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

[Silent Ludicrosy]

Current national EV subsidy is:

• 150-200 km: 15,000 yuan (c.$2,230)
• 200-250 km: 24,000 yuan
• 250-300 km: 34,000 yuan
• 300-400 km: 45,000 yuan
• over 400 km: 50,000 yuan (≈$7,450)

It looks like this is moving to 0 for <250km, 250km-400km ? and >400km cut in half to 25k yuan (c.$3.7k)

If the that’s true, it’s more negative for short range EV makers than it is for Tesla.

 

[shlokavica22]

A similar headline from Top Gear

Tesla's Model 3 outsold the 3 Series, C-Class and A4

Why the f* they don't link to actual data?

 

[ABCTG]

the upside wildcard of their re-negotiated 18,650 cell supply contract with Panasonic. If indeed their cell costs improved by ~30%

This isn't the 1st time you've discreetly mentioned this, and of course it's not for sure, but if true, as far as I'm concerned, it is kind of a
BIG DEAL!!

 

[Esme Es Mejor]

Why the f* they don't link to actual data?

InsideEVs has some actual data:
Tesla Model 3 Tops European Sales Chart For Premium Midsize Sedan

 

[KarenRei]

I particularly liked:

which, according to Google, translates to "Due to high demand, the South Korean company suddenly demanded 10 percent more money for its batteries, according to German media."

A point I've made before is that while Tesla is certainly battery constrained, their competitors are even more constrained and at the whim of their supplier for pricing. "That's a nice automotive business you've got there. But we have [competitor] after us to increase their supply and I'm afraid we'll have to cut delivery rates to you because what you're currently paying us isn't competitive."

If I were a company looking for a battery supplier, I wouldn't touch LG. They're hostage-takers. Same company that's been threatening to immediately cut off battery supplies to VW if they don't cancel their Gigafactory plans with SK Innovation.

 

[ReflexFunds]

I think both of these assumptions are too rosy. Elon seems proud when he tells stories about how they purchased a line then replaced it by something else when it didn't work, when they dusted a flufferbot, when they quickly built a side line in a tent, when they realised they wanted to automate too much. Plus you compare two cars produced a few weeks apart and it there's already significant change, some of which needs updated tooling. I suspect their internal change on existing lines is far higher than zero. Secondly, they have about $9B in tooling and machinery. A basic budget of 10% to maintain and retool which is in my experience a very common guideline in industrial automation gets us to a budget of $900M a year.

I agree that we can put the majority of R&D costs as supporting growth. However, I suspect a significant part of R&D is software development and supporting promises made to current customers that require a continuous upkeep. For example, improving enhanced autopilot, maintaining the significant historical software maintenance debt for an increasingly diverse car system (AP1/AP2/AP2.5/AP3, old/new MCU, different sensor suites, different motors, different packs with different BHS, etc...)

I can't see it being anywhere close to 10%. Most often these capex rule of thumbs include both maintenance and replacement capex.

Looking at General Motors in 2018, depreciation is 8% of gross PP&E, capex is 13% of gross PP&E. Depreciation should roughly equal replacement capex, so that leaves c.5% of PP&E was capex invested in maintenance and growth projects. GM likely have significant growth capex in EVs, fuel efficiency, AV etc, but even assuming growth capex is 0, that leaves maintenance capex at a maximum 5% of gross PP&E. This would map to c.$450m per year at Tesla or c.$125m per quarter.

Another data point here: In Tesla's Q4 letter: "Our 2019 capex, the vast majority of which will be to grow our capacity and develop new vehicles, is expected to be about $2.5 billion."

On your $900m maintenance number, this would leave a maximum of 64% of 2019's capex budget for the growth projects described, I can't see 64% reasonably being considered a "vast majority".

 

[Mars ☰mperor]

Good in the short term, bad in the mid-to-long term, since Tesla's GF3 production will be domestic.

Well it has long been decided by the government the subsidies will phase out at the end of 2020.

And if, yes that is still an if, Model 3s from GF3 are eligible for subsidies, it will at most last for about 15 months. So I don’t think it is a big loss for Tesla.

At least Tesla has always been able to get you a free license plate, which normally costs as much as $16000 in big cities like Shanghai. In Beijing, it’s even more brutal, money won’t guarantee anything, getting a normal license plate is like winning a lottery.

 

[AndyH]

Initial reports from Sweden mentioned Tesla's problems with getting Model 3 delivered.
Is there some details about this development?
(if you can point to a Swedish source, I can recap it in English here).

The rumour is that there was a problem with the certificate of conformity that Tesla supplied to the Swedish agency Transportstyrelsen. Not sure who's to blame. Deliveries in February was delayed but are in full swing now.

