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

[ReflexFunds]

Does anyone notice how much Tesla appears to have planned for March/April 2019?

Mar/April-19 - Launch of AP HW3 production
Mar/April-19 - Ramped up production on new SR Grohmann module lines at GF1
Mar-19 - Panasonic 35Gwh/year run rate at GF1
Apr-19 - Panasonic moving S/X production to US (according to Nikkei)
Early 2019 - Supercharger V3 launch

Mar-19 - Model Y Reveal
Mar-19 - Possible Pickup reveal
1H19 - Solar Roof production ramp up at GF2
Apr/May-19 - S&P inclusion

I think many of these could be related:

Towards release of Supercharger 3

1. Model 3 module production is moved to new lower cost Grohmann lines
2. Model S/X cell production is moved to GF1 with current model 3 module/pack lines repurposed for S/X
3. Upgraded S/X batteries allow launch of Supercharger 3.

Towards release of SR model 3 (below actions could increase GP per car over $5k)

1. Launch of AP3 increases take rate of FSD and allows recognition of FSD revenue, significantly increasing margin per car.
2. New Grohmann lines lower module costs per model 3
3. S/X cell production at GF1 increases Panasonic's economies of scale and leads to lower cell pricing for Tesla
4. Launch of SR option supports production ramp up from c.5k to c.7k, lowering production costs another $2-3k due to lower depreciation and staff costs per car.

Of course, launch of AP3 itself may be the most significant development in Tesla's history.

 

[EVMeister]

Surely Jaguar is losing money on such a cheap leasing deal. Usually such deals can only be found in ZEV-states in the US, where car manufacturers will happily sell or lease an EV with a loss, as that one sale prevents them from having to pay fines on the sale of several ICE's (if I understood correctly). For the same reason my brother in SF got a $138 per month lease deal (for three years) on a Bolt

Do car manufacturers in the UK also have such a need for 'compliance cars'? Or is Jaguar already having a hard time moving the I-Paces it produces?

Some caveats with this lease deal include fairly low mileage (although excess charges aren't extreme) and the fact it's very much a base model I-PACE. There were some theories going around that, in 18 months time, there will be quite a bit of demand for fairly lightly used base model I-PACEs. Perhaps Jaguar aren't too optimistic about their ability to ramp up production? The monthly cost went up quite a lot if you were to opt for a 24 month or longer lease period.

Some people also speculated that perhaps Jaguar were finding it easy enough to sell higher end models but not so much the base model. Either way, there is no way to get an I-PACE anywhere near this cheap if buying today. It's roughly twice the monthly cost now, with no 18 month option.

 

[avoigt]

Rumor, from Carsonight, is that they are already making MR packs with the new design...

You have a link or source?

 

[saniflash]

Market Action

What I find interesting about the price movement this Friday: even though the uptick rule was no longer in effect, there wasn't a significant downward pressure on the price (I'm aware it's only a sample size of 1).

Combined with this tweet:

Could this be a weak first signal that shorts are heading to the exit in a sorted manner? They might have managed to plug the P&D figures into Q3 ER after all....looking forward to seeing whether the downward pressure (along with a significant MMD) will return or not.

The only thing that's certain is that TSLA will not become boring any time soon.

 

[CorneliusXX]

Direct link:

http://ir.tesla.com/static-files/7ac705ce-df45-4560-80a0-e9fe6c526a91

The contents of the revolving car lease loan facility (the "warehouse facilities") were securitized earlier in the year. I did the math and realized this was most of them. Apparently it was literally *all* of them. There were two facilities (the 2016 and the 2017). The 2016 facility has no loans outstanding. Apparently the 2017 facility also had no loans outstanding, and was automatically closed (probably by its original contract terms). Tesla promptly replaced it with a new *almost identical* 2018 facility. (I guess the 2016 facility didn't auto-close.)

I think this isn't actually a material event and shouldn't have been reported, but Tesla is being overcautious in their reporting right now.

The new 2018 facility has $92m of leases funded at the time of reporting. They could be new leases written after the start of the 2018 facility, or the 2018 facility could have purchased a small tail of remaining leases from the 2017 facility.

Another tidbit of information is that the warehouse is currently paying 3.9% (Libor + margin). Current 1 month libor is c.2.5% meaning Tesla pay a margin of c.1.4% on their drawn funds. My guess is that Tesla would hedge their fixed rate lease payments back to Libor, however I do not know what rate that would be at.

There are probably some pretty hefty commitment fees while Tesla are running over $1b in unused capacity.

 

[jbcarioca]

...
I think this isn't actually a material event and shouldn't have been reported, but Tesla is being overcautious in their reporting right now.

