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

[lklundin]

I agree with you on all of this, in fact... I simply conclude that "over time" is a really long time. Robotaxis in 20 years? Sure. In 10 years? Maybe. In 2 or 3 years? No way in hell.

I have previously gotten disagreement on TMC for advocating that Elon Musk should stop providing specific deadlines for delivery of new technology.

Before I give a good example, I will mention that I think it was great when during the Investor's Autonomy Day Elon Musk listed the goals Tesla had previously committed to and subsequently reached.

This was an impressive list and I consider it inconsequential how closely they met or exceeded any previously self-imposed deadline, so it was perfectly fine for me that the list contained no mention of deadlines.

"I said we would do them. We did it".

Well done, Elon Musk!

Then after mentioning his problems with dead-lines and yet eventually getting things done, he sets himself up for trouble, I believe.

"We expect to have the first operating Robo-Taxis next year" (i.e. 2020), with the accompanying slide adding "Pending regulatory approval".

First, there is no way that investors can assess the probability that regulatory approval will be given anywhere in the world (where Tesla can train a robotaxi) in 2020, so in that sense the timeline is not even helpful.

Further, if by some effort that only Tesla could pull off, they actually manage to demonstrate a robotaxi next year, then it would not detract from that truly revolutionary event that Elon Musk had not told investors that they would get it done by 2020.

This is especially true because at this point in time hardly any investor and certainly no Wall-Street analyst can fathom the economic consequence of a robotaxi (as evidenced by the current SP).

So effectively, with that self-imposed deadline (that Elon Musk does not control), he has basically set Tesla and himself up for:
1) with a very high probability massive amount of criticism and ridicule for not demonstrating the robotaxi by 2020, and
2) with a equally low probability, a gigantic sensation that wouldn't be less so if Elon Musk had not already now put a timeline on it.

So in my mind, Elon Musk should just point to the impressive list of things that Tesla have done, point out how quickly they have managed those things and then go on to say:
"Tesla's next monumental accomplishments will be the following", and then go through his list leaving his audience with the impression that these new goals will also be reached surprisingly quickly.

A previous post of mine that did not unambiguously praise Elon Musk was dismissed with a comment that I should not be critical just because my TSLA currently has a paper loss. There was also something about not repeating a TSLAQ talking point.

So let me just point out that:
1) Just because a short seller says something does not in itself make it incorrect, and
2) I have a plan in place for paying for my Model 3 without selling any TSLA and that as such I am only happy if the SP will remain undervalued for e.g. the remainder of the year, since I in that case be will able to buy even more TSLA.

 

[defc0n]

Agreed.
Canary trap - Wikipedia

Wow funny that Tesla/musk is already cited as an example there

 

[Krugerrand]

SR + worldwide deliveries + leasing were all part of the plan to get to 10-15k /week.

You don’t find it discouraging that they’ve also reduced prices and added other incentives at 6k /week?

I don’t buy the good will argument. Not with cash being so precarious. That would be irresponsible timing, wouldn’t it?

And they will get to 10k/wk, it just won’t be coming out of a single location.

No, not discouraging. Tesla's getting cheaper while also maintaining margins is encouraging. It’s a positive all day long, every day. And Elon was clear about putting as many EVs into people’s hands as possible and that he understood to do that the price needed to drop.

Tesla does goodwill all the time because Elon is in charge and he is to his core fair, generous and unmotivated by money.

You’re parroting doomers when you talk of precarious cash limits.

 

[lklundin]

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.

I will become an FSD optimist once it causes the insurance companies to offer substantial premium reductions, because they have the statistics - and the ability to understand the data.

Until that happens, I just hope to enjoy monitoring it from the driver's seat...

 

[Fact Checking]

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.

Except the example I cited: on ice the stopping distance is +60% with ABS, and the best braking strategy is to slip intentionally. Which a professional driver won't be able to perform due to always-on ABS.

So yes, ABS is an example of safety technology adoption that is obviously less safe in at least one important driving scenario.

