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

[EVNow]

I don't want them to take on debt. I'd rather they sold enough super high margin robotaxis to pay for the ones they keep.

Either way they are not selling cheap robotaxis- that simply doesn’t make sense.

 

[AcesDealt]

Just watched the relevant portion again. The graphic says the cost is <38k. It’s not clear if it is because the price of sr+ is 38k and they didn’t want to give any more info about COGS or whether they assigned any cost to FSD or ....

Essentially I don’t think we can derive margin from this information. I mean COGS could be 30k and the graphic would still be accurate.

SR+ is clearly more than 38k$. You've spent 500+ hours here since Q3 financials came out. Any time between then and now you could have sat down and figured this out yourself.

 

[EVNow]

SR+ is clearly more than 38k$. You've spent 500+ hours here since Q3 financials came out. Any time between then and now you could have sat down and figured this out yourself.

SR+ wasn’t there right after Q3 ER. Apparently you didn’t even know that.

I have no use for this kind of trollish conversation, anyway.

 

[dqd88]

Electric Mercedes Benz doesn't scare the bejezus out of Toyota nor Detroit.

You need a compelling $25k CUV/hatchback and a compelling $35k Pickup for that.

It doesn't have to scare Toyota or Detroit (though based on the Prius decline I'd say it does scare Toyota).

It has to scare BMW/Audi/MB first. Tesla is a premium product. It has to be because of the cost to produce. It cannot be sold (yet) at a mass market cost. This is good anyway as the transition to EV is partly a perception problem. If EV can be seen a "premium" thing, that will create a better leverage effect than it being just a "green thing".
Plus the inherent benefits of EV (more space, more safety, more torque) line up naturally with a premium experience. It will eventually trickle down to the masses. It's the way forward.
Detroit can/will be the last to adopt electrification. It wouldn't make financial sense for them yet, plus their customer base is less enthusiastic about it.

 

[SPadival]

My quess - robotaxi presentation slide

Speaking of which, Caleb from The Tesla Show podcast was kind enough to take screenshots of the presentation slides.

Tesla Autonomy Investor Day Slides — The Tesla Show

PS: I wish Caleb went solo with his podcast. I can’t stand Mike.

 

[RobStark]

The funny thing is, when they have that people will say: $25k still too expensive, once they have a $15k CUV and $25k pickup... goal posts always on the move.

Funny thing is the heart of the market is the heart of the market.

Toyota makes no money on $15k CUV neither does Ford on a $25k pickup.

Toyota CH-R starts at $21k in the USA and RAV4 at $25k.

Ford F150 starts at $28k but Ford makes no money here with work truck specials.

"They" also always complain about goal post moving.

 

[RobStark]

It doesn't have to scare Toyota or Detroit (though based on the Prius decline I'd say it does scare Toyota).

It has to scare BMW/Audi/MB first. Tesla is a premium product. It has to be because of the cost to produce. It cannot be sold (yet) at a mass market cost. This is good anyway as the transition to EV is partly a perception problem. If EV can be seen a "premium" thing, that will create a better leverage effect than it being just a "green thing".
Plus the inherent benefits of EV (more space, more safety, more torque) line up naturally with a premium experience. It will eventually trickle down to the masses. It's the way forward.
Detroit can/will be the last to adopt electrification. It wouldn't make financial sense for them yet, plus their customer base is less enthusiastic about it.

It does have to scare Toyota and Detroit if you want to transition the world to sustainable transportation instead of transitioning the global 1% to sustainable transportation.

Since Toyota doesn't even attempt a serious ground up BEV it doesn't scare Toyota. Toyota doesn't make very much money on Prius.

Prius was their greenwashing vehicle. Now, they are attempting that with Mirai.

It was never Musk goal to make Tesla a premium product but an ubiquitous product.

Tesla needed to start up top and work their way down because of a lack of capital and economies of scale.

Legacy OEMs are only going as fast as regulators make them. Tesla gives regulators ammunition in demanding ever cleaner vehicles. But this is indirect and slow at best.

When Elon talks of multiple Gigafactories in all markets and eventual market cap goals of $650B Plus he is talking past making Tesla an example for other OEMs to follow. He is talking about crushing some legacy OEMs and forcing others to transition to BEVs from the sight of peers collapsing. More sticks than carrots approach.

 

[SPadival]

Excerpts from a pay walled interview with Baillie Giffords' James Anderson

You’re the largest outside holder of Tesla [TSLA]. In March, you toldBarron’s you’d be OK with Elon Musk stepping aside as CEO and taking another role at the company. Do you still feel that way?

