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

[neroden]

And according to TSLAQ (who are funding Hothi and therefore very well informed) he will now counter sue Tesla for malicious prosecution.

That would be extremely unwise. Tesla will pull out the evidence if he's that much of an idiot, but in that kind of case, Tesla gets to recover costs. Hothi has a history of proven trespassing.

 

[neroden]

Don’t think so. Anything interesting would be the footage from the cameras. Tesla will settle quickly and quietly if there is any real possibility of that coming out. The issue is that the footage will reveal exactly how doctored the promotional material for the autonomy day was.

Doubt Tesla cares about that, really.

(Not making friends on this board today, lol). Luckily Hothi is cleary a hired gun himself so money will easily motivate him to accept Tesla’s terms.

Hothi seems to be a fanatic, not a hired gun.

 

[EVNow]

Does that also include undoing the damage done by adding an income cap below bay area poverty line? The cynical explanation as to why was 'this 60k income household limit is 400% of national average annual income'.

Its kind of an empty bill - because there is no funding provided. They want ARB to figure out the funding from existing sources and make all the rules.

Sounds like they may reduce the rebate by the amount of Fed tax rebate. This will directly benefit Tesla (and GM).

 

[neroden]

Weekend conspiracy theory....

We know that Tesla has invested like crazy on the product, factory and tech which drives near term revenue by producing a very nice product with margin.

We also know that Tesla has been underinvesting in certain aspects of the company (to the extent that posts on it are no longer allowed) which could hurt its long term success.

Yep, and if anyone wants to discuss the future of Tesla, TSLA, and the investment world, I'll be monitoring over there --> Neroden on service (out of main)

Tesla also has the cash to remedy said deficiencies but has been slow, much to the dismay of certain members.

We also know that EM is very smart (understatement), good with numbers, tech, and strategy. He’s not a people person (also understatement), but that has nothing to do with the deficient areas.

I am unsure about whether it really has nothing to do with the deficient areas.

So why underinvest? Perhaps he has a very good reason.

What if Tesla might be able to get onto the s&p 500, by cutting expenses in certain areas? The resulting inclusion in indexes and prestige would totally be worth the short term pain.

How likely is that?

Extremely unlikely for Q2. But possible.

So the general consensus is that Tesla's going to come in with good cash flow. Non-GAAP profitability is not guaranteed, but is likely. GAAP profitability is harder, but still fairly plausible. However, the financial swing necessary to get enough GAAP profit to make the running total of the last four quarters positive is way larger than our best estimators (luvb2b, Doggydogworld, etc.) can come up with even with bullish assumptions. An big ZEV credit sale or something might do it. It would require $251.13 million in GAAP profit; this wasn't achieved in Q4 2018 and in Q3 2018 Tesla both had a very expensive mix of cars (high ASP) *and* big one-time stuff like ZEV credit sales.

For Q3 2019, it is just as hard because the "good numbers" quarter of Q3 2018 drops off the rolling four-quarter average, so the hurdle is even higher; if we assume Q2 2019 is as good as Q4 2018, then Q3 2019 would need to be a record-high $423.17 million in GAAP profit.

Q4 2019 is more plausible -- if we assume Q2 and Q3 are as good as Q4 2018 (and Q3 will quite likely be better), then Q4 would only need $283.69 in GAAP profit, which is perfectly likely.

Tesla absolutely cannot afford to postpone resolution of service problems until 2020, which is what it would take to accelerate S&P addition. That said, I think most of "service hell" isn't really something which can be fixed with money alone -- as Musk said about "production hell", it needs management more than it needs cash thrown at it. Cutting good staff is going to make the problem worse though.

TL;DR -- nice theory, but no.

 

[Thekiwi]

Its kind of an empty bill - because there is no funding provided. They want ARB to figure out the funding from existing sources and make all the rules.

Sounds like they may reduce the rebate by the amount of Fed tax rebate. This will directly benefit Tesla (and GM).

Its an additional $5000 per EV, up to 5 million cars? So $25 Billion, over a 5-7 year time frame perhaps (more costly in later years)?

 

[EVNow]

What if Tesla might be able to get onto the s&p 500, by cutting expenses in certain areas? The resulting inclusion in indexes and prestige would totally be worth the short term pain.

Musk has wisely refocused the target - it is no longer profitability, but cash flow.

 

[EVNow]

Its an additional $5000 per EV, up to 5 million cars? So $25 Billion, over a 5-7 year time frame perhaps (more costly in later years)?

They already have 600k ZEVs on the road - so 4.4Million more. They expect it to cost some $17B. As the target gets closer the rebate gets smaller. But the problem is there isn't enough money and are never given enough money in the budget. Thats why ARB always runs out of money mid year.

 

[neroden]

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?

None of them have changed their mindset yet, excepting VW *after its entire executives went to prison and were replaced*. There's an old saying that scientific progress is made one death at a time -- the point being that the attitude doesn't change until the people change.

 

[neroden]

Tesla has chronically overvalued "previously owned" Tesla models, not just for those accepted as trade-ins and marketed as CPOs, but also for the contract amounts used in resale/residual value guarantees and direct lease monthly payment computations. The magnitude of the over-valuations is generally reflected in the quarterly inventory write-downs on the Cash Flow statements (most, but not all, of which is used vehicles in Finished Goods and charged to Services & Other COGS.) The higher trade-in values helps Auto Sales GM% but also contributes to the disturbingly high negative GM% in Services & Other --albeit with a lag of multiple quarters.

