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

[Remus]

It seems Tesla already has some machine learning in its manufacturing processes:
From an employee on Linkedin - Senior Machine Learning and Controls Engineer at Tesla

I presume Tesla ultimately aims to move much of the manufacturing code to machine learning. OpenAI made a breakthrough here last year with a new method to train a robot in simulation that was much better at transferring to the real world than prior methods. Their idea was that rather than trying to model the physics of the real world accurately (which makes your simulation very brittle to real world imperfections and complexities not captured by your model), they instead varied the laws of Physics in their simulation and trained a robot that could perform well in any of these simulated conditions. This AI robot was much more robust at dealing with the variations between the real world and the simulation. Still a long way to go though. Learning Dexterity

I'm quoting this for the discussion about the cost for building the car. My point is multiple sources indicated that Tesla is not standing still on the manufacturing front. Their efforts will bear fruits that reduce the cost.

Elon saying "humans are underrated" but they are still trying to reduce human labor on the line. Computer vision, for which they have tremendous expertise, is widely used. Tesla is already using computer vision on quality control. That's the low hanging fruits many AI companies are also working on, just take a look at Andre Ng's landing.ai.

There is also information indicating that they are working on using vision to guide the robot arm. The eye hand coordination part is harder than vision based quality control, but it's much simpler than self driving.

I am optimistic that they can continue to lower the cost as their technology progress

 

[Maitri982]

I thought it seemed pretty clear that we really don't yet know the global demand for model 3 after the pent up demand is supplied. What makes you say it is clearly over 500k/yr?

No one has a crystal ball, but i think basic common sense based on some objective, non-hyperbolic extrapolations lead to this being a conservative estimate. I think its higher myself.

 

[MarcusMaximus]

Mod: Software quality became UI quality begat audiophile stuff. Too off topic even for a weekend. Stop now. Take it to one of the many other threads. --ggr.

I’m guessing this came about from my asking about neroden’s listening habits yesterday? If so, I apologize. Didn’t think it would run away like this...

 

[Maitri982]

That's true. But why be satisfied with 30%, when you can rake in 100%

Because they make huge profit up front on selling the car and continue to make money after it is sold. Haven't done complete analysis, which would require making some very loose guesstimates (e.g. what they could sell these cars for, the charge per mile for TN, etc.), but my gut tells me the time value of money means the economics favors selling the cars rather than not.

 

[CorneliusXX]

Another 10k vins registered today. Was hoping for more RHD.

Model 3 VINs on Twitter

 

[EVNow]

Because they make huge profit up front on selling the car and continue to make money after it is sold. Haven't done complete analysis, which would require making some very loose guesstimates (e.g. what they could sell these cars for, the charge per mile for TN, etc.), but my gut tells me the time value of money means the economics favors selling the cars rather than not.

I got this ARK model from GitHub. That is what I used to come up with 270k as the upfront price if selling without a % cut. If taking 30% cut, you can price at about $190k - assuming about 20% IRR for the purchaser.

 

[Maitri982]

One thing not talked about much here are macro events (other than the trade war) and its effect on our beloved Tesla.

Maybe no one else feels it in the winds like I do right now, but I am feeling a shift both internationally and also domestically on the global climate issues and the people of the earth needing to do something about this now. And I mean like immediately NOW. These voices seem louder and more pervasive to me than even 2018. I feel we could be at a tipping point in this narrative. This will lead to large changes on the governmental regulations side to push for green economy. Please don't get into political debate on the guy at the top right now...we all know what he is...no need to restate it over and over. But I think the movement could gain so much mindshare that it won't matter who is at the top. That is just here...China/Europe/Asia will actually likely lead on this front. US will follow.

If I am right, there is a single leader in this field and the gap to number 2 is huge right now. And before the others realize the above is true, it will take them lots of time to catch up IMO. So lets see what happens and each of us should, regardless whether you hate or love Tesla, do what is needed to be done to protect the earth and its people.

If you care about money, great, there is HUGE money to be made in electrifying the world. Huge. i wish the oil guys would get this and start using their $$$ from oil to make more $$$ from solar/wind/whatever to help the earth. They will sleep better at night if they did this and that is priceless.

 

[mongo]

I got this ARK model from GitHub. That is what I used to come up with 270k as the upfront price if selling without a % cut. If taking 30% cut, you can price at about $190k - assuming about 20% IRR for the purchaser.

@Maitri982

Doesn't baking in all/ most of the future profit to the sales price make the vehicle uninsurable? Unless the manufacturer is the insurer and will replace the car at real cost (sans future profit), covering the loss would require huge premiums. For a high use vehicle, accident rates (due mostly to others) would be higher than average.

 

[Doggydogworld]

I'm quoting this for the discussion about the cost for building the car. My point is multiple sources indicated that Tesla is not standing still on the manufacturing front. Their efforts will bear fruits that reduce the cost.

