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

[McMountain]

Re Glovis Captain:

They are doing model S roll-on roll-off without assembly at Tilburg? Interesting.
Tilburg assembly is done to avoid EU import tariffs.

 

[Fact Checking]

I suspect they need to prepare to move down market.

I don't think Daimler or BMW can move down market in any significant fashion - that would require much higher production output, which they simply don't have the factories for. They'd have to turn into Volkswagen AG in essence.

Note that even VW all but abandoned the high margin premium market with their entry in the EV space: the "VW I.D." did a last minute U-turn and avoided a head-on collision with the Model 3 and Model Y, and is instead going for the significantly smaller VW Golf/Seat form factor and mass market instead, in the €15k-€40k price range.

As a VW executive recently described VW's EV strategy, rather candidly:

"VW Boss: Tesla Controls 50% Of EV Market, We’re Aiming For The Rest"

'What about Tesla? Keogh says, “Right now market share is 50 percent Tesla and 50 percent everyone else. Who is going to win the other 50 percent? That breakthrough product has not arrived yet.”'​

I believe the main hope of the ICE industry is:

• Tesla messes up execution. (There's plenty of historic examples of that...)
• The 3 trillion dollars ICE market converts into a 10 trillion dollars EV market, due to the much higher utility of EVs and due to self-driving features. Legacy industries have successfully transitioned into new markets when the size of those new markets was larger than that of the cannibalized market.

 

[bhtooefr]

Note that the German premium brands are already pushed into the upper end of the mainstream market in the European market, thanks to corporate leasing arrangements and the like.

BMW probably has some room to move downmarket, with Mini being their only downmarket brand below them.

Mercedes will have some pain, as their lower-end product is jointly developed with Renault, and they'd be pushing down into Renault's market space.

Audi will have lots of pain, as they're already right down against Volkswagen, who's right down against Skoda. Neither Audi nor Volkswagen have any room to move down. In the US, they're not far above Volkswagen, and Volkswagen's been moving down to below even Skoda-tier, as I understand, and it's not working (because that tier of buyer would rather buy Japanese or Korean).

 

[Buckminster]

I

I suspect they need to prepare to move down market. They'll need to trim cost out of their product so that they can cut price and sustain cash flow. They've got a strong legacy brand to monetize as they go down market. I've my hunch is correct, this movement could become a problem for Toyota, Nissan, VW, and GM as luxury brands push into their value segments.

The answer is obvious - they need to increase prices - cash cow the entire line. No more dev etc. Then retire before MY comes on line.

 

[Buckminster]

The answer is obvious - they need to increase prices - cash cow the entire line. No more dev etc. Then retire before MY comes on line.

 

[Fact Checking]

The answer is obvious - they need to increase prices - cash cow the entire line. No more dev etc. Then retire before MY comes on line.

BTW., what might save Daimler AG is their truck division: they seem to be taking electrification seriously now, and if there's one segment where I'm certain that the EV conversion will be mostly done within the next 5 years [*] it's the trucking industry: fleet operators are much more concentrated, much more rational and driven by the bottom line.

There's a LOT of money in the electrification of the trucking industry - and whoever gets that growth business going first will have plenty of cash flow to electrify their consumer products as well.

[*] "Done" as in more than 50% of new truck sales will be EV trucks in the next ~5 years, in the biggest truck markets, I believe.

 

[shlokavica22]

They might be forced to drop prices though - but probably only after the introduction of the €35k Model 3.

Until then the damage from the Model 3 should be limited to specific lines of high performance sports sedans, for which there are no reliable, fine-grained sales statistics nor "delivery reports" like Tesla does, so Mercedes and BMW will be able to hide or mislead about a drop in market share for a long time I believe. (If you check the financial reports of Daimler AG, VW and BMW you'll see how awfully secretive they are about model specific sales performance...)

That holds true only for people that MUST buy right now. However many sales will be lost from people that will decide to wait another year or so, until cheaper Tesla arrives (or any other EV that can fit their needs). It will become increasingly clear (for the general public) that buying new ICE right now (unless necessary) is money down the drain.

They will eventually drop prices. It's inevitable.

 

[Etna]

Is the French auto and business press saturated with Tesla FUD

I read a lot of mainstream French media and the term public lynching comes to mind.

