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

[SW2Fiddler]

THEN we find out the two senators had just gone off to do a live radio interview with a local talk show host who was broadcasting his show live from the state capitol, interviewing state legislators. And JUST WHEN WE NEEDED THOSE TWO SENATORS, they get yanked out of the committee and they wind up yacking on the air???

Dealership ads don’t provide significant funding for radio stations. Couldn’t be more than 85% of the ads, 90% tops. Mouse nuts. No Collusion!

 

[tinm]

Who is sponsoring the bill? Has Tesla retained representation?

Bill’s sponsored by two senators, one the chair of the committee, and another senator from Albuquerqye who just so happens to own a Tesla. Tesla has had a lobbyist for the bill for months and he was very much engaged today.

 

[Buckminster]

I was not 100% convinced on the 60-75 upgrade. However, the higher the cost, the more you can charge. The upgrade cost is significant for very little extra range. It changes the economics significantly.

The upgrade path looks logical throughout and constantly demands that the customer stretches up to the next package.

The timing of this message is presumably going to be a success. Approx 5% bump? This either will insulate from the shorts FUDing the ER if average or will mean a spectacular breakout is guaranteed if the ER is great. 2 news cycles but kind of only 1 SP bump (for premarket hours).

Furthermore, the biggest outcome of this is that I feel that Tesla are really starting to think more about resale value. Presumably they liked the 60-75 upgrade potential. If I buy an S for $85k, I can sell it used for $50k to my neighbour. However, it is worth significantly more to Tesla. Tesla can buy it for $55k. They now have the choice of keeping it standard range with no drop in range or reselling as extended range (dependent on degradation). Resale price:
Standard range - $60k
OTA Extended - $65k

Outcome:
1) Increases Tesla profits
2) Sells more Teslas - best resale % on market (another moat)
3) Happy original customer - will become a trade in purchaser as forced to return to Tesla - want to test drive the Model Y sir?
4) Used car range shows zero degradation (another moat compared to competition)
5) Tesla controls the aftermarket almost completely. They can control quality standard etc. through refurb.
6) Tesla can eventually buy these cars to put on Tesla network - owned by Tesla (cheaper than new but same price per ride)

Ludicrous OTA upgrade - similar story but even greater profits.

 

[sundaymorning]

OT . . . and now for your irregularly-scheduled New Mexico Tesla update...

So the senate committee hearing was today. About 30 Tesla owners showed up in the New Mexico State Capitol this afternoon. We sat there for ~2 hours while other bills were debated in the committee and then finally it was time for the very last bill on the list today... ours.

Problem: two crucially important senators on the 7-member committee had stepped out and were not present when the Tesla bill came up. Chaos and confusion ensued. Committee chairman did the classic shrug ¯\_(ツ)_/¯ -- I kid you not. I just watched him do that gesture from his committee chair seat, and it was like watching some dark comedy unfold. More like a trainwreck, really. Aides were sent off to find the two missing senators. Minutes tick by. Chair says we're gonna adjourn for 15 minutes to find the missing senators.

Fifteen minutes go by. No luck. The two missing senators were still missing. (I swear, no Hollywood screenwriter would get away with a plot like this.) So there were two choices: proceed without those two senators, and watch the bill die a gruesome death because the 3 Rs on the committee, doing the auto dealers' bidding (the dealers brought seven or eight paid lobbyists to the hearing), would have then all voted no, causing a 3-2 vote that would have instantly killed the bill. We needed a 4-3 vote to win, but with two of the four yes's not present and accounted for, forget it!

THEN we find out the two senators had just gone off to do a live radio interview with a local talk show host who was broadcasting his show live from the state capitol, interviewing state legislators. And JUST WHEN WE NEEDED THOSE TWO SENATORS, they get yanked out of the committee and they wind up yacking on the air???

Ok, think about that. It doesn't take much imagination to wonder if this was a set-up. Maybe it was just a screwup (Occam's Razor would say: yep, Keystone Kops screwup) but damn it sure felt like a set-up, felt like dealer shenanigans, who knows.

Anyway, faced with this situation, the senator sponsoring the bill did I guess what he had to do, and announced he was withdrawing the bill from consideration before the committee -- at least for today.

Now we have to wait to find out when it might get heard again. And who knows if all 7 senators will stay put and be there and vote right and do the right thing the next time the bill gets brought up (assuming it does!!!).

Man do I hate politics.

Stay tuned.

