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

[AcesDealt]

In regard to Tesla's plan, since they won't tell us. I believe they have had disappointingly low demand in Q1 and thus the three price cuts (ignore the VIN counts.. seriously d00ds). This last one was dramatic and the purpose was to finally and for sure fill all the order queues so that demand > production. When they get to that level, they run the wait times out on the cheaper models and people then reorder themselves a little bit to higher price points for faster delivery. Once that all stabilizes then they have a very good demand model across a wide spectrum of price points, and they can fiddle with raising prices with a little more information. I'dd *guess* the old model they were using of slowly winding down the price stack had them shooting in the dark.

When they do raise prices they will do so regressively (higher percentage increase at bottom than top) because they would vastly prefer to sell 45k$ cars over 35k$ cars. Not even close. I don't think the 35k$ price point lasts the year, but it might last through July, and depends on where demand goes.

Elon's nonsensical. probably half-lie, about the S-curve regarding the SR models is because they don't want to sell them at these prices. It's pretty straightforward.

 

[Oldman]

I think we can safely say that European delivery hell has been resolved, judging by the large number of deliveries per day now being reported from Norway, Germany and The Netherlands. Elon didn't waste time when he cut out the Zeebrugge handler within one week, and that seems to have been the right decision.

But if I understand it correctly the pile of service issues is getting bigger and bigger, maybe due to the cancellation of ICO ?

 

[TNEVol]

Just saw 3 Tesla haulers heading east on i-40. First ones seen on daily drive since January 11. Reminds me of December when this was a daily observation. Are there still ships loading. I would like to think they have decided to sacrifice Q1 to fill the pipeline rather than maximize deliveries

Edit oops just saw 1 more

 

[anthonyj]

In regard to Tesla's plan, since they won't tell us. I believe they have had disappointingly low demand in Q1 and thus the three price cuts (ignore the VIN counts.. seriously d00ds). This last one was dramatic and the purpose was to finally and for sure fill all the order queues so that demand > production. When they get to that level, they run the wait times out on the cheaper models and people then reorder themselves a little bit to higher price points for faster delivery. Once that all stabilizes then they have a very good demand model across a wide spectrum of price points, and they can fiddle with raising prices with a little more information. I'dd *guess* the old model they were using of slowly winding down the price stack had them shooting in the dark.

When they do raise prices they will do so regressively (higher percentage increase at bottom than top) because they would vastly prefer to sell 45k$ cars over 35k$ cars. Not even close. I don't think the 35k$ price point lasts the year, but it might last through July, and depends on where demand goes.

Elon's nonsensical. probably half-lie, about the S-curve regarding the SR models is because they don't want to sell them at these prices. It's pretty straightforward.

Barely anyone will buy a stripped down $35k car. Most will at least add a paint option or go for SR plus

 

[neroden]

I worked out the warranty manually by figuring out S/X over past years then holding that steady and tracking the changing model 3 allocation. It takes some modelling. It has fallen a lot and represents a big chunk of improved savings on the COGS for model 3 over the last year. ReflexFund put up a model here that was qualitatively thorough but he put overoptimistic ranges on all the individual line items. Base Model 3 was ~37k$-38k$ in Q4 and that number is not coming down very fast.

edit: $1730 is my exact figure, and I know that's still high relative to BMW models but that might very well be appropriate.

Thank you very much. To get back to reading the tea leaves of the Deutsche Bank statement, they described "cash gross profit" as "gross profit plus depreciation", which would imply that they are deducting the warranty reserve (which is not depreciation). We have no idea whether that's accurate or not, though.

 

[humbaba]

In regard to Tesla's plan, since they won't tell us. I believe they have had disappointingly low demand in Q1 and thus the three price cuts (ignore the VIN counts.. seriously d00ds). This last one was dramatic and the purpose was to finally and for sure fill all the order queues so that demand > production. When they get to that level, they run the wait times out on the cheaper models and people then reorder themselves a little bit to higher price points for faster delivery. Once that all stabilizes then they have a very good demand model across a wide spectrum of price points, and they can fiddle with raising prices with a little more information. I'dd *guess* the old model they were using of slowly winding down the price stack had them shooting in the dark.

