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

[Artful Dodger]

The best strategy would be to have three factories, US, EU and China, and all of them producing all mainstream cars (S, X, 3, Y).

Why duplicate the S/X line in China and Europe? Steady state world-wide demand for ultra-premium models is about 100K. Building new lines for old tech would be a waste of resources.

Better to put that capex toward Model 2, which will be a true world car. Bigger sales volume in China and in the EU than in the USA. And the Model 2 is unquestionably more important to the mission.

S/X are awesome cars, but they will NEVER move the world themselves; they are halo cars and do their role well as brand ambassadors. But the mission requires mass production in WW2-level NUMBERS.

This is why we go to China. Look for min 20K/wk combined 3-Y-2 from GF3/Shanghai (1M/yr). That, along with China's greening of their electrical grid, WILL move the needle. We all need this to get done. Fail in China, we all cook at 2C+ over pre-industrial temp.

So let's get'er done!
Cheers!

 

[PhaseWhite]

Well, I’m seeing tons of reports now of Model S/X ordered in April with no delivery scheduled and no VIN. Odd thing to be making S/X that there’s no demand for and then not shipping them to the people that ordered one...

Tesla made the Model S/X refresh announcement on 4/23, which was 1 day before they released Q1 earnings which I think most here would agree were way worse than expected (even with 200m in credit sales).

To me it seems likely that the announcement was moved up a bit before the manufacturing lines and or supporting supply chain (motor manufacturing in Giga1) were ready to go. Given the huge drop off in S/X demand in Q1 that was probably a smart move.

 

[DaveT]

Here’s some weekend thoughts on TSLA/Tesla.

Tesla/Elon really screwed up with Model 3 costs, which appear to be $38,000 for cheapest model.

In order to have delivered a $35k in mass numbers, Tesla would need to have reached a cost of production of probably $30-32k for the cheapest model.

So, for Tesla to have missed that number is quite disappointing. And they didn’t miss it by a little; they missed it by probably over $6k.

The result is that Tesla will sell a lower number of Model 3s than they originally projected but their ASPs will be higher (since their base model price is higher). How much lower Tesla’s delivery numbers will be is up for debate, but for sure they will be a lot lower compared to if they would have reached their $30-32k original cost projection.

I know this won’t be a popular opinion here, but I have a hard time seeing Tesla deliver more than 400k Model 3s a year for this year, next year or even the year after.

But the good news is Model Y is coming and will provide much needed boost to revenue and margins. While I don’t think Tesla will sell more than 400k Model Ys a year, I still think it will dramatically boost their profitability and bring Tesla to much more solid ground.

Gen4 will likely be announced within the next couple years, and it will be a barebones robotaxi under $30k. That’s my guess. You heard it here first.

 

[durkie]

Indeed, LTSE is serious. Much more so than the New York based financial media, who are barely covering the story.

For example, the 'Silicon Valley Entrepreneur' the Reuters article declines to name is none other than Marc Andreessen (co-author of Mosaic, the first widely used Web browser; co-founder of Netscape; and co-founder and general partner of Silicon Valley venture capital firm Andreessen Horowitz):

SEC approves new Silicon Valley stock exchange backed by Marc Andreessen, other tech heavyweights

This could get big, fast.

Cheers!

Unfortunately, aside from some mentions of share voting power tied to duration of ownership, it seems like the exact rules and mechanisms they are planning to implement to bias things towards long-term holders cannot be disclosed at this time.

So, not a lot to go on for the time being, but it does look interesting.

 

[Remus]

Here’s some weekend thoughts on TSLA/Tesla.

Tesla/Elon really screwed up with Model 3 costs, which appear to be $38,000 for cheapest model.

In order to have delivered a $35k in mass numbers, Tesla would need to have reached a cost of production of probably $30-32k for the cheapest model.

So, for Tesla to have missed that number is quite disappointing. And they didn’t miss it by a little; they missed it by probably over $6k.

