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

[Remus]

Because 80% of the EV models out there - scratch that - every EV model except Teslas out there have very poor range that degrades badly, that you simply can't use them effectively after a few years and can't sell them for a bag of potatoes either. So the best option is to lease it, preferably short terms like 2 years and give it back. I leased two Leafs and I am happy I leased and didn't buy.

I bought the Tesla.

it's so obvious, right?

 

[ZachShahan]

Zach who?

I got the job!!!

Oh, wait ...

 

[30seconds]

Notes

1. Laughing at the shorts who are still claiming Tesla can’t pay their convert with cash

2. Confused why people don’t realize that the 18650s benefit from chemistry advances, yes there is some gain from bigger battery but most will be from chemistry and improved pack design - which Tesla can do with the 18650s.

3. Relieved that Tesla is focusing on root cause issues causing longer service & not throwing bodies at it.

4. Impressed that Tesla is now funding R&D from operating cash flows!!!

5. Greatful for Deepak’s leadership over the years & announcing that he is departing on this call thereby allowing me to get some Leaps at these levels

 

[ZachShahan]

Why is everyone so upset about someone retiring?

We obviously know what's going to happen here, but ...

Anyone following Tesla honestly and closely should know/realize that Deepak retired previously, then Tesla went through a really tough period and had to pull him out of retirement, now Tesla is in smooth sailing and can let him retire again. This is, by any objective measure, a positive sign.

Of course, the $TSLAQ freakout will continue and CNBC will be full of nonsense. What can you do?...
(That said, I would have summarized that story in a similar way as I just did in order to make sure at least some reporters understood the highly positive side of the story.)

 

[Carl Raymond]

The goal of the shorts is to swindle and steal money from weak and ignorant longs.

While I don't care if stupid people lose money, what is most despicable is, the shorts spread lies to scare prospective car buyers into thinking that Tesla would be bankrupt sooner or later and it is only a matter of time. Teslas will catch fire and kill your family. yada yada.. That kind of lying and spreading rumors about the product through social media and MSM, is criminal in my book.

I put that kind of behavior on par with drug pushers and pedos.

It’s on par with filling the fire truck’s water tank with gasoline...

Greta Thunberg’s house is on fire:

There are precious few fire trucks. Tesla is one.

 

[hacer]

My thoughts on Elon's response to the first "retail investor/owner" question about Tesla Service.

• I was hoping he was gonna nail it. He did not nail it. I fear he still doesn't get it.
  
• At least, what he announced reflects a continued lack of understanding about service issues.
• As I said last time, it's all about customer/company communication (CCC).
  
• Today Elon simply focused on optimizing the ability to request a service appointment.
  
• This is what tech startups call "low hanging fruit" -- in my opinion, in this case, fruit that's already on the ground.
  
• This is a baby step. Not even touching the core problems.
• And to reiterate, the core problems are managing expectations and full accountability.
• You don't achieve superb CCC without those two ingredients in the company culture.

If Elon had announced the following:

• The app tracks every step of your service experience, showing where car is now, status of it, who your point of contact is now, how to reach them with a tap of screen, when car will be ready, etc, then that would be something. I hope that's coming.
• The app lets you contact Tesla, track your communications, lets you know when you're supposed to hear back, updates you with notifications if there are delays, etc.
• On the back-end (within the corporation): system tracks all inbound and outbound communications with customer, every issue tracked, all due dates highlighted, name of employee highlighted (who owns this customer at every step of the process), who the supervisor is if things start slipping, supervisor gets alerted the second stuff slips, etc. In other words, tools to help staff manage expectations and accountability.
• Until I see that kind of thing, Tesla is not nailing it.
• In fact, what they're introducing now with the "tap a button in the app, schedule service appointment" may wind up increasing in-flow of service requests to the service centers. This risks new bottlenecks and more problems not less. They're potentially opening floodgates for inbound requests but Elon offered no information on how systems (and management!) are being improved in-house so that they can handle a larger influx of service requests.
• I still don't think Elon gets it.
• I still don't see superb CCC being in the company DNA or culture.
• I am still hoping, but I am still waiting.