When they do raise prices they will do so regressively (higher percentage increase at bottom than top) because they would vastly prefer to sell 45k$ cars over 35k$ cars. Not even close. I don't think the 35k$ price point lasts the year, but it might last through July, and depends on where demand goes.

Elon's nonsensical. probably half-lie, about the S-curve regarding the SR models is because they don't want to sell them at these prices. It's pretty straightforward.

You forgot to put the care into that post. Show me you care, I need some affirmation

 

[capster]

I think the problem with the store closings is most do not realize what is going on at all. Someone in North Dakota is like, "DAMN. We don't even have a store and they are closing it." They have no clue you can throw a rock in LA and most likely hit a Tesla store or Gallery.

What Elon should have said is, "Tesla will redistribute the stores and Galleries." For example they could close 10 stores in LA and open Galleries in ten cities that have nothing at the moment and still save a fortune while enlightening new customers. Of course they will still be laying off employees in the process.

The few states that out right refuse to allow Tesla to even have a Gallery should have gear sales locations or have one of those shopping mall booths or kiosks that simply sell Tesla key chains, hats and gear. Is it actually illegal to talk cars at a retail store for hats? To stop Tesla from selling hats and key chains would be a blatant violation of US law.

Last but not least..... and I know this sounds crazy for us older folks but IN APP PURCHASE.
Why can I not buy a Tesla with the freaking APP? How is that much different than using my Ipad to make a purchase on the website?

‘cause getting in-app purchases through App Store Review can be such a pita? Not that my experience should necessarily generalize.

Kidding, that’s an excellent idea!

Order a test drive then order the car in the app! Excellent.

[edit:] Strictly speaking, Tesla wouldn’t use Apple’s in-app purchase mechanism because Apple would get a cut. Tesla would manage the purchase themselves through their own servers. Apple’s rules should allow this and Apple take no cut because Tesla is not dealing with purely digital content and a physical good is being delivered in the case of the car purchase itself.

 

[lascavarian]

@MP3Mike was specifically referring to the liquid cooling portion of @Fact Checking 's post. Tesla already reported having S and X versions of HW3.

Fact checking says that Tesla has "reliably liquid cooled thermal environment which helps a lot" and he says they are drop-in replacements on the S, X and 3.

Seems that Mongo is saying that the present S and X do not have liquid cooling at the board even though the 3 does. I don't know about the S and X but I do think the board is the same among the present S, X and 3 so whatever today's board requires seems like the new NN chip set should support.

I would like to have confirmation that the S and X do not have liquid cooling in the present board and if that is correct then the term "drop-in" may be overly optimistic for the S and X.... unless the liquid cooling is not required or there can be some other clock speed adjustment that tempers the need for liquid cooling or something else (ie a fan).

To expand on this a bit. It is my expectation that every new design will have a better future model to build toward. Each new design builds on assumptions and they are better in every iteration. S & X may be able to fully support this new NN board but if it becomes 4 NN chips then that probably won't be supported.... probably not even the present 3 but perhaps in the Y (it's a newer design with a better set of assumptions).

 

[gene]

Barely anyone will buy a stripped down $35k car. Most will at least add a paint option or go for SR plus

My Swiss ex-wife who is the tightest person I have ever known just ordered her Model 3. She got basic SR version (no +) but she blew me away by buying the most expensive paint which is red! I was sure she'd order standard black.

 

[AcesDealt]

Thank you very much. To get back to reading the tea leaves of the Deutsche Bank statement, they described "cash gross profit" as "gross profit plus depreciation", which would imply that they are deducting the warranty reserve (which is not depreciation). We have no idea whether that's accurate or not, though.

I was kind of assuming they were simplifying since just pulling out depreciation is creating a bizarre half-breed of a useless stat. On a cash basis, I certainly think it's profitable and ramping up revenue is good for cash cycle and so on... it's just that cash flow on this basis isn't a very good proxy for the strength of the business so it is a strange thing to optimize for. If they need cash, just go get some cash Elon. geeze.

