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

[CorneliusXX]

loved them back in ICE days

I can't wait to see this comment become mainstream

 

[Dwdnjck]

Isn’t it called Ice age?

 

[Bobfitz1]

No. They have not. But it is obvious. That is the tech., that reduces costs radically. No paint shop, minimal body shop with no car specific tooling.

Don't know if I'd go as far as obvious. But I do think there is a good chance. Also occurs to me it's not unlikely Tesla/SpaceX metallurgists are working on some advance(s) to the current techniques used for shaping the stainless steel for Cybertruck.
Such (entirely hypothetical for now) advances might further reduce costs of using SS, and perhaps allow the designed in China vehicle to be less radically shaped than CT.

 

[SOULPEDL]

Pretty surprised at the lack of downward pressure from bears/shorts both today and on Friday. Would have been a good time to do a bear raid because volume on Friday and today has been lower than what the average has been for the past 1-2 months by quite a bit. Dare I say bears & shorts are too afraid of what's on that earnings call to initiate a bear raid???

Or the shorts saving their powder and story for post ER (to help with some truck loading around here).

FYI, I'm only a bit skittish short-term because of what happened last year (and for mostly FUD reasons). I know it's different now with larger investors climbing in and word of mouth sales, but just be careful people. Taycan stories are mounting for one, so I can see someone planting a seed story of a low-cost version to start the Tesla chase (in people's minds, and some for-reals). I'm not a Porsche guy, but didn't they produce a 914 and the such? And then Rivian, with their sexy curve appeal, announcing their lower cost version.

On the other hand, if we hit 600 this week, I will have to bow and eat crow. My temptation to sell a bit as a hedge against any downward pressure would be tickled, but then I'd be daytrading. There is a small part of me that wants to try an option again, but avoiding them has been working out great so far.

 

[RobStark]

I’ve never heard that term. What do they mean by it?

The quintessential hybrid electric vehicle(HEV), the Toyota Prius, has ~1.2 kWh battery pack (depending on the model year) and has an all electric range(AER) of ~1 mile.

A typical mild hybrid electric vehicle (MHEV) typically has a battery pack of ~.4 kWh to store electricity from regenerative braking and zero all electric range. The electric motor simply aids the gas engine in propulsion(requiring less power) so it uses less gasoline. Typically, the "transmission" is much simpler in design.

 

[Nocturnal]

A couple of quick thoughts on macros / coronavirus. I am seeing some good news today: mainly, mild severity / lack of local transmission in countries where the virus has been imported; reports of a drop in persons within Wuhan presenting with fever at hospitals; estimations of lower reproduction numbers (~1.5-2.5) than previously estimated, and signs of symptoms presenting earlier than previously estimated (~5 days, as opposed to up to 14).

If (big if) the trend of good news holds through Thursday, the collective sigh of relief could be rocket fuel to a good earnings call for TSLA.

I think, that China is just being overly cautious and flexing their authoritarian power. This looks very scary to us in the west because we can't imagine a response like this.

That said, I did pick up some extra bottled water and non-perishable food yesterday. I'm not a prepper but it's easy to stock up on the basics just in case.

 

[Pezpunk]

Or the shorts saving their powder and story for post ER (to help with some truck loading around here).

FYI, I'm only a bit skittish short-term because of what happened last year (and for mostly FUD reasons). I know it's different now with larger investors climbing in and word of mouth sales, but just be careful people. Taycan stories are mounting for one, so I can see someone planting a seed story of a low-cost version to start the Tesla chase (in people's minds, and some for-reals). I'm not a Porsche guy, but didn't they produce a 914 and the such? And then Rivian, with their sexy curve appeal, announcing their lower cost version.

On the other hand, if we hit 600 this week, I will have to bow and eat crow. My temptation to sell a bit as a hedge against any downward pressure would be tickled, but then I'd be daytrading. There is a small part of me that wants to try an option again, but avoiding them has been working out great so far.

i just dont see how either Porsche or Rivian could possibly produce enough cars or get enough electric batteries to threaten Tesla, even if their products do (improbably) turn out to be comparable on price / range / technology, let alone do so profitably. Tesla is emerging from that hell. Rivian and Porsche are just entering into it.

 

[RobStark]

And then Rivian, with their sexy curve appeal, announcing their lower cost version.

Rivian didn't announce a different version of their truck, base model is still 105 kWh with ~230 miles of EPA range. What they announced is lower prices. But they didn't announce specific prices yet.

Rivian further said their previously announced base price of $69.9k is for a well equipped truck with the midsize pack of 135 kWh.

 

[Nocturnal]

i just dont see how either Porsche or Rivian could possibly produce enough cars or get enough electric batteries to threaten Tesla, even if their products do (improbably) turn out to be comparable on price / range / technology, let alone do so profitably.

I also very much believe that Amazon will be sucking up most of Rivian's production for the foreseeable future.

 

[SOULPEDL]

Is it my imagination or are the GF greenfield sites selected in strong part to Tesla's ability to propagate EV tech and manufacturing expertise in countries that also lead in the ICE world? China, then Germany - sure the argument for most companies is distribution and talent. I say there's a 3rd criteria that deals with the climate mission at a much higher level to cause the fastest EV transition possible. They probably still don't know what hit them. And I'm super glad the Saudi's were not a huge part of the 420 private deal. Look at us now (no, don't look) and still public with with all that associated FUD! I'm sure there are some discussions of how their plan is not working anymore and may have backfired.