Tesla owners in Sweden were already quite miffed at Transportstyrelsen because the agency constantly mislabel power figures of Tesla's which then messes with insurance premiums. And then there was the news about Transportstyrelsen threatening to stop all Tesla sales a while ago which was just FUD.

 

[Papafox]

I just looked at Troy's Model 3 Survey #4 from Feb 28 (when SR and SR+ first appeared) until present day and saw 169 entries. Here's how they break down into versions of Model 3:

Observations:
* Even though orders have picked up immensely since SR was introduced, only 3.5% of orders are for SR. The vast majority of orders are for a high version of Model 3
* I strongly suspect that versions of M3 above SR+ have benefited from introduction of SR because the SR cements the decision to buy a Model 3 but most buyers will upgrade to some extent before pushing the "buy" button, suggesting that introducing the SR has proven to be an excellent demand lever that so far preserves a very nice mix of high end Model 3s.
Biases:
* Virtually no China orders
* Lower representation of European orders vs. North American Orders
* Respondents to an enthusiast survey may be somewhat biased toward higher-end M3s.

 

[Fact Checking]

InsideEVs has some actual data:
Tesla Model 3 Tops European Sales Chart For Premium Midsize Sedan
View attachment 390507

I'm wondering to what extra this is taking away market share from ICE incumbents vs. growing the market.

 

[mongo]

I just looked at Troy's Model 3 Survey #4 from Feb 28 (when SR and SR+ first appeared) until present day and saw 169 entries. Here's how they break down into versions of Model 3:

View attachment 390512
Observations:
* Even though orders have picked up immensely since SR was introduced, only 3.5% of orders are for SR. The vast majority of orders are for a high version of Model 3
* I strongly suspect that versions of M3 above SR+ have benefited from introduction of SR because the SR cements the decision to buy a Model 3 but most buyers will upgrade to some extent before pushing the "buy" button, suggesting that introducing the SR has proven to be an excellent demand lever that so far preserves a very nice mix of high end Model 3s.
Biases:
* Virtually no China orders
* Lower representation of European orders vs. North American Orders
* Respondents to an enthusiast survey may be somewhat biased toward higher-end M3s.

So the $35k SR is a gateway drug?

 

[VValleyEV]

More praise for Tesla

Tesla Model 3 Performance im Test: Das Raumschiff ist gelandetView attachment 390484

WAIT. My friend in Germany tells me this is a mostly negative piece, more like “This is the car that makes German manufacturers tremble, but take a closer look, perhaps they should not”.

From his translation as native German speaker, and the context that he is a techie and car nut but still skeptical of EVs, and partial to PHEVs:

>>>>>>>>
They like the great usage of space made possible of course by no engine in the front, which will of course be possible for any EV to reproduce, but then ..

• trunk space is "ok" but the size of the hatch is too narrow
• quality - especially inside is not anywhere near BMW or Mercedes
• as somewhat "spacy" usability - no more knobs or switches - it is all on
  the touch screen - you have to get used to it
• biggest complaint: the door handles are not suitable for ladies with long
  fingernails
• And the key card is fragile - can easily break

He adds that he hates touch screens, skeptical of their use in winter, and prefers an EV to look more like the current classic car design than be quite as futuristic, He doesn’t like the looks of the BMW i3, and wishes it looked more like the BMW X3.
————

Comments? The point is NOT to argue with his critique, but to get a sense for what the article is saying, and how Germans feel about BEVs in general and Tesla in particular, wrt Tesla prospect for continued sales growth in Germany and what the competition is likely to do.

I do love the comment about ladies with long fingernails - I never would have thought of that. @KarenRei ?

[EDIT] PS: “slobberfest” is my new most-favorite word.

 

[KarenRei]

So the $35k SR is a gateway drug?

Tesla's one hell of a drug.

 

[Chickenlittle]

Yes, but Q1 SR margins will probably be poor due to too few units being burdened with a fixed D&A expense and production only having started in the final 4 weeks of the quarter.

In Q2 or Q3 it will be more meaningful to talk about SR GAAP margins.

Also note that this works both ways: the SR lines are not burdened with the expensive history of the Long Range battery pack assembly lines - so eventually even GAAP margins of SR units could be quite nice.

Are you sure capex will be broken out for each variant of model3? I mean they do not break out the margin for other options such as paint color or wheel types. Perhaps margin will be reported for all which will of course drag down margin of all but with explanation of spending on new battery pack line

 

[Tim S]

I do love the comment about ladies with long fingernails - I never would have thought of that.?

My wife has relatively long nails. She has no problem opening the doors in our Model 3.