Yes, and the relevant point "...payment in full of all obligations thereunder as result of a securitization..." normally means that all potential collateral substitutions and/or loss reserve contributions have been made so the remaining lease contract benefits accrue to the buyers of the securitized assets rather than the originator. Absolutely normal but...good news in a modest way because Tesla-originated lease obligations are performing as expected or better.

If anybody is seriously anal and has access to all the data it is fairly easy to find out exactly how that paper has been performing relative to peers. I'm far too lazy to do that myself, unless I am being paid to do so. However, were there any significant collateral substitution or loss reserve contributions that had been made we may be assured there would have been loud screams of incipient disaster. Since there has been total silence we may be assured that all is well.

obviously if I thought otherwise I'd state things much differently. Still, in a public forum nobody should rely on any anonymous statements, including explicitly mine. None of you have any idea whether I have ever seen a securitization before. I claim to have led and/or participated in quite a few of those from motor vehicles and credit cards to more exotic assets, including collateral evaluation and substitution definitions/terms.

 

[ReflexFunds]

The new 2018 facility has $92m of leases funded at the time of reporting. They could be new leases written after the start of the 2018 facility, or the 2018 facility could have purchased a small tail of remaining leases from the 2017 facility.

Another tidbit of information is that the warehouse is currently paying 3.9% (Libor + margin). Current 1 month libor is c.2.5% meaning Tesla pay a margin of c.1.4% on their drawn funds. My guess is that Tesla would hedge their fixed rate lease payments back to Libor, however I do not know what rate that would be at.

There are probably some pretty hefty commitment fees while Tesla are running over $1b in unused capacity.

Commitment fee should be 25% or 30%, so 1-1.3%.

Tesla is selling c.2.5k S/X per Q through direct leases (c.$150m/Q financing needs). The Warehouse line is used as temporary capital before selling ABS (i expect a new ABS every 6-9 months). Tesla financing needs are for Model S/X production cost, the Warehouse line likely lets them borrow as a % of net present value of lease payments plus residual value. This NPV is likely higher than ASP, and significantly higher than the production cost/book value. So Tesla can likely borrow against >100% of book value of new operating lease vehicle assets.

Anyway, looks like they are leaving room on this facility to start some Model 3 in-house lease deals.

 

[SebastianR]

OT

I wanted to pick-up from a thought I had long time ago here on the development of Porsche vs. Tesla:

Porsche is really interesting. Here is how many cars they sold:

1995/1996 - 19,262 cars (or about Tesla in 2013)
1996/1997 - 32,383 - Tesla in 2014
[...]
2000/2001 - 54,586 - Tesla in 2015 (it took Porsche until 2000 to crack the 50k threshold)
[...]
2005/2006 - 96,794 - Tesla in 2016 (again, it took Porsche a few years to get up to about 100k)

To continue the saga:

In 2010/2011 - 116,978 - Tesla in 2017 was "only" 104.000 cars.

In 2018 Tesla was at 245,240 cars which overtook Porsche already in Q3.

In other words, it took Porsche some 22 years to get the volume where they are now (ok, ok - I'm not starting in 1931 that would be silly. I looked for a similar size to Tesla in 2013 to have a proper starting point...). Tesla did the same in only about 5 or 6 years. And until the MR was introduced, the cheapest Porsche was the prices of the cheapest Tesla (so that's until Q3).

 

[JRP3]

No, as opposed to being cynical.

Evidence based reasoning is now cynicism? I consider it the scientific method.

Ironically enough, you also took a shot at every single person who arbitrarily believes any media headline or article content

And? It's always better to get more data from multiple sources. TSLA related, Elon fell into the trap of believing a headline without looking further when he recently tweeted a link to an article with bad data.

Whether or not there is evidence, it is a widely held belief,

Unfortunately there are many widely held beliefs with no evidence to back them up. It's never a good position from which to operate. For example there are some people who believe the heat trapping effects of CO2 molecules will not affect our climate.

 

[KarenRei]

Tesla isn't going after the "EV" market.

Tesla is going after the entire "enchilada."

Italy buys a bit more cars than Iceland.

So the plan is "build out store and service infrastructure that you plan to just let sit idle for 1-2 decades because eventually you're going to need it, and meanwhile don't build out places that can earn you profit now"?

 

[Dwdnjck]

I think Monday will be a very positive day for the stock market. Trump will have the army take over Wall Street because of an emergency to keep prices from going down. It’s gonna be great.

 

[2virgule5]

Why not include AWD version of the SR from the beginning?

