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

[SpudLime]

Bears/shorts were waiting for an excuse for a bear attack and for a nullification of the good Q4 results, and increasing 'doubt' and 'concern' about Tesla's 2019 earnings.

Since ASP is a key input variable to every model of Tesla earnings, taking $1,100 out of ASP when selling around 100k vehicles per quarter is a significant shift in revenue and profits when assuming simplistic demand/supply forces, especially if your $TSLA price target is a super honest and well founded $185 that is in absolutely no relation to your firm's short position.

Bro, can I get an ELI5 on that?

K thx

 

[Carl Raymond]

Its not that black and white.

A demand curve shows different demands at different prices. So, when the price is lower, the demand is *higher* (usually). In other words, the decrease in price allows higher demand - and higher supply to satisfy that increased demand.

I know it only a word, but to economics students an *increase* in demand requires that the demand curve move. Your comment gets a red line through the second last word from the economics teacher.

To quote the wiki “It is important to distinguish between movement along a demand curve, and a shift in a demand curve”.

 

[CalX]

Maybe if enough of us tweet at the media like LATimes, we might get some more factual reporting. I just cancelled my subscription. Calvin Y on Twitter

 

[Buckminster]

It's Internet slang for strong approval of the quoted/replied-to comment:

Urban Dictionary: This​

This

 

[Buckminster]

No neroden for the past week - hope he is okay.

 

[Fact Checking]

I know it only a word, but to economics students an *increase* in demand requires that the demand curve move. Your comment gets a red line through the second last word from the economics teacher.

To quote the wiki “It is important to distinguish between movement along a demand curve, and a shift in a demand curve”.

That's true, but note that the Model 3 does not have a static demand curve:

• The Model 3 is not fungible, not a commodity, it's a unique product with no substitute.
• Market knowledge about the Model 3 is not even close to 100%. This delays price discovery and introduces significant latencies and distortions. Everyone knows commodities like coffee and knows how much they'd buy at a given price. Once new coffee prices are published price discovery is near instantaneous. EV knowledge is not widespread yet, at all, price discovery will take months, years.
• Market participants are particularly irrational and emotional when buying high value items, and cars tend to be the second biggest purchase of consumers in their whole life. I.e. potential buyers don't really know whether they'll buy a car for a given price or not, and the "getting them into the dealership is 50% of the sale" effect and irrationality is very real.
• Social marketing channels are significant demand generation forces, more affordable entry prices are unlocking thousands of new Tesla evangelists, accessing tens of thousands of new, previously inaccessible consumers and increasing Tesla's addressable market - I.e. generating demand for higher priced units as well.
• Because the Model 3 is a unique product controlled by Tesla, they can also control the supply of lower priced models. It's up to Tesla how many Medium Range or Standard Range units they are going to make - and they can shift demand via this channel as well.

Put differently: every single $1,000 price reduction of Tesla's entry price is going to shift the demand curve to the right, significantly. (Even though the demand curve is a flawed representation for Tesla products.)

Economics professors who strike through this with red will have to re-learn economics.

 

[Carl Raymond]

No neroden for the past week - hope he is okay.

Last disqus comment 2 days ago. Don’t panic yet.

 

[shlokavica22]

Yeah, the Leaf 2018 is already suffering from the lowest Model 3 ASP being "too close". Leaf 2/3 MRSP starts at $30,000, with the following trim levels (sorry, 1 year old pricing - couldn't find the newest ones):

So basically the $42,900 Model 3 will beat these specs in major ways:

• Even the Medium Range Model 3 has almost twice the effective range of the Leaf's ~150 miles.
• "Fast charging" is a higher trim option on the Leaf, it's a default trim on the Model 3.
  
• The Model 3 has a liquid cooled active battery management system that is best for battery longevity and thus resale value.
• "Navigation" is a default trim feature on Tesla, it's an extra option on the Leaf.
  
