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

[elasalle]

As soon as SP starts moving in the Upward direction, Trolls tend to self disappear.

 

[MarcusMaximus]

Porsche now planning on doubling production of Taycan to 40,000 per year.

Hmm actually getting up near Model S numbers. Not serious competition to Tesla(yet), but serious to everyone else.

 

[Driver Dave]

Porsche now planning on doubling production of Taycan to 40,000 per year.

Porsche has a long long road to become viable in EVs.

No charging network.
Still gotta deal with the scummy dealers.
They cheated on emissions.
Dated interface and specs.

They aren't really a competitor until they can actually compete.

 

[MarcusMaximus]

Porsche has a long long road to become viable in EVs.

No charging network.
Still gotta deal with the scummy dealers.
They cheated on emissions.
Dated interface and specs.

They aren't really a competitor until they can actually compete.

In fairness to Porsche, they haven’t, and likely never will, cheat on emissions on the Taycan.

 

[JRP3]

FYI, sorry if was already posted
Berkshire's lithium venture may supply U.S. automakers, including Tesla - FT

Berkshire denies media report on accord to extract lithium

 

[Tslynk67]

https://www.handelsblatt.com/untern...r-plan-fuer-das-autonome-fahren/23887612.html

The BMW-Daimler-Plan for autonomous driving


No mention of tesla

These big incumbents slowly merging as they've no answer individually to Tesla, totally amazing!

 

[Tslynk67]

It sure got me a car months faster than my relatives, who reserved a day later! No print for me despite standing in line, though. Early reservations in the US mattered a lot.

Are you sure it wasn't geographical?

For sure in Europe it has made little difference for the current order - what was it a couple of weeks for reservation holders allowed to order, before it was opened-up (for those countries that can order, before Karen gets on a rant...)

Maybe with the $35k model it will come into play. If we assume that there's possible 300k reservation-holders waiting for that then it could make a big difference if they open up based on reservation moment.

 

[PhaseWhite]

In my view the single most important development which will impact Tesla's earnings, volume and mission in 2019 is progress with reducing the cost of production of a base $35k Model 3.

This is what drives their ability to launch non premium and short range car options, which is the largest factor in whether Tesla can achieve sustainable demand of 7k Model 3s per week. This cost reduction progress is also what impacts their ability to maintain Model 3 gross margin above 20% and progress towards its 25% target.

Significant progress has been made in 2018, with a $29.1k reduction in average cost between Q1 and Q4 2018 on my estimates. Excluding the impact of spreading fixed depreciation costs over higher car volume, cost reduction achieved was $17.2k. I think Tesla likely exited 2018 with a cost of c.$37.5k.

Implied Tesla average COGs for a $35k base car:

• 1Q18 $67.6k ($53.2k ex depreciation).
• 2Q $49.0k ($42.3k ex depreciation).
• 3Q $40.1k ($37.4k ex depreciation).
• 4QE $38.5k ($36.0k ex depreciation).

To get to 25.0% average margin on my long term option mix estimates (50% EAP, 50% Premium interior, 50% US, 50% SR, 15% MR, 10% LR, 20% LR AWD, 5% AWD P) Tesla needs to reduce this cost by another $5.5k to $32.0k. Elon has previously stated a target of reducing this cost to $30k, which should correspond to an average margin closer to 30%.

Much of the easy work on cost reduction has now been done, so it is going to be a significant challenge to make further progress.
Roughly I think this $5.5k cost saving could be achieved by:

• Production ramp from 5k/week to 7/k week, which could reduce depreciation by c.$0.5k per car and staff costs by c.$1.5-2k per car.
• New more efficient battery module and pack designs: $0.5-1k per car
• $10-20/kwh reduction in Panasonic cell purchase cost: $0.5-1k per car
• Cancellation of referral program (I'm not sure how this is accounted for, but it may reduce deferred revenue by c.$0.5k)
• Cancellation of Trump's China tariffs: $0.5-1k per car.
• Other supplier cost savings with negotiations and purchasing scale: $0.5-1k
• Other car design improvements: $0.5-1k
• Better production quality to reduce scrap, rework and warranty costs: $0.5-1k

Does anyone have any views on whether these potential savings look realistic?

Great speculative work @ReflexFunds

If we take current pack costs of about $150 kwh I'd assume just going from ~60kwh down to 50kwh packs (which the SR is assumed to use) would bring pack costs down by 10*150 = $1500

This would be the easiest cost reduction since Tesla owns the supply chain. Assuming your estimated Q4 exit cost of $37.5k that would bring costs for the PUP version of the SR to about $36k

The next easiest is probably the seats, again because Tesla makes them in house. But I don't see huge cost savings here, maybe a few hundred dollars if they remove all the motorized options so it's probably not worth it.

