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

[dc_h]

My coworker are asking me if I feel safe having my Tesla park in my garage due to spontaneous combustion. My dad is advising me to not us AP due to it killing people. The brand is being damaged. In fact elon's going private email specifically said the reason to go private is because teslas brand is being damaged.

The brand is hurt and helped at the same time. Tesla, like Trump, is click bait. Love it and you click on anything Tesla hate it and click all things Tesla. Some people may get scared away, but the brand is now the Kleenex brand of electric and high tech vehicles. It may be annoying, but the tslaq crew may do for Tesla what the Trump hating media did, giving him billions in media coverage that Jeff Bezos could barely afford.
The best way to fight fud is really talking with people. Walking dogs yesterday my neighbor and I talked about Spacex and Tesla. He had al the usual fud info but had an open mind. He’s. It in the market, but was interested in how far Tesla is ahead of the competition.

 

[GeoX750]

Oh geeze. Why do people keep confusing "Reduced Volume" in Q1 with Reduce Demand. I see no valid argument that indicates demand. Clearly people don't own one or believe the Troll crap out there.

Show me evidence there is a demand issue.

Might be some inaccuracies, but 2019 has generally been something like this:

Price cuts, tax expiration - Jan 2nd

Layoffs - Jan 2nd

Price cuts again - Feb 6th

Layoffs again - Feb 8th

Price cuts again, S/X - March 1st

Retail staff compensation cuts, store closings - March 2nd

Layoffs again - April 6th

Actual Q1 results, unexpected $700M Q1 loss - April 24th

Price cuts again, S/X - May 21st

If demand was burgeoning, you staff up for it and increase prices. Not layoff and cut prices. So you can see the reasons for concern about demand.

And this is without getting into Elon shifting the bull case narrative to FSD, autonomy, 1 million Robotaxis next year, appreciating cars, insurance, leasing or the actual delivery numbers, Tesla's own missed guidance and the SP in 2019.

Outside this thread, there no question that Tesla has to show investors that North America demand is still there. I think it is there and there are a lot of new markets to enter. The longterm future is still bright. But 3 sales are not the fire that was expected and there are short term challenges before the FUD is overcome and widespread adoption occurs.

 

[ZachShahan]

At least you did not get his infamous “Ok” tweet response.

I have been listening to Ashlee Vance bio audio book again and he recounts a similar response when a SpaceX employee sent Elon an email about a complicated actuator that he had been working on for 9 months. Within minutes, Elon sent a reply with just “Ok” lolol .

Another observation after listening - nothing has changed after all these years:

• Elon was/is optimistic with his timelines (and he provides a reasonable explanation on why),
• “competition is coming/Tesla is going BK” FUD from Jalopnik and the rest of the media.

Haha, we've had at least a handful of one-word responses from him. I think "Sigh" is most common, and seems to only be in response to our articles. We write about the shorts and ridiculous media coverage too much.

I have decided that I don't really know if I want him having the "sigh" — response. What is better for Elon & Tesla, bringing more awareness to the topic and bringing it to his attention in our own way or just ignoring the issue?

We dropped that focus for a bit after #Pravduh seemed to run its course, but in this time of hyper-FUD, it just seems needed.

Side note: special CNBC Tesla flashback special tomorrow night. The rEVolution will not be televised — read all about it on CT.

 

[ZachShahan]

Elon has been off but saying pumping is too much. One bad quarter can’t make Elon suddenly this bad. Pumping is different than being aggressive. All the products promised have arrived and things have played out fine. Take the core three products, s x and 3, all fantastic leading their segments and giving equivalent ICE cars run for their money.

The cash flow and every quarter profit comment was something you can accuse him of pumping. But all ceos make positive aspirational comments.

Now the biggest pump you can accuse is FSD. The autonomy day proved that while timing may be off, they are not sitting and pumping out fake news.

Regarding automation in factory, while he compromised to using part human labor, the Tesla GA has turned into an amazing automated factory.

Solar roof is delayed and mostly because of the lack of investment and conviction in the product, compared to cars.

So tell me what else was he pumping? The worst he did was the useless tweets, but that’s not pumping.

I think the solar roof delays (we have quite a lot of info on this) are primarily due to time. Well, that is what Elon has indicated quite convincingly before — need to test the product and it requires time. But will have updates on the tech sooner or later. One of our writers has been consistently on the topic.

