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

[lklundin]

Really wish folks would quit mis-remembering quotes then attributing them to Elon, without a link. It took all of 5s effort Googling to find the real quote:

Elon Musk says preventing a 'fleet-wide hack' is Tesla's top security priority - Electrek

The statement was made at the National Governors Association meeing in July 2017. Elon never said such a hack would bankrupt TESLA (you still reading too much TSLAQ?)

Here's what Elon actually said:

“I think one of the biggest concern for autonomous vehicles is somebody achieving a fleet-wide hack.

“In principles, if someone was able to say hack all the autonomous Teslas, they could say – I mean just as a prank – they could say ‘send them all to Rhode Island’ [laugh] – across the United States… and that would be the end of Tesla and there would be a lot of angry people in Rhode Island.

“We gotta make super sure that a fleet-wide is basically impossible and that if people are in the car, that they have override authority on whatever the car is doing. If the car is doing something wacky, you can press a button that no amount of software can override and ensure that you gain control of the vehicle and cut the link to the servers.

“Within the car, there are multiple sub-systems that have specialized encryption, like the powertrain for example. Even if someone gains access to the car, they cannot take control of the powertrain or braking system.”​

As usual folks, years later fear colors memory more intensely than wise counsel. HTH.

TL;dr It's never a bad as you thought.

Cheers!

Excuse me, which part of "the end of Tesla" do you not understand?

 

[SteveG3]

TD Ameritrade appears to be functional again if anybody else has been unsuccessfully trying to place a trade this morning. I just had an online trade I entered show up under "order status" as filled.

 

[jbcarioca]

Maybe there's some confusion about the definition of a monopoly here.

For valuation purposes I'm not using the layman definition of 90%+ market share and total dominance. Instead I use the economic definition of monopoly: dominant market position with pricing power. In the U.S. there are precedents of companies with just 40% of market share to be convicted of being predatory monopolists.

Tesla already has a significant pricing power in their favor, but instead of rent seeking and profit maximization they chose to price aggressively to transform the ICE market faster and grow.

All the other examples I gave have dominance and pricing power in their markets: Microsoft, Google, Paypal, SpaceX and even Apple with their ridiculous profit margins.

Pricing power in their segments is what is required to gain the market valuation of a monopoly - which is the primary factor to @FrankSG's thesis.

JFYI, Warren Buffet almost exclusively invests in quasi-monopolies, and yes, they exist all around us.

Warren Buffet knows a monopoly when he sees it so he invests in railroads.
I refer you to Investopedia:
Monopoly

Zero question about it, legal definitions differ and frequently do not meet the economic definitions.
BTW, this debate might be thought to be off topic. I think it is very much on topic because we are already seeing strong signs that TE has major technical advantages in grid services, Solar Roof might well have no genuine competitors yet, and Model 3 already has dominance in it's price category in many markets, just as Model S still does that year after year.

Yes, some of those might seem monopolistic. However there is zero chance even a political case would succeed anywhere. Why? Tesla will allow anybody at all to use their patents 'in good faith'. Presumably some moron might try to accuse Tesla of predatory pricing. That accusation would produce loud guffaws. Then there is the argument that not permitting dealers wis anti-competitive. That one is in the courts now, but Tesla is the plantiff.

As investors the notion of Tesla as monopolist is laughable unless, and only unless, the mere fact of high market share in a narrowly defined market without imposed barriers to entry can be made to be monopolistic.

 

[ninpb]

In a perfect world we wouldn't be so hyper-fixated on that 360K number anyway. It's absurd to suggest that a few thousand lower or higher should affect the stock price at this point, but that's what Wall Street would have us focus on, I guess.

But I think it'll be a beat

Provides good dips for buying. Just like cybertruck glass breaking. You really think a guy and the people he surrounds himself with that can land a rocket back down can't fix bulletproof glass?! Ok I'll be happy to buy your shares.

 

[PeterJA]

I have read it all. He makes a few very good points. However his basic premise is, frankly, absurd. No company ever has a monopoly in anything without government mandate prohibiting competition.

