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

[Tslynk67]

Headlines I'll never see
Buick hits student on Lime scooter
Ford hits student on Lime scooter
VW hits student on Lime scooter
Toyota hits student on Lime scooter
...
Headline I did see
Tesla hits student on Lime scooter

While this is annoying, it shows the ubiquity of the Tesla brand.

Everyone is obsessed with Tesla, lovers and haters alike. We/they are consumed by it. The ones who aren't are yet to hear about Tesla and, when they do, they'll be the same.

All news is good news.

 

[neroden]

I am one of your fans. But here I disagree. Those are not necessarily good news, especially for people who don't want to wait for years.

Here is my wishful thinking:

So Tesla just become Amazon on steroids: Keep the thinnest margin possible, just to ensure survival. Aggressively cut price to grab market share, killing competitors, in this case, ICE producers. It seems to me Elon finally realized that he can not persuade them to join him, so now he decided to just kill them.

Why is this bad news. You just need to go back to see the Amazon's share price over the years. Amazon cut free shipping minimum from $99 to $49 to $25 as early as 2002, began offer Prime membership on Feb 2005, AWS dates back to 2006. They were well on their way to dominate two different markets while all others are sleeping, yet the stock price barely moved for several years. People see the pathetic profit on their financial report and ignored everything else. And unlike Elon, Jeff Bezos kept his mouth shut and avoided conflict with anybody.

I expect to see Tesla oscillating between profit to loss in the next several quarters, driving away more and more longs looking for profit.

OK. I can wait, I'm a long-termer.

 

[jerry33]

To be fair, I bought my first Tesla as a result of seeing Model S in a gallery - this is a high-traffic location in central Brussels. The place is tiny, so small in fat that they can't get a Model X inside.

In the interest of full disclosure, I did test drive the S during one of the dog an pony shows that Tesla had. I had already placed a reservation and the only thing I wanted to check was that it was okay for parking lots. Some high powered cars don't work very well there because they "jump" given just a little acceleration. (There was much less known at that time about the drivability.) Had I not had the test drive, I would have still purchased, but it was nice to confirm.

 

[Thumper]

Won't payment of the bond generate a 10K (maybe a different document)?

 

[TheTalkingMule]

I am one of your fans. But here I disagree. Those are not necessarily good news, especially for people who don't want to wait for years.

Here is my wishful thinking:

So Tesla just become Amazon on steroids: Keep the thinnest margin possible, just to ensure survival. Aggressively cut price to grab market share, killing competitors, in this case, ICE producers. It seems to me Elon finally realized that he can not persuade them to join him, so now he decided to just kill them.

Why is this bad news. You just need to go back to see the Amazon's share price over the years. Amazon cut free shipping minimum from $99 to $49 to $25 as early as 2002, began offer Prime membership on Feb 2005, AWS dates back to 2006. They were well on their way to dominate two different markets while all others are sleeping, yet the stock price barely moved for several years. People see the pathetic profit on their financial report and ignored everything else. And unlike Elon, Jeff Bezos kept his mouth shut and avoided conflict with anybody.

I expect to see Tesla oscillating between profit to loss in the next several quarters, driving away more and more longs looking for profit.

So Tesla Automotive is clearly becoming the Amazon of personal transport, Tesla Energy will become the AWS of electricity, and your problem is.........it won't happen in 16 months?

 

[EVNow]

I am one of your fans. But here I disagree. Those are not necessarily good news, especially for people who don't want to wait for years.

Here is my wishful thinking:

So Tesla just become Amazon on steroids: Keep the thinnest margin possible, just to ensure survival. Aggressively cut price to grab market share, killing competitors, in this case, ICE producers. It seems to me Elon finally realized that he can not persuade them to join him, so now he decided to just kill them.

Why is this bad news. You just need to go back to see the Amazon's share price over the years. Amazon cut free shipping minimum from $99 to $49 to $25 as early as 2002, began offer Prime membership on Feb 2005, AWS dates back to 2006. They were well on their way to dominate two different markets while all others are sleeping, yet the stock price barely moved for several years. People see the pathetic profit on their financial report and ignored everything else. And unlike Elon, Jeff Bezos kept his mouth shut and avoided conflict with anybody.

I expect to see Tesla oscillating between profit to loss in the next several quarters, driving away more and more longs looking for profit.

