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

[Artful Dodger]

Question:

• Given cells being the limiting factor on Model 3 production, and
• with SR+ allowing 1.50x cars to be produced with those cells,
  
• FCA C02 pooling making each car +5K Euro gross margin (correct?)

Then:

Is it now net MORE profitable to sell SR+ in Europe rather than LR AWD or P?

 

[RobPet]

Headlines seem to be going for the "Model 3 no longer available to order online" and let the negative spin.

Minimal mentions of leasing, or take rates, availability of SR+ in Europe or anything other positive. Business as usual.

Tesla Halts Online Sales of $35,000 Version of Model 3
Tesla’s $35,000 Model 3 is no longer available to order online
Tesla will no longer sell cheaper Model 3 online

Interestingly, Dutch headlines seem to be going for the SR+ availability. With a price of €47,800, it is a very interesting company car as it's below €50k. The "private use tax" is limited to 4% (rather than 22% for anything above €50k). I wouldn't be surprised to see many orders, especially leasing and with a real world range of 300km it's more than enough for most.

 

[Mars ☰mperor]

That's AWD which I think was always 310 miles?

Yes, AWD is always 310 miles.

Fun fact, seems now China is the only market that sells LR RWD online, until those from Q1 are exhausted.
And LR RWD for Europe has never seen the light of the day.

 

[Mars ☰mperor]

How much could an Uber driver earn if they worked 22hrs a day, 360 days a year?

Multiply by .75, to ensure driverless is cheaper than driven.

That's the earnings potential of a driverless car, in the first year of service.

It gives a ballpark for how much the value of these cars appreciates when nation one legalises autonomous Teslas. Subtract shipping cost to said nation.

You left out the big potential saving from gas cost.
I don't want to do the math, but it obviously gets juicier.

 

[Singer3000]

I turn my back for a few hours and all hell breaks lose. Some thoughts:

• Tesla's statement in response to the Nikkei article strongly implies that Panasonic are now the bottleneck for their production growth. Some here (Neroden?) think that might not the the truth. If it is, Tesla should consider buying Pana's North American battery division, so they have full control in synchronizing the capex schedule for cell production with the rest of the business. The Maxwell acquisition alone doesn't achieve what's needed due to long term offtake contracts with Pana. Perhaps though it's seen internally as a necessary first step?

• Lots of dispute here but the dropping of the $35k Model 3 screams to me that Tesla tried as hard as they could but can't make that model at the cost they need to. Anyone out there that's desperate for one, fair play, we did promise. Call us and we'll get around to making a batch (for now at least).

• The bundled Autopilot option costs $2k for the SR+, $1k for the LR and $0 for the Performance relative to yesterday's prices. Seems a fairly clear indicator of where they see the weight of demand falling for Model 3. If this bundling is what's needed to get +25% average gross margins for the full suite of Model 3 products, that's fine with me. Interesting too that Musk made the comment shortly after the SR launch along the lines that that SR+ with Autopilot was the best choice for most people. This is where they're forcing the market to, with a $10k increment to the next option. Fewer cells, more unit sales, more potential software upgrade customers (and more carbon saved).

• Lots of people have said there's no problem with North America demand, Tesla haven't even pulled the leasing trigger... As with all recent Tesla communications, I'm left confused. We're going to raise prices, while at the same time pull a significant demand lever. By the way, Model S or X on the website still has Autopilot as a paid option and not a bundled one. Hmmm.. guess we're not ready to move prices back up yet for those.

• "Customers who choose leasing over owning will not have the option to purchase their car at the end of the lease". Yeah maybe this is a gimmick. But despite the maths from others above, it does look a slight gamble given the cashflow impact 3-4 years from now if there's still no Tesla network. It's a long term concern but I am pleased to hear that Tesla intends to keep on balance sheet some of the eventual Tesla Network fleet, both as an investor and future ride hailing customer.

• Management in this place need to eat less sugar [edit: before you ask, I typed and meant sugar, that's not the naughty word filter]. The continual changes in pricing and offerings is total chaos and is not giving me a warm and fuzzy glow.

And finally if you want to feel much better about the long term value of TSLA then please read Uber's IPO prospectus. It's an absolute riot:

• EBITDA of negative $3.5bn,
• normalised negative Free Cashflow of more than $5bn
• a book value for normal equity holders of negative $7bn.
• Even two thirds of the preferred stock value of $14bn can be attributed to the Didi and Grab investments.

And yet I'm reading of an IPO target valuation of $100bn.
S-1

 

[SteveG3]

Headlines seem to be going for the "Model 3 no longer available to order online" and let the negative spin.

Minimal mentions of leasing, or take rates, availability of SR+ in Europe or anything other positive. Business as usual.

