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

[neroden]

Can anyone translate the latest Maxwell acquisition amendment to plain English? I can’t tell what changed.
https://ir.tesla.com/sec-filings/sec-filing/sc-ta/0001193125-19-141554

They are simply not mentioning the recent stock prices, because said stock prices have been too volatile and they don't want to have anything inaccurate in the filing. This actually says to me they're closer to closing.

(Item 10(b) mentioned recent stock prices.)

 

[AcesDealt]

Yeah. It's actually lack of supply, but it's being reported as if it's lack of demand.

The fact it that lack of supply is a serious problem, though. Gotta manufacture those cars!

I wish I had that confidence in demand. I'd be doubling down at this SP. I'm not at all clear that the 12k S/X performance was transient.

 

[Carl Raymond]

Yeah. It's actually lack of supply, but it's being reported as if it's lack of demand.

The fact it that lack of supply is a serious problem, though. Gotta manufacture those cars!

Well, Q1 saw both problems. Lack of cell supply affected Model 3 supply. The refresh rumours temporarily hurt S and X demand.

 

[Carl Raymond]

This worries me.

His approach is from the the first principle, one of science, and not engineering. That produces awesome proof of concept systems, but not great production-ready code.

I'm worried we'll get quicker delivery times, but end up with more brittle codebase; such that Tesla will end up paying technical debt for years to come.

If it’s delivered, i.e. passed regulatory approval, that’s freaking amazing. Nothing else will matter.

 

[neroden]

Tesla's Capital Raise Offered No Real Benefit To The Company Or Its Suffering Shareholders

This analysis is so bad I don't even know what to say about it.

Agreed. While I think the equity raise was done mainly to get Wall Street to shut up, and that it won't work, it *does* have some advantages; we now know exactly where the funding for the Model Y production line, the Semi factory, and the rampup at the Solar Roof factory are coming from (it's sufficient to cover all three), and there's spare to cover any problems which might arise.

 

[neroden]

Only Semi-OT

Great, now would you care to pick out all of the business deals he has had throughout his life that proved successful?

There are so few.

Really, Trump is a terrible businessman. Those of us who followed his "career" in the NY papers back in the 1980s knew this. He usually fails to pay his suppliers, threatens to sue his suppliers, and then after a long lawsuit, caves and pays them more than he would have if he'd been honest originally. There is *all kinds of stuff like this*. The only reason he's rich is that he inherited a lot of money. (Ivana was smarter, and Ivanka inherited her brains.)

Full credit to Trump -- he does have some skills. He won a lifetime achievement award from World Wrestling Entertainment for his acting skills.

Relevance to investor thread? If you can't correctly analyze Trump's (total lack of) business acumen, you have no business playing around with individual stocks.

 

[neroden]

OT, tariffs

Not a fan necessarily of trade wars, but it will hurt China more than it will hurt the US.

Chinese exports to the US are >4% of their GDP
US exports to China are <1% of our GDP

Since both of these are in the high value-added tradable goods sector, you probably also have 2-4x multiplier value in these numbers. China has a whole lot more to lose than the US.

Wrong. The importer loses when import tariffs are stupid.

If you are an importer and you manufacture lots of widgets, putting tariffs on imported widgets can be beneficial to your domestic widget industry. Fine. This is the sort of tariff which China and Mexico imposed on the US.

If you are an importer and you manufactuer NO widgets, putting tariffs on imported widgets just hurts you. THAT is the sort of idiot tariffs Trump has been implementing.

China will sell the US exactly the same amount of exported goods and US consumers will just pay more for them.

 

[neroden]

OT, world economics

This is just plain stupid to the Nth degree.

China is a strategic competitor not a "special partner. "

Trump can sustain this trade war for the next 5.5 years.

The predicted economic chaos hasn't happened and will not happen.

The economy is doing so well Trump approved an additional 30k foreign worker visas.

The status quo antebellum means China has a massive strategic advantage in bilateral trade.

Any future POTUS that surrenders unilaterally will rightly be called on it during his/her re-election campaign.

Oh, it's too late. China's the only world superpower now. The US has a precise sum total of zero leverage in trade negotiations with China; that was lost when Reagan decided to outsource production to China back in the 1980s.

Most people in the US haven't noticed, just like many people in Britain still seem to think they have an Empire.

 

[EVNow]

In general terffs are useful only when they prevent industries from shutting down domestic factories to open foreign ones. Even then, only when the domestic competition is heavy.

Otherwise it’s just increasing domestic prices. Just indirect tax.

 

[lascavarian]

LOL. Moving one guy up means nothing - as I said earlier could just be a simple promotion.

Speculating but at some point a new tech has to apportion resources toward support of regulatory approval tasks.

