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

[Fact Checking]

Yes, you did. And only one of those 17 categories was even "average", only a couple were "good", and all the others were "great". So again: what the heck?

Yep. In that interview Consumer Reports comes very close to slandering Tesla, in addition to the libel in their press release two days ago. CR also went out on a limb to spread libel against Tesla by "reaching out" to several media outlets beforehand, basically gifting shorts with material non-public information, significantly harming Tesla investors.

It would be a slam dunk court case: the slander in the interview and the libel in CR's press communications is refuted by CR's own data:

What the *sugar*?? Why isn't CR giving Tesla an award for outstanding Model 3 reliability???

 

[mrdoubleb]

CBS News Technology Analyst Larry Magid speaks with Consumer Reports Auto editor Patrick Olsen on why the magazine pulled its coveted "Recommended" rating from the Tesla Model 3

Consumer Reports Auto editor Patrick Olsen on why Tesla Model 3 lost the "Recommended" rating

My commentary notes:

Consumer Reports did not do a sufficient job justifying their "Not Recommended" rating.

The interviewer is great. Owns a Tesla Model 3 and is very knowledgeable about his car and how Tesla's "work."

Interviewer asked very reasonable questions that made sense. How can such a well regarded car not be recommended. CR response was not sufficient.

Consumer reports is going to wait ONE MORE YEAR to verify that Tesla fixed the issues. The owners were surveyed in Summer of 2018

Paint/Trim/Electronics/Glass was the issues behind the rating. Back in the day, engine, transmissions were the issues of concern. The Tesla equivalent is motors, inverters and batteries. No complaints about those!

Consumer Reports LOVES Toyota and their very methodical and minor incremental improvements. Opposite of Tesla - and where is our Toyota EV?

I think the very modest price drops in TSLA reflect the overall inconsequentialness of this downgrade.

Journalists interviewing journalists is never objective. They always feel like they have to stand up to protect the integrity of their craft.

Having said that this wasn't too bad and I am not even mad at CR for disclosing the issues. What does bug me, however are the following:

• CR pulled the recommendation on multiple cars, incl the BMW 5 series, a staple of the premium segment, yet they put the Tesla (and 1 other brand) in the headline. I can't help to think that this is to generate traffic, sales and interviews as Tesla + scandal = clicks. As a consumer who is normally vary about the objectivity of media reviews and headlines, this makes me question their motives a bit.
• The detailed chart that [EDIT: you can see right above my post as well] showed top ratings in almost all of those 17 categories, 2 "OK" scores and 1 exclamation point. It is weird to me how that can lead to such a bad total score and is certainly not disclosed in the headlines, articles and this interview, giving the impression that the car was full of major issues.
• The data collection period. I get it, all manufacturers said they fixed stuff, but Tesla is the only one that doesn't operate with model years. Also the gap between the survey period and the publishing of the result is way too big. Their data points were probably from the first 10-20k of a brand new model, whereas the car has sold in 10x as many copes by now.
• Scratched paint and misaligned panels are bad, but not in the "reliability" category for me.
• Not sure about the exact SW issues, but while having to restart the computer mid-driving is bad, tor he screen freezing in a menu is annoying, it is not the same as e.g. the car becoming uncontrollable. Also regular OTA updates vs taking it to the dealer hoping they have fixed a sw bug after a year maybe.

Not excusing Tesla for the well documented quality issues, but it does feel like this was not a justified move. It certainly got them the headlines though.

 

[Fact Checking]

BTW I've always wondered whether CR gives minor issues like panel gaps the same weight as major ones like catching fire in the driveway (as some ICE vehicles are prone to do). I found the answer:

The Overall Reliability Verdict summarizes a model's overall reliability over all 17 trouble spots. Because problems with the engine major, cooling, transmission-major, and drive system can be serious and more expensive to repair, our calculation gives extra weight to problems in these areas. The Reliability scores show whether the model had more or fewer problems overall than the average model of that year.
So the Model 3's below average ranking implies there's more than just minor issues, or the minor issues are so common they overcome the low weighting.

Here are the 17 categories:

CR has 17 "reliability index" categories: the Model 3 got the higgest rating in 14, got the second highest rating in two, and "average" in one. Not a single "below average" or "much worse than average" rating.