I think Amazon's situation was different. People were not sure how they will make a profit - also remember a bunch of internet companies were going under at that time because they couldn't figure out how to make money. Remember all those memes about how a crucial step before the profit step is missing ?

With Tesla, the main bear argument is that there is not enough demand for 400k cars a year. So, a few quarters of healthy sales numbers will negate that argument.

 

[StarFoxisDown!]

I'm honestly a bit surprised that they went the route of making Autopilot cheaper instead of introducing a subscription based model. Charging $40/month over the course of 10 years, Tesla would get $4,800. The customer will like it more because they don't necessarily pay for the entire length of the Autopilot. So say someone buys a 3 and owns it for 4 years paying monthly, they only paid for the time they actually used the system($1,440). Then the next owner of the car can decide if they want to pay monthly for it. It's win for customers and Tesla gets long term monthly revenue.

Autopilot revenue is deferred correct? So Tesla isn't recognizing that revenue at the moment. Are they waiting for feature complete to recognize it? And if so, at what point does Autopilot become feature complete? If all Autopilot revenue is deferred right now, switching to a subscription based model wouldn't hurt their profits right now.

 

[MarcusMaximus]

Naive investors might believe that he had turned into an actual elephant?!?

Still might have, I suppose. Could be the reason he only talked to reporters and via a phone call... hmmmm

 

[Hock1]

One more possibility tomorrow, hiring a COO. I think it has a better chance than Elon stepping down as CEO.

Right on cue. [/

Anybody care to guess how TSLA will fare after the announcement? The obvious possibilities - $35k Model 3, Autopilot HW3, Supercharger v3, even a Model S/X refresh - are probably already baked in, so I'm leaning towards a "buy on rumor, sell on news" scenario, unless Elon announces something unexpected that knocks our socks off. Still long and strong and hope I'm wrong though...

Won't payment of the bond generate a 10K (maybe a different document)?

It would be an 8-K, but I don't think redemption of the bond would necessarily require it.

 

[dhrivnak]

As the Mobile Service Technician put on his vestments while standing next to the customer’s car in the driveway, the customer asked the Technician if he was able to perform the sacrament of Alignment on the car’s wheels and he said, nay, that requires a service center. Alas, the land in which this customer dwells hath enacted laws banning such facilities, and upon the customer’s and Technician’s mutual realization of this fact, the Technician returned to his vehicle and with regret, left. And it came to pass, as his Mobile Service Tech vehicle disappeared from view, the customer began to contemplate the long overnight journey to a faraway place where fairer laws permit such facilities to exist.

But any good tire place can give you an alignment. No need for a service center.

 

[humbaba]

Strongly suspect the SR has fewer cells. I think the Grohmann machine is much better at producing packs with "missing cells" than the previous production lines, and they're taking advantage of that.

220 miles / 240 miles = 91.67% the cell count, so about an 8% reduction in the highest cost component of the SR? That would certainly eat into margins quite a bit. And if, as you speculate, the new machines can be programmed to do it there isn't even an argument for increased production cost for two variants as that is already sunk in the production equipment. For what its worth, I think you are right about the machines -- but I think it only amplifies, as opposed to being required for, the financial necessity of not doing a software limited pack for an already low margin vehicle.

[edit: for stupid error in editing original post ]

 

[phil0909]

l but did a very rough back of napkin projection using 500K cars in 2019 as the starting point and between 50 and 75% annual growth in production. I'm not suggesting this year/cars projection is going to happen or likely to happen. I just wanted to see what might be a plausible answer plus or minus a million.

2019 500K
2020 800K
2021 1.3 M
2022 2 M
2023 3 M
2024 4.5 M
2025 7.5 M

How lame that analysts and clueless media commentators can't do a simple linear projection of Tesla annual production growth five or six years into the future.

Your projection is not linear. It is
.
.
.
.
(wait for it...)
.
.
.
.
EXPONENTIAL!!!!!!!!!!!!!!

 

[Remus]

So Tesla Automotive is clearly becoming the Amazon of personal transport, Tesla Energy will become the AWS of electricity, and your problem is.........it won't happen in 16 months?

Even those profit would be used to further cut prices and product expansions. Balance sheet won't impress.

I have no problem. I can wait for years. I just don't expect others to see those.

