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

[Fact Checking]

Some nice pre-market action starting at 7:00am EST, on even higher volume than earlier.

It coincided with improvement in futures, so I'm wondering whether it's due to macro news that is particularly good for $TSLA.

 

[mongo]

Q: How do you make a 10% price increase look like a good deal?*
A: Start with a 33% increase...

*(Supercharging was still a good deal, this is in the JCPenny sense of the term)

 

[Reciprocity]

It's dangerous. If fewer people place reservations (after seeing how little having a reservation affected your place in line in many cases with the Model 3), then it'll look like there's not as much demand for Model Y as with Model 3, which could spook the markets.

Model 3 reservations were also useful as a source of cash (even though it came with a corresponding debt obligation) to help fund the scaleup. But Model 3 is turning into a cash cow now, so it's not as critical. Still, that said, Tesla can certainly use every dollar they can get, so...

Tesla could easily just limit the number of reservations to the first 100k which would be very useful for those who want an early delivery while also stating that you wont need done beyond that due to the Snow curve ramp. 100k would be WW limit so distributed around the world means less then half would be US. They could also refine this a bit with set numbers for each region.

 

[dhrivnak]

That avoided the question, so I'll repeat it: "Are you happy about the fact that this means slowing down the expansion of the Supercharger network?"

(And to respond to your post: A) even with the 33% price hike it's similar to prices for DC charging from other networks, and B) why a price hike would have anything to do with "lock-in" is beyond me; Tesla is moving away from its own connectors and toward CCS, which is literally the opposite of lock-in.)

I respectfully disagree as Tesla SuperCharging is a key differentiator and pricing it competitively is a plus.

 

[dc_h]

Tesla doesn't pay for destination charger electricity, that's paid by the destination, mostly hotels. Tesla gives the equipment and I believe the install as well.

I understood that. It’s why it won’t stay free as EV gets more popular. Tesla can stepminto the breach and help offset the cost and even recoup costs with local charging stations.

 

[Reciprocity]

All the above are relevant, and reducing labor costs per unit is probably where the most significant
Impact is to be had, explaining the recent layoffs.

The autonomous driving unit hardware included in all cars , Irrespective or whether it’s paid for,
Might be dropped. Any thoughts ?
At least in the cheapest car version.

It's silly for make reasons. The main one is not the value of the data, which is very valuable or that manufacturing is cheaper when making 1M vs 500k. The best reason to include the hardware is that every single car will eventually have FSD enabled. If not by the first owner, then be the second, third or by Tesla to move a cpo. Fleet buyers might also sweep up used model 3s as autonomous taxis. Think of the hardware as a $10,000 piggy bank. Some piggy Banks will only have $5k in them, some will have no money in them. But most will have between $5k - 10k in them as EAP is required for FSD.

What about cheaper wheels? I made a joke about not including the screen and instead a place to doc your phone and just run the Tesla app for all the features. That was only a joke though.

 

[gora321]

Tesla's home state grabs almost half of Model 3 registrations
Plenty space to grow in the US.

 

[aubreymcfato]

New video by Tesla on Youtube

 

[Dan Detweiler]

I respectfully disagree as Tesla SuperCharging is a key differentiator and pricing it competitively is a plus.

I'm sorry, you kind of lost me here. Are you saying that you feel the Tesla Supercharger network does not set Tesla apart from other EVs?

Dan

 

[Dan Detweiler]

Tesla's home state grabs almost half of Model 3 registrations
Plenty space to grow in the US.

Hey, we made the list!!!
Go Georgia!

Dan

 

[CorneliusXX]

Some will say this isn’t a big deal but it says a lot about the organisational maturity (or lack of it) at Tesla.

The company is transitioning from being a niche early adopter consumer product provider to a mass market one (with sights set on being perhaps the market’s biggest). It also needs to ensure it’s building a business model that remains sustainable through the economic cycle.

I just cannot get my head around the 180 degree pricing decisions they’ve made recently based upon a few twitter accounts and some opiniated geek with a blog. Normal people who buy cars don’t do twitter and they certainly don’t read EV blogs.

You can’t keep undermining the marketing department with these sudden embarrassing reversals without fatally compromising its ability to function. If the original decision making is that poor and they had missed a major impact on demand from their pricing, replace the key people. It just comes across as ameteur hour right now.

Petrol prices change by the hour. It's been a luxury to have fixed supercharger prices to this point.

 

[Todd Burch]

Bought 420 shares this morning. Not kidding.

 

[JRP3]

I have a different take on the SC price change. Tesla claimed that after the price hike it would still be cheaper than gas, when shown that wasn't the case they adjusted. What's the problem? Seems like the right correction tho make.

