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

[aubreymcfato]

This is a really important issue for Tesla investors. I've spent a lot of time thinking about this for both Tesla as a whole and FSD/autonomy separately.

My conclusion is that Tesla will become a near monopoly. Especially in terms of industry profit.

Some things are "self correcting" and others are not. The NBA has a salary cap, if it didn't the league would be even more dominated by rich owners in big markets. Labor unions demand higher wages from the most profitable companies in an industry, thus keeping weaker competitors alive. On the other hand, cancer or drug addiction expand until the fuel runs out.

It's easy to think that the auto industry is one of those self-correcting industries because we've always had lots of different producers. But what we have now is simply the vestiges of what has taken place over the last century. We still have many newspapers but only as a reminder of a time gone by.

Economies of scale and the network effect dictate that the first mover in a new industry has a good chance of winning it all. Why did Amazon, Apple or Google win? They got there first and sucked all the air out of the room. There is no "self-correcting" force in those industries. Not until you become so big and so powerful that the govt has to step in.

An electric, connected and autonomous vehicle is as different to today's ICE vehicle as Twitter is to Life magazine. Macy's never had a chance against Amazon, Motorola against Apple or the Yellow pages against Google.

To those who say that the race has not been won yet I say twaddle! Tesla leads in every metric that matters: Sales, distribution, advertising, management, corporate culture, balance sheet, brand, production costs, pace of innovation, hardware, software, efficiency, product satisfaction, safety and design. (That was just off the top of my head so sorry if I left out a few.) So who is going to catch Tesla? The ones that could write the code can't make the cars and the ones that could make the cars can't write the code. (No way AMZN wants to be partners with the UAW either if you think some partnership might work.) Every day we get farther ahead.

So my prediction is that yes "There can be only one."

I agree in principle, and agree that Tesla is gonna take a "pareto" slice of the pie (70-80% of the profits), but Tesla is not the first mover (maybe in some areas, like FSD): it's simply the best.
But this is enough.
There where others search engines when Google started, or other social networks when Facebook started (MySpace anyone?). Hell, even Wikipedia was not the first, free, volunteer-based encyclopedia out there. But they were better enough to eat the competition.
Let me resurrect a post of mine from 2 years ago:

I'm reading Network science by Albert-László Barabási¹: he's famous for his mathematical models of real networks (like the Web), and his definition of scale-free networks, which are basically the famous "long tail" that Anderson described some years ago.
This kind of networks (and power laws) are all over the place: this is why you have few hubs (Google, Facebook, Amazon) that collect a huge percentage of the links of the web, and the millions of remaining websites just keep the change. Power laws follo the famous Pareto principle: 20% of the nodes keep 80% of the links... And these proportions could be even more skewed.

The work of Barabási is to study and recreate these kind of networks, discovering new ways to end up with the same higly asymmettrical distribution. Not all real networks are the same, but somehow they end up being really similar.

Another intersting variable, for Barabási, is "fitness", meaning that every link created by one node in the network remains forever. For example, a company that makes every new customer into a loyal partner.
He demonstrated mathematically that if the fitness of one node is high enough, this node can become an hub even if its initial conditions in the network are way worse than other nodes. For example, he's the new shop in town, or the new EV startup in a world of huge, century-old OEMs...

I found this model² directly interesting for Tesla. This is why the M3 rampup is so important: every new customer will be a EV owner, and a Tesla customer, for life. This accelerates the rise of Tesla as an hub, a one of the few winners in his own network. And remember that power laws follow an exponential curve: Tesla will be exponentially bigger than his peers, provided that continues to do good (and steady). Every new car is a link more in the network, and Tesla needs it to grow and go on top of the others.

¹ Albert-László Barabási - Wikipedia. He's also the author of Link, which I recommend to everyone.
² Bianconi-Barabási model, for those of you that are interested

What I wrote above is still relevant today: if you are good enough to retain your customers (with a percentage of them becoming evangelists) you are well poised for "world domination". In a market that is brand new and not self correcting, as you say, I see an exponential curve forming.
I believe that Tesla, in this unique hybrid of analog (cars, batteries) and digital (FSD, software) is doing something that is much more difficult than what Google and Facebook did¹. And something that is also more defendable, especially after all these years.
But this also underlines the importance of major drawbacks that could discourage customers, like service.