 

[davecolene0606]

FY19 free cash flow of -$246 million.

Can we have a call each quarter where verified Tesla investors can question the analysts and/or comment on their "misses."

Next move is to jack EPS forecast to record level!

Fire Away!

 

[Dan Detweiler]

Kurt Hellyn‏ @KurtHellyn


@teslamodel3fan @Model3Owners @karlvhilst @DMC_Ryan @rrosenbl @TeslaClubBE first are model s waiting for some more pictures

This ship has reached cult status! I bet there has been more footage, pictures, media stories and social media threads regarding this boat than Donald Trump. Wait, did I say that? Sorry.

Dan

 

[PaulusdB]

So it turns out Eurostat has the right kind of statistics required to judge buying power, median per capita disposable income of EU member countries:

Eurostat - Tables, Graphs and Maps Interface (TGM) table

Netherlands: €24,696
France:      €25,022
Austria:     €26,730
Germany:     €28,473
Norway:      €28,653
Switzerland: €29,540

(Note that this controls for different levels of income taxation, but doesn't control for different VAT levels, nor for car registration fees, incentives and annual taxation and various fees.)

These were pretty surprising results to me, with three big outliers:

• Norway has very high per capita GDP, but also very high levels of taxation, real disposable income is actually at the same levels as Germany.
  • So the spreading of EVs in Norway can almost exclusively be credited to the EV friendly incentives and regulation in Norway.
• Germany has actually higher per capita disposable income than the Netherlands - yet Model 3 penetration is much lower.
  • VAT of 19% is actually one of the lowest among these countries. The Model 3 should be very affordable to Germans - yet Germany has one of the lowest market penetrations.
    
  • I believe part of the picture must be the existential threat the German auto press is feeling about Tesla's impact on the German car industry and on the generous ad revenues from that industry. Much of the German press/media is also pretty concentrated under the control of just a few wealthy families, and is well aligned with the car industry.
    
  • Even today it's almost impossible to read an article about Tesla in the mainstream German auto and business press without some piece of FUD or a negative note about Tesla's future (or past) being present as well. Because "balance" and "skepticism" is very easy when you are not biting a feeding hand.
• France actually has more disposable income than citizens of the Netherlands, yet Model 3 market penetration is only 18 there, while 226 in the Netherlands - a 12.5x factor. (!)
  • Is the French auto and business press saturated with Tesla FUD, or do French carmakers have undue influence over Tesla's communications and marketing channels? This is a really curious result.

The EV case for The Netherlands is dominated by favourable government treatment of EV's as company cars.
For starters, there is a zero CO2 tax (BPM) for those cars (obviously).
Most importantly, private persons using company cars pay income tax on that use ('bijtelling'). That tax is yearly income tax on a whopping 22% of list price of the car including VAT. For EV's this was temporarily lowered to 0% up to 2013, then became 4% and starting last January 1st the 4% is capped to the first €50K (22% on the remainder). New cars keep the percentage for the first 60 months.

The issue of company cars has always been an attractive way to compensate (senior) staff without paying the relatively high income tax (> 50%). To counter that, the 'bijtelling' was introduced in 2000. This tax became a very efficient lever to pull for fiscal stimulation of certain car technologies. Typically over the years Dieselgate cars were stimulated by lowering the tax to 14%, PHEV and EV 0%, PHEV 7%, EV with 4%, currently capped to first € 50K, curiously FCEV (Hydrogen powered EV) still has 4% uncapped.

 

[Fact Checking]

That holds true only for people that MUST buy right now. However many sales will be lost from people that will decide to wait another year or so, until cheaper Tesla arrives (or any other EV that can fit their needs). It will become increasingly clear (for the general public) that buying new ICE right now (unless necessary) is money down the drain.

They will eventually drop prices. It's inevitable.

Yeah, "deferred sales" being one of the main drivers of the EV conversion is actually one of my pet peeves!

Managed to quantify that effect in a major market recently: in China in 2018 for every EV sale there was not just a lost ICE sale, but a second lost ICE sale in form of deferred sales: the 2018 Chinese EV market grew to about ~7% of all new units sold, but ICE sales fell by about -14% ...

