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

[BioSehnsucht]

Is this part of the robotaxi pick-up software being tested? Like... when an empty car pulls up, it could invite you to get in.

(The wrong people could hear it and get in. All those problems need to be ironed out)

Just have the car ask riders to face the cameras for biometric verification.

 

[BioSehnsucht]

It’s concerning for the early model 3 fleet because it will only work with the new speakers used for low speed awareness. But theoretically you could send your car to pick up food for you while you sit at home haha

but pretty sure musk said it would be impossible to retrofit older models with this speaker

Adding the speaker is probably not that hard (likely "not possible" only due to a reluctance to go through the effort to do so), but the easy alternative is to lower the windows and use the interior sound system. Or even just display a code on the screen and have the mobile app display a matching code to verify it's the car you're expecting.

 

[RobStark]

 

[StealthP3D]

Notice how he says himself this is speculation on his part. So I believe that he is being very optimistic here. I hope he's right obviously but I would caution everyone to manage their expectations. He is also referring to long-term sales demand, not production. Ramping up to these levels if the demand is there will take time.

Of course it's speculation, that's the only way to project long-term demand. By nature it's speculation.

And the projected demand for ANY product is going to be a very rough estimate because it will vary wildly with a number of factors. I think if the economy distributed the wealth of productivity more evenly to the workers rather sending an inordinate amount of it to the top 1%, then those demand estimations would be conservative. They would also be conservative in a stronger economy. There are millions of people who would love to own a Model 3 but every new car, gas or electric, is out of their financial reach because they are only making $15 or $20/hour. I overheard two thirty-somethings talking today about a 2001 Nissan Pathfinder for sale for only $2,000. Their comment was "I mean, a 4 wheel drive for only $2K, that's incredible!" Which is true, I imagine it's probably worth $3K. And the reason it's only worth that much is that people with a bigger car budget want a nicer car than a crappy, shagged out Nissan Pathfinder with marginal safety for their friends and family. Raise the purchasing power of the working class and those demand estimates will be conservative.

You can get a nice but very cheap house in towns and cities that no one wants to live in too. Most things of some value have basically unlimited demand at the right price point. So, lower the price of the car because of production efficiencies and demand soars even higher than those conservative estimates! Tesla is always working to produce better products with less production and delivery costs. And they are good at it which is why 2019 wasn't the predicted "Year of the Tesla killers". And 2020 won't be either.

Here's a related observation: Tesla's first four cars, the S, X, 3 and Y (ignoring the Tesla/Lotus), all have the same design language - they are all easily recognizable by most people as "Tesla's". This is a good way to build brand recognition. However, imagine a world where even 33% of new car sales are Tesla's. Everywhere you looked, you would see the same f*cking thing. This would naturally start to turn off many from buying a Tesla and being like everyone else. Tesla is already dealing with this issue now! They could have made the Tesla pick-up all aerodynamic looking so it matched the existing Tesla design language and, indeed, that is probably what most CEO's would have done. But Elon is already planning ahead for when Tesla's rule the road. I can't wait to get my butt in the seat of my Cybertruck! Too cool! Then we have the first designed in China Tesla model Elon spoke of recently. We don't even know what it looks like yet. But you can bet Elon will inspire the most creative Chinese designers to make something truly outstanding and appealing to the modern markets. It would surprise me if he doesn't already have a concept for it. But he's going to get the Chinese designers to create it. So, that will be an entirely new design language. And so forth. Something for everyone.

It may be against the odds, but it wouldn't surprise me if Tesla's relentless quest for producing better vehicles at ever lower costs results in them becoming such a dominant manufacturer that, eventually, governments around the world start throwing the "monopoly" word around. This wouldn't happen until well after 2030 when all new cars will be electric anyway so it will be no more disastrous than the sanctions levied on MSFT.

 

[FrankSG]

Here's a related observation: Tesla's first four cars, the S, X, 3 and Y (ignoring the Tesla/Lotus), all have the same design language - they are all easily recognizable by most people as "Tesla's". This is a good way to build brand recognition. However, imagine a world where even 33% of new car sales are Tesla's. Everywhere you looked, you would see the same f*cking thing.

I agree with pretty much everything you said, and an epic completely unique Chinese designed Tesla would be amazing, and would help to set the brand further apart along side the Cybertruck.

However, this quoted part I think is overblown. I talked about this in my most recent thesis:

The much more profound change that autonomy will bring along with it, is the complete change of who is going to buy passenger vehicles. As of today, the majority of passenger vehicles are sold to individual consumers for private use. However, AVs (autonomous vehicles) will be much more expensive, but at the same time drive down prices of taxi services. The effect this will have on the marketplace is that private car ownership will diminish, and almost all passenger vehicles will be bought with the intention to be used as a robotaxi. Some individuals might still buy cars for private ownership, but not many will buy a car and not have it earn income for them as a robotaxi when cars cost tens of thousands of dollars more than today, and can earn tens of thousands of dollars per year operating as a robotaxi.

