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

[Krugerrand]

I've never had that experience in over six years. It's always been prompt. I think once I might have waited a couple of minutes.

When you call their call display must be showing ‘Big Kahuna’.

 

[CorneliusXX]

Problem is, Tesla doesn’t know how to make money with EVs either.

They could, however spending money on growth and innovation is more important to the mission.

 

[Artful Dodger]

I vote for this. They’ve had almost a decade. How much longer do they deserve to have to drag their feet and spew their crap? Enough. Die already.

Lol, seems to me GM tried to kill their EV1 back in, what was it, 2002? That was a damn good car 20 years ago, even with SLAs. I heard there was a NiMH version near the end.

If GM dies, it's their own choice.

 

[Chunky Jr.]

no one is making money with this electrification thing, so he doesn't think they will switch

That's because they make terrible electric cars. They seem to think it's just a matter of slapping some batteries and an electric motor into the body of an existing ICE car. Then they act surprised no one wants to buy a car that costs about as much as a Tesla, but has significantly less range and performance. And on top of that, the software and overall user experience is terrible compared to Tesla. No wonder they hope EVs, and Tesla in particular, to go away.

And this doesn't even touch on how EVs throw a giant monkey wrench into their dealership machine. That's another can of worm they don't want to deal with.

 

[Krugerrand]

I agree phones should always work. These communication and customer services responses should be the easiest for Tesla to fix. I don’t get it either.

Ah, but it involves people. That’s why it’s not a simple fix. People are complicated.

 

[MartinAustin]

This difference will only get more astronomical with the upcoming spaceship.

No pun intended LOL

When I was watching the autoline show yesterday I started to feel the same way about Tesla.

I think Elon was assuming the rest of the industry would follow along after the 2010-2014 period... instead Tesla was laughed at and a concerted attempt to squash them has been underway since. I don't think Elon has any more sympathy for the legacy manufacturers. They have relied on capitalism and its evil brother, legislation, to keep momentum. They won't be able to stay afloat if people aren't buying their products... and Tesla's amazing rate of innovation and growth is starting to show. There needs to be some serious carnage to slow down ICE production and FF consumption. The one thing we can definitely say is that Tesla has done it fair-and-square: by staying away from sleazy legislation and government help, and simply selling products that people want.

One other point... some were saying that Model 3 demand might slow down once the 400,000 reservations were supplied; I believe the opposite to be true. Don't forget that the 400,000 reservations were from people who don't mind fronting $1,000 without seeing the car. There are a lot of other people interested who want to wait until they see it on their local streets, and/or can test drive it. I would say at least a 2x number of cars can be sold to this latter group. THEN there is the word-of-mouth from owners who get hold of the car in the newest markets like RHD. These will translate into even more orders. No demand problem.

I believe there will also be a price cut in the base Model 3, first back to a $35,000 base price, and eventually even further downwards. Tesla won't stop applying pressure.

 

[Chunky Jr.]

But I know if they see that Tesla isn't profitable, the ICEmakers won't even try to switch

I think we'll have an entirely different auto industry, with lots of upstarts, just like the giant mainframe makers of the 60s and 70s are not making the computers you use every day.

 

[EVMeister]

How would YOU know?

I wasn't claiming "losing" nearly a billion dollars in a quarter was rough. Nor was I claiming it wasn't. Point being made was you didn't lose that money and have no idea how Tesla feels. Because you know... The money didn't just evaporate into the ether. They're growing massively and massive growth requires investment. And I reckon that level of growth and seeing the fruits of their labour feels pretty damn good for Tesla actually. It's really quite simple.

 

[Green Pete]

I agree. I believe Elon is just waiting for that specific European country to get their poo together and take the plunge.

Just as he waited out China to get the arrangement he wanted (which btw is equally beneficial to ALL parties, not one sided), he’s waiting for Europe.

The China deal still worries me. China already makes most of the worlds EVs. What they might want is access to autonomous tech. They chased Uber out of china quite successfully. I still don't understand why the Chinese let Tesla have a WOFE. Something about this still makes me nervous.

 

[Chunky Jr.]

