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

[neroden]

If that was the case, it doesn’t make sense to cut the price of the remaining model.

Or does it? Suppose total SR + LR order rate is higher than the production rate, but LR order rate alone is lower than the production rate. You can figure this out, right?...

As a history note, once Model T production started really ramping up, Henry Ford cut the price every year while expanding production (and cutting production costs). We all know what playbook Tesla is working from.

 

[Singer3000]

I've only seen a brief mention here, but the UK announced a new huge BIK tax incentive for EVs last week which I think has a good chance to take UK to Tesla's number 3 market going forward.

I also did not see any mention here that the UK govt announced this week it will guarantee £0.5bn of loans to Jag-LR for the production of EVs in the UK.

One further bit of title tattle that might positively drive the UK regulatory environment for Tesla. When Boris Johnson becomes PM next week (as looks almost certain), he is rumoured to be moving into Downing St with his 31 year old girlfriend, who it is said has become a key advisor to him concerning his personal political branding. Her biggest area of policy interest to date has been environmentalism.

Johnson this week affirmed his support for the UK economy to be carbon neutral by 2050 at a leadership hustings event, the voting members of which are likely to include an outsized percentage of climate change deniers. I’m not saying it’s the bravest statement by a politician ever but he could have dodged the question (like he does so often) and did not. This bodes well.

There’s also considerable outrage of the UK public that they were incentivised by the UK state to buy cheat device diesels, which now have fast deteriorating residual values. I’d expect a diesel-to-EV scrappage before too long, as this cuts across not just climate change policy but also economic hardship and air quality policy, about which there is increasing public focus and consensus (ironically enough thanks to the Dieselgate headlines).

Note to Elon, if the UK manages to Brexit with a zero tariffs deal with the EU, it’s not to late to build GF4 in the UK.

 

[LN1_Casey]

Ouch. Talk about making a comment at the worst possible time. How long after this post did the price reduction get announced......15 minutes?

To be fair though, I still don't think they NEED to drop the prices. They just did, because #Tesla.

 

[kengchang]

Price drops also put pressure on rest of the competitors as Tesla gobbles up the market with production increase

 

[Mike Smith]

The unknown variable in all this is the magnitude of Jerome's production increase.

 

[Carl Raymond]

20% of 100k is $20k. 20% of 50k is $10k.

Cannibalization halves the operating profit.

Only if there are x buyers. If the market is y dollars, you will sell that market two model 3s, instead of one model S. You make the same $20k profit. You have twice as many robotaxis awaiting the big awakening.

 

[neroden]

I also did not see any mention here that the UK govt announced this week it will guarantee £0.5bn of loans to Jag-LR for the production of EVs in the UK.

One further bit of title tattle that might positively drive the UK regulatory environment for Tesla. When Boris Johnson becomes PM next week (as looks almost certain), he is rumoured to be moving into Downing St with his 31 year old girlfriend, who it is said has become a key advisor to him concerning his personal political branding. Her biggest area of policy interest to date has been environmentalism.

Johnson this week affirmed his support for the UK economy to be carbon neutral by 2050 at a leadership hustings event, the voting members of which are likely to include an outsized percentage of climate change deniers. I’m not saying it’s the bravest statement by a politician ever but he could have dodged the question (like he does so often) and did not. This bodes well.

We should take this to the market politics thread, but that's fascinating.

 

[neroden]

Note to Elon, if the UK manages to Brexit with a zero tariffs deal with the EU, it’s not to late to build GF4 in the UK.

No chance. Don't want to be on the wrong side of the Chunnel for logistics.

 

[neroden]

The unknown variable in all this is the magnitude of Jerome's production increase.

Yeah. Tesla's really done well at clamping down on leaks, unfortunately for those of us who are analyzing the company!

 

[schonelucht]

Or does it? Suppose total SR + LR order rate is higher than the production rate, but LR order rate alone is lower than the production rate. You can figure this out, right?...

Yes, I can figure out that in that case it’s more optimal to just increase the price of your SR offering (and possibly LR).

For me the more likely scenario is a repeat of Q1. Back then, the reason to get the SR out of the lineup was the reconfiguration for Raven. This time around it’s the reconfiguration with an eye towards Model Y ‘leaked’ in an email to employees.

 

[Tslynk67]

Just Long Range and Performance X (I assume S too) on Belgian site, with Ludicrous now standard for P.

Refresh coming?

Edit - there are zero inventory S & X on tesla.com in Belgium, there is one 2nd hand MX and pre-facelift Model S. There are 11 M3 in inventory.

Looks about right given the almost empty showroom I saw yesterday.

 

[StealthP3D]

As a history note, once Model T production started really ramping up, Henry Ford cut the price every year while expanding production (and cutting production costs). We all know what playbook Tesla is working from.

The Revero playbook? Revero who?

Very good points. And it's worth adding that as Model T production increased and prices dropped, Ford continued to improve the product. The Model T got periodic HP increases, became easier to service and become more reliable. Ford also increased the wages of production line workers to the point they could actually afford the product they were producing, double the prevailing wages of the day for a factory worker. People thought he was crazy for lowering the prices and increasing wages but his empire continued to grow and the profits were mind-boggling. The primary reason someone bought something other than a Ford was that Ford was selling them as fast as they could make them. Even as fast as they increased production capacity, they were still production limited, not demand limited. That's what his 19 years of price cutting did. Made the automobile affordable to the masses and that was the cause of his success.

And you could order it in any color you wanted, as long as it was black.

