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

[Driver Dave]

Elon's song drops and... GREEN!

 

[woof]

Breaking News:

This just in from Gus's nursery -

The ants go marching three by three
To leave the Gigafactory
And they all go marching
Out of the woods
To get out of the way

Out in the woods...isn't that where the bears are having their picnic? Seems a great place for the ants to go!

 

[printf42]

Want to point out what I feel is the most important part of the third row Tesla podcast part 2

Starts at 42:42.
When Gali said they can throw money at R&D now, Elon said

That’s not how it works. It’s not like if you have more money, you can spend them effectively on R&D....It’s incredibly difficult to find the right talent and integrates them to a organization and have it work effectively. It’s not a money thing...There is this fundamental limitation on (number of) exceptional engineers, there just aren’t many...

To me this perfectly outlines why no one else would be able to catch up with Tesla.

• Speed of innovation is the key.
• To do that you need the best talents.
• Best talents don’t work for money, they work for the right mission.
• Tesla has the best mission statement out there(probably only second to SpaceX)
• No existing auto company could possibly compete on talent front, it’s not a money thing.
• Even startups don’t have as good of a mission statement or probability of succeeding in the mission, so they mostly attract people using money. Again, really exceptional engineers don’t work for money.

This is why I say Tesla would see no competition in the long run.
It’s not a money thing, throwing money at R&D won’t guarantee any good outcome.
No one was able to catch up on Tesla for the past 10 years, and no one would be for at least the next 20 years.

 

[hobbes]

LOL if Germany drags its feet and Tesla hasn't signed the final agreement (has it?) then I could see it pulling up shop and saying "see ya suckers, we ain't got time for slowness."

Has been signed: Tesla Notary Has Certified Purchase Agreement, GF4 Berlin Plans 500K units
Looking at the current progress (setting up access roads, WW2 bomb clearing), IMHO it looks like everything is going according to schedule. See pics on twitter feeds (1) #Gf4 #Gigafactory4 (@Gf4Tesla) / Twitter [URL='https://twitter.com/gigafactory_4'](1) Gigafactory4 (@gigafactory_4) / Twitter[/URL] (face palm for bad english though).

 

[qphan79]

Easy. If it’s getting close to the time for leases to be returned and they aren’t ready to use them, offer those people a chance to renew their lease or buy the car or Tesla will have used Model 3s for sale. No biggie.

Do you think they will enable FSD in each returned lease car? That would allow them to sell for at least $4-5k above what it would be be worth without.

 

[Nocturnal]

We're running hot and overdue a recession, as a contrarian myself I see it as a perfectly rational option in the macro. Just not a great idea with TSLA.

Yeah but they think this is the case every day.

 

[hobbes]

I just read yesterday (somewhere) that this delay was old news, the contract was signed (this week?), on track. Sorry, no citation.

Maybe here ? Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

Also see Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

 

[CorneliusXX]

Oh for fook's sake, Bloomberg is really a habitually criminal organization when it comes to Tesla reporting - they took that quote wildly out of context, in a way that completely inverted its meaning.

Here's the original article (in German):

Tesla: Brandenburgs Wirtschaftsminister Steinbach über Gigafactory​

The minister was asked very aggressively about the protests and all, and in that context he hedged a bit when asked whether the permits will be granted in time, but he also said:

"Sprechen Sie mit dem Unternehmen darüber, dass die Erwartungen vielleicht nicht erfüllbar sind?"

"Dazu sehen wir keine Veranlassung. Wir sagen auf der einen Seite nicht völlig selbstmörderisch: Alles ist möglich. Gibt es bei dem Projekt eine neue Lage, stellen wir uns der Aufgabe konstruktiv und sagen nicht von vornherein, huch, jetzt haben wir aber ein Problem, das können wir nicht mehr lösen. Wir versuchen, alle Probleme zu lösen. Und bis jetzt klappt das auch."​

Translation:

"Are you talking to [Tesla] that expectations may not be met?"

