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

[neroden]

Well... I actually thought Tesla might do the $35k in February -- which they did, just under the wire. What I didn't expect was that the car I bought would lose so much value in such a short time. If I was wealthy and had just bought it outright the sting would be less, but I'm on the hook for six years on this car that has lost significant value already. So I really understand where complainers would be coming from.

Hey, ask the 2012-2013 Model S owners about what happened to our resale value with (a) the center console, (b) the facelift, (c) Autopilot, (d) Autopilot 2... it's pretty predictable.

Tesla used prices hold up very very well until there's an upgrade to the new cars or a price cut on the new cars and then bong, they drop suddenly.

But it is just like anything else that moves quickly, there's going to be a lot of change. I knew I had no reason to buy in November (as I don't get the tax break) other than to get the car earlier. And that is a choice I made.

I never regretted having the car sooner. I hate driving gas cars.

 

[neroden]

I don't know how to take all this news...35k car goal done, but we don't know profitability or margins. Store closures = eh good and bad. Good will save $, but gives a bad perception like when you think about Macy's store closures for the mainstream people.

Really don't like no profitable Q1 as he said there's a chance of a tiny profit.

Guess we just gotta strap the seat belts and be patient...this rollercoaster ride is truly bipolar lol.

Musk memo to employees leaked, says 82% of customers bought without a test drive and 78% bought online.

Elon Musk just sent this memo to employees about the cheaper Model 3 and store closures

Doesn't seem worth it having stores with *those* percentages. Expanding the return period to 7 days / 1000 miles will definitely help sway some, and there will still be some galleries for people to check the cars out (probably in the biggest cities, maybe 1 each in NY, Chicago, LA).

 

[scaesare]

It hit a rock frozen to the ground.

I wonder if this would be covered under the pack warranty that protects against damage... Probably not as it was off-road

 

[neroden]

Do you have a list of all Tesla debts upcoming handy?

It's in every quarterly and annual SEC report.

The weird bit in the Q4 report is a sudden unexplained new $75 million dollar loan in "auto and other loans". They don't go into detail.

 

[Opus BC fan]

Lived in Elizabethtown PA for 3 years 89-92. Had absolutely no idea we were so close to TMI when we built the house. When I read the TMI Emergency Evacuation Plan we were given after we moved in I realized if that ####er went up we were screwed. There is no way sane people site any nuclear reactor near 100,000s of population. I don't care how safe they claim they are today. Nuclear is perfectly safe until it isn't.

OT
I was living about midway between Lancaster and Elizabethtown in March of 1979. I had just graduated from college and was working at a local hospital. I could write volumes about the experience. Never again will I live in the shadow of a nuclear plant. I am immune to advertising campaigns for clean coal, safe fracking, and other such bulls@#t. My money and free time go to projects that are green.

 

[AudubonB]

Yes, WA is wrong.

There was some anti-Tesla language in a bill that was slipped in at the last moment at one time. But was caught before it was voted on. Basically no direct sales for future OEMs, but Tesla was grandfathered.

Tesla wins battle against auto dealers in Washington state, but future rivals are screwed

BTW, this wiki page has a good list.

Tesla US dealership disputes - Wikipedia

As I read the map, it is correct: There is that blue Tesla "T" inside the red color, indicating that Tesla has a special exemption.

 

[TheTalkingMule]

What effect will closing most stores have on Tesla Energy consumer sales? Will that just be centralized and people will deal with an anonymous salesman via email or phone in Reno or someplace in California?

Energy likely has no solid plan for customer acquisition. Door to door sales is a nonstarter and is already saturated enough by SunRun, Vivint and others. I can't imagine putting those sales people in stores made a material difference.

They'll likely coast through this spring/summer and see how the market moves. Residential solar is evolving every 6 months or so, I don't see any rational avenue for Tesla to advance that part of the Master Plan in the very near term.

I'm hoping their next big move is via acquisition. Ideally lean local installers take considerable share from the larger firms and Tesla can then swoop in to acquire someone like Sun Run for $2-4B in stock. Retain the CEO as head of Tesla Residential Energy, then split off commercial, utility and grid services under someone else.

 

[lascavarian]

Something interesting here: the auto dealers may have done themselves a disservice by blocking Tesla in some states. Because of that, Tesla figured out they could sell cars just fine without even having a store, and get around franchise laws. There’s nothing at all stopping any other manufacturer from doing the same.

Agreed. I can't help but think that there is an "Osborne Effect" in play delaying purchasing of new ICE vehicles. Detroit can push some production out the dealers but if they sell poorly then things start to unravel I guess. This reduction in pricing, if successful, is a haymaker laid on an already staggering opponent. It is going to be an interesting Summer.

I am watching Autonation (symbol AN) since they should be early bird recipients of the OE and they never miss a chance to throw shade on Tesla. I think they see the writing on the wall. Just as Tesla has made some sacrifices in their retail presence area, the Detroit manufacturers will have to look for who to throw overboard if they are to stay afloat.

 

[UnknownSoldier]

Yeah seriously and big time!

IIRC, the infamous "standard battery available in 4-6 months" came out with the Mid-Range Model 3 on Oct 18, 2018.
So 4 months and 10 days later...

Voila!

Note the Mid-Range 0-60 has improved from 5.6 to 5.2. Magical!

