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

[Nocturnal]

What would you consider "plush or optioned out"?

Dan

Nothing specific I suppose, just something that feels more upscale than the 3? I happen to love the minimalistic 3 interior but it just seems like higher cost model buyers usually like a little more. Maybe more trim material options, cooled seats etc.

 

[JusRelax]

Is it possible that Tesla hasn't yet determined a price yet for the China made Model 3, and is using this contest to determine/garner interest in the model 3 and find out what price level the market is determining for the Model 3? If I were trying to maximize profitability, I'd do something like this to make sure I'm not leaving any profit on the table by selling a car for too cheap compared to how many cars I'm able to produce initially.

I suspect that Tesla is trying to determine the correct price point to match demand with their expected production levels at initial release. As production rises, they will probably slowly drop prices to match demand as well.

 

[mongo]

I think eventually with a new chassis. S and X are higher priced vehicles with nice margins but takes long to assemble. I am sure Tesla wants to get those man hours down, and part counts down. The only way to do that is a new chassis. Question is, what is the ROI of doing it now or waiting a couple of years.

Isn't chassis assembly (stamping, welding, painting) highly automated?
Seems like the rest of the component architecture (electrical, cooling, displays, switches, HVAC) would be easier to change, lower cost, and less manufacturing down time to implement versus a full frame update.

 

[Doggydogworld]

Interesting info...

Tesla Order Rate Surges 25% Worldwide, 116% In North America, According To New Data | CleanTechnica

It looks to me (and many others here) like a lot of Q1 was pulled into Q4, and now it is back to "normal"

This is bad methodology. As they say:

...this methodology will be flawed and actually overestimate orders for quarters in which Tesla started with a significant backlog of orders (a backlog implies some cars have been ordered but not yet built and therefore not captured in the in-transit numbers).​

They entered Q3, for example, with a huge backlog that was not part of in transit. They presumably entered Q2 with a SR+ backlog. They also say:

However, Q1 2019 is not such a quarter since there was virtually no backlog from the fourth quarter​

That's just flat wrong. Europeans placed a ton of Model 3 orders in Q4 that were not included in the 12/31 in transit number.

I don't see how you can conclude anything one way or the other using this approach. Tesla doesn't define or regularly report orders, so it's nearly impossible to map Elon's 50k against quarterly deliveries in the first place. Does the 50k include Model Y? Why not? Also, there's a surge of orders every time Tesla opens ordering for a new variant or in a new region. Q2 had one mid-sized surge, SR+ in Europe and China, and a couple of small ones such as UK opening for orders. Q1 had a large surge from the 2/28 SR intro and price cuts, plus a mid-sized surge from China and a couple of smaller EU markets opening.

I just don't see how you filter through all this and produce a meaningful conclusion.

 

[Dan Detweiler]

Nothing specific I suppose, just something that feels more upscale than the 3? I happen to love the minimalistic 3 interior but it just seems like higher cost model buyers usually like a little more. Maybe more trim material options, cooled seats etc.

The more I drive my Model 3, the less I want "more". I had to drive a rental Buick for the last 4 days while out of town. Hated, hated, HATED it. Chrome, buttons, knobs, gauges, displays, switches, crap everywhere. Really made me miss my 3.

Dan

 

[EVNow]

I don't see how you can conclude anything one way or the other using this approach. Tesla doesn't define or regularly report orders, so it's nearly impossible to map Elon's 50k against quarterly deliveries in the first place. Does the 50k include Model Y? Why not?

I don't think the 50k includes Y - that wouldn't make any sense in the context of the mail. The mail was to cheer people to produce more 3s, so as such should be talking about 3 (may be s+x if we are generous) orders.

But on the whole I agree, we can't conclude much from the email in terms of actual % increase. We can just say it looks like there are more orders in Q2.

 

[dc_h]

On the S forum, someone who seems to be in the know stated no. Maybe new headlights and tail lights. Not expecting a chassis till 2022, the S body will be 10 years old. The Europeans car makers go 7 years between body changes.

hmm, I wonder if there is any way of speeding that ramp up if they get like 200-400k reservations.

No. This is in ludicrous mode already. It does look like production could start late Q3 or early Q4 though, which is crazy looking back to January's Shanhai swamp.

 

[mikevbf]

No. This is in ludicrous mode already. It does look like production could start late Q3 or early Q4 though, which is crazy looking back to January's Shanhai swamp.

Agreed, not the start date. I was thinking more the ramp to volume production.

 

[Nocturnal]

Would you have first-hand knowledge of this?

BTW, do trolls with good English grammar make more money?

I'm just asking questions! With no agenda or anything, honest!

"Hey, aren't you guize super concerned that Elon might be embezzling money to fuel is underground mole people plans? What? I'm just asking a question!"

