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

[tinm]

Gali has a new video on the Pickup:-

I agree with his eventual 150K sales target...

In terms of where to build it, Tesla may need a new factory on the East Side of the US, to build Model 3, Model Y and the Pickup...

That would smooth out a lot of their delivery logistics...

I also think a car factory outside of California may help convince some US Pickup buyers that Tesla is a US company...

So I can't quite see Gali's late 2021 target, perhaps late 2022 for early low volume production...

They make make the Semi at GF1 but beyond that it is going to take time to sort out housing and all the associated issues.

They may build something at Lathrop, but again my hunch would be something Plaid..

They may squeeze Model 3, Model Y and updated Model S/X into Fremont, but again my guess is that is about the limit..

But it is very easy to be wrong in trying to guess this stuff... I'm not confident.... apart from the minimum 150K annual demand for the Pickup

Let’s just say I’m pretty sure Elon also believes the Tesla pickup is reminiscent of the APC (armored personnel carrier) shown in the 80s movie ALIENS.

 

[jerry33]

Tesla is not a “car manufacturer” it exists to accelerate the transition to sustainable energy. That means remaining sustainably profitable to enable a massive expansion which includes premium mark up on options but absolutely not to the suppression deployment of sufficient numbers of products to assure market penetration capable of overcoming the status quo.

Fire Away!

Well,, to further the mission, cashflow (created by gross margin) is needed. Emphasizing configurations with higher margins rather than the lower margin base models furthers the mission. Because the context is cars, what other car manufacturers do is relevant in this case. Other car manufacturers have the dealers do this for them, in Tesla's case, with no dealers, the base model is a bit harder to obtain.

 

[Fact Checking]

Here's the summary:
As previously reported, Roth Capital analyst Craig Irwin downgraded Tesla to Sell from Neutral after reviewing the company's 10-Q filing for the third quarter, which he said offers evidence that the company's margin performance is "unsustainable."

Nonsense:

Warranty adjustments are a large driver of the reported margin beat, according to Irwin, who said the quarterly filing shows that Tesla cut accruals by $185 per car and reversed certain warranty provisions for a one-time benefit.

Firstly, this was entirely expected: actual warranty outflows came down dramatically since early 2018, due to Model 3 production quality improvements. Adjusting warranty reserves was entirely justified.

Secondly, $185 per car is only around 0.3% of margin, and the margin improvements are permanent, I.e. sustainable.

The margin beat was also helped by allocating fixed costs over 10% higher production,

Tesla's fixed costs were depreciated significantly faster than German carmakers are doing with comparable equipment - so this too was justified and is sustainable.

automotive inventory liquidation,

Inventory actually went up, plus liquidation of pre-Raven units in Q3 reduced ASP and margins ...

and a in release of Smart Summon deferred revenue, said Irwin

This was only $30m, deferred revenue actually increased significantly over Q2.

I.e. not only is this sustained, there's more margin improvements lined up.

who maintains his $249 price target on Tesla shares.

Oh, that price target certainly explains his TSLAQ truthing about the 10Q...

 

[viridi]

I don't know... another BS in short's pants.

Craig Irwin - ROTH Capital Partners | About ROTH | Investment Banking
Managing Director, Senior Research Analyst
t: 646-358-1910, e: [email protected]
Joined ROTH: September 2014
Coverage: Cleantech
Education: BS from the University of Rochester
Experience: Wedbush Securities, Merriman Curhan Ford, and First Albany
Craig Irwin is a Managing Director, Senior Research Analyst leading ROTH’s Cleantech coverage in biofuels, advanced lighting, and the companies providing products and services that enable the Utility of The Future, including batteries and electric vehicles. Prior to joining ROTH Capital Partners, Mr. Irwin covered Cleantech companies at Wedbush, Merriman Curhan Ford, and First Albany, where his equity research experience in the sector reaches back to 2001. Mr. Irwin has also served as a Director of corporate strategy for a public energy storage company, where he completed the acquisition of leading energy storage and technology companies.


Mr. Irwin has a BS from the University of Rochester.

Not exactly the best analyst:

https://www.tipranks.com/analysts/craig-irwin

Analyst Profile

Craig Irwin
Roth Capital
Wall Street Analyst
Ranked #2,301 out of 5,583 Analysts on TipRanks(#4,587 out of 12,584 overall experts)
Craig Irwin's Performance
Success
Rate
46%
126 out of 272 ratings were successful
Average
Return
+1.2%
Average return per rating

 

[Nocturnal]

GM, Toyota, and Fiat are backing Trump's ridiculous lawsuit against the CA clean air standards.
*fast forward anywhere from 6 months to 5 years from now
"Halp, these new air standards aren't fair. We didn't know this was coming and now we will be at a disadvantage!" Pollution and climate change aside, they are short sighted idiots.

GM and Toyota Support Trump Administration on Emissions Rollback

 

[Artful Dodger]

*fast forward REWIND anywhere from 6 months to 5 years from now to 45 YEARS AGO. "Halp, these new air standards aren't fair.