Once Tesla shows OEM that EVs are profitable

Maybe I'm just naive, but does it really matter if Tesla is profitable as long as they have positive cash flow? I'm not an accountant, but from what I understand there are a lot of accounting details (eg depreciation and other write offs) that impact profit but do not impact cash flow. To me, the important thing is that their cash balance keeps increasing so they don't have to raise more money and can fuel innovation and growth.

 

[Krugerrand]

Lol, seems to me GM tried to kill their EV1 back in, what was it, 2002? That was a damn good car 20 years ago, even with SLAs. I heard there was a NiMH version near the end.

If GM dies, it's their own choice.

Yes, of course GM being the exception as having been dragging their feet even longer.

This is all making for a really fascinating historical chapter in human existence. Exciting times!

 

[Chunky Jr.]

I don’t know if we will ever, ever see a true Model 3 competitor. No one can build it at Tesla’s price point.

I think the only model 3 competitor will be a company that licenses the Model 3 "skateboard" (along with software for managing batteries/charging) and puts their own body and software on top of it. They can differentiate with the interior, user interface, etc. Basically the Model 3 skateboard becomes a reference design like a PC clone. I don't actually see this happening.

Someone could create their own from scratch, but it will take a while, and that's what we'll see. People, and the industry, are starting to realize that what Tesla has done is a lot harder than it looks.

 

[mongo]

I wasn't claiming "losing" nearly a billion dollars in a quarter was rough. Nor was I claiming it wasn't. Point being made was you didn't lose that money and have no idea how Tesla feels. Because you know... The money didn't just evaporate into the ether.

Only a blind and willfully ignorant fool would fail to see that they are growing massively. And massive growth requires investment. And I reckon that level of growth and seeing the fruits of their labour feels pretty damn good for Tesla actually. It's really quite simple.

It's not even accurate, the money wasn't lost. Building a ton of cars in Q1 that were delivered in Q2 is not losing money. Paying off a $900 million loan is not losing money.
Adjustments to sales price may be a loss, or it may just be less profit.

 

[Doggydogworld]

It was several/many thousands of dollars per S/X sold this quarter if it's all attributable to them, depending on how you break it down into buyback guarantees vs. written-down inventory.

Yes, it's more than I thought. First paragraph of earnings letter says 121m for RVG + inventory writedown. RVG was 92m which leaves 29m of write-down. That's almost 2k per S/X. I assume it's unevenly distributed, e.g. 17% of inventory written down an average of 10k each.

You write inventory down to "estimated realizable value", not "artificially low value which will allow us to report 25% gross margin in subsequent quarter". The latter constitutes fraud. Of course the word "estimated" means it will never be exact, but auditors don't look kindly on large one-time "mistakes" that boost subsequent period profits.

When you say ASP, are you talking about your model for ASP, including the M3 price increases?

​

Yes, actual data plus estimates to fill in the gaps. I assume emissions credits drop back to ~2k/car from 3.3k in Q1. If they recognize a huge chunk of prior period deferred EAP/FSD revenue it will drive ASP (and margins) up, however. I didn't account for that.

Possible, although the SR/SR+ number for Q2 sounds high. There seem to have been very few delivered in Europe, and one presumes China is similar.

I assumed 60% US, 90% Canada, 0% Norway, 12% rest of Europe and simply guessed at 15% in China. We'll never know for sure. ​

80% take rate on EAP? You have to be joking.

​

I was hearing anecdotes from people at Tesla stores of something like 25-30% EAP take rates on SR+.

Was EAP ever an option on SR+?

Take rate for 3k AP on a 37k SR+ should be similar to 5k EAP on a 50k AWD. If SR+ buyers were really that price sensitive and anti-AP we'd have seen a huge shift to the 35.4k SR after they started force-bundling AP in the 39.9k SR+. It didn't happen.

Even if $3k AP take rate was only 50% on SR+, though, the SR+ "price increase" was only 1400. On the other hand, AWD was 51k in January and 49.9k in February. Add 3-4k to that for 60-80% EAP take rate. That's ~54k ASP (ex-color/wheel/etc.) vs. 49.9k today. At least half of US AWD and essentially all Euro-AWDs sold at those higher prices in Q1. That more than offsets any SR+ price increase.

