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

[Unpilot]

My brother was going for a test drive in Indianapolis this weekend.
Not sure if he did or not since he went radio silent.

Maybe he is having too much fun in his new M3!

 

[22522]

Given age, girth, overall stiffness, I had to get in and out of an M3 before final purchase. I had already driven a Model S where the same issue existed. Now I'm "relearning" how to twist after side-saddle sit. Getting the last leg in is still a problem but a hand helps.

If I can do it almost anyone can. When TSLA hits $4,000 if I last that long (and still driving) will probably upgrade to an MX if refreshed.

What is the technique for getting out?

 

[ZachF]

VAG has become the world's #1 automotive manufacturer due to their success in China - where they are being forced to step up to the EV plate.

It's going to be especially interesting because ICE sales in China are collapsing. Auto sales declined 2.7% in China last year with EVs going up ~50%... If you do the math, ICE sales declined around 4.5%. It looks like overall auto sales in China may decline by about 15% this year, with EV sales again increasing rapidly... Which may mean an 18% decline in ICE sales!

Total Chinese auto sales (2019 is est)
2013: 21,984k
2014: 23,499k
2015: 24,661k
2016: 28,028k
2017: 29,123k
2018: 28,348k
2019* 24,000k

Chinese EV sales:
2013: 40k
2014: 80k
2015: 212k
2016: 351k
2017: 602k
2018: 1,100k
2019*: 1,500k

Chinese ICE sales:
2013: 21,944k
2014: 23,419k
2015: 24,449k
2016: 27,677k
2017: 28,521k
2018: 27,248k
2019*: 22,500k

VAG has been successful because of china, I think soon you are going to start to hear about large writedowns of companies that have been dependent on large ICE sales in China.

ICE sales also peaked in the US in 2015, and may have hit their all time peak never to be seen again:

Total US sales:
2013: 15,883k
2014: 16,843k
2015: 17,845k
2016: 17,866k
2017: 17,584k
2018: 17,625k
2019*: 17,600k

US EV sales:
2013: 98k
2014: 122k
2015: 116k
2016: 159k
2017: 200k
2018: 361k
2019*: 500k

US ICE sales:
2013: 15,786k
2014: 16,721k
2015: 17,730k
2016: 17,707k
2017: 17,384k
2018: 17,263k
2019*: 17,100k

 

[BornToFly]

At the Utah gallery you could test drive used vehicles... I have no idea if this will change.

 

[jerry33]

What is the technique for getting out?

For in and out, I've always used this:
1. Stand with your back to the car.
2. Sit down as you would in a chair.
3. Move your legs in.
Reverse to exit.

The way that doesn't work is:
1. Face the front of the car.
2. Put your right leg in.
3. Sit.
4. Put your left leg in.

 

[RobStark]

I

US ICE sales:

2019*: 17,100k

I will go out on a limb and predict 2019 US ICEv sales at 16.3M

 

[wipster]

Over on the Model 3 Owners Club forum they have started a test drive database of sorts where you can put in your information if you are willing to give people test drives in your car and people can then be matched up with those looking for a ride. I signed up for the Atlanta area.

Dan

Wow! I cannot think of another auto or other product (with the possible exception of the early Apple Macintoshs through the Mac User Groups) where people so willingly and quickly volunteered their time and property to help out potential customers. It's been a day and a half and there are already 2 pages of volunteers, actually more than that when you count the local clubs, volunteering to facilitate a test drive!

I love Tesla, as apparently do a lot of other folks. This really speaks volumes!

 

[wipster]

Did I miss something -- is it confirmed that test drives are a thing of the past? Or are we speculating based on store closures? If the latter, test drives could still be given via service centers, for instance.

Even if all that remains are gallerys, surely they will allow test sits won't they? Being comfortable sitting in the driver's seat would go a long way for me, especially knowing what the car itself is capable of.

 

[wipster]

For in and out, I've always used this:
1. Stand with your back to the car.
2. Sit down as you would in a chair.
3. Move your legs in.
Reverse to exit.

The way that doesn't work is:
1. Face the front of the car.
2. Put your right leg in.
3. Sit.
4. Put your left leg in.

