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

[Big Blue 1011]

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.

That’s a lot of maybes and you could well be correct, but I’d be scared to death to buy at the open today. After the retail trades settle, the institutional traders will wade in. If they push the SP higher by the close, I’d agree this is much ado about not much. Otherwise, it could be a rough slog. Which it shouldn’t be, given all of the positive news regarding SR release and Model Y reveal.

 

[Fact Checking]

Musk is super impulsive and needs a COO with a calm and far-thinking demeanor.

Edit: for those disagreeing pls explain why. I am a large shareholder myself so this is not just FUD. He is doing things without thinking thru all the repercussions which is the very definition of impulsive.

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

Your accusation that the 16 disagrees you got was from members who "can only stomach positive news" is an unfair ad hominem attack.

Maybe you need a COO who makes sure you only post in a calm and far-thinking demeanor?

Elon's passion and dedication is very likely a package deal, just like Steve Jobs's passion and dedication was a package deal.

I don't pretend that this and other past decisions couldn't have been done better, I just don't think that removing Elon's decision making flexibility would improve things.

Also note that there's a dozen plausible reasons @ReflexFunds listed which could have been the basis for the change in the store closure strategy:

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.

Only a few of those scenarios would have played out differently with a more patient approach. In fact a few of those scenarios would have made a patient approach the worse strategy.

 

[Tslynk67]

30k Model 3s? What a joke.

Even more ridiculous: a less than 2:1 M3-to-S+X ratio. What planet is he living on where he thinks that's remotely plausible?

This is total nonsense. How many ships was it left for China and Europe, 16? 3k on each average, you're already close to 50k

 

[Fact Checking]

This is total nonsense. How many ships was it left for China and Europe, 16? 3k on each average, you're already close to 50k

Assuming they'll all result in deliveries, which they might not: some of the ships are cutting it really close to the end of quarter.

 

[hobbes]

Quick question: Is there anywhere that has a list of all Tesla February European sales? I'm thinking about working on an infographic this evening.

Year-see my footer .

 

[dw4ngg]

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.

Your accusation that the 16 disagrees you got was from members who "can only stomach positive news" is an unfair ad hominem attack.

Maybe you need a COO who makes sure you only post in a calm and far-thinking demeanor?

Elon's passion and dedication is very likely a package deal, just like Steve Jobs's passion and dedication was a package deal.

I don't pretend that this and other past decisions couldn't have been done better, I just don't think that removing Elon's decision making flexibility would improve things.

Also note that there's a dozen plausible reasons

My posts are more of a groupthink gauge on how Tesla homers deal with potentially less than positive facts. Wording sways folks heavily, it seems. To be fair, I am impulsive myself and can empathize with someone who makes best available decisions quickly and then continues to iterate without worrying about short term consequences and perception.

Finally, I would categorize myself as a Tesla bull and shareholder, not a Tesla homer. I don’t believe in spinning all potential analysis positively via literal spin or wording.

Basically don’t be the opposite of a FUDster spreading HID... hope ignorance and denial.

 

[omarsultan]

Tesla in talks with China's CATL for rechargeable batteries: Bloomberg
Tesla in talks with China's CATL for rechargeable batteries: Bloomberg — Reuters

 

[Fact Checking]

Commission sales people don't generally like to switch to non-commission.

I think those are exactly the employees Tesla needs to lose, and those preferring a showroom, educational and service role should get a pay raise.

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.

True, but that paperwork is now shifting to delivery centers, right? So total paperwork is constant - in fact up due to much higher sales this year.

 

[aubreymcfato]

Quick question: Is there anywhere that has a list of all Tesla February European sales? I'm thinking about working on an infographic this evening.

Are you aware of this thread?
Tesla Europe Registration Stats
The numbers are updated monthly in the first page.

 

[lascavarian]

It's not been a secret that most of the batteries in GF3 will not be from Panasonic.

This has been revealing in a way that recognizes that either there is a lot of politics going on (err - yes) but also that battery tech in today's LI packs is not much of a moat.

It could be that with much higher volume manufacturing, it is nearly impossible to switch manufacturing methods without a stand-in supplier. This could be part of the plan in the sense that if GF1 is going to make substantial line changes then it cannot do this while at expanding production rates.

GF3 could qualify a supplier other than Panasonic. GF1 reduces capacity of 2170 for change to dry electrode method (at some point). GF3 fills up returning vessels (model S & X) with 2170 wet packs to cover for the transition period. This could help ease transition stress while also helping continuing expansion of volume production. This has to be dawning on competing manufacturers in a sickening feeling kind of way.

As an investor, I REALLY like having a second source for critical components and a method of managed technological upgrading.

