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

[Chunky Jr.]

how the ID.3's struggles demonstrate Tesla's lead in software and R&D,

Tesla : we're going to deliver 500K vehicles this year
Analysts : Pfft. Big deal. Legacy automakers will soon be making way more than that
Legacy automakers : uh, no we aren't. We can't figure out how to make something competitive. It's a lot harder than we thought

 

[ReflexFunds]

So here's the previously undisclosed data embedded in that chart, which @Prunesquallor or others might help decode:

• 2019 "Tesla Pooling Arrangement Contribution", already paid: 6 pixels high
  
• 2020 "Lower diesel mix" minus eco-improvements: 16 pixels
  
• 2020 "Compass, Renegade, Wrangler PHEVs, [Fiat] 500 BEV": 20 pixels
  
• 2020 "Tesla Pooling Arrangement Contribution", planned: 18 pixels
  
• 2020 "5% Compliance Exemption": 5 pixels
• Height difference between 125 g/km and 95 g/km bars: 59 pixels

Based on this, Tesla's pooling contribution in 2020 would be worth about (125-95)*18/59 = 9.1 g/km, or about 30.5% of the 30 g/km emissions reduction FCA is targeting in 2020 to be completely penalty free.

If it's accurate that FCA is facing total penalties of €1.7b, which penalty figure I took from @Prunesquallor post from December, then Tesla's penalty reduction benefit is about €518m - which is lower than what we speculated about before. The reason for the discrepancy is probably that we missed the many other tools the EU left open for FCA to game the emissions statistics.

Now we don't know how much of this €518m figure Tesla would be getting - but back in April 2019, when the deal was signed, Tesla also marked ZEV credits as deferred revenue - which they recognized in Q4'2019. This is how they accounted for these supposed FCA credits in Q1'2019:

"Deferred revenue related to sales of automotive regulatory credits was $140.0 million and $0 as of
March 31, 2019 and December 31, 2018, respectively."​

So if the 6 pixels high bar in FCA's 2019 Tesla pooling cost was $140m, then the 2020 bar of 18 pixels would indicate a planned payment of $420m - or about €380m. This would suggest that Tesla gives FCA an about 25% discount on the ZEV credits they are selling in Europe - i.e. they keep about 75% of the penalty reduction benefit.

Note that the 2019 bar is particularly small, and depending on how I measure it might be 7 pixels high, in which case the calculation is 18/7*140 = $360m, or €327m - a 37% discount and a 63% recovery rate for Tesla.

Finally, these estimates also depend on the €1.7b FCA penalties figure being accurate - do we have any other estimates that we could compare it against?

It's worth noting Tesla did not book the $140m deferred revenue in Q4. It is still sitting on balance sheet. Even though it looks like this payment was related to 2019 emissions pooling.
For some reason Tesla chose not to book it - perhaps because they were saving it to boost Q1.

But if your numbers are correct it looks like Tesla may receive $360m more cash and book $500m revenue for FCA EU pooling in 2020 (vs $0 revenue booked in 2019).

Also, if FCA do manage to get so much CO2 reduction through internal efforts, then Tesla will likely have a lot of excess EU EV sales that they can use to reduce other ICE OEMs emissions fines. I just hope they kept enough flexibility in their FCA deal to do this.

 

[gerebgraus]

I want VW Group to succeed when they have the right mind set, as in they need to realize their EV offering is there to kill off their ICE offerings, not to Osborne or kill off Tesla. Nothing they have done have showed me this. They announce fake ranges and prices years ahead to Osborne as much as they can. They park Etrons in front of Tesla super chargers and service centers. From my perspective, they just want to get rid of this pest named Tesla more than wanting a sustainable future.

Not one company is willing to work with Tesla even though Musk has numerous times said zero people contacted them about using their super chargers. Why? Because they don't want to admit or give Tesla any credibility as they are seen as weed that can't be killed off. So until they begin to show me that they finally embrace and cut off their right hand just to save themselves and the planet, they can go F themselves with every failure.

Tesla superchargers are no longer free, so it could open its superchargers of any owners of competing EV-s if it wanted. Chargepoint, etc. has no contract with car manufacturers either. It has contracts with car owners.

 

[Chunky Jr.]

here's my guess what VW is doing in those daily meetings:
- what's the latest status
- who is doing what today
- is there anything blocking progress

These kinds of short daily meetings are a core principal of agile software development methodology. These meetings are typically called scrums.

 

[CLK350]

Under Diess maybe. There's no telling what they're up to now with the rumor of him being pushed out.