I still feel that way, but it seems less likely to happen now than when we talked. After speaking with Barron’s, I went to see Tesla and met with the new chair [Robyn Denholm]. You can imagine we discussed this. It was plain to me that Tesla needed to strengthen some of the other voices on the board, and encourage a greater degree of understanding on the part of Mr. Musk about his responsibilities. The new chairman made it clear she regards him as a good chief executive. There is also a stronger team now. Sanjay Shah, who came from Amazon, understands what needs to be done on the batteries and energy front. I like the chief financial officer [Zach Kirkhorn], who, although young, has the kind of relationship with Musk that allows him to tell Musk things. I would still say it is conceivable that Musk wouldn’t remain CEO, and it might not be a bad thing if it happened, but I hope I wasn’t definitive in saying he had to go.


Given Tesla’s challenges, including its latest quarterly loss, Musk’s controversial statements, and his tendency to make promises the company can’t keep, how do you know you have backed the likely winner in electric-vehicle technology?

Tesla’s recent earnings numbers were worse than expected, and it was unfortunate that Musk made a point of saying there would be a million Tesla robo-taxis on the road in a year. You can convey great and justified excitement about the company’s comparative advances in autonomous vehicles without providing a timetable. We were also puzzled by the company’s change of tone on raising capital. We have said in discussions with Tesla that, if they decided to raise capital, we would understand it and be prepared to back it, which remains the case. Ideally, we prefer companies to raise capital when confidence and share prices are high; otherwise they have to issue more shares to raise the same amount of capital. Obviously, Tesla’s share price today is considerably lower than it was eight or nine months ago [the stock has fallen 37% since early August, to $237], but we remain supportive shareholders.

Although we have reservations about some things at Tesla, we are upbeat about the company’s leadership in its industry. Tesla is six to seven years ahead of the competition in the product and battery technology. Clayton Christensen [a Harvard Business School professor known for his theory of disruptive innovation] was basically right in noting that it is profoundly difficult for traditional companies to change. The decline in the fortunes of the traditional auto makers, particularly luxury-car companies, has been happening faster and more seriously than we would have expected five or six years ago. We feel more confident about Tesla’s underlying position than we did 12 months ago.

 

[lklundin]

That might have been a short term positive but I prefer they use that capital for a new manufacturing line in the biggest EV market in the world. Longer term the Shanghai factory will be key factor to Tesla’s success.

OK, I can buy that:

"Having accepted that their attempt at reaching a domestic, weekly 10k production plateaued far below that, Tesla decided that the return on additional investments to actually increase production was better spent in China."

 

[lascavarian]

It took Toyota two decades to convince people their cars last longer though. Most people would need to see many old Tesla's running on the road to be convinced. So this thing will have no effect on stock price for a long time.

I get what you are saying about the value of quality paying off in the end. But by removing the combustion engine there is such an enormous opportunity to reduce maintenance that we are beyond easy comprehension. It won’t require the same level of proof IMO. The trucks will help.

Add in reduced wiring and SW controls and modern EVs could dramatically alter the value proposition. And this is before trying to forecast the value of FSD and a vastly improved safety profile.

Imagine if LIFT contracted to buy 20% or 50% of all Model Y production at a premium going forward in order to be allowed to participate in the TN. It might work out for LIFT in order to have a million mile platform on the global stage.

(Putting EVs into high utility usage makes a lot of environmental sense)

How would this effect ASP? I really struggle to apply traditional presumptions or metrics. I guess this is the delivery of disruption.

 

[lklundin]

You are obviously an outlier, who is using things that nobody else uses or cares about (much). Specifically, Tesla does not care about the things you care about. Nobody will buy a Tesla because it handles music on USB sticks well, and nobody will not buy a Tesla because it doesn't. I'm sure you've had to live with that your entire life and have figured out how to deal with it. It can't possibly be surprising to you at this point. So why do you keep complaining about it?

Pretty much the entire time I worked at Apple, I spent most of my working time using the command line interface to the underlying Mac OS X Unix system. All the cool stuff we were doing to make Mac OS X good for customers was totally useless to me and made my life not one bit better. The bugs I cared about almost never got fixed. Such is life when you're not part of the mainstream. It's not worth complaining about.

I gave the above a disagree, because when something so basic and simple to fix as not being able to listen to one's own music collection in one's car (the second most expensive purchase one makes), then it really is a poor advice to just say: "Take your money elsewhere".

