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

[lklundin]

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.

S & P 500 inclusion after 19Q2 as opposed to after 19Q3 would benefit Tesla's investors.

Would it benefit Tesla itself?

Because in principle, Tesla could focus on North American deliveries during March and in that manner keep their number of vehicles in transit low at the quarters' end.

They would then have the option to transition to exporting a more constant fraction of their production on a monthly basis at a later stage (after S&P 500 inclusion), at which point they would incur the one-time hit of a quarter with a high number of vehicles in transit.

But if this would not benefit Tesla itself, then they might as well go for the longer term advantage of exporting a more constant fraction of their production on a monthly basis from now on.

 

[Fobble]

OT-
Pre market SP is nothing to write home about...

For market, yes it will be an exciting day (up almost 200 points). For TSLA, it's depressing :-( Investors are focusing on the projected poor Q1 earning. I still think Tesla's strategy is good for long term growth.

 

[elasalle]

This clip is appropriate on so many levels!

OK, EM, Bob Lultz and Mary Barra

 

[Tenable]

I will say, the Bolt seats are very comfortable. Model 3 seats have changed, like, 4 times already, but I really disliked the first iteration.

Do you know if there have been any changes to the model 3 since August? I’m being offered a discount on a 2018 P3D, just wanna make sure I know what I’m getting.

Thanks N

 

[KarenRei]

Worth noting that it's AP, not EAP - Traffic-Aware Cruise Control and Autosteer only. EAP also included Summon, Autopark, and Navigate on Autopilot, all of which are now part of FSD.

Hmm... that's a bit confusing (and not as appealing then). I don't care so much for navigate-on-autopilot (our Ring Road doesn't exactly have a ton of forks in it ), but Summon had actually been kind of appealing to me (e.g. small parking spaces, parking spaces with meltwater puddles, etc, plus the benefit of using it for pranks ). Yet the way they describe Summon sounds like "Advanced Summon":

"Summon: your parked car will come find you anywhere in a parking lot. Really."

Meh, I'm not going to pay $3k just for Autosteer and TACC. :Þ Fogeddaboudit

 

[Pezpunk]

For market, yes it will be an exciting day (up almost 200 points). For TSLA, it's depressing :-( Investors are focusing on the projected poor Q1 earning. I still think Tesla's strategy is good for long term growth.

being publicly traded seems like such a detriment to Tesla's mission. it puts unnecessary pressure on short-term goals and nonsense, and conjures an armies of detractors with real financial interest in spreading disinformation about it. (in addition to the army of detractors who would be there anyway -- the oil industry and traditional auto industry).

 

[jerry33]

Do you know if there have been any changes to the model 3 since August? I’m being offered a discount on a 2018 P3D, just wanna make sure I know what I’m getting.

Tesla makes changes to the cars all the time. When the S was ramping up, there were 30+ changes per week. Don't know what it is now, but they still make changes to the S. I wouldn't be at all surprised if the Model 3 has a similar change rate.

 

[dw4ngg]

You think these changes weren't the result of extensive long-term planning and discussion?

Tesla moves quickly. Any executive who's not used to moving quickly leaves, leaving only those who, like Musk, like to move quickly. The speed at which Tesla moves is why they've been eating everyone else's lunch. They need to keep doing so rather than sit back and rest on their laurels.

Agreed for certain things - disagree for others, such as his tweeting. I think the price changes are great, but I also think the frequency at which they occur seem to leave a bitter taste in the mouths of some. Maybe this could be accounted for; maybe not. I am not in this camp, but I can empathize

 

[intelligator]

Worth noting that it's AP, not EAP - Traffic-Aware Cruise Control and Autosteer only. EAP also included Summon, Autopark, and Navigate on Autopilot, all of which are now part of FSD.

(That's actually a bit weird, as there's a lot of lower tier brands that have auto parking nowadays, I could've gotten it on my Prius, even (granted, only on the top trims). But, eh, it'll encourage FSD sales, and there's a logical progression into it - I suspect a lot of people that weren't going to get EAP will now get AP, and a lot of people that were going to get EAP but not FSD will now get FSD.

Also note that if you have a state tax incentive, all options are exempt from tax when delivered with the car. Purchasing after delivery, sales tax will be added to the cost of the option.

 

[Fact Checking]

Elon reportedly said his developer AP already performs the FSD traffic light & stop sign and city street driving features promised for later this year. He says his version also already makes its own turns.
Of course, all still with full human supervision and responsibility, but I begin to see why he has confidence in feature complete with human supervision later this year.

FSD is back but ambitions are scaled back notably and so are those for autopilot : neutral.

Actually, the FSD news is a huge positive, see the additional FSD information above from @ReflexFunds.

'Level 4 quality FSD with human supervision by the end of the year" for a significant percentage of routes looks like a high probability outcome now.

