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

[M3Rider]

I can't believe that after wading through half a dozen pages, nobody has mentioned the obvious about the price cut (which I should reiterate, was for US/Canada, *not* EU/China).

Let's pick Germany as an EU country for comparison.

Model 3 LR AWD: €55400 = $63125, / (1,19 VAT + 0,1 tariffs) = $48934, minus (large) international shipping costs

Now, the US before the cut:

Model 3 LR AWD: $51000, minus (small) domestic shipping costs

And the US after the cut:

Model 3 LR AWD: $49900, minus (small) domestic shipping costs

Got that? Even after the price cut, Tesla earns significantly more money on its domestic sales than its international sales. It wants to sell more at home. A US/Canadian price cut says not a bloody thing about EU and China demand.

So what's the argument - Tesla can't sustain 5+k/wk in just the US and Canada with no non-pup SR? Well no freaking duh. Who was arguing that they ever would? That said, the closer they get to non-PUP SR, the larger the percentage of their sales they'll move in the US and Canada, and thus the less international shipping and tariffs they have to pay to sell their production.

Looks like cost for Europe is 30% more, not 20%.

So, $49,900*1.3=$64,870=57,027€ that would be an equal price for selling a Tesla in Europe not considering the extra shipping.
So, looks like Tesla eats at east 1,600€, which means a smaller margin.

 

[KarenRei]

Looks like cost for Europe is 30% more, not 20%.
View attachment 374943
So, $49,900*1.3=$64,870=57,027€ that would be an equal price for selling a Tesla in Europe not considering the extra shipping.
So, looks like Tesla eats at east 1,600€, which means a smaller margin.

Try adding my 1,19 (100% of the sale price + 19% (German VAT - most of Europe is around 20%)) and 0,1 (10%, the EU tariff) and let me know what number you get

My post did that math in the other direction - taking the current German pricing and eliminating VAT and tariffs.

Either way you do it, it's clear that margins are significantly higher (for a given model) to sell it in the US. So sure, moving a P3D in Europe or China is better than an MR in the US - but EU and China P3D demand is limited and easy to saturate. When it comes to moving, say, a dual motor AWD? They definitely would rather do that in the US than EU or China. They don't even offer the MR in Europe or China yet as the margin would be even smaller than it already is in the US.

 

[bhtooefr]

I saw several posts suggesting selling the Model 3 MR as SR with software limited pack.

The new battery module which is "lighter, better and cheaper" is already being made I think - carsonight has said something like it - and Elon also guided production of the new pack in Q1 2019.

I believe we'll see the Model 3 SR for sale soon. It's just not finished yet.

Oh, I should be clear here - when I'm speculating about a SR-as-limited-MR, I'm assuming that this would be a new MR pack based on the new architecture. It's talked about in the context of SR, but I haven't heard anything saying that the architecture is specific to SR (for all we know, it may also support LR and reduce costs and weight there, too).

 

[ktrivedi70]

Something just occurred to me. Since Tesla depends upon non-traditional advertising (word of mouth, Twitter, etc), then expanding the market (by lowering cost) is also increasing your advertising, without paying for advertising. It's actually marketing that creates income rather than expense. Pretty clever.


edit- clarified the second item in parenthesis

 

[Fact Checking]

Something just occurred to me. Since Tesla depends upon non-traditional advertising (word of mouth, Twitter, etc), then expanding the market (by lowering cost) is also increasing your advertising, without paying for advertising. It's actually marketing that creates income rather than expense. Pretty clever.

Exactly: the significant "network effects" of word-of-mouth and non-broadcast based advertising/marketing.

It's slower and more difficult to bootstrap (you really have to build a significantly better product, you cannot just lie about your product in broadcast media), but once it gets going it's self-sustaining.

 

[ReflexFunds]

Global EV sales achieved a 59% CAGR from 2012 to 2018, reaching 2.018 million (69% are EVs, 31% PHEV). Pure EVs grew 72% in 2018 & 63% in 2017.

Over this period annualised December sales have roughly equaled the following years sales. 286k Dec-2018 sales could suggest 3.437m 2019 EV sales.

Global EV sales CAGR has been 59% over the past 6 years; if this growth rate is sustained for the next 6 years then December 2024 EV sales will reach an annualised rate of 55.5 million. This would likely require $400-600bn capex on car, powertrain & battery pack factories and $100-200bn on battery cell factories, together with significant investments in Nickel refining & cobalt/lithium mining & refining. Only pocket change compared to the $5trn annual global fossil fuel subsidies.

 

[DaveT]

Something just occurred to me. Since Tesla depends upon non-traditional advertising (word of mouth, Twitter, etc), then expanding the market (by lowering cost) is also increasing your advertising, without paying for advertising. It's actually marketing that creates income rather than expense. Pretty clever.


edit- clarified the second item in parenthesis

This assumes that lowering price expands the market. There's also the possibility that lowering the price doesn't expand the market, especially in scenarios where most people don't know much about your product. Example, if Tiffany's lowers their prices on their products by 5%, would it really expand their market?