The result is that Tesla will sell a lower number of Model 3s than they originally projected but their ASPs will be higher (since their base model price is higher). How much lower Tesla’s delivery numbers will be is up for debate, but for sure they will be a lot lower compared to if they would have reached their $30-32k original cost projection.

I know this won’t be a popular opinion here, but I have a hard time seeing Tesla deliver more than 400k Model 3s a year for this year, next year or even the year after.

But the good news is Model Y is coming and will provide much needed boost to revenue and margins. While I don’t think Tesla will sell more than 400k Model Ys a year, I still think it will dramatically boost their profitability and bring Tesla to much more solid ground.

Gen4 will likely be announced within the next couple years, and it will be a barebones robotaxi under $30k. That’s my guess. You heard it here first.

It is hard to believe the cost of model 3 would stay the same year after year.

 

[Right_Said_Fred]

It might be a stretch to say he’s betting the company again, but he’s betting the company again.
Regarding risk to the product, I don’t think that’s an issue. He has a vision about how this is all going to work. He’s had this vision for at least two years. Anybody who doesn’t get it, or agree, is not going to stay. We will see how this plays out, again a bull or bear thesis is there for both sides. I’d prefer he had teams he trusted, but this and starship are the two things of utmost importance right now. His value as his own A-team is why this forum exists. It’s why Tesla exists, and Spacex. They’ve grown beyond him micromanaging everything, but this is the big issue of the decade and there’s first and last.

Betting the company (farm) implies taking a financial risk that could push the company over the edge. With a cash reserve of almost $5 billion and investments in NN and software not being extremely capital intensive, it is very unlikely that he is betting the farm.

Elons remark that they are putting everything they have in FSD is unlikely to be a reference to ‘all their money’. He probably meant it is their most important project. That makes sense given that last week he said FSD could make Tesla a $500 billion company.

 

[Bet TSLA]

They are simply overworked und understaffed for the amount and scope of their work they have to deliver.

Having worked for Apple doing software, as well as many other top companies (Silicon Valley and elsewhere), I can state with absolute certainty that every single team was always overworked and understaffed, often egregiously so. So what?

 

[Electroman]

Here’s some weekend thoughts on TSLA/Tesla.

Tesla/Elon really screwed up with Model 3 costs, which appear to be $38,000 for cheapest model.

In order to have delivered a $35k in mass numbers, Tesla would need to have reached a cost of production of probably $30-32k for the cheapest model.

So, for Tesla to have missed that number is quite disappointing. And they didn’t miss it by a little; they missed it by probably over $6k.

The result is that Tesla will sell a lower number of Model 3s than they originally projected but their ASPs will be higher (since their base model price is higher). How much lower Tesla’s delivery numbers will be is up for debate, but for sure they will be a lot lower compared to if they would have reached their $30-32k original cost projection.

I know this won’t be a popular opinion here, but I have a hard time seeing Tesla deliver more than 400k Model 3s a year for this year, next year or even the year after.

But the good news is Model Y is coming and will provide much needed boost to revenue and margins. While I don’t think Tesla will sell more than 400k Model Ys a year, I still think it will dramatically boost their profitability and bring Tesla to much more solid ground.

Gen4 will likely be announced within the next couple years, and it will be a barebones robotaxi under $30k. That’s my guess. You heard it here first.

Screwed up, did you say?

As in, every other manufacturer have already hit that price point for a 220 mile EV, but somehow Tesla alone is unable to do it?

 

[DaveT]

Screwed up, did you say?

As in, every other manufacturer have already hit that price point for a 220 mile EV, but somehow Tesla alone is unable to do it?

Yes, they screwed up because their costs wildly exceeded what they had projected them to be.

 

[AlMc]

Yes, they screwed up because their costs wildly exceeded what they had projected them to be.

Agreed. It is not that they are not the cost leaders in the space. It is that they did not bring the cost down for the base '3' to make it cost effective for them.