Frank's thesis that Tesla could achieve a near-monopoly in transportation in not a "premise."
Definition of PREMISE
It is a conclusion based on demonstrated facts and likely events:

• Tesla's demonstrated lead in critical technologies (batteries, powertrains, FSD hardware, FSD software, global infrastructure, etc.)
• Tesla's (and SpaceX's) demonstrated lead in engineering innovation.
• Tesla's demonstrated acquisition of top engineering talent (only 1% of job applicants).
• Tesla's likely continuation of these leads, due to first-mover advantage.

Elon has created a brain-drain of top talent from universities and corporations worldwide to his companies. Several surveys name SpaceX and Tesla as the most desirable employers for engineers. Why? Because Elon's companies are dramatically changing the world for the better, and smart creative people want to be part of that.

Get enough smart creative people working together, and you create a force that is difficult to compete with. This is clearly true of Tesla so far, and I see no reason to believe it will not continue to be true.

There has never been an engineering force quite like Tesla/SpaceX/Boring/Neuralink, because there has never been an entrepreneur quite like Elon. To say that "no company ever has a monopoly" is not only false (as pointed out by Fact Checking). It is reasoning by analogy, not first principles (to use Elon's terms). I think it's a mistake.

 

[lklundin]

Note that audits aren't perfect. I'd know; I'm a former winner of the Underhanded C Contest.

As someone who tried to get better by studying those problems and their solutions, I can say that is truly impressive.

 

[jbcarioca]

Frank's thesis that Tesla could achieve a near-monopoly in transportation in not a "premise."
Definition of PREMISE
It is a conclusion based on demonstrated facts and likely events:

• Tesla's demonstrated lead in critical technologies (batteries, powertrains, FSD hardware, FSD software, global infrastructure, etc.)
• Tesla's (and SpaceX's) demonstrated lead in engineering innovation.
• Tesla's demonstrated acquisition of top engineering talent (only 1% of job applicants).
• Tesla's likely continuation of these leads, due to first-mover advantage.

... To say that "no company ever has a monopoly" is not only false (as pointed out by Fact Checking). It is reasoning by analogy, not first principles (to use Elon's terms). I think it's a mistake.

While I agree with your list of observations I am dismayed that you chose to quote me partially. Nothing that you say leads to monopoly although they absolutely act to confer market leadership.

Frank actually stated the premise in his introduction. The economic definition of monopoly is the issue. That was in one of my previous posts. By definition Tesla seeks more competition, not less and acts to encourage that through open access to patents among other things. Thus I take Elon's Master Planning at it's word. I shall then never expect that Tesla will seek or encourage any anti-competitive actions. He will absolutely do everything in his powewr to prosper.

OTOH, no such promise exists for SpaceX. There it seems evident he has minimal intention to share technological lead.

 

[Bet TSLA]

As I drove to my New Year’s Eve dinner, I drove down the ‘auto strip’; the road that houses lot after lot of every car manufacturer available for purchase. This section of car dealerships covers somewhere between 1-2 miles.

It was before 6pm and not one dealership was open. Not a body in sight, no potential customers strolling the lots, all the vehicles covered in snow.

On the other hand, Tesla has a bloody ‘stand in line for hours to get your car hot of the presses’ event?!

BTW, Tesla recently opened a SC only locale on this road, but way, way at the other end of it, like 10 miles the other way where no car dealerships exist.

To be fair (although, really, why should we be fair?), the business model of all those manufacturers with dealers is such that I don't think it matters much to them when the cars are sold to end customers. I suppose it matters some to the dealers, but they are generally privately owned and so don't have Wall St. pressures.

 

[mars_or_bust]

@mars_or_bust But NHTSA has already said that they are going to investigate this collision, what do you think they are going to investigate if not AP/NoA? (Remember in the cross traffic death NHTSA investigated and said that AP contributed to the crash even though it is specifically stated that TACC/AP doesn't handle cross traffic,)

OK, NHTSA are idiots. Or are actively working to hurt Tesla. Probably both.

 

[mars_or_bust]

Tesla setting up Israel R&D office
The electric car venture's new office, managed by Adi Gigi, will scout for Israeli startups and technologies



Tesla EVTOL in the works?