I made this argument last year a couple of times: neural networks have non-trivial scaling properties, where 20x performance increase with the Tesla AI chip results in emergent improvements in the quality of FSD. Even software experts are often surprised by this, because there's no equivalent for this in the procedural software space: speedups don't add new features, they only enable the adding of new features. With neural networks it's fundamentally different.

So with HW3 I expect an almost singularity-alike event of FSD quality improvements this year. You like and love TACC and NoA already on your daily commute? Buckle up ...

 

[Chocochip]

There is no upgrade available YET.
If the cars are produced as 240 and sold as 220 ... at any later time Tesla can make "a special offer for you my friend ... for a mere 3k you can unlock additional 20miles of range and stronger acceleration".
I see lots and lost of 220 buyers that couldn't/wouldn't pay 37k at the start, but will upgrade in a few months.

I've been no-locked-battery SR proponent until I made the calcutains ... by offering locked 220 Tesla will make more money.
Who will not love to upgrade their car after some months? Delayed revenue and higher profits a bit down the road.

The battery pack on the SR is probably a software-locked SR+, but I actually don't expect the SR to be upgradeable to 240 miles. The price difference between the SR and SR+ is only $2k, and for that money you don't only get increased range and marginally improved acceleration, but also the partial premium interior. So the question is who would pass on the SR+ at purchase time and then be willing to shell out $2k (or more) later on without the ability to upgrade the interior and a fairly marginal range improvement.

The SR is there for 3 reasons I can think of:

• taxi-like services which are super-sensitive to cost and don't care about interior trim, colours, etc.
• to drive purchases of the SR+, possibly even of the MR
• to stamp on the negative "Tesla will NEVER make the $35k Model 3!" argument

 

[S3XY]

Service center? What's that?

"Service centers" were centralized places of worship, which were targets of so-called "gascar owner" pilgrimage every couple of months. These "gascars" used complex Ruby Goldberg machines consisting of thousands of moving parts (!!) - unlike anything you can see today, and these so-called "engines" were frequent targets of prayers, to keep them working, especially near the end of their very short life time. According to archeological records these "service centers" were shrouded by a cloud of burning hydrocarbon incense smoke, which had an intense smell and which probably had deep religious meaning to humans of the Modern Neolithic, which were not space-faring societies yet.

Kids today know nothing.

Great response made even better by you referring to me as a kid!

 

[lklundin]

I bought a used Volt (bridge to 3) and a P/U through Carvana without a test drive with exactly the same 7 day no cost return and they were the best cars and purchase experience other than Tesla I ever had.

I bought an Audi A8 that had been leased for 18 months after only sitting in it (I figured that the lease company had every incentive to discover damage done during the lease, and the gave me the subsequent inspection report made by a third party).

I already sat in a Model 3, that's going to be good enough for me.

 

[avoigt]

Just received a short message from Tesla stating that they added a cost free upgrade for NoA, automatic lane change, Autopark and Summon.

Note that I do not have my car yet....

 

[elasalle]

The profit warning might be a good thing in setting low expectations for Q1. Comparable to how Tim Cook, NVDA CEO's came on CNBC before earnings, stock took a hit and then reversed after earnings/cc.

The quarterly production news in early April might help if the production numbers/volume is above 7K+/week. Most still think we are <5K/week.

 

[Tslynk67]

OT-
Pre market SP is nothing to write home about...

Wall Street are fixated on quarterly profits, they have no idea (yet) what has just transpired.

 

[CorneliusXX]

All they need is one function to declare revenue recognition.

Automated enabling of fart mode when image recognition reads a Taco Bell or Del Taco sign.

Not hot dog

 

[jerry33]

Agreed for certain things - disagree for others, such as his tweeting. I think the price changes are great, but I also think the frequency at which they occur seem to leave a bitter taste in the mouths of some. Maybe this could be accounted for; maybe not. I am not in this camp, but I can empathize

Every time there has been a change at Tesla, whether hardware or price, there are some who "just purchased but don't get". It's inevitable in a rapidly improving hi-tech product. The only way to avoid this is to buy just after a release. What would be helpful is if there was a "Date since last upgrade" and an "average number of days between upgrades" for each model. (The MacRumors site does this.)

 

[Tslynk67]

Do you know if there have been any changes to the model 3 since August? I’m being offered a discount on a 2018 P3D, just wanna make sure I know what I’m getting.

Thanks N

You too? Some other guy asked the same question earlier...

 

[KarenRei]

Jim Cramer: "I agree with Morgan Stanley that the news is more bearish than bullish. But that said... um... I want one."
Anchor: "But Jim, didn't you just get a Lamborghini?"
Jim: "... That was more my wife that wanted that one."

Hahaha