 

[Krugerrand]

No pun intended LOL


I think Elon was assuming the rest of the industry would follow along after the 2010-2014 period... instead Tesla was laughed at and a concerted attempt to squash them has been underway since. I don't think Elon has any more sympathy for the legacy manufacturers. They have relied on capitalism and its evil brother, legislation, to keep momentum. They won't be able to stay afloat if people aren't buying their products... and Tesla's amazing rate of innovation and growth is starting to show. There needs to be some serious carnage to slow down ICE production and FF consumption. The one thing we can definitely say is that Tesla has done it fair-and-square: by staying away from sleazy legislation and government help, and simply selling products that people want.

One other point... some were saying that Model 3 demand might slow down once the 400,000 reservations were supplied; I believe the opposite to be true. Don't forget that the 400,000 reservations were from people who don't mind fronting $1,000 without seeing the car. There are a lot of other people interested who want to wait until they see it on their local streets, and/or can test drive it. I would say at least a 2x number of cars can be sold to this latter group. THEN there is the word-of-mouth from owners who get hold of the car in the newest markets like RHD. These will translate into even more orders. No demand problem.

I believe there will also be a price cut in the base Model 3, first back to a $35,000 base price, and eventually even further downwards. Tesla won't stop applying pressure.

The tide turned at that private talk with Elon and owners at one of the Tesla stores in Europe back in the day (2013/2014).

He clearly expressed his disappointment that the OEMs were not following Tesla’s lead. He basically said, if they won’t follow then we’ll kill them.

 

[Sudre]

We have a Tesla and a Leaf. Tesla service has been first rate. Prompt, and no issues. Leaf service is another matter. Even though an appointed is made, the Leaf technician is typically either not there (didn't work the day of the appointment and no one said anything) or just quit. No difference if another Leaf dealer is tried (have tried several).

My service has been first rate too, except once. The bad news is that's not how the American political process works. Tesla has people volunteer to take off work and come in to laminate over how immensely happy they are. Then the National Dealer Association will pay the politician money to their campaign and the politicians will decide that Tesla should use a franchised dealer or not sell cars in the state. Since Tesla is the one in question they can not bring in customers to complain about franchise dealers and even if they did that testimony would be ignored because the franchise dealers are not the method in question. This is slowly starting to change now that larger numbers of people are happy with Tesla.

Currently in some states the above is how things have gone and why Tesla's can not have stores in certain states and no service centers in others. With the number of people having difficulty getting their cars services through Tesla, this will only lead to a worse situation. Now the above description will include peoples horror stories about Tesla service. If each side gets the same amount of time for testimony and each side presents the same number of happy versus unhappy customer stories then the National Dealer Association will not even have to pay off politicians. Other states will start to turn the corner away from Tesla too.

SO... while I completely agree with your view Tesla has to get the service/repair delays worked out because of how the "system" works in the US. I guess Tesla could just setup a really large budget to start paying off.... I mean start donating to politicians... I mean campaigns. I'd rather have that money go to service improvements.

 

[canoemore]

I agree phones should always work. These communication and customer services responses should be the easiest for Tesla to fix. I don’t get it either.

Maybe they're just stalling until Neuralink Personalized Customer Service (™) comes online and obviates the need for humans

 

[EVNow]

OT :

Or India's horrific caste system....

Which most of my relatives even now refuse to recognize as horrific .. that reckoning is yet to happen. Just as many people here refuse to believe there is systematic racism.

 

[pyromatter]

 

[canoemore]

I think Elon was assuming the rest of the industry would follow along after the 2010-2014 period... instead Tesla was laughed at and a concerted attempt to squash them has been underway since. I don't think Elon has any more sympathy for the legacy manufacturers. They have relied on capitalism and its evil brother, legislation, to keep momentum.

Man, I can't imagine how cynical I would be in his shoes after this whole experience. Just how soul-crushing and demoralizing it must be to show folks the way and not only have no one follow you, but to endure such concentrated ridicule and hatred. ooof. More power to him - he certainly keeps his chin up.