I'd also say that in China EVs mostly spread in low price market segments - and this effect of deferred sales is probably even more dominant in premium market segments:

• prestige and having the best possible car your budget can afford are important factors and deferring the purchase of a new premium car,
• premium cars also have much longer life cycles: you are still owning your existing premium car, and extending that ownership for a few more years is very viable consumer behavior with few downsides to anyone but the ICE industry.

So I'd expect such market movements to happen - but there's very little data about this so I'm cautious about extrapolating and speculating too much. I'm already way too bullish about Tesla.

 

[Starno]

So it turns out Eurostat has the right kind of statistics required to judge buying power, median per capita disposable income of EU member countries:

Eurostat - Tables, Graphs and Maps Interface (TGM) table

Netherlands: €24,696
France:      €25,022
Austria:     €26,730
Germany:     €28,473
Norway:      €28,653
Switzerland: €29,540

(Note that this controls for different levels of income taxation, but doesn't control for different VAT levels, nor for car registration fees, incentives and annual taxation and various fees.)

These were pretty surprising results to me, with three big outliers:

• Norway has very high per capita GDP, but also very high levels of taxation, real disposable income is actually at the same levels as Germany.
  • So the spreading of EVs in Norway can almost exclusively be credited to the EV friendly incentives and regulation in Norway.
• Germany has actually higher per capita disposable income than the Netherlands - yet Model 3 penetration is much lower.
  • VAT of 19% is actually one of the lowest among these countries. The Model 3 should be very affordable to Germans - yet Germany has one of the lowest market penetrations.
    
  • I believe part of the picture must be the existential threat the German auto press is feeling about Tesla's impact on the German car industry and on the generous ad revenues from that industry. Much of the German press/media is also pretty concentrated under the control of just a few wealthy families, and is well aligned with the car industry.
    
  • Even today it's almost impossible to read an article about Tesla in the mainstream German auto and business press without some piece of FUD or a negative note about Tesla's future (or past) being present as well. Because "balance" and "skepticism" is very easy when you are not biting a feeding hand.
• France actually has more disposable income than citizens of the Netherlands, yet Model 3 market penetration is only 18 there, while 226 in the Netherlands - a 12.5x factor. (!)
  • Is the French auto and business press saturated with Tesla FUD, or do French carmakers have undue influence over Tesla's communications and marketing channels? This is a really curious result to me. (Maybe someone with a better understanding of the French car market (@bhtooefr?) knows the answer. Are car sales down in France due to social friction? Brexit fears? Or are French EVs good enough to take away Model 3 demand?)

As someone living in France right now I'd say 2 things seem to stick out in my eyes :

1. Communication is really bad in France. A lot of FUD, or even worse, they're just ignorant about Tesla. They simply don't know what Tesla is. It's the same in most other countries, but at a larger extent in France. Probably the same as in Germany, but in Germany the general population is more "interested in cars" than in France, so on average, at least, they tend to be more aware of what Tesla is.

2. French people tend to put much more value into real estate and other expenses than cars. It's much more common for people being able to afford "more luxurious cars" to still drive a "less luxurious" car, than in Northern countries. That's why even though disposable income might be comparable or higher than in Netherland, they just don't spend it the same way (on average).

 

[Fact Checking]

Communication is really bad in France. A lot of FUD, or even worse, they're just ignorant about Tesla. They simply don't know what Tesla is. It's the same in most other countries, but at a larger extent in France. Probably the same as in Germany, but in Germany the general population is more "interested in cars" than in France, so on average, at least, they tend to be more aware of what Tesla is.

I suspect because most of the unbiased Tesla information is in English, there's possibly a language barrier as well:

List of countries by English-speaking population - Wikipedia

Netherlands: 90%
Germany: 56% (much higher in younger generations)
France: 39%​

If I was Tesla I'd try to invest some extra effort into the most popular French speaking YouTube "influencers".

French people tend to put much more value into real estate and other expenses than cars. It's much more common for people being able to afford "more luxurious cars" to still drive a "less luxurious" car, than in Northern countries. That's why even though disposable income might be comparable or higher than in Netherland, they just don't spend it the same way (on average).

I'm wondering how "southern" the driving style is in southern France? I really wouldn't want to drive a Tesla in places where roads are narrow, where driving is weighted towards early in the morning or late in the evening, and small bumps and scratches are often not even worth stopping for.

