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

[Mkorpal]

Yes, by definition a recession would reduce total sales. But it wouldn't reduce sales evenly across all manufacturers. One car maker is not sales constrained (guess who) and there is no guarantee a recession would cause them to be sales constrained. The kind of person that retained their job through a recession is already the kind of person more likely to buy a Tesla. Recessions do not cause car sales to cease, not even close. Recessions hit companies that are sales constrained the hardest because the slightest dent in the economy reduces sales and therefore profits.

What was the hit to the overall automotive market during the last recession, 40%? Even if Tesla significantly outpaced the industry, lets say they only saw a 20% reduction in demand, do you not think that could have an impact? New car sales have a very elastic demand, they get hammered in economic hard times.

Now, granted, this argument is quite silly. The likely hood of a recession the likes we saw in 2008 happening now are slim to none. The only real default risk out there right now is student loans, and that has existed for a while. And the virus, well, it's either going to be contained or spread to the point where quarantines become unnecessary and we will just go about our lives. And even if such a recession happened, there are so many other factors that would impact how Tesla and the automotive industry in general fare, it's really impossible to just make blanket statements.

 

[Dr. J]

The likely hood of a recession the likes we saw in 2008 happening now are slim to none.

+1
However, student loans aren't the only default risk. There are a lot of corporate loans, especially in oil and gas, that are turning to crap. Still, unless there is a beyond-stupid AIG-like derivatives situation sitting undetected, the next one isn't likely to be as bad as 2008-09.

 

[Evoforce]

One of these?

This "do it in a tent" mentality is contagious! This proves Elon and Company are true leaders! Tents are underappreciated![/QUOT

Really?

 

[Bullish_Bear]

Bear me if we have discussed it but I failed to catch up: could someone point me the February 2020 letter from Mark Spiegel and his Stanphyl Capital? It is always fun to read him. Thanks!

 

[lafrisbee]

Now YOU are going to make me go look...I have a 2000 sq ft roof, single story, and as easy a roof to do as there is. And just for the solar roof they had me at over $32k. The quote for a high-quality fancy asphalt single was less than $15K.
The deal is I would get Solar to make my house hurricane/Power outage proof. And to do that it needs 3 powerwalls. So the minimum quote was $52K.
These are all round numbers. But that "quote" from 4 months ago really threw some cold water on my belief in Tesla. Not the cars and battery storage, but the Tesla Roof was looking bad.
Here in Florida with a low price on electricity, the ROI was going to take so many years that I'd be dead. I'm 63.
Now I will read all the "new pricing."?
Nope...I re-did the "solar roof calculator... it still came in the same. My numbers don't match yours.

worse than I remembered...Here's exactly what they were wanting me to sign off on....

Pricing Details
Solar Roof

$48,537

3 Powerwalls

$18,835

Purchase Price

$67,372

Federal Tax Credit

-$13,618

Net Cost

$53,754

So $54K Subtract the $15k for a very good structural shingle roof. $39k
So 16 years 4 months to break even
Now I could take that $39k and buy TSLA...and in 16 years it is worth?

 

[Artful Dodger]

Giga Berlin Update: "Arikon” Will Officially Build Giga Berlin, First Crane Arrives : teslamotors

European customers are being told their Model Y will come from GF Berlin.

That makes perfect sense to me, it also seem s logical GF Berlin would make RHD Model Y for the UK market.

GF Shanghai makes Model Y for China ,and possibly RHD Model Y for Asia Pacific..

So Fremont only makes Model Y for US/Canada there, is a minimal wave for Model Y, and transport is optimised.

Fremont continuing to make RHD Model 3 for worldwide markets is no big deal...

The final step is GF Berlin making Model 3 for Europe and possibly RHD Model 3 for the UK.

Get to this stage there is a minimal wave, transport is optimised as far as possible and no factory is making an overly complex mix of products...

It also makes sense for any future high volume models to be handled in a similar manner.

Ho! You forgot the most important reason for making Model 3s for Europe only at Fremont for the next 2-3 years: Osborne Insurance!

Because only Model 3 will be available, the FCA emissions pool will ensure that every single available Model 3 will (as necessary) be grabbed up greedily by Europe.

Even if Model Y creates a noticable (albeit temporary) slump in N.American sales, deliveries of Made-in-Fremont Model 3s in total will NOT decline.

Then by the time Made-in-Germany Model 3s are available (end of 2022), Made-in-Fremont Model 3s will be updated with Model Y tech (subframe casting; electrical wiring; cooling).

Tesla's rollout strategy for Model Y is brilliant. Its so nuanced, it will see amazing uninterupted growth in TSLA!

Cheers!