 

[MP3Mike]

Since I made this graph months ago, the only change has been sales starting in Mexico:

Actually there is at least one more change: People in the UK can place a Model 3 order now.

 

[kbM3]

I have previously gotten disagreement on TMC for advocating that Elon Musk should stop providing specific deadlines for delivery of new technology.

Before I give a good example, I will mention that I think it was great when during the Investor's Autonomy Day Elon Musk listed the goals Tesla had previously committed to and subsequently reached.

This was an impressive list and I consider it inconsequential how closely they met or exceeded any previously self-imposed deadline, so it was perfectly fine for me that the list contained no mention of deadlines.

"I said we would do them. We did it".

Well done, Elon Musk!

Then after mentioning his problems with dead-lines and yet eventually getting things done, he sets himself up for trouble, I believe.

"We expect to have the first operating Robo-Taxis next year" (i.e. 2020), with the accompanying slide adding "Pending regulatory approval".

First, there is no way that investors can assess the probability that regulatory approval will be given anywhere in the world (where Tesla can train a robotaxi) in 2020, so in that sense the timeline is not even helpful.

Further, if by some effort that only Tesla could pull off, they actually manage to demonstrate a robotaxi next year, then it would not detract from that truly revolutionary event that Elon Musk had not told investors that they would get it done by 2020.

This is especially true because at this point in time hardly any investor and certainly no Wall-Street analyst can fathom the economic consequence of a robotaxi (as evidenced by the current SP).

So effectively, with that self-imposed deadline (that Elon Musk does not control), he has basically set Tesla and himself up for:
1) with a very high probability massive amount of criticism and ridicule for not demonstrating the robotaxi by 2020, and
2) with a equally low probability, a gigantic sensation that wouldn't be less so if Elon Musk had not already now put a timeline on it.

So in my mind, Elon Musk should just point to the impressive list of things that Tesla have done, point out how quickly they have managed those things and then go on to say:
"Tesla's next monumental accomplishments will be the following", and then go through his list leaving his audience with the impression that these new goals will also be reached surprisingly quickly.

A previous post of mine that did not unambiguously praise Elon Musk was dismissed with a comment that I should not be critical just because my TSLA currently has a paper loss. There was also something about not repeating a TSLAQ talking point.

So let me just point out that:
1) Just because a short seller says something does not in itself make it incorrect, and
2) I have a plan in place for paying for my Model 3 without selling any TSLA and that as such I am only happy if the SP will remain undervalued for e.g. the remainder of the year, since I in that case be will able to buy even more TSLA.

IMO Elon’s goal with 2020 is not to impress the analysts. It is to put an impossible deadline for the Autopilot team so they work harder and put in more hours.

 

[lklundin]

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.

Yes. Thinking of how Tesla chose the GF1 site, I could imagine how Elon Musk solicited offers from several auto makers, maybe conducting several rounds of a kind of blind auction, making sure to get the most out of Tesla's unique pooling offer.

The fact that FCA is the car maker most exposed to the penalty in question makes me think that something like this happened, causing FCA to offer the highest price and one that saved them little money.

 

[kbM3]

Except the example I cited: on ice the stopping distance is +60% with ABS, and the best braking strategy is to slip intentionally. Which a professional driver won't be able to perform due to always-on ABS.

So yes, ABS is an example of safety technology adoption that is obviously less safe in at least one important driving scenario.

Think of the difference in optics:

1) I have dry graphs and charts proving my client could have stopped shorter, so what if the whole industry does it, they’re still at fault!
Or:
2) Video subpoenaed from Tesla showing the car running over a little girl, because it didn’t have the human intuition to know that might happen after a ball rolled out from behind a car. Members of the jury, only Tesla is heartless enough to create these murderous vehicles!

 

[kbM3]

And they will get to 10k/wk, it just won’t be coming out of a single location.

No, not discouraging. Tesla's getting cheaper while also maintaining margins is encouraging. It’s a positive all day long, every day. And Elon was clear about putting as many EVs into people’s hands as possible and that he understood to do that the price needed to drop.