¹ I don't talk about Amazon, because I don't really know it and moreover I have bias: I don't like it. But it has some interesting analogies with Tesla, I think.

 

[samppa]

Different rates in FIRST year as the manufacturers include the fee in the car cost

15-18 euros a month PLUS €0.29 to 0.33 per kWh from year TWO

IONITY network dramatically increases EV fast charging costs

"Discounts on the new fees Europe will be available to members of Connected Mobility Service Providers networks, such as Audi e-tron Charging Service, Mercedes me Charge, BMW ChargeNow, Porsche Charging Service and Volkswagen WeCharge.

Mercedes me Charge, for example, has already announced that it will charge €0.29/kWh at IONITY chargers, with no annual subscription fee for the first year. Audi e-tron Charging Service will cost €0.31/kWh plus a monthly subscription of €17.95, while Porsche Charging Service will cost €0.33/kWh plus a basic annual fee of €179. BMW ChargeNow and Volkswagen WeCharge have not yet announced their tariffs.

As a comparison, Tesla charges an average of €0.24/kWh in France, €0.33/kWh in Germany, €0.28/kWh in Belgium, €0.25/kWh in the Netherlands and €0.30 in Italy."

it's almost like they don't want anyone to use their charging network.. or buy their cars.. I wonder why

 

[MartinAustin]

Thoughts on the hiring of the Apple Pay chap. Don't forget, Elon likes to disrupt banks and had to sell PayPal before it had reached its full potential.

Tesla will create Tesla Pay. It will be accessible through the Tesla App, which as we know, only owners use at the moment but eventually anyone can install it to hail Robotaxi or buy Tesla stuff. This will be a challenge to Apple Pay and others - just as Tesla's automotive software infrastructure is an impenetrable wall for Apple/Android CarPlay.

This will be used to buy stuff for

owners sitting at Superchargers.

upgrade software on your car
order your new car or other tesla services e.g. solar roof
set up service
pay for services
anything else Tesla wants to sell - doesn't have to do with Tesla products
book services that are near Superchargers or Destination chargers you're planning to travel to

hotel-nights
movie tickets (sometimes there is a cinema near the charger)
spa
rock-climbing
(perhaps we need a map of super/desintation chargers built into the app)
ordering a to-go meal from a restaurant menu before you arrive... the order is placed as you approach the charger, so that it's ready to pick up when you walk in... it's like you're your own Uber Eats pickup driver!
etc.etc.​

people who don't own Teslas

ordering up a Robotaxi
ordering any Tesla product​

payment plans

Tesla automotive loans/leases or solar roof loans etc.
Tesla Insurance
enabling FSD on your car for limited periods, eg. one day at a time​

 

[Silentk]

More than ever now it seems like so much good stuff waiting to happen... just around the corner and all at the same time. Almost as if there was a plan to blow the shorts out of the water forever

 

[CyberDutchie]

In a few months??

Elon said "I think I remain confident that we will have the basic functionality for level five autonomy complete this year."

He has used the word functionality before, so in that respect this is no news—other than his confidence that it will be complete this year, which would be one year later than his believe during autonomy day (he’s an optimist).

Having functionality complete is not enough for it to be safe. It still needs the training which may take a few years, plus the regulatory approval. It’s like your teenager has the functionality to drive (hands, eyes, brain, etc.), but still needs to learn to drive and pass the test to get a drivers license.

 

[jerry33]

Fred's take on it is that Tesla is doing it to improve the Supercharger experience... But honestly what could they improve upon? You walk up, you plug in, you drive off.

More locations. Sure, if you're in Calif. or the East Coast, there are lots of locations and mostly what's required is more stalls per location. In the central states locations are, for the most part, few and far between and if one location happens to go offline (I recall one being inaccessible due to flooding) you're stuck. Also there are many places that are 200 miles between SCs. Doable in the summer but very problematical in the winter.

 

[jerry33]

He said he still expects level 5 to be complete this year.

