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

[troym]

I think Tesla wants to discontinue the cheaper Model 3s and use that production capacity for Model Y as soon as possible. Therefore they are considering Fremont instead of Gigafactory because it would move Model Y production sooner than the original end-of-2020 plan.

Imagine these four trim levels and their gross margins. This would be excellent:

• Model 3 Long Range AWD
• Model 3 Performance
• Model Y Long Range AWD
• Model Y Performance

I mentioned Fremont as a possibility a few weeks ago:


The only problem is, Model Y design is too close to Model 3. They should make the Model Y more SUV-like with a roof-line that extends more towards the trunk. The third-row seats would have more space then too.

This completely contradicts Elon saying the goal is 1) to accumulate as many autonomous miles as possible and 2) to deal with battery constraints by prioritizing SR+ sales over LR.

 

[TradingInvest]

How do they exist that way? There's overhead also...

Most insurance companies operate that way, they lose money by looking at the combined ratio, but they earn money by investing the float. If on average they can keep the premium for 5 years before payout, they can earn quit a bit even if just keep the float in treasuries. They also invest in stocks and other assets.

 

[Cloxxki]

Well, first quarter behind us. Sooo, any word on how sales are going this quarter to date. Probably hard to tell.

The changes are still coming in.
Updated S and X are on the line so can be delivered in North America Q2. Will they have upped production by now? Few in transit new S/X should be added.
I don't see how Europe and China could get the same number of ship and not impact stock. Also, export car were already built late Q1 I believe?
SR+ drops the cell average for Model 3. So at 5.5 GWh car cells, 70 KWh average, around 80K is doable. But the assembly line could well be limited to 65K.

 

[dc_h]

I think we are speaking too soon.

Expect tomorrow morning to have a full on attack and as much fire as they can fund.

TheStreet on Twitter

Is Cramer the wizard behind the short war? Anton was a day one hater and I thought even a keif wompy wheels fan. CNBC hosts any bear and the hosts seem unaware Elon owns a successful rocket company, or think rocket science isn’t what it used to be.

 

[UnknownSoldier]

I should buy ARKK. Then I can get exposure to TSLA but someone else who knows what they are doing is actively managing how much of TSLA there is, when to buy and sell, and also the other 92% of ARKK is other things.

 

[Dutchie]

The federal government allows each state to make their own rules regarding the licensing of insurance carriers. As a general rule, states will require insurers to set aside adequate reserves to pay future claims. That means a portion of the funds must be in cash or highly rated securities, US bonds, etc. Many states also have restrictions on insurers cherry picking their customers. Massachusetts, for example, requires each insurer to participate in the state's Assigned Risk Pool, which consists of high risk customers. With respect to auto insurance that would mean drivers with multiple accidents, driving violations, DUI, etc.

Insurance can be a highly lucrative enterprise, as Warren Buffet would attest. But navigating the regulatory schemes of dozens of states, in addition to tieing up a substantial amount of capital in the form of reserves until premiums build, will be quite the challenge. He is Elon, of course, so he probably figured it all out before breakfast. I'll be interested in seeing the details next month.

Obviously they are not creating their own insurance company but they will offer an insurance product (he specifically mentioned product). There would be a real insurance company covering it.

 

[sundaymorning]

Although I enjoy profiting by trading TSLA stock, I dream of a $300 go private offer from Elon and others, in order for him to give a final "hard core smackdown" to Wall Street and the SEC. And to put Tesla behind the curtain (goodbye quarter-end pushes!) like Rivian is going to enjoy by being owned privately by Amazon/Ford/etc.

Screw Elon and this go private talk. That ship has sailed and keep it that way. I don’t want to hear this crap again and I’m glad he relizes what’s happened. One more go private suggestion from Tesla and the stock goes to $100. This is coming from a bull.

 

[neroden]

Well, first quarter behind us. Sooo, any word on how sales are going this quarter to date. Probably hard to tell.

You are correct, sir! "Hard to tell". We have no factory leaks on production, a lack of car-counting on ships, totally obscured inventory, scrambled and extra VINs, and no other way I can tell to get numbers early.

 

[sundaymorning]

Per a tweet from the Gerber(Ross) baby. Tesla is going to partner with an existing insurance carrier.

Let’s hope it ain’t one of Warren Buffet’s company.

 

[Boomer19]

In Elon's mind that ship has sailed.

But nothing is for certain in business. Someone buying tsla for $1000 per share will be able to take it private.

Or if tslaq attack succeed, you bet GM or F will take it private.

not disagreeing with that

 

[Jayjs20]

Sigh, no relief for my 400 Jan21s

 

[Cloxxki]

That's wrong according to Jack Rickard, who found that the 18,650 chemistry has been updated too and it has just as high energy density as the 21,700 cells of the Model 3.