"We see no reason to do so. On the one hand, we don't say in a politically suicidal fashion that everything is possible. If the project faces a new issue, we face the task constructively and don't say from the outset, yeah, but now we have a problem, we can no longer solve it. We try to solve all problems. And so far it works. "​

I.e. Steinbach specifically took the effort to stress that they are within the timeline so far and that everything is working fine so far. But he's also an elected politician representing voters, so he will not promise that everything will happen 100% sure as long as there's external factors out of his control, such as Tesla submitting the paperwork and finishing preparations in time. The journalist pressured Steinbach aggressively to admit to problems - but there's none really at this point.

As to what the main milestones are to meet the mid-February deadline:

So what has to be completed by mid-February to start clearing the forest?

"The ordnance disposal must be completed by then. And a garbage deposit on the site must be completely disposed of. This work is currently in full swing."

Do the animals that live there have to be relocated?

"Yes, the anthills must also be relocated by then."​

(Btw., there was talk about a protected bat species before, but it turned out that they found none - not a surprise, pine forests are not their favorite breeding areas. So literally the only protected animals that have to be relocated are anthills.)

We do know that the explosives team is in full work, they possibly already completed their work.

Which leaves the removal of an illegal garbage deposit site, before the trees can be cleared.

I am still amazed that they have to move ants. Surely every possible place that ants could naturally live is already full of ants. All you're going to do is create an ant migrant problem and ant wars.

 

[dc_h]

I

thanks for the heads up. I was thinking yesterday he would say more than the little he did. Don’t think they tape in advance so guessing he wsnted to make it more inclusive with comments and do as his lead.

I can't believe I'm recording Mad Money!

 

[CorneliusXX]

The sad crap isn't just the "what is battery day?" but also the other guy, the anchor, thinking that hey, Tesla can easily end up getting a "Disney+ to Netflix" type of competitor. He has no clue about the moats Tesla has, and thinks that to ramp up the knowledge and then execution of what you need to launch a great content streaming platform is not any different from what Tesla's products and pipeline require.

Exactly, the moat for streaming services is content (which Disney has). There's no other company that has an equivalent battery or FSD moat that could possibly do the same thing.

 

[gerebgraus]

I wouldn't call 2-3 months delay on an exceptionally difficult challenge a meaningful delay. Particularly in the context of lease cars which will not return for another 2 years.

I just want Elon to be honest and to disclose his current expectations. From that investors can make their own judgement on whether they will be quicker or slower. Its much harder for investors with no transparency at all - in that case first you have to make a wild guess what the company itself is targeting and then again adjust to whether you think they will beat their timeline (as they have on their 2014 production goals for 2020 and GF3 and Model Y launch timelines) or miss their timeline (as they have with Autopilot).

Elon and Tesla have very clearly said their near term goal is to release a feature complete driver assist system. And they have been very clear there is very limited visibility on how long it will take to get from there to an accuracy level where you can remove the driver and then from there when regulators will be convinced to allow Robotaxis.

I don't really care if some investors hate to hear ambitious goals - Elon should ignore investors and just focus on optimising for execution. Ambitious goals are self fulfilling and Elon understands this. This is why he has set the most ambitious goals of any company in the world and this is a key part of the reason why he is rapidly executing on them.
Elon's number one skill is the imagination, creativity and multi discipline knowledge he uses to break down seemingly impossible long term visions into smaller sub tasks that look to be achievable in the near term. He then sets separate teams to deliver on these sub tasks and tells them very clearly what they have to do - Engineers are extremely smart and efficient at doing what they are told, but very few are good at knowing what they should be working on in the first place. Its very important Elon makes people believe these goals are achievable in the near term as this is what motivates his team to work on them and this is what attracts the brilliant engineers to work for him. Without these goals and this belief we would never have reduced the cost of EVs 10x, we would not have landed on the moon in 1969 and we will never achieve self driving cars.

Musk sets aspirational goals for his companies and their companies tend to accomplish the goals with delays and slightly above budget. Slightly underperforming these crazily ambitious goals result in mind boogling result.

