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

[Fred42]

Am I the only one who sees a mountain of slightly used Model 3's from people with no intention of keeping the car?

Some stores used to sell goods "on approval", which meant you paid for the goods or returned them after some period of time. I don't think Tesla is doing that. You have to pay Tesla for the vehicle up front with cash or a loan, a big barrier for people looking to take advantage. But I agree they'll have lightly used cars to sell at a lower price. Hopefully Tesla's cost won't exceed their projection.

I wonder if they'll hold on to the destination and documentation fee.

 

[wipster]

Sigh... the price of a Model S LR with certain options I like is now $84.5K. And the price of the M3P is like around $59K. Tesla is making it extreeeeemely difficult for me to not trade in my aging 2013 S with nearly 97K miles on it.

Speaking of which, how does one do a trade-in now?

 

[jerry33]

And btw, I’m sure they have all the data, most people order online. If you want a test drive, ask a friend..

I'm pretty sure a forum search will find some "test drives by a friend" that didn't turn out very well, and I think there were some that weren't covered by insurance as the driver wasn't a registered driver (I might have misremembered that part).

 

[Causalien]

The standard plus is a good move. For a 35k car to be manual is a bit too basic so most will upgrade.

 

[ReflexFunds]

It's a very bullish update for production, note the ranges:

• 70k-100k Model S-X
• 350-500k Model 3s means a 2019 average weekly production range is 6.7k-9.6k/week range.

Note that 500k is not the 2019 "exit rate" anymore:

We do know it from Carsonight that Tesla has already comfortably exceeded the lower range of 6k/week and is probably already at the 6.7k/week rate. That's already a guaranteed baseline of 350k/year. If the second Grohmann machine goes online now then this should further increase that rate.

If this materializes then the exit rate at the end of 2019 could be well over 10k Model 3's per week, if we add in the 3k/week the Shanghai Gigafactory wants to achieve...

Ambitious!

Wondering what @ReflexFunds thinks about this guidance.

This makes the 360-400k 2019 total deliveries guidance in the shareholder letter look a bit ridiculous. Not even an overlap with this new 420-600k production suggestion. I presume and hope the guidance on this media call today has been approved by the Tesla comms team, though it doesn't necessarily contradict what was said on the Q4 call.

420k Model 3s would be equivalent to c.8k cars per week for 9M19, followed by c.11k per week in Q4 with GF3 ramping immediately to capacity from September, all with 1 week downtime per quarter. I think getting to 500k Model 3s would likely require more significant capex in Fremont.

 

[DFibRL8R]

I hope you meant the Bolt.

Nope, the Volt.

GM is laying off thousands of workers, closing three plants, and ending production of the Chevy Volt

 

[neroden]

Just some info for your consideration. I have a great deal of experience in consent decrees and agreed orders. A consent decree has both attributes of a Court Order and a contract. It represents an agreement (contract) between the parties that is incorporated into a court order. Because it is a contract it can go beyond what the government can demand if the other party agrees. For example one case in which I was involved dealt with closing State institutions. The DOJ couldn't require the closure but the state agreed to do so. That agreement became enforceable through contempt.

Contempt can be civil or criminal. Here I expect that the SEC is taking the position that EM did not follow his agreement. I have never seen a contempt action brought on such insignificant technical basis. I would have feared being ridiculed for wasting the Court's time for bringing such an action. Again this is a contract. Is EM's tweet a material breach and what are the damages? I also wonder if in the contempt proceeding whether Tesla can find out who or what pushed the SEC's action. Regardless this is solely about the agreement and I can't help but believe that if it were a breach, that it was not material.

You seem to know your stuff. Can you help us with an amicus brief to the court? This situation is bizarre and I think the Court should be told what's really going on. I figure even if the judge refulses to take the amicus brief it'll wake her up...

 

[Ulmo]

We saw a similar price-drop after-hours on Monday when the SEC complained. On Tuesday the share price closed almost flat. Tomorrow the market may begin to realize the brilliance of these new policies. They should help insure the long term dominance of Tesla in the EV field, which before long should be the only automobile field.

Indeed. Tesla is innovating by removing physical stores. We don't see Apple or Ford doing that, yet; Tesla beat them to it.

 

[MarcusMaximus]

Speaking of which, how does one do a trade-in now?

My guess: just like Apple’s trade in program for iPhone. They send you a giant box, you put your car in it and mail it back to them.

 

[EV forever]

So you’ll lock up $40k in Tesla, wait another 2 months to get it refunded just to be malicious? While I can see Mark Spiegal doing it, him getting in one might even change his mind. Shorts just need to own their car for a week in order to see the light. I can see this move converting a lot of shorts. Just look at Kramer’s face after he drove the Model S. Says it all.

I agree, there shouldn’t be unlimited returns. A second purchase should be non refundable.

Am I the only one who sees a mountain of slightly used Model 3's from people with no intention of keeping the car?

I'm curious if the bears would intentionally orchestrate a scene where they bought a lot of cars and returned them in an effort to destroy the company. I don't think unlimited returns on cars is a good idea when there are so many malicious actors out there.