 

[jhm]

One of my biggest near-term concerns now is the Chinese rare Earth issue - I have seen numerous articles reporting that the language in the Chinese press is threatening to cut off supply to the US as a next step in the trade war. This could be very bad for Tesla, especially as they have just switched to permanent magnet motors not only in the 3, but now also the front drive units of the S and X.

I wonder how this would impact Tesla if they were to build the drive units in China and ship them back to US. Might that get around REM export issues?

 

[dc_h]

Is it possible that Tesla hasn't yet determined a price yet for the China made Model 3, and is using this contest to determine/garner interest in the model 3 and find out what price level the market is determining for the Model 3? If I were trying to maximize profitability, I'd do something like this to make sure I'm not leaving any profit on the table by selling a car for too cheap compared to how many cars I'm able to produce initially.

I suspect that Tesla is trying to determine the correct price point to match demand with their expected production levels at initial release. As production rises, they will probably slowly drop prices to match demand as well.

It's possible and possible that initial pricing will be a bit above long term pricing plan. A 20 to 25% cut from today's price will be very profitable, since that will just cut out the current tariff cost and labor and local parts will reduce overall costs. In the short term, why not charge based on depreciation costs at 50% of production capacity and then cut prices moderately as production starts to hit stride. There should be at least a quarter of SR+ backlog in China. Seems like building capacity for China and Greater China region shouldn't happen well into 2020 and that would be the time you drive pricing down to the long term plan.
Balancing pricing to block out competitors and getting big day 1 deposits and maximizing profit on day 1 production would be an interesting discussion with Elon, Zach and their core team. I'd guess they price about 10% above long term plan.
Pros and cons:

Even 50,000 pre-orders is 125 million in cash and assures 2 quarters of production as they ramp from hundreds of cars a week to 3000 cars a week. Less than 50,000 pre-orders could be sold by tslaq as a sign the plant will have no market to sell to.
Aggressive pricing could create 100,000 or more pre-orders and cover plant loan costs for the year and make Shanghai cash flow positive on day 1, but likely leave a couple hundred million on the table.
Aggressive pricing could Osborne more LR and Premium cars, but these markets are differentiated. Probably at least 20% of LR\Premium consumers would be on the fence.​

The wild card is the chatter about moving Y production up to end of 2019. That would leave Tesla short of capacity at least until GF3 is completely built out. I love the idea, but it seems unrealistic and wishful.

 

[Pras]

Feels like TSLA wants to break out but is kept subdued. The pressure keeps building. One day!

 

[homer214]

Just green. Beginning of an upward swing...

 

[ZeApelido]

I advised her that, if she doesn't like one ply toilet paper, she try folding twice to make 4 ply toilet paper -- I know I had to, when visiting the Bay Area Mother Ship of my US-based employer in the past. Somehow, the sight of that toilet paper did not make me suddenly want to change employers.

The rumours about employees having to buy toilet paper are apparently unfounded, unless she has very stingy colleagues. Perhaps it's just her bringing more high quality toilet paper, but apparently she does not want to share with colleagues ,-).

Joanne

what a dope!

uh..excuse me

umm.. I'm sorry

this is.. this is kind of embarrassing but.. there's no toilet paper over here

Elon

(from the stall on Elaine's right)

are you talking to me?

Joanne

yeah.. I

I just forgot to check

so if you could just spare me some

Elon

no I'm sorry

Joanne

what?

Elon

no I'm sorry, I can't spare it

Joanne

you can't spare it??

Elon

no there's not enough to spare

Joanne

well I don't need much, just 3 squares will do it

Elon

I'm sorry I don't have a square to spare, now if you don't mind

Joanne

3 squares? you can't spare 3 squares??

Elon

no I don't have a square to spare, I can't spare a square

Joanne

oh is it two-ply? cause it it's two-ply I'll take one ply, one ply, one, one

puny little ply, I'll take one measly ply

Elon

look, I don't have a square and I don't have a ply (flushing and leaving)

Joanne

no no, no no, don't don't, I beg you


p.s I will turn everything into a Seinfeld reference.

 

[MartinAustin]

1) If orders open per expectations, I wouldn't be surprised to see 500,000 Model 3 orders from the China factory to be announced at the June 11 shareholders meeting.

2) S+X just got their refresh for 2019. There are two refreshes in one year? What is this talk about 400 miles for? They're not switching S+X to 2170 until a) they absolutely have to [which is a LONG way from being true, it's still the sales leader in large Luxury cars] and b) Gigafactory production issues have been solved for the entire product line including Powerwall+Semi+Y. S+X are absolutely at the back of the line for 2170.

Why don't people look at this CNBC hit piece as nothing more than that? It's from Lora K who has written little other than garbage concerning Tesla. Her articles always look "potentially possible" on the day of publication but when looking back you can see how much of her stuff is just plain wrong or fabricated. And just like her other garbage, it's based on claims of interviews with people whose names are missing from the article.