As a result of this big change in the purpose for what a passenger vehicle is bought, some things become less important factors in buying decisions and others become more important:

Less Important:

• Styling. This means the people who buy cars will care less if they buy the same care as everybody else. A fleet operator isn't going to care whether everybody else has the same car as them, if it is the best car.
• Performance. It doesn't matter much what a robotaxi's top speed and acceleration are, unless perhaps in the far distant future driving rules are changed when non-FSD cars are outlawed. I doubt this happens before 2050 though.
• Safety. Not to say it won't matter at all anymore, but sadly somebody who is looking to make money from their robotaxi driving around others, is going to care somewhat less about safety than a person who buys a car for personal use.

More Important:

• Ruggedness/reliability. Enter the Tesla Cybertruck, Cybercar, etc. Due to how hard it is to damage this thing, it's going to be an amazing robotaxi, because less damage = less repair costs = more profit.
• Total Cost of Ownership. If you recall the EV efficiency chart from the very beginning of this blog in the battery section, you'll remember that Teslas are the most efficient EVs in the world by quite a margin, resulting in lower fuel costs. Tesla not aiming to profit from service, should also help Tesla achieve the lowest TCOs in the business.
• Longevity. This is why Tesla's million mile battery + powertrain + motor is going to be a MAJOR advantage for them. For a robotaxi that drives 100,000 miles per year, the difference between a regular car that lasts 200,000 miles and a Tesla that lasts 1,000,000 miles is enormous. In the AEV (Autonomous Electric Vehicle) future, this might be Tesla's single biggest advantage.

We don't know exactly when full autonomy will be here, and even then there is still value in a wide variety of awe-inspiring vehicles, but I don't think widespread S3XY styling will hurt Tesla adoption much.

 

[RobStark]

Yes, logistics is key. Personally, I look forward to the day when the newly finished car can 'FSD' itself onto a waiting semi-trailer, which the drives away as part of an 3 truck autonomous platoon (ya gotta beat rail on those shipping $$$ ya kno').

Elon thinks ultimately Fremont can produce 1 Million cars per year. I think they get there with robotics and stainless steel (CTs).

Tesla's Fremont factory could manufacture up to 1 million vehicles per year, says Musk - Electrek | May 5, 2016

Cheers!

 

[generalenthu]

Tesla's relentless quest for producing better vehicles at ever lower costs results in them becoming such a dominant manufacturer

I was thinking about this. Tesla's battery pack costs are at or below 70$ per kWh (based off of the price difference between the 300 and 500 mile semi). With an average small car having 50 kWh of capacity, the entire power train is about $5k. There is no reason why Tesla cannot offer a substantially superior car / CUV at 20 k/25k in China that would beat the pants off of a corolla / Civic / CR-V. That would be sticker price parity.

When they get this going, it's not unreasonable to imagine a 10 million unit volume, as soon as they can print enough giga factories.

The only caveat is the material supply chain. Based on the information from our resident AI, The right kind of Nickel is the main roadblock with lithium and manganese* needing some planning. I expect the battery investor day to substantially focus on this.

Edit: with the in-housing of the FSD chip design, marginal cost of the electronics is going to be pretty small. I for one am looking forward a few strategic small acquisitions to bring everything but commodities in-house.

*Edit2: presumes moving to NMC chemistry for the million mile packs

 

[Causalien]

I think most of us know being an emeritus professor has little to do with investing, although the initial post did chide a mathematical whiz for lack of personal success at investing. Emeritus just means you're older than dirt. Most helpful to me has been an undergraduate engineering degree with a pretty sound grounding in science. Many here have similar or much more important advantages. It does bug the pee-waddin out of me, as my mother used to say, when our wealth manager called the other day urging immediate sale of 20% of our TSLA stake since it now constitutes 60% of our portfolio instead of the long-standing 40%. What is the emergency? Have we invaded someone else?

They shorted and can't find shares to cover.

Whenever your broker or adviser calls you to do something, it means they are on the other side and losing too much money.

 

[Artful Dodger]

the auditors (PwC) have to improve their audit process.

This header appears at the top of each page of the financial results (ie: Tesla 2018 Q4 Update Letter)

• Tesla, Inc.
  Condensed Consolidated Statements of Operations
  (Unaudited)
  (In thousands, except per share data)

I think the 10-Q is audited, but not the quarterly update letter.

