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

[oneday]

Minor point: chip is 10x the processing power, but there are two for redundacy.



They guided for a loss before the FCA agreement. P&D only said it would negatively impact Q1 net income.

Current agreement with FCA is for 2019, 2021 would be a bigger Tesla payout (if the still pool then) due to stricter emission standards. So they could get cash from FCA as soon as Q1. However, holding off the FCA monies till Q2 might be better to ensure a positive quarter to meet S&P guidelines (not that I expect a non profitable Q2 without it).

It should be noted that current agreement with FCA is for 2019 *to our knowledge based on government filings*. It’s very likely that their agreement is much more substantial than just 2019 and they filed for 2019 because that was their only requirement. I suspect that they have an agreement for more than just 2019 *but none of us know until we receive more info*.

 

[Artful Dodger]

According to CarsofNight, however, sometime during the course of Q1 Panasonic installed and spun up 3 additional battery production lines, to increase the total number of lines to 13 rather than 10.

No. According to carsonight (he's from Carson, NV) that happened in 2018Q4. He's been replying to bty questions with the same points for months now. Did you see his comment yesterday?

"Thank you for your kind words, but reality is that my estimate was off by a wide margin. I was expecting production of 80K last quarter based on what I was repeatedly told was production of 6K plus battery packs per week. Indeed, we were worried that a certain somebody would not be home for Christmas last year because word was they would not get Christmas off if their production was not up to 7k per week. To say I was surprised is an understatement; it was like taking a step that wasn't there. The people I talk to live their own lives and I certainly do not interrogate them.

"Conversations when we're together are as diverse as somebody has been in the hospital or do you wanna go out target shooting. I value my relations and certainly I'm not going to pester them with constant queries about work. When the subject does come up, you can bet I'm listening. I'm going to be seeing some of them at a birthday party this week, and I'll be very intrested in their comments then."​

So again, we have anecdotal evidence, but are not seeing the whole picture. Shortz work that information deficit to spin everything as bad news. Conversely, not everything is good news, but the truth must be somewhere in between.

Cheers!

 

[Papafox]

NASDAQ Tesla Insider Sales

If you check out the link and visit various pages on it, you'll see that J. B. Straubel has maintained between 300,000 and 350,000 shares for years. That's around $100M of TSLA stock when it's trading above $300. Does it make sense for him to continue to sell shares as he exercises options so that he maintains this amount? I think so!

Prevent FUD from multiplying by doing some research and then responding with facts.

 

[Prunesquallor]

Grew up reading my grandfather and fathers pop mechanics. Gives great perspective to a young student...
@ggr

Smithers! Fire up the autogyro!

 

[MABO]

There is potential for significant growth in TE in Q4. Elon has mentioned several times that there will be a big ramp in TE and I think he mentioned that he eventually expects a similar margin to TM. In previous quarters TE was constrained by a lack of batteries/packs. However, Tesla sold 10K fewer cars in Q1 vs Q4 which means battery constraint may not be a factor in Q1. There also may be additional battery pack production capacity with the extra lines. What is the impact on revenue and earnings if the excess battery production goes into TE products? Can anyone do this calculation? My estimate is around $600M in additional revenue which would offset the shortfall TM deliveries. Does anyone have any insight into Powerwall and Powerpack deliveries or delivery times?

I have just the one anecdote that I posted earlier. Our small solar supplier was able to place a new order for 12 Powerwalls and receive them 30 days later (both events in Q1). This is scant information, but it suggests at least the possibility that they were able to move through some, if not all, of their backlog.

While I agree with your sentiment that TE may have upside, I seriously doubt it would come close to making up for the hole left by the disappointing P&D numbers for Tesla auto. After last week, I'm tamping down my expectations for the short term Regardless, It may be a nice boost to the TE business in terms of growth % QoQ. There is nothing wrong with that.

Finally, you estimated in an earlier post that the gross margin % was 20% for Powerwalls? I wonder if anybody here has insight to the GM % (not for all of TE, just the Powerwall)? Hard to imagine it being as low as 20%.

 

[BBone]

Yeah, because the constant trolling by shorts on SA and twitter really add value to the discussion!!

You can't even read the $TSLA twitter thread anymore. It's total rubbish. Just look at Tesla short numero uno, Mr. Mark Spiegel. Insulting federal judges and spewing profanity all over twitter. Does this guy even have an ounce of manners or even intelligence?!

Insulting judges always helps your court case. /s

 

[jhm]

In real world elasticity of luxury cars are lower than regular cars. For example, if Ferrari dropped the price by $5K it would hardly affect the demand of the car. But imagine the same for camry.

