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

[Fact Checking]

Chinese news network reported that China Ministry of Commerce confirmed a high profile US team will visit china on Jan-7th and 8th to continue the tariff talk.
中美将于1月7日-8日举行经贸问题副部级磋商
It's currently the top news listed on their website.

This is not really news, since we already saw it reported several days ago:
Bloomberg - Are you a robot?

But the way it's reported in Chinese media shows the gov want people to be assured that they are making good progress, which means either they really did make great progress or they are willing to make a deal happen.

Could be positive sign for Macro.

Yes, macro futures are up so far, with the NASDAQ index leading with +1.7%.

I'd expect the China deal to look like NAFTA 2.0: token concessions to allow Trump to claim victory.

The big question is, does Trump want to see the 52th state of the U.S., where most of U.S. manufacturing is done (also called "China"), which is pegged to the U.S. dollar, see crash and burn, together with the U.S. economy? If yes then he has the executive power to make it happen.

My guess:

• China can offer the Trump clan a sweet, sweet side deal the conman will not be able to resist.
• Secondly, owners of the Fix News bubble he is relying on is deeply invested in the U.S. economy, and the anti-Fed attacks are already showing that they very much do not want a prolonged stock market crash.
• Third, a lousy U.S. economy next year (which a China crash would guarantee) would sink even a good president's re-election chances. A president with Trump's humiliating midterm results would have no chance for a re-election amidst a recession.

I.e. I don't think Trump wants a recession - and China doesn't want one either: China deal secured?

 

[NicoV]

Does anybody know if Tesla has opened Model 3 to all EU, or just reservation holders? That could be indicative of demand.

When went to my local SEC to look at the Model 3, they said everybody could order and receive it in Q1.

 

[WarpedOne]

I hold day 1 reservation but am delegated to Other Europe... no Configure for me...

 

[PANN]

I.e. I don't think Trump wants a recession - and China doesn't want one either: China deal secured?

I speak from China, our president cannot afford a recession (maybe more than Trump). Ever since the two met at G20, it looks a secured deal to me.

 

[JollyRoger]

Tesla Inc said on Friday it plans to start delivering Model 3 cars to customers in China in March, cementing a time frame that the U.S. electric vehicle maker's chief executive, Elon Musk, tweeted about late last year. Does this mean SP will be hit hard today as every model 3 made the company must "make a loss"
apparently!!! #bankwrupt.

Some good news starting to come in, with some nice charts being made, hope we don't get trumped on today!!

 

[lklundin]

Doubt it.

Other designs may yield 5 star safety ratings but they don't match Model 3 probability of injury.

Tesla designs the safest cars possible within reasonable cost. Tesla doesn't design to pass test.

Model 3 is safer than C Class,3 Series, A4 et al.

Exactly.

What is surprising about Munro's latest interview is that he is so impressed about Tesla's design for the BEV-specific components, yet when it comes to the design of the body he outright assumes that it is not a deliberate design it decision but rather a poor design that the body is designed to be stronger than the BMW 3 he compares it to.

That we have yet to learn of a traffic fatality in a model 3 may not be just luck but also due to the deliberately extra strongly designed Model 3 body.

 

[BioSehnsucht]

This is a really good interview of Munro:

I'm only ~25 minutes in, some summary here
...

Interesting he said only some Japanese manufacturers bought the report, nobody else did. Then later says Chrysler already had bought the report (perhaps the comment about Japanese was after the report made the news?). Also mentioned that "friends in Italy" were interested in how Tesla was using Halbach arrays in their motors for better power per mass/cost. Much later references "some of your analyst friends" gesturing towards the Bloomberg guy so it seems possible it was in fact the source for UBS among others. So that's confusing with all the conflicting "only this" "and also that" with regards to their customers for the report, but interesting...

Back on the Halbach arrays, he says you can't really figure out the precise way they put together their magnets without having been there when they did it (I suspect that's actually not true, he just doesn't know enough about magnetism / doesn't have the right experts on his payroll to do it).

He also said that he thought that without changes to the BIW (which he still recommends, not understanding why the pack should maybe not be a structural member when smaller packs are intended to be lighter and cheaper), Model 3s built in China could cost 20% less to produce.

 

[saniflash]

Core points for me out of the Munro video (emphases mine):

There's enough hints [...] we know how you're gonna build up [...] a [35,000$] vehicle and our customers [for our reports] are jumping up and down, especially some of [the] analysts who normally don't spend much money on anything, and a couple of them are like "we need real numbers real fast, can you give us something".

But what really got the ball rolling was "hey, Tesla's gonna make this in China, what's gonna be the cost of the vehicle?" [...] [Musk] is gonna be able to clobber everyone in China [...] A China Model 3 will cost [...] easy 20% [less] [...] [Tesla] can easy pull out 300 dollars out of the body-in-white [if they clean up the overengineering]

[...] The millenial buyer or the buyer of this car isn't interested in gas, they don't give a damn [...]