After Detroit get crushed, it is tome for Boeing

 

[MP3Mike]

Honestly, I wouldn’t trust them to be investigating anything. For all I know, someone with influence told someone in the NHTSA to say they’re investigating.

Conspiracy theorist me if you will, but it makes zero sense to investigate because someone ran a red light. Whether the person had AP/EAP on is irrelevant.

Everybody in the NHTSA should know the current capabilities of Teslas. If they don’t, then somebody needs to be fired. It’s not their first rodeo investigating AP/EAP.

OK, NHTSA are idiots. Or are actively working to hurt Tesla. Probably both.

@Krugerrand @mars_or_bust While I mostly agree with both of you, if NoA was involved in this I think it will be found partially at fault and Tesla will be required to change, or disable, it. The problem is that NoA will take the exit on its own and then turns off NoA but leaves TACC enabled. I think it needs to turn all AP features off and bring the car to a stop, with the hazard lights on and beeping inside, until the driver acknowledges that they are attentive and in control of the vehicle. (Just like if you are failing to provide enough toque on the steering wheel on Autosteer, but in this case torque alone shouldn't be enough to avoid the stopping.) Basic CC/TACC don't cause the same issue since it never steers and so if you fall asleep you are likely to have an accident on the freeway normally glancing into a guardrail. Not running a red light and hitting cross traffic.

 

[Rarity]

Tesla setting up Israel R&D office
The electric car venture's new office, managed by Adi Gigi, will scout for Israeli startups and technologies

Tesla EVTOL in the works?

I suspect that Tesla and SpaceX will team up to launch a supersonic aircraft company. But aircraft design has a very long gestation period and it takes a very long time to ramp up manufacturing after that. As such, these activities won't hit Tesla's bottom line for a long, long time.

Ramp up of TE is much more relevant for this thread.

 

[EinSV]

Returning to @FrankSG for a moment.
One topic he covered in some detail was solar roof including mentioning a few companies making some offering in that arena. There have been quite a few attempts, almost all fo which have failed.
IMHO, probably among the best is this one:
eMetal, eRoll, eFlex & Customization | Flisom
They're Swiss and have seemingly strong backing plus a diverse technical base including a former Tata Solar executive. Their approach si totally different than is Tesla in that they do not actually have a roof replacement product.

There are probably some dozens of examples, most fo which will probably fail.

The point of that introduction is that I agree with Frank that Tesla has stuck with the research and iterations and thus now seems to have the only competitive roof replacement in the world, certainly the only one that is system integrated with grid tie capacity through Powerwall. It does not require high technical ability to adopt this solution.

As investors have ignored this development year after year, ourselves included, we appear to have a working solution, albeit arriving in the infamous 'Elon time'. As investors the problem with this one is that it is the Model S of roofs. How can anybody imagine something that has never been done before?

My personal opinion is that any responsible calculation of the potential for this will result in growth that is unimaginable. After all, California now is mandating solar on new construction:
California Gives Final OK To Require Solar Panels On New Houses
Even with new single family homes declining:
https://www.sacbee.com/news/business/real-estate-news/article232979792.html
We still have a 100% certain market for ~90,000 houses that WILL have need for a roof and WILL have solar panels.
Since Tesla is the only viable roof-replacement vendor (my bad: that seems just like a monopoly, does it not?) one can safely assume Tesla could supply, say, half fo those were the capacity to exist. Certainly some large portion would also have storage and grid intertie so those would be easy Tesla sales.<snip>

I am glad someone raised the solarglass roof opportunity. This project has suffered from an extended delay that has had the psychological effect on most investors of setting it off to the side as something fanciful or speculative. But consolidating two separate products that require two separate, labor-intensive installations into one has the potential to be a huge game changer if done right.

The press has focused on Elon’s initial goal of 1000 per week but ignored his other stated goals of 10000 then 20000 per week, or 1 million per year.

Engineering this product has been quite a challenge for Tesla but while the timing remains in doubt, I don’t think there is much doubt about the eventual outcome. The potential for this product is enormous, and almost entirely ignored by the market.

 

[Artful Dodger]

Excuse me, which part of "the end of Tesla" do you not understand?