Elon saying "humans are underrated" but they are still trying to reduce human labor on the line. Computer vision, for which they have tremendous expertise, is widely used. Tesla is already using computer vision on quality control. That's the low hanging fruits many AI companies are also working on, just take a look at Andre Ng's landing.ai.

There is also information indicating that they are working on using vision to guide the robot arm. The eye hand coordination part is harder than vision based quality control, but it's much simpler than self driving.

I am optimistic that they can continue to lower the cost as their technology progress

Tesla is undoubtedly working to lower costs. But in Musk's own words, it's "Game of Pennies". If you run the numbers you'll see almost all the costs are purchased parts and materials. One reason Tesla stopped pushing Fremont and turned their focus to Shanghai, IMHO, is so they could qualify additional Chinese parts vendors. They then plan to use those vendors to reduce parts cost back in Fremont. That won't pay off for a while, though.

 

[Doggydogworld]

@Maitri982

Doesn't baking in all/ most of the future profit to the sales price make the vehicle uninsurable? Unless the manufacturer is the insurer and will replace the car at real cost (sans future profit), covering the loss would require huge premiums. For a high use vehicle, accident rates (due mostly to others) would be higher than average.

It'd be a 40k car with a 150k FSD upgrade. Insurance would just cover the car. Tesla would make the FSD license transferrable or something in case the car was totaled.

 

[kbM3]

It'd be a 40k car with a 150k FSD upgrade. Insurance would just cover the car. Tesla would make the FSD license transferrable or something in case the car was totaled.

If such a scenario were to occur, where Tesla alone is able to run robo-taxis at very high profit, why would they ever sell a car without FSD? Wouldn’t it be bundled?

 

[EVNow]

Another 10k vins registered today. Was hoping for more RHD.

Model 3 VINs on Twitter

22% dual motor (i.e. LR & Perf).

They need about 3K in added options, + 50% take on the 6k FSD to get to around 50k ASP. Assuming 10% LR and 10% Perf.

 

[mongo]

It'd be a 40k car with a 150k FSD upgrade. Insurance would just cover the car. Tesla would make the FSD license transferrable or something in case the car was totaled.

If they did it as a license fee or such, maybe. But how to get a loan for up front payment?

P.A. Wish they did that (transferable FSD) for current owners who purchased before the features existed.

 

[EVNow]

@Maitri982

Doesn't baking in all/ most of the future profit to the sales price make the vehicle uninsurable? Unless the manufacturer is the insurer and will replace the car at real cost (sans future profit), covering the loss would require huge premiums. For a high use vehicle, accident rates (due mostly to others) would be higher than average.

​

It'd be a 40k car with a 150k FSD upgrade. Insurance would just cover the car. Tesla would make the FSD license transferrable or something in case the car was totaled.

Yes, mandatory upgrade option

Of course, they don't need to do all this - which means the only viable insurance is with Tesla insurance.

 

[Maitri982]

@Maitri982

Doesn't baking in all/ most of the future profit to the sales price make the vehicle uninsurable? Unless the manufacturer is the insurer and will replace the car at real cost (sans future profit), covering the loss would require huge premiums. For a high use vehicle, accident rates (due mostly to others) would be higher than average.

Hadn't thought about it, but probably. As it is now the more expensive the car the more the insurance premiums are. The more mileage the more the premiums are.

So yea...for sure. But there is a big BUT in this case. If the FSD as stated needs to be many times safer than human drivers, then that should help keep rates lower than they would be otherwise.

I wonder if this is why Tesla is getting into insurance? They see the same issues with cars on the Tesla Network and insurance as you do.

 

[canoemore]

One thing not talked about much here are macro events (other than the trade war) and its effect on our beloved Tesla.

Maybe no one else feels it in the winds like I do right now, but I am feeling a shift both internationally and also domestically on the global climate issues and the people of the earth needing to do something about this now. And I mean like immediately NOW. These voices seem louder and more pervasive to me than even 2018. I feel we could be at a tipping point in this narrative. This will lead to large changes on the governmental regulations side to push for green economy. Please don't get into political debate on the guy at the top right now...we all know what he is...no need to restate it over and over. But I think the movement could gain so much mindshare that it won't matter who is at the top. That is just here...China/Europe/Asia will actually likely lead on this front. US will follow.

If I am right, there is a single leader in this field and the gap to number 2 is huge right now. And before the others realize the above is true, it will take them lots of time to catch up IMO. So lets see what happens and each of us should, regardless whether you hate or love Tesla, do what is needed to be done to protect the earth and its people.

If you care about money, great, there is HUGE money to be made in electrifying the world. Huge. i wish the oil guys would get this and start using their $$$ from oil to make more $$$ from solar/wind/whatever to help the earth. They will sleep better at night if they did this and that is priceless.