 

[Artful Dodger]

OT

Has Tesla ever brought up the concept of regen suspension? It could work very much like regenerative breaking in that anyplace where there is movement, it can be exploited into energy and vice versa, the energy could control the movement. On top of the potential energy to be collected, it could also be used to control the movement of the wheels and tires the same way the proposed Bose active suspension did some 10 or more years ago. I remember being blown away by that but it was never implemented to my knowledge.

What think y'all?

Speculation is that's what Raven does with a Maxwell Supercapactitor added to the Active suspension. It was discussed here last Spring. Some photos of the suspected part were provided. Paging @mongo

Cheers!

 

[jw934]

Bear me if we have discussed it but I failed to catch up: could someone point me the February 2020 letter from Mark Spiegel and his Stanphyl Capital? It is always fun to read him. Thanks!

Found this in TMC. You can google for the rest.

 

[adiggs]

What was the hit to the overall automotive market during the last recession, 40%? Even if Tesla significantly outpaced the industry, lets say they only saw a 20% reduction in demand, do you not think that could have an impact? New car sales have a very elastic demand, they get hammered in economic hard times.

Now, granted, this argument is quite silly. The likely hood of a recession the likes we saw in 2008 happening now are slim to none. The only real default risk out there right now is student loans, and that has existed for a while. And the virus, well, it's either going to be contained or spread to the point where quarantines become unnecessary and we will just go about our lives. And even if such a recession happened, there are so many other factors that would impact how Tesla and the automotive industry in general fare, it's really impossible to just make blanket statements.

Using your hypothetical of a 20% reduction in demand for Tesla, consider also (my claim at least) that we don't know the actual demand for Teslas. If Tesla is under delivering demand by 20%, then a 20% reduction in demand nets out at no change in production or deliveries (I realize those numbers don't quite work out - it's the idea I'm going for).

If actual demand is 2x what Tesla is currently producing and delivering, then a 20% reduction in demand means they'll only be delivering to 1.6X of demand during the recession instead of 2x. I.e. - Tesla keeps growing with their foot on the go pedal, while everybody else is cratering. This is what I expect we'll see in the US, especially if we see serious impact to car sales in the US.

 

[wipster]

View attachment 518450
View attachment 518451

Cool reference, Major Kong.

Yee haa!!!

 

[Mkorpal]

+1
However, student loans aren't the only default risk. There are a lot of corporate loans, especially in oil and gas, that are turning to crap. Still, unless there is a beyond-stupid AIG-like derivatives situation sitting undetected, the next one isn't likely to be as bad as 2008-09.

Now that I think about it, I am a little concerned about the airlines. They have been taking on quite a bit of debt to modernize fleets, and they are currently the ones hurting the most right now. I'm quite interested in how they fare over the next few months.

 

[dl003]

What was the hit to the overall automotive market during the last recession, 40%? Even if Tesla significantly outpaced the industry, lets say they only saw a 20% reduction in demand, do you not think that could have an impact? New car sales have a very elastic demand, they get hammered in economic hard times.

Now, granted, this argument is quite silly. The likely hood of a recession the likes we saw in 2008 happening now are slim to none. The only real default risk out there right now is student loans, and that has existed for a while. And the virus, well, it's either going to be contained or spread to the point where quarantines become unnecessary and we will just go about our lives. And even if such a recession happened, there are so many other factors that would impact how Tesla and the automotive industry in general fare, it's really impossible to just make blanket statements.

When the meteor hit the Earth, dinosaurs died first. Small animals survived better. That's the dynamic between Tesla and the rest of them. Tesla just increased its serviceable market by 100% with model Y. How hard does a recession has to be to nullify that huge spike in potential demand? Even if it's that bad, Tesla is more than capable of surviving. Elon can raise billions at will. Automakers? Not so much. They are the dinosaurs crushed by pension, overhead, UAW, etc... They will die first. And from their ashes Tesla will rise.

 

[Silent Ludicrosy]

One of these?

This "do it in a tent" mentality is contagious! This proves Elon and Company are true leaders! Tents are underappreciated!

Have you heard about Tesla’s “extreme” assembly line? Its really in tents.

 

[wipster]

It's all Toyota's fault... they've been planning this since 1957...

 

[Mkorpal]

When the meteor hit the Earth, dinosaurs died first. Small animals survived better. That's the dynamic between Tesla and the rest of them. Tesla just increased its serviceable market by 100% with model Y. How hard does a recession has to be to nullify that huge spike in potential demand? Even if it's that bad, Tesla is more than capable of surviving. Elon can raise billions at will. Automakers? Not so much. They are the dinosaurs carrying with them pension, overhead, UAW, etc... They will die first. And from their ashes Tesla will rise.

