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

[BaneBeater]

Ok, I stand corrected by Elon - Elon Musk on Twitter
2019 EOY

Yeah, he said 10k per week by the end of 2018, too.

It's going to take more than a year to:

• Create a foundation (factory is on swamp land)
• Connect utilities (factories take a lot of electricity)
• Build the structures
• Order the machines
• Hire the workers
• Test and tweak for mass production

EOY is a classic Elon timeline.

Also, why the Model 3? Why not the Model Y?

Model 3 is already accumulating inventory in the US. I'd rather see new products rather than duplicating an existing one.

 

[oneday]

Tesla urges tariff exemption for Chinese-made car computer 'brain' | Reuters

What computer is this? Is it the new AP3 chip?

 

[Zaxxon]

It's going to take more than a year to:

...

Model 3 is already accumulating inventory

Try harder.

 

[Carl Raymond]

So a US program called "60 minutes" did a segment on a breakthrough project to solve climate change that has been in the works quietly for 25 years or so involving a breakthrough method of extracting sugars from plant cellulose much more effectively. Potential replacement for coal and fossil fuels as it develops. Bunch of MIT PhDs on the board.

Easy transition for cleaner ICE vehicles but an unknown scale-up timeline. Probably get some wall street discussion as to impact on stocks related to climate change solutions.

“Cleaner” won’t help us. The world needs to hit zero or negative emissions (e.g. using carbon negative concrete). “Solutions” that get us half way then reach a dead end should be ignored. We would merely be running off the cliff at a slightly slower pace.

 

[RobStark]

 

[RobStark]

 

[AZRI11]

“Cleaner” won’t help us. The world needs to hit zero or negative emissions (e.g. using carbon negative concrete). “Solutions” that get us half way then reach a dead end should be ignored. We would merely be running off the cliff at a slightly slower pace.

Xyleco laid off half of their work force two weeks before Christmas. Facility in Washington state is closed, multiple violations, not obtaining proper permits. 60 Minutes is turning into the fake news.

 

[Fact Checking]

M3 timeline got beat.

We really shouldn't whitewash history there:

• original Model 3 timeline was indeed 2018,
• but then Tesla got a lot of pre-orders, raised billions of dollars to increase volume and accelerate the timeline to 2017,
• then missed the 2017 timeline and missed the "10k/week by end of 2018" timeline, despite spending those billions

So it was a miss. The good news: it's up from here.

 

[phnix]

...
It's going to take more than a year to:

• Create a foundation (factory is on swamp land)

...

It's not a swamp. Some lands in the area were reclaimed from the sea but they have been stabilized for many years. Google Earth history shows that the land had been farmland since as early as 2002. There was much water in the picture because it was just after a heavy rain and the drainage is to be built yet. There were a lot of tracks of trucks and machines that had already leveled the land to prepare for construction. The Tesla land is right to the fence which was built just in a few days (Tesla Gigafactory 3 in China to finish initial construction in summer after groundbreaking event):

This is a satellite image in 2017 showing roads and buildings east to the Tesla land, showing how developed the area is:

The land does need special foundation treatment because the soft dirt is hundreds of feet deep (like all other lands in Shanghai), but the treatment methods are mature and not very time consuming. For construction, the land isn't much different from Lujiazui which is now full of skyscrapers (The Bund - Wikipedia).

 

[phnix]

This is a satellite image in 2017 showing roads and buildings east to the Tesla land, showing how developed the area is:
View attachment 366871

Forgot to mention the electric power towers.

 

[Mobius484]

Just watched a you tube about oracle servers. The battery back up system looked like a megapack like setup. Anybody know if oracle uses Tesla energy?

—at 2:30
Anybody know of how many power packs or powewalls have been installed in Q4?
Any more amazon installs?

Tesla is working with Amazon to deploy more energy storage at distribution centers

 

[W84M3]

Teslarati has pictures, looks like the parking lot is already ready for inventory model 3's /s

TESLARATI on Twitter

 

[CorneliusXX]

The interest rates on these lease financing transactions appear to be rising (possible faster than LIBOR).