The problem has been that Musk has communicated these internal goals externally and then analysts talking heads could enjoy bashing TSLA etc. for failure to reach his goals. It is talking head truism that if a company promises doubling but manages only 90% growth is a bad company that you should sell while a company promising 5% growth but manages 6% should be your favorite company in your portfolio.
Solution was pretty simple. Separate internally declared goals from the much less aggressive externally communicated goals. You will be able to beat those goals and everybody is happy.
Of course talking heads are not confused, because they keep discounting TSLA's forecast because Musk never delivers, not noticing that the public goals are easily beatable.
Of course prediction is difficult, so with the FSD delivery is late even from the public goal.

 

[humbaba]

I am still amazed that they have to move ants. Surely every possible place that ants could naturally live is already full of ants. All you're going to do is create an ant migrant problem and ant wars.

Oooo that evil Mr. Musk is a dirty war monger. I knew it!

 

[LJS22]

Cramer on his redemption tour just blasted oil and gas stocks. Basically said everyone is devesting from owning these, managers are tired of being told what is right or wrong with the world and hedge funds are putting their money into clean energy. Called them tobacco stocks and said it’s the other side of Tesla, young people are betting on Tesla and have denounced oil and gas it’s happening faster than you think, this is the nail going into the coffin.

Becky on Squawk Box was shocked that he’d say that. She said “well you mean the stocks are dead, we will be on natural gas for a while” and Cramer just said “eh it’s happening faster than you think”

CNBC on Twitter

The video for those interested

 

[Remus]

Great summary!

The structure of an organization is reflected in the structure of the production. Tesla had a module team, so Model 3 has modules (this has been restructured to just a "battery team"). And then you end up with a box in a box. Because this team wanted an enclosure, and this team wanted an enclosure, so you have a box within a box. And then on the Model 3 you have the pack, and then an underbody, a third enclosure, because the body team wants to have an enclosed body. Lots of brackets on brackets. The teams historically haven't been integrated as much as he'd like to see.

This sounds way too familiar. He's describing.... Google!! The very reason Google got slaughtered on cloud computing despite of a decade head start on technology is that nobody takes care of the product and they just want to sell their organization chart. "Build it they will come" doesn't work anymore but they haven't changed.

And there is no doubt in my mind Google would be much better than traditional car makers. Can't imagine how much advantage Tesla has against them, simply from organization efficiency point of view!

Here's a real important point that is not well appreciated, this is a point that should be advanced by short-sellers, but I've not seen it articulated - but it should be: the incumbent car companies make most of their money by selling spare parts to their existing fleet at high margins. And they sell the new cars at a de-facto zero margin or even at a loss. It's kind of like printer cartridges and razor blades: you sell the razor at a loss and the blades at a profit, or the printer at a loss and the cartridges at a profit, or video game consoles - the actual cost of say, an X-box may be $600 but you can buy it for $300-400 because they make up for it on the games that are bought. So if you're a new company, you do not have a fleet. You have no fleet from which to subsidize the sale of your new cars. This is the primary reason there has not been a successful car company startup in the United States. Most car companies have 80%, 70% of their fleet out of warranty. ... Even if they stopped selling new cars, they would still... (laughs) their profits would increase!"

Wow! This means, in several years they gonna lose that advantage against Tesla. Given the dismal place they are in right now, how many of them can survive?

 

[mejojo]

Really good video from Cramer yesterday on Tesla and why it's following the Netlix and Amazon stories. He makes some nice digs at the shorts, admits he was wrong on the stock etc. I don't know about you guys, but hearing good things about Tesla from the media is still novel.

Also, can you believe people give this guy money to invest for them? Not even the fact that he thinks this, but that he is so unaware or so insulated in a bubble of internet trolls, that he thinks it's not a problem to share these views? "If you don't allow Hollywood execs to pray on women then action movies won't be good." What even?

View attachment 506319

Same. I have a 2/7 call at $585 that I'm holding. ​

Why not roll it into twice as many 2/7 625's for the same total price?

 

[TradingInvest]

Do you think they will enable FSD in each returned lease car? That would allow them to sell for at least $4-5k above what it would be be worth without.

The plan is to use those lease returns on Tesla Network, Tesla should be able to earn $200k from each car. A lot of details need to be sorted out. It may take a while. I think it will happen.