There's virtually no suppliers at Tesla [...] one of the reasons most of the analysts are wrong, is that there's no second markup [...] who's richer, the supplier community or the OEMs?

starting from 42:20

 

[Papafox]

Regarding a deal with China, there have been so many serious problems in the trade and intellectual property rights relations between the U.S. and China that I don't think we'll get a window dressing agreement. After all the pain both countries have endured through these negotiations, I'm expecting something substantial to occur because something considerably less would be regarded as a sell-out, and I don't think Trump can afford to take a hit like that right now.

 

[Fact Checking]

Potential 2019 TSLA bonus points not on Wall Street radar.
Updated S/X battery and electronics would improve assembly processes, performance and margins. There will be a significant number of S/X owners "needing" to upgrade to track mode. A complete update to the body & batteries could reduce costs based on Model 3 learnings by 10% and greatly increase performance. Switch to steel and margins could go crazy. I know keeping the 18650 line running is helpful, but they need to keep their lead from the competition.

Note that S/X cash margins are already phenomenal due to efficiency improvements, they were possibly above 30% in Q3.

The main S/X manufacturing overhead is in the interior I believe - so I'd guess that the next improvement to the S/X is going to be an interior refresh, adopting the Model 3 simplifications, with premium aspects to differentiate.

I believe they'll wait for the FSD and HW3 release before touching the S/X battery pack: functional mass-market FSD could double demand or more - at which point a 2,170 transition would lift the 100k/year ceiling.

They could probably already assemble 130k-150k S/X's in Fremont if not for the 18,650 cell limit. Maybe with a few upgrades and by offloading pack assembly to GF1 they could increase S/X production to 200k/year, at Fremont.

 

[Fact Checking]

After all the pain both countries have endured through these negotiations, I'm expecting something substantial to occur because something considerably less would be regarded as a sell-out, and I don't think Trump can afford to take a hit like that right now.

Trump doesn't care about anything but media optics: if the Fix News narrative is that the China deal is a "massive win", his base will believe that.

This is what happened with NAFTA 2.0 as well. It was a sell-out with nothing substantial, yet regarded a "win".

The Republican Party started replacing critical thinking with party loyalty in the Raegan days, the transition was sped up in the Gingrich days with the adoption of global warming denial and other types of anti-science dogma, and the indoctrination is complete by today.

Nixon would be called a RINO today: an overly liberal sellout of Republican values. Yet Watergate would blow over within 1-2 news cycles and would be called "fake news" - or if there was a video of the Watergate break-in conservatives would be applauding Nixon for showing 'em, and would be outraged about prosecutorial overreach and would call it a "witch hunt" if it was investigated by the FBI. "They didn't hurt anyone and only took documents to prove Democrat corruption, no harm done!" As to Nixon's lies: "he misremembered" and his lawyer would insist that "truth isn't truth".

Anyway, a China deal would be good to Tesla and good for macros.

 

[RobStark]

I wouldn't be so sure of that. Y, Pickup, Semi, Roadster, stationary storage... Tesla was able to ramp the Model 3 faster than Panasonic ramped the 2170 production. I suspect that the Y will ramp much faster than the 3 did. The Pickup, Semi, and Roadster will burn through cells faster than you can imagine...

I would be.

Tesla sources 2170 from Samsung for storage too.

Elon said GF Shanghai will source from several companies including Pana.

If Panasonic can't keep up Tesla will either add other suppliers or build cells themselves.

 

[Sancho]

As to Gene Munster: my speculative guess is he missed the Q3 boat and intends to enter a large TSLA position. He needed the "miss" price dip and assisted the CNBC shortz to make that happen. After the Q4 earnings report he'll be very, very bullish.
.

As others have said in this forum, don’t jump to evil intentions when there are more benign explanations.

I’ve followed Gene for more than a decade. He’s not playing games to line his pocket. And unlike most analysts, he really gets technology and innovation. He gets Tesla.

But, rightly or wrongly, he feels that he needs to go out of his way not to appear to be a fanboy or cheerleader for the companies he follows. So he will keep his outlook conservative, and when he can find anything to criticize, he will take advantage of it to appear “balanced.”

It’s an unfortunate asymmetry that analysts and reporters that don’t get it can exaggerate their criticism all they want, while analysts and reporters who do get it generally feel they need to temper their enthusiasm and participate in the criticism.

What makes this forum so valuable is that we have access to really informed people like you who don’t have a paycheck that relies on them appearing “balanced.”

 

[JollyRoger]

Left hand drive variant now avalible to design and order on Tesla website!
With the market opening up +6.5 this morning in pre market

 

[Fact Checking]

I’ve followed Gene for more than a decade. He’s not playing games to line his pocket. And unlike most analysts, he really gets technology and innovation. He gets Tesla.