The interest rate under the 2017 Warehouse Agreement is generally based on (i) LIBOR plus a fixed margin, currently resulting in an interest rate of approximately 2.7%, or (ii) the interest rate of short-term commercial paper notes used by certain lenders to maintain their loans. ...However, unlike the 2017 Warehouse Agreement, the A&R 2016 Warehouse Agreement provides that following the next drawdown of funds thereunder, additional drawdowns will require the consent of the lenders. ​

http://ir.teslamotors.com/index.php/static-files/57581c07-fc53-4d08-886a-27defba73b01

The 3Q18 10Q showed $566 drawn against (both?) Warehouse Agreements and an interest rate of 3.5%

For TALT 2018 A, Moody's showed on 2/16/18 $546 million for the initial ABS split as:

Tesla Auto Lease Trust 2018-A
$422,610,000, 2.32%, Class A Notes, Definitive Rating Assigned Aaa (sf)
$40,140,000, 2.75%, Class B Notes, Definitive Rating Assigned Aa2 (sf)
$27,970,000, 2.97%, Class C Notes, Definitive Rating Assigned A2 (sf)
$23,710,000, 3.30%, Class D Notes, Definitive Rating Assigned Baa2 (sf)
$31,620,000, 4.94%, Class E Notes, Definitive Rating Assigned Ba3 (sf)
​

For TALT 2018 B, Moody's showed on 12/16/18 $837.4 million for the second ABS split as:

Tesla Auto Lease Trust 2018-B
$673,680,000, 3.71%, Class A Notes, Definitive Rating Assigned Aaa (sf)
$57,480,000, 4.12%, Class B Notes, Definitive Rating Assigned Aa2 (sf)
$36,790,000, 4.36%, Class C Notes, Definitive Rating Assigned A2 (sf)
$30,350,000, 5.29%, Class D Notes, Definitive Rating Assigned Baa2 (sf)
$39,090,000, 7.87%, Class E Notes, Definitive Rating Assigned Ba3 (sf)​

The loan interest rate {under the 2018 Warehouse Agreement} is generally based on (i) LIBOR plus a fixed margin (a sum currently equal to approximately 3.9%), or (ii) the interest rate of short-term commercial paper notes used by certain lenders to maintain their loans....

http://ir.teslamotors.com/static-files/7ac705ce-df45-4560-80a0-e9fe6c526a91

Thanks, this is very helpful. Most of the interest rate increase is due to LIBOR increases which has been going up over the last couple of years. Tesla should be at least notionally pricing their leases at a margin over LIBOR to protect the profit however I haven't found any lease rate information in the Moody's reports for either TALT deal.

 

[shlokavica22]

Also, why the Model 3? Why not the Model Y?

Model 3 is already in "mature" stage of production. The risk is much lower when you replicate working solutions.

 

[shlokavica22]

Just watched a you tube about oracle servers. The battery back up system looked like a megapack like setup. Anybody know if oracle uses Tesla energy?

—at 2:30
Anybody know of how many power packs or powewalls have been installed in Q4?
Any more amazon installs?

Tesla is working with Amazon to deploy more energy storage at distribution centers

That one will be nasty surprise for the shorts team. They try to put under the rug the Energy business and pretend it won't grow much, even though Elon and the team indicated it will grow faster than the auto business.

 

[JollyRoger]

Does any one have any pre market predictions?

I'm thinking up 2% before market opens, unless the shorts find some magnificent way to spin the China breaking ground story!

Allrdy up 1.52% as i was taking the time to write my message

 

[Fact Checking]

So would this not be something for the SEC to investigate ?

So I suppose even in an ideal (and imaginary) world where the SEC does go after big players as well, that would depend on the precise timing: if Bloomberg indeed reacted to the last-minute VIN additions of Tesla and adjusted their model 2 days before the delivery report, then that's not fraud, nor dishonest.

It's somewhat sloppy methodology (freshly assigned VINs at the end of the quarter cannot possibly turn into real Q4 production ... especially with Tesla's history of shutting down most of production at the end of year), and hides their track record of projecting way lower production through something like 97% of the quarter - but it's still honest methodology.

So I concur with @tsunamiofhurt and withdraw my objections to Bloomberg's late update. I somehow got the impression they updated on the day of the delivery report - but that's apparently false, they updated on December 30.

