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

[Off Shore]

So was that the MMD?

 

[UncaNed]

Might seem dramatic but I just want to emphasize that the german workers councils are not the UAW. No more so than Chrysler is Google. Just massively different animals. It's one reason why the german auto industry started looking abroad for manufacturing, going to poland, hungary, etc. The managers in the companies I consulted for tread on eggshells around the workers councils and they were german as they come.

By comparison, how are things working out with Grohmann since Tesla bought them? Aren't they union?

 

[heltok]

Tesla #3 by market cap now:
Top 25 Automakers by Market Cap

 

[Mike Smith]

Does anyone know if the latest shareholder deposition that Dana Hull quoted is available e.g. on Court Listener or another online service? There was a curious quote from Musk there, saying that in hindsight he probably would not have acquired Solar City. I'd like to see it in the context of the full deposition if it is publicly available.

I read it and I remember reading that part and thinking it was nothing bad. She's misrepresenting what he said. It was something along the lines of if he had know Model 3 was going to be a disaster he might have delayed the purchase of Solar City, since it delayed when they could actually focus on Solar City. He never said he regretted acquiring Solar City.

His overall argument is that the only reason Solar City struggled initially is because they needed to take away all the engineers and other resources to help with Model 3, but now they're back on track.

 

[johnnybgood888]

Where's the best place to learn the basics about calls? I know next to nothing about options.

You do know how millionaires are made playing options, right? They start out as billionaires.

 

[Prunesquallor]

Absolutely. And while the average per-capita GDP is rather low, this does not apply to everyone in the country, and there's surprisingly strong EV incentives there. They can justify a small Tesla presence in the east and north.



Here's the E30 / M5 en route to Chelyabinsk:

View attachment 476482

Road from Nur-Sultan to China (not as good, but definitely a road):

View attachment 476486

China, en route to Urumqi:

View attachment 476487

From Urumqi:

View attachment 476489

Some of the folks I used to work with went hunting meteorite fragments after the Chelyabinsk Event. They were out in the surrounding countryside, and unfortunately saw massive environmental damage from the mining and metallurgical industries during the Soviet era.

 

[dc_h]

I'm sure its posted upthread, but Global Times quotes Elon as projecting about 17,400 cars built in Shanghai by end of year. That should mean Q4 production of about 120,304. If they nail deliveries as well as production, Q4 should be great. Toss in a surprise from TE and we could have a really nice start to 2020.

Tesla's Gigafactory 3 in Shanghai obtains green light for mass production - Global Times

 

[ggr]

Probably much too small. There is plenty of land out there. The area is not very developed. Lots of water, though not actually a swamp. The region will profit handsomely, as it is currently considered the poor side of Berlin.

I am contemplating taking some of the TSLA profits and investing in real estate in the area - like housing.

A good idea if you can manage the property, or engage good property managers. Employees at the new factory will probably be very reliable renters. Or you could look at commercial properties like convenience stores. We turned some of our early Tesla profits into a medical clinic and a rental apartment.

 

[Tslynk67]

BTW, say hello to Tesla's first Supercharger in Kazakhstan (and indeed, central Asia in general)

View attachment 476475

Can't wait to see that turn into a route from the European Supercharger network, through Ukraine into Russia, to Chelyabinsk (WNW of Nur Sultan), through Kazakhstan, into China, and via Urumqi to the established Supercharger network in the east.

Elon did promise this in Kazakhstan, can't quite recall when though...?

 

[SteveG3]

I'm sure its posted upthread, but Global Times quotes Elon as projecting about 17,400 cars built in Shanghai by end of year. That should mean Q4 production of about 120,304. If they nail deliveries as well as production, Q4 should be great. Toss in a surprise from TE and we could have a really nice start to 2020.

Tesla's Gigafactory 3 in Shanghai obtains green light for mass production - Global Times

I think that’s sloppy reporting at best.

