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

[Singuy]

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.

I know some company (such as AMD) does not include unannounced future news in guidance. Is this also the case for Tesla? So this is the post SR announcement vs pre-announcement from the letter?

 

[riverFox]

This is the new Tesla, leaner and smarter with their money. Imagine all the rent, overhead, employment cost, hiring, electricity, insurance, benefits that they won’t have to pay anymore. When I ordered my Model 3, I did it online, there’s no need for retail stores when you’re a brand like Tesla/Amazon, etc. Car buyers tend to do their research quite rigorously before purchases. When you have 100,000 people lining up to order car without seeing one, let alone a test drive, you know you’ve broken the retail model.

I love this move in that it instills confidence, that even without a store front, our product will sell like hotcakes.

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

I agree. Elon is ruthlessly attacking the dealership model from a different angle. It might cost less to bankrupt them going full Amazon rather than litigate to change laws.

 

[Carl Raymond]

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

Liquidity will prevent abuse of the scheme. Few disingenuous people have $35K sitting around.

 

[Curt Renz]

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

An electric car does not have a manual transmission. Not automatic either, since their is a single gear ratio. But that is essentially the same as automatic.

What's in the standard version is manual seat and steering adjustment.

Sorry if I misunderstood, but I'm of the old school for which manual referred to a method of gear changing within the transmission.

 

[Fact Checking]

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.

Circumstances changed meanwhile:

• China tariffs threat is much lower,
• U.S. recession threat is much lower,
• European and Chinese demand is stronger than expected,
• GF3 is being built,
• SR Grohmann machine got installed and they found a pathway to 6% price reduction and $35k introduction with a truly amazing high quality trim.

All of this means a doubling of the addressable market, IMO.

 

[defc0n]

Very surprised to see standard range unveiled today. Thought for sure we’d be waiting until summer.

At this moment, I do not believe they will be able to break even on the lowest end model, but that isn’t terribly important yet. They likely have a path of getting there sometime in the future.

I think SR+ will be close to breakeven very soon.

After more efficiency gains, will Tesla be profitable with a full mix lineup and no built up pending demand? Leasing will soon come into play too, which opens up a large new set of buyers.

As always, the future will be interesting. I think Tesla will be just fine, and model Y will be very big (likely future buyer here).

The path to world domination is and has always been on the progress of autonomy. As long as Tesla gets by until then, most of this is just noise .

 

[sundaymorning]

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 also want to add that I’ve heard Roadster 2 will come to market before mid or end of summer next year. Has anyone heard anything about this?

 

[riverFox]

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).

I'm gonna have to find a rich woman to marry very soon.

 

[Ulmo]

Bloomberg - Are you a robot?

No, I'm not a robot.

 

[Carl Raymond]

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

Carsales.com.au ?

 

[Singuy]

Liquidity will prevent abuse of the scheme. Few disingenuous people have $35K sitting around.

Correct, joy riders or people who wants to rent the car for free needs to write Tesla a 35k check and then get it back at a much later date. Also you have to file additional paperwork just to get your registration tax refunded. Kind of a hassle.

 

[sundaymorning]

Circumstances changed meanwhile:

• China tariffs threat is much lower,
• U.S. recession threat is much lower,
• European and Chinese demand is stronger than expected,
• GF3 is being built,
• SR Grohmann machine got installed and they found a pathway to 6% price reduction and $35k introduction with a truly amazing high quality trim.

All of this means a doubling of the addressable market, IMO.

My guess is that model 3 takes about $35k to make right now. With the 6% reduction that’s about $2100 profit. I’m also guessing that the mid range and long range demand is around 5k/week. So not everyone ordering a $35k Model 3 will get their car right away, there’s going to be a mixture of high end, mid and lower end cars. Customers who opt for the $2k upgrade to premium interior or AP will get their cars first. With the price reduction, I can see a lot of people willing to pay.

 

[neroden]

Continuing waaaay off topic...

A short essay from Pendantry Today that I hope is not too far astray:
A friend pointed out to me that the correct spelling for the male gender version is “fanboi”. Various urban dictionaries confirmt this, and it seems that this intentional misspelling reinforces a naiivete and immaturity, and/or the “i” is a reference to fans/fanatics of Apple’s “i” devices. Or maybe also a reference to the song “Sk8er Boi”.

Here is a deep dive with evidence that the “fanboi” spelling predates both the song and Apple “i” devices:
What is the etymology of "fanboi"?

Nothing succeeds like excess.

Interesting -- coming from SF TV fandom, I always thought fanboi was devised in parallel to fangrrl (note spelling). The LGBTQ community tended to prefer "fangrrl" over "fangirl" for reasons which would take a long feminist history essay to explain, and they were already using "boi" (look it up...), so "fanboi" was logical.

"Fanboy" and "fangirl" are much older, but were considered mildly derogatory due to the implication of youth; "fan" was (and still is) preferred. "Fangrrl" was reclaiming a positive association for the more slash, shipping and squee aspects of fandom (traditionally derogated by the term "fangirl"), but squeeing fans who identified as male needed a term...

 

[M3Rider]

Tomorrow the market may begin to realize the brilliance of these new policies.

Are you kidding?
Even with 10x magnifying glass those CNBC "analysts" will not see any brilliance. For every Cathy Wood there'll be 20 other idiots screaming no demand & higher FSD prices.

 

[Antares Nebula]

Interesting that the news was actually pretty big (thought not as epic as a Y or pickup reveal). I would not have expected this reaction from the stock. I guess the concern was Q1 lack of profit. But even before that detail arrived, it sold off a bit in the after hours, which shows the concern with profitability over the lower margin M3. Honestly didn't expect this till spring or summer. Goes to show that once again TSLA stock reacts completely unpredictably. Still, I think 290/300 is the bottom barring some bombshell from the SEC thing. I think we get some volatility around the 300 level for a few days and then we start the steady climb to 400 and higher. Model 3 margins will only improve. Huge volume and revenue going to come in now. Musk and his team of rocket scientists will deliver on the margins. And then we have a lot to look forward to for the rest of this year with new models, autopilot, Tesla Energy, etc.

 

[Krugerrand]

whats weird to me about the store closures is that they opened several in late 2018

You still don’t get Tesla. It’s called innovation. When you are continuously solving problems, figuring out new ways, new efficiencies, you embrace change even if it’s midstream of your previous innovation. This is how it works when your mission is to change the world. Everything is up for debate/change.

And all the people complaining about service ought to be jumping for joy now with savings from closing stores and Elon putting service top on his list for this year.

 

[EVNow]

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:

I think with all the price cuts and the $35k SR - they will again be production constrained. It would be interesting to see what orders they get in the next couple of days and whether Tesla will publish it.

Ofcourse with the 7 day return, it becomes easier to order as well.

 

[Dynastar]

My middle School teacher friend who I'm giving my second reservation to ended up picking the SR+ with no other options. He was planning on getting a $35k model but the SR+ was too tempting to pass up. I suspect many people will make the same decision.

 

[K_Dizzle]

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.

After driving it they’d turn to bulls pretty quickly

 

[Singuy]

Someone on reddit noticed that the SR and MR models has the same exact weight according to the spec. Perhaps they are the same car. This plays more to the theory that SR and SR+ are software limited MRs.