Thanks for the update. Crap like this doesnt dishearten me, it strengthens my hatred for oil, dealerships and the establishment. It also strengthens my bond with Tesla.

 

[jhm]

Do you have anything to support that they used to guarantee 80% on the S&X? (I thought that they never provided a capacity guarantee, the Model 3 was the first to have one.)

Tesla Model 3 Battery Warranty Includes 70% Retention Guarantee
Apparently your recollection is better than mine. This article discuss this, but note that one commenter to this article also claims that they got a 80% retained capacity provision in their warranty. So it is still a bit of mystery why some of us early buyers thought we got this 80% thing. In the early years, Tesla had to work harder to win over buyers, offering crazy stuff like unlimited Supercharger charging for life and service centers that had parts. Times change.

 

[Buckminster]

Why are Tesla dropping the 75 S/X?

1. 
   To replace with a rebranded Standard Range (minor refresh) approx April
   11 vote(s)
   6.6%
2. *
   To replace with a rebranded Standard Range (interior refresh) approx April
   7 vote(s)
   4.2%
3. 
   To replace with a rebranded Standard Range (interior refresh + 2170) approx April
   32 vote(s)
   19.2%
4. 
   Unaltered 100 will be the only option in 2019 (~$10K price drop)
   30 vote(s)
   18.0%
5. 
   Refreshed 100 will be the only option in 2019
   18 vote(s)
   10.8%
6. 
   120 will be introduced alongside an 85-100 in 2019
   69 vote(s)
   41.3%
   
   Still time to change your vote...

 

[ZachShahan]

THIS I think is a genius move... trade-in/lease return as normal model, resell as performance. dampens/changes the entire residual value game

That's how I've long seen it. This is a pretty wicked secret weapon of Tesla's since it absorbs most(?) of the used Tesla trade-ins. Take in a used car that you sold for $70K (or whatever it is), account for normal depreciation, unleash the full battery pack (and perhaps more power), and sell the car again for a wicked margin. It's an extremely good long-term plan, and I tend to think Elon is a long-term kind of guy.

 

[Buckminster]

Recent tweet from Karpathy:

1) Tesla as always seems to be on the right path - Agile - building up your model as you go. Start simple is the mantra.
2) It has cats...

Input 3

“This”

“is” “a”

“cat”

 

[jhm]

Do we know yet whether the new versions of X&S in fact still use 18650 cells? Even if it does, it seems the new line up would make it easy to switch over to 2170 cells. I don't think the ER offers enough incremental range for the money. It should be priced closer to $100 per incremental mile range. So it could be that the S ER is limited to 335 miles by virtue of still using the 18650 cells. If that could be bumped up to 400 miles range, then the $8k upgrade would be well worth it. I believe this would require a switch to 2170 cells.

Perhaps I'll have to wait longer before trading in my Tesla for a new one. Oh, well, I'm a patient guy.

 

[ZachShahan]

We've seen continued covering from shorts this past several trading sessions. The chart from Dusaniwsky doesn't really drive home the same point as the daily numbers in his "short sight" daily emails. I calculated nearly 400,000 additional short shares covered yesterday. The trend continues.

Think that's why we're not seeing as much FUD leading into this shareholder letter/call?

 

[printf42]

Also we’d all be better off if posters like Karen didn’t feel the need to weigh in on every single development/conversation in the thread.

We’d be better off if poster like this don’t feel the need to divide the community by discouraging active members from posting.

 

[MP3Mike]

For folks the live on TMC, sure, but for the other 99.9999% of the general market, I think it will be a welcome relief. Apple is quite good at this. A typical iPhone buyer cannot tell you how much RAM their iPhone has, how fast the CPU runs of what the CPU even is--nor do they care. The only thing you pick when you buy and iPhone is how much storage you want, and, over time, the high end storage option is now the mid-range storage.

Why wouldn't they just call it the Standard, Mid, and High capacity like you just did?
​

That is what Tesla is doing changing the capacity to just a class instead of an exact measurement.

 

[MP3Mike]

Do we know yet whether the new versions of X&S in fact still use 18650 cells? Even if it does, it seems the new line up would make it easy to switch over to 2170 cells.

Why would it make it any easier? They still would have to redesign the whole battery pack. Exactly the same amount of work.