CR doesn't disclose their exact weighting, but it's mathematically impossible for these ratings to be weighted with positive nonzero, 1-normalized weights and result in a score that isn't better than average. (In fact pretty much any common-sense weighting that doesn't zero out the 14 top scores would result in an "outstanding" reliability rating, based on this data.)

So Consumer Reports must have "changed the rules" against the Model 3, and CR invented a bad rating out of whole cloth, not supported by their own data...

 

[Artful Dodger]

I think the very modest price drops in TSLA reflect the overall inconsequentialness of this downgrade.

Actually, it was 10 bucks which is the absolutely minimum bite increment for any organized FUD. Note the Oct Bloomberg Bear Raid was a $20 touch. The 'prestigious' NY Times Aug hit piece was $30. Elon's January earnings warning was $50. They love it when Elon says *sugar*. What did the Joe Rogan podcast cost again? A $30 haircut? For a legal imbibement?

But the one I really, really liked was the $80 drop in Dec 2018 for absolutely NO REASON WHATSOEVER. Of course we found out on Feb 15 that some random Billionaire placed a $150M bet against TSLA in Puts. But 'greed is good' right?

They really don't need an excuse, though they sometimes make one up. The shorts and market makers are manipulating the share price, and cashing in big time while the SP wallows.

But its alright. SP wiggles no longer affect Tesla or its Mission, which is now unstoppable. Make what you can off TSLA, keep up the good fight, and always point out the lies and treachery.

Cheers,
Lodger

 

[CorneliusXX]

Quake 4: Released in 2005
Command and Conquer 1: Released in 1995

Just saying It was the first popular, true RTS game ever made (three years before the original Starcraft), and spawned a series of 11 games over a decade and a half timespan, selling over 30 million copies. I just figured people would have heard of it

Also sorry, OT!!!

It was one of my favourite games as a kid. It's a shame the series ended up in the EA graveyard.

 

[Fact Checking]

The data collection period. I get it, all manufacturers said they fixed stuff, but Tesla is the only one that doesn't operate with model years. Also the gap between the survey period and the publishing of the result is way too big. Their data points were probably from the first 10-20k of a brand new model, whereas the car has sold in 10x as many copies by now.

It's even worse: this is the "annual" report, CR only updates their ratings once per year AFAICS.

Thus CR will continue to libel and slander Tesla until the end of February 2020, by which time Tesla will have sold more than half a million of Model 3's, all the while CR pretends the safest, most satisfying car in their survey is not a "recommended" car, based on feedback from "made before September 2018" models ...

While, perversely, CR's own data is not even backing up their negative rating:

Note that there's no real exclamation point: there's a single "average" score, two "above average" scores and 14 top ratings.

WTF is CR doing?

 

[KarenRei]

It was one of my favourite games as a kid. It's a shame the series ended up in the EA graveyard.

OT: Yeah, I get nostalgic thinking about it I loved invading bases by building walls of turrets into them. Although nothing was ever more fun than having an APC pick up a package that confers stealth, letting you haul five engineers straight into their base One game that really stands out in my mind was one where both sides managed to destroy the other side's base, but my GDI foe had lots of tanks and troops left over, but I only had a single damaged stealth tank. The game went on for hours, and I actually won, via hit-and-run tactics and the occasional health crate

I was also Queen of the Recon Bike Horde. So underappreciated they were. They could outrun a nuclear weapon launch, dodge with 'X', do hit and runs all over the map, same attack power as a (60% more expensive) medium tank but with a 60% faster firing rate, damaged vehicles could quickly retreat and be repaired, they had innate air defense, and you could churn them out quickly and cheaply. It was an extremely effective tactic for dominating the map. Particularly deadly for taking out enemy harvesters.

I hardly ever play games anymore, but I think back fondly about my days in college playing on our home-built LAN that we had strung up to the ceiling with duct tape

 

[Artful Dodger]

WTF is CR doing?

Occam's Razor applies: They're 'joining the party'. Why should these groups have all the fun/make all the money?

• GoldmanSachs/Adam Jonas '<4K M3s/wk until May 2019'
  
• UBS/teardown & sue to squelch positve findings
• NY Times/Interview hitpiece 'actually fake news'
• Bloomberg / their policy is to reward Reporters that move the market
• Business Insider / Lopez paying spy+sabateur at GF1
• Moody's Credit Downgrade / based on shortz talking points

So why, oh why, should poor destitute little old Consumer Reports miss out on all that good gravy? It's their birthright, isn't it?