 

[Carl Raymond]

The unknown variable in all this is the magnitude of Jerome's production increase.

I recall listening in on an earnings call where Musk was asked if he would increase model 3 production if it meant taking a margin hit, but was profit neutral. He said yes.

Makes sense. Max the growth, continue the focus on efficiency. Even if you don’t see profit go up in the following quarter, you soon do in the quarter after that and every subsequent quarter. I think the term is “positioning”.

 

[LN1_Casey]

I also did not see any mention here that the UK govt announced this week it will guarantee £0.5bn of loans to Jag-LR for the production of EVs in the UK.

One further bit of title tattle that might positively drive the UK regulatory environment for Tesla. When Boris Johnson becomes PM next week (as looks almost certain), he is rumoured to be moving into Downing St with his 31 year old girlfriend, who it is said has become a key advisor to him concerning his personal political branding. Her biggest area of policy interest to date has been environmentalism.

Johnson this week affirmed his support for the UK economy to be carbon neutral by 2050 at a leadership hustings event, the voting members of which are likely to include an outsized percentage of climate change deniers. I’m not saying it’s the bravest statement by a politician ever but he could have dodged the question (like he does so often) and did not. This bodes well.

There’s also considerable outrage of the UK public that they were incentivised by the UK state to buy cheat device diesels, which now have fast deteriorating residual values. I’d expect a diesel-to-EV scrappage before too long, as this cuts across not just climate change policy but also economic hardship and air quality policy, about which there is increasing public focus and consensus (ironically enough thanks to the Dieselgate headlines).

Note to Elon, if the UK manages to Brexit with a zero tariffs deal with the EU, it’s not to late to build GF4 in the UK.

Off Topic: Ick, Boris Johnson? I thought you Brits would have learned from America's mistakes.

On Topic: Even besides that, I think the logistics of having the first/only GF in Europe to be in the UK a poor idea. They'd be able to get a lot of vehicles to the UK residents, but they're a RHD when a majority of the world is a LHD (as a RHD producer it also doesn't make much sense, because Australia and Japan, other RHD locations, are quite the distance from there, and it doesn't make logistical sense). Not only that, but they'd have to either boat it or Chunnel the vehicles from the Isle's to the rest of Europe, so shipping would still be an issue.

Further, I don't know if the UK would be able to get zero tariffs into the EU. If the UK ever actually goes through with Britex.

 

[Mike Smith]

The 2025 bonds have rallied from 81 up to 89 in the last 45 days, now yielding 7.41%

 

[Tslynk67]

Regarding price reductions ... Makes no sense to cite lack of demand as the driver, given that Tesla just announced their order book is increasing and that some major territories don't even have access to all models as of yet. My take is that Testa have reduced their operating and manufacturing costs such that they can pass these savings on to the customer - this has always been the modus operandi. They're not in business to generate huge profits, they're in business to remove dependence on fossil-fuels - the more cars they can sell to a wider demographic, the better.

It is also likely linked, as other have said, to the increase in production as hinted by the parts supplier order increase and Jerome's email. I think the Q2ER will be very interesting indeed.

For S/X, I suspect with the previous price reductions, the LR and P models became too compelling and osbourned the SR, furthermore, some looking at the SR perhaps went for an P3D instead at a lower price, so maybe the demand fo this variant wasn't there.

We also heard about some major improvements in S/X production, so perhaps this has decreased the manufacturing costs to allow them to cut prices and keep margins.

I see it as incredibly bullish.

 

[RobStark]

GF4 GF5 GF6 GF7 will not be built on measly profits or small quarterly losses that are moral victories.

Loans need to be paid back.

 

[Singer3000]

Off Topic: Ick, Boris Johnson? I thought you Brits would have learned from America's mistakes.

On Topic: Even besides that, I think the logistics of having the first/only GF in Europe to be in the UK a poor idea. They'd be able to get a lot of vehicles to the UK residents, but they're a RHD when a majority of the world is a LHD (as a RHD producer it also doesn't make much sense, because Australia and Japan, other RHD locations, are quite the distance from there, and it doesn't make logistical sense). Not only that, but they'd have to either boat it or Chunnel the vehicles from the Isle's to the rest of Europe, so shipping would still be an issue.

Further, I don't know if the UK would be able to get zero tariffs into the EU. If the UK ever actually goes through with Britex.

I find this an odd comment. In recent years, a significant proportion of UK manufacturing has catered for exports to the LHD European market. Just as a majority of the UK's RHD vehicles have been produced in LHD Europe.

OT for this thread: Boris and Trump both have blonde hair. That's about as far their similarities go. Trump has waged war with the press, Boris is a journalist, Trump is anti immigrant, Boris is strongly pro uncapped skilled immigration and amnesties for illegal immigrants, Trump is protectionist, Boris is an ardent free trader, Trump likes to play at culture wars, Boris was one of the first British conservatives to promote gay-marriage, Trump claimed to be minutes from bombing Iran, Boris has long implored him to return to diplomacy etc... Anyhoo...TSLA. Future demand in the UK should be excellent.

 

[LN1_Casey]

GF4 GF5 GF6 GF7 will not be built on measly profits or small quarterly losses that are moral victories.

Loans need to be paid back.

GF4 will be built off the back of GF3's success.

 

[mrdoubleb]

Not to get way off into speculation area on GF4, but the tentatively discussed "smaller and cheaper than Model 3" (BMW 1 sized hatchback?) Tesla would be a good candidate for GF4 production, along with SR+ 3 and Y for the local markets.