 

[carterm2]

Solar Panels and Solar Roof is on the Tesla.com web site... You can configure a single panel set (doesn't really tell you anything about specs), with or without a Powerwall, and get a quote.. About $8K without a Powerwall after tax break. Then you need to pay $99 (fully refundable) to "order". Likely this starts the sales call and visit from, ? a Tesla employee?

Overall, this is surprisingly simple, and I usually am quoted 4X the cost. But then again, there is not enough information for me to buy.

(and I am saving every dollar at the moment.)

I had heard that there were good prices and it was a better way to get solar panels. I just don't think anyone will know about it.

The Solar Roof product looks amazing... If I were building a house or replacing a roof it would be on the list.

 

[Zhelko Dimic]

Yeah -- I was being cautious and had them pencilled as stuck to 100k for every year going forward. oops.

But you can actually boil the entire Tesla story down to a single variable and that's the cost of the model 3 to build. COGS is running about 44k$-45k$ per unit right now and that is nowhere near close to the original target. Elon predicted ASP would be 42k$, much less COGS!!! I should have walked away when I first figured this out.

Things change.

The way I understand situation with M3 production (from @DaveT info) is that massively automated line is as expensive to maintain, as is building cars much more manually in tent. Plus, there is all sunk cost that needs to be amortized, and is screwing up COGS.

I could have misunderstood that. But if not, fundamentally, one quick write-off of $2-3B (the whole M3 prod. line) could be all we need to clear books, and offer different, better vantage point into operations - though I'm not sure if that's possible based on accounting rules. One time write-off may hurt, but WS is usually understanding if that clears air. This opens another debate, concerns re Tesla's ability to win through automation; but I doubt that angle would be too damaging, and I'm sure Tesla will eventually evolve their experience into a win.

Or you know, EM could borrow 1-2B by pledging SpaceX shares, and buy 5-12M shares, I'm sure that'll put floor under SP
We must be approaching levels where he and Board are ready to do something a bit more substantive than twit and write emails.

EDIT: Huh, I meant this post to be optimistic; yet, Engineer in me wants to put in all disclaimers, and yeah, I diluted message.
Message is: things are not even remotely as bad as SP indicates, and there are many ways forward that will validate Tesla's future.

 

[Krugerrand]

I thought you were making an excellent point up to this, but now I’m skeptical as that’s a bridge/litter too far!

If they were rescuing kittens, which they aren’t but probably should be, my Ford message would be this:

I’ve never owned a Ford, never will, and have nothing positive to say about them, but if you insist on owning one I won’t hold it against you since apparently Ford has one redeeming quality in that they rescue kittens.

 

[UncaNed]

.

OT

Hypnotising - you're gonna love it.

Pretty sure I glimpsed a car drive right under a light blue tractor trailer about 20% into this video...

 

[EVNow]

Musk said if the burn continues, they'll be screwed in 10 months.

This is exactly like what I told my toddler just now.

If you keep throwing tantrums I will never take you to the park again.

 

[Krugerrand]

This is an entirely different argument, and is beside the point. You're right--there is a group of Tesla lovers, and a group that is unlikely to back Tesla regardless.

The salient point is that there's also a third group, much larger than the other two, and it's filled with folks not decided one way or the other. This group is heavily influenced by the headlines, and their average view of the Tesla brand is absolutely being tarnished.

In short, the FUD damages the brand not by turning off those who 'support Tesla and then don't.' The damage comes from turning the large undecided masses negative.

That other group is full of willfully ignorant and that’s why they haven’t decided. It’s not until they consciously decide to no longer be willfully ignorant that they can become brand ambassadors.

Being brainwashed by advertising, which for the most part is a combination of exaggeration and lies is NOT brand perception positive - which is the topic of our discussion here. It’s just temporary brainwashing until something shinier comes along to get their attention.

All those Coke commercials and adverts telling people how good Coke is for them, their relationships, their lives in general and polar bears only works until some sexy, hot chick drapes herself over Dale Earnhardt’s race car and passes him a Mountain Dew.

People in that other group are fickle. They’ll buy the trend but they do nothing positive for the brand UNTIL they decide to be open to and consciously seek knowledge beyond quick Google headline searches or a 30 second commercial.