18,650 is just a form factor, a "bottle size" dimension, and it would be 100% stupid for Tesla and Panasonic to not use the best, most advanced chemistry is all their cell formats.

21,700 cells have better volume density, which is important for the Model 3 which smaller, but whuch doesn't matter for the 100 kWh battery packs of the S and X.

I.e. S/X updated to 21,700 would likely have a very similar range and power as the current 18,650 based packs.

What a 21,700 refresh on the S/X will allow, sometime later, are 105 kWh, 110 kWh and 115 kWh packs - but those will likely be significantly more expensive than the current 100 kWh packs.

(@KarenRei made similar arguments too in the past.)

I skimmed some of those videos but what I got from it is that the 2170 simple do not deliver on the promise ~2016 by JB and Elon in some talk that 15% more energy density at the chemistry level was on the way. Same number of 18650s still to a pack since the start, same capacity.

 

[Pras]

Tomorrow the SP should go up because our long friends will buy back after selling their positions. I stayed as is so at least I saved the trading commission.

Now my July 315-365 long call spread seems in danger. If Tesla delivers 90k+ we may see that again.

 

[Causalien]

So linear projection of the current downward channel projected towards ~May 1st for Q1 ER. The highest SP should be about $274 and lowest should be about $250. $274 should be reached about mid April during the Autopilot showcase and we probably sit around $250 before ER since everyone will be expecting it to be ugly.

Good luck to all.

So this was pretty good.
Haven't been able to be so accurate since I stopped taking spice (coffee)

Now I went ahead and took some spice (coffee) so I can look into the future again. Eyes still blue from prescience.

kull mansuj manfud

 

[neroden]

After-hours MXWL reaction seems muted, despite Tesla saying it's going through in May.

Merger arb speculation must be assuming that there's something which can kill the merger which is out of Tesla's control (failure to tender enough shares might be assumed to be out of Tesla's control, though I'm not sure it actually is)

 

[RobStark]

Some auto insurance companies are doing that now, but with stupid plug-in dongles. This is much better. In theory, rates could be based on how much you drive, how you drive, how much you use AP/FSD, etc.

No, actuaries know rates should be based on marital status and the zip code of where the car is parked overnight.

Tesla has no experience here.

 

[dc_h]

From what I heard, they indicated they'd fit it by building a new tent.

I think they will use the upstairs vacated by motor assembly for final assembly and possibly use the 3 platform assembly.

 

[troym]

I liked this from the first quarter letter:
"Learning from our experience, we can now build a second-generation Model 3 line in China that we expect will be at least 50% cheaper per unit of capacity than our Model 3-related lines in Fremont and at Gigafactory 1."
What kind of margins do you think this translates to!

If I understand correctly M3 ASP of $50k w/20% = $10k profit on $40k cost. Assuming the same values but cutting cost by 50% would translate to 60% GM. That would be incredible.
Interestingly, at this point, the SR+ must be very close to breakeven? I suppose playing the long game to get FSD feature complete by accumulating autonomous miles is worth it...

 

[AcesDealt]

Have you accounted for the lease accounting, which always gives me trouble?

I think the key is moving the S/X ASP up substantially higher than previous quarters and lowering the margin rather substantially, then most of the other numbers net out fairly reasonably with model 3 ASP similar to Q4 near 55k$. S/X ASP going up in Q1 does fit the likely facts, yes? I have trouble remembering all the changes. Presumably margin gets crunched mostly by fixed cost anti-dilution effects.

I think Tesla has probably mostly ceased reducing the model 3 cost basis which was the fundamental reason why the SR was never long for this world. If they can hold that ASP up where they claim it is now (just under 50k$ in NA) then they should be just fine. That's maybe a more significant data point than the 90k+ delivery guidance (which is more speculative and hopeful than fact driven).

 

[Prunesquallor]

It was mostly the Air Force providing necessary funding in exchange for engineering concessions that they mostly never used (like being able to do a once-around orbit, capturing a satellite for return during the one orbit, and being able to land somewhere on friendly ground, which necessitated HUGE cross range abilities, which resulted in the massive wings, which impacted other issues, etc ...). The better designs were choked out by AF in favor of their military focused features which then were generally unused and wasted.

True, but winged, horizontal landing vehicles were baked into NASA's design space since the very beginning (think X-plane programs). The only vertical landing concepts NASA was involved with were the Chrysler SERV concept of 1970 (went nowhere) and of course the McDonnell-Douglas DC-X/Y flight test/concepts of the 1990s.

But NASA never took vertical landing seriously.