Too bad they don't have swivel seats like the early '60's Dodge Polaras... that was cool and would have worked perfectly for this situation.

 

[sparcs]

People seem to keep forgetting that Tesla can reverse this situation whenever or wherever they want. For now, the price reduction is driving way more demand than test drives would have. But if they ever decide they want test drives again - say, 6-12 months from now? They can, and they've saved 6-12 months of test drive operation costs (minus the startup / shutdown overhead). od for everyone. Including long-term investors, although it sucks for investors in the near-term because it's left everyone freaking out.

In the really long term once Tesla hits FSD without any driver involved, Tesla could even have demo cars drive to your home. No stores or salesmen needed.

Word of mouth and enthusiasts are more than enough to cover the near term growth. Customers are more than happy to give people rides. They could even stage driving events for customers independent of a sales office or salesmen.

 

[ZachF]

I will go out on a limb and predict 2019 US ICEv sales at 16.3M

Certainly possible, and more likely than the over on my number IMHO.

I honestly have no idea what 2019 US auto sales will be like (much more uncertainty), so I just used 2018's number rounded.

ICE sales have peaked in the US, Europe and China. This is 2/3rds of the worlds auto market. As EV penetration gets deeper ICE sales declines will only get worse... The longer manufacturers wait to bring competitive EVs to market the worse it is going to be for them; they will be too busy trying to debride their increasingly gangrenous ICE operations to mount effective competition.

 

[dondy]

A long long time ago I participated in a funny long conversation about "arrival of the digital age" where us stupid students were seeing only "ease of access" and wanted to be oblivious about side effects of coming internet era: "comfort zone=selective messaging", lack of scrutiny, and general overload by information. Social conscience and common "average" access to information is actually worse than 20 years ago. Granted none of us expected "Clip mentality" so normal nowadays.
There was time when it was normal to talk about "primary" and "secondary" sources of information.
So let check the primary source.
It is not difficult to get a transcript from Musk 28 February call:
Dropbox - Tesla Call Transcript (2.28.19).pdf
Let address some most reoccurring FUD moments.
1)Closing shops and removing test drives:
"
We also have stores that there will be converted to galleries and information centers so you can go there and learn about Tesla ...So if you do go to the store they'll simply show ...then in order to get the need for a test drive."
"We will be closing some stores. And there will be some reduction in headcount as a result. There's no question about that."

I hope these quotes are sufficiently clear. Some=/all.
I expect they will close shops which don't attract enough traffic.
btw. he also pointed the reason why they do that:
"I think this is actually going to online only is incredibly helpful to us for selling anywhere in the US because in many parts of the US we are unable to sell effectively because of franchise laws whereas if the sales concluded online we now have anyone can buy the car anywhere in the United States immediately so this I think really substantially opens up our ability to sell the cars."
2) X and S prices. He mentioned only reduction due to the simplification of the sell process. But it is not the only action they did.
Tesla reduced head count on S/X conveyor greatly simultaneously reducing number of batch variants. More of it, if I understand correct Panasonic contract is renewed, with obviously new prices which are ~30% less.
I expect new car prices come from recalculating standard profit margins on new operational costs.
Cheers, don't loose your heads.

 

[brian45011]

Wouldn't leasing open up as many (more?) people at this moment than the introduction of 35K car AND allow Tesla to still maintain profitability...then introduce the 35K?

The negatives to beginning direct leases now rather than focusing on outright sales include:

• Lower GAAP profits because a vehicles GM is recognized over the term of the lease not at time of sale.
• Slightly lower cash flow because the sum of what Tesla receives from the WH creditors plus up-front lease collections is less than Tesla would receive from an out right sale. When the direct leases are assigned to the WH line creitors as security, they make sure the LTV is low enough to protect them against estimated defaults.

Also, it's likely Tesla ultimately bears the residual value risk on direct leases; if Tesla understimates how much it can improve and/or reduce the sales price on future models, that exposure will show up in future quarters when the leases end. That exposure is non-existent on direct sales.

