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

[winfield100]

OT forgive me but I remember annual car trips to Florida in late 50s. We had to plan in advance where to get gas because they might be closed on Sunday or after 5pm and what if s new owner changed hours. My first experience with my S reminded my of these days. As this returns for ICE as neighborhood stations continue to close there will be a dramatic effect on ICE.

fleeing Hurricane Irma in 2017 from Florida, fistfights at the last open gas station in Cape Coral, city of over 200,000, at corner of Pine Island and DelPrado, literally _100_ mile traffic jam fleeing Houston and hurricane Rita after Katrina running out of fuel, Tesla opening up extra capacity of 60kWh packs to 75's
edit:
Super Storm Hurricane Sandy and gas stations unable to pump because of no electricity for a number of days and EV's able to go to areas with electricity and keep going (specifically a guy with an electric MiniCooper, among others)

 

[Carl Raymond]

This technique of reducing prices for a short period, building up a healthy order book, then raising prices again seems oddly familiar.

I believe it’s called a ‘SALE’ (yes, usually shouted like that). I’m fairly sure I’ve seen other car outlets do it. What I can’t remember are news headlines about use of the sale technique proving that those car brands were experiencing demand or leadership issues. Very strange.

 

[Singer3000]

This technique of reducing prices for a short period, building up a healthy order book, then raising prices again seems oddly familiar.

I believe it’s called a ‘SALE’ (yes, usually shouted like that). I’m fairly sure I’ve seen other car outlets do it. What I can’t remember are news headlines about use of the sale technique proving that those car brands were experiencing demand or leadership issues. Very strange.

Whatever way you cut it, telling thousands of employees they were out of work, only to reverse the decision two weeks later is poor management. The sensible investor can overlook these sort of mistakes due to the hyper growth nature of the company but it’s unwise to pretend that this was all a cunning plan.

 

[GSP]

This technique of reducing prices for a short period, building up a healthy order book, then raising prices again seems oddly familiar.

I believe it’s called a ‘SALE’ (yes, usually shouted like that). I’m fairly sure I’ve seen other car outlets do it. What I can’t remember are news headlines about use of the sale technique proving that those car brands were experiencing demand or leadership issues. Very strange.

Just Tesla being brilliant at getting free advertising and publicity, completely eliminating the need for paid advertising (the usual way of notifying customers of sale pricing).

Tesla instead spends their ad budget on Superchargers, benefiting customers and driving more purchases. Great strategy IMO.

GSP

 

[Remus]

Tesla "we'are closing stores". TMC: brilliant
Tesla "We'are not closing stores" TMC: "Outstanding move"

So all those discussion regarding test drive didn't happen at all in your opinion?

 

[Tslynk67]

Are we only delivering performance model 3s to Europe/China currently? Does anyone know the answer to this question?

Don't know if it's indicative or Europe as a whole, but in Norway it was P's at the beginning, but now almost exclusively LR - note that historically there are very few S/XP's in Norway too:

 

[Antares Nebula]

We're still awaiting one piece of FUD - Stewart Meissner's latest "whistleblower". Let's take a moment to remember his last two, "Guy-Who-Says-That-The-Sinaloa-Cartel-Operates-Out-Of-GF1", and "Sabateur-Who-Fled-To-Hungary-And-Now-Stuart-Pretends-He-Never-Knew".

He made a similar claim back in the summer, and it was nothing, nobody reported it; I can't even remember what it was about. Let's see if he is BSing again. He said he would release it before market open.

 

[Big Blue 1011]

This technique of reducing prices for a short period, building up a healthy order book, then raising prices again seems oddly familiar.

I believe it’s called a ‘SALE’ (yes, usually shouted like that). I’m fairly sure I’ve seen other car outlets do it. What I can’t remember are news headlines about use of the sale technique proving that those car brands were experiencing demand or leadership issues. Very strange.

Except Tesla didn’t call the January 2nd and February 6th price reductions a ‘limited time only sale’. We will see what happens when they release the revised pricing, but this almost looks like a rollback of the February $1,100 price cut. People can draw their own conclusions as to whether there is a method to the madness.

IMO, for whatever that’s worth, it would have been more effective if they had announced at the time that the $1,100 discount would end on March 18. That would have looked more like a sale.

 

[Nakata]

Don't know if it's indicative or Europe as a whole, but in Norway it was P's at the beginning, but now almost exclusively LR - note that historically there are very few S/XP's in Norway too:

View attachment 385163

If you look at crowed sourced europe data you see that P Model is 15 percent of total sales.

Tesla Model 3: Europa Bestellungen/Europe Orders

 

[ReflexFunds]

Interesting update on the store closures, obviously some disorganisation and unnecessary pain, but I wouldn't really call it a reversal of strategy, just an adjustment.

Before an unspecified number of stores were being closed over an unspecified period of time. Now we are told 10% are closed already and 20% are under review, and not all of these will close. Maybe this means c.20% of stores will close overall. The update says this is half as many closures as previously planned, so maybe c.40% were planned to close previously.

Tesla will still move to fully online sales and it looks like they will still remove employee commission. Most significantly, a major part of the savings before were on cancelled future store openings - I presume this is where the majority of SG&A savings will still come from in 2019. I presume Tesla will also still likely drop very costly court battles over dealership rights in many states (while continuing to fight for service rights where this is still not legal).