You're aware that elasticity is measure in relative change (%), not absolute change ($), right? A $5k price drop on a Ferrari is just a few percent whereas for a Camry it can nearly be 20%. So yeah, even for the same PED the quantity response is 4 or 5 times as intense for the Camry. I that what you're trying to get at?

 

[BBone]

From Twitter....
Maybe the matrix below will be more complete and helpful...


View attachment 394722

Yes note also the plan date column. It's been a few years since I did this securities stuff for a company listed on Nasdaq but I believe that means that they filed a pre-filing agreement to sell up to x # or % on certain pre-determined dates/periods. That is to smooth out and not surprise the market.

 

[neroden]

Important boundary condition: if you put in a bid equal to or over the ask, you get matched with the person offering the ask.

Posting limit orders at the ask is actually pretty common in illiquid instruments, or if you have no access to the full book where you can view the liquidity. It will also protect you against algos baiting via large orders which get moved away from your desired price based on retail order flow sniffing.

I usually put limit orders at the ask/bid. I only do market orders when the market is moving *really* fast and I *definitely* want to buy/sell.

Also, posting limit orders 'into the spread' (between the bid and ask) is highly recommended for far-out-of-the-money options for TSLA, you almost always can get a good price improvement over what is visible in the order book, especially when there's a strong price movement ongoing that day against those options.

I usually don't because I've found the spread will often move against me when I do (market makers, order flow being sold to front-runners...) and I usually definitely want the trade to go though.

To be clear about this, the "go to the middle of the spread but give the market maker a nickel" method works for moderately out of the money options. But if you're going *deep* out of the money, which I have been lately, sometimes there's nothing there, and you have to take the bid or ask.

If I'm not picky about whether I get the trade or not, of course, I have a different strategy; I just use a "take it or leave it" limit order which either gets executed or not.

 

[TNEVol]

con·spir·a·cy
/kənˈspirəsē/
noun:

1. a secret plan by a group to do something unlawful or harmful.
   "a conspiracy to destroy the government"
   synonyms: plot, scheme, stratagem, plan, machination, cabal, intrigue, palace intrigue; More
   deception, ploy, trick, ruse, dodge, subterfuge, sharp practice;
   informalframe-up, fit-up, racket, put-up job;
   rarecomplot, covin
   "the company was involved in a conspiracy with bookmakers to manipulate starting prices"
   • the action of plotting or conspiring.
     "they were cleared of conspiracy to pervert the course of justice"
     synonyms: plotting, collusion, intrigue, connivance, machination, collaboration;
     treason
     "he was due to stand trial for conspiracy to murder"

Ok I guess I am using the Robert Mueller technical definition. I do not believe there is an agreement or plan between the SEC and the big investment houses. I think there is an acceptance of mutual objectives based upon working relationships and common goals. But again you could be right. I just do not see the SEC making an agreement with GS for example to attack Tesla. For the same reason it is unlikely that Trump had an agreement necessary to constitute a legal conspiracy even though he clearly encouraged and welcomed Russian involvement.

 

[jhm]

Clickbait headline concept:

Tesla greenwashing Fiat Chrysler, helps troubled automaker avoid 2 billion euro fine for carbon emissions, pockets hundreds of million euro

How about that, click it?

 

[printf42]

Also the day the SEC sued, so it's hard to tell which one it refers to.

So that’s why SEC was in such a hurry to file the contempt allegations?
They knew the news and thought it will leak right way, so they need something hard to smack down the SP?

 

[neroden]

Umm, why? They allow plenty of cars to be driven without responsible drivers now.

Because for some reason people are totally OK with irresponsible, incompetent humans in charge of things, when they're not OK with irresponsible, incompetent robots in charge of things.

This annoys me. However, this is proven by psych studies. We have to deal with it.

 

[Pras]

You're aware that elasticity is measure in relative change (%), not absolute change ($), right? A $5k price drop on a Ferrari is just a few percent whereas for a Camry it can nearly be 20%. So yeah, even for the same PED the quantity response is 4 or 5 times as intense for the Camry. I that what you're trying to get at?

Yes. The curve i showed is not necessarily meant to be unitary elastic (which is also a curve). Bad drawing in my excel chart, maybe. Because of lesser substitute effect the ultra luxury cars they will have lower elasticity than the mass market cars. My point was even on a percentage change basis.

 

[neroden]

I'm with you. I don't understand all the disagrees to this. Model 3 ASP is dropping and will continue to drop as the initial demand for the much higher priced premium options is exhausted.

Wrong.

