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

[Artful Dodger]

‘Unwinding the wave’ is not happening like I expected. Instead of an extra ship in the last month of the quarter, it seems all ships for this quarter have already left San Francisco.The last ship heading towards EU left 3 days earlier than in Q1.
I wonder why in Q2 the first EU ship only departed the 17th of the first month? At a production rate of 1000/day, Tesla only needs 4 days of production to fill the first ship. Even if Tesla keeps producing USA cars untill 30/6, we should see a ship leave for Europe at the latest at the end of the first week of Q3, if not, not a lot of wave unwinding will happen.
BTW: The Benelux FB groups are currently flooded with pictures of proud people taking delivery of their Model 3.

It's the US Fed Tax Credit expiry at end of June. This $3,750 benefit is perfectly sized to lure middle class income buyers into an SR+. Hence the 33K June delivery target for the U.S. (2X Employee bonus for 36K deliveries).

We're looking at on the order of 66K US deliveries in Q2. If the EU can do 24K (6 shiploads), that's already 90K for the quarter, and every delivery in China adds to a record-breaking quarter.

Cheers!

 

[mongo]

It's the US Fed Tax Credit expiry at end of June. This $3,750 benefit is perfectly sized to lure middle class income buyers into an SR+. Hence the 33K June delivery target for the U.S. (2X Employee bonus for 36K deliveries).

We're looking at on the order of 66K US deliveries in Q2. If the EU can do 24K (6 shiploads), that's already 90K for the quarter, and every delivery in China adds to a record-breaking quarter.

Cheers!

Minor correction:
July 1st marks the tax credit reduction by/to $1,875. The credit does not phase out entirely until the end of the year.

 

[BioSehnsucht]

Thanks! The original version was actually much slower and people wanted it faster. I uploaded these to youtube now which has speed controls.

I don't know if you can actually find useful data to do it, but it would be interesting to see the growth of charging networks over time. Obviously one would be the Supercharger network, though I'm not sure how you would handle the rest (all public networks as one? all public separate? pure CHAdeMO nissan locations versus CCS locations?). It would be a cool visualation if you could get the data and decide what to compare it to, though.

 

[neroden]

If your point is anyone can go bankrupt, then sure - its unlikely though and even if that was possible, they'd be bailed, like GM was. VW is far more integral to the German economy than GM was to the US economy, or Penn Central for that matter.

Not even CLOSE. Penn Central was EXTREMELY important to the US economy -- so much so that at least five different federal laws were passed (nicknamed "Amtrak Act", "3R", "4R", "Northeast Rail Service Act", and "Staggers") to rescue the parts of the economy dependent on it -- in addition to major actions by the states of Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, and Maryland, as well as actions by Michigan.

If the entire German car industry went down -- not just VW but also BMW and Mercedes -- and didn't just go through bankruptcy, but threatened total closure and liquidation -- it might be comparable. But probably it would be a much smaller impact.

The German economy would be just fine if VW went bankrupt and was reorganized by its bondholders. If Deutsche Bahn threatened to discontinue operations, they'd be in serious trouble, and the Penn Central bankruptcy was the equivalent.

I just think it being thrown around casually on this forum is a bit rich given how sensitive people are to anyone mentioning the possibility of Tesla going bankrupt. Any VW fanboy could list 800 reasons why VW is nothing remotely like Penn Central, or GM for that matter.

Fair enough! VW isn't really in nearly as bad shape as either of those companies.

Yet.

 

[neroden]

Sure but then I’d question why Tesla isn’t using this same efficient method on the European carriers and those times are getting longer...

Maybe different workers loading the ships. Hmm. I don't know a lot of details about the employment structure there. Who employs the people loading the ships? Tesla? (Apparently not.) The Port? The ship owner?...

 

[Pezpunk]

You missed the important part of that quote. He said it would be limited to 10,000 per year. At that production volume and a supposed price of $200,000 after the Founder’s price of $250,000, I would argue they will have much more supply than demand.
In a way though, I guess you can technically argue that would be a limited production.