True, and you can be sure Diess has his enemies within VW who are die hard ICE believers. He's clearly in the hot seat. Being fired from VW would be great for Tesla, I'm pretty sure Tesla would love to hire him for some post at Giga Berlin* - he knows the German and EU markets very well

(*) In a similar vein, SpaceX hired Bill Berstenmeier, NASA's chief of manned missions - perfect timing as SpaceX starts its new programs, and a good way to remember how Bill saved Tesla and SpaceX in Dec '08 when everything looked really dire for Elon Musk
https://www.space.com/spacex-hires-bill-gerstenmaier-nasa.html

 

[TheTalkingMule]

The reason for the discrepancy is probably that we missed the many other tools the EU left open for FCA to game the emissions statistics.

There was considerable incentive for EU regulators to leave wiggle room for Euro manufacturers to avoid handing billions to an American company.....until of course the German GF and design center announcement. I wonder if there were any assurances from Elon that these funds will(in net) never leave the continent?

 

[Fact Checking]

So here's the previously undisclosed data embedded in that chart, which @Prunesquallor or others might help decode:

• 2019 "Tesla Pooling Arrangement Contribution", already paid: 6 pixels high
  
• 2020 "Lower diesel mix" minus eco-improvements: 16 pixels
  
• 2020 "Compass, Renegade, Wrangler PHEVs, [Fiat] 500 BEV": 20 pixels
  
• 2020 "Tesla Pooling Arrangement Contribution", planned: 18 pixels
  
• 2020 "5% Compliance Exemption": 5 pixels
• Height difference between 125 g/km and 95 g/km bars: 59 pixels

Based on this, Tesla's pooling contribution in 2020 would be worth about (125-95)*18/59 = 9.1 g/km, or about 30.5% of the 30 g/km emissions reduction FCA is targeting in 2020 to be completely penalty free.

If it's accurate that FCA is facing total penalties of €1.7b, which penalty figure I took from @Prunesquallor post from December, then Tesla's penalty reduction benefit is about €518m - which is lower than what we speculated about before. The reason for the discrepancy is probably that we missed the many other tools the EU left open for FCA to game the emissions statistics.

Now we don't know how much of this €518m figure Tesla would be getting - but back in April 2019, when the deal was signed, Tesla also marked ZEV credits as deferred revenue - which they recognized in Q4'2019. This is how they accounted for these supposed FCA credits in Q1'2019:

"Deferred revenue related to sales of automotive regulatory credits was $140.0 million and $0 as of
March 31, 2019 and December 31, 2018, respectively."​

So if the 6 pixels high bar in FCA's 2019 Tesla pooling cost was $140m, then the 2020 bar of 18 pixels would indicate a planned payment of $420m - or about €380m. This would suggest that Tesla gives FCA an about 25% discount on the ZEV credits they are selling in Europe - i.e. they keep about 75% of the penalty reduction benefit.

Note that the 2019 bar is particularly small, and depending on how I measure it might be 7 pixels high, in which case the calculation is 18/7*140 = $360m, or €327m - a 37% discount and a 63% recovery rate for Tesla.

Finally, these estimates also depend on the €1.7b FCA penalties figure being accurate - do we have any other estimates that we could compare it against?

BTW., there's one interesting detail - @Prunesquallor's model shows FCA payments of €2.1b in 2021:

But JATO Dynamics last year published a study that estimated €3.2b penalties for FCA:

​

I haven't found the 2020 estimates of JATO, but if we assume that the difference between the models resulting in €3.2b vs. €2.1b is linear, then the extrapolated JATO result for 2020 would be 3.2/2.1*1.7 = €2.6b - which would increase the value of the Tesla emissions reductions from €518m to around €790m.

The €380m estimated recovery would be roughly 48% of the penalty reduction - which would also be in line with the game theory outcome of 50%. This all is imprecise to about 5%, so 50% is within the margin of error - assuming the JATO figures are the right ones.

 

[goinfraftw]

Very cool.

JPMorgan announces big moves to support environment, including ending loans to coal industry

Key points:

• JPMorgan Chase announced a pledge to facilitate $200 billion in environmental and economic development deals and will pull back from advising and lending to the coal-mining industry.
• Apart from helping to fund new climate and economic inclusion projects around the world, the bank said it was taking new steps to accelerate the transition to clean energy.
• On top of stepping back from advising companies that get most of their revenue from coal extraction, JPMorgan said it will put restrictions on financing new coal-fired power plants, phase out “credit exposure” to the industry by 2024 and will stop funding new oil and gas drilling projects in the Arctic.

 

[Singuy]

Tesla superchargers are no longer free, so it could open its superchargers of any owners of competing EV-s if it wanted. Chargepoint, etc. has no contract with car manufacturers either. It has contracts with car owners.