 

[willow_hiller]

To clarify, this podcast was recorded in 2019, correct?

Does "early next year" mean "early 2020"?

Too late to edit, but thanks @mongo for your answer that no, the podcast was recorded in early 2020. So Elon stated that dojo is likely to come late 2020 or early 2021.

 

[PeterJA]

I think its very unlikely Tesla throws away battery capacity.

Agreed, Tesla won't throw away anything.
Except the cell drying rooms that require much more space, time and cost than the Maxwell process.
And the cathodes with shorter life.
And the chemistry with lower energy density.
And the suppliers of same with higher costs.

All the rest (form factor and can packing lines)... sure, keep it.

 

[shootformoon]

imho tesla should at least offer to capital lease everything Panasonic currently in GF1. For too long, due to capital intensive nature of the cell manufacture business, tesla contracted out the production to up stream manufacturers like Panasonic, but it is time to bring them back. The cost of integration, coordination and unavoidable delay(due to more decision making steps involved) is increasing and will outweigh the benefits of capital efficiency. Battery is the key now and you can't afford to let others decide your capacity and production timeline.

I think its very unlikely Tesla throws away battery capacity. As Elon has said multiple times, battery capacity and excellent engineering talent are the two fundamental constraints on growth rates.
LG and Panasonic are likely going to remain on long term contracts, for CATL however I think there's a chance Tesla signed a short term deal to accelerate growth in 2020 and 2021 and make use of unused cell capacity in China after the collapse in marketwide EV sales vs targets following the subsidy cuts last year.

I do think ideally Panasonic's cell lines can be upgraded with some of Tesla's in-house cell breakthroughs including Maxwell electrodes etc.
However I'm not sure Tesla would want to share its technology so closely with a third party. I think this upgrade would be much easier if Tesla buys Panasonic's GF1 business and its another reason i'd really like to see this acquisition in the coming months - particularly now that Tesla's share price growth makes acquisitions far cheaper than before.

I think Tesla's battery improvements are going to be primarily focussed on reducing cost rather than improving customer's features, and there's also room to continue improving the chemistry in the current cells alongside Tesla's next generation product.
I think the 1 million mile battery is primarily useful for Robotaxis, Semi and grid storage.
I do think however the new battery designs are likely to also allow a faster charge rate - perhaps an average charging curve that gets much closer to the maximum 250kW on the V3 superchargers.
Many of the breakthroughs Maxwell and Dahn have been working on do point to higher energy density in cells, but I think this may just mostly lead to less cells per car. And also they may trade off some of this improved energy density for better longevity. For example Maxwell tech may allow a higher cathode % per cell (and hence higher energy density for like for like chemistries), however this might be offset by moving to chemistries with lower cathode energy density (lower Nickel %) but higher cycle life and or higher charge rates. So cathode % up, but cathode density down - this could lead to cells with flat energy density vs the current tech, but much better cycle life, better charge rates and much lower production cost. But its also very possible that this does still balance out as higher cell energy density too.

 

[StealthP3D]

I don’t know your experience level with options but your losing time value and now your option is deep in the money. If you believe it’s going up would be better to sell it and buy one out of the money. For every dollar the stock goes up your new option would perform better

And for every dollar it goes down, it would perform worse.

Also, I believe in speaking accurately (or at least attempting to). In this light, it's not what direction you "believe" the stock will go that determines the better course of action - it's what direction the stock actually goes (which, of course, no one knows with certainty). So the best course of action is not knowable. It may seem that I am splitting hairs here, but I'm not. Because it's really a matter of probabilities around risk/reward. So, just because you think it's more likely than not to be going up, doesn't imply one should take the higher risk option.

Playing with options is a lot like playing poker - if you don't have a good sense of the odds, you will, over time, get killed. If life were all about making money, and not about living, I would do a lot better to take a lot more and a lot bigger option positions more often. Because I have a proven ability to buy/sell profitable options. But making money is not my primary goal in life. Those who have just become enamored with watching their net worth soar might want to chill out for a while and regroup. I recommend contemplating this:

Keanu Reeves rarely talks about money — but when he does, it's life-changing