If it does everything it’s promised to do (600 mile range, 1.x 0-60, 250+mph top speed, no battery cooling issues, $200k price tag), 10k per year wont be nearly enough to satisfy demand.

 

[dqd88]

Sure but then I’d question why Tesla isn’t using this same efficient method on the European carriers and those times are getting longer...

There’s only so many cars you can load in .48 of a day, to 1 day, to 1.5 days, to 3 days, etc.

And at that we can choose to agree to disagree on this.

Are you here from the Shorty Air Force?

 

[neroden]

I hadn't really thought about this before. I wonder if Diess feels alone in trying to turn the VW ship around.

Yeah, probably!

It's like nearly the entire command structure disappeared overnight, and the only one left in the command structure was the guy running the IT department, who got a field promotion to the top, so nobody will take him seriously even though he's trying his best to make the right calls. Almost the entire internal structure of the company will be resisting any commands he makes to turn the ship around.

Yep. And this is why it's going to be so hard for VW. Most of the departments, including the Board of Directors, are resisting Diess.

I wish him the best of luck and the cunning to see the inevitable back stabbing in time to fend it off. He probably can't make all the decisions he wants to make because if he did he'd find himself either out of a job or his efforts internally sabotaged. He'll have to make lots of small changes while constantly distracting the opponents to his vision so that he can turn the boat in fits and starts, rather than simply hauling the wheel over in a hard turn. He won't be truly alone, if nothing else likely those in the EV group would back him, but he can't simply replace everyone around him with those people because he'll need them where they are, too.

Yep.

 

[Spacemanspliff]

Are you here from the Shorty Air Force?

No, I’m not. Im just not blindly bullish, if something looks strange I have a question about it.

 

[Alphacrux]

Has the consolidation started? WSJ proposes a merger between Fiat-Chysler and GM:
https://www.wsj.com/articles/bold-plan-for-detroit-make-big-three-into-big-two-11559934922

One mention of Tesla:
“And let’s face it, neither company holds a candle to Tesla Inc’s. growing dominance in electric cars. By combining forces, GM and Fiat Chrysler can take the resources it saves by combining the conventional business to finally give Elon Musk a run for his money.”

 

[Artful Dodger]

Minor correction:
July 1st marks the tax credit reduction by/to $1,875. The credit does not phase out entirely until the end of the year.

Yes that's well known, but also not my point. Most US buyers looking at a SR+ purchase likely owe enough annual Federal Income Tax to be closely or entirely offset by the $3,750 tax credit.

That's why the expiry of the $7,500 credit on Jan 1st was of no particular interest to them since they couldn't claim the full amount.

However, the looming expiry of the $3,750 tax credit directly affects them and thus motivates a purchase this month (also motivated Tesla to release the SR+ in Q1).

Perhaps @neroden can remind us what his model predicts for "pull-foward" of demand from Q3 to Q2 due to this "mini-cliff". The size of the 'US July dip'? EU offset? Thanks!

Cheers!

 

[BioSehnsucht]

You missed the important part of that quote. He said it would be limited to 10,000 per year. At that production volume and a supposed price of $200,000 after the Founder’s price of $250,000, I would argue they will have much more supply than demand.
In a way though, I guess you can technically argue that would be a limited production.

I'm not sure if his reply was meant to indicate per year, or period. (The question may have been per year, but I think his reply was something like "Well, we probably won't make more than 10,000 of them" which leaves it ambiguous both as to time frame and to scale, as if they were targeting 5k/yr that would also be covered by that statement - it at best caps production at probably 10k/yr, but it could be all the way down to 10k period)

 

[BioSehnsucht]

$251,136,000 in net profit. Stupendously unlikely. Expect the S&P 500 addition after Q1 next year.

 

[dqd88]

No, I’m not. Im just not blindly bullish, if something looks strange I have a question about it.