It's not free but the plug is proprietary. Also no manufacturer want their cars sitting in a Tesla super charging station. That just get the customer to think.."why didn't I buy a Tesla to begin with"?.

 

[Fact Checking]

Big push down to $810, synchronized with a macro drop - I suspect the shorts are expecting a FUD-fest around the NHTSA "press briefing" about AutoPilot and the mobile-gaming-while-on-Autopilot crash case later today?

I hope there's going to be a few friendly journalists at the press conference as well, asking the NHTSA board a few probing questions, like:

• Why is the NHTSA in the business of second guessing engineering decisions of the safest U.S.-made car in existence?
• Why is there a statistically disproportionate investigations of Tesla accidents?
• Does the NHTSA board know about the incident back in December, when a short seller submitted a mostly bogus "complaint" about "sudden unintended acceleration", with the possible goal to engineer a drop in the share price of Tesla?
• Does the increased frequency of bogus complaints filed to the NHTSA with fake VIN's influence the NHTSA's decision making process about which manufacturers to investigate?
  
• What will the NHTSA do with owners cars made by other manufacturers playing mobile games while driving?

 

[dl003]

Big push down to $810, synchronized with a macro drop - I suspect the shorts are expecting a FUD-fest around the NHTSA "press briefing" about AutoPilot and the mobile-gaming-while-on-Autopilot crash case later today?

I hope there's going to be a few friendly journalists at the press conference as well, asking the NHTSA board a few probing questions, like why are they in the business of second guessing engineering decisions of the safest U.S.-made car in existence, and what they'll do with owners of other manufacturer cars playing mobile games while driving?

Shorts are playing a dangerous game. One big positive news about the virus and the pain train will resume its schedule immediately.

 

[StealthP3D]

here's my guess what VW is doing in those daily meetings:
- what's the latest status
- who is doing what today
- is there anything blocking progress

The tricky part is "Who is doing what today". And a meeting doesn't really solve that problem.

 

[Nocturnal]

Shorts are playing a dangerous game. One big positive news about the virus and the pain train will resume its schedule immediately.

You are missing one key thing though.


They are very stupid.

 

[Tslynk67]

Shorty running wild for the moment, that's some MMD!

I guess the buyers are waiting this NTSB "ruling"? Annoying...

 

[gerebgraus]

It's not free but the plug is proprietary. Also no manufacturer want their cars sitting in a Tesla super charging station. That just get the customer to think.."why didn't I buy a Tesla to begin with"?.

But nobody asks other manufacturers. I never ask Tesla whether I can charge at Chargepoint. At this point, superchargers are still money losing marketing tools for Tesla. Once it becomes profitable it will probably be open to other BEV cars.

 

[UCF3]

Shorty running wild for the moment, that's some MMD!

I guess the buyers are waiting this NTSB "ruling"? Annoying...

Buyers are waiting for $799

 

[vikings123]

Shorts are playing a dangerous game. One big positive news about the virus and the pain train will resume its schedule immediately.

Shorts piling on as the market turns negative, perfect opportunity for them. We need major news from Tesla.

 

[Kuhz]

Big push down to $810, synchronized with a macro drop - I suspect the shorts are expecting a FUD-fest around the NHTSA "press briefing" about AutoPilot and the mobile-gaming-while-on-Autopilot crash case later today?

I hope there's going to be a few friendly journalists at the press conference as well, asking the NHTSA board a few probing questions, like:

• Why is the NHTSA in the business of second guessing engineering decisions of the safest U.S.-made car in existence?
• Why is there a statistically disproportionate investigations of Tesla accidents?
• Does the NHTSA board know about the incident back in December, when a short seller submitted a mostly bogus "complaint" about "sudden unintended acceleration", with the possible goal to engineer a drop in the share price of Tesla?
• Does the increased frequency of bogus complaints filed to the NHTSA with fake VIN's influence the NHTSA's decision making process about which manufacturers to investigate?
  
• What will the NHTSA do with owners cars made by other manufacturers playing mobile games while driving?

what time is the briefing?

 

[Nocturnal]

So I guess the market hasn't realized that Model Y deliveries are being scheduled? 6-8 months earlier than Tesla had stated originally, which is probably at least a year earlier than analysts expected. (and of course the shorts claimed it would never come out)

 

[dl003]

Shorty running wild for the moment, that's some MMD!

I guess the buyers are waiting this NTSB "ruling"? Annoying...

That's what they want you to believe. Nobody really cares about this. It is my understanding that buyers know this sort of thing would happen during this potential pandemic and so they want to let these fools do their things. In the words of once-billionaire David Einhorn "Don't interrupt your enemy when he's screwing up."