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

[JusRelax]

Let me ask the question you are asking us to ask, who is the first?

Obviously,

@Fact Checking .

After all, he is Elon, right?

 

[JRP3]

Right now the price difference between a EV and a comparable gas engine car is just too much.

Ask him the price difference between a BMW and comparable Tesla.

 

[StealthP3D]

Disagree. The Mach-E is pretty compelling, and they intend to ramp production well beyond compliance. While the Y does almost everything better, the Mach-E screws up very little.

You have test driven the Mach-e?

I wasn't aware it was even available yet.

 

[Steve m]

As those who can buy BEVs, those that can't will enjoy the dropping resale value of non BEVs.

 

[Dreadnought]

I have been carrying on a conversation about BEVs with an old friend in Germany. He agrees that BEVs are the future, and that reasonably well-off folks like us can afford to make the jump. But he worries about the overall demand to support a transition to BEVs in Germany and Europe based on the current prices and incentives, and hence is a bit concerned that VW and Tesla will build lots of of BEVs but not enough folks will be able to afford them.

He very recently purchased a Smart EQ BEV. Here is his latest summary:

(???Comments???)

——————
“Right now the price difference between a EV and a comparable gas engine car is just too much.

A great example is my EQ:The EQ costs 20k € (after all subsidies)
The absolutely identical car with a gas engine costs 12k.
So I spent 8k to go electric

100km with the gas car will take about 6 litres of gas – costing about 8.5 €
100km with the EQ will take 14kWh that is 4.2 € ( I pay 30 cents per kWh)

So I save 4.3€ on 100km with the EQ
8000 / 4.3 yields 1860 lots of 100k à 186000 km
186,000km ???? that will take ions – at least much longer than the EQ lasts

Yes I know – maintenance cost is lower for the EQ – but after 10 years or so that battery is dead and must be replaced.
A replacement gas engine is a lot cheaper.

All this is just for a tiny EQ – a typical family sedan or wagon probably doubles these values
As long as the economics are as described, why would normal family with a budget go for the EV ?”
————-

There is a good reason why Tesla has been working their way down from sports car to luxury and then premium. Margins get smaller with the car and need economy of scale to be viable - independent from drive train. Perhaps made-in-China Smarts will benefit from lower labour costs and have enough volume to be competitive with their ICE siblings but I won't hold my breath.

Maintenance is a factor that really starts to hit after several years and repairs are unpredictable, so it's easy to dismiss from TCO considerations. Likewise, depreciation is something that people love to ignore. The depreciation of a car bought new and sold after a few years can easily be the biggest chunk of TCO. Not a pleasant thought when you're about to spend a five digit sum and thus more convenient to blank out. EVs have already shown that they are holding their value better than ICE and the gap will widen further in the coming years. Used ICEv will take the same path as Diesel today.

Finally, the portion of TCO that you get frequently reminded about is the cost of energy. Germany is at the top end of electricity prices in EU, which causes the difference between the cost of fuel and charging to be rather small.
Side note: Ironically, a significant portion of the ~30 cent/kWh are additional taxes to fund renewable energy projects. Not sure if this is a matter of short sighted politicians or effective lobbying. And to add insult to injury, this applies only to small consumer, including EV charging stations. Big B2C customers (like refineries) are exempt.

 

[EV forever]

I have been carrying on a conversation about BEVs with an old friend in Germany. He agrees that BEVs are the future, and that reasonably well-off folks like us can afford to make the jump. But he worries about the overall demand to support a transition to BEVs in Germany and Europe based on the current prices and incentives, and hence is a bit concerned that VW and Tesla will build lots of of BEVs but not enough folks will be able to afford them.

He very recently purchased a Smart EQ BEV. Here is his latest summary:

(???Comments???)

——————
“Right now the price difference between a EV and a comparable gas engine car is just too much.

A great example is my EQ:The EQ costs 20k € (after all subsidies)
The absolutely identical car with a gas engine costs 12k.
So I spent 8k to go electric

100km with the gas car will take about 6 litres of gas – costing about 8.5 €
100km with the EQ will take 14kWh that is 4.2 € ( I pay 30 cents per kWh)

So I save 4.3€ on 100km with the EQ
8000 / 4.3 yields 1860 lots of 100k à 186000 km
186,000km ???? that will take ions – at least much longer than the EQ lasts

Yes I know – maintenance cost is lower for the EQ – but after 10 years or so that battery is dead and must be replaced.
A replacement gas engine is a lot cheaper.

All this is just for a tiny EQ – a typical family sedan or wagon probably doubles these values
As long as the economics are as described, why would normal family with a budget go for the EV ?”
————-

Ask your friend if his utility company offers different plans for EV owners- often people are not aware there are different plans (we were not aware of this in 2013 when we got the Leaf) equation flips dramatically if night time rates are lower. For us, daytime charge is 34cents/kWh and night time ranges from 7-9 cents. Our electricity bill went from avg 120/month to 210/month with daily charging on standard plan and then dropped to 150/month with the switch to EV plan. So $30 for about 1000 miles in 1 month - not bad.