From the “article,”

“According to information obtained by the Global Times, the estimated weekly output will be 2,900 units at the phase-1 factory complex. So with six weeks left in the year, the factory could make 17,400 of the Model 3.“

 

[PaulRocket]

I'm sure its posted upthread, but Global Times quotes Elon as projecting about 17,400 cars built in Shanghai by end of year. That should mean Q4 production of about 120,304. If they nail deliveries as well as production, Q4 should be great. Toss in a surprise from TE and we could have a really nice start to 2020.

Tesla's Gigafactory 3 in Shanghai obtains green light for mass production - Global Times

That's not what the article says. The author is speculating, here is the exact quote:
"According to information obtained by the Global Times, the estimated weekly output will be 2,900 units at the phase-1 factory complex. So with six weeks left in the year, the factory could make 17,400 of the Model 3. "

I don't think anyone should expect that number. I would be very happy if Tesla reaches 1k per week at the end of December and produces somewhere between 1k and 5k Model 3s in China in 2019.

 

[Unpilot]

So if I have a $420 profit on $420 calls....do I HAVE to sell?

 

[ggr]

Fantastic write-up, but I'd like to quibble with this part.

Convertible bonds have reduced yields, in exchange for the conversion option: above $250 or $360 (depending on which bond we are talking about) they can be converted into TSLA stock. I.e. above their conversion price they have 1:1 equity returns, dollar for dollar.

With that in mind it makes little sense to "hedge" anything IMHO: the unlimited equity upside, while having a 100% face value payment guarantee if the stock price is too low is the whole point of convertible bonds.

Some funds might use the convertibles to short against the box, or to take profits once the equity returns are satisfactory, but I believe the typical Tesla convertible bond holder is more like George Soros (who never shorts manufacturing companies) or Chamath Palihapitiya (Facebook angel investor and former derivatives trader and software developer - he has a colorful CV) - who in this CNBC interview explains why he invested in Tesla's convertible bonds.

Most of the convertible bonds are still below the conversion price - so I think only a minority of them are shorted against.

The 2024 bonds (the most recent offering) convert at $309.83. See Bond trading

 

[Tslynk67]

1. It’s only premarital would wait for open market before expressing disappointment.
2. Wait for release of incentives to do the factory their

Nope, I've run it through Google Translate, but still don't have a clue what you're trying to say...???

 

[Fact Checking]

I think that’s sloppy reporting at best.

From the “article,”

“According to information obtained by the Global Times, the estimated weekly output will be 2,900 units at the phase-1 factory complex. So with six weeks left in the year, the factory could make 17,400 of the Model 3.“

Appears to be quite well sourced, if we look at the wider context:

"An employee in the PR department of Tesla in Shanghai confirmed the news to the Global Times."

"At the end of October, Tesla Global Vice President Tao Lin said that the Shanghai factory is ready for production and sales will begin after its gets product certification and government approval. The company has conducted trial production at the plant."

"According to information obtained by the Global Times, the estimated weekly output will be 2,900 units at the phase-1 factory complex. So with six weeks left in the year, the factory could make 17,400 of the Model 3."​

 

[EinSV]

Dana claims "Elon Musk’s Solar Deal Has Become the Top Threat to Tesla’s Future".
It is quite clear that Solar has become the focal point of shorts and the FUD media now that they have lost everything else. Kind of ironic given everyone still values it as zero. But i do think it will continue to create negative noise, together with the other spurious lawsuits Tesla/Elon are fighting.

It was always clear that Tesla's acquisition was bailing out a company in temporary liquidity trouble, however this does not mean it was not good value. Solarcity had liquidity trouble because shorts led by Chanos played an effective Confidence Crisis Short & Distort strategy to misinform people about SolarCity's very complicated business model and to cut off its access to the capital markets which it needed to continue building its lease portfolio. SolarCity's heavy reliance on leasing and external financing wasn't the most sensible model, but this doesn't mean they were not creating long term value. Part of the reason for the extreme and irrational hatred of Elon from shorts like Chanos is that they were like a pack of wolves that had wounded their prey and they were going in for the kill. Elon stepped in and took this prey away from them after they had already smelt blood and they have never given up the chase again since.