 

[Buckminster]

1. Layoffs
2. S/X demand back with increased margin
3. Q1 profit should be substantial
4. Profit over 4 quarters ~ 90% likelihood
5. S&P500 inclusion May/June ~ 80% likelihood

 

[NicoV]

No sooner than absolutely necessary. The 18650s are perfectly functional, and the cost/range benefits of the switch are not worth the huge capital investment in new cell and pack lines (to say nothing of any reengineering of the vehicles or their production lines to use them - and do recall that packs are structural elements that affect crash forces, as well as being potential fire hazards), when capital investments in other things (to pick one example among many, Model Y) have a much more dramatic return.

A far more rapid, low-capital turnaround for giving S/X better stats, for example, would be to switch one motor to a Model 3-based drive unit, which would up range (due to the greater efficiency), charge rates (in terms of mph/kph), lower costs (the Model 3 drive unit line is arguably Tesla's most efficient, automated, scalable line of anything that they do), sustained track performance, etc.

People don't want to hear this. They want to pretend that capital is infinite. It's not. Yes, there is "a" financial return for switching from 18650s to 2170s. But it's not the best return for their (very much finite) money. There's nothing wrong with the 18650s. They work great. They have a great chemistry. Yeah, you can get somewhat more energy into a 2170 pack and yeah they can make them somewhat cheaper. But just because something can be "better" in some regards (although note: worse in others, such as surface area / cooling potential, for the same internal cooling design) doesn't make it the best return for your capital investment.

Tesla needs to be able to replace broken battery packs a decade from now. I doubt they will stockpile packs for a decade, which means that they have no other option than to build a new (2170) pack compatible with current (and previous!) Model S/X versions. So at some point i time they will HAVE TO incur the development cost for that.

Besides, Elon stated years ago that it would be possible to replace a worn pack with a bigger one in the future.

 

[oneday]

1. Layoffs
2. S/X demand back with increased margin
3. Q1 profit should be substantial
4. Profit over 4 quarters ~ 90% likelihood
5. S&P500 inclusion May/June ~ 80% likelihood

You might want to dial back likelihood of S&P inclusion in May/June after Elon’s recent letter about slim profits in Q1.

If Tesla hits FactSet’s consensus GAAP EPS of $1.26. It would need to have a Q1 GAAP EPS of $1.21.

I would say a coin flip would be generous. Obviously we will know a lot more after tomorrow.

 

[Bet TSLA]

I hate the idea of software limited packs.

Anything done in software is cheaper, simpler, and more flexible than anything done in hardware. Think about these advantages and you'll hate the idea less.

As an investor, I love that Tesla tries hard to please its customers. The advantages to customers of battery packs being software limited are:

• faster supercharging
• better 0-60 performance
• less battery degradation
• ability to charge to 100% with no regen limiting
• ability to run the battery to 0% with no danger
• magical range addition during crises
• the option of upgrading trivially
• possibility of cheap upgrade one day
• possibility of remote rescue if run down to 0% (speculation)

The advantages to Tesla are:

• fewer options so simpler to manufacture
• simpler to test
• simpler to service
• faster charging increases throughput at superchargers
• batteries degrade less
• trivial to upgrade when traded in
• cheaper to rescue people who run out of battery (speculation)

The only disadvantages are:

• the car is heavier (so less range and harder on the tires and roads and harder to transport)
• the car is more expensive to build, so lower margins
• if manufacturing is cell limited, then fewer cars can be built
• some find it psychologically disturbing to own something they can't use the way they would prefer

There are no doubt several things I've missed.

Edit: cell limited means fewer cars

 

[Papafox]

Think that's why we're not seeing as much FUD leading into this shareholder letter/call?

Zach, wish I knew ; )
What I'm curious about is that while short interest continues to decline, we're seeing a full-court press by the day-trade short manipulators. When FINRA percent of selling by shorts is in the vicinity of 60% or even above 55%, there's typically lots of evidence of price manipulations that definitely affect the stock price. What I wonder about is whether the manipulations we're seeing on a daily basis are "cover" for allowing the same manipulators to liquidate their own short positions at a good exit price, whether they're helping other specific shorts exit their positions without pushing the stock price too much higher, or whether they're just doing their usual manipulations with a hope of keeping the stock price low enough so that Tesla has to pay the March notes in cash and thereby create as much trouble for Tesla as they can. My hope would be that they're covering their own substantial positions and the mandatory morning dips, the capping, and the dips on steroids into close will lessen. Not holding my breath but curious.

 

[Mike Smith]

 

[printf42]

Elon Musk on Twitter
tbh smh

tbh idk wtfits