 

[lklundin]

Do we have a pool regarding how much EPS winds up being?

Yes.

Depending on whether you think EPS will be good or bad you buy or sell a security called TSLA. If you find yourself to be undecided, you can wait and see (i.e. hold).

The pool has more than 100G $, so there are a lot of players.

 

[SOULPEDL]

Rivian didn't announce a different version of their truck, base model is still 105 kWh with ~230 miles of EPA range. What they announced is lower prices. But they didn't announce specific prices yet.

Rivian further said their previously announced base price of $69.9k is for a well equipped truck with the midsize pack of 135 kWh.

Ya, I wasn't clear in my wording there, but understood.

When is Toyota going to do a little tonka toy EV maybe? (I don't buy the Hydrogen focus as anything more than a Japanese city project that can't undo plans that easily.) I'm looking forward to many new EV versions out there!

 

[lklundin]

Coronavirus fears are bringing the whole market down.

Yes.

So with her year long interest and intimate knowledge of all things Tesla, I wonder if Dana Hull will do a story about how the Tesla Model S/X has a HEPA-grade air filter that protects the occupants from e.g. the coronavirus?

 

[RobStark]

I also very much believe that Amazon will be sucking up most of Rivian's production for the foreseeable future.

The Amazon vehicle will be built on a seperate line than the passenger SUV-pickup truck and the 100k order will be delivered over ~5 years.

 

[Nocturnal]

The Amazon vehicle will be built on a seperate line than the passenger SUV-pickup truck and the 100k order will be delivered over ~5 years.

Yes but I don't see them having enough batteries to keep both running at full speed.

 

[RobStark]

Yes but I don't see them having enough batteries to keep both running at full speed.

I see Rivian giving a much firmer order than legacy OEMs which typically depend on their BEV demand.

I see Rivian signing deal stipulating they either buy the cells they promised to buy or they pay a penalty.

Meaning they actually get the cells they ordered.

BEVs aren't a side business for Rivian. They can't lean on ICEv sales.

Or it could be RJ Scaringe is an idiot.

I trust Jeff Bezos judgement that RJj Scaringe in not an idiot.

 

[StealthP3D]

Agreed. Might not this increase higher margin S and X sales in China because of the superior air filtration system?

Yes, but S&X sales are not what's driving the share price.

 

[rsm287]

Seems like the protests against Giga 4 may be dissolving amid strong local support and more information from Tesla/Elon :

Anti-Tesla protesters at Giga Berlin throw in the towel after TSLA supporters hold 2nd rally

 

[CorneliusXX]

I see Rivian giving a much firmer order than legacy OEMs which typically depend on their BEV demand.

I see Rivian signing deal stipulating they either buy the cells they promised to buy or they pay a penalty.

Meaning they actually get the cells they ordered.

BEVs aren't a side business for Rivian. They can't lean on ICEv sales.

Or it could be RJ Scaringe is an idiot.

I trust Jeff Bezos judgement that RJj Scaringe in not an idiot.

Jeff Bezos is RJ's muscle.

"Oh, LG, I don't know why your TV's are showing at the bottom of our search on Amazon. You should raise a ticket with our customer service team."

 

[The Accountant]

No, this is wrong. Vehicles go into inventory on the balance sheet when produced, which btw affects FCF, but not on the P&L Statement. When the vehicle is sold, then that asset is moved from the Balance sheet to P&L, with COGS (less labor which is a fixed expense) go to Expense and the sales becoming Revenue.

Given that Tesla made 21.8% gross margin on vehicles with an ASP around $53k, that's about $11.5 gross profit for every extra vehicle sold, regardless of when it was produced. Then given that Tesla sold 6,100 more vehicles than it produced in Q4, that's an est'd $70M in ADDITIONAL gross profit for 2019Q4 vs just selling the same no. of cars as they produced.

And since we know 2019Q3 was profitable while selling 15,000 fewer vehicles, we have a strong indication that MOST of that extra gross margin in Q4 will flow straight through to bottom line profits. I estimate the effect on profits to be +$172.5m from this alone.

Paging @The Accountant "Is this Accounting 101, or Accounting 301?"

Cheers!

haha - Cost Accounting is definitely an Accounting 301 level course. It's probably the second hardest undergraduate course behind tax accounting.

Your points are spot on....and I would like to add this short example that I just worked up.
For a growing company like Tesla, you can see that it does not take much to get margin improvements.
This is only a guesstimate ...but my example below shows how Tesla can easily grow Model 3 margins from 18.8% in Q3 to 22.7% in Q4.
Here are the assumptions for Model 3 margins:
- Production grew 8.9% in Q4 vs Q3 to 87k vehicles
- Fixed Costs stayed flat
- Variable costs increased only 4.7% despite increase in production of 8.9% due to 4% productivity
- Total Costs (Fixed & Variable) grew 3.7% in Q4 as production grew 8.9%
- Average Selling Price remained at 50k

With these assumptions:
- margins grow by $2k per vehicle
- margin % grows from 18.8% in Q3 to 22.7% in Q4.

We would see similar results with Models S/X