Granted, I was not alive during the K-Pg extinction event, as I assume you were not. But I'd venture to say the small animals also faced considerable hardship.

 

[Off Shore]

Granted, I was not alive during the K-Pg extinction event, as I assume you were not. But I'd venture to say the small animals also faced considerable hardship.

Although some of the small animals (e.g. your ancestors) survived. (Mine too, so don't be cross).

 

[MC3OZ]

Ho! You forgot the most important reason for making Model 3s for Europe only at Fremont for the next 2-3 years: Osborne Insurance!

Because only Model 3 will be available, the FCA emissions pool will ensure that every single available Model 3 will (as necessary) be grabbed up greedily by Europe.

Even if Model Y creates a noticable (albeit temporary) slump in N.American sales, deliveries of Made-in-Fremont Model 3s in total will NOT decline.

Then by the time Made-in-Germany Model 3s are available (end of 2022), Made-in-Fremont Model 3s will be updated with Model Y tech (subframe casting; electrical wiring; cooling).

Tesla's rollout strategy for Model Y is brilliant. Its so nuanced, it will see amazing uninterupted growth in TSLA!

Cheers!

Yeah I did think of that, you have expressed the point very well..

Also while waiting for a Model Y in Europe, the only Tesla options are S/X/3....

This is one reason why S/X sales dropped in Europe Q1 2019, is that Model 3 was available.

if a locally made Model Y eventually displaces a US imported Model 3 in Europe chances are it will become a higher margin product very quickly..

This is also why they may not rush to make Model 3 at GF Berlin... they need to gauge the overall demand for Model 3 worldwide when Model Y is available.

 

[Cirrus MS100D]

The solar roof expansion is interesting - We’re in PA and up until today, we were still just a reservation, but now it looks just like it did when we did our traditional panels + Powerwall install where it’s asking for an electric bill upload.

We’re doing a renovation in conjunction with an entire roof replacement, so I’m curious if they’ll deny us for that. If they say it’s OK, then I’m going to suspect they’ll deny us because our roof is too complicated.

That’s why we’re simultaneously pricing out a standing seam metal roof with thin film solar stick on panels as a sort of alternative solar roof, but obviously we’d prefer to stick with Tesla if it’s available.

Two dads at our preschool claim they are 100% interested, know the projected costs, of Solar Roof and were skeptical it would open up beyond the initial ~7 states for many years. Maybe they’re actually cranking them out at scale?

 

[Dr. J]

Now that I think about it, I am a little concerned about the airlines. They have been taking on quite a bit of debt to modernize fleets, and they are currently the ones hurting the most right now. I'm quite interested in how they fare over the next few months.

The first airline bankruptcy was today: Lessons from the Airline Industry’s First Coronavirus Bankruptcy

Then I found this (as of 4Q 2019):
THE DEBT-TO-EQUITY RATIO OF MAJOR U.S. AIRLINES
Airline Debt-To-Equity Ratio
United Airlines 177.35
Allegiant Airlines 166.48
Spirit Airlines 157.34
Hawaiian Airlines 125.92
Delta Airlines 117.17
Alaska Airlines 74.28
JetBlue 65.68
Southwest Airlines 40.70
American Airlines (AAL) is not included as it is currently running a negative debt-to-equity ratio.

Context:
The Debt-To-Equity Ratio in the Airline Industry
The average D/E ratio of major companies in the U.S. airline industry is 115.62, which indicates that for every $1 of shareholders' equity, the average company in the industry has $115.62 in total liabilities. The airline industry is a highly capital intensive sector and is often considered to have some of the highest D/E ratios.

 

[dl003]

The first airline bankruptcy was today: Lessons from the Airline Industry’s First Coronavirus Bankruptcy

Then I found this (as of 4Q 2019):
THE DEBT-TO-EQUITY RATIO OF MAJOR U.S. AIRLINES
Airline Debt-To-Equity Ratio
United Airlines 177.35
Allegiant Airlines 166.48
Spirit Airlines 157.34
Hawaiian Airlines 125.92
Delta Airlines 117.17
Alaska Airlines 74.28
JetBlue 65.68
Southwest Airlines 40.70
American Airlines (AAL) is not included as it is currently running a negative debt-to-equity ratio.

Context:
The Debt-To-Equity Ratio in the Airline Industry
The average D/E ratio of major companies in the U.S. airline industry is 115.62, which indicates that for every $1 of shareholders' equity, the average company in the industry has $115.62 in total liabilities. The airline industry is a highly capital intensive sector and is often considered to have some of the highest D/E ratios.

I have tons of Delta skymiles. Glad it's only middle of the pack.
Some of us here can probably own an airline with their gains already