Then, equation changes even more dramatically when you get solar (we did in 2014) because the EV simply changes your attitude to energy. Now for last 5.5 years our electricity bill is only some service charges that the utility company adds on ~$10/month. We charge the Model 3 only once a week or so. Still about 800-1000 miles per month of driving on EV, but now it is essentially free.

 

[StealthP3D]

Congrats. I bet this is happening a lot right now.

TSLA goes up... More TSLA investors can afford Teslas and with more options... Tesla revenue and ASP increases... TSLA goes up... Repeat

Uh-oh...Does this mean that TSLAQ was actually right about something for a change?

That Musk is running one big pyramid scheme?

It all makes sense now! I thought there was something fishy about the way Tesla sales have been growing exponentially while the other automaker's sales have been shrinking!

/s

 

[PhaseWhite]

I am sample size of one, but I am waiting for plaid myself. I am hoping for much longer range option like 500 miles. I think I am not alone and if they deliver something that exciting no one is modeling how big the sales would be.

Same here, I’ve been saving my pennies for an S refresh and hope to pull the trigger on the new Plaid Model S. I think Plaid will bring back higher margins on S/X (back to 150k for the Performance Model)

 

[RobStark]

Well Ford better start pumping them out fast because as of April 2019 they already had 115K “EV” sales (including plug-in hybrids).

Ford currently has 1 PEV for sale in the USA. The Fusion PHEV. It sells about 700 per month.

No danger of Fusion busting the 200k limit anytime soon.

 

[AudubonB]

It could have the opposite effect. Inclusion will decrease total active share float, since the majority of those shares will probably not participate in share lending. That would produce increased volatility and greater opportunity of algorithmic manipulations.

I disagree - I believe the reason the great share of the passive index-mirroring funds are able to come as close as they do to matching the performance of their respective indices - which otherwise is nigh-impossible because of transaction costs and management fees - is through lending their shares to short sellers. Happy to learn otherwise through any incontrovertible evidence someone may have.

 

[scaesare]

(i'd rather walk)

Sure looks like the pressure vessel ruptured catastrophically and the H2 then ignited...

 

[Carl Raymond]

I was pleased to learn there exists a fossil fuel free index, SP5F3UP. I figured it would be a useful tool to track the demise of fossils (the success of Tesla’s mission). We should start to see divergence between this index and and the regular S and P.

The google comparison tool is not working for me. Is the problem with the tool, a lack of historical data, my technique... ?

TIA.

View attachment 495088

Although I was unable to compare the S and P to the fossil fuel free index SP5F3UP, I found another way to test if Tesla’s mission is working.

This fund (VDE) is purely US fossil energy stocks and it does work with the google comparison tool, going back years.

It reveals that fossils had a static 2019, but surprisingly are up in the final quarter. I mean, there’s only one truth, if Tesla succeeds, oil takes a dive, just as the iPhone decimated film.

Seems the people who are long VDE are not watching TSLA, or refuse to believe it.

 

[Curt Renz]

Solving The Money Problem - Thursday:

 

[Artful Dodger]

Well, those billion lines of code for FSD aren't going to write themselves.

Ironically, that's almost exactly how training the AI works. The training engine writes the code which becomes the neural net. Yes, it writes itself, you just feed it the data.

Say I wonder where a small mid-sized automaker could get tillions of real-world data data points to feed that engine?

Cheers!

 

[EVNow]

* He's bracketing way OTM - he's bought 300x $600 Feb '20 ($67500) and 40x $600 Mar '20s calls ($19400), but also 70x $300 Feb 20 puts ($7070) and 30x $350 puts ($12330). E.g. short $19400 and long $86900, for a net of $67500 long. Sold 801 shares at $404 (= $323604; 300 shares remaining) to fund it and some other plays and take out cash.

That's only slightly better than my $700 Jan calls. But then, I bought them in Jan' 19.

Looks to me $500 and $400 calls / puts would be decent for Feb/March. But those are fairly costly - but he could get fewer contracts.

 

[StealthP3D]

How do we get through 2 hours and extract the essence in 2 minutes?

edit: Please let this not be the 2nd “Santa isn’t real moment” for me today - I don’t care what he says about financials, that’s not his area. But if he says something about their technology, my heart will be broken...

I listen to him on 2X speed so it got it down to 1 hour. No, his change in strategy had nothing to do with Tesla financials or anything about the company. He said it was all about the strange situation going on with the shorts.