Tesla does goodwill all the time because Elon is in charge and he is to his core fair, generous and unmotivated by money.

You’re parroting doomers when you talk of precarious cash limits.

It did reassure me that Tesla maintained guidance on margins, but I thought I read some summary of the call where Elon tried to castigate the analysts for nitpicking about margins, which would seem a negative.

Ok instead I will phrase it as It is strange to ask for a capital raise while giving away feature for future good will. I know that’s great for the long run, but I would think it’s not the wisest timing.

Fact is that we don’t know whether it was done for a demand lever or goodwill. I just feel it’s more likely it was done to juice demand.

 

[Carl Raymond]

The main problem I see is the transition period, when you have a mix of FSD and human drivers on the road. Humans will take advantage of the fact that FSD has safety as the primary objective, so human drivers will cut off FSD cars, force them on the sidelines, will not allow them to merge etc.

Time to patent ‘Automatically deployed and retrieved inflatable driver and steering wheel’.

 

[reardencode]

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!

Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable

In some cases, the best driver will deliberately slip the wheels.

 

[Prunesquallor]

Time to patent ‘Automatically deployed and retrieved inflatable driver and steering wheel’.

Otto-Pilot!!

 

[Carl Raymond]

Yeah but a unique email to 40k staff, not so easy - I know you can fiddle about with prints, placing seeming random tiny ink-dots, but in an email...?

As a php developer, I’ve never been asked to do this, but I could. Choose two pairs of adjacent letters at random and switch them. Keep a list. If the random pairs chosen have already been used, pick another random set. Each fudge would look like a typo, hopefully not detected and corrected by the target. Two pairs should be enough for a mailing list of 40,000, if the email has a few paragraphs. The longer the better to mask the deception.

 

[Krugerrand]

It did reassure me that Tesla maintained guidance on margins, but I thought I read some summary of the call where Elon tried to castigate the analysts for nitpicking about margins, which would seem a negative.

Ok instead I will phrase it as It is strange to ask for a capital raise while giving away feature for future good will. I know that’s great for the long run, but I would think it’s not the wisest timing.

Fact is that we don’t know whether it was done for a demand lever or goodwill. I just feel it’s more likely it was done to juice demand.

And that’s why I’m not nervous/worried and bought more last week and you are and didn’t; we view what’s happening from different perspectives.

 

[BioSehnsucht]

It's not just TOPS/W

Tesla has 144 TOPS across:
4x36 TOPS from identical NNA-Units

NVidia Pegasus has 320 TOPS across:
2x20 TOPS from SoC-GPU
2x10 TOPS from SoC-TensorCores (NNA)
2x130 TOPS GPU (again split between Compute- and Tensor-Cores?)

So it should be much harder to get max performance out of this system. Although it might allow for more concurrent processes without switching between them.

Nvidia's claimed TOPS are not realistic for large NN processing at small batch sizes, they are peak theoretical rates using larger batch sizes and likely smaller NN's (perhaps the current NoA NN wouldn't be "too big" but the FSD NN would be). Especially so for the GPU TOPs. Even the "Tensor Cores" are likely not as purpose optimized as Tesla's NN architecture, but at least it's closer to an apples-to-apples comparison. The GPU TOPs from the dGPU and SoC GPU are very apples-to-oranges. All you have to do is compare the claimed performance of the AP2.5 HW versus Tesla's measured performance as reported during autonomy day to see a large discrepancy for GPU compute

An arbitrary benchmark may easily get NVidia's claimed performance but no real application will. Tesla's architecture with unique purpose built and tightly coupled hardware and software should obtain very close to theoretical performance, NVidia's chips will be nowhere near in real applications, which makes the real world performance per Watt even worse. .