Tesla Launches $45,000 Model 3 With 260-Mile Range

View attachment 381729

Boy it sure would be nice if the AWD LR got any improvements. Still stuck at 4.5 because I guess they are that afraid of cannibalizing the Performance. Sigh.

 

[RobStark]

I am so happy that I bought my LR RWD model 3 when there was only one option. If I were to make a decision now I would spend days going back and forth, and spend months after my purchase regretting either paid too much or did not get enough!

You are the reason Costco only has 1 type of Ketchup, 1 type of Mustard, and 1 type of Mayonnaise.

 

[neroden]

Yes. Here's the ones that will be repaid I think (the others like short term warehouse credit lines that I expect to be rolled forward):

• $566M Convertible Senior Note due in FY4Q19. SolarCity leftover.
• $210M Revolving Aggregation Credit Facility due in FY4Q19

That's all for the next two years, until March 2021 when $1.4b convertible notes will be due with a $360 conversion price, but I'd expect those to convert to shares. The $210m one might be paid off, or rolled over.

Oooh, you're out of date. They paid off the Revolving Aggregation Credit Facility (which was SolarCity's rolling facility for loans, mostly on solar panels) in Q4. I think it was refinanced out of Tesla's big Credit Agreement.

I was expecting them to shut down the SREC loan facility, but they didn't; it does appear to be shrinking fast.
I also expected one of the term loans to be ended, but they seem to be kicking it forward a few months at a time, now expiring April 2019.

 

[AudubonB]

Going through every last one of the day's posts, I've noticed only one poster (sorry - don't remember your handle) who mentioned insurance as one of the hurdles to overcome in purchasing a car. That will entail one more sticking point for anyone thinking of borrowing a car for 1,000 miles with "only" a $35,000 or so fully refundable downpayment. Plus registration. Plus. Plus. Plus. And you wouldn't be able to protect-wrap it and expect to get that back. And don't think you'd get away without having to cough up for that little rock ding here or scrape there.

By the way, after two months of this thread, we now are at a run rate of having 117,000 posts this year.

C'mon, Fremont! You can beat that!!!!!

 

[AudubonB]

You are the reason Costco only has 1 type of Ketchup, 1 type of Mustard, and 1 type of Mayonnaise.

But I can't decide if I want the mayo or the mustard!

 

[neroden]

It is pretty disappointing to hear Musk say Tesla definitely won't be profitable in Q1 and only likely profitable in Q2. Only 4-5 months ago on the Q3 earnings, Musk was so confident that every quarter going forward was going to be profitable. It's pretty hard for me to understand how Q2 will not 100% be a profitable quarter.

Profit is a lot harder than cashflow. For a long time, Tesla has been plowing money into CapEx; that comes back as depreciation, which reduces profit, but not cashflow.

With all the cars in transit at the end of Q1 (and there will be cars in transit), it's going to amount to a substantial drop in deliveries versus Q4 (though not a drop in production) -- add in one-time items and, to analysts like me, has seemed unlikely to be much better than break even. The transit time is just too high: 18 days Fremont to Shanghai is great, but it's significant.

 

[neroden]

second round of layoffs sucks

I always suspected they were spending too much on sales and not enough on logistics and service. I think this news is very positive. Hopefully some of the salespeople can transition to service jobs (service needs some "secretaries")

 

[MarcusMaximus]

The dealers' first line of defense is the contracts they have with their manufacturers. Their second line of defense is the states requiring that the manufacturers do not compete with their own franchised dealers. I suspect that either of these defenses may also apply regarding online sales.

The more recent monkey wrench has been some states requiring an automaker that has never had franchised dealerships to get some anyway. As you imply, today Tesla may have melted that monkey wrench.

The second would seem to violate the interstate commerce clause. Thus far, it’s been ok, because putting limits on owning physical stores in-state is fine. But only the feds have jurisdiction over such commerce. And where we’re going, we don’t need stores.

 

[neroden]

So...WTF was Tusk all about?

I believe Elon Musk found out about the actual elephant and was really pleased.

Big, Beautiful, And Rare: Twin Elephants In Tanzania

 

[neroden]

I got some thru Merrill Lynch. 450k

Ummmm..... was that actually legal? It looked like it was under the "institutions only" rule, which doesn't allow individuals to buy it AT ALL, even if they're accredited investors. Maybe you shouldn't ask too closely whether Merrill Lynch was complying with the law... but they might reverse the trade if I'm correct.

 

[dc_h]

Profit is a lot harder than cashflow. For a long time, Tesla has been plowing money into CapEx; that comes back as depreciation, which reduces profit, but not cashflow.

With all the cars in transit at the end of Q1 (and there will be cars in transit), it's going to amount to a substantial drop in deliveries versus Q4 (though not a drop in production) -- add in one-time items and, to analysts like me, has seemed unlikely to be much better than break even. The transit time is just too high: 18 days Fremont to Shanghai is great, but it's significant.

I’m not sure deliveries will be down, or down much. Production is likely 15,000 to 20,000 higher, but with 10-15,000 cars in transit it is a big one time hit. Next quarter cars in transit may be as high or higher, but the cash flow will be better as sales ~ equal production.

 

[Remus]

You are the reason Costco only has 1 type of Ketchup, 1 type of Mustard, and 1 type of Mayonnaise.

And I am an executive member., Of course.