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

[VValleyEV]

YEAH! To compute with all those OTHER 400 mile EV's!

What a buncha losers!

Another bit of evidence that a refresh of S/X will extend the range somewhat as a further differentiation? Could turn into “You don’t really need long range for daily driving, and even for road trips 300 miles is great with our SC network, and this keeps our mid-size luxury line more efficient and affordable. BUT, want really insane long range? Buy our new S/X models with 375/400 range, or a Semi with 500.

 

[Doggydogworld]

Revenue is an Operating Statement item, not Balance Sheet. The question is about how the "order processing fee" will be handled on the Operating Statement. Will it be deferred Revenue? An offsetting credit to SG&A expense? Or not appear at all on the Operating Statement?

The $2500 does not hit the income statement until Tesla delivers the car.

When you order a Model Y, Tesla's Cash asset and Customer Deposits liability both increase $2500. Tesla does not recognize any of the $2500 as revenue until you get your car and the paperwork is complete.

 

[capster]

So what should we do about those that bought the option in 2016-2017 when the communication from Elon and Tesla has always been that unsupervised driving in public traffic is going to be possible with their car?

Don’t sweat it.

I’m confident FSD will be worth to me far more than it cost. I’m also optimistic about the range of functionality and even the timeline.

Also, I don’t recall that Tesla ever guaranteed or committed to your desired performance level, though I am hopeful too.

 

[TradingInvest]

I really like how Tesla handled the Model Y "ordering" vs. Model 3 "reservation". Because the standard and mid range Model Ys are not offered for ordering, Tesla is not obligated to produce them ASAP. They can delay the low-end versions for a long time without much backlash.

By the time Model Y starts production, I estimate the all-in cost will be around $33k, ASP $53k (assume FSD take rate will increase by then). Selling one million Model Ys could generate $20B positive cashflow. I see nothing that can compete with Model Y in the next few years.

I estimate by 2023 Tesla will have 5 vehicle producing sites - two in the US, two in China, one in EU. Annual unit production should be close to 2 million by then.

In the near term, my biggest question is how many Model 3 orders that Tesla will get for Q2. It could be weak, though I have no clue how to estimate it. For the long term, I'm very bullish about TSLA.

 

[Chocochip]

Slightly OT (or is it?): school kids all over the world are currently protesting against the lack of action on climate change. Have a look here (Electrek link, but not a Fred article), or follow #climatestrike on Twitter to get a sense of the scale of this movement, which hopefully won't go away too soon.

My point with this is, how many of these kids will choose an EV in the next 4-5 years? And how many of them will insist that their parents choose an EV as their next car, or at a minimum, introduce that notion to their parents?

 

[Doggydogworld]

…. BUT, want really insane long range? Buy our new S/X models with 375/400 range...

Exactly. Model S is the flagship. 400 miles will keep Tesla head and shoulders above the also-rans. It will also reinvigorate sagging S/X sales, which is financially critical. They can hit 400 miles with 10-15 kWh of additional 18650s and more efficient Model 3-style PMSR motor. New pack design should also feature improved cooling for v3 Supercharging.

I expected them to announce all this last night. They can't announce until they're ready to ship, though.

 

[MarcusMaximus]

I don't know anyone who has actually used lemon law suggest anyone else try it. For lemon law the car has to be in the dealer's possession for 30+ days, they have to have had something like four chances to fix the same problem, etc. and even then you have to go to arbitration and in many cases the dealer/seller will not be forced to give you a replacement vehicle but simply buy you out of yours.

People who have never used it love to talk about it though.

Ah, here's my state's relevant section, so yeah, I'm SOL.

Ah, too bad, that. Best of luck.

 

[KarenRei]

I was originally going to say that, but giving the eTron the benefit of every doubt in my comparison. Even with doing that, it pales in comparison.

I always love comparing charging. Let's just pretend that there actually is a 175kW CCS v2 (not v1) charging network where you're going.

E-Tron is nominally 150kW to 80%, but in practice appears to be 150kW to ~60%, and under 120kW to 80%, and further slowing above that. So, say, starting a charge with 40 miles remaining as a safety buffer, and adding 140 miles, that's 20% to 90%, so probably an average of 125kW or so, due to the slowdown near the end. At around 240Wh/km WLTP, that's 520kph WLTP.

40 miles on a Model Y LR is 13%, and 180 miles is 60%. On a newly-updated 145kW V2 Supercharger, that'll be an average of, say, 135kW. Model 3 WLTP Wh/km is 140, so let's say 155 for Model Y. 870 kph WLTP. Now let's redo for Supercharger V3, with an average of, say, 155kW over that range (probably too pessimistic). 1000 kph WLTP.

And E-Tron is only a 5-seater with 40% as much cargo space as Model Y Much closer to Model 3 in interior size than Model Y (despite its bulky exterior dimensions; it's poorly packaged with a massive hood). The above charging figures for Model 3 instead of Model Y become 12% to 55%, ~140kW, 1000 kph WLTP on V2; and ~165kW, 1179 kph WLTP on V3.