He said "basic functionality". That's different than Level 5 complete.

 

[marvinat0rz]

Musk's rhetoric on FSD is a bit dishonest, TBH. Level 5 autonomy is very specific regarding that there will never, or practically never, be necessary to intervene. So saying "feature complete for level 5 autonomy" is a bit of an oxymoron if you're willing to give the benefit of the doubt, or a lie of omission at worst, given that Tesla's driver assist would still be at level 2 autonomy at this stage. It's not an incremental classification; it's a step change from one level to the next.

Waymo is arguably at level 3 at the moment, but no one is further along than that. Saying that Musk intends for Tesla to be feature-complete for full self driving but at level 2 autonomy in 2020, gunning for level 3 with extended validation and fixing edge cases in 2021 would be a more honest description.

This rhetoric is a little problematic, because it leads customers to believe that things are rosier than they really are.

Beyond that, I perfectly agree with previous posters who point out that it is very valuable to offer an autonomous driving/driver assist system that is at level 2 but with a rapidly expanding feature set. Also, Tesla's data collection in the real world is a great strategic advantage, which will be hard for competitors to replicate. But let's at least not delude ourselves to belive that things are further along than they really are.

My expectation is level 5 autonomy for Tesla no earlier than 2025, and I'd probably have most industry experts disagree with that timeline for being incredibly optimistic. I would obviously love to be proven wrong.

 

[RobStark]

Level 5 is no steering wheel.

Level 4 is autonomous save extreme weather or rare corner cases.

 

[UkNorthampton]

EV Sales: Norway June 2020

Will this be remedied by September or will it require Model Y?

In my opinion (but I haven't checked detail on boats and Norway deliveries) it need boatloads of Teslas for Europe. I'd be interested to see key markets in Europe (Norway, Netherlands and UK?) and see how stock levels are.

On Autotrader there are something like 244 Teslas for sale, 20-40 Model 3 (I forget), but just 3 Long Range.

I don't think potential customers in Europe have been able to get them.

 

[neostars]

Musk's rhetoric on FSD is a bit dishonest, TBH. Level 5 autonomy is very specific regarding that there will never, or practically never, be necessary to intervene. So saying "feature complete for level 5 autonomy" is a bit of an oxymoron if you're willing to give the benefit of the doubt, or a lie of omission at worst, given that Tesla's driver assist would still be at level 2 autonomy at this stage. It's not an incremental classification; it's a step change from one level to the next.

Waymo is arguably at level 3 at the moment, but no one is further along than that. Saying that Musk intends for Tesla to be feature-complete for full self driving but at level 2 autonomy in 2020, gunning for level 3 with extended validation and fixing edge cases in 2021 would be a more honest description.

This rhetoric is a little problematic, because it leads customers to believe that things are rosier than they really are.

Beyond that, I perfectly agree with previous posters who point out that it is very valuable to offer an autonomous driving/driver assist system that is at level 2 but with a rapidly expanding feature set. Also, Tesla's data collection in the real world is a great strategic advantage, which will be hard for competitors to replicate. But let's at least not delude ourselves to belive that things are further along than they really are.

My expectation is level 5 autonomy for Tesla no earlier than 2025, and I'd probably have most industry experts disagree with that timeline for being incredibly optimistic. I would obviously love to be proven wrong.

You don't work behind the scene, stop guessing. If Elon does release Feature complete by the end of the year, you going to eat your shoe?

 

[marvinat0rz]

You don't work behind the scene, stop guessing. If Elon does release Feature complete by the end of the year, you going to eat your shoe?

You're arguing a point I didn't make. If Tesla has an arguably feature complete FSD system at level 2 autonomy by the end of the year, I'll be happy and slightly, but not super, surprised.

If Tesla releases a Level 5 autonomous driving system by the end of the year, I'll go ecstatic. And then I'll eat my shoe.

Keep in mind, this means that it can't randomly disconnect or crash for every 1000 miles it drives without supervision. That's what we're talking about here.

 

[mongo]

OT batteries in space

Someone needs to clue him in that every Falcon 9 has a model S battery pack (power's the grid fins that guides the 1st stage to a landing zone.).