So my thesis that Tesla is primarily a battery and SW company might need to be updated to Tesla is really a SW company on a platform of open energy storage methods - or something like that.

 

[Solar Aussie]

Isn't Perth a bit like Portland?

Kinda weird and very pro environment and pro EV?

It would be great to have Superchargers using solar energy across the Nullarbor

 

[mrdoubleb]

Year-see my footer .

@KarenRei just be careful with the UK and Ireland Model 3 lines. In some countries we get official per model breakdown, in others we only get Tesla totals, elsewhere we have to do an estimate based on Tesla`s usual percentage of "other brands". @Troy did a great job with the algorithms behind the scenes, but it cannot handle the UK data very well and splits the S+X totals to S+X+3. In reality there haven`t been any right hand drive deliveries yet, so ignore those lines.

 

[jerry33]

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

That would be a real boon to those who drive where there are deer, elk, and moose.

 

[jerry33]

I think those are exactly the employees Tesla needs to lose, and those preferring a showroom, educational and service role should get a pay raise.


True, but that paperwork is now shifting to delivery centers, right? So total paperwork is constant - in fact up due to much higher sales this year.

Agree with the first point. Commission salespeople degrade from the car buying experience.

The ordering and credit application items have never been done at the delivery centres, and will now be done online rather than at the stores. This is where the reduction happens. The delivery signatures have always been done at the delivery centres--no change for that part.

 

[Artful Dodger]

When will we learn more details about the SEC? Tomorrow?

Why wait? Learn about them now:

SEC.gov | About the SEC

 

[Vitold]

This has been revealing in a way that recognizes that either there is a lot of politics going on (err - yes) but also that battery tech in today's LI packs is not much of a moat.

It could be that with much higher volume manufacturing, it is nearly impossible to switch manufacturing methods without a stand-in supplier. This could be part of the plan in the sense that if GF1 is going to make substantial line changes then it cannot do this while at expanding production rates.

GF3 could qualify a supplier other than Panasonic. GF1 reduces capacity of 2170 for change to dry electrode method (at some point). GF3 fills up returning vessels (model S & X) with 2170 wet packs to cover for the transition period. This could help ease transition stress while also helping continuing expansion of volume production. This has to be dawning on competing manufacturers in a sickening feeling kind of way.

As an investor, I REALLY like having a second source for critical components and a method of managed technological upgrading.

So my thesis that Tesla is primarily a battery and SW company might need to be updated to Tesla is really a SW company on a platform of open energy storage methods - or something like that.

Working with other suppliers keeps Panasonic in check. Also, it is likely that longetivity, density, performance reliability will not be as good as imported batteries which will cause faster depreciation and continued demand for high end imported trims.

 

[Carl Raymond]

That would be a real boon to those who drive where there are deer, elk, and moose.

Run of the mill to detect using AI and vision, for a car that can self drive, I should think. This conversation began from the problem of driverless acceleration from zero in a car space, when unsupervised children do not understand that under the bumper is not a safe place to hide during hide n seek games.

 

[ReflexFunds]

This has been revealing in a way that recognizes that either there is a lot of politics going on (err - yes) but also that battery tech in today's LI packs is not much of a moat.

...

As an investor, I REALLY like having a second source for critical components and a method of managed technological upgrading.

So my thesis that Tesla is primarily a battery and SW company might need to be updated to Tesla is really a SW company on a platform of open energy storage methods - or something like that.

I don't think this is really the right conclusion. Tesla having the flexibility to choose between multiple companies for contracted cell manufacturing (to Tesla's specification) is a strong indication that Tesla (and not Panasonic) owns the key chemistry IP in its cells. Battery cell manufacturing isn't easy, but cell chemistry, module and pack assembly are the main competitive advantage. Several companies can manufacture cylindrical cells, but only Tesla knows how to affordably assemble cylindrical cells into modules and packs. This is why everyone else is stuck using pouch/prismatic cells.

 

[jerry33]

Run of the mill to detect using AI and vision, for a car that can self drive, I should think. This conversation began from the problem of accelerating from zero in a car space, when unsupervised children do not understand that under the bumper is not a safe place to hide during hide n seek games.

Correct, but it could additionally be used to detect large animals on the side of the road that are hard to see using just the visible spectrum. No reason it can't perform both actions. Deer have a tendency to jump out and by the time the regular camera sees them it's way too late. Having an infrared camera to also check the sides of the road would give the driver (or AI) warning so that slowing or other evasive measure could be taken. The current deer crossing signs are pretty useless because most of the time there are no deer even though there could be. An infrared sensor could at least say "Hey dummy, there are deer on the side of the road, watch it".

 

[Freder Reeve]

i take it they threw up a fancy new hit piece to drop price this much premarket?