• The Model 3 is a mid-size sedan, the Leaf is a compact car. Trunk and frunk space significantly larger.
• You get all the safety features with the Model 3 at the entry level already, and this is an OTA upgraded promise for the future as well. With the Leaf every trim level introduces new safety features.
• Model 3 acceleration is much better.
  
• Unbeatable audio: the Leaf has 7-speaker Bose system, while the Model 3 has 12-speaker premium audio which is comparing very favorably with high end car audio systems from Harmon Kardon, Kenwood and Alpine.

So the Leaf 2018 isn't really competitive with the Model 3 - it can probably only capture U.S. sales where buyers are absolutely stretching with maximum incentives in the $22k-$25k effective price range, which price category Tesla cannot reach yet - or are leasing it.

I.e. every time an EV tried to compete in Tesla's price range it didn't end well. Almost all successful EV products carefully dodge Tesla and create healthy price separation downwards.

Even Volkswagen AG blinked: their new VW I.D. EV got down-sized and redirected from the $30k-$35k price range towards the ~$25k-$30k price range in the last minute, I believe in an attempt to avoid competing with Tesla directly.

Or as a VW executive recently admitted:

VW Boss: Tesla Controls 50% Of EV Market, We're Aiming For The Rest

What about Tesla? Keogh says, “Right now [U.S.] market share is 50 percent Tesla and 50 percent everyone else. Who is going to win the other 50 percent? That breakthrough product has not arrived yet.”
​

You just painted an already nightmare scenario (for TSLA competitors) with even darker colors.

 

[RobStark]

Worth remembering the bulk of non-tesla EVs have been sold at much lower ranges.

Sold to early adopting environmentalist with incentives.

That is not mass market.

Most people are sold on a transition to sustainable future, as long as it doesn't demand too much of them in terms of money or convenience.

 

[Fact Checking]

Bro, can I get an ELI5 on that?

K thx

In case your comment wasn't just a cool demonstration of Gen-Z talk, which part would you like me to ELI5 specifically?

 

[RobStark]

Thank you for so eloquently demonstrating the difference between US and EU perception of consumer rights.

You are welcome.

 

[Fact Checking]

Most people are sold on a transition to sustainable future, as long as it doesn't demand too much of them in terms of money or convenience.

The good news is that Tesla's cars don't require any compromise: they are much, much better cars than similarly priced ICE equivalents, in almost every way.

So if you are fine with the Model S/3/X form factor and it's affordable (has a sufficient total cost of ownership), there's very few usecases where an ICE vehicle is the better choice.

 

[Fact Checking]

Poster in the Dutch sectuon confirmed the issue was an untimely software update which hung the car. Poster was (only customer) on site waiting for his delivery seeing it play out in real time... talking about unlucky. A bit dishonest by Elon to insinuate it had something to do with Zeebrugge while it had everything to do with their own software test practices.

I don't think it was dishonest, here's what he said:

"@StrikMichael Sorry, many unexpected challenges with cars coming through Zeebrugge first time. Cars will start moving out in volume tomorrow."​

Their staff at Zeebrugge probably shouldn't have updated the car with a brand new firmware version right before delivery - but they were already delayed and wanted to cut corners to rush things I guess.

This probably wouldn't have happened at the Fremont delivery center.

I didn't read Elon's comment as trying to shift blame away from Tesla.

 

[j6Lpi429@3j]

Sold to early adopting environmentalist with incentives.

That is not mass market.

Most people are sold on a transition to sustainable future, as long as it doesn't demand too much of them in terms of money or convenience.

Most people are used to having to travel to a gas station to buy gas, rather than have it filled silently while they sleep. people just need to adjust to the new reality of car ownership. More up front cost, way lower running cost, a different way to think about fuel. I find my S WAY mroe convenient than an old fashioned ICE.

 

[RobStark]

Most people are used to having to travel to a gas station to buy gas, rather than have it filled silently while they sleep. people just need to adjust to the new reality of car ownership. More up front cost, way lower running cost, a different way to think about fuel. I find my S WAY mroe convenient than an old fashioned ICE.