 

[M3Rider]

FYI - Elon actually did say on the Q4 earnings call that he prefers higher unit volume even if total overall profit was the same (ie lower margins per car). I thought that was a bit of an odd thing to say on an earnings call, but realised it made sense when you are trying to achieve scale fast.

3 SRs vs 2 LRs = -50% more tailpipes and +50% Tesla advocates helping boost a future demand.
Given the same profit, what's not to love?

Also note that if the estimates quoted below are correct, then the ICE taxes in Norway are not punitive, they simply charge the true cost of an ICE car, which is more than the car's purchase price:



I.e.:

• average estimated life time health damage caused by gasoline cars with U.S. pricing = ~$134,000
• average life time health damage caused by diesel cars with U.S. pricing = ~$170,000

Which means that for Norway it's common sense to severely restrict and then ban ICE cars, just like it's common-sense to charge more for radioactive fuel, to cover the rod removal and safe long term nuclear waste storage costs - which clean-up costs wind and solar energy does not have.

Except that for ICE cars the waste is currently emitted straight into the atmosphere, "for free", in a free-loading fashion, causing various sorts of damage - hence the mis-pricing.

There's no more freeloading for the ICE industry in Norway.

Well, given your numbers for the health damage = $134k, what Norway charges is in no way equals "no more freeloading"

If you look at those taxes, majority is 25% VAT(value added tax), which obviously got a temp waiver for EVs to help them enter the market, but at some point in the future will be applied to EVs as well. It gets applied to Tesla sales in EU(19% VAT).
Then weight tax, will be added too for EVs in the future.

VW Golf
Import price: $21,500
CO2 tax: $3,750
NOx tax: $260
Weight tax: $2,500
Value-added tax: $7,000
Total retail cost: $35,000 (all other fees included)

VW e-Golf
Import price: $30,590
CO2 tax: $0 (tailpipe-based)
NOx tax: $0 (tailpipe-based)
Weight tax: $0 (exempt)
Value-added tax: $0 (exempt)
Total retail cost: $31,000 (all other fees included)

Why Norway leads the world in electric vehicle adoption

What they are charging for pollution is a mere $4k on a $21.5k car. Not anywhere near $134k.
Still looks like a freeloading.
The rest is a temp EV incentive.


I skipped some posts...just in case it wasn't mentioned,
Bloomberg - Are you a robot?

Volkswagen AG is making changes to its battery-purchasing plan worth about 50 billion euros ($56 billion) over concerns one if its supply deals, with Samsung SDI Co. Ltd., might unravel, according to people familiar with the matter.

Samsung initially agreed to deliver batteries for just over 20 gigawatt hours, enough to power 200,000 cars with 100 kilowatt hour packs, before different views on production volume and schedule emerged during detailed negotiations, said the people, who asked not to be identified as the talks are confidential. The impasse cut pledged supplies to less than 5 gigawatt hours, they said.

 

[anon]

They're not switching S+X to 2170 until a) they absolutely have to [which is a LONG way from being true, it's still the sales leader in large Luxury cars] and b) Gigafactory production issues have been solved for the entire product line including Powerwall+Semi+Y. S+X are absolutely at the back of the line for 2170.

I'm afraid i don't agree - we heard within the last couple of months or so that Panasonic is likely to switch Japanese production to 2170 at some point within a year. September could be an ideal for Tesla to introduce updated S+X - Gigafactory output should have increased further by then, so Tesla can temporarily use the excess capacity to cover S/X production while the equipment in Japan is being upgraded/replaced, then switch back to the new Japanese supply for the S/X while the Gigafactory output is ready for Semi+Y next year.

 

[anon]

I wonder how this would impact Tesla if they were to build the drive units in China and ship them back to US. Might that get around REM export issues?

That's a good point. Depends on exactly how the Chinese choose to implement it - they could choose to limit only exports of rare earths themselves, or else certain products that use them. It's possible that even just buying a finished magnet from China would get around it (perhaps they already buy the magnets from China?), but the Chinese could choose to restrict magnet exports. So the same applies to the motor - maybe that would get around it, or maybe they could choose to restrict motor exports that use rare earths.

 

[KSilver2000]

I'm afraid i don't agree - we heard within the last couple of months or so that Panasonic is likely to switch Japanese production to 2170 at some point within a year. September could be an ideal for Tesla to introduce updated S+X - Gigafactory output should have increased further by then, so Tesla can temporarily use the excess capacity to cover S/X production while the equipment in Japan is being upgraded/replaced, then switch back to the new Japanese supply for the S/X while the Gigafactory output is ready for Semi+Y next year.

Putting the 2170’s into the S/X is not plug and play. It doesn’t fit into the existing S/X.

 

[MarcusMaximus]

Looks like the press has decided it’s time to pump TSLA again: