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

[Doggydogworld]

There's some actual evidence that exactly that was happening. Remember that several TE cell lines were converted to automotive to meet Model 3 demand. (Then, more recently, converted back.)

Presumably they had built the TE pack line to be fed by all the TE cell lines... before converting some of them to automotive... so it would have been underutilized during the period when all the cells were going to Model 3.

But what's the cost of that line? $10 million? $20 million? They assemble Model 3s on a line they threw together out of spare parts, this should be an order of magnitude less expensive than vehicle assembly.

Let's say they spent a ridiculous $100m on lines designed to do 2 GWh of Powerwalls and Powerpacks last year but only ran them at 50% due to cell shortages. Depreciated over 10 years it's $10m/year. That means depreciation cost $10/kWh last year instead of $5. These are $500/kWh products, five bucks is a rounding error.

 

[Anstandswauwau]

what about the Nasdaq. does that count? because it doesn't seem to care either.

Well

 

[pnungesser]

The note about Tesla not allowing buyback of leases is interesting. There are two options.

1. That's just fluff to push fence sitters to buy rather than lease or attempting to pump up the ride hailing.
2. They are serious about ride hailing and really do want those already depreciated, gently used vehicles for their network.

Of course if they are not ready to accept the off-lease vehicles, they could still still decide at the time to allow the cars to be bought by the lease holders. It's not like Tesla has never changed its mind/policy/prices/etc.

 

[tslalala]

wall street will make it so $tsla finishes the day just below 270 for their max profit. so sadly SP not going anywhere today.
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What website did you get this from? I'd like to bookmark this

 

[Fact Checking]

Leasing – on this forum here – was always deemed as *the* strongest lever to increase M3 demand. If that's not a sign of decreasing demand, I don't know what is. And that's by the bulls' very own logic.

Yesterday they effectively raised prices of the Model 3 and reduced configurations, which is a demand reduction move - it's only natural to pair it with a demand boosting lever.

Furthermore, if Panasonic's claim that they increased cell production to 35 GWh/year is true then they can make ~20% more Model 3's in Q2.

That's two very good justifications to pull the leasing demand lever now, even if they had no Model 3 demand constraints up until now.

 

[Anstandswauwau]

Regarding EU, see the earlier discussion regarding FCA/Tesla pooling. Tesla is going to get extra cash for every sale in the EU, and the SR+ would not only increase sales, but do so using fewer battery cells (which Tesla still maintains is their chief bottleneck).

That could be an explanation for the EU. I doubt it but it could very well be the case.

Do we have any projected numbers for what for what the FCA pays, virtually, for every Tesla sold in the EU?

 

[M3Rider]

For the folks complaining about 'broken promise' when the $35k 3 goes fully away (which I think is inevitable in the medium term given these announcements): meh. They did bring the car to market. I'd rather this have been a limited-time promise kept than have it hamper their ability to continue moving toward self-sustainability going forward.

I'd be satisfied if EU folks get their chance too to order SR whenever SR+ opens up for them.
After a quarter, expect it gone if this does happen.
Although with tariffs etc. they will not see 35k price.

In China, the goal was to make cheap cars, so I'm not quite positive that their start price will be 40k. They may see lower prices/cheaper options there.

 

[anthonyj]

I’m disappointed with the leasing rates. Extremely high. I’m sure if it will increase demand though. What is causing the high rates though? Is it interest/MF? Residual? Anyone have a breakdown? I’m used to paying 1% a month 0 down for a car that I lease. Example: 60,000 car leased for $600/$0 down

 

[Curt Renz]

It’s poor execution to promise a $35k car and not be able to deliver it.

People do. The market and media do, too.

It's a broken promise and some former Tesla fan/sympathizers feel betrayed be that. On an human level, there's nothing good about that news. Absolutely nothing.

To everyone complaining about Tesla supposedly breaking their promise of $35k Model 3.

Did you forget Dieselgate?
VW is doing just fine after multiple rounds of lies to US regulators. The fact they they are still allowed to sell anything in the US is beyond me. Germany can go ahead and keep them on the pedestal but I won't. Sold my rare Porsche at a good premium weeks after the news broke and not buying another VWAG product until they earn it.

Tesla can set any price they find sustainable and I applaud removing all references to 35. On top of that, today's Model 3 is a much better value compared to $35k Model 3 shown in 2016.

The Verge - today: Tesla’s $35,000 Model 3 is no longer available to order online

This price change doesn’t apply to the $35,000 Model 3 with Standard Range battery, which consumers will still be able to buy without Autopilot, according to a spokesperson.

Tesla blog - today: An Update to Our Vehicle Lineup

As a result, Model 3 Standard will now be a software-limited version of the Standard Plus, and we are taking it off the online ordering menu, which just means that to get it, customers will need to call us or visit any one of the several hundred Tesla stores.

 

[Vaamo]

You can also order SR+ here in Finland. Now this a bit interesting, car cost is 49 200€. With delivery etc costs, it becomes about 51k€.
We have an incentive of 2k€, for EV:s that cost less than 50k€.. now I wonder whether that incentive applies here or not.

Tricky indeed. I would guess the delivery fee will be detached, i.e. car price will be under 50k. It would be unreasonable from Tesla to price SR+ in violation of incentives in particular market. Even if the two are considered as bundled together(price of the car 50.200Eur) discount of 200 Eur should be possible. Unfortunatelly, it is Tesla, thus maybe they rushed the pricing without sensible pricing in mind.

Hope for you, that you will be eligible with your purchase.
Optional service plans & guarantees are not accounted directly to price of car either, as much as extra set of wheels(outside of special deals like free warranty etc).