I don’t believe that will be a big issue. It takes a lot of time and effort to put together the money for a car - loans down payments credit checks etc - not something that people would do frivolously. Plus 7 days is a good amount of time to fall in love with the car. If I was to be honest with myself, I don’t think the test drive of Model S I did before the Model 3 was delivered really helped much, in fact I didn’t really get a good feel because we were so distracted by all the features like autopilot and sharing the test drive between me and hubby. 7 days is perfect, I doubt any serious buyer would return just for the sake of fun filled weekend. committed shorts are a different story, but even they would have trouble coming up with enough funds to make this a big issue

 

[Fact Checking]

This makes the 360-400k 2019 total deliveries guidance in the shareholder letter look a bit ridiculous. Not even an overlap with this new 420-600k production suggestion. I presume and hope the guidance on this media call today has been approved by the Tesla comms team, though it doesn't necessarily contradict what was said on the Q4 call.

420k Model 3s would be equivalent to c.8k cars per week for 9M19, followed by c.11k per week in Q4 with GF3 ramping immediately to capacity from September, all with 1 week downtime per quarter. I think getting to 500k Model 3s would likely require more significant capex in Fremont.

Isn't today's figure 350k-500k Model 3 production?

420k-600k is the result of adding 70k-100k Model S/X production.

Totally consistent with the ER conference call.

 

[Ulmo]

A short while ago I phoned two Chicagoland Tesla sales agents, one in Westmont and one in Highland Park. They only know a little more than we do. They are certain their service centers will remain open, and likely also the stores but with reduced personnel. They expect to keep giving pre-purchase test drives, but those would cancel the 7-day return policy. They said that the popular configurations of all Tesla Models are now kept in inventory for next day deliveries. At least that is true in Chicagoland.

I should stress that these people did not want to be considered authoritative, but expressed likelihoods when I pressed them.

EDIT: I corrected the information about inventory cars to indicate that that applies to all Tesla models, not just Model 3's.

I'm sure that's all currently very true, but I'm guessing that it will transition to not being true within months or so. (That's consistent with their insistence on hedging (by using likelihoods), for which I applaud them.)

 

[ReflexFunds]

OMG I was away, did really Tesla committed suicide by killing their sales centers? And I always thought Elon is a sales guy. OMG this is disaster, I hope I am reading misleading news at the moment. If what I red is true, we are at 190 tomorrow. Congrats to shorts and I am so stupid so stupid idiot, who was believing in this company? You just cannot take away personal connection out of car sales. It is not buying socks?

I think you can assume Tesla knows what % of sales come from online vs instore. Without a store option most people would move online to purchase, though I'm sure some sales will be lost at this stage. This should be more than compensated by increased demand from lower pricing, as well as higher profit per car.

 

[neroden]

No longer worth the time for NHTSA to investigate Tesla crashes as there are 180,000 vehicle fires per year due to crashes.

National safety board won't investigate fiery Tesla crash that killed doctor

"The Tesla’s driver, Omar Awan, was speeding between 75 mph and 90 mph while heading north on South Flamingo Road about 4:30 p.m. Sunday, witnesses told police."

All these crashes are speeders.

I'm thinking that there should be a permanent speed limiter on Teslas which prevents them from going above the top state speed limit (80 in Texas), unless the driver specifically goes into the menus and selects "Track Mode" and acknowledges that he is on a private road. That would really eliminate all liability claims.

 

[Sparky]

...From a personal point of view, I'm an accredited investor, so if he lets accredited investors stay in when he goes private, I'm OK. I realize that a lot of people wouldn't be able to stay in, but he could let a lot of the larger individual investors stay in.

So, is there anything more to "accredited investor" than this?:
Personal net worth >$1M
or
Income > $200K in each of last 2 years or joint income >$300K
or
Trust with assets> $5M

I'm still concerned that the SEC thing might lead him to go private very soon. Consequences for many here if that happens. (yeah, I'm personally in above club but I prefer everyone here who've been riding this rollercoaster be able to continue).

 

[mblakele]

Am I the only one who sees a mountain of slightly used Model 3's from people with no intention of keeping the car?

A fleet of Model 3 service loaners? I like it!

 

[MarcusMaximus]

I don’t believe that will be a big issue. It takes a lot of time and effort to put together the money for a car - loans down payments credit checks etc - not something that people would do frivolously. Plus 7 days is a good amount of time to fall in love with the car. If I was to be honest with myself, I don’t think the test drive of Model S I did before the Model 3 was delivered really helped much, in fact I didn’t really get a good feel because we were so distracted by all the features like autopilot and sharing the test drive between me and hubby. 7 days is perfect, I doubt any serious buyer would return just for the sake of fun filled weekend. committed shorts are a different story, but even they would have trouble coming up with enough funds to make this a big issue

Something else I just thought up: any damage to the car in that time could gum up the works.

Speaking of which, I wonder what happens for various levels of damage to the car during the return period. Sugar happens.

 

[Ulmo]

And avoiding the untrustworthy lying Saudis.

The Saudis had been bragging for years about how much money they had to invest -- and I presume they made the same claim to Musk, causing him to think that they had the funding.

But I'd been reading articles for years saying that, uh, maybe the Saudis were lying and didn't have that much money. Well, they were lying. I think this caught Musk unawares.

Do you have any sources I could look up?

 

[ReflexFunds]

Isn't today's figure 350k-500k Model 3 production?

420k-600k is the result of adding 70k-100k Model S/X production.

Totally consistent with the ER conference call.

That's true, though I would have expected the S/X range to be more like 50-90k so the Q4 call commentary could at least have an overlap with the Q4 shareholder letter official guidance.

 

[Ulmo]

Am I the only one who sees a mountain of slightly used Model 3's from people with no intention of keeping the car?

At an even lower price?