Intentional or not, production does not appear to have increased substantially over the last 4 months or so.

So this is the actual problem here.

Manufacturing efficiencies are likely similar to Q4. Model 3 ASP is decreasing because it has to in order to match demand.

Wrong.

Sure, Tesla could focus on only selling the higher margin models worldwide

Tesla should be able to do this, but apparently can't manage to make enough Euro-spec models.

but that would almost certainly limit sales to less than current production

Wrong

It would also limit sales in the U.S. to a rather small percentage due to exhaustion of the backlog interest in the higher margin trims.

Right

Margins are generally best in the U.S. due to far lower shipping costs. Tesla wants to continue to supply to the U.S. and international, which means they absolutely must provide lower priced variants, particularly in the U.S. It's a crazy juggling act that did not go particularly well in Q1.

Again, the problem is that production isn't up to the target rate. Otherwise we would have seen 30,000 cars shipped to the EU.

 

[neroden]

EM mentioned during the Model Y unveil that Tesla is building a gigawatt hour scale energy storage system in California. The only project of this scale that I was aware of was with PG&E. However, I thought that the project got cancelled because of PG&E's bankruptcy. Any more info on this?

Wasn't cancelled, project is still on. CPUC would kill PG&E management if they tried to cancel it.

PG&E had four battery projects. A different one of the four had financing fall through because of the PG&E bankruptcy and credit risk. Maybe that's the one you're thinking of?

 

[Pras]

So that’s why SEC was in such a hurry to file the contempt allegations?
They knew the news and thought it will leak right way, so they need something hard to smack down the SP?

Personal ego?! I mean Musk was laughing at them so they wanted to teach a lesson. They just jumped the gun. Too bad for them!!

Edit: I am sure they were waiting to find a bad tweet since the cbs interview. The moment they saw anything with production number they jumped at it.

 

[TradingInvest]

I tried the new SW update (9.0 2019.8.5), I really like what I saw. There is a sharp 90 degree curve that I try with every new update. The yellow sign before the curve said 15 mph. In the past my car always try to make the turn at 25 mph, which is scary, I always have to take over at the last moment. Today, it slowed down perfectly to 15 and made the turn. It turned just like a human driver. I don't know if it read the speed sign.

Also, after NoA on a busy highway, it exited, slowed down, then stopped right before the red light. I didn't know it will handle red light. Maybe it will only handle some traffic lights, so definitely be very carful. Later it maintained 40 mph toward a stop sign, I don't think the car intended to stop, so I took over at the last moment. Later I will go through that stop sign a few times and see if it can learn.

A quick update on that sharp 90 degree curve. I tried again today and failed a few times. My car tried to go through the curve at 25~30 mph, which is too fast. Now I guess the first day it dropped speed to 15 mph because there was a car from the opposite direction right when I entered the curve, on that day my car slowed down to 15 to avoid a potential collision.

Edit: I think 2019.8.5 is mainly about Navigate on Autopilot on highway without conformation. So this kind of sharp curve probably is not in this release. I'm just curious when it will be able to handle the curve.

 

[neroden]

Or to put it another way: this map isn't joking

One of the windiest countries on Earth. I literally had a steel shipping crate full of tonnes (literal) of steel, wood and glass tossed around like a child's toy. This despite the windbreak I built... or more to the point, before the same storm sheared every single post of the windbreak at the ground. Had to anchor the crate down afterwards with piles of boulders.

Want a diverse array of possible natural disasters? Political and economic disasters too? Visit Iceland! Come to see Mother Nature try to kill you, stay because your airline went bankrupt!

So, um, have they managed to make wind turbines which don't get knocked over by the Icelandic wind?

 

[neroden]

No, there's a third with PSA. EU documents aren't as easy to find as they might be, are they?

Here's the pdf: https://circabc.europa.eu/sd/a/c37a5306-28b9-4753-88aa-b7f3f42c1878/M1 declarations of intent to form open pools (25.02.2019).pdf

EDIT: The link above is for open pools. Here's a full list of open and closed pools: https://circabc.europa.eu/sd/a/c616f73f-9c3f-49ee-8f27-8b081d3212b7/M1 pooling list 25.01.2019.pdf

Note that the "duration" column for FCA-Tesla shows "2019" only. Other pools show ranges, such as "2019-2024". I don't know how significant that is.

Thank you. I think that's helpful. With the leak of "low three digit hundreds of millions" and the indication you found that this is a one-year agreement, I think that this means that Tesla got paid EUR200 -- EUR300 million for one year of pooling. Since it's only for one year, the payment's probably upfront.