The part you skipped about Elon making a joke [laugh]?

"they could say ‘send them all to Rhode Island’ [laugh] – across the United States…"​

This was not a serious scenario, it was Elon's joke. The rest of the quote (which didn't make it into your 'memory' of 'bankrupcy' explains why this scenario can not happen.

This is the same reason Elon was found Not Liable in the recent Civil Trial vs Vern the Caveman: its not meant to be taken literally.

Maybe it's an English language thing. I think it's obvious to native speakers that Elon was crafting a funny scenario for illustration purposes, and chose the most dramatic example he could imagine. He never implied Tesla going bankrupt as a possible result.

The worse case scenario involves the 'possibility' of Tesla having to disable use of FSD in the affected region. Since Wall St. currently values FSD at zero, you'll now need to explain how that scenario results in Tesla going Bankrupt.

Or, we could just drop it...

Cheers!

 

[humbaba]

OK, NHTSA are idiots. Or are actively working to hurt Tesla. Probably both.

I blame the holidays, but I hadn't quite registered that this current report is about NHTSA versus NTSB

The NTSB has a long established feud with Tesla which I've detailed somewhat before. Interestingly, in one case where their preliminary report specified their intention to excoriate Tesla the final report went after California's highway maintenance instead. I don't recall ever seeing the final report in a news article.

The NHTSA is a different kettle of fish and, as far as I can tell, the agency is only doing what it is required to do. When the media wanted a statement from the NHTSA as to whether or not autopilot was involved the agency declined to comment. No surprise, they haven't even asked Tesla for information yet as far as I can tell.

But to give some context to NHTSA investigations, they've already looked into autopilot before and found that it lowers the crash rate[1]. So while the agency is being compelled to investigate it is premature to conclude that their findings will be negative for Tesla. In fact, I would be surprised if the crash rate had not improved. So while the media is predictably using the fact of an investigation to bash Tesla that is not the actual context.

1) NHTSA’s full final investigation into Tesla’s Autopilot shows 40% crash rate reduction – TechCrunch

 

[SpaceCash]

Geez the return on my LEAPs today compared to my boring ol' shares makes me want to double down on calls.

Gonna hold off for now though. I am already very leveraged.

 

[LJS22]

OK, NHTSA are idiots. Or are actively working to hurt Tesla. Probably both.

They get a lot of pressure to look into Tesla’s systems and evaluate autopilot. Investigating keeps lobbyist off their back or atleast from saying they don’t care.
Essentially they will look to see if autopilot was being used. Once it is known if it was being used or not they can access human error or software error. If it was on autopilot then you look at Tesla’s safety measures and can access if all safety measures were being used by the driver (hands on steering wheel/attention to road). If all safety measures were used then it will be checked to see if this is a one off instance or if the system is endangering the entire fleet.

I expect they will take their time investigating in order to keep pressure off from lawmakers looking to roll back autopilot. It would not set a good precedent to find Tesla guilty in this or any autopilot case currently. Tesla does not take control away from the driver, and statistically it is a safer system when used properly. Plus The argument could be made that all drivers pose a danger by driving a 2-3 ton vehicle over 20mph.

I think 6 months ago this would have created a bad day for TSLA. But we’ve seen these investigations come and go over that time, it’s well known to anyone following that Tesla is merely in level 2 autonomy. As more Tesla’s hit the road the odds of people abusing autopilot will increase and thus create more headlines, I think the story is growing old to investors at this point.

 

[wipster]

Now that's a great start to the Tesla Twenties!

 

[HG Wells]

Geez the return on my LEAPs today compared to my boring ol' shares makes me want to double down on calls.

Gonna hold off for now though. I am already very leveraged.

GEE, my leaps haven't even traded today so my account shows no increase.

September 2021

 

[Nocturnal]

Tesla has not addressed people using defeat devices. I really would like to see them do so and threaten removing your license for AP/FSD if you are shown to have used one. I have to think it's as simple as detecting that the weight on the wheel hasn't changed in X amount of time and recognizing that as an idiot who is abusing the system and slowing down progress for everyone.

Fortunately the market seems to brush off these small events now. The FUDsters overplayed their hand too many times.