 

[gringotuanis]

So it turns out Eurostat has the right kind of statistics required to judge buying power, median per capita disposable income of EU member countries:

Eurostat - Tables, Graphs and Maps Interface (TGM) table

Netherlands: €24,696
France:      €25,022
Austria:     €26,730
Germany:     €28,473
Norway:      €28,653
Switzerland: €29,540

(Note that this controls for different levels of income taxation, but doesn't control for different VAT levels, nor for car registration fees, incentives and annual taxation and various fees.)

These were pretty surprising results to me, with three big outliers:

• Norway has very high per capita GDP, but also very high levels of taxation, real disposable income is actually at the same levels as Germany.
  • So the spreading of EVs in Norway can almost exclusively be credited to the EV friendly incentives and regulation in Norway.
• Germany has actually higher per capita disposable income than the Netherlands - yet Model 3 penetration is much lower.
  • VAT of 19% is actually one of the lowest among these countries. The Model 3 should be very affordable to Germans - yet Germany has one of the lowest market penetrations.
    
  • I believe part of the picture must be the existential threat the German auto press is feeling about Tesla's impact on the German car industry and on the generous ad revenues from that industry. Much of the German press/media is also pretty concentrated under the control of just a few wealthy families, and is well aligned with the car industry.
    
  • Even today it's almost impossible to read an article about Tesla in the mainstream German auto and business press without some piece of FUD or a negative note about Tesla's future (or past) being present as well. Because "balance" and "skepticism" is very easy when you are not biting a feeding hand.
• France actually has more disposable income than citizens of the Netherlands, yet Model 3 market penetration is only 18 there, while 226 in the Netherlands - a 12.5x factor. (!)
  • Is the French auto and business press saturated with Tesla FUD, or do French carmakers have undue influence over Tesla's communications and marketing channels? This is a really curious result to me. (Maybe someone with a better understanding of the French car market (@bhtooefr?) knows the answer. Are car sales down in France due to social friction? Brexit fears? Or are French EVs good enough to take away Model 3 demand?)

Think of how many Germans are either employed by or have a relative working for one of the German auto manufacturers. It must be huge headwind for sales there.

 

[Chickenlittle]

FY19 free cash flow of -$246 million.

Can we have a call each quarter where verified Tesla investors can question the analysts and/or comment on their "misses."

That could be great forcast with company paying off 930 million in bond, building out China gigfactory (set to open this year), completing gigafactory1 and other capital expen

 

[gringotuanis]

I think position of this ship was posted here almost every day

Yep poster is the one missing the boat. Bwahaha

 

[schonelucht]

Re Glovis Captain:

They are doing model S roll-on roll-off without assembly at Tilburg? Interesting.
Tilburg assembly is done to avoid EU import tariffs.

I'd rather think those are S's for Switzerland or Norway that are just in transit for the EU.

 

[shlokavica22]

Yeah, "deferred sales" being one of the main drivers of the EV conversion is actually one of my pet peeves!

Managed to quantify that effect in a major market recently: in China in 2018 for every EV sale there was not just a lost ICE sale, but a second lost ICE sale in form of deferred sales: the 2018 Chinese EV market grew to about ~7% of all new units sold, but ICE sales fell by about -14% ...

I'd also say that in China EVs mostly spread in low price market segments - and this effect of deferred sales is probably even more dominant in premium market segments:

• prestige and having the best possible car your budget can afford are important factors and deferring the purchase of a new premium car,
• premium cars also have much longer life cycles: you are still owning your existing premium car, and extending that ownership for a few more years is very viable consumer behavior with few downsides to anyone but the ICE industry.

So I'd expect such market movements to happen - but there's very little data about this so I'm cautious about extrapolating and speculating too much. I'm already way too bullish about Tesla.

That's only one side of the coin. Us, Europeans have to also consider what the impact will be once the German giants start crashing.

 

[Fact Checking]

Think of how many Germans are either employed by or have a relative working for one of the German auto manufacturers. It must be huge headwind for sales there.

I don't think company loyalty is taken that literally in Germany (in fact unions and emotional independence from employers is much stronger in Germany than in the U.S.) - maybe with the exception if you are a business representative of one of the (tens of) thousands of parts suppliers to big German car companies perhaps. Driving the "right" kind of company car is probably wise in that case.