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

[Chop110]

Fed announcement dragged everybody down

 

[abasile]

This is my only fear. Tesla so far has made only "urban cruisers" which can't take any real abuse. A proper pickup needs to be able to be abused. E.g. you might scratch or dent it, but you're not going to break a trim clip or drive a large rock into the battery pack. Current design approaches just don't suffice.

I agree that Teslas aren't made to take serious abuse like a large or sharp rock into the battery pack. In practice, though, the Model S and X (and maybe the 3) do just fine on rocky dirt roads as long as you watch your ground clearance. Most people with expensive ICE trucks don't want to tear up the underside, either.

Tesla could sell the option of an extra strong underbody plate, below the battery pack, but there would be a weight penalty and probably the need for additional crash testing. I don't see this happening anytime soon, however.

 

[StarFoxisDown!]

Welp so much for my comment

 

[Off Shore]

Ow, my eyes!

I dunno, you could herd a lot of sheep with that.

 

[Steve m]

I do not predict where tsla will go today but I suspect overall market will drop (except aapl).
No rate drop—-market down
.25% drop in interest rates—so expected sell off on announcement
.5% drop in interest rates—“fed knows something we don’t” so sell off

Good prediction

 

[anthonyj]

Irrational freak out

 

[kengchang]

Seems more short dumping on the Fed news?

 

[Steve m]

Nasdaq down 130 pts.... This is why we need AI driving cars... So that they behave just as rationally as the AI driven markets.

 

[dc_h]

I would be cautious about Germany. Concerned anti tesla policies and attitude will not change by locating a factory there. Look at Michigan attitude toward tesla, did not change when they purchased company there and kept jobs there

they have a couple hundred jobs there, not really enough to offset the decay of GM and Ford.

 

[Cherry Wine]

Well that dip got gobbled right TF up. Thought my $240 calls might have been spared.

 

[Tslynk67]

Yeah, and I love the utilitarian, off-road design language of both of them.

Wouldn't want to be hit by those barely street legal grill guards though, I suppose at NCAP testing they don't award any negative stars for pedestrian protection? They really should.

"Bull Bars" I would call those and yes, they're lethal to pedestrians, anyone that has them fitted in a city car should get a good slapping.

 

[Cherry Wine]

The market really wanted to hear that this was the beginning of a longer-term trend of lowering rates? Jesus, people are short-sighted.

 

[Chop110]

Seems more short dumping on the Fed news?

Yup. I predict a quick recovery. Someone out there is busy buying dips lately!

 

[JRP3]

Initially losing money is integral to nearly all great missions!

No need to compound loss when introducing a product which would be in high demand. Simply put starting out with fleet sales for the Tesla pickup makes no sense at all.

 

[Todd Burch]

Seems more short dumping on the Fed news?

Not much I don't think. TSLA is doing better than most of the other FAANGs. Don't suspect this had much of anything to do with the shorts. All the Fed announcement, and someone's taking advantage of the deal...

 

[StealthP3D]

I do not predict where tsla will go today but I suspect overall market will drop (except aapl).

It looks like AAPL took a similar hit to everyone else in response to the rate cut.

I'm curious why you thought they would respond differently?

 

[MarcusMaximus]

Already recovering.

 

[ReflexFunds]

I think now would be a great time for Tesla to purchase Panasonic's cylindrical battery business. I think its very clear to Panasonic by now that this is no longer a long term growth business as Tesla is refusing to give them contracts for expansion beyond the initial 35GWh. Panasonic also have no other customers for cylindrical batteries. A disposal is an easy way for Panasonic to "address" the Tesla operating losses, while for Tesla it will make it much easier to use Panasonic's GF1 staff to ramp up Tesla's in-house cell production, reduce the risk of IP disputes and make it easier to upgrade Panasonic's equipment with Tesla's cell design improvements when they are ready. Panasonic's whole business is obviously under a lot of pressure operationally and market cap is now just $20bn, I think Tesla could get a good deal on the battery business right now, maybe a combination of cash and stock. Panasonic did note on the call that they have "further business portfolio reform going on, but its not something they are allowed to disclose now" - really this could refer to anything, but I'm hopeful its a Tesla deal.

The more I think about this, the more I'm convincing myself this acquisition is very likely to happen, at least for the GF1 US business (the Japan S/X factory maybe unlikely).

Panasonic has invested $1.6bn in GF1 capex. I guess it also has cumulative cash operating losses at GF1 of around $0.5bn? It may have invested some working capital too, let's say $0.2bn? (Tesla payables to Panasonic will be higher, but Panasonic has its own payables to suppliers). Then the remaining value in this business is the staff experience and manufacturing IP. The value of this part is very different for Tesla vs Panasonic. Assuming Panasonic knows Tesla plans to make cells for Model Y and future expansion in-house, it knows it is never going to get the scale to make its GF1 business significantly profitable - so discounted cash flow value of this IP is actually very low to Panasonic (unless they think they can sue Tesla for IP theft). For Tesla however, Panasonic's GF1 staff experience and parts of their manufacturing IP are likely very valuable (though parts of the IP will probably be substituted out with products from Tesla's R&D lab), particularly given the scale of its future ambitions and how much this acquisition could lower execution risk with cell ramp for Model Y.
Tesla looks in the stronger negotiating position here to me. Tesla will likely just go it alone with cell production if Panasonic don't sell up (possibly at risk of some lawsuits). If Tesla offers $2.5-3bn for Panasonic's GF1 business I can see Panasonic accepting (around 15% of Panasonic's market cap for a business with annualised EBIT at more than negative $200m with no obvious prospects for significant future cash generation).

If this is part of Tesla's plan, then they want to get the acquisition closed before they start to ramp their own new cell capacity for Model Y and before their March battery investor day. Given M&A can take time to close, then a deal announcement could be due very soon. Of course only if i'm not just going crazy with meritless speculation!

 

[Steve m]

It looks like AAPL took a similar hit to everyone else in response to the rate cut.

I'm curious why you thought they would respond differently?

I read it as appl wont drop if there is no change. If rates went down appl was no longer immune

 

[abasile]

Well that dip got gobbled right TF up. Thought my $240 calls might have been spared.

No kidding. I noticed the spike down into the 230s, but by the time I put in a limit order to buy a bit more, it was already back above $240! It appears that someone is soaking up every relatively cheap share that they can get.