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

[StarFoxisDown!]

It definitely affects sales. I know of at least 2 or 3 people who did not buy because of FUD. Multiply this effect out, and it's a lot of people.

Put another way: if Tesla had 2x the demand across all price points, they would have more aggressive expansion plans.

They would raise more money at lower cost, and build out faster. Not saying they're not doing pretty darn well now, but a tailwind would push production higher.

Ok....this is physically impossible for Tesla to do. They do not control cell manufacturing, Panasonic does. They could not, no matter how much money they had, increase production more than they did in Q4, Q1, and Q2. They have acknowledged that they are going to have to take on cell manufacturing themselves...….but they didn't realize there would be an issues until probably Q4 2018. Even if they had 100 billion in the bank, they would not have been able to get cell production up and running by Q1, or even Q2.

Again, I'm sure there are people out there affected by the FUD they read. But I think the pool of potential customers limited by the price is exponentially bigger than the pool of potential customers affected by FUD. The introduction of SR+ and Q2 results and increased production in Q3 all prove this theory. People keep saying I know people and so? At my office, there were 9 people that were waiting on the SR to come out because they couldn't afford anything higher than 40k.

 

[Artful Dodger]

Not sure how much evidence you need in front of you. Panasonic has openly admitted they are lagging on cells and that it was the direct cause for why Tesla couldn't make more 3's in Q1. It was impossible for Tesla to make more Model 3's for Q1. It was impossible for Tesla to make more Model 3's for Q2. Tesla's website said you could get a SR+ in 2-3 weeks in the first few weeks of the SR+ being available. It was proven that the website estimate for delivery is wrong. This was verified from many people that ordered that said they were not going to get their 3 until weeks later.

I'll repeat....FUD has not cost Tesla any sales right now. If Tesla could have made more Model 3, they would have sold them. I think you have a crazy level of expectations of you believe that there's should be a order backlog of 285,000 Model 3's(current quarterly production rate times 3)

Yes on the 3's. But Electrik+Kim+Ben were all talking about the 'refresh' for the S/X. Kim even refused to take delivery of her free (referral award) Model X because she was holding out for the 'interior refresh'. Sean is STILL blathering on about a refresh (don't make me link the vid) even after being TOLD by Elon there is no refresh planned.

The result wasn't reduced sales; it was reduced ASP. Telsa had to discount inventory S/X to move them. Every S/X that wasn't sold (due to uncertainty on behalf of a potential customer) when the Raven announcement dropped from Telsa is a haircut for investors.

FUD isn't just on CNBC; its on the web and YouTube too, mostly by privateers that are click or view seeking show boats. Not always helpful. Just look at their sensationalized headlines.

 

[KSilver2000]

When ICE manufacturers start collapsing, it will become apparent that they were lying about Tesla going bankrupt.

That’s as ridiculous of a statement as those saying Tesla is going to bankrupt and go out of business, not even a restructure.

If there’s a significant change in car buying preference to EV, you don’t think current ICE brands will also change mindset to cater to changing consumer behavior? That’s a basics of business even an elementary kid can comprehend that, and for some reason you think no ICE will?

 

[KSilver2000]

Yes on the 3's. But Electrik+Kim+Ben were all talking about the 'refresh' for the S/X. Kim even refused to take delivery of her free (referral award) Model X because she was holding out for the 'interior refresh'. Sean is STILL blathering on about a refresh (don't make me link the vid) even after being TOLD by Elon there is no refresh planned.

The result wasn't reduced sales; it was reduced ASP. Telsa had to discount inventory S/X to move them. Every S/X that wasn't sold (due to uncertainty on behalf of a potential customer) when the Raven announcement dropped from Telsa is a haircut for investors.

FUD isn't just on CNBC; its on the web and YouTube too, mostly by privateers that are click or view seeking show boats. Not alwayshelpful. Just look at their sensationalized headlines.

Sensationalists on both sides of every topic are always nuts.

 

[Artful Dodger]

yes, a capital raising took place and raised less than it otherwise might.

Good points, and even the Cap raise amount was likely unaffected. Tesla would have just issued fewer shares to obtain the $2.4B they were looking for in May. The dilution does not seem to have phased anybody, TSLA is still trading at the technical bounds present before the new shares were issued.

I'm more interested to see if Tesla has plans for all that cash (Mega-cube? PanaGF1? Insurance Co acquisition), or if the $$ is just sitting in a current account as a rainy day fund.

Hopefully we'll see that in Tesla's cash on hand when their Letter to Shareholders comes out after the Close on Wed. Although, we might not get those details until the 10-Q comes out in a few weeks.

Cheers!

 

[EVDRVN]

The FUD works. The things I hear from people who does not follow tech at all are all regurgitated spill from TSLAQ crowd. These people all have the means to buy several TSLA in the upper echelon of society. They also, don't use the internet LOL. Some don't even have computers. Thing is. There's a big population of people like these who's sole information source are the traditional media.

FUD has a significant impact on sales. I speak to dozens of educated people monthly that want a Tesla but are reluctant because of what they read and hear. Many companies have terrible products but they sell tons of product because of positive marketing buzz. It goes both ways.