 

[omarsultan]

It was a mistake to promise a fixed $35k price in the first place. That's why Tesla is not making the same mistake with Model Y.

Probably true, but it would be great if Tesla just owned that instead of all the games which make it seem like a leadership team that is winging it. In a matter of weeks, we have gone from "online is the future, we cannot afford a $35K car unless we close all the stores to lower our costs of sales" to "so, we still have a $35K car but you now have to go online or get on a phone to buy it (which inherently increases costs of saies, but ignore that)."

The $35K price point if an albatross of Tesla's own making. I'd like to see them just stick a fork in the $35K model going forward, commit to honor the price for anyone that had an existing reservation based on the availability of a $35K model (for good will and to avoid lawsuits), and then move on.

 

[Doggydogworld]

It is a leap to get from 35GWh “capacity” for Pana (whatever that means) to a 35GWh take-or-pay commitment by Tesla. The offtake contract between Tesla and Pana was heavily redacted last time I looked. Have I missed an update?

The agreement is redacted enough that it's impossible to extract pricing or other competitive info, but the mechanism for adding capacity is pretty clear. Tesla and Panasonic jointly agree to add capacity and Tesla agrees to buy the output.

If the extra 8-10 GWh of new capacity is new machines, Tesla is on the hook to buy the output. If it's theoretical capacity that Panasonic could add by modifying existing machines then there's no additional obligation yet (and might not ever be if the mods are cheap enough).

 

[Anstandswauwau]

Yesterday they effectively raised prices of the Model 3 and reduced configurations, which is a demand reduction move - it's only natural to pair it with a demand boosting lever.

No offense, but that's your subjective interpretation of their actions.

In light of eg. Apple's pricing- and product-strategy you could very well interpret this the other way around, too. Turns out, if your product is in a finite market of more-or-less loyal customers, you can increase prices and slash options while maintaining or, in some cases, even increasing demand ("luxury effect", very apparent with special runs of expensive watches).

Others simply call it "milking the cow". Not saying this is what Tesla is doing, but it'd be foolish to rule this possibility out, either.

 

[Fact Checking]

Um... did anyone notice the mother of all MMD's just now? Any thoughts what caused the shorts to dump so hard?

View attachment 396139

Appears to be macro triggered, TSLA followed a drop in the NASDAQ - but there might also be "Friday Is Options Day" shenanigans behind it. Volume is relatively low which allows "end of day price setting" activities.

 

[KarenRei]

Q: How will InsideEVs deal with leases? Will they show up as sales?

 

[⚡️ELECTROMAN⚡️]

I’m disappointed with the leasing rates. Extremely high. I’m sure if it will increase demand though. What is causing the high rates though? Is it interest/MF? Residual? Anyone have a breakdown? I’m used to paying 1% a month 0 down for a car that I lease. Example: 60,000 car leased for $600/$0 down

How do the M3 lease rates compare to the lease rates of the MS and MX?

 

[Nocturnal]

I’m disappointed with the leasing rates. Extremely high. I’m sure if it will increase demand though. What is causing the high rates though? Is it interest/MF? Residual? Anyone have a breakdown? I’m used to paying 1% a month 0 down for a car that I lease. Example: 60,000 car leased for $600/$0 down

If they were lukewarm about leasing then I get why they wouldn't make the rates super low. Seems like many companies use cheapI leases to dump excessive inventory. Knowing Tesla if demand isn't high they will just adjust rates down.

 

[Fact Checking]

In light of eg. Apple's pricing- and product-strategy you could very well interpret this the other way around, too. Turns out, if your product is in a finite market of more-or-less loyal customers, you can increase prices and slash options while maintaining or, in some cases, even increasing demand ("luxury effect", very apparent with special runs of expensive watches).

Huh? Compared to Apple Tesla is in the virtually infinite market of EV growth that will some day, in many many years reach 2,000-3,000 billion dollars revenue but which market is currently maybe at 50 billion dollars annualized revenue if we add up all the EV makers.

I.e. Tesla has only barely scratched the surface of EV demand, they have captured only around 1% of total addressable market so far. Their pricing actions, even if we assume that they are an EV monopolist who has pricing power (which is true to a fair extent), cannot be compared to Apple's ideal pricing actions in low growth markets.

So if what I presented, and which you did not quote, is true:

Furthermore, if Panasonic's claim that they increased cell production to 35 GWh/year is true then they can make ~20% more Model 3's in Q2.

That's two very good justifications to pull the leasing demand lever now, even if they had no Model 3 demand constraints up until now.

... then if Tesla wants +20% more Model 3 sales in Q2 it's time to use some of the demand levers.

This topic is reasonably well researched in economics: see "revenue maximizing" vs. "profit maximizing" behavior of semi-monopolists. Apple was obviously profit maximizing to a fair degree, due to the very high margins and the low capital intensity of their markets. Tesla on the other hand was always in a mix between revenue maximizing and profit maximizing pricing patterns.

Not rocket science.

 

[MP3Mike]

Q: How will InsideEVs deal with leases? Will they show up as sales?

I assume the same way they handle them for the S, X, and every other car manufacturer. (Which would be to show them as sales.)

 

[Nocturnal]

No offense, but that's your subjective interpretation of their actions.

In light of eg. Apple's pricing- and product-strategy you could very well interpret this the other way around, too. Turns out, if your product is in a finite market of more-or-less loyal customers, you can increase prices and slash options while maintaining or, in some cases, even increasing demand ("luxury effect", very apparent with special runs of expensive watches).

Others simply call it "milking the cow". Not saying this is what Tesla is doing, but it'd be foolish to rule this possibility out, either.

i.e. shifting your supply curve