As the Volvo stealership anecdote illustrates, used cars are a significant profit center for ICE dealership franchises. Tesla lacks skilled appraisers of trade-ins and eschews minor rehabilitation of non-Tesla vehicles so those profits are ceded to third-parties.​

...in addition, Tesla's really quite bad at selling used Teslas, to the point where private party purchases are preferred by the informed used Tesla buyer. Specifically, buying a used Tesla from Tesla is too much of a "pig in a poke" operation with insufficient opportunities to examine the car. This essentially exerts a downward pressure on what *Tesla* can charge for a used Tesla -- they can charge less than a private seller because they haven't got the procedures set up for buyers to examine the car, so they get a "no examination" discount price.

 

[neroden]

I don’t think that’s entirely true.

You’re right that Tesla’s trade-in, and lease residual, values are horrendous. They’re so low that the delta between what price Tesla turns those used cars around and what it cost them is huge. Their margins on used car sales are no joke. If production of new cars is production constrained, they still make really good money selling used.

Evidence (from repeated corporate statements about the financials) is that they don't make good money selling used and I have an explanation why in my previous post

 

[neroden]

The tweet that follows:

Nafnlaus on Twitter

Moderators? service issues are on topic. This isn't.

 

[SOULPEDL]

Broken windshield, made appt in 10 sec, 3 days out. I've had nothing but good experiences with my Model 3 and Tempe Az SC so far. Ya, just one data point...

My Allstate broker was annoyed that ONLY Tesla can replace the windshield using only OEM. (Maybe a critical camera alignment thing). But I can already sense concern discussing "Insurance" and "Tesla" in the same sentence with him.

Writing's on the wall I think with Tesla Insurance. You know... how Black Holes eat up stars.

 

[neroden]

It's odd that he cites Newton's 3rd law as the reason why it's impossible to do without burning things. Newton's 3rd law says nothing about burning things. It just requires that in order to propel the rocket upwards, something needs to be pushed backwards with equal force. Burning things is a very effective way to do that, but it certainly isn't the only way to do that. It's probably correct to say that's the only currently available way to make sufficient propulsion, but he makes it sound like anything else is completely impossible.

Space railguns could be built with existing technology. I guesstimated the cost, and frankly, Musk just isn't rich enough to do it. It would only cost half of one year's US military budget though.

 

[KSilver2000]

Its kind of an empty bill - because there is no funding provided. They want ARB to figure out the funding from existing sources and make all the rules.

The truth.

These types of ideologically initiatives tend to lack funding specifics. I would like for this to happen, but want to see the details first.

 

[kengchang]

Broken windshield, made appt in 10 sec, 3 days out. I've had nothing but good experiences with my Model 3 and Tempe Az SC so far. Ya, just one data point...

My Allstate broker was annoyed that ONLY Tesla can replace the windshield using only OEM. (Maybe a critical camera alignment thing). But I can already sense concern discussing "Insurance" and "Tesla" in the same sentence with him.

Writing's on the wall I think with Tesla Insurance. You know... how Black Holes eat up stars.

But is there really aftermarket windshield for Tesla out there? I doubt it

 

[SOULPEDL]

Broken windshield, made appt in 10 sec, 3 days out. I've had nothing but good experiences with my Model 3 and Tempe Az SC so far. Ya, just one data point...

My Allstate broker was annoyed that ONLY Tesla can replace the windshield using only OEM. (Maybe a critical camera alignment thing). But I can already sense concern discussing "Insurance" and "Tesla" in the same sentence with him.

Writing's on the wall I think with Tesla Insurance. You know... how Black Holes eat up stars.

Correction, I just got the confirm on this appt. It's Aug 1st - 10 days out. Hmmm.
My windshield is cracked ~12". OK for Az law, not obstructing my view anyway.

 

[AudubonB]

MOD:

Thirteen posts moved to “Neuralink Master Thread”. If yours didn’t get caught, consider yourself unlucky.

No more discussion of same in this thread.

 

[SOULPEDL]

But is there really aftermarket windshield for Tesla out there? I doubt it

Maybe not enough volume... yet? I read here that Tesla requires only they do camera alignment. So people just go to the SC for the whole thing, but it's all out of pocket, and pricey. Insurance companies will bock at this eventually. Labor is $40/hr for normal windshield techs, but $125/hr Tesla Labor rates? This could be how they're getting to a profitable SC. The tire thing too.

Hey, as long as there is Tesla profit somewhere! Protecting the environment can be expensive when you go it alone.

 

[S3XY]

Do you have a friend who can introduce you to a blonde?

 

[neroden]

The truth.

These types of ideologically initiatives tend to lack funding specifics. I would like for this to happen, but want to see the details first.

I don't know how it's done in California, but in New York, it's actually pretty common to pass laws which give the governor or a board controlled by the governor vast discretion while saying "fund this", and such things do get funded, though not by specific appropriation provisions. I know this is not how it works at the federal level, with the exception of the corrupt money pit which is the Department of Defense.