The fourth group of people is the next generation. Fortunately, they’re on the ball about Tesla. They are the ones who will be deciding brand perception in the near future.

 

[SOULPEDL]

Might be some inaccuracies, but 2019 has generally been something like this:

Price cuts, tax expiration - Jan 2nd

Layoffs - Jan 2nd

Price cuts again - Feb 6th

Layoffs again - Feb 8th

Price cuts again, S/X - March 1st

Retail staff compensation cuts, store closings - March 2nd

Layoffs again - April 6th

Actual Q1 results, unexpected $700M Q1 loss - April 24th

Price cuts again, S/X - May 21st

If demand was burgeoning, you staff up for it and increase prices. Not layoff and cut prices. So you can see the reasons for concern about demand.

And this is without getting into Elon shifting the bull case narrative to FSD, autonomy, 1 million Robotaxis next year, appreciating cars, insurance, leasing or the actual delivery numbers, Tesla's own missed guidance and the SP in 2019.

Outside this thread, there no question that Tesla has to show investors that North America demand is still there. I think it is there and there are a lot of new markets to enter. The longterm future is still bright. But 3 sales are not the fire that was expected and there are short term challenges before the FUD is overcome and widespread adoption occurs.

Good argument, but investors will take time to come around for FUD and undertow currents, and that will be an amazing run up. How about this narrative since we're all speculating here.

Tesla is selling everything they can make. But because they're juggling more vehicles, improving processes (and capacity), and upgrading vehicle designs, they are trying to match production to natural demand which is difficult I'm sure. So they have their little firesales and price drops along with some increases along the way as well. But if that balance is off, they need these incentives because inventory is really bad. Meanwhile, they're trying to smooth from the shock of digital demand increase from overseas. I see this as the most complex part of deliveries this year that made them sweat hard. I have trouble believing they have their whole supply chain perfectly aligned, so I'm sure there are times they have to build what they can, battery supply included. All these variables, no wonder. And the evidence is how the "weeks for delivery" on the orders page never made any sense. This issue of people getting vehicles in weeks when there is clear demand elsewhere is sheer chaos.

And the obvious factor were that incentives from the wealthy ended in Q4 (and Q1 is typically soft). Anyone who cared about (and could use) a write-off did so in 2018, including me on the 3. These are your S and X customers and so hi-end sales took a hit in Q1. Hey, good time to re-tool and take the big hit in Q1 on everything else as well.

Somehow we got to 6,000/mo+ (per Bloomberg) from efficiency improvements out of the line. Did you think they could have made more? Then they came out with the Raven to keep pushing the envelope on range and quality. Meanwhile, resources are under attack regarding service and support, so hiring was/is likely all over the map. Are we hearing about all the hiring? No, only cut-backs get leaked, even though thinning as we go is expected here to be nimble and quick. # of Openings are dynamic and in large numbers.

Sorry, when the capacity starts dropping for unknown reasons, then I'll believe your theory on demand. So just don't buy it, this car is amazing!

 

[UncaNed]

Might be slightly OT but...

I wonder if there might be something to this. While I was employed at Tesla, I created a significant amount of training content (mostly well received) and recently I started toying with the idea of creating Tesla related content from an owner/investors perspective in an attempt to combat the FUD. Unfortunately, this strategy is only effective if the reach is expansive enough and, since I do not partake in social media, I fear that most of the content will fail to reach a wide enough audience. That begs the question: what would crowdsourced advertising in this context look like?

This idea is great, but I'm pretty sure social media has an order of magnitude better ROI than whatever advertising you're thinking of.

 

[Krugerrand]

This is exactly like what I told my toddler just now.

But it means nothing to your toddler IF he/she knows you won’t follow through. Hollow threats are, well, hollow. That’s why when I tell a child to sit down and be quiet or consequences, they actually sit down and close their mouths. I’m all about following through and they know it. Apparently adults also pick up on that. And dogs. Cats, not so much because they really just don’t give a crap.

 

[Artful Dodger]

Paying for advertising would negatively impact the bottom line which would negatively impact the stock price, with no guarantee that they would suddenly get enough positive articles to counteract the FUD. Tesla cant outspend the established industries rallied against them.

True that. When the time comes, Tesla needs to pick one media outlet and play them against the others. Can't be CBS (60 Minutes *sugar* show), can't be NY Times / WSJ / Bloomberg et.al since they are already in the deep pockets of the forces of darkness...