 

[Joe F]

‘cause getting in-app purchases through App Store Review can be such a pita? Not that my experience should necessarily generalize.

Kidding, that’s an excellent idea!

Order a test drive then order the car in the app! Excellent.

I disagree. Why do I have to D/L an app when I have a perfectly good browser and a web site designed to work well with it? Too much overhead in an app (IMHO) for a one time function.

 

[Dan Detweiler]

Granted, I am not a particularly bright man, but I can still tie my own shoes...I've got that going for me at least. lol

That said, could the lowering of the top end flagship Model S and X prices be simply to put tons of pressure on the legacy manufacturers where it hurts the most? In their cash cow high end vehicles. Seems to me this amounts to a 1-2 punch with the attack on their low end models by Model 3 and now undercutting the top end. Seems like a potential knock out blow to me.

Enlighten me...like I said, I ain't too bright.

Dan

 

[Joe F]

I would like to have confirmation that the S and X do not have liquid cooling in the present board and if that is correct then the term "drop-in" may be overly optimistic for the S and X.... unless the liquid cooling is not required or there can be some other clock speed adjustment that tempers the need for liquid cooling or something else (ie a fan).

Heat pipe, perhaps.

 

[AcesDealt]

Barely anyone will buy a stripped down $35k car. Most will at least add a paint option or go for SR plus

I agree that fits into the analysis.

Pardon if this was already posted. An anonymous source says there is some resolution for the China import issue.. likely corresponded to that buy spike earlier: China agrees on solution to Tesla customs issue: source

 

[printf42]

Is that 568k buy order at 10:48 related to this?
China agrees to Tesla remedy for Model 3 customs block:
source
China agrees to Tesla remedy for Model 3 customs block: source

If it is, how this whole thing was rumored then reported then clarified need to be investigated by this dog:
Shayne Calliss on Twitter

 

[MP3Mike]

You sure about S and X not having liquid cooled AP computer?

Yes, there have been tear-downs which just show a fan on the top of the AP module that blows the hot air into the dash cavity.

 

[saniflash]

Just treat this as a buying opportunity. I personally can’t since I bought a lot of TSLA after Elon’s $420 tweet and I was too stupid to unload it for break even when the stock price got back up to $374 for a few hours. My bad.

agreed. unfortunately in the same boat as you @Cosmacelf

the current stock price is either
a) incapability in communications from Tesla's side OR
b) a gigantic bear trap & opportunity for institutions to buy

 

[Chunky Jr.]

It looks like the market is having a hard time trying to digest the closing of the stores. With the stores and the price points, a lot of analysts assumed Tesla would be the Apple of cars. Now without the stores, that theory seems to have been cast aside. Now they are wondering if it is really more like Amazon.

If the number one issue with closing stores is lack of test drives, there are other ways to solve that. As several people have mentioned, there could be an Uber like test drive request app where a local owner can give you a test drive and the owner gets compensated in some way with service credits or something. They can also turn service centers into a place where test drives can be scheduled.

 

[neroden]

I was kind of assuming they were simplifying since just pulling out depreciation is creating a bizarre half-breed of a useless stat. On a cash basis, I certainly think it's profitable and ramping up revenue is good for cash cycle and so on... it's just that cash flow on this basis isn't a very good proxy for the strength of the business so it is a strange thing to optimize for. If they need cash, just go get some cash Elon. geeze.

Eh, I think the general assumption is that most of SR+ vs. SR is pure profit. I really don't think they would have gone forward unless SR+ was profitable on a GAAP basis. And almost everyone is ordering SR+. SR is to meet a promise.

This has got me to thinking, how much of sales was actually allocated to the cost of the car, rather than to overhead (SG&A). Arguably some of it (commissions/bonuses).

 

[larmor]

Elon didn't move into the center of the Bear Cage just to slink off with his tail between his legs. He want this fight. In America. Where it matters. Where it will make a difference if he wins.

"Peace was never an option".

The auto market in the US is not expanding, and soon the China market will dwarf normal growth curves. Their upper middle class will grow. India will be the primary manufacturing source after the next decade, and then their upper middle class will grow...