 

[PANN]

Just saw video comments from China lead negotiator Vice Premier He Liu, doesn't seem like China will retaliate immediately with tariff on US cars. If Tesla act quickly, they can probably make enough M3 and ship them to China before tariff, so Q2 delivery # won't be hurt.

Tesla probably only need to ship enough M3 for China Q2 sales. Around June-July, China M3 sales will be very low if any as Chinese people wait for cheaper local made M3 from Shanghai Giga. Likely Telsa would announce prices of China local M3 and taking orders in July.

 

[Carl Raymond]

Fixed costs of about $6 billion/year, which are pretty stable with increasing volume.

Does it bother you that they were planning 10k per week model 3 from Fremont, but now planning 7k ex Fremont and 3k ex Shanghai? I mean, GF3 adds fixed costs.

Or is it going to be an insignificant blip on the charts when we look back a few years from now? The 3k strikes me as a convenient way to pretend the original goal will be met, which is false. But 3k is not an output level that will be held. It’s just a marker on a chart that will go passing by.

 

[neroden]

Tesla autopilot is pro-bunny :

Dealer of Happiness on Twitter

Hmmph. Should have stopped rather than swerved; you can't tell which direction a bunny is going to run.

 

[neroden]

Does it bother you that they were planning 10k per week model 3 from Fremont, but now planning 7k ex Fremont and 3k ex Shanghai? I mean, GF3 adds fixed costs.

That absolutely hurt, significantly. Yes, it does bother me. Yes, it lowered my long-term valuation of the company. It's still undervalued, just not as undervalued.

From an accounting perspective, most of the factory is capex and COGS; the non-capex fixed cost portion of "keeping the lights on" is relatively small. Tesla seems to have been able to stabilize capex at $2.5 billion/year while expanding (which is higher than I'd like, but it's OK).

This is one of the two places where the failure to hit 10K/week out of one factory came through into my model; had they hit their target I would have had it as $2 billion/year. The other place is, of course, gross margins of 20% - 25% instead of 25% - 30%, because the number of factories needed per car has risen.

R&D seems to be stabilized at $1 billion/year. SG&A is the one which might expand with growth, but I think it's going to be stable around the $2.5 billion/year level (it's currently a bit lower) after they finish expanding and straightening out service centers.

Or is it going to be an insignificant blip on the charts when we look back a few years from now? The 3k strikes me as a convenient way to pretend the original goal will be met, which is false. But 3k is not an output level that will be held. It’s just a marker on a chart that will go passing by.

Yeah.

 

[neroden]

What's up with all the hatred of Trump on this forum?

I suspect most discussions in ancient Rome got distracted by discussions of Emperor Caligula, too. Seems normal when there's a deranged person in a position of power for them to "suck the oxygen out of the room".

 

[PANN]

Liu emphasized that China government need a trade deal with dignity, and he hope his US counterparts understand this. My interpretations are that some terms from US would make Xi look weak in domestic politics and undermine his ruling, he can't take that. So Xi negated them after Liu agreed with those terms with Mnuchin and Lighthizer.

 

[neroden]

• CJ Moore runs the “integration” team, which acts as the liaison between Autopilot and the rest of Tesla. He makes sure, for instance, that Tesla’s user-interface team,

Tesla has a user interface team? Could have fooled me. I assumed they were all fired in early 2016 and not replaced, based on the evidence.

Is there any way to wake Elon up to what a bunch of incompetent clowns the current user interface team are? Now that the geographical distribution of service centers is being fixed, this is the biggest problem with Tesla as a car brand.

 

[lascavarian]

Hmmph. Should have stopped rather than swerved; you can't tell which direction a bunny is going to run.

Perhaps they mistakenly invoked the squirrel prediction NN.

 

[neroden]

OT

This is purely a thought exercise and I'm hardly offended by people seeing it differently. Consider this, when the internet was in it's infancy, how many saw it and thought "this is going to put retail stores out of business"

For the record, I was going around telling people that it was going to replace the "general store" business with a "hyper specialty online store" business and they needed to adjust. Random small local retail stores DID figure this out and became the world supplier in their specialty. Those who were still trying to be generalists mostly went under.

or "this is going to kill broadcast TV"? Very few (zero?). It's extremely likely that we are missing similar huge disruptions that are destined to occur.

People mostly do not see the logical consequences of any given change, yes.

 

[LJS22]

The market just needs to see that the demand is still there for Tesla. The narrative over the last few months has been about the ev competition, demand after tax incentives drop, and Q1 numbers. That’s the chart being read right now. Investors don’t care about solar, robotaxis, or even semi’s right now. Once there is reassurance that Tesla can continue their lead in the EV market, improve delivery and demand, and get back to profitability then they will have all the support they need.
The only thing they can control is delivery at this point. If they can get that aspect smoothed out then the rest should take care of itself and the market will answer accordingly.