I've made it half-way through so far. Here's the funny thing: He's still very bullish on Tesla over 5 years, he just wanted to go into casino gambling mode. And he flat out admitted it. He also admitted he will probably lose on this move but he couldn't resist it because it's just "too much fun". I tend to agree he's going to lose overall on this hairbrained scheme to profit from a short-squeeze that may or may not happen. And he really cheaped out - all his calls and puts expire on Feb. 21, yes, next month! And the calls are $600 and the puts $300. I'll be really impressed if he does better than holding his shares. I fully expect him to have to admit what a stupid move it was. This is the oddest turn-about I think I've ever seen.

What I was most shocked about was that he only held 1100 shares previously, the way he spoke about his "large" position I thought he had $2-$5 million worth. And that was before it appreciated! I think he said he sold his shares at $404 to go into gambling mode. Just plain stupid. Maybe he needs to check into Gamblers Anonymous? He also admitted that he has lost more money doing stuff like this than almost anyone. But it apparently doesn't matter much because he's also made a sugar-ton of money. Which begs the question: Why did he only have 1100 shares? Too much gambling?

 

[Artful Dodger]

TSLA goes up... More TSLA investors can afford Teslas and with more options... Tesla revenue and ASP increases... TSLA goes up... Repeat

I expect that's precisely what happened with the $2K 'Christmas Bonus' for many AWD Owner/Investors.

I've seen survey (unscientific) estimates of a 10% take rate for the $2K performance boost. That could mean ~10K upgrades, with ZERO marginal cost (it's just uncorking the rear motor to run with the same performance as the single motor in the original RWD LR Model 3).

So, gravy for 2019Q4 bottom line. Is that $200M in profit? Yikes! It can't be that much! Or can it?...

Anybody know how many AWDs have been produced total to date? Anybody seen any other estimates on the 'take-rate' for the upgrade? Anybody know why Richie did Bobby Lupo?

Cheers!

 

[Fact Checking]

So I save 4.3€ on 100km with the EQ
8000 / 4.3 yields 1860 lots of 100k à 186000 km
186,000km ???? that will take eons – at least much longer than the EQ lasts

Yes I know – maintenance cost is lower for the EQ – but after 10 years or so that battery is dead and must be replaced.
A replacement gas engine is a lot cheaper.

A couple of comments:

• A cheap gas engine's gasoline and oil consumption gets progressively worse with time.
• Very few people "change engines" in Germany, it's an intrusive procedure that is not reflected in the residual value of a car, with a lot of labor cost. It's generally not economically advantageous to put an expensive new engine into an otherwise old gascar where the rest of the drive train will be old. After 100k-200k km people usually sell their cars - it goes either to poorer people or to poorer countries: Germany exports about half a million used cars per year, dominantly to poorer countries, Eastern Europe, Africa, etc.
• Chances are that the drive train of an EV is perfectly fine after 100k-200k km, and the battery of a Tesla class EV will only have degraded 5-10%. Even if the battery of the EQ is crap, the change of a battery pack is not nearly as intrusive as the change of an engine.
• 0.30€/kWh sounds too high in Germany. There's night EV charging tariffs for 0.22€/kWh, taking advantage of much cheaper overnight base load costs.
• He must absolutely include gas engine maintenance costs and higher brake system maintenance costs (brake pad, brake disk replacement) in any long term cost analysis.

I.e. IMO he underestimates the costs of gas cars and overestimates the costs of EVs.

 

[hacer]

So I got a direct mail add from Audi on Thursday, offering me a $100 Amazon gift card to test drive an e-tron. Can't imagine I'd ever buy a turd, but I am curious to see/drive it in person.

The offer is only valid for the person on the mailing label which seems like a stupid marketing plan - I couldn't even pass it on to my friend who is a fan of Audi and he so far hasn't received such an ad. Also one of the incentives in the ad (7 days of SilverCar rental [because you won't want to road trip in the e-tron I presume]) expired at the end of 2019, before I even got the mailing.

I assume I was chosen for this marketing as the owner of a Tesla model S. I'd sort of maybe feel bad about taking Audi's $100, but it is nearly 1/4 share of TSLA so I think I'll bite. It does make me think that Audi believes the market for electric cars is more existing electric car buyers rather than just car buyers. That doesn't bode well for their future.

 

[Joshker]

Congrats. I bet this is happening a lot right now.

TSLA goes up... More TSLA investors can afford Teslas and with more options... Tesla revenue and ASP increases... TSLA goes up... Repeat

I’m one of these people. This week I took some of my profits, turned my MR into the P3D I really wanted to buy last year. The previous owner of the P3D bought an inventory X and my MR was sold to my coworker who was going to buy a $20k used Bolt. He is not a car guy by any means, just smart enough to listen/trust my opinion and made the right move and did the ever so common “Tesla Stretch”. Win win for all involved and we gain another owner/salesperson for the brand. I’ve never been so excited to be a TSLA investor.