It will be very challenging to get it down another 4k even with the PUP removed... And I'd speculate dropping PUP is it's self going to be very difficult:

I don't think Tesla actually has the suppliers on board for the non PUP version and this would increase costs by reducing volumes on parts needed for PUP while forcing Tesla to spend money the supply chain and design and manufacturing engineering for the non PUP version, not to mention changes to assembly lines which require additional capital investments.

Instead, I'd like to see Tesla invest resources in the software options on the car which can drive high margin revenue and tilt the scales to making the base model profitable at very low margins because they will be selling a software platform that can continue to add revenue going forward for the life of the car.

Some examples:

1. Add an option for Autopilot to bill daily/monthly. There are a lot of people who avoid the 5k charge but would fork over a monthly payment or at least enable it during road trips. Obviously pricing needs to find the right balance to not cannabalize existing EAP sales. Perhaps $50 Daily/$200 Monthly with the option to upgrade to the permanent option discounted by how much you have spent so far.

2. Add Premium Connectivity+ which includes ability to stream HTML5 content and provide a hotspot in the car. This would enable video streaming in car on the screen. Pricing would be a fixed % up charge on whatever cost they can negotiate with their wireless providers.

3. Performance unlocks: We know with near 100% certainty that Tesla uses performance to artificially segment their cars. Based on lots of circumstantial evidence the Model 3 AWD is likely capable of nearly the same performance as the Performance Model 3. It's also likely that the LR and MR are also capable of slightly faster 0-60 times by are handicapped for segmentation purposes. Previously Tesla has rolled out performance upgrades to Model S/X for free to fix segmentation issues (like when the Model 3 LR came out). These upgrades will increase warranty costs so Tesla will need to price accordingly.

Example software unlocks:
1. MR+ upgrade: 0-60 in 5.2s (About as fast as LR): $2.5K
2. LR+ upgrade: 0-60 in 4.8s (A little slower than base AWD): $2.5k
3. AWD+ upgrade: 0-60 in 4.0s (.5s slower than P model): $5k
4. Performance+ (Ridiculous mode): 0-60 in 3.1s (with rollout): $7.5k

The great thing about these is that once most people get a taste of the instant torque of a Tesla, they want more, and this gives them a way to spend more money at a later date without the hassle of trading the car in like Jason from EngineeringExplained recently did when he traded his MR in for a P3D.

 

[dc_h]

Porsche now planning on doubling production of Taycan to 40,000 per year.

We’ll see if they follow through and if they’re the first competition to meet their proposed specs. This is part of the Tesla mission, so win win. 100 million cars sold every year. 20 or 40,000 is not going to solve the climate thing, or kill Tesla.

 

[Don TLR]

So Tesla can do two things:
1) Release an unprofitable Model 3 SR/non-PUP today (make a loss, have the cash flow ok and not go bankrupt)
2) Wait and release a (barely) profitable Model 3 SR/non-PUP later this year (and continue to be modestly profitable and be killing it in terms of cash flow)

Isn't Option 1 making the people who pay for premium car basically pay a subsidy to the entry model car. Lower the price of all cars while making a profit.
I think people can understand it happening at ICE dealers on completely different models but the 3 is lesser optioned car so at least to me its the same model car that might ruffle feathers of premium buyers.

 

[Right_Said_Fred]

Porsche now planning on doubling production of Taycan to 40,000 per year.

They plan on doubling production. Yes, and I plan on doubling my muscle mass. When you want to double production you need to double sales first.

If the car starts at $80,000-90,000 before options, and it will, they won't sell 40,000 per year. But you will counter: Model S sells 50,000 cars per year at that price, so why can't Porsche. Except, Model S is a much more versatile car, that can be used as a family car and can be used to haul things around (I just transported two 2 meter long matrasses in mine). The Taycan is a 2+2, in which you probably don't want to sit in the back for more than half an hour. That is a limited market. I would be surprised if they can sustainably sell more than 10,000 to 15,000 per year.

An electric Panamera, Cayenne or Macan is another story. But it will be some years before those arrive. I hope they do though.

 

[Zaxxon]

Are you sure it wasn't geographical?

Yes. I hear you on European reservations not mattering. For those of us in the US, and willing to buy the first-production configurations, having a reservation, and the timing of said reservation, definitely mattered. A lot.