And E-Tron is the fastest-charging of the "competitors" released thusfar

 

[electracity]

Okay, some guy with no connections to Tesla. Now his source is?

He starts talking about Tesla at minute 35

 

[jerry33]

In the near term, my biggest question is how many Model 3 orders that Tesla will get for Q2. It could be weak, though I have no clue how to estimate it. For the long term, I'm very bullish about TSLA.

If you are worried about the Y vs 3, don't. The Y isn't going to be available till fall 2020, and it will probably be a couple of months after that when it's available in quantity. Those who are in the market for a car this year, aren't going to go for a Y. If you're worried about general demand, again don't. Despite all the FUD, Tesla's problem is production capacity, not purchasers.

 

[AudubonB]

That Tesla Semi Truck production might start by the end of 2019 is a super interesting observation.

It's a very intriguing possibility, and the picture from the unveil is convincing:

Elon said that this is how the Chinese Gigafactory is going to look like at the end of 2019 then that's 20 Tesla Semis on that picture alone ...

Also note the title of the picture: "2019 Gigafactory Shanghai".

The heavy duty truck market is both huge and very profitable - and none of that is priced into TSLA yet. I always thought that the Semi is more important to Tesla's growth curve than the Model Y, because electrification of the trucking industry will happen much, much faster than the electrification of passenger light vehicles.

A few considerations about Shanghai GF:

1. I was looking in this render for a Semi or two being squeezed out like toothpaste - couldn't find one that was only 1/4 or 1/2-way out; shucks.

2. Much more seriously: a manufactured Semi is a tractor . It is not a tractor-trailer, such as those shown. Trailers are a mass market commodity.

3. Back to last night, a question: during the reveal, Mr Musk referred to this GF as equal (??) to the Fremont and Sparks factories combined. Did anyone understand that that means -

• in terms of function: i.e., producing voumes both of vehicles and batteries
• in terms of size: i.e., as large as two of the world's current 3 or 4 largest buildings
• in terms of annual capacity: i.e., Holy Deleted!
• in terms of something else?

 

[Fact Checking]

Tesla has enormous market cap compared to peers and it is based not on sales/profits today but hoped for profits tomorrow.

That's nonsense, it's not actually true, Tesla has much better cash generation metrics and gross margins than BMW:

BMW last quarter:

• revenue: $24.7b
• cash from opeations: +$1.88b
• free cash flow: -$296.9m

TSLA last quarter:

• revenue: $7.2b
• cash from operations: +$1.13b
• free cash flow: +$880m

So if we only measure cash earned and ignore the much higher growth rate of Tesla, then Tesla is already generating more cash per unit of revenue than BMW, is close in absolute terms, and Tesla actually has positive free cash flow, and does this from a third of a revenue.

I.e. cash generated per unit of revenue is just around 7.6% for BMW, while 16% for Tesla: 2x larger.

If BMW is valued $55b then by this metric Tesla should be valued about $110b, or over $500 per share, without a growth premium.

The fact is, Tesla is massively undervalued compared to its automotive peers. I have no idea how you came up with the 'enormous market cap compared to peers' nonsense.

edit: fixed the numbers - sorry!

 

[jhm]

btw, if reservation numbers are high, there is an always option to fast-track MY production timelines ..
IIRC, something similar happened after M3 reservations ....

Agree. I think there is value in Tesla starting production ASAP, but allow the relative demand for MY vs M3 to dictate steepness of the MY ramp. But starting production very early, they've got an option on MY demand which serves as a hedge against lower M3 demand or supply. Basically, Tesla would have options like to make a marginal increase in production capacity to either M3 or MY: increase weekly production of M3 by about 100 units or MY by about 100 units. Relative demand would dictates which move is more valuable at a given point in time. Or suppose MY ramp hits a snag, then there may still be opportunity to increase M3 production while MY ramp issues are being solved. This is the beauty of having multiple product lines that still have opportunity to keep ramping up production.

My focus as a Tesla investor has been on rapid growth of revenue. I don't get to worried about which product line is going to contribute the most to growing revenue. I actually want multiple lines of growth to derisk the potential for a single line to slow growth. So I love that Solar Roof and Power products have been on a back burner while Tesla focused resources on ramping the M3. That was how they played that option. And they still have huge growth opportunities in TE as the M3 ramp slows.

 

[TradingInvest]

Have been having a back-and-forth discussion over Tesla’s patent sharing with a friend/engineer/entrepreneur who does lots of business in China, and this led to discussions of Tesla’s patent sharing, specifically their legal requrements for “good faith” from someone who wishes to use Tesla’s patents. His standpoint is that these restrictions are all BS to thrill Tesla fanboys, that no one has signed up because these restrictions are a joke. I have read some of the details, and to me it just seems that to use Tesla’s patents you have to join the “we share all EV patents” club, which seems fair not BS. But I be neither attorney nor entrepreneur.