I want to know who they tipped off in advance of the story release. Their are prohibitions against insider trading, in spite of how these groups flaunt the law. I guess it doesn't help when the situation in the Executive Branch of Government is even worse.

Regards,
Lodger

 

[EVMeister]

All CR is doing is adding 2+2 together and making -1.

 

[KarenRei]

CSCC Europe is now in Zeebrugge (what is this, the 4th ship to Europe to arrive? Captain, Cosmos... I think there was one more in there?)
Emerald Ace is entering the bay to Tianjin (3rd ship to China).

 

[uselesslogin]

All CR is doing is adding 2+2 together and making -1.

Or they are extrapolating one year of data assuming problems will get worse over the years. That may not be the case for the Model 3 issues especially with all the paint issues that came straight from the factory but look at the Buick Enclave which was redesigned for the 2018 model year. It gets the exact same ratings for the 2018 model year as the 3. Two were above average, one was average, the rest far above average, and overall it's below average.

Hey, I'm not a fan of Consumer Reports putting Tesla front and center but I do see their ratings as consistent. Their methodology may be flawed but there is no malice in it.

Edit: Oh sorry Enclave got a worse overall score. They are far below average overall which goes to show you they must weight drivetrain issues as more important.

Edit 2: And before everyone says it gets a worse rating because the previous years are taking it down a notch keep in mind the 2017 still gets an above average rating.

 

[KarenRei]

Their methodology may be flawed but there is no malice in it.

"Never attribute to malice what can be adequately attributed to incompetence"

 

[SebastianR]

Hi all,

Can we let off the CR stuff for a while? Our age is showing... (don't hate me - but seriously, CR is only relevant to for older farts like myself to rationally confirm / justify a decision I emotionally made already!)

I’m only now discovering the Peediepie universe. For one this video is getting more and more views, likes and “reactions”. And the more I learn about this, the more I think whoever is behind Elon’s idea to be on this show is a certified genius: the amount of internet sub-cultures that little meme review is hitting is insane. And the way Elon comes of as just a nerdy, nice guy is great. There was a comment on the video that sums up what I think this video does: "Elon just makes all things on the internet better" - "even cars!" is what I would add...

PS: 7.5 Million views / 670k Likes / 89k comments in 14 hours. This is massive! How much did Audi spent on their Superbowl commercial again?

 

[Fact Checking]

I’m only now discovering the Peediepie universe. For one this video is getting more and more views, likes and “reactions”. And the more I learn about this, the more I think whoever is behind Elon’s idea to be on this show is a certified genius: the amount of internet sub-cultures that little meme review is hitting is insane. And the way Elon comes of as just a nerdy, nice guy is great. There was a comment on the video that sums up what I think this video does: "Elon just makes all things on the internet better" - "even cars!" is what I would add...

"Will Smith" (totally not) hosting meme review was a genius of a title as well. (The impatient should fast forward to 13:00) Elon had his best video performance since the "holy flying *sugar*, that thing took off!" Falcon Heavy launch reaction.

Generation Y and Generation α, here they come.

 

[CorneliusXX]

Occam's Razor applies: They're 'joining the party'. Why should these groups have all the fun/make all the money?

• GoldmanSachs/Adam Jonas '<4K M3s/wk until May 2019'
  
• UBS/teardown & sue to squelch positve findings
• NY Times/Interview hitpiece 'actually fake news'
• Bloomberg / their policy is to reward Reporters that move the market
• Business Insider / Lopez paying spy+sabateur at GF1
• Moody's Credit Downgrade / based on shortz talking points

So why, oh why, should poor destitute little old Consumer Reports miss out on all that good gravy? It's their birthright, isn't it?

I want to know who they tipped off in advance of the story release. Their are prohibitions against insider trading, in spite of how these groups flaunt the law. I guess it doesn't help when the situation in the Executive Branch of Government is even worse.

Regards,
Lodger

The only one on the list which I understand (but don't agree with) is Moodys. Their job is to take a conservative view rather than the probability weighted view that most investors take. Their methodology is based on "what would happen in the event of a certain scenario occurring". A AAA scenario is the most severe - think great depression on steroids. While a single B is based on a very minor downturn. They assign a rating on whether the company passes their tests based on each scenario and give a rating equal to the highest scenario passed. At the time, with production problems on the M3 there was a reasonable refinancing risk on the company and a high stress scenario at that time would have been difficult for Tesla to pass. The exceptional ramp, high average sale price of the M3 and cost cutting measures in H2 18 have most certainly put those concerns to bed.

