it much, much higher than that until people really took a hard look at the numbers.

 

[RobStark]

Jaguar CEO Points To Battery Supply For Slow I-Pace Sales

"When it comes to electric vehicles, the question isn’t how many cars I can build but rather how many batteries I can buy," Speth said in the interview.

The I-Pace certainly skews to the higher end of Jaguar's current lineup and it doesn't sound like the company is in any place to change that soon, as he predicts battery prices to rise in the coming years due to demand.

 

[Doggydogworld]

There's more where that came from too. In their 2019Q1 Investor's Letter, Tesla took a $500M write-down on Model S/X buyback guarantee allowances.

It was a 91.7m writedown. Not really a writedown, to be precise, but a reversal 500.5m of prior period revenue and 408.8m of COGS. The effect on profit was REV-COGS, not REV alone.

This adjustment had no material effect on Q1's 18.6% Automotive Sales gross margin.

 

[Boomer19]

are we sure that all 1.8bb euros are going to tesla

this article says fca will spend 1.8b euro over next 3 years for reg emissions credits and later on in article that they pooled with tesla to the tune of hundreds of millions

FCA CEO Manley sees ‘significant opportunities’ for auto partnerships

which is a big difference

or, are we assuming it’s all to tesla bc they’re the only one that makes enough evs to be able to sell them to cover fcas needs

thx

 

[Prunesquallor]

To make some unpleasant calculations -- suppose Tesla does go full-in on robotaxis before they're ready (which they shouldn't), and starts losing jury awards. How much are they exposed to?

Well, the value of a human life turns out to depend on *how* the person gets killed. Among other phenomena, the more robotic the method of death, and the "deeper pockets" the person/company being sued has, the higher the awards are! Traffic wrongful deaths tend to average around $10 million. But that's with a human to blame. I'm going to guess it would average $20 million/death. Tesla would be found negligent for releasing "self-driving" cars without a driver when they weren't ready, which would push it to the higher number -- corporate unsafe-practices can run $30-$100 million/death so I may be underestimating.

The political fallout would be worse. Uber was allowed back on the road after killing someone, but most states will not be as laissez-faire as Arizona.

The deaths so far in Teslas are different because the driver was supposed to be supervising (and wasn't), so Tesla will win those cases. It's a huge difference.

This is exactly the brick wall I don’t see a way through. This is a lawyer’s rainmaker. Tesla has deep pockets and will be s big fat target. Worst case is if plaintiffs find a slice of bizarro world like that East Texas town where juries keeps finding in favor of the Apple patent trolls.

 

[ReflexFunds]

are we sure that all 1.8bb euros are going to tesla

this article says fca will spend 1.8b euro over next 3 years for reg emissions credits and later on in article that they pooled with tesla to the tune of hundreds of millions

FCA CEO Manley sees ‘significant opportunities’ for auto partnerships

which is a big difference

or, are we assuming it’s all to tesla bc they’re the only one that makes enough evs to be able to sell them to cover fcas needs

thx

The FT interpreted FCA's comments that the Eur1.8bn is all Tesla and they haven't been corrected.
I don't think anyone else would have any credits to sell in Europe and Tesla is the only deal we have heard about and the only company mentioned on FCA's call.
In the US, I also think FCA's only long term deal for credits is with Tesla (Tesla has sold every US GHG credit to FCA since 2013). But it is possible FCA topped these up with some credits from Honda in 2017 and 2018 (the regulatory data is not granular/yet available for these years). I don't think these possible Honda purchases would be on a long term contract though so I assume these wouldn't count in the EUR1.8bn long term credit purchase agreements disclosed by FCA.
So in conclusion, not certain, but seems most likely the EUR1.8bn is all Tesla.

 

[Prunesquallor]

Of course it will be bigger, it has to haul huge trailers and sh1t

I haven’t followed Semi specs so much, but I seem to remember reading that 4 AWD-type motors can power it? If that’s true, I find that phenomenal.

 

[Pras]

Jaguar CEO Points To Battery Supply For Slow I-Pace Sales

"When it comes to electric vehicles, the question isn’t how many cars I can build but rather how many batteries I can buy," Speth said in the interview.

The I-Pace certainly skews to the higher end of Jaguar's current lineup and it doesn't sound like the company is in any place to change that soon, as he predicts battery prices to rise in the coming years due to demand.

The capital raise should remove any doubts on Maxwell acquisition, but more importantly Tesla can go aggressive on developing/producing the 1 million mile battery. Very important for Tesla to have its own battery supply. For a vertically integrated company, Tesla has this piece to solve.

 

[Sudre]

You don't have to be safer than the average human, you have to be safer than the best human.

Typically I agree with most of your points but not this one. When an autonomous car can on average get people statistically somewhere 10x safer, you won't be able to afford insurance without the feature on your car.

No one (except you) cares in the slightest how well the best human driver drives. That person is not the issue. The car just needs to be better than average.

Where I agree with you is that it will probably take a lot more than many think for the car to get that much better than the average person statistically. I guess we shall see in the not to distant future.

 

[ZsoZso]

By that logic the following car safety automated technologies wouldn't exist:

• ABS-brakes are actually braking worse than the best human driver: in slippery conditions a professional driver can just stay at the edge of wheel slip, without waiting for the wheel to actually slip. To make matters worse ABS typically cannot even be turned off by the human driver, it's an all-or-nothing feature included by manufacturers. This means that braking distance with ABS is actually longer than with the "best human" driver, hence by your logic ABS technologies would have been "shut down" already.
  
• Airbags will sometimes kill people too, because they are generally calibrated for average height and average weight, so too small people can get hurt. Sometimes even ordinary size people with a medical condition can be hurt by airbags, badly - and the outcome can be worse than a seatbelts-only mild collision that usually deploys them. Airbags generally cannot be turned off either - they are a mandatory safety feature. By your logic airbags would have been "shut down" already, because they can make things worse.

You are also making the invalid assumption that all markets that Tesla is active in are unpredictably litigious as the western world. If for example Chinese regulators allow robotaxis based on scientific data and under common-sense oversight, then the litigation risk is a lot lower than say in the U.S. or in Germany. Not every high-tech economy in the world is run by lawyers.

ABS brake only activates after the wheel spin occurs. Therefore, if your professional driver -- who is capable of "staying on the edge before slip" -- drives, then the ABS never activates, so you still get the shortest possible stopping. And this is exactly why your counter-example does not work. It is a technology that activates only to help the average-to-bad drivers, even if someone dies due to car slipping with ABS on ice, the car was still driven by a human, so its his/her fault for driving too fast on icy road. But if an FSD driven car kills a person, that will be looked at completely differently: a robot killed a human => SKYNET must be stopped and banned!