 

[Boomer19]

In theory you can't vote shares that you've lent out. In practice it's complicated. The company doesn't really have anything to do with it, though. If you register the shares in your own name then the company will have you listed in their registry and you can always vote. This is rare, though, outside of early employees and such. Most tradeable shares are held in "street name" and registered by the DTCC. They track which shares belong to which brokerage and the brokerages track which shares belong to which customers. The exchange isn't really involved and the companies has no idea if you own their shares, when you bought them, whether your broker lent them out, etc.

To do the kind of stuff you want, I think they'd need a separate repository that competes with the DTCC. Or convince the DTCC and the brokerages to track it all. I can't see the LTSE having enough clout for either.

well, yeah. part of what @jhm was alluding to sounds more like an end-beneficiary market practice. it’s not really a thing in the US.
there are similar things like it in other markets. off the top of my head, brazil has such a a case. india has omnibus and personal accounts practice, although not sure if this starts at the execution level or after the trade is made, at clearing house and custody level

in theory, the exchange could require the inclusion of end beneficiary information tagged on the order for it to be executed. this would require registry info from participants, brokers would also have to facilitate...
at dtcc these customers could hold their shares in direct registration, still electronically, but fees apply to brokers, would would be passed to customers.

now i’m thinking about the logistics of this and if there’s a way around it at the depository, and if they can be pooled in the brokers omnibus account. on the one hand, it’s up to the brokers to properly segregate customer $ and shares. there’s more than 1 use case in a given pool of seg’d shares, so maybe it isn’t such a stretch. but if brokers have to code their clearing systems for this, it’ll probably never happen the way i’m thinking about it. interesting though, im curious as to whether this is going to be a fluff marketing ploy or an actual real deal attempt. at first glance it seems the former, but we will see.

 

[KSilver2000]

Here’s some weekend thoughts on TSLA/Tesla.

Tesla/Elon really screwed up with Model 3 costs, which appear to be $38,000 for cheapest model.

In order to have delivered a $35k in mass numbers, Tesla would need to have reached a cost of production of probably $30-32k for the cheapest model.

So, for Tesla to have missed that number is quite disappointing. And they didn’t miss it by a little; they missed it by probably over $6k.

The result is that Tesla will sell a lower number of Model 3s than they originally projected but their ASPs will be higher (since their base model price is higher). How much lower Tesla’s delivery numbers will be is up for debate, but for sure they will be a lot lower compared to if they would have reached their $30-32k original cost projection.

I know this won’t be a popular opinion here, but I have a hard time seeing Tesla deliver more than 400k Model 3s a year for this year, next year or even the year after.

But the good news is Model Y is coming and will provide much needed boost to revenue and margins. While I don’t think Tesla will sell more than 400k Model Ys a year, I still think it will dramatically boost their profitability and bring Tesla to much more solid ground.

Gen4 will likely be announced within the next couple years, and it will be a barebones robotaxi under $30k. That’s my guess. You heard it here first.

Also...
Although the Model Y isn’t even close to release yet, they still upped the price already by $1,000 since debut. They really need to get a handle on their pricing.

On the topic of Y. I apologize if it’s been discussed before, but what was the reason for changing how reservations are done? Why change it from a $1,000 deposit with the 3 to a $2,500 refundable down payment if they can’t even recognize it until after return period passes.

 

[MP3Mike]

Tesla/Elon really screwed up with Model 3 costs, which appear to be $38,000 for cheapest model.

Part of the reason for that is that the $35k model wasn't popular enough to actually decontent the car like they planned to. (Or at least that is what they claim.) It comes with so much more than was originally planned... (Glass roof, larger battery, fog lights, power seats, power steering column, premium interior materials, extra speakers, etc.)

 

[Spacemanspliff]

Yes, they screwed up because their costs wildly exceeded what they had projected them to be.