Ok, let's assume your analysis is correct. Ultimately we want to know how this feeds into the total deliveries. You said your projection for Q2 is 93k deliveries. How about Q3 and 4?

 

[Spacemanspliff]

Ok, let's assume your analysis is correct. Ultimately we want to know how this feeds into the total deliveries. You said your projection for Q2 is 93k deliveries. How about Q3 and 4?

I have no idea, whatever Tesla guides until insideevs, EU registration numbers, etc start coming in and I can make an educated guess.

 

[Wooloomooloo]

Not even CLOSE. Penn Central was EXTREMELY important to the US economy -- so much so that at least five different federal laws were passed (nicknamed "Amtrak Act", "3R", "4R", "Northeast Rail Service Act", and "Staggers") to rescue the parts of the economy dependent on it -- in addition to major actions by the states of Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, and Maryland, as well as actions by Michigan.

If the entire German car industry went down -- not just VW but also BMW and Mercedes -- and didn't just go through bankruptcy, but threatened total closure and liquidation -- it might be comparable. But probably it would be a much smaller impact.

The German economy would be just fine if VW went bankrupt and was reorganized by its bondholders. If Deutsche Bahn threatened to discontinue operations, they'd be in serious trouble, and the Penn Central bankruptcy was the equivalent.

Deutsche Bahn are a middling railroad company. Did you mean Deutsche Bank (my former employer!)? If so, I agree.

VW's operations contribute about 1.5% to the entire German economy - you can't tell me that wouldn't be noticed.

 

[neroden]

Yes that's well known, but also not my point. Most US buyers looking at a SR+ purchase likely owe enough annual Federal Income Tax to be closely or entirely offset by the $3,750 tax credit.

That's why the expiry of the $7,500 credit on Jan 1st was of no particular interest to them since they couldn't claim the full amount.

However, the looming expiry of the $3,750 tax credit directly affects them and thus motivates a purchase this month (also motivated Tesla to release the SR+ in Q1).

Perhaps @neroden can remind us what his model predicts for "pull-foward" of demand from Q3 to Q2 due to this "mini-cliff". The size of the 'US July dip'? EU offset? Thanks!

Cheers!

Super roughly, it predicts a really bad July in the US. The only people buying Teslas in July in the US will be people who weren't paying attention to the tax credit.
There will be a weak August in the US for Model 3 but S & X should be back to normal by then. Everything should be back to normal by September.

I think the EU and RHD deliveries could offset all of it for Q3 wince the backlog is so long, but many of those deliveries may well arrive in August.

 

[kbM3]

I'm gonna throw in a bit of optimism here. People are getting advanced summons I believe - can't confirm but 2019.20.1 had 51 downloads today on TeslaFi, must have EAP for the feature so I've read. Early beta had it in 2019.20 as well.

So let's say the talk in the conf call is a lot about FSD progress while Tesla's are cruizin' parking lots ALL OVER THE US. People will freak out... H-e-ll-o!

I would expect Enhanced Summon to perform poorly at first (like Nav on Autopilot). This will mitigate the WOW factor, and thus any big stock bump. I would then expect it to improve quickly, but the initial reaction will have dulled.

The only analogy I can think of is the frog in the boiling water analogy. All of these factors don’t quite add up to a step change and leave just enough room for doubt and FUD for the frogs (and by frogs I mean shorts) to boil

 

[neroden]

VW's operations contribute about 1.5% to the entire German economy - you can't tell me that wouldn't be noticed.

It would be noticed, sure, but it's nothing like the Penn Central bankruptcy. Threatening *liquidation and shutdown of operations* -- the potential destruction of the entire freight & passenger railroad network from DC to Chicago to Maine. That would have devastated the US economy quite spectacularly -- about a quarter of the employees of all firms in the NEC wouldn't have been able to get to work, and a substantial percentage of factories would have promptly died due to inability to ship raw materials or product. Including car companies.

 

[Etna]

Elon's twitter unusually quiet. More often than not, that precedes big news.