Sorta
SpaceX is using Model S packs directly on the Starship test units. SpaceX is installing Tesla battery packs on its Starship MK1 rocket prototype

Falcon 9, Crew Dragon, and Cargo Dragon use specialized aerospace versions in custom packs Tesla batteries powering SpaceX’s Falcon 9 and Dragon capsule, reveals Shotwell

The Electron rocket uses batteries to run the engines' pumps. Electron (rocket) - Wikipedia

LEO/ GEO satellites uses batteries for those times they are in shadow (and inital launch/ deploy) with solar to recharge them (photons being more plentiful in space than H2 and O2).

 

[chrsk]

In my opinion (but I haven't checked detail on boats and Norway deliveries) it need boatloads of Teslas for Europe. I'd be interested to see key markets in Europe (Norway, Netherlands and UK?) and see how stock levels are.

On Autotrader there are something like 244 Teslas for sale, 20-40 Model 3 (I forget), but just 3 Long Range.

I don't think potential customers in Europe have been able to get them.

A colleague of mine tried to get a hold of a model 3 for the summer. Started in late may... All Tesla could offer was aug/sep.

So at least in Norway the marked share could be higher.

 

[Bobfitz1]

I think it's important to put down Elon's exact words:
"I think I remain confident that we will have the basic functionality for level five autonomy complete this year. So, yes, I think there are no fundamental challenges remaining for level five autonomy. There are many small problems. And then there's the challenge of solving all those small problems and then putting the whole system together and just keep addressing the long tail of problems so you'll find that you're able to address the vast majority of situations."
...
"But I'm absolutely confident that this can be accomplished with the hardware that is in the Tesla today and simply by making software improvements we can achieve level five autonomy."

I think Elon has an extra ace up his sleeve to help with the long tail of problems. My recollection from Autonomy Day is that Tesla was already at work on an even faster follow up AI chip to the one now in HW3. Once it is ready for release, I expect that next chip is going to pop right into the HW3 board. I don't remember exactly how large the additional processing power was predicted to be, but I'm confident it is substantial. I don't think Elon values perfect consistency or accuracy in his FSD forward looking statements. Is the new more powerful chip in the Tesla today? No. But the board it will fit into is!

 

[j6Lpi429@3j]

I understand your scepticism Drumheller.

Does your skill set include AI development? I too have been writing code for 20+ years, but nothing involving machine learning or neural nets. In a way, experience with traditional software leads one to underestimate the possibilities of AI.

FWIW I coded my own neural network from scratch and have been coding for a scary 39 years *cracks knuckles*.
Yes, teslas approach is not only the best, but IMHO the ONLY one that can possibly offer a truly universal solution, and the only one that can produce a really safe solution to FSD.

But hell... this stuffs hard. Neural networks become a lot more like art than science. Its a messy *fuzzy* business, and starts to feel more like voodoo than normal code. Despite all the memes, its not that hard to predict how far through a project you are when its normal object-oriented traditional C++, but the minute you have a massive neural net involved... things get way harder to predict.

FWIW my entirely subjective opinion is that they may still be another small rewrite away from FSD. I think the big gear change was karpathy. He understands that you need the code to be mostly neural net, with minimal procedural code. I think thats the only answer, and its a tough one to agree with unless you work on this stuff all day, because it feels SCARy as a coder to effectively cede control of decision making to a neural net nobody can understand.

From what I read, karpathys time at tesla has been one of progressively lobbying for the NN to take over more of the decision making. I think it will make up an overwhelming proportion of all the FSD code eventually.

I dont think we will get FSD until end of 2021 at best. But I am 100% certain nobody will beat tesla to it, or even get close. Persuading trad auto companies to let software control a car is very hard. persuading them to let software *nobody understands* to do it is almost impossible. Its only possible at tesla because elon is a coder with an interest in how brains work.

 

[marvinat0rz]

I'm considering to reduce my TSLA holdings down from the current 50% to 25% of the amount I initially purchased many years ago.