For one, we haven’t seen a convincing argument that an SR+AWD is even possible. With the current state of affairs (current motors) the range of such a car would max out at 200 miles in ideal conditions, and it is not clear that the battery pack with less cells would have even enough juice to supply two motors efficiently.
It makes more sense to keep the base model SR to RWD without additional manufacturing diversity that would eat margins, at least initially.

 

[S3XY]

Elon Musk with the most enigmatic tweet ever:

"..."

Translation: P&D ... ER for the win!

 

[KarenRei]

I wouldn't be surprised at all to see a pullback (profit taking, second-guessing extreme one-day optimism based on nothing more than words, random Trump actions, etc) on Monday. Although I don't plan to "wager" on it; I don't bet on short-term movements like that.

 

[KarenRei]

For one, we haven’t seen a convincing argument that an SR+AWD is even possible. With the current state of affairs (current motors) the range of such a car would max out at 200 miles in ideal conditions, and it is not clear that the battery pack with less cells would have even enough juice to supply two motors efficiently.

This is just plain silly. Model 3 cruises on about 15-25kW of power. The LR pack outputs at least 340kW in practice and even more in theory. So SR will "cruise" at less than a tenth of its peak power. The notion that on heavy acceleration you can't split the power is just nonsense. And would be even if this wasn't the case - EV motors are efficient at all power levels. Induction motor efficiency "drops off" at low power levels, but even then we're talking very low power levels to get down to even efficiencies in the 70s-ish percent. And the induction motor is not "always on", it's only for when you want either more power or more traction than the rear motor can provide. Creeping along at low speeds / powers is done on the rear (PM) motor, which is highly efficient even at very low powers.

Do we even need to mention that Tesla's PMSRM motor is modular, so you can make it as powerful (or weak) as you want? Not sure about the front motor on the Model 3, but I wouldn't be surprised if it were modular as well.

The base Model 3 is - and will be - RWD for very simple reasons. 1) It's lighter, 2) it's cheaper to build, 3) it's more efficient (higher EPA rating), and 4) It's incentive for people to pay more to upgrade, and thus increase Tesla's margins, while still keeping the base entry price low.

 

[2virgule5]

This is just plain silly. Model 3 cruises on about 15-20kW of power. The LR pack outputs 340kW in practice and even more in theory. So SR will "cruise" at less than a tenth of its peak power. The notion that on heavy acceleration you can't split the power is just nonsense. And would be even if this wasn't the case - EV motors are efficient at all power levels. Induction motor efficiency "drops off" at low power levels, but even then we're talking very low power levels to get down to even efficiencies in the 70s-ish percent. And the induction motor is not "always on", it's only for when you want either more power or more traction than the rear motor can provide. Creeping along at low speeds / powers is done on the rear (PM) motor, which is highly efficient even at very low powers.

Do we even need to mention that Tesla's PMSRM motor is modular, so you can make it as powerful (or weak) as you want? Not sure about the front motor on the Model 3, but I wouldn't be surprised if it were modular as well.

The base Model 3 is - and will be - RWD for very simple reasons. 1) It's lighter, 2) it's cheaper to build, 3) it's more efficient (higher EPA rating), and 4) It's incentive for people to pay more to upgrade, and thus increase Tesla's margins, while still keeping the base entry price low.

The key word here is efficiency. So we agree that such a solution would not be.

 

[KarenRei]

The key word here is efficiency. So we agree that such a solution would not be.

Sure, if you ignore absolutely everything I wrote.

 

[Lucky_Man]

(Spoiler alert: GF1. Tesla is obsessed with the concept of facilities where "raw materials enter on one side and cars leave on the other", and the massive worker increase plans talked about for GF1 aren't just for giggles)

OT

FWIW, the cost of living in Reno/Sparks is cheaper by far than Fremont. While researching housing for a potential reloc to a lower altitude, I discovered home prices are much less expensive, at least for now. If you're thinking about a job at GF1, you'd better jump on it. The only downside for me is the water quality is inferior to our well water here in Larkspur.

Maybe Elon will build a new 'factory town' out there? Or barracks like in China? ;^)

 

[AudubonB]

===>TWENTY!!!!<==== overnight posts moved to "Politics". Stop being lazy.

 

[Lucky_Man]

Tourism has been good to us in the past decade. That said, I'm sure we'll be dropping in the 2018 rankings; our exchange rate is worse and tourism growth has slowed.

As for Polestar... lol I have no clue what Volvo is thinking.

OT, (cntd)

Agreed. You're country has excellent hiking opportunities. If I *EVER* get my passport, I'll be heading over there.