 

[Tslynk67]

Hmmm, just went to my MX account on tesla.com and the FSD upgrade option, which was still present this morning for €5300, is not there any more.

Other news, InsideEV's scorecard updated: Tesla Model 3, S, X February 2019 U.S. Sales: $35,000 Disruptor Coming

 

[Fact Checking]

Strongly suspect the SR has fewer cells. I think the Grohmann machine is much better at producing packs with "missing cells" than the previous production lines, and they're taking advantage of that.

Carsonight has reported that the SR pack is much faster and easier to assemble and handle, because it's half the size of the LR pack.

Tesla apparently radically redesigned the SR pack, for mass production and cost efficiency.

 

[mongo]

I'm honestly a bit surprised that they went the route of making Autopilot cheaper instead of introducing a subscription based model.

They only changed the split and what is included.
It was $5k for EAP , and $3k for FSD orignally, $8k.
(E)AP is $3k, FSD is $5k and includes NoA, AutoPark, and Advanced summon. Still $8k total

Autopilot revenue is deferred correct? So Tesla isn't recognizing that revenue at the moment. Are they waiting for feature complete to recognize it?

FSD portion was deferred, EAP was recognized, I believe. With the new definitions, going forward FSD may be mostly (all?) recognized.


Regarding stores:
I am 6'8" I need to sit in a car to see if I fit. Beyond that, I get all my information online.
Going to assume I'll fit in the pickup and place a reservation, if they still do those things, fingers crossed.

Franz! Fix the S/X style headrests before then!

 

[MarcusMaximus]

I'm honestly a bit surprised that they went the route of making Autopilot cheaper instead of introducing a subscription based model. Charging $40/month over the course of 10 years, Tesla would get $4,800. The customer will like it more because they don't necessarily pay for the entire length of the Autopilot. So say someone buys a 3 and owns it for 4 years paying monthly, they only paid for the time they actually used the system($1,440). Then the next owner of the car can decide if they want to pay monthly for it. It's win for customers and Tesla gets long term monthly revenue.

Autopilot revenue is deferred correct? So Tesla isn't recognizing that revenue at the moment. Are they waiting for feature complete to recognize it? And if so, at what point does Autopilot become feature complete? If all Autopilot revenue is deferred right now, switching to a subscription based model wouldn't hurt their profits right now.

With the now slimmed down feature set, it’s complete. Onto FSD. Though I imagine they might still need to hold onto some of the previous EAP money, since they’re grandfathered into a bit more.

 

[Tslynk67]

Not having service center is the problem. I think they will start giving test drives at service centers at some point. They need to open a lot of service centers to service 300k+ cars they will sell a year.

Having all orders be placed online makes perfect sense to me. Infact I'm surprised they were spending so much on retail sales now. I thought it would be a miniscule amount not 5%+.

Brussels is a combined showroom and Service Centre, all test-drives are done from there. There's just a small gallery (about to close) on one of the most prestigious shopping-street in the city.

 

[FrANce]

FrANce, you don't have a VIN yet. Contact Tesla customer service and request the adjustment. This past November there was a small cost reduction announced days before I got my VIN and the adjustment was made.

Regarding the pricing changes, I compared our fully loaded M3LRD, White on White, EAP, FSD, 19's and see a difference of 2250 after the Fed tax credit (full vs half). I took delivery the 6th of December, it isn't so terrible. About resale, the 3 is our first EV. All cars are a long term commitment for us, so a non issue. Welcome to all those who can benefit from the adjustments which have now made the M3 so much more affordable!

Received a pro-active message from Tesla this afternoon:

Good news for you ; your autopilot will include the "Full Self Driving" at no additional cost (Features : Autosteer, Traffic-Aware Cruise Control + Navigate on Autopilot, Summon, Auto Lane Change, Autopark and Full Self-Driving features in the future)

I couldn't be happier... the car will be even better and cooler than anticipated, at no extra cost. Tesla rocks.

 

[EVNow]

2019 500K
2020 800K
2021 1.3 M
2022 2 M
2023 3 M
2024 4.5 M
2025 7.5 M

We also need to take into account capacity constraints. To get to 7.5M by 2025, Tesla needs 15 factories the size of NUMMI. So, they should be building 3 such every year … I doubt it will be that many by 2025.