Hard to know what has driven this updated strategy; it could be positive or negative reasons. It could be just that Elon was willing to take on feedback from staff, investors & customers and is not too stubborn to change his mind. Maybe demand mix for the non base car was higher than expected so they think it makes sense to raise prices. Maybe demand bump from the lower prices was lower than expected so they decided to maintain the extra sales channel and extra margin per car. Maybe exiting leases was harder than anticipated. Maybe it was just an excuse for a temporary price reduction to shift Q1 inventory. Maybe the added cost from keeping an extra 20% of stores open with less staff is lower than the new 3% price increase and this will be positive for operating margin.

 

[Carl Raymond]

Whatever way you cut it, telling thousands of employees they were out of work, only to reverse the decision two weeks later is poor management. The sensible investor can overlook these sort of mistakes due to the hyper growth nature of the company but it’s unwise to pretend that this was all a cunning plan.

Yes, quite likely accidental genius, but whichever way you cut it, the order books are currently filling fast. SR because it’s the best car for that price by a mile. Other models because there’s a 7 day 3 percent reduction. And come Friday, an avalanche of model Y reservations.

 

[Fact Checking]

it’s unwise to pretend that this was all a cunning plan.

That's certainly true, but:

telling thousands of employees they were out of work

This isn't exactly what happened: previously they told retail employees that about half of the stores would be closed, with high traffic ones converted to showrooms. They didn't tell which stores, except the ~10% they are closing immediately.

For the other 90% there was uncertainty, with a ~50% likelihood that it would result in a layoff - which now being changed to a high likelihood of being kept.

I agree that it is still painful and sucks, and I guess most retail employees who are not comfortable with a showroom role are now actively looking for Service Center positions or another employer.

 

[Remus]

Whatever way you cut it, telling thousands of employees they were out of work, only to reverse the decision two weeks later is poor management. The sensible investor can overlook these sort of mistakes due to the hyper growth nature of the company but it’s unwise to pretend that this was all a cunning plan.

Agree

There have been many posts regarding this now and it's not only the retail employees. Tesla hired many factory workers when automation dream didn't work out, only to let them go after automation is improved.

 

[Antares Nebula]

Interesting update on the store closures, obviously some disorganisation and unnecessary pain, but I wouldn't really call it a reversal of strategy, just an adjustment.

Before an unspecified number of stores were being closed over an unspecified period of time. Now we are told 10% are closed already and 20% are under review, and not all of these will close. Maybe this means c.20% of stores will close overall. The update says this is c.half as many closures as previously planned, so maybe c.40% were planned to close previously.

Tesla will still move to fully online sales and it looks like they will still remove employee commission. Most significantly, a major part of the savings before were on cancelled future store openings - I presume this is where the majority of SG&A savings will still come from in 2019. I presume Tesla will also still likely drop very costly court battles over dealership rights in many states (while continuing to fight for service rights where this is still not legal).

Hard to know what has driven this updated strategy; it could be positive or negative reasons. It could be just that Elon was willing to take on feedback from staff, investors & customers and is not too stubborn to change his mind. Maybe demand mix for the non base car was higher than expected so they think it makes sense to raise prices. Maybe demand bump from the lower prices was lower than expected so they decided to maintain the extra sales channel and extra margin per car. Maybe exiting leases was harder than anticipated. Maybe it was just an excuse for a temporary price reduction to shift Q1 inventory. Maybe the added cost from keeping an extra 20% of stores open with less staff is lower than the new 3% price increase and this will be positive for operating margin.

Yeah, I didn't get the math on that either -- re 50%. There is some additional info there that they haven't released.

 

[jerry33]

I agree that it is still painful and sucks, and I guess most retail employees who are not comfortable with a showroom role are now actively looking for Service Center positions or another employer.

Commission sales people don't generally like to switch to non-commission. Also, there will still be staff reduction at the stores that remain open. When you're not doing the paperwork to close the sale, there is far less time needed per customer.

 

[X Fan]

“agree that it is still painful and sucks, and I guess most retail employees who are not comfortable with a showroom role are now actively looking for Service Center positions or another employer”.

This.....not ideal if your customer facing employees are unhappy or rapidly turning over.

 

[Vitold]

Brilliant move by Tesla. Lowering prices -free advertising. Increasing prices, but not immediately - demand lever.

While at the same time setting performance goals for its employees and continuing lease negotiations.

 

[Carl Raymond]

Where are all the Tesla homers now who can only stomach “positive” news and disagreed with my post that Elon is super impulsive?

Depends on your def of impulsive. I would call it a decision based on one data point. Musk is collecting data all the time. When the trend is clear, he pivots. I’m loving the show. Dropping prices stimulated sales. Now giving 7 days notice that prices are not staying down super-stimulates sales. If competition cries foul they look stupid - they have sales all the time.

 

[Tslynk67]

Musk is touting a car that finds you in the car park, this year. That’s a level 5 system, albeit at a slower speed. By January next year, it will be time to review estimates.

What I fear is a small child standing or even laying down immediately in front of the car as it departs the car space. A (cautious) human checks for that before getting in the car. Blame lax parenting. Doesn’t fix it.

Add a forward-facing infa-red camera to to the sensor suite that can, easily, I would imagine, detect life-form heat signatures.

 

[mongo]

It may also be that the SR SR+ availablity along with the full 3 price/ option list shifted store trends.
When all the LR/MR buyers had their cars and the SR SR+ were not out yet (especially post EV credit step down), why go to the store? Hiwever, once you could actually order the car, then people would again be interested in checking it out (like they did when the 3s first hit stores).

Flip side of this is that, once the 3 SR surge ebbs, store traffic may dip below the sustainable threshold (at least until the Ys show up).

Cutting test drive availability will also reduce head count and costs.