The Fast Food Analogy
You know when you go into a fast food restaurant? They all have the same systems: you see these touchscreen computer monitors with pending orders. As the orders get "stale" as the seconds tick by, the background color goes from green to RED. That means the customer is waiting a long time. This is a simple way of managing customer expectations that the food really is fast, and that they can pump through many orders without a hitch. Employees and management constantly seeing the status of all pending customer orders and they can act accordingly.

Tesla needs something like that in-house, on huge scale, and then simple UI/UX reflected in the app (and mirrored in My Tesla part of website) and if they did all that, and Elon hired/fired based on management nailing new objectives for CCC success, we'd be somewhere.

Like always, Tesla, I'm happy to help. Ping me.

Communications is poor, I agree. However I don't think that is the root cause of the customer frustrations with service. The root cause is that Tesla simply doesn't have an actual parts system for service - it's totally ad-hoc. Nobody can communicate with you because they don't know when (perhaps even if) they will get the parts needed to fix your car. Telling you that multiple times does not "manage your expectations" in a positive way, so they don't say anything.

If parts were available, most of the problem situations would go away because your car would get fixed quickly. How pissed could you be that you didn't get an update email and a message about what time you must pickup before they close? At least your car is actually fixed! Compare that to now when you either get passed along to someone else (who also has no answers) or are told some almost certainly false made up answer or get no response at all.

Communications will matter a whole lot less when the work actually gets done. Also most communications will automatically improve because the answers to customer questions become (much more often) known instead of unknown.

I'm currently living a (trivial) service absurdity: at delivery of my wife's model 3 (1 year ago this coming Monday) we noticed cracked and gouged plastic inside the charge port. It was the only thing on the due bill. It's purely a cosmetic issue and only visible when the charge port door is open. I've contacted my local service center (also where delivery took place) 4 times about this and each time they look it up, see in the system that it is on the due bill, that the part has been ordered but no expected date for the part. Each time they have no idea what's up but say they will investigate and get back to me. They've never got back to me. Twice this was in person with someone who I know and has followed up promptly on other issues (for my S) where parts were actually available (e.g. getting a mirror skull cap and having it painted to match) so I really don't think it's a lack of customer communications that they never get back to me.

I assume it's because the service center can't get the part and nobody at Tesla knows when, if, or how it will ever happen. I think that is the root problem and it's one that Elon said they are going to fix.

 

[AudubonB]

Sorry for the delay.
No.

... except to be introduced as the new CFO.

Yay! Congratulations.

So: What is the current price/kWh of the 18650s and 2170s?

 

[PhaseWhite]

Translation: "we are not going to Osborne the S & X at this time"

At the very least I think this means it's not coming for a long time. What we will probably see much sooner is a move to use the Model 3 motor in the non performance Model S/X this could give a decent perhaps 8-10% range boost.( 360-369 miles EPA range on the S using the same 100kwh pack)

 

[HG Wells]

Yep.

Production Hell
Delivery Hell
Service Hell

Lets see.
Nine levels in Dante's depiction of hell.
Just six more to go.

 

[Yuri_G]

For anyone else keeping track VW missed their 2018 EV goal by about 250k. 2025 will be different, right?

VW Makes Big Bet on EVs

 

[ZachShahan]

I don't think it's Deepak retiring.

I think it's that a 50B+ public company just handed the CFO job to an internal 31-year-old.

It should be easy for Tesla to recruit incredible talent for the CFO job. Why didn't they?

They don't want a high-cost outsider who might not understand Tesla culture, and who might stay for a few months and then jump to something else. They know Zach. They know he's happy at the company. They know he knows the company well. They know he's qualified. They want to reward him for being an early guy in the company.

Common sense. Their only worry was probably the market reaction, and they clearly said, "screw it."

How old was JB Straubel when he became CTO?

 

[S3XY]

Yep.

Production Hell
Delivery Hell
Service Hell
Short's Hell

FTFY

 

[Yuri_G]

They don't want a high-cost outsider who might not understand Tesla culture, and who might stay for a few months and then jump to something else. They know Zach. They know he's happy at the company. They know he knows the company well. They know he's qualified. They want to reward him for being an early guy in the company.

Common sense. They're only worry was probably the market reaction, and they clearly said, "screw it."

How old was JB Straubel when he became CTO?