 

[Fact Checking]

This would likely require $400-600bn capex on car, powertrain & battery pack factories and $100-200bn on battery cell factories, together with significant investments in Nickel refining & cobalt/lithium mining & refining. Only pocket change compared to the $5trn annual global fossil fuel subsidies.

With the small complication of convincing established 'old energy' owners of fossil fuel extraction and distribution infrastructure to part with those trillions of dollars subsidy supporting a ~100 trillion dollars capital investment.

 

[omgwtfbyobbq]

The caps are worse at low temp also. 225 amp mas at 40 deg C, 140 A at 15 C.

They are. At the same time, the loss in power compared to temperature isn't as bad as it is with batteries.The spec sheet for this Maxwell module lists the operating temperature range as -40C to 65C. Each of these modules provides ~15kW and weighs ~12lbs, so adding an extra ~60kW of power would increase vehicle weight by 50lbs (less if they are integrated into a car instead of separate modules).

https://www.mouser.com/datasheet/2/257/Maxwell_16VModule_DS_1009363-10-1179674.pdf

 

[mekberg]

This assumes that lowering price expands the market. There's also the possibility that lowering the price doesn't expand the market, especially in scenarios where most people don't know much about your product. Example, if Tiffany's lowers their prices on their products by 5%, would it really expand their market?

Veblen good - Wikipedia

 

[M3Rider]

Try adding my 1,19 (100% of the sale price + 19% (German VAT - most of Europe is around 20%)) and 0,1 (10%, the EU tariff) and let me know what number you get

Somehow mis-read as 0,01. Right.

 

[viridi]

CNBC seems like it is about to do its normal Tesla bashing. Going into commercial, "Tesla lowers prices . . . again." They are going to discuss it in a few minutes.

 

[Majorgroove]

CNBC seems like it is about to do its normal Tesla bashing. Going into commercial, "Tesla lowers prices . . . again." They are going to discuss it in a few minutes.

I just cant stand CNBC and all of its TSLA bashing. I'm waiting for the day that TSLA will be the wall street darling, it will come.

 

[MXWing]

 

[Cherry Wine]

FYI:

U.S.'s Mnuchin to visit China next week for trade talks: CNBC interview | Reuters

WASHINGTON (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Wednesday that he and other U.S. officials will travel to Beijing next week for trade talks, aiming to clinch a deal to avert a March 2 increase in U.S. tariffs on Chinese goods.

 

[viridi]

CNBC seems like it is about to do its normal Tesla bashing. Going into commercial, "Tesla lowers prices . . . again." They are going to discuss it in a few minutes.

They bashed a bit. Talked about competitors coming, huge upcoming debt payment and the need for the stock to be above $360 (did not mention that Tesla has clearly stated that the debt payment is not an issue), and a bit about demand concerns.

 

[Curt Renz]

InsideEVs - 38 minutes ago: Daimler In Talks With Tesla For Electric Van

 

[avoigt]

Employee apparently is telling customers that Elon himself called yesterday with the message to deliver 150 cars today. They were totally unprepared for it which is why they are manning the phones trying to reach as many customers as possible to hear if they have insurance etc lined up. One guy who had to decline because he is flying tonight got a second call at the airport if he really isn't able to make it. So it seems plausible. But on the other hand : it's a story from Tesla employees so anything could be true or not. Witness : some are saying 150, some 200 and another one told a customer only performance cars are on this boat while there is at least one confirmed delivery of a non-performance tonight as well. So...

Thanks thats helpful! Lets see ... would be quite a scoop....

First delivery days I have seen provided are Feb 12th.

 

[Curt Renz]

CNBC seems like it is about to do its normal Tesla bashing. Going into commercial, "Tesla lowers prices . . . again." They are going to discuss it in a few minutes.

They bashed a bit. Talked about competitors coming, huge upcoming debt payment and the need for the stock to be above $360 (did not mention that Tesla has clearly stated that the debt payment is not an issue), and a bit about demand concerns.

Advertising is the lifeblood of the media. Tesla does not advertise. The long established automakers, their dealerships and oil companies do so quite heavily. Even if top network management has not put out any specific directives, it is understood in the back of the minds of producers and talent that one should think twice about slighting an advertiser, while a non-advertiser is fair game.

 

[schonelucht]

Unfortunately, Tesla just mass cancelled all deliveries in the Netherlands planned for tonight. Several customers got the call while driving to the delivery center (sounds familiar, you'd think Tesla had learned its lesson). Conflicting reports between 'logistics issue' and 'firmware issue'. Everyone is rescheduled for tomorrow. There was at least one delivery earlier in Belgium, unclear if there were others.