 

[gora321]

James Stephenson on Twitter

 

[gora321]

Don't Bet Against Elon on Twitter

 

[AlexS]

James Stephenson on Twitter

Q1 deliveries seems too high, I can't believe it is possible to deliver that many cars in Q1. Shipping takes time and some cars will be on the ships.

 

[Reciprocity]

Thanks for your estimates. I can't find a fault with them. But then again, don't listen to me on that topic.

A few considerations why / why not to release the SR / non-PUP model today: Bob Lutz (and really the whole car industry) have taunted Tesla that the Model 3 at 35k is a money losing proposition. (And they are right since THEY can't produce a car at that price point profitably. See Bolt, see VW statements on the I.D. etc.).

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)

If we believe that Tesla is a 100% mission driven company the decision between 1) and 2) lies in the time it takes to get SR/non-PUP ready for the market:

Option 1) will make customers happy but will convince the rest of the car industry that EVs are bad for the wallet and will not make them accelerate their EV projects. In fact, it will lead to a lot of "I told you so" from Bob & Co. Yet this would still be a better option than not releasing the SR at all since it would put competitive pressure on legacy car makers who might be forced to develop their own "loss leader EVs"

Option 2) is frustrating to early reservation holders. But really, that damage is already done; Once released would send a massive, massive shockwave through the industry (if it happens this year). Today Tesla is profitable. Lots of naysayers say it is either fraud or a one-time fluke. If Tesla posts even one USD of GAAP profit per quarter from here on out and get even the tiniest of profits the quarter after they start selling the 35k SR; every legacy car maker would be under immense pressure to accelerate their own plans. This would not be optional, this would be simply a matter of survival. Which is in line with the Tesla mission statement.

I believe that Wall St. would rather see hyper-growth even if Tesla makes losses and would not mind capital raises etc. I think the ones that could impact on advancing sustainable transport (i.e. other car companies) would be more moved by massive margins, profits and a very affordable $35k car that's eating their lunch and forcing them to sell existing cars at diminishing margins. (also see the definition of "Peak ICE as the moment when no profits can be made in the sale of ICE cars" by @jhm and @neroden in the Shorting Oil thread)

Your thinking about this wrong. The model 3 requires only one physical thing to be released. The new automated grohmann lines, which should be running by the end of Q1. The other reason it won't be released then has nothing to do with profitably of the car itself. It has to do with the demand for the non-SR. Meaning as long as there is enough demand for MR+, you wont see an SR. As soon as demand starts to weaken below 6-7k/w WW. Then you will instantly see the SR. The grohmann system was running in Europe before being shipped so I'm sure they made packs for validation so it's just a matter of being able to build the packs as cheap as possible. 3x faster 3x lighter and 3x cheaper is roughly what the quote was from Elon.

Demand will drive SR availability. SR ramp will trigger a quick ramp to 8k/w and beyond as they fulfill more orders. It's a chicken an egg situation. You need model 3 SR to ramp past 7k and you need savings from ramp to make SR profitable. So those things should happen together over the shortest time possible. Now there will also be capex to go from somewhere around 7k up to 10k. They probably know exactly what they need to do now given last year's 9k S3X week. They were probably stressing the system to do where the limit was of the existing configuration of the lines, Which is probably 7k/w, tough they might have found a couple of fixes to get to 8k with no significant capex investment.

The question I have is how much demand for MR+ is there in China and Europe, that will dictate model 3 SRs arrival. Once it arrives the ramp should happen fairly quickly because they have known for years that they would need to expand the lines to support 10k, they just didn't know exactly what parts would require duplication. My guess is that there are spaces left in the line to duplicate slower processes so the line does not have to be reconfigured in most cases, just a new station added to double capacity of that part of the line. Clearly they could not foresee every need so some reconfiguration could be required.

Time will tell but to me Elon is not being 100% honest about the SR. For one, the ASP should be North of $40k so there is no reason to calculate the cost based on $35k. Most will buy one if the major upgrades, AWD, EAP, PUP. This will bring the ASP North of $40k. Assume a ratio of 4:1 LRAWD/P to SR for balancing. If Tesla can maintain that ratio, it will be easy to get 20%+ GM.

I think Elon is sandbagging the SR to sell as many MR+.

 

[dhrivnak]

I'm sorry, you kind of lost me here. Are you saying that you feel the Tesla Supercharger network does not set Tesla apart from other EVs?

Dan

Yes definitely, but if they charge more than the alternatives that differentiation is severely compromised in my opinion.

 

[Pezpunk]

Virginia in 8th place, not too shabby, considering we offer zero state incentives, and the referral program is illegal in our state.

 

[Dan Detweiler]

Yes definitely, but if they charge more than the alternatives that differentiation is severely compromised in my opinion.

What are they charging more than? Certainly not gas.

Dan