Wikipedia gave me this gem JB's Home Page

Looks like 31 from the last update on that website.

 

[S3XY]

Tesla's electric to ICE in-car drive train cost differential (likely referring to Model 3); guess off the top of Elon's head, currently $7k more, trending to $4 to $5k. But total cost of ownership for electric is lower. As Elon said at the beginning of the call, the major problem is that people who want Teslas just can't physically buy them because they don't have enough cash, so getting the (initial car) cost lower is important.

This would also suggest that leasing will be a big demand lever.

 

[Cherry Wine]

Green compared to tomorrow's open or today's close of 308 ?

After the past few ERs, when Tesla moved down after ER (5 times) - it came back to previous day's close (i.e. today's close for this quarter) within 3 to 12 days. One of those times, it didn't come back within 15 days (that I was checking).

This doesn’t feel like one of the latter. “Bad” news was way too overblown.

Lets see.
Nine levels in Dante's depiction of hell.
Just six more to go.

I’m hoping the ninth level is:

Finding Places to Stash All this Money Hell

 

[jhm]

Cash burn is over.

2017 saw ($61M) cash from operations against $3,415M in capex, ($3,354M) in free cash flow.

2018 saw $2,098M cash from operations against $2,101M in capex, just ($3M) in FCF.

So all of 2018 was roughly FCF neutral. This is why no capital raise was needed.

Now let's fast forward to 2019. It this is just a replication Q4 in terms of cash flow from operations, then we are looking at about $5B for all of 2019. Tesla is guiding $2.5B in capex. So 2019 could see $2.5B in FCF.

 

[30seconds]

Leasing + SR Model3 will be an INSANE demand level.

Basically $3500 + $400 / month (lease)

 

[ZachShahan]

He's chasing Red Herring. Communication is broken, and Elon keeps talking about his unrelated pet ideas that mostly already work well. Enhancing them will help on the margin, but it won't fix massive communication issues that are prevalent today. And it's not only service: all touch points are compromised (CS, Sales). When you get to people they're usually great, but system is poorly setup, black holes of missed communication, lost tickets, delayed answers, lack of info about status of the car, poor processes etc...

They actually have no clue why they have a problem, and are not listening. This is a symptom, like just recently realizing that they don't have good geographic coverage for US, of which @neroden has complained for years. It's very unfortunate that I recognize this sort of blindness from my own experience and I know it's not easy for Teska execs. While it may look trivial to us, sometimes it's much, much harder understanding the problem from the inside of the company, because of the avalanche of data one is exposed to.

We see anecdotes, and while usually unhelpful, they sometimes may the the right tool to communicate nature of the problem to executives. For example, no one is returning my call in order to sell me the car. No app is gonna help with that. If anyone has ear of the Tesla management (@bonnie), it's important we tell them what Elon described is not a solution. Someone needs to answer phones, and be able to follow up, and it seems that people in Tesla are in their own quagmire of poor process/systems implementation.

I'm gravely concerned: Seriously thinking about going down to only 50% TSLA. This is first time I've thought like this since early 2015
@tinm has similar post, just two posts above:
Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable

We can publish an article about this stuff. I was going to reach out to @tinm based on his post above, but thinking it would be better to have a joint piece written by a few of you, and signed off by others.

Just need 1-3 of you to take a lead on it, and can either include me in a Google Doc working draft or share a full draft when it's ready.

I know @neroden has had important and valid complains about comms for years (like many others). Would recommend involving him if he's willing.

Thanks!

 

[EVNow]

They don't want a high-cost outsider who might not understand Tesla culture, and who might stay for a few months and then jump to something else. They know Zach. They know he's happy at the company. They know he knows the company well. They know he's qualified. They want to reward him for being an early guy in the company.

The high-cost outsider will have ZERO commitment to Tesla - and will jump ship if someone offers more money (for less work too!). The most important thing to consider is fit of the person to Tesla in terms of culture, work hours etc. Someone willing to work hard and put up with demands of EM needs to be really committed to Tesla's vision. If they think of it as another job, it won't work. This is infact the reason we regularly see execs depart. They can't handle the workload.

 

[ZachShahan]

(request for moderator to fix my typo and delete this post. )


What am I? Your editor? Or just some lowly proofreader?