If so then why didn't Gene Munster mention that these delivery numbers:

• met Tesla's own guidance,
• are a natural and expected consequence of Panasonic installing their new lines in mid November - so first half Q4 produced at 4k/week, second half at 6k/week. 6k/week sustained is sure bullish, right?
• virtually guarantee record Q4 revenue, cash flow and profits,
• guarantee paying back the March bonds fully in cash,
• project 6-8 billion dollars of cash flow in 2019 that Tesla could use to double their projected 2019 capex ...
• "forced equity raise" is now off the table,
• S&P 500 inclusion in 4 months secured,
• Moody's upgrade secured.

One would think that these are more newsworthy than freaking out about missing the artificially large expectations of bearish analysts: for example the 79k deliveries "estimate" by one of the analysts was larger than all new VINs registered in Q4 ...

Someone who understands Tesla ought to know these - so why didn't he talk about them?

 

[sundaymorning]

I wonder what shorts thinks about these types of fi$res that occur daily to gasoline vehicles?

7 killed after fiery crash, fuel spill on Florida highway

Tesla is up premarket $307

 

[NicoV]

I wonder what shorts thinks about these types of fi$res that occur daily to gasoline vehicles?

7 killed after fiery crash, fuel spill on Florida highway

Tesla is up premarket $307

I noticed in the past that bad news pushing TSLA down can only be maintained for 1.5 to 3 days. It’s to be expected to go up about now.

 

[KarenRei]

It opened up Model 3 ordering to most of Europe (except for the UK, Ireland and Eastern Europe) and to everyone who placed a reservation in the past or places one now.

Nope. Certainly not to us in Iceland at least.

Oh, I can google. What you provided looks to be a reliability report, not customer satisfaction. @KarenRei is specifically talking about Customer Satisfaction (obviously). Too - my link was also for 2018. See the chart. But I think you might know that.

You're both incorrect - but at least your link was actually for a customer satisfaction report Unfortunately, check out the publication date right at the top:

By Consumer Reports
December 21, 2017

That was published a year ago. There has been no new customer satisfaction report since then.

 

[Tslynk67]

The Tesla tweet for non-reservation configuration opening: Tesla on Twitter

Does anybody know if Tesla has opened Model 3 to all EU, or just reservation holders? That could be indicative of demand.

Tesla (TSLA) wipes out billions in market cap with production numbers and price reduction

I agree with Fred's analysis, my logical sense also says Tesla didn't make as many M3 in Q4 because they spent time/effort on optimizing production for higher margins. M3 margin could likely be big surprise beat in Q4 earning, just as they did in Q3.

EDIT: watch on YouTube and checkout the comments replay too - Dan Neil commenting quite a bit.

If Tesla can be highly profitable at current 5k/w level, and it can fund Model Y program solely using cash flow/profit generated from Model 3, it makes Tesla a truely self-sustainable company. It also destroy the main theme short thesis that Tesla always lose more money when produce/sell more cars.

I think in 2018, Elon changed his view -- while the mission is not profit, the mission can't be achieved without good profit -- this is not only to sustain Tesla, but also show case the world that EV is much more profitable, to enourage mass investments in EV. Remember, Tesla alone cannot achieve the mission, and knowing human nature, there's no better way to "accelerate the world's transition to sustainable energy" than making EV a highly profitable business.

What Fred said in the article was fair enough, but once again it's a misleading click-baity headline. $TSLA isn't down because it missed targets or cut prices. $TSLA is down because it has been manipulated in that direction. Simple.

I am watching this right now, absolutely bullish points about Model 3 all over the place.

• He said he is interested in who is going to sell the most cars and make the most money, then dismissed i-Pace just after looking and does not even have any interest to take it apart.
• The body in white was heavier than 320, which according to him was the heaviest in class. One bit he was not pleased is the battery is not being used as a structure member, so has not contributed to the body strength as it could. But I suspect Tesla has their own reasoning, it's not just because of sloppy engineering, for example, they might already planed for the different pack design of SR, so the lighter pack won't compromise overall safety.
• He talked about the motor and especially the magnet in it. Tesla glued 4 strips of magnets into one piece, to take advantage of a known physical effect that no one else had went through the trouble to make it work, result is 40% better performance.
• least amount of piping, least amount of wiring harness, etc...

These are the reason why Model 3 is superior than competitions, but at the same time can have most juicy margin.
Anyone who want to understand why Model 3 changes everything should take a look.

So sad the video only have 6.6k views so far.

It's a long video, but very good. Also strongly recommend everyone here watches it.

Munro absolutely gushes over Model 3 and it's clear that Tesla are so far ahead of the rest, even more than I thought. The business with the motor magnet design is just beautiful.

 

[Tslynk67]