Unless there is a specific reason to review the company more than once per year it is unlikely for a change in rating to happen more frequently than their annual review. I think it is very likely that Tesla will be upgraded around March this year as cashflows have improved dramatically and debt obligations will also have dropped notably.

 

[mrdoubleb]

It's even worse: this is the "annual" report, CR only updates their ratings once per year AFAICS.

Thus CR will continue to libel and slander Tesla until the end of February 2020, by which time Tesla will have sold more than half a million of Model 3's, all the while CR pretends the safest, most satisfying car in their survey is not a "recommended" car, based on feedback from "made before September 2018" models ...

While, perversely, CR's own data is not even backing up their negative rating:

Note that there's no real exclamation point: there's a single "average" score, two "above average" scores and 14 top ratings.

WTF is CR doing?

Right. Need to get my eyes checked.

 

[Artful Dodger]

Unless there is a specific reason to review the company more than once per year it is unlikely for a change in rating to happen more frequently than their annual review. I think it is very likely that Tesla will be upgraded around March this year as cashflows have improved dramatically and debt obligations will also have dropped notably.

3.7 billion specific reasons (cash on hand; 0 need for equity raise), and all their other 'concerns' have been shown to be demonstrably false:

Moody's downgrades Tesla's corporate family rating to B3, senior notes to Caa1. Outlook is negative.

Let's revisit this topic in 5 weeks, to see what the next set of excuses are explaining why Moody's hasn't upgraded Tesla's bond ratings.

Bookmarked.

 

[Reciprocity]

Honestly I’m over the CR thing, the only good thing that will happen is that Tesla will improve manufacturing. The only reason the stock price was impacted was because of a short attack. Too many bread crumbs lying around for it to be anything else.

Tesla will improve regardless of what CR says. CR losses a bit if credibility in exchange for some publicity. Not uncommon these days. Comes with the disruption territory. At the end is the day, it's meaningless as people will make their decisions based on a billion factors same weighted very much higher than CR.

 

[Reciprocity]

Agreed, and since i'm one that generally throws water at the 'this time it's different' line of commentary, I thought I should say so. It really is different:

Roadster --> Model S: No comparison. Totally different vehicle, Tesla's first 'real' vehicle made fully in-house.
Model S --> Model X: Minimal comparison. Tesla originally said they were going to build the X off of the S platform but that... didn't happen. Much at all.
Model X --> Model 3: Minimal comparison. Tesla said they took learnings from the X and used them to streamline the 3, and I'm sure they did. But it was still a new platform, new cell type, new pack architecture, new software, new new new. And also intended for an order of magnitude increase in volume compared to either S or X.
Model 3 --> Model Y: The Y is said to share 75% of its components with the 3. It really is much more similar to the 3 than the X is to the S. It will likely use the 3's cell type, pack design, etc. It is intended for similar volumes as the 3. It will use the 3's software platform. Tesla will be unveiling it at a later stage of development vs the 3 on its development timeline.

This is not to say that I think Tesla will ramp up the Y as quickly as they'd like to. There will be issues. I just don't see them as being quite as numerous or severe as what the 3 went through, where it took 6 months from initial deliveries just to get any sort of volume going and another 6 to truly get things rolling.

X was a debacle. They learned that you should design it from the ground up to be what you want long term. The model 3 was designed to be easy to manufacture and robotically. Some of that was a mistake, most clearly was in Target.

Another reason to build Y on model 3 is that model 3 is an exceptional platform. Extraordinary safe and efficient. It will simply be taller, with lift back and a few more inches of ground clearance. Interior is where most of the changes will be. It will be interesting if Tesla tries to add a 3rd row, maybe jump seats. Would be much more useful in a cuv when compared to an S. And it's a pretty simple option to add.

 

[Ulmo]

I held my nose and watched that.

OMG I am getting irrelevant! I have no freaking idea why that channel can get so many subscriptions!

Pewdiepie looked paid bored & Elon vid tacked on. Not a good look. I skimmed, though, so I don't know how fans received; only the second PDP vid I've ever seen in my life, so no idea what they get out of his usual.