So IN THE ABOVE (long-winded) CONTEXT, can someone decode his latest response for me:
“ANSI/ISO/IEC/ITU IPR and Statement of Participation agreements are precise. They do not allow for anyone's IP to be "free". RAND terms where the royalty is zero is OK, but that does not EQ "free". If you won't sign a Statement of Participation agreement you are basically disallowed from making any contributions and perhaps even participating in those standards making bodies. If TSLA was serious they would do same (SoP), but I do not believe that they are.”

Thanks!

Your friend probably got fooled by the bashers.
Suggest him to take a look of these two pages:
Privacy & Legal | Tesla (Patent Pledge)
Privacy & Legal | Tesla (Patent List)

Any one can use these Tesla patents for free, they don't even need to notify Tesla. They don't need to join a "share all EV patents" club, there is no such a thing. If your friend still sticks to his view after reading Tesla's pledge and patent list, I see no point to keep arguing.

 

[Sweft]

Stock is testing $275. I think it's going to break through. If so, next stopping point would be ~$260.

 

[kbM3]

Anyone on this forum or any analyst that bases Tesla's value on other auto makers should not be taken even remotely seriously. I pretty much shut that noise out because they either chose not to or can't understand the basic concept that stock price/market cap is based mostly on growth and future growth prospects. GM, BMW, VW, etc...it doesn't matter what auto maker you pick.....what is the current growth rate? What is it projected to be 2 years out? 5 years? 10 years? They're valued based on the fact that they little to no growth, no future growth prospects(their growing EV sales will only replace their current ICE sales.....at lower margin) and they are predominately focused on specific areas of the auto market. GM is focusing on SUV/Trucks.....not sedans. BMW is focusing mainly on sedans and SUVs....not trucks. By 2021, Tesla will be in the market for sedan, SUVs, pickup trucks, super cars, and Semi trucks and their market is the EV market which will continually expand for the next 15-20 years before market saturation while ICE market will(and already has) started it's long downward decline.

Having said all that.....it's pretty obvious that Wall St is not going to value Tesla correctly for probably most of 2019. We've had great news for the company over the past 2 weeks and the stock has gone down. I don't think the FUD and the narrative of no demand actually has any affect on who's buying/selling. It's not that hard to do your own research to know that the lack of demand narrative makes no sense and that there is very obvious evidence that points to the opposite. I think most of Wall St knows that they can continue that narrative and play the volatility back and forth for the next year. Since apparently no big investors want to step in and buy massive amounts of shares, Wall St is all too happy to continue the price action of the past year.

2020 becomes a year where the revenue and it's growth rate will be too impossible to ignore. We'll be ending 2019 at a annual run rate of 35-38 Billion which will grow another 50-75% over the course of 2020 thanks to the increased Giga 3 output of Model 3, volume deliveries of Model Y in 2nd half of 2020 as well some(likely small) revenue from Semi and Roadster 2.0. 2021 will be another year of 50% growth thanks to a full year of Model Y production as well as some pickup production.

Right now the only wild card that I can see that would break the hold that Wall St has on the valuation of Tesla is TE. I really...…...really hope Elon is serious that 2019 will be the year that TE gets the spotlight and attention it deserves. If they give TE the amount of focus on production and margin expansion that the Model 3 got, it would crush the Wall St narrative that Tesla should be valued as a auto maker. Tesla guided for 2-2.5X revenue for TE for 2019. Elon said he thought they could do 3X revenue for 2019. If they could push that to 4X revenue which would be 6-7 billion annual revenue rate for TE by the end of 2019 and give guidance that TE will double revenue for 2020 to a annual revenue rate of 12-14 billion....that would be a game changer.

I agree with TE being a wild card, but I think FSD is a larger one (in the short run).

 

[Fact Checking]

3. Back to last night, a question: during the reveal, Mr Musk referred to this GF as equal (??) to the Fremont and Sparks factories combined. Did anyone understand that that means -

I believe there were Shanghai Government planned documents mentioned here a couple of week ago, with a GF3 full production capacity of 30,000 Model 3's per week equivalent ...

So it's clearly larger than all existing Tesla factories combined - in every metric.

 

[Causalien]

So one question I want the analysts to ask on the ER conference call is. How much similarity is there on Model Y's production line vs Model 3's. Does it require a complete new line to be installed and how much is the capital cost on that.

 

[KarenRei]

So one question I want the analysts to ask on the ER conference call is. How much similarity is there on Model Y's production line vs Model 3's. Does it require a complete new line to be installed and how much is the capital cost on that.

Vehicles need many lines. Tesla probably could make Y share all its lines with 3, but there's no point to that; the goal isn't to sacrifice 3-capacity to make Y, it's to make Ys in addition to 3s.

 

[Bobfitz1]

Massive investment always seems to accelerate delivery. My proof? Apollo program.

It can accelerate delivery to some extent. However adjusting the Apollo massive investment to 2019 dollars suggests a factor of 10 more massive than what any company can afford to accelerate delivery greatly.