 

[Nocturnal]

I'm wondering to what extra this is taking away market share from ICE incumbents vs. growing the market.

Looking at trade ins is probably somewhat of a window into that.

 

[Mars ☰mperor]

WAIT. My friend in Germany tells me this is a mostly negative piece, more like “This is the car that makes German manufacturers tremble, but take a closer look, perhaps they should not”.

From his translation as native German speaker, and the context that he is a techie and car nut but still skeptical of EVs, and partial to PHEVs:

>>>>>>>>
They like the great usage of space made possible of course by no engine in the front, which will of course be possible for any EV to reproduce, but then ..

• trunk space is "ok" but the size of the hatch is too narrow
• quality - especially inside is not anywhere near BMW or Mercedes
• as somewhat "spacy" usability - no more knobs or switches - it is all on
  the touch screen - you have to get used to it
• biggest complaint: the door handles are not suitable for ladies with long
  fingernails
• And the key card is fragile - can easily break

He adds that he hates touch screens, skeptical of their use in winter, and prefers an EV to look more like the current classic car design than be quite as futuristic, He doesn’t like the looks of the BMW i3, and wishes it looked more like the BMW X3.
————

Comments? The point is NOT to argue with his critique, but to get a sense for what the article is saying, and how Germans feel about BEVs in general and Tesla in particular, wrt Tesla prospect for continued sales growth in Germany and what the competition is likely to do.

I do love the comment about ladies with long fingernails - I never would have thought of that. @KarenRei ?

Fingernails?
Gotta be kidding!
Let the Germans keep thinking highly of themselves. It won’t be long.

 

[Radpioneer]

OT....sorry

I would love that - @neroden, @Fact Checking, @ReflexFunds and you @KarenRei - hosting a YouTube channel with @Papafox, @brian45011 and a few other doing appearances as we need - that would be awesome

When Karen first mentioned "brain in a jar" I got this image of ...3 brains in (3) jars.....as moderators with guest appearances of "real humans"..... PLEASE do this....

 

[Causalien]

WAIT. My friend in Germany tells me this is a mostly negative piece, more like “This is the car that makes German manufacturers tremble, but take a closer look, perhaps they should not”.

From his translation as native German speaker, and the context that he is a techie and car nut but still skeptical of EVs, and partial to PHEVs:

>>>>>>>>
They like the great usage of space made possible of course by no engine in the front, which will of course be possible for any EV to reproduce, but then ..

• trunk space is "ok" but the size of the hatch is too narrow
• quality - especially inside is not anywhere near BMW or Mercedes
• as somewhat "spacy" usability - no more knobs or switches - it is all on
  the touch screen - you have to get used to it
• biggest complaint: the door handles are not suitable for ladies with long
  fingernails
• And the key card is fragile - can easily break

He adds that he hates touch screens, skeptical of their use in winter, and prefers an EV to look more like the current classic car design than be quite as futuristic, He doesn’t like the looks of the BMW i3, and wishes it looked more like the BMW X3.
————

Comments? The point is NOT to argue with his critique, but to get a sense for what the article is saying, and how Germans feel about BEVs in general and Tesla in particular, wrt Tesla prospect for continued sales growth in Germany and what the competition is likely to do.

I do love the comment about ladies with long fingernails - I never would have thought of that. @KarenRei ?

When I phone first came out and black berries still dominated the corporate world. I made a bet with a co-worker that the iphone will eventually dominate most of the market share of the blackberry and blackberry will not be able to invade the consumer space. Back then, the most repeated argument for blackberry dominance is the presence of a real keyboard that allows business people to text really fast.

We all know how that turned out. All tech eventually becomes fashion and status symbol. The higher ups will want to be associated with the better status symbol. It will be rammed down to the lower ranks.

Keycards? Who uses keycards? use your damn phone.

Trunk space or hatch. Meh. Get a Y or an X. The model 3 is not meant to haul your yacht.

 

[T@oo]

• trunk space is "ok" but the size of the hatch is too narrow

Yes, they complain its no hatchback. Guess what. It isn‘t. So is a Van.

• quality - especially inside is not anywhere near BMW or Mercedes

Without giving any examples whatsoever. It just has to be that way.

• as somewhat "spacy" usability - no more knobs or switches - it is all on
  the touch screen - you have to get used to it

Yes. As I need getting used to switching from BMW to Audi...

• biggest complaint: the door handles are not suitable for ladies with long
  fingernails

Well. What can I say. Thats their main point... what does it say about them?

• And the key card is fragile - can easily break

Don‘t you know? Credit cards break all the time. Always. No mention of phones replacing the keys of course.

Overall, they like it. They can‘t say so of course. They seem desperate to find downsides.