As long as the lower-priced models provide some contribution margin to offset operating expense, it's proably a better a choice until leases are necessary to increase volumes, RHD vehicles should come next, before direct leases

The other benefits of stimulating US demand are the pull-forward before the next phase-down of the FIT credits and earning ZEV, CAFE, & GHG credits.

 

[EinSV]

Did I miss something -- is it confirmed that test drives are a thing of the past? Or are we speculating based on store closures? If the latter, test drives could still be given via service centers, for instance.

I have not seen Elon say they are discontinuing test drives. They are closing stores and reducing the need for test drives through a 7-day return policy. Both of those should reduce the number of test drives.

But I think the goal is to reduce test drives — not eliminate them. You don’t need a store for a test drive. About a week ago I got a call from Tesla inviting me for a test drive. They offered to come to my house to do it.

Speculation but I think this is their plan for the future. Test drives will be significantly reduced and where available Tesla will shift to primarily “mobile test drives” — like they are shifting to primarily mobile service. Less overhead and less expensive overall.

 

[Fact Checking]

Another point is cash flow per car is significantly higher than reported gross profit per car. To get to cash flow you add depreciation, add back deferred revenue and add back warranty reserve.

There's also:

• Stock compensation, some of which is in cost of goods: such as the stock comp of most factory workers. Tesla usually includes stock comp in gross margin. Stock comp is a non-cash expense, so backing it out of gross margins would further improve cash margins.
• UnIike ZEV credits, greenhouse-gas credits are pretty reliable per unit income that generates cash in addition to the ASP from the customer. Since the $35k version starts in the U.S. this is probably a margin improvement as well.

Agreed?

 

[dondy]

I have not seen Elon say they are discontinuing test drives. They are closing stores and reducing the need for test drives through a 7-day return policy. Both of those should reduce the number of test drives.
.

He mentioned explicitly test drives as one of the purpose of the new "galleries". I have provided direct quote already.

 

[Fact Checking]

2) X and S prices. He mentioned only reduction due to the simplification of the sell process. But it is not the only action they did.
Tesla reduced head count on S/X conveyor greatly simultaneously reducing number of batch variants. More of it, if I understand correct Panasonic contract is renewed, with obviously new prices which are ~30% less.

That's interesting, what's the source of this?

 

[dgodfrey]

I'm telling ya, head first entry is the back and knee saver. (that doesn't sound very good does it?) Seriously, I started using this method when I drove a TR6 and have used it ever since.
Wrong quote, I meant to paste this one.
Over on the Model 3 Owners Club forum they have started a test drive database of sorts where you can put in your information if you are willing to give people test drives in your car and people can then be matched up with those looking for a ride. I signed up for the Atlanta area.
Dan

There was a google docs database like that that I signed up for last summer when I got mine. I had one young fellow, his gal and friend take me up on it. I even let them drive. He ended up buying a Leaf. How bad at sales must I be if I'm showing off my Model 3 and the guy turns around and buys a Leaf. So ashamed (looking at feet, bottom lip sticking out).

 

[Antares Nebula]

Part of longer tweet thread by Tom Randall on Twitter

"Musk’s new wager is that if Tesla focuses on nothing but the product, price and (he vows) service, the cars will sell themselves and no one will be able to catch up. It’s a super-lean sales model, and he’s taking a meat cleaver to everything that doesn’t serve those goals."

 

[anthonyj]

In the really long term once Tesla hits FSD without any driver involved, Tesla could even have demo cars drive to your home. No stores or salesmen needed.

Word of mouth and enthusiasts are more than enough to cover the near term growth. Customers are more than happy to give people rides. They could even stage driving events for customers independent of a sales office or salesmen.

FSD was promised in 2016, then 2017, then 2018, now 2019. We haven’t had any updated proof of concept or demo. Sure, they are putting HW3 in the cars. But all we have is Elon’s word that the software is coming this year.

Tesla to transition from ‘Enhanced Autopilot’ to ‘Fully Self-Driving’ as soon as ‘3 to 6 months’, says Elon Musk

I’m very skeptical when Elon mentions FSD and I can see why it’s easy for bears to scream Theranos. On the other hand, if FSD does actually live up to expectations, Elon will be able to buy Facebook and delete it ten times over