 

[SPadival]

From Kelvin Yang (@KelvinYang7) on Twitter

GF3 has Chinese gov max support: 1200KVA grid connection took only 37 days vs 80 days average.

I won’t bother linking to Vincent tweets because Elon himself RTs Vincent

 

[Fact Checking]

Does any one have any pre market predictions?

Macro is still a big factor I believe:

• Fed rate rise worries are easing after Powell clarified on Friday that they are data driven and if the data is worse than expected they won't rise rates (which was pretty clear from the recent FOMC statement to begin with but the markets can sometimes be rather obtuse). Not raising rates will also get the Trump propaganda machinery off the Fed's back - and not raising rates based on "data" is the perfect excuse: with the 2020 elections getting nearer the Fed will probably try to stay out of politics and keep rates constant.
  
• Brexit is still a cluster-sugar, and the British political elite still doesn't realize that they got outsmarted by EU competitors who will now take over Britain's (former) EU-internal markets. Brexit it is in March 29, or full capitulation via Article 50 withdrawal. Whether soft or hard Brexit probably doesn't matter much to the markets anymore: the EU appears to be ready to 'soften' any hard BRExit, i.e. airport closures and starving Brits lining up for food rations probably won't be in the news, for humanitarian and financial stability reasons. 99% of the bad part of Brexit will still hit Britain in the years to come, with no good part of Brexit to gain from.
• U.S. Government shutdown - the messaging war is still on. If a solid majority of U.S. voters keeps blaming Trump and Republicans for manufacturing this crisis as a distraction (which would be a factual description) then I'd expect it to end in some sort of compromise that Trump will be able to tout as a win on Fix News. It's unclear at this stage what the timetable is going to be. Weeks of uncertainty, and uncertainty can project to consumers, and consumers can trigger recessions ... at which point the Fed will probably step in so it's not all bad - but not all good either.
  
• China tariffs, another manufactured Trump crisis, are a wildcard. It's still unclear (to me) whether Bolton (the true foreign policy decision maker at the White House) wants to bleed China dry before China gets too strong. With China's economy hurting and the U.S. economy hurting as well there's strong incentives for both sides to make a deal to get back where they started. Assuming rational actors - but Trump & Bolton is all but rational.

The sum of these macro topics is still "worrying" and is projecting a lot of uncertainty, and some of these got a bit worse over the weekend (the government shutdown sabre rattling got more intense) - so barring any breaking news I'd expect some early trading rise of $TSLA on Shanghai Gigafactory hype, which might be corrected back if macro is weak.

U.S. futures indices are, after a +0.7% optimism in Asian markets, currently neutral - i.e. they gave back the Asia gains.

 

[Fact Checking]

GF3 has Chinese gov max support: 1200KVA grid connection took only 37 days vs 80 days average.

I predicted this kind of speed about a month ago:

I believe it's even better than that, let me translate the Shanghai Mayor's statement, taking mainland China politics into account:

• The Shanghai Mayor effectively ordered local construction firms to accept, accelerate and prioritize Tesla contracts with the highest priority.
• The myriads branches of city management buerocracy will be accommodating at every level.
  
• Local banks quickly approved Gigafactory loans at favorable terms.

Mainland China is still to a large degree a centrally managed command economy, and in the 100+ billion dollars Shanghai city-state the Mayor is the top dog - far more powerful than the Mayor of New York City.

The Mayor of Shanghai is more like the CEO-owner of a franchise with 100+ billion dollars of revenue. (!)

If the Shanghai Mayor says "jump!", local construction firms will be stampeding, asking "how high?".

Tesla will get the best contractors, and the A-teams from those contractors - and Tesla will be served before other clients.

This is why Elon went to Beijing and Shanghai this summer: if there's high level political buy-in in China then things start moving fast.

This is a Big Falcon Deal.

With Trump making it clear that they want to stifle China's growth before it becomes the leading global superpower via any economic means necessary, the importance of the Shanghai Gigafactory has strategic importance on every level of Chinese politics: on the local (Shanghai) and at the Beijing level as well.

I'd not be surprised to see Elon to go to Beijing this week.