 

[EVNow]

I disagree.
FUD has negligible effect on ASP. Volume more affected, but not price.

When demand volume is higher than production, you can charge more i.e. higher ASP.

 

[PeterJA]

If there’s a significant change in car buying preference to EV, you don’t think current ICE brands will also change mindset to cater to changing consumer behavior?

Sure, their mindset will change when they go bankrupt, or get bailed out like Chrysler after the oil price spike of 1979. ICE makers have thin margins and don't need much push to collapse.

That’s a basics of business even an elementary kid can comprehend that, and for some reason you think no ICE will?

It's a basic of the auto business that they can't turn ICE factories into battery factories overnight. Battery supply at low enough cost seems to be the Achilles heel, and will take time to change. When consumers decide to wait for an EV rather than buy an ICE off the lot, collapses will happen fast.

 

[mrmage]

Ok....this is physically impossible for Tesla to do. They do not control cell manufacturing, Panasonic does. They could not, no matter how much money they had, increase production more than they did in Q4, Q1, and Q2. They have acknowledged that they are going to have to take on cell manufacturing themselves...….but they didn't realize there would be an issues until probably Q4 2018. Even if they had 100 billion in the bank, they would not have been able to get cell production up and running by Q1, or even Q2.

Again, I'm sure there are people out there affected by the FUD they read. But I think the pool of potential customers limited by the price is exponentially bigger than the pool of potential customers affected by FUD. The introduction of SR+ and Q2 results and increased production in Q3 all prove this theory. People keep saying I know people and so? At my office, there were 9 people that were waiting on the SR to come out because they couldn't afford anything higher than 40k.

You're looking at very short term effects and a narrow window, but the effect is long term. Let's go with the last 4 quarters. You really think that if Tesla had double the demand across all price points 4 quarters ago, that they would not have raised more capital last year to build more x/s/3 with elevated margins? And used part of that capital to give more downpayments or guarantees to Panasonic to increase battery production later this year or next?

Of course Panasonic would invest in increased production. That's what businesses do. They expand based on projected and known demand from customers. But Panny won't do that unless Tesla can put up, which it can't because it doesn't have 2x the demand.

Similarly, the production capacity for m3 was affected by demand years before. FUD and production capacity are long games.

You're arguing that FUD in one quarter doesn't affect Tesla sales volume the same quarter because Tesla is production constrained. That is mostly true.

But FUD today affects production capacity 1-2 years from now. Similarly the FUD 1-2 years ago is what affected production capacity today, and therefore sales volume today.

 

[jerry33]

That’s as ridiculous of a statement as those saying Tesla is going to bankrupt and go out of business, not even a restructure.

If there’s a significant change in car buying preference to EV, you don’t think current ICE brands will also change mindset to cater to changing consumer behavior? That’s a basics of business even an elementary kid can comprehend that, and for some reason you think no ICE will?

When radial tires started to come to North America, the tire manufacturers didn't want to have anything to do with them. They created all kinds of FUD (some of which is still being mouthed today) and thought that no one would purchase them because the price was higher. As radial tire market penetration increased, the tire manufacturers made bias-belted tires (think hybrids) but they weren't successful as they had problems that couldn't be engineered away. By the time they realized that radial tires were going to replace bias-ply tires, it was too late, (it takes experience to make radial tires), so now all but Goodyear are gone, and Goodyear only made it because of their other products. Firestone, UniRoyal, B.F.Goodrich. are just brand names owned by other companies.

Bear in mind a legacy car manufacturer has to tell its shareholders not to expect profit for several years while they make the switch. They also have to secure a battery supply. Right now, if Tesla magically ceased to exist the car manufacturers would drop electric cars like a hot potato. Will legacy car manufacturers survive. One or two will, and maybe more depending upon how many government bailouts they receive, but as a whole they will be significantly reduced and most dealers will be gone as well.

 

[kbM3]

Ummmm yes pricing limits the groups of consumers that can buy a product. Q1 introduced SR+ in limited markets in low numbers, Q2 introduced SR+ in more markets. Results? Lots of demand.

I'm not sure what point you're trying to make here. Q1 Model 3 numbers were production constrained.....FUD had no effect on Model 3 sales. FUD was at it's peak after Q1 results and it still had no effect. Q2 proved that. The increase in production has further proved that. My comments have been targeted towards the notion that FUD has affected demand and/or will affect demand in the future. I simply don't think that's true.

If FUD caused even a single person to not order a Model 3, then it has affected demand.

 

[KSilver2000]

When demand volume is higher than production, you can charge more i.e. higher ASP.

True.

But, do we have evidence that has been the case with Tesla?

 

[StarFoxisDown!]

You're looking at very short term effects and a narrow window, but the effect is long term. Let's go with the last 4 quarters. You really think that if Tesla had double the demand across all price points 4 quarters ago, that they would not have raised more capital last year to build more x/s/3 with elevated margins? And used part of that capital to give more downpayments or guarantees to Panasonic to increase battery production later this year or next?

Of course Panasonic would invest in increased production. That's what businesses do. They expand based on projected and known demand from customers. But Panny won't do that unless Tesla can put up, which it can't because it doesn't have 2x the demand.