Not everyone has access to a plug where they park their car overnight. Some only have one car, a car that must do road trips. And recharge time and availability of charging stalls will be an issue for them.

Various people will switch at various times.

Trying to pretend that there are not a lot of real people with real issues isn't helpful.

On the other hand, homeowners with multiple cars with private garages/parking spaces refusing to make their commuter car BEV are just retarded.

 

[Thekiwi]

Reading some tesla mentions on twitter saying the Tesla European sites have been updated slightly today to de-emphasize the “with savings” price, possibly due to some EU advertising regulations

 

[schonelucht]

I don't think it was dishonest, here's what he said:

"@StrikMichael Sorry, many unexpected challenges with cars coming through Zeebrugge first time. Cars will start moving out in volume tomorrow."​

Their staff at Zeebrugge probably shouldn't have updated the car with a brand new firmware version right before delivery - but they were already delayed and wanted to cut corners to rush things I guess.

This probably wouldn't have happened at the Fremont delivery center.

I didn't read Elon's comment as trying to shift blame away from Tesla.

The staff was not delayed. On the contrary, deliveries were only planned for next week. Then suddenly yesterday morning it was decided to rush forward delivery with a week. Word is that order came from Elon himself. As far as I understood from this customer the firmware update itself happened automatically and was pre-scheduled. Regardless this was not at Zeebrugge (that's just a big parking lot and nothing more) but in Tilburg. Seems plausible, cars come out of deep sleep for 4 weeks, see Tesla WIFI for the first time, great moment to schedule a firmware update.

And, at any rate, a brand new firmware version going into production is Tesla HQ responsibility. Local staff should never be able to push an update that hangs a few hunderd cars, period.

 

[Carl Raymond]

Safety, fun to drive, saves on gasoline, great for the environment, less maintenance, premium audio system, autopilot, free SW update, front trunk, large space inside that can hold a mattress, nice user interface, video recording, great handling, games, higher resale value, highest owner satisfaction rate. Am I missing anything?

Most won’t care, but if talking to a nerd add “helps scale up the battery industry, which brings down the cost of storage and makes coal uncompetitive against renewables”. Sustainable transportation and sustainable energy have a ying yang thing going.

 

[Fact Checking]

Regardless this was not at Zeebrugge (that's just a big parking lot and nothing more) but in Tilburg. Seems plausible, cars come out of deep sleep for 4 weeks, see Tesla WIFI for the first time, great moment to schedule a firmware update.

Not a big issue, but I believe you are misreading Elon's characterization:

"@StrikMichael Sorry, many unexpected challenges with cars coming through Zeebrugge first time. Cars will start moving out in volume tomorrow."​

It's a fact that new cars coming in through Zeebrugge fully assembled is a "first" for Tesla, at this volume: most Model S/X's for Europe came disassembled in the past.

New workflows frequently expose/magnify pre-existing weaknesses in a process.

I don't think Elon was trying to "blame" Zeebrugge, he was identifying the cars that came through Zeebrugge, and was apologizing.

 

[Fact Checking]

Safety, fun to drive, saves on gasoline, great for the environment, less maintenance, premium audio system, autopilot, free SW update, front trunk, large space inside that can hold a mattress, nice user interface, video recording, great handling, games, higher resale value, highest owner satisfaction rate. Am I missing anything?

Other nice features:

• Remote heating and cooling, cabin overheat protection. Especially remote cooling and dehumidification is unique, even when compared to executive class ICE cars. Enables camping mode.
• Independently driven front and rear axle with instant torque: superior traction control and handling. Beyond safety this also makes Track Mode possible.
• Advanced Summon.
• Hopefully in a week: Sentry Mode and Dog Mode, plus built-in dashcam.
• Silence. Idling without using fuel.
• Regenerative braking: have more range after coming down from a big hill.
• Higher efficiency in city traffic than at highways speeds.