FTFY.

 

[StarFoxisDown!]

Would be pretty good show of strength to come all the way back go a break even for today considering the pressure put on the stock this morning

 

[Dan Detweiler]

I’d agree with you but when I priced my M3 for trade in with Tesla it was a joke. I owed more than the trade in value of the 3. Much better off keeping the car.

...or sell privately.

Dan

 

[KarenRei]

Would be pretty good show of strength to come all the way back go a break even for today considering the pressure put on the stock this morning

I find it hard to sweat this noise given how far up we are. Would have liked to have deleveraged a bit more than I did before jumping back down, but I got half done with what I planned to. There's so much awesomeness coming this quarter, a couple kittens batting at the stock price doesn't faze me.

 

[StarFoxisDown!]

I find it hard to sweat this noise given how far up we are. Would have liked to have deleveraged a bit more than I did before jumping back down, but I got half done with what I planned to. There's so much awesomeness coming this quarter, a couple kittens batting at the stock price doesn't faze me.

I'm not worried about the stock or whether it drops through this or that level, etc.... I am however very tired of being in this trading range and am very impatient on entering a new trading range

 

[woodisgood]

So is this pretty much the extent of the 10Q damage they were hoping for?

 

[Bobfitz1]

With trucks being the #1 seller in the US automotive market, I think it makes more sense to talk about production targets instead of sales targets. They will sell every one they can make, it's just a matter of how many they can make.
I think Gali is wrong about the range of the base model being 350 miles. I'm guessing 220 miles. That's enough for a contractor that works in one city with perhaps trips to nearby rural areas and is the only way to keep the price of the base model under $50K. I'm expecting to order the longest-range version (hopefully around 400 miles) and I imagine there will be some expensive options that are going to be hard to pass up. Truck buyers like to spend a lot of money on options because their truck is part of their identity so it would be a mistake for Tesla to not capitalize on that.

My guess would be higher than 220 miles. Tesla's cell cost is going down 7+ % each year and truck production is two years off.
The extra cost to make the short(er) range variant 300 miles is just not that much (by then) to cheap out on range for the SR Pickup.
All the more for a high ASP vehicle.
More important, we'll learn in a few months in what time frame the Maxwell battery tech will lower cell cost even more than the incremental Li ion yearly cost reduction.

 

[AlexS]

Not exactly the best analyst:

https://www.tipranks.com/analysts/craig-irwin

Analyst Profile

Craig Irwin
Roth Capital
Wall Street Analyst
Ranked #2,301 out of 5,583 Analysts on TipRanks(#4,587 out of 12,584 overall experts)
Craig Irwin's Performance
Success
Rate
46%
126 out of 272 ratings were successful
Average
Return
+1.2%
Average return per rating

Thanks for the picture, now I understand the bullshit, seen him on yahoo and msm talking total misleading crap many times. Basically irrelevant analyst, trying to help his shorty friends.

 

[KSilver2000]

I’d agree with you but when I priced my M3 for trade in with Tesla it was a joke. I owed more than the trade in value of the 3. Much better off keeping the car.

You shouldn't be comparing the trade-in value to what you originally paid. It is relative to what it costs a buyer new now.
If you're serious about trading in, it's best to get a trade-in quote every once in a while. Tesla seems to change their trade-in values as often as their used car values with no rhyme or reason. Goes up and down like the stock market. Someone on the forum recently got a trade-in value of just 20% off current new prices for a one-year-old 3.

 

[Nocturnal]

My guess would be higher than 220 miles. Tesla's cell cost is going down 7+ % each year and truck production is two years off.
The extra cost to make the short(er) range variant 300 miles is just not that much (by then) to cheap out on range for the SR Pickup.
All the more for a high ASP vehicle.
More important, we'll learn in a few months in what time frame the Maxwell battery tech will lower cell cost even more than the incremental Li ion yearly cost reduction.

Definitely. A truck with 220 with no load isn't great because you will wind up at closer to 100 actual with load. The range will need to be at minimum 220 miles WITH a moderate payload.

 

[Bobfitz1]

I don't agree with any of this. Weird that I find myself agreeing with Gali and not you!

• In heavy work duty, a 220mi truck would be lucky to go 100mi and need to stop to charge every 75 miles or so. That's grossly insufficient. That would make the truck a mockery. Huge negative PR. Tesla would never do this.
• It's not even remotely the "only way to keep the base price under $50k". At, say, $130/kWh pack cost and 310Wh/mi, a 350mi SR truck would have a $14k pack. That'd be $4k more expensive than a Model 3 LR's pack and $7k more than a Model 3 SR+'s pack. How's that supposed to be a barrier?

I think Gali's estimate of 350mi for an SR version, and perhaps 550 for an LR version, sound reasonable. Non-work-duty ranges must be huge because work duty will slash them heavily. If they don't do this, the truck will be a joke, only suitable for in-town work.