Tesla Halts Online Sales of $35,000 Version of Model 3
Tesla’s $35,000 Model 3 is no longer available to order online
Tesla will no longer sell cheaper Model 3 online

Interestingly, Dutch headlines seem to be going for the SR+ availability. With a price of €47,800, it is a very interesting company car as it's below €50k. The "private use tax" is limited to 4% (rather than 22% for anything above €50k). I wouldn't be surprised to see many orders, especially leasing and with a real world range of 300km it's more than enough for most.

Yup. I don't know about The Netherlands, but, in the US, the bulk of the media is not in the business of informing the public about Tesla, much less helping Tesla makes sales. Rather, the media is in a sense in the business of selling the fossil fuel economy. Elon Musk, Tesla, and their products presented as untrustworthy messes is one way of selling the fossil fuel economy.

 

[Artful Dodger]

TSLA Apr. 12, 4:25 a.m. EDT
Pre-market 271.50 +3.08 (1.15%)

 

[electronblue]

Interestingly, Dutch headlines seem to be going for the SR+ availability. With a price of €47,800, it is a very interesting company car as it's below €50k. The "private use tax" is limited to 4% (rather than 22% for anything above €50k). I wouldn't be surprised to see many orders, especially leasing and with a real world range of 300km it's more than enough for most.

At this price Model 3 is still in the larger Audi A6, BMW 5 price category in Europe though.

The sizewise similar Audi A4, BMW3 category starts usually at around 35,000 to 39,000 euro range depending on the market (39,000 euro in the case of Netherlands).

 

[stef]

At this price Model 3 is still in the larger Audi A6, BMW 5 price category in Europe though.

The sizewise similar Audi A4, BMW3 category starts usually at around 35,000 to 39,000 euro range depending on the market (39,000 euro in the case of Netherlands).

Not in Switzerland.
As an example here standard range+ (AP included) is 48.200 chf and the entry level 3 series saloon (318d, manual transmission, zero options... let alone anything comparable to AP) is 47.700 chf
No brainer.

 

[schonelucht]

So.

1. Panasonic said in an emailed statement that they have established a 35GWh/year cell capacity by end of March 2019 as reported by Reuters Tesla, Panasonic to seek productivity gains before new battery investments
2. Tesla said demand for cells is outpacing supply Tesla disputes report saying carmaker is freezing spending on $4.5 billion Gigafactory
3. Current cell demand from Tesla can't be more than 25GWh on a yearly basis (this is extremely generous, it's more likely close to 20GWh)

So. Who is lying? Panasonic or Tesla?

 

[cricketman]

Standard range plus here in Spain costs EUR49,000. The model 3 is an amazing car for that price, but effectively it is only EUR7k cheaper than the long range version from last week. I cant see demand going through the roof

Unfortunately the only people who can afford a EUR50k car here are aged over 50, and they are not exactly tech savy.

Actually the average age of someone buying a new car across Europe is 60 years old, I am not sure what that tells you about the purchasing power of young people in Europe at the moment

The media in Spain only have negative Tesla articles which have been badly translated from the English speaking negative news articles.There is one social media guy, Saul, who is basically fighting against the whole of the country to show that actually Tesla is great and revolutionary, but very few people believe it yet.

 

[electronblue]

Not in Switzerland.
As an example here standard range+ (AP included) is 48.200 chf and the entry level 3 series saloon (318d, manual transmission, zero options... let alone anything comparable to AP) is 47.700 chf
No brainer.

It depends on the market of course but Audi A4 starts at 41,410 chf in Switzerland. In Germany Audi A4 and BMW 3 are in the 37,000 - 39,000 eur region as they are in many euro markets.

So Model 3 price-wise is still a ”class” higher with this in Europe as the A6s and BMW 5s start at 10,000 above A4s and BMW 3s...

 

[electronblue]

@cricketman Yes in Spain Audi A4 starts at 35,610 euro and Model 3 SR+ 48,200 euro. That is a $14,000 difference in American currency.

Mind you I am not saying Model 3 isn’t a good car for the price just looking at the people the price can reach.

 

[electronblue]

At this price Model 3 is still in the larger Audi A6, BMW 5 price category in Europe though.

The sizewise similar Audi A4, BMW3 category starts usually at around 35,000 to 39,000 euro range depending on the market (39,000 euro in the case of Netherlands).

What is there to Disagree with my post @M|S|W ? It is merely a fact that A4/BMW3 starts at around 35,000-39,000 euro in Europe where as A6/BMW5 starts at around 10,000 euro higher — which coincides with the Model 3 SR+ starting price in Europe?

 

[cricketman]

@cricketman Yes in Spain Audi A4 starts at 35,610 euro and Model 3 SR+ 48,200 eur. That is a $15,000 difference in American currency.