My expectation is still that Tesla will become one of the world's dominant technology companies and retain that position for decades. My initial investment thesis from then still holds - namely that electric transportation will become the world's dominant transport technology, and that the established transportation industry is caught in a classic Innovator's Dilemma which makes them structurally incapable of competing, eventually resulting in their downfall.

Tesla has executed beyond what I had even dared to think in the most optimistic scenario, and the competition has floundered worse. They've done almost all the critical strategic bits right. Still not sold on the SolarCity acquisition, but I have my suspicions that this move averted an obscure liquidity problem that would have been a grave threat to Tesla. The future is looking bright, and Tesla is the only player that shows real credibility for innovating in electric transport and tech manufacturing. I wouldn't be surprised if they're making aircraft in five or ten years. So few companies and capitalists dare to put their money where their mouth is. It's so promising to support such a movement.

With that said, the current stock rally is putting me in a position where I am within arm's reach of my life financial goals, almost a decade ahead of schedule. The freedom that comes from being in such a position might be greater than potentially losing out on having a relatively ridiculous (hey, I'm middle class) ownership stake in tomorrow's greatest tech behemoth.

I am seriously considering to lock in most of those gains and put them in something diversified. It's been years of light anxiety and worry. It's scary to have the finish line in sight.

Dunno how you folks have been managing this situation. Few on this board are independently wealthy, and I notice we've lost a few members over the years of rollercoaster appreciation.

 

[j6Lpi429@3j]

I don't think potential customers in Europe have been able to get them.

FWIW in the UK here, every time I get a valuation for my 2015 model S it goes up...so maybe we dont have enoguh of those in the country

 

[dmvevguy]

I'm considering to reduce my TSLA holdings down from the current 50% to 25% of the amount I initially purchased many years ago.

My expectation is still that Tesla will become one of the world's dominant technology companies and retain that position for decades. My initial investment thesis from then still holds - namely that electric transportation will become the world's dominant transport technology, and that the established transportation industry is caught in a classic Innovator's Dilemma which makes them structurally incapable of competing, eventually resulting in their downfall.

Tesla has executed beyond what I had even dared to think in the most optimistic scenario, and the competition has floundered worse. They've done almost all the critical strategic bits right. Still not sold on the SolarCity acquisition, but I have my suspicions that this move averted an obscure liquidity problem that would have been a grave threat to Tesla. The future is looking bright, and Tesla is the only player that shows real credibility for innovating in electric transport and tech manufacturing. I wouldn't be surprised if they're making aircraft in five or ten years. So few companies and capitalists dare to put their money where their mouth is. It's so promising to support such a movement.

With that said, the current stock rally is putting me in a position where I am within arm's reach of my life financial goals, almost a decade ahead of schedule. The freedom that comes from being in such a position might be greater than potentially losing out on having a relatively ridiculous (hey, I'm middle class) ownership stake in tomorrow's greatest tech behemoth.

I am seriously considering to lock in most of those gains and put them in something diversified. It's been years of light anxiety and worry. It's scary to have the finish line in sight.

Dunno how you folks have been managing this situation. Few on this board are independently wealthy, and I notice we've lost a few members over the years of rollercoaster appreciation.

I ended up taking a majority % out back in the 800s and 900s. I guess too early . I ended up paying off an investment property mortgage with the profits, and have been sitting in the sidelines. I'm amazed and happy at the current stock price. I actually don't see it going down from here as long as they keep executing, meeting delivery numbers, and with looming S&P 500 I think great profits going forward. The only risk I see in the 6 month short-term future is massive outbreaks again and lockdowns, but I doubt that will happen with election season.

Looking back, I guess I could have held until now, but you will never know. If you have a plan of what you will do with the profits, then it may be good.

I'm in my late 30s, and never have to work another day in my life again...I still choose to 'work' as I have a small business, and love what I do...but majority of my "freedom" is to TSLA!!!!

 

[UkNorthampton]

FWIW in the UK here, every time I get a valuation for my 2015 model S it goes up...so maybe we dont have enoguh of those in the country

Same with most second hand electric cars in the UK, even early ones (I've heard). Maybe just buy a load and keep in a warehouse somewhere - why sell? I think VW are doing something similar with ID3?