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

[Silent Ludicrosy]

Vincent on Twitter

The long waiting lines to check out Tesla Model 3 in South Korea

Expensive gas and 220v outlets everywhere in Korea. Should sell well.

 

[Artful Dodger]

What if Tesla sold FSD “options”. The option to buy FSD for $6000 in 2020 could cost $500 today.

Indeed. Why not sell it now, separately? Why do you need to own a car? License the software to the User, not the vehicle.

Also, let owners 'lease' the software for trips. Going on vacation for 2 weeks? Here's a deal for $500 so you don't have to drive while tired. If you add your car to the Tesla Network, it should enable 'Robotaxi' for the duration of the assignment, whether or not the Owner has personal FSD. That's little different from an owner wanting FSD for a specific drive. Lots of ways to make $$ off a subscription service beyond a 1-time payment model of $7K or whatever.

Cheers!

 

[Krugerrand]

Yeah not at all the same thing. No way you’re actually arguing that $7k for autopilot in its current form is a good thing. Some vague promise of “at some point in the future FSD will actually be a thing” and “feature complete” is dumb AF. Elon is way ahead on the pricing and well below expectations on actual execution of FSD. Which hey I don’t blame them, it’s a difficult problem to solve. But don’t go saying dumb things about it and promising unrealistic things.

I got FSD for 2k. My car has already appreciated.

I’m not in the FSD will take a decade+++ group. I’m in the FSD will happen when it happens camp and I’m totally okay having given Tesla some extra cash to do their thing until FSD is fully and completely here. I’m also doing it a second time having optioned out my Model Y order.

No, I don’t think it’s a bad idea to charge whatever the market will bear for a yet to be completed feature. Tesla’s been doing that since they sold their first Model S. Seems to have worked just fine. Every single car Tesla has made has improved since purchasing and it hasn’t cost the owner a cent. I’m inclined to say your barking up the wrong tree and I could make some pretty good educated guesses why it cranks your shaft personally rather than from a business/investment stance.

I have no idea when FSD features will be complete, when regulators will get on board, or when all the rest will happen. And I don’t care. I’ve long since accepted my money may be lost and I may never see a return for it.

But. I’m a betting person.

There’s a chance I’ll live long enough to see the day, when the DMV refuses to renew my driver’s license because I can’t pass the clock test or whatever, that I then get to flip them the bird and get into my Tesla and have it drive me wherever I bloody well feel like going. That right there has value to me. So far that value has been to the tune of $5k (3 + Y) + whatever it costs me when I fully option out my Tesla pickup.

I’m as happy as a clam.

 

[KarenRei]

Janet Yellen (previous fed chair) is dubious of the significance of the yield curve inversion in this case as being an indicator for a recession:

Janet Yellen on recession risks: On this occasion inverted yield curve may be a less good signal

 

[KarenRei]

Expensive gas and 220v outlets everywhere in Korea. Should sell well.

Not to mention huge EV incentives (total = $16,5k). SR+ can go for as cheap as $26,5k there.

Tesla Model 3 fever hits South Korea as crowds flock stores to see the ~$26.5k EV

South Korea population = 51,5 million.
Disposable income per capita is 13th highest in the world.

 

[Unpilot]

Not to mention huge EV incentives (total = $16,5k). SR+ can go for as cheap as $26,5k there.

Tesla Model 3 fever hits South Korea as crowds flock stores to see the ~$26.5k EV

South Korea population = 51,5 million.

Yeah but what abut the "demand" problem?/S

 

[KarenRei]

Yeah but what abut the "demand" problem?/S

Don't worry about the demand problem - if Tesla needs to, they could put out some please-don't-buy-our-car ads to try to lower demand to levels that they can manage

 

[ZeApelido]

From the demo rides and video of same at Autonomy Day, I think most TMC members believe the next 18 months will bring really major improvements in Tesla's self driving. That progress doesn't need to be FSD level 4/5 to still be very impactful in differentiating Tesla EVs from all other ICE and EV cars. Tesla absolutely should conserve cash to survive and ride out a possible global recession.
However in a recession auto sales go way down but not to zero. I'm hopeful that if/when a global recession arrives Tesla will be far better positioned than all other automakers, because it's auto driving will be sufficiently amazing by then to be widely understood and valued.
It should be able to continue selling as many EVs as it can produce, while growing capacity more slowly until recession eases.

Wikipedia: Automotive industry crisis of 2008 - 2010.
"The annual capacity of the industry (was) 17 million cars; sales in 2008 dropped to an annual rate of only 10 million vehicles made in the U.S. and Canada."

How much do the sales and average selling price, change for the "luxury brands" in recessions? I am concerned that they will be hit harder.

While many here love to espouse the 'demand > supply', I am concerned in a recession Tesla's ASP will have to drop and kill the margins at current production rates.