I think this is an excellent point, and it mirrors my own rationale for holding TSLA long term. I do have some hope that the United States won't be too much of a laggard, especially once the narrative changes. There's the old saying oft-attributed to Churchill: "You can always count on the Americans to do the right thing after they have tried everything else". I have a MUCH less comprehensive understanding of the details than a lot of people here, but it does seem like Chinese leadership in some of these areas might not be as insurmountable as it seems - the tiger might not be made of paper, but perhaps wood? Maybe even a softwood, like pine, rather than ironwood or ebony.

I don't think this hope is entirely fanciful. There seems to be some evidence that China's largess with renewable energy investments doesn't always translate into efficient outcomes. Extensive problems with grid connections, for example, have left large amounts of Chinese wind assets under-utilized. Meanwhile, in Texas - not exactly a bastion of environmentally-friendly lawmaking - smart, market-oriented policy in the early 2000's set the stage for high grid-penetration by renewables. Furthermore despite electric vehicles being an apparent cornerstone of Chinese economic policy and receiving commensurate state investment, the highest quality, most innovative E.V.'s still seem to be made by a little(can we say that anymore?) American company. Maybe all the trials and travails that Tesla has waded through in the relatively policy-hostile United States will leave it more trim and fit when the narrative finally does change dramatically like you suggest, making it that much more competitive against Chinese (and other) rivals that didn't have to survive such hard times.

I think you're very right to bring this up as a macro issue to keep in mind. When the narrative switches, there's a hell of a lot of old infrastructure to replace, and Tesla is well-positioned to supply a lot of it, especially on the consumer-facing side. Not losing sight of the forest for the trees and whatnot.

 

[mongo]

Hadn't thought about it, but probably. As it is now the more expensive the car the more the insurance premiums are. The more mileage the more the premiums are.

So yea...for sure. But there is a big BUT in this case. If the FSD as stated needs to be many times safer than human drivers, then that should help keep rates lower than they would be otherwise.

I wonder if this is why Tesla is getting into insurance? They see the same issues with cars on the Tesla Network and insurance as you do.

I think it is part of Tesla insurance, so they can have their own fleet covered without dealing with the extended value.

FSD helps against at fault and possibly some not at fault, but doesn't help against many not at fault accidents such as getting rear ended at a red light. So FSD rates would be somewhat equivilent to an experienced accident free driver, scaled up by mileage.

 

[Causalien]

One thing not talked about much here are macro events (other than the trade war) and its effect on our beloved Tesla.

Maybe no one else feels it in the winds like I do right now, but I am feeling a shift both internationally and also domestically on the global climate issues and the people of the earth needing to do something about this now. And I mean like immediately NOW. These voices seem louder and more pervasive to me than even 2018. I feel we could be at a tipping point in this narrative. This will lead to large changes on the governmental regulations side to push for green economy. Please don't get into political debate on the guy at the top right now...we all know what he is...no need to restate it over and over. But I think the movement could gain so much mindshare that it won't matter who is at the top. That is just here...China/Europe/Asia will actually likely lead on this front. US will follow.

If I am right, there is a single leader in this field and the gap to number 2 is huge right now. And before the others realize the above is true, it will take them lots of time to catch up IMO. So lets see what happens and each of us should, regardless whether you hate or love Tesla, do what is needed to be done to protect the earth and its people.

If you care about money, great, there is HUGE money to be made in electrifying the world. Huge. i wish the oil guys would get this and start using their $$$ from oil to make more $$$ from solar/wind/whatever to help the earth. They will sleep better at night if they did this and that is priceless.

When the weather was whiplashing between extreme cold and hot, it was hard to tell if it was warming or cooling.

However, this year, everyone in Canada agrees that climate change is real. 100 year floods 2 out of 3 years. Temp 7 degree above historic norm.

The average temp is up and the extremes are worst.

 

[Maitri982]

When the weather was whiplashing between extreme cold and hot, it was hard to tell if it was warming or cooling.

However, this year, everyone in Canada agrees that climate change is real. 100 year floods 2 out of 3 years. Temp 7 degree above historic norm.

The average temp is up and the extremes are worst.

Yea...unfortunately even among the dimwitted the evidence will soon be overwhelming and they have to get on board. Although of course still not admitting human involvement in whats happening, because you know, temperatures have always changed throughout the history of the world.

 

[Causalien]

What exactly is Xi asking for - changes based on regulations rather than law ?

For example, not publicly holding the threat of tariffs while negotiating might be a good start. From my understanding of it. Conceding will mean losing face.

On top of it, I saw some talks equating these demands to those at the end of opium war.

Not blasting all these on twitter for the whole world to see can be a first step. For China, allowing trump to parade a win is losing face. For Trump, the whole thing is about parading a win.

The content is a moot point. Look at the new nafta with Canada is. Well, the tariffs is still in effect. China saw it and demanded that tge tariffs be removed first so they don't suffer canada's fate.