Mind you I am not saying Model 3 isn’t a good car for the price just looking at the people the price can reach.

Right that's the issue. Even if the price of a Porsche 911 halved in price, still the vast majority of people wouldn't be able to afford one. Model 3 is going to have that problem still in most countries.

In Norway and California it is very different because average salaries over twice as high as in Spain, plus there are government incentives/tax breaks that make it cheaper than an ICE equivalent.

In the South of Europe, all you have is low salaries and high taxes. It stinks!

 

[Dan Detweiler]

TSLA Apr. 12, 4:25 a.m. EDT
Pre-market 271.50 +3.08 (1.15%)

Isn't it funny how SpaceX has a flawless launch of Falcon Heavy and the Tesla stock jumps 3%? More proof that the market is fickle beast.

Dan

 

[Mars ☰mperor]

Speaking of reducing Model 3 variants.
Correct me if I leave something out, but I see only 3 physical differences between SR+ and the other 2 higher versions.

1. Battery pack
2. Single motor vs dual motors
3. More speakers.

Partial Premium does not have rear heated seats, but I guess that's also software limited
(Darn it, I want rear heated seats but don't want to go AWD, let me unlock it Elon!)

All other differences are related to software (shown in blue).

 

[Fact Checking]

So.

1. Panasonic said in an emailed statement that they have established a 35GWh/year cell capacity by end of March 2019 as reported by Reuters Tesla, Panasonic to seek productivity gains before new battery investments
2. Tesla said demand for cells is outpacing supply Tesla disputes report saying carmaker is freezing spending on $4.5 billion Gigafactory
3. Current cell demand from Tesla can't be more than 25GWh on a yearly basis (this is extremely generous, it's more likely close to 20GWh)

So. Who is lying? Panasonic or Tesla?

Note that capacity != production.

Carsonight reported that Panasonic has trouble finding new employees for GF1, despite top pay and nice benefits: from 100 people signed up in local employment pushes maybe 30 show up for work.

So I can very much imagine the capacity being there in principle, but production bring significantly lower.

If so then this would also explain Tesla's insistence on maximizing existing equipment before expanding GF1.

(Plus there might also be negotiation tactics behind it all, I'm sure Panasonic would love to have the Shanghai supply contract.)

 

[M|S|W]

What is there to Disagree with my post @M|S|W ? It is merely a fact that A4/BMW3 starts at around 35,000-39,000 euro in Europe where as A6/BMW5 starts at around 10,000 euro higher — which coincides with the Model 3 SR+ starting price in Europe?

You are taking "base" prices, add some extras too and prices are almost equal.

 

[SteveG3]

Sorry, but you are talking 100%, complete, absolute, breathtakingly unadulterated nonsense there:

• You can order a Model 3 Standard Range Plus in Germany for €44.500 today.
• $35,000 plus ~$3,000 shipping costs, plus 10% import tariffs plus 19% VAT in Germany at a 1.12 exchange range is €43,600.

For this €44.500, which is €900 on top of the 2016 price (with 0% inflation, before incentives) you get the following features over the 2016 Standard Range Model 3:

• A SPECTACULAR glass roof, (metal roof promised in 2016),
  
• ~10% higher range (220 miles promised in 2016, 240 miles delivered today),
• ~200 kW peak charge rate, (twice of the charge rate of 2016),
  
• Autopilot, (was a $5,000 option in 2016),
  
• better acceleration, (5.6s promised, 5.3sec delivered),
  
• upgraded interior, (basic, all-plastic interior promised in 2016),
  
• 12-way power adjustable heated front seats, premium seat material and trim, custom driver profiles (only basic seats promised in 2016),
  
• better audio, (~twice the number of speakers, "Immersive Sound"),
• auto-dimming, power-folding, heated side mirrors, (simple mirrors planned in 2016),
  
• better online services,
• center console with storage, 4 USB ports and docking for 2 smartphones. (Simpler trim planned in 2016),
  
• Dog Mode, Sentry Mode, Romance Mode and whatever future OTA upgrade Tesla can think of,
  
• and a 10x faster FSD computer, which includes two of Tesla's revolutionary AI chips that might or might not fall under U.S. weapons export controls due to the danger they pose on humanity should SkyNet break free.

There's the promises Tesla kept, and in fact Tesla over-delivered fantastically:

You are welcome!

Tesla is delivering tremendous value with the Model 3.

That said, Tesla really wanted to deliver a $35k Model 3.

Many years ago, before a Model S had even been delivered, Elon emphasized that there would be no point to Tesla if they could not deliver a car for the cost of a Camry. The Model 3 was originally talked about as a $30k car. Then by the intro in March of 2016, it was $35k. Yes, there will be some delivered at $35k to those who already ordered it, but, I suspect this target was not an easy one to let go of for Tesla.