 

[Right_Said_Fred]

How much do the sales and average selling price, change for the "luxury brands" in recessions? I am concerned that they will be hit harder.

While many here love to espouse the 'demand > supply', I am concerned in a recession Tesla's ASP will have to drop and kill the margins at current production rates.

The pricing of luxury brands is usually pretty immune to recessions, because recessions mostly hit the people with low wages.

(But why are we discussing this? There will be no recession)

 

[elasalle]

Vladimir Grinshpun on Twitter

With all (with the exception of one) top 20 institutional $TSLA shareholders reporting their Q2 positions: - as a group, they were buyers


1,912,502 shares - buyers > sellers by 71% - 3 largest 3 buyers were SG Americas, Norge Bank, Morgan Stanley

 

[Cherry Wine]

Vladimir Grinshpun on Twitter

With all (with the exception of one) top 20 institutional $TSLA shareholders reporting their Q2 positions: - as a group, they were buyers


1,912,502 shares - buyers > sellers by 71% - 3 largest 3 buyers were SG Americas, Norge Bank, Morgan Stanley

LOL. Someone tell MS's analyst. Who am I kidding? They knew what they were doing. Wall Street is such a joke.

 

[Unpilot]

The thing is Tesla has ALWAYS had a demand problem....it is just inverse of what the TSLAQ crown (or CNBC...but they might be the same thing) would have people believe.

People DEMAND Tesla product's and Tesla cannot make enough to satisfy this demand.

Pretty nice place to be...and as a owner and investor a great place to be.

 

[ZeApelido]

The problem with $7k for FSD is not just that it's a big ask for something that does so little. It's that it's such a large fraction of the vehicle price that it outright prices itself out of the market for most buyers. I've never spend $7k on an entire car before; Model 3 is already a massive stretch for me.

Everyone has a price cutoff, after which it becomes "I'll just drive myself." FSD has existed since the advent of vehicles, in the form of a chauffeur. Why doesn't everyone have a chauffeur? Because it's too dang expensive. Most people simply can't afford that. $7k is a lot cheaper than a chauffeur, but it's still pretty dang expensive for most people.

And currently it's $7k for a "not-a-chauffer-but-theoretically-will-become-one-some-day-if-we're-right-although-many-people-doubt-us".

The FSD price is the Expected Value of the probabilistic distribution of future FSD value. Much like TSLA's stock price is Expected Value of the probabilistic distribution of future cash flows!

 

[KarenRei]

Not to mention huge EV incentives (total = $16,5k). SR+ can go for as cheap as $26,5k there.

Tesla Model 3 fever hits South Korea as crowds flock stores to see the ~$26.5k EV

South Korea population = 51,5 million.
Disposable income per capita is 13th highest in the world.

Doing a little math on this:

• Non-California US is about 60% of Tesla sales (California distorts things because it's both populous and has unusually high incentives)
• So about 27k Model 3s were sold outside California in the US in Q2.
• US:
  • Median disposable income was $36,5k in 2015. Let's say $38k now.
  • Model 3 SR+ with an average of $4k incentives in Q2 ~= $36k
  • One year's disposable income is about $2k more than a Model 3 SR+.
• South Korea:
  • Median disposable income was $26,5k in 2015. Let's say $27,5k now.
  • Model 3 SR+ after incentives is $26,5k.
  • One year's disposable income is about $1k more than a Model 3 SR+.

Pretty similar. Now factor in that the market in SK is already much more accepting of EVs than non-CA US, 220V power standard, greater population densities favouring EVs, etc etc... but worsening it for a theoretical "not made here" factor... I'd wager similar rates of adoption to the non-CA US. Note that US sales appear to have significantly grown since Q2, if a July-April comparison has anything to say about it.

Non-California US Model 3 deliveries were 35% of total global Model 3 deliveries. SK's population is 18% of the non-CA US population. So if these calculations are right, the "sustainable rate" for South Korea would be about 6,3% of Tesla's global Model 3 market. The initial percentage would of course be much higher, just as it is in any newly-launched market.

 

[keydiver]

How much do the sales and average selling price, change for the "luxury brands" in recessions? I am concerned that they will be hit harder.

I may be wrong, but in my experience recessions encouraged people to car shop smarter, more economical. When the ecomony got tight in the early 80's the local Honda and Toyota dealers sold every car without a discount. The salesman bragged to me that he didn't have to haggle with me, as he knew he would sell every Honda at full sticker price (I went elsewhere). I saw that happen again in the early 2000's, with Prius and other frugal cars selling like hotcakes. I can only hope that in the next recession people finally figure out that EV's have a low TCO, so they become the next "economy car". Or, if nothing else, I hope it puts an end to the record sales of huge diesel pickups and land yacht sized SUV's.

 

[davecolene0606]

The problem with $7k for FSD is not just that it's a big ask for something that does so little. It's that it's such a large fraction of the vehicle price that it outright prices itself out of the market for most buyers. I've never spend $7k on an entire car before; Model 3 is already a massive stretch for me.