Just a reminder of what Tesla actually bought with the Solarcity acquisition which was approved by 85% of shareholders:

• A portfolio of solar leases generating c.$400m annual revenue with very limited cash cost (mostly maintenance) and 25 year term and likely renewal post lease. This is well over $10bn of undiscounted cash flow.
• A $1bn custom built factory
• Solar staff with experience of solar admin and installation.
• Solar engineers who also have expertise that can be used for Electric Vehicles, Battery and Charger installation.
• Sales/word of mouth synergies with environmentally conscious customers.
• Experience in operating as a utility that can be used for Tesla’s Virtual Grid strategy.
• A call option on solar R&D expertise with Silveo (which later expired worthless but had option value at the time).
• Early work on the solar roof product and lots of expertise to take it further.
• By saving Solar City, Tesla also protected Elon’s brand which has huge value for Tesla. They also reduced the risk of fear contagion to Tesla from a Solarcity bankruptcy.
• A full Solar + Storage + EV offer to help fight the FUD that EVs are still powered by dirty energy.

For this, Tesla paid:

• $3.2bn debt (more than half of this was non recourse project financing).
• $1bn of minority equity interests in the solar lease portfolio (can be thought of as amortising subordinated non recourse debt)
• $2.1bn Equity.

Things haven't gone smoothly at Solar City and the solar roof took longer than planned, but i think in the long term it will still prove to be a great acquisition.

If Solarglass Roof has even a fraction of the sales Elon predicted (10K/wk then 20K/wk), then all the hand-wringing and kvetching about Solar City will look petty and short-sighted -- if not downright ridiculous -- in hindsight.

Unfortunate it's been delayed but should be amazing once Tesla begins producing and installing in volume.

 

[Chickenlittle]

Nope, I've run it through Google Translate, but still don't have a clue what you're trying to say...???

Just put me on ignore then

 

[nativewolf]

Fair enough. But Tesla isn’t another German Mfger and Elon isn’t your average eggshell walking CEO. Everything will work out just fine.

The location choice is very clever. Like crazy like a fox good. I was hoping for Poland, but this is better and labor could easily be pulled from Poland anyway.

It is a good location, just like Toyota opening factories in the US in the 80s. Smart business beyond the utility of the factory. It will allow German's to buy a Tesla with less guilt/pressure to buy a stupid vw and Germans are nationalistic, they like to buy German.

BMW couldn't make that site work, if Tesla can that's a good gut punch too.

It is German but Northern German, different politics and culture than the south of Germany.

It is normally the non egg shell walking CEOs that have gotten in the most trouble with workers councils..that's precisely the risk issue here. Oh well, good marketing means some risks.

Speaking of Risks...the stock price is holding up on a slightly down day for the market.

 

[SteveG3]

​

Appears to be quite well sourced:

An employee in the PR department of Tesla in Shanghai confirmed the news to the Global Times.

At the end of October, Tesla Global Vice President Tao Lin said that the Shanghai factory is ready for production and sales will begin after its gets product certification and government approval. The company has conducted trial production at the plant.

According to information obtained by the Global Times, the estimated weekly output will be 2,900 units at the phase-1 factory complex. So with six weeks left in the year, the factory could make 17,400 of the Model 3.​

the sloppy reporting I refer to is taking the phase 1 target of 3k vehicles per week (for whatever reason reported here as 2.9k) and assuming that immediately Tesla produces at that rate for the remaining 6 weeks of 2019.

Things move faster in China, but, going immediately to 2.9k or 3k per week is almost ‘certainly’ incorrect.

 

[Tslynk67]

So Germany’s unions “welcome” Tesla while UAW does all in its power to destroy Tesla and choke production of EV’s in the U.S.. (see my earlier post, set up for long term Euro auto win)

Fire Away!

I've been hoping for Tesla to diversify out of the USA for a long time, so relieved this is hapenning.