 

[CorneliusXX]

Seems like China was the smart play considering all the problems in the USA. China rolled out the red carpet for Tesla. Readily available supply of batteries in China. Chinese loans for the factory. Rapid construction for a factory they were always going to build anyways.

Agreed, if the autocratic government of the worlds largest auto market offers you an amazing deal (cheap debt, cheap land, changing the laws to allow you to own the company 100%, preferential supplier and construction treatment, apparently free utilities connections, control of the media narrative, etc) to produce 10s of thousands of additional vehicles in a few years you don't say hold on a year or two until I tweak my current factory to increase production by a couple of K per week.

 

[kbM3]

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.

Do you know for a fact that the original plan was 5k / week / GA line and not 2.5k / week / GA line?

If it was 5k/week/line then they really, really missed needing 3 lines just to hit 5k /week. They would have missed by more than a factor of 2!

 

[kbM3]

This is exactly right. The COGS for model 3 and the trajectory of it has been easily estimated since Q3 last year when they hit reasonable volume and it was clear that the cost for the base model was coming in around 37k$ to 38k$ (Elon then literally confirmed it in a Q4 employee email, and then again recently in regard to the cost of a robotaxi). Given the wide ranging implications of this fact, it should have been the key point of discussion the last 9 months but was largely ignored. I'd be wary of those showing up on your disagree list.

Elon said their production cost of their base Model 3 is <$38k in his autonomy day presentation.

Also, in the investor call for cap raise he said that their production cost for base Model 3 is about $38k.

Just watched the relevant portion again. The graphic says the cost is <38k. It’s not clear if it is because the price of sr+ is 38k and they didn’t want to give any more info about COGS or whether they assigned any cost to FSD or ....

Essentially I don’t think we can derive margin from this information. I mean COGS could be 30k and the graphic would still be accurate.

The $38k cost referred to the 1M mile robo-taxi. In fact the slide before, setting up the discussion, was titled “Custom Robo-Taxi”.

We don’t even know for sure this refers to Model 3, but even if it does, it at least differs In battery chemistry from the current Model 3, and knowing Tesla it will vary in quite a few other ways as well.

I would think Model Y would become the basis for the custom Robo-Taxi, however the quoted efficiency of 4.5 m / kWh would be extremely aggressive, so maybe it is based on the Model 3?

 

[PANN]

According to sales ranking of Autohome (#1 auto review & sales portal in China), Model 3 just climbed to the top spot of mid-size car sales in all tier-1 cities of China like Shanghai, Beijing, Shenzhen...

 

[Boomer19]

Excerpts from a pay walled interview with Baillie Giffords' James Anderson

hmm, well it sounds like he’s more critical now than has been in past. i don’t recall him ever saying anything but canned responses in the few interviews i’ve read or seen. then again, if they were really that pissed, they wouldn’t have tipped their hand (unless their move had already been made, but just not filed publicly yet)

 

[CorneliusXX]

SR+ is clearly more than 38k$. You've spent 500+ hours here since Q3 financials came out. Any time between then and now you could have sat down and figured this out yourself.

Perhaps that analytical skill could be shared with us idiots.

 

[davecolene0606]

I gave the above a disagree, because when something so basic and simple to fix as not being able to listen to one's own music collection in one's car (the second most expensive purchase one makes), then it really is a poor advice to just say: "Take your money elsewhere".

So what other car can you plug in a USB drive to?

Fire Away!

 

[Words of HABIT]

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!

LTSE would need to be ubiquitous with foreign investments for TSLA to move (example: Canadian RRSP, TFSA, etc.) or need not apply. All existing NASDAQ shareholders would need to be portable. If so, LTSE may be well suited for TSLA listing to reduce short interest. More information is needed.

 

[Prunesquallor]

I gave the above a disagree, because when something so basic and simple to fix as not being able to listen to one's own music collection in one's car (the second most expensive purchase one makes), then it really is a poor advice to just say: "Take your money elsewhere".

And i'll say this is untrue. I have an extensive music collection that plays flawlessly on my Model 3 sound system. The music resides in the memory of my iPhone - the same one used to unlock and remotely control the car. Why would I want to have to duplicate and maintain/sync this collection on a separate dedicated off-line memory device? That is an exceedingly poor implementation IMHO. It would bother me not at all if the USB music feature was removed entirely and its software support reallocated to other priorities.

Edited for clarity.