Everyone has a price cutoff, after which it becomes "I'll just drive myself." FSD has existed since the advent of vehicles, in the form of a chauffeur. Why doesn't everyone have a chauffeur? Because it's too dang expensive. Most people simply can't afford that. $7k is a lot cheaper than a chauffeur, but it's still pretty dang expensive for most people.

And currently it's $7k for a "not-a-chauffer-but-theoretically-will-become-one-some-day-if-we're-right-although-many-people-doubt-us".

So since I paid 3k for EAP and 5k for FSD in 2017 for HW2.5 and it’s lookin like Elon’s promise to us of early access ain’t gonna happen, I should:
A. Feel like Fred
B. Suck it up and keep hoping.
C. Pay no attention to the great value everyone is now getting.
D. Keep remembering the insane ROI I have earned from TSLA.

(It’s still a little painful)

Fire Away!

 

[Cherry Wine]

Doing a little math on this:

• Non-California US is about 60% of Tesla sales (California distorts things because it's both populous and has unusually high incentives)
• So about 27k Model 3s were sold outside California in the US in Q2.
• US:
  • Median disposable income was $36,5k in 2015. Let's say $38k now.
  • Model 3 SR+ with an average of $4k incentives in Q2 ~= $36k
  • One year's disposable income is about $2k more than a Model 3 SR+.
• South Korea:
  • Median disposable income was $26,5k in 2015. Let's say $27,5k now.
  • Model 3 SR+ after incentives is $26,5k.
  • One year's disposable income is about $1k more than a Model 3 SR+.

Pretty similar. Now factor in that the market in SK is already much more accepting of EVs than non-CA US, 220V power standard, greater population densities favouring EVs, etc etc... but worsening it for a theoretical "not made here" factor... I'd wager similar rates of adoption to the non-CA US. Note that US sales appear to have significantly grown since Q2, if a July-April comparison has anything to say about it.

Non-California US Model 3 deliveries were 35% of total global Model 3 deliveries. SK's population is 18% of the non-CA US population. So if these calculations are right, the "sustainable rate" for South Korea would be about 6,3% of Tesla's global Model 3 market. The initial percentage would of course be much higher, just as it is in any newly-launched market.

Karen - do you have a handle on which untapped markets for Model 3 remain?

 

[Remus]

Indeed. Why not sell it now, separately? Why do you need to own a car? License the software to the User, not the vehicle.

Also, let owners 'lease' the software for trips. Going on vacation for 2 weeks? Here's a deal for $500 so you don't have to drive while tired. If you add your car to the Tesla Network, it should enable 'Robotaxi' for the duration of the assignment, whether or not the Owner has personal FSD. That's little different from an owner wanting FSD for a specific drive. Lots of ways to make $$ off a subscription service beyond a 1-time payment model of $7K or whatever.

Cheers!

It's not that people don't believe the value of FSD if it's achieved. It's that people don't believe that it can be achieved in a year or two, or ever for someones.

 

[Cherry Wine]

I may be wrong, but in my experience recessions encouraged people to car shop smarter, more economical. When the ecomony got tight in the early 80's the local Honda and Toyota dealers sold every car without a discount. The salesman bragged to me that he didn't have to haggle with me, as he knew he would sell every Honda at full sticker price (I went elsewhere). I saw that happen again in the early 2000's, with Prius and other frugal cars selling like hotcakes. I can only hope that in the next recession people finally figure out that EV's have a low TCO, so they become the next "economy car". Or, if nothing else, I hope it puts an end to the record sales of huge diesel pickups and land yacht sized SUV's.

To play devil's advocate, this could be countered with respect to Tesla by low gas prices due to a drop in oil pricing -- makes EVs less attractive (from a TCO perspective) relative to gasoline-powered vehicles.

I think it would behoove this group to really dig into the data from the last recession and not just handwave away what are very valid concerns (not directed at you @keydiver, but this board in general). The effect of a recession on Tesla has always been one of my chief concerns with the company; I will be focusing more closely on what information I can find (and will probably revive the separate thread on this topic).

 

[KarenRei]

Karen - do you have a handle on which untapped markets for Model 3 remain?

Not counting ones starting this quarter / early next quarter:

* All of eastern Europe and the Balkans, plus Iceland (the latter of which I expect to have a sustainable sales level around 25 per week M3 (325 per quarter / 1300 per year), rising significantly with the addition of MY and the pickup to the lineup)
* Russia
* India
* Brazil
* Saudi Arabia (a surprisingly big auto market - 1m cars per year with a high ASP). If I'm not mistaken, existing Middle Eastern markets are also yet to get Model 3.
* UAE + Jordan (are existing S/X markets but haven't started Model 3 sales - smaller markets than Saudi Arabia, though)

After that, untapped markets start shrinking significantly in potential sales (Indonesia, for example)