Cheers!

 

[Bullish_Bear]

Update on China's delivery estimates:

• MiC M3 SR+ is still listed as Q1 2020
• M3 LR is Q2 2020
• M3 P is also Q2 2020

I don't know if these were updated recently, but apparently you can no longer order a US made Model 3 in China and have it delivered before the end of Q1.

I'm kind of surprised by and slightly skeptical about the Q1 2020 delivery estimate of the MiC M3. It would either imply that the reports of daily order rates of 1000 vehicles are way overblown, Giga 3 will be able to produce way more vehicles this quarter than any of us are expecting, or Tesla has simply not updated the page yet.

The 1000 orders/day has been way too overly interpreted. Actually it only showed 1000 orders for one particular day, not every single day. Actually, for the first one or two days with huge price drop and new car demo in China, I would feel very disappointed if they couldn't make 1k.

 

[The Accountant]

This header appears at the top of each page of the financial results (ie: Tesla 2018 Q4 Update Letter)

• Tesla, Inc.
  Condensed Consolidated Statements of Operations
  (Unaudited)
  (In thousands, except per share data)

I think the 10-Q is audited, but not the quarterly update letter.

Cheers!

Yes - Agree the earnings report is unaudited.
I worked at one of the big Public Accounting Firms (not PwC but one of the other recognizable firms). So this is my experience:
PwC signs off on the earnings press release. The reason for this? No one wants to see the Earnings Release financial numbers not match the 10K numbers - which will get released 2 weeks later. So even though the ER is not audited, PwC will sign-off and for this their audit needs to be substantially completed.

 

[RobStark]

 

[Carl Raymond]

German parts supplier files for bankruptcy.

This link should trans article to English from German.

Google Translate

 

[FrankSG]

German parts supplier files for bankruptcy.

This link should trans article to English from German.

Google Translate

The group of companies with its headquarters in Aschheim near Munich is an important provider of plastic solutions in the automotive sector and, among other things, manufactures cable protection systems.

Model Y's revolutionary wiring system is already bankrupting the competition before its even gone into production.

But in all seriousness, the automotive suppliers have a very tough decade ahead. I hope the employees at the companies that inevitably go bankrupt will be able to find different jobs in the EV (or another) industry.

 

[Bet TSLA]

Important thing is it was a reply to a question. Not an announcement.

I don't think that signifies anything. Elon Musk has umpty-ump tweets to him on every subject imaginable. I think that often, when he wants to say something, he just searches for a tweet to respond to. That way he gets to say what he wants to say and be responsive and interactive for free.

Not that he doesn't often respond to tweets in the flow of things, but I don't think you can really distinguish meaningfully between announcements and responses.

 

[ggr]

I hope Earnings are out earlier too...but for the ER to be published earlier, not only does Zachary have to get better at closing the books, the auditors (PwC) have to improve their audit process.

Last year, the Q4 earnings were released on Jan 30 and the 10K issued on Feb 19.
The PwC Audit Report is dated Feb 19th, but the Jan 30th Earnings press release was signed off by PwC as well.
PwC substantially completed the audit last year by Jan 30th (allowing the earnings announcement). From there until Feb 19, PwC audited the "Notes to the Financial Statements" and the rest of the 400 page 10K Annual Report.
So, to get earnings out by Jan 20-24, PwC has to get there act together as well.
I think the best we can expect is Jan 24th but Jan 27-29 is likely.

It has never not been on a Wednesday after the closing. 22nd (90%) or 29th (10%) is my bet.

 

[uselesslogin]

That is a big Cybertruck reveal.

 

[DaveT]

Good video from Dave ... explains the benefits very well.

@MC3OZ thanks for posting that.

I think the China-designed Tesla car might just be the gen4 car that I’ve referenced many times in the past. And perhaps they can get the price down to near $25k which would be remarkable. It would be by far their best-selling vehicle.

 

[dw4ngg]

@MC3OZ thanks for posting that.

I think the China-designed Tesla car might just be the gen4 car that I’ve referenced many times in the past. And perhaps they can get the price down to near $25k which would be remarkable. It would be by far their best-selling vehicle.

china R&D benefit can be summed up as... “the happier China is, the happier Tesla is”

 

[powertoold]

@MC3OZ thanks for posting that.

I think the China-designed Tesla car might just be the gen4 car that I’ve referenced many times in the past. And perhaps they can get the price down to near $25k which would be remarkable. It would be by far their best-selling vehicle.

I doubt it. Tesla designs cars 4-5 years in the future. The China car will be radical, as was the CT. As far as we know, the Chinese design center doesn't even exist yet.