 

[Doggydogworld]

I think we can now get a rough idea of the Tesla/Fiat credit deal with your model and the new info from FCA:

• FCA says in 2018 global credit purchases and non compliance fines cost €600m. Tesla sold $316m (€280m) of US Ghg credits in 2018, presumably all to FCA. I would guess there was no EU fine last year? If so, they had €280m US ghg purchases and €320m US fine.
• They expect 2019 to be moderately up from €600m.
• FCA expected a €390m fine this year (well done @generalenthu with your €430m estimate!). This sounds like they are referring to EU, but not completely clear. With the new credit deal they now expect to be close to compliance in 2019.
• EU compliance costs are now expected at around €120m this year. I think we can presume this is all credit purchases from Tesla. It also aligns with the $140m deferred reg credit revenue in Tesla's Q1 report.
• We also know total FCA cost of EU and Nafta credit purchases is €1,800m. As far as we know this is all from Tesla.
• From your model FCA's EU fine would be €2.5bn in 2020 and 2021.
• The transcript isn't clear if they are talking 2020 or 2019, or global/EU, but it sounds like FCA expects 80% of its EU fine will be reduced by credits in 2020 (with 20% from other tech) and 15% in 2021 (with 40% NEV tech & 45% conventional tech).

So assuming a continued €280m per year credit purchases from tesla in the US - this is €840m in the next 3 years. This leaves €1bn credit purchases in the EU. We can estimate this €1bn EU credit purchase offsets €390m 2019 fine, €2.5bn *80% = €2bn 2020 fine and €2.5bn *15% = €375m 2021 fine. Or a total €2,765m. This makes the EU Tesla payment 36% of the estimated EU fine - so this is roughly 3x more cost efficient for FCA. This number also roughly aligns with the €120m credit purchase for a €390m fine reduction in 2019. I think 80% EU compliance would need about 170k EVs in 2020, so this looks like c.€4.2k per car in the EU ($4.7k or likely +c.10% to Tesla's EU Model 3 gross margin).

If this is correct, Tesla should get c.€120m from FCA for the EU and c.€280m from FCA for the US in 2019 (total $450m). In 2020 they should get c.€720m for the EU and €280m in the US (total $1.1bn). Tesla should be able to record this as straight profit.

Anyone agree/disagree with these assumptions?

I don't know enough to disagree, but I have a couple questions. If FCA bought ~190k GHG credits from Tesla in 2018 and still paid €320m in US penalties, how will they be in compliance in 2019? Also, how did Tesla recognize 200m of non-ZEV credit saies in 1Q19? That can't be GHG, can it? That's almost 4x higher per US delivery than Q3/Q4. 200m is ~140m higher than one would expect. So we not only have 140m of non-GHG cash received in Q1 that was deferred, but another 140m of 'mystery' non-GHG that was recognized. Thoughts?

 

[Singer3000]

Anecdotes aren’t a trend but they can be helpful. For years I’ve been gently mocked by a small group of friends for my continual advocation for TSLA, with every inappropriate tweet or sharp price drop treated with a sarcastic cheer. I must report that the damn has broken, following this latest drop in the price they are either now invested, on the verge of investing or apparently quite interested in the product itself. All highly financially literate but generally quite risk averse.

Institutional investors are really just people much like this but that happen to be responsible for big pools of money. Doesn’t take many to have a similar shift in sentiment for TSLA to be well on its way.

It DOES need Panasonic to get their sugar together and supply enough batteries however. Which I why I’m with Neroden, I want a recording or a verbatim transcript of what the CEO and CFO said about this in the private investors meeting.

 

[printf42]

IMO Elon’s goal with 2020 is not to impress the analysts. It is to put an impossible deadline for the Autopilot team so they work harder and put in more hours.

Same with almost all of Elon’s self-imposed deadlines and NDEs of the company.
At times it’s humanly impossible to achieve on time, but totally possible at +6months, where they usually deliver.

 

[Carl Raymond]

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.

Insurance should not change much for those driving a ‘horse’ car. But should be cheaper for those with FSD.

As ‘horses’ become scarce, the chance of being run into by an uninsured ‘horse’ falls. The horse driver also enjoys lower accident rate as other cars on the road are increasingly likely to have FSD.