Totally agree that Tesla will make sure even SR trucks will have generous amount of range. However these trucks will have Regen braking just like every model Tesla makes. How do you figure a heavy work duty truck w X miles of light load range would use over double the Kwh when working with heavier real life loads? I would think Heavy work duty doesn't mean mostly hauling heavy and large drag loads for hours each day on superhighways at 70 mph. Which would be the worst case for KWh per mile efficiency.

 

[Artful Dodger]

In case you haven't heard this yet on Rob Mauer's Tesla Daily Podcast:

Robyn Denholm & Ron Baron Speak at Investor Conference, GM & Others Back Federal Government on Emissions Standards (10.28.19) - TechCast Daily

Cheers!

 

[jbcarioca]

A3 is produced locally? At what factory? Knockdowns? Remember that knockdown parts are only taxed at 2% unless they're available locally.

For the Tesla comparison, remember that it doesn't exactly take ages to install a $10k battery to an already knocked-down car. And the whole rear suspension / drive unit assembly is held in place by just four bolts and attached via a handful of connectors.



Even going with that, 10k cars would be about 3% of Tesla's entire global Model 3 sales right now, for just one country.



Again, "parts not manufactured locally" face only a 2% tariff. I think it goes without saying that the vast majority of the hardware on a Tesla has no locally-manufactured equivalent..
.

As usual, I agree completely with your post.
FWIW, VAG did assemble a past-generation A3 in Brasil for domestic and Mercosur consumption. They discontinued that product a decade or so ago. VAG produces hundreds of thousands vehicles in Brasil and Argentina for Mercosur consumption and a couple for export. They periodically import vehicles from Mexico on favorable terms. PSA also does the same. The largest producer is Fiat, whose largest market is Brasil (larger than Italy). Daimler Benz also does large production in Brasil, mostly Trucks and busses, where DB and VAG are the two largest producers.

India shares with Mercosur the growing importance of Chinese producers. In Brasil Chery is by far the growth leader in cars with production rapidly increasing.

The biggest news, in my opinion, is that only the Indian (JLR) and the Chinese (Volvo, Chery, JAC) have definitive BEV entry plans among the new entrants. The Zoe and the Leaf are both here, but only in a couple of cities, and there not with strong support.

There is little question in my mind that the Chinese and Indians are making big plans, with busses and small urban delivery vehicles at the forefront. Specifically the Indian push for small urban vehicles will change much of the world. Tesla is the only player ready for infrastructure to handle this progress, at present. The Europeans are rapidly dominating the infrastructure side, as exemplified by their dominance in wind turbines. The Chinese own solar generation.

I strongly think the entire world outside of major traditional industrial countries is not even aware of how far behind they are. Only a handful of EU countries are successfully preparing. Even Germany persists in dependence on coal and Imported natural gas.

Tesla remains the only real pure play. Just imagine how much growth an be in energy storage by itself.

 

[ReflexFunds]

So about the extent of FUD TSLAQ could drudge up from the 10-Q:

Craig Irwin from ROTH Capital Partners. He thinks it is unfair that Tesla has increased car production quality and thus reduced warranty reserve. Because of course production quality is not a normal or predictable goal of an auto manufacturer. He also thinks it is unfair that Tesla has increased production and therefore increased leverage of fixed costs.

Jim Chanos. He thinks it is unfair that Tesla has negotiated lower pricing from its suppliers now it has increased production scale. Because of course lower supplier pricing is not a normal or predictable goal of an auto manufacturer.

Charley Grant. He thinks it is unfair that Tesla is selling cars outside of US, China, Norway and Holland. Because of course, only frauds think the world consists of more than just 4 countries.

PlugInFUD (with support from TESLACharts and some cautious support from Chanos). Thinks three digits repeating between earnings report is clear evidence of fraud.

Mark Spiegel. Same as the above, but with a different three digits.

That's about as far as I'm willing to delve into TSLAQ's dream world. Honestly these people are so stupid it makes my head hurt (they are also fraudulent and spreading deliberate misinformation, but the quality of their FUD is so poor it is their stupidity that gets me most).

 

[KarenRei]

Totally agree that Tesla will make sure even SR trucks will have generous amount of range. However these trucks will have Regen braking just like every model Tesla makes. How do you figure a heavy work duty truck w X miles of light load range would use over double the Kwh when working with heavier real life loads?

Because they just do. Check out any video on YouTube of a Model X towing a heavy load and check out how much its consumption spikes. Here's one for you. "Slightly over double" was me being generous. Same sort of thing will happen if you put an oversized draggy load in a bed and spike your streamlined truck with a Cd in the upper 0,2s into the 0,6s or so while increasing your cross section. Or when you drive offroad (aero drag shrinks to almost nothing, but rolling drag increases by as much as an order of magnitude, depending on the terrain). Or basically all the sort of things that pickups are designed to do.

Pickups have to have huge ranges in "normal" driving, because in work duty, their energy consumption will go off the charts.