To be fair they haven't been able to get above a 5,000 weekly average in any quarter production wise part of those problems stemming from a major supplier, so acting like A) its all Teslas fault and B) costs are done and dusted after Q1 seems a bit premature.

 

[Boomer19]

Tesla certainly knows, as they have called me in the past to encourage me to vote my shares, and mine are just through a broker...

brokers use 3rd parties like broadridge (former adp) and mediant to facilitate the handling of proxy, bankruptcy, and other event typeset. they curate list of record date holders, notify the holders, collect and tabulate votes, etc

 

[Boomer19]

order to have delivered a $35k in mass numbers, Tesla would need to have reached a cost of production of probably $30-32k for the cheapest model.

So, for Tesla to have missed that number is quite disappointing. And they didn’t miss it by a little; they missed it by probably over $6k

well we originally were hoping for ~28k after hearing the full munro tear down

what are the data behind your implications of missing 30-32 by over 6k (i take that to mean that you mean their cost on a 38k model is more than 38k)

 

[neroden]

I don’t understand your point. Can you please elucidate?

Here’s my take:

1) Model 3 ultimate demand is 15k / week.
2) A nice rough breakdown would be:
— 7k U.S.
— 4k Europe
— 4k China

If the above is true, then the mistake was the original plan to manufacture 10k / week in Fremont, not the current plan for 7k / week in Fremont and presumably 4k / week each in Europe and China.

What am I missing?

If you can get 10k/week out of one set of lines at one factory -- rather than 7k/week -- you are producing more cars for the same capital cost, more cars for the same human labor cost, and essentially you have a lower cost structure per car.

Straight up economies of scale. That's what you're missing. The better the economies of scale are, the more profitable Tesla is. If they're capped out at 7k/week in Fremont on three GA lines, that's fewer economies of scale than if they can hit 10k/week in Fremont on two GA lines (as originally planned).

That is all.

 

[neroden]

I don't think we should jump to conclusions about max production rate from Fremont. Obviously more cars can be pumped out since they are in the middle of approving Model Y's production location. My guess is that Model Y is now a consideration at Fremont as a cost saving strategy since China's gigafactory is going up as fast as the Chinese promised. There's a difference between not having the ability to hit 10k Model 3s/week vs not wanting to hit 10k/week at Fremont. Considering that the Model Y is expected to sell more than S3X combined, Elon would really be shooting themselves in the foot trying to share Fremont's 7k/week limitation between the Y and the 3.

So, it's quite possible that the only 7k/week limitations at Fremont are on the GA lines and the paint shop. Model Y will have a new GA line, of course, probably with higher capacity and better optimization than the Model 3 lines. The paint shop will be expanded. Economies of scale may be leveraged on the body lines, stamping, etc, which quite possibly have substantially higher limitations (we don't know how high). This would be the logic behind Fremont.

 

[Skryll]

Why duplicate the S/X line in China and Europe? Steady state world-wide demand for ultra-premium models is about 100K. Building new lines for old tech would be a waste of resources.

A lot of people don't even know yet what they are missing, tesla does no advertising and the media are misrepresenting the best they can to discourage sales, even consumer reports concludes 'can't recommend' on the Model 3 that scores higher than all others in most of their categories and that everybody that owns one loves so much.

This will be overcome by network effect sooner or later, especially when FSD is a thing and observable around you. Who is going to drop top $ on a legacy tech BMW 5-7series at that point, when they get passed on the autobahn and at every light in the city all the time.

The first wave of that could already come next year.

 

[Skryll]

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.

Whenever I have a doubt about demand I take my Model 3 for a spin and try to remember what kind of POS legacy gas cars where before I left them behind. No doubt at all after that. Just for fun I was driving my Model 3 for Lyft in 2018, 'wow, got to sell my s4 for this!' type reactions, easy 5.0 rating. And now I hear more and more people complain about $80/week gas cost on their commuter car and I just tell them how much cheaper AND better electric driving is and that the Model 3 is now starting at $35k, and they are floored.