 

[Tslynk67]

While it is true with respect to the purchase/delivery time order, there was a couple of extra gifts you could get if you reserved early

1. Early reservation holders received a nice 'Thank You' card from Elon with early design sketches of the Model 3.
2. Those who lined up first day to reserve personally in stores also received a die-cast 1/43 toy model of the Model 3.

I reserved pre-reveal, I got the print, no die-cast

 

[ZsoZso]

We’ll see if they follow through and if they’re the first competition to meet their proposed specs. This is part of the Tesla mission, so win win. 100 million cars sold every year. 20 or 40,000 is not going to solve the climate thing, or kill Tesla.

It is a very good news that they are planning to build that many! It means they are willing to give up roughly 40,000 fossil-fuel car sales per year, since EV demand is way beyond supply, so every EV sale is one less ICE sale -- and for big name incumbents its usually within the brand.

 

[Tslynk67]

Porsche now planning on doubling production of Taycan to 40,000 per year.

Fabulous!

You do realise that we here want as many successful EV's as possible coming to market?

You do understand, right, that Tesla's mission is to transition our planet away from fossil fuels.

Obviously you're a very smart fellow, so you'll appreciate that Tesla cannot do this alone, at least not fast enough to save us. We need the other manufacturers to get on with it too.

The Porsche Toucan may take some sales from Tesla, I've no doubt, but primarily it's going to osbourne other Porsches.

It will be a nice car, Porsche make nice cars, nobody argues with that. But I doubt they have enough batteries for 40k cars per year and, once again, no dedicated charging network, and how may 350kWh public chargers are there?

So a nice car for Sunday driving, but a long way to go before it can be used on Autobahn.

 

[Fact Checking]

Yes. I hear you on European reservations not mattering. For those of us in the US, and willing to buy the first-production configurations, having a reservation, and the timing of said reservation, definitely mattered. A lot.

Yes, and note that due to the Model 3 ramp-up the supply of Model 3's was limited for a long time: for the first 12 months of deliveries, starting with 2017/Q3 deliveries, Tesla delivered only about 28k Model 3's - roughly 6 weeks of production at current rates:

  2017/Q2 =      0
  2017/Q3 =    220
  2017/Q4 =  1,550
  2018/Q1 =  8,180
  2018/Q2 = 18,440
  2018/Q3 = 55,840
  2018/Q4 = 63,150

So if you wanted a new Model 3 delivered during the first year of production, being a reservation holder was pretty much the only way to do it.

 

[KarenRei]

It is a very good news that they are planning to build that many! It means they are willing to give up roughly 40,000 fossil-fuel car sales per year, since EV demand is way beyond supply, so every EV sale is one less ICE sale -- and for big name incumbents its usually within the brand.

Of course, the question is "40 thousand when?" The EV market grows by about 50% every year. 20k more (or even 40k) globally at some arbitrary point in the future doesn't even come close to cutting it. Even having a number of manufacturers making these "20k this year, 40k the next" sort of production rates cumulatively are still a drop in the bucket. And most are doing this only at the top end of the market. Guess what? Tesla's S/X production rates are fixed; they're focused on taking over the (much more valuable) midrange segment. In order to cut Tesla's S/X sales, you first have to eat up the entire rate of EV growth in their segment. And Tesla doesn't even operate in many major markets around the world at all, or advertise at all, or a ton of other demand levers they could pull if they ever had to.

And meanwhile, you have to hope that the "competition" actually get something more than their current joke of a charging network, AND nothing improves in S/X. No charge rate improvements. No range improvements (something Tesla already totally dominates on). No performance improvements. No price reductions. No style refreshes. And hey, guess what? Every last one of those will probably happen this year.

What certainly won't happen this year? Anyone making a charging network that's even a shadow of the Supercharger network.

 

[Unpilot]

Porsche now planning on doubling production of Taycan to 40,000 per year.

That's a whole lot of...um...plans. So their research shows a need for that many "city only" cars?

 

[Tslynk67]

#Tesla registered 86 new #Model3 VINs. ~100% estimated to be dual motor. ~67% estimated to be International. Highest VIN is 251145.
Model 3 VINs on Twitter

Colour me confused, but why is it some days they register 25k, then other, 86 - what's the purpose?

 

[Ellec]

The early ER announcement along with Elon's dampening of expectations makes me think this is tactical in order to get the SP close to or above the March note conversion price.

The short interest after the letter would have increased and a surprise to the upside on Jan 30th could provide a sizeable short squeeze, anything that get close to ATH and with another bit of good news could cause a cascade above $400.