Similarly, the production capacity for m3 was affected by demand years before. FUD and production capacity are long games.

You're arguing that FUD in one quarter doesn't affect Tesla sales volume the same quarter because Tesla is production constrained. That is mostly true.

But FUD today affects production capacity 1-2 years from now. Similarly the FUD 1-2 years ago is what affected production capacity today, and therefore sales volume today.

Yeah we're just not going to agree. I don't agree with pretty much any of that. You make it sound like taking on cell manufacturing……..2 years ago......would have been the most simple of things and that money solves all problems......I'm really glad Elon does not have that mindset because that is how you blow money down the drain. Panasonic didn't "invest" in more production because they were scared off by the initial Model 3 ramp and questioned Tesla's goals for future production. They got caught with their pants down. And even if they didn't get cold feet, I've never head someone make cell production sound as easy as you're making it sound. There wasn't the investment nor resource collection in place 2 years ago that would have allowed any manufacturer to jump from 0 sales to 500k/year in only a year.

Sorry I'm not trying to be rude but to say FUD today will affect production capacity in 1-2 years is a joke. Tesla is already on their way to reaching 500k model 3's a year.....despite their manufacturing difficulties. The FUD had absolutely no bearing on them getting the Model 3 to the 500k/year goal. AGAIN.....if FUD was so effective then it would have had a material impact on Q2 sales since FUD was peak FUD for the 2 months after Q1 numbers and earnings. Yet somehow Tesla miraculously did record deliveries, is selling every Model 3 they make, and is ramping production. It's laughable to me that FUD from 2 years ago is the direct reason for where Model 3 production is right now. That completely ignores all of the obvious variables that have shown themselves since then.

Did everyone forget Model 3 was pushed up from a 2020 launch? Tesla and Elon made that decision because there was so much demand and it was a hasty decision.....and they've paid for that hasty decision by an expensive and inefficient ramp.

Feel free to reply but we are on different sides of the world when it comes to this argument

 

[MP3Mike]

Very interesting.. Were CNBC Sources — "Tesla Employees" — Funded By TSLAQ? | CleanTechnica

 

[EVNow]

True.

But, do we have evidence that has been the case with Tesla?

They increased AWD price in Q3 when orders outpaced production ? They introduced only higher optioned trims first … whatever Tesla has done till date says they will try to get max ASP. That is how it should be, too.

But in Q1, they
- Lowered price, multiple times
- Introduced lower priced models
- Slashed FSD price

All this doesn't lead to the conclusion they were production constrained. They were receiving orders at a rate less than their production (or planned production). Worse, they introduced SR but couldn't make them in Q1 !

ps :

I think “disaster” should be replaced with “stock price collapse”. Not one rivet in GF3 was delayed. Growth continues at max. Hardly a disaster.

Yes, a capital raising took place and raised less than it otherwise might. I’ll give that. In hindsight, 18 mths from now, it will be insignificant.

Well, Tesla had a lot of cash flow difficulty is the quarter. Musk has talked about it.

If Tesla had more money they would grow faster. Its a question of missed opportunities.​

 

[Carl Raymond]

FUD has a significant impact on sales. I speak to dozens of educated people monthly that want a Tesla but are reluctant because of what they read and hear. Many companies have terrible products but they sell tons of product because of positive marketing buzz. It goes both ways.

If half the population think EVs suck, it’s irrelevant to Tesla moving their product. Tesla only need to convince about 2 percent of car buyers that Tesla is best. There are plenty of headstrong, media and politically savvy people whom we can classify as ‘FUD immune’.

FUD may have a small effect on ASP. It definitely affects the stock price because of misguided shorting. It has no effect on model 3 sales volume. As Dodger pointed out, Osborne type rumours did have an effect on S/X ASP.

Simply saying “FUD works” is far too blanket. Sales volume is largely immune.

 

[Krugerrand]

Edited to add: and

 

[kengchang]

China is not a democracy. New leadership, new objectives and Tesla could be in big trouble. If Trump could do whatever he wanted, Tesla would be gone. The American system doesn't allow that. The Chinese system does.

Able to shut down Tesla in China sounds good on paper, but what would that action do to foreign investment? Chinese is too smart to do that.

 

[mrmage]

Yeah we're just not going to agree. I don't agree with pretty much any of that. You make it sound like taking on cell manufacturing……..2 years ago......would have been the most simple of things and that money solves all problems......
...

Sorry I'm not trying to be rude but to say FUD today will affect production capacity in 1-2 is a joke.
...

I'll respond only because I never implied or said anything of the sort. Anyone educated (most people here) knows that scaling isn't easy, and no one thinks that money solves all problems.

I won't address any more, because hyperbole usually means strong emotions, and that rarely leads to anything productive. Cheers.

 

[Carl Raymond]

Very interesting.. Were CNBC Sources — "Tesla Employees" — Funded By TSLAQ? | CleanTechnica

Particularly like the tweet from Lora to Carlos. “I think you have me confused with somebody else”.

Did she mean “you knucklehead, you’re supposed to pretend you don’t know me”?