Who's left Tesla could support and trust? Start their own network is Elon's style, but that sounds like a lot of moola...

Ideas? The idea is to make the media drool over the revenue they see Tesla paying to a single (honest) outlet, and to curb themselves to attract some of that money.

Maybe the print/tv media just dies off on their own in the coming decades? Elon's already well positioned for the next generation of Tesla owners/TN subscribers.

Cheers!

 

[UnknownSoldier]

What's the current over/under on Elon meeting his 90k deliveries goal right now?

 

[Chartered321]

I had a nice conversation tonight with a Uber driver. As the majority of UberX ones he was driving a Toyota Prius for economy reasons. Late twenties, smart, playing cool music, good driving skills, I asked some questions about the Uber moltiplicator and the last passengers trend. Finally I came up with the question: what would it be your dream car for this job. He answered a Tesla. I kind of knew the answer but then he specified a model X. I thought more of a model 3. Basically he wasn't aware of the availability and existence in UK and he was expressing his doubts of the reliability of the car, because on the media you only hear bad things. So long story short this guy is waiting for some Model 3 owner to tell him his experience. As he doesn't really trust the media anymore. Smart people don't trust the media anymore. It's all about the word of mouth.

 

[EVNow]

But it means nothing to your toddler IF he/she knows you won’t follow through. Hollow threats are, well, hollow. That’s why when I tell a child to sit down and be quiet or consequences, they actually sit down and close their mouths. I’m all about following through and they know it. Apparently adults also pick up on that. And dogs. Cats, not so much because they really just don’t give a crap.

Incredibly, that actually results in them stopping the tantrum.

The point was, it was a threat - just like Musk's was a threat. A silly one, that cost us 15% in SP.

 

[UncaNed]

Few days back @jhm made a very useful post about how web ads work in the modern world. I think everyone should read this - with an open mind.

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

Ha, ha. Did you know I used to work in quantitative marketing? I actually have a very favorable of view of market research, brand marketing, CRM and smart media buys. My area of focus was CRM and direct response marketing.

Go Google, "Disney vacation." Visit the website. Now watch what ads follow you as you move about on the internet. You will see little spots for Disney vacations for months. Disney pays for these ads because they there is a high probability that you are in the market for a vacation and have an interest in Disney. So it is super cost effective to try to keep Disney vacations at the top of your mind. We are talking about pennies of online ad spend to reel in a vacation booking worth several thousands of revenue dollars to Disney.

Now Google, "Tesla Model S." Visit the site. How many Tesla Model S ads follow you the rest of the day? How many ads for other cars follow you around the internet? If Tesla is buying your personal ad space, every competitor is buying it at a lower cost, and Tesla runs the risk that you will forget about your little Model S fantasy and fill your mind with some other noise.

If Tesla really wants to be an online only marketer of cars, they really need to step up their online marketing game. Following up on web searches is really basic Internet Marketing 101. The cool thing is that it can be highly targeted to persons "in-market" and the intensity of the media buy can be dialed up and down depending on net order rates without sending huge messages to investors. Disney does an awesome job keeping their resorts and them parks packed at all times through a lot of direct marketing touches. It's a lot more discrete than Tesla announcing a price cut to cars one day, only to bump it back up a month later.​

Wow! I Google Tesla things and wonder why these obsolete ICE auto ads bother to follow me around with their irrelevant ads, and wonder which marketing company is peeing away their client's ad money. I never thought about it from your perspective.

I like to comment on Facebook ICE ads asking the range between charges, then expressing concern about ICE car obsolescence just to have a little fun with them though.

 

[Krugerrand]

What's the current over/under on Elon meeting his 90k deliveries goal right now?

Does it matter? If yes. Why? If no...

 

[Krugerrand]

Incredibly, that actually results in them stopping the tantrum.

The point was, it was a threat - just like Musk's was a threat. A silly one, that cost us 15% in SP.

As I said, though, the threat doesn’t work if the other party knows you won’t follow through.

Eventually the toddler will get brave and test you. If you aren’t going to keep your end of the deal, you’re screwed from that moment forward until you can prove you’ll consistently follow through on your threats. That’s how it works.

However, on the rare occasion an individual simply will be willing to take the consequences. There’s not a thing you can do about that.