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

[Fact Checking]

Shorts must realize by now that they're pissing into the wind. They're adding 1-2M shares every week yet TSLA keeps rising..

Their thesis is that Q2 and all quarters beyond will be awful:

• If Q2 deliveries are good they'll pivot to be "concerned" about margins,
• if Q2 ER falsifies it they'll immediately pivot to dropping July U.S. sales in Q3,
• if that is falsified they'll pivot to bad Q3 margins,
• etc. etc.

The Tesla bear thesis is infinitely flexible and will only be falsified by the bull thesis strengthening in an unstoppable fashion, which likely requires multiple quarters of solid growth - which will be hard after Q3 and Q4 2018.

A short squeeze to $300 this summer looks possible - assuming Tesla delivers in Q2, literally.

But not advice.

 

[Mike Smith]

Tesla didn't offer any discount when they did the equity raise at 243 last month, and had no trouble selling it. Since then the news has only been positive. Things like that would trouble me if I was short..

 

[Oil4AsphaultOnly]

Try this...

Collect about 20k of the previous generation ecus.

Test car with new ecu. That is just pluged in not bolted down. Swap new ecu for older ecu. Ship car. Swap old ecus just before delivery and bolt them in. Ship old ecus back to Fremont.

Swaping an ecu should be a 10 minute job. So for Norway doing 200 cars a day you need about 4 people for the entire country. Now $400 times 6 is $2400 that is a pretty good hourly wage.

10 minute job?!?! On a brand new car without scuffing/marring the interior? laying down protective material takes time, as well as removing them, you also need to protect both the new and old board to prevent damage while transiting your parking lot (oh and don't mix them up either) - because the factory is full and doesn't have enough space to store all the cars while the ecus are being replaced. Plus you forgot to factor in the swap over at the states. As much as it's a computer on wheels, the logistics of swapping a board isn't a 10-minute job, and it all costs money.

Although profitable production is a game of pennies, the board-swap idea is penny-wise, but pound-foolish.

 

[RFernatt]

Here is what I wrote to Meijer:

“This isn’t a complaint. I just wanted to say thank you for supporting Tesla by having Superchargers at many of your locations. I am a Tesla owner and have used quite a few of those Superchargers like in Cadillac, Traverse City and Gaylord. I have shopped at Meijer for years but now I make a point to shop there much more often and use my Meijer card more often as well. I am a big supporter of Tesla and it’s great to see that Meijer is too.

Keep up the great work with supporting Tesla! I will certainly continue to support Meijer!”

This was their response:

Thank you for taking the time to contact Meijer regarding the electric superchargers that we offer at our gas stations. We are delighted to hear about your positive experience!

Meijer is committed to providing our customers with a comfortable, welcoming, and friendly shopping environment. We value your opinion and appreciate it when you share with us that we are meeting our high standards.

I am forwarding your message to the appropriate department for review, and also documenting your feedback.

Thank you again for taking the time to write, and for shopping with Meijer. We appreciate your business and look forward to serving you again soon.

Sincerely,

Bill
Meijer Customer Care

I wrote something similar to Sheetz, but haven't received a response. Encouraging everyone to send a supportive, positive message to the companies that host Tesla chargers.

 

[Fact Checking]

10 minute job?!?! On a brand new car without scuffing/marring the interior? laying down protective material takes time, as well as removing them, you also need to protect both the new and old board to prevent damage while transiting your parking lot (oh and don't mix them up either) - because the factory is full and doesn't have enough space to store all the cars while the ecus are being replaced. Plus you forgot to factor in the swap over at the states. As much as it's a computer on wheels, the logistics of swapping a board isn't a 10-minute job, and it all costs money.

Although profitable production is a game of pennies, the board-swap idea is penny-wise, but pound-foolish.

Also, there's another problem: with Tesla's current factory setup it's very much essential that the computer be in the car as it progresses along the production lines and gets driven to the ship carrier. They'd have to have a separate pool of 'factory units', swap them out after the car is stored on the ship, and install them before the car is driven off the ship. This is not something most ro-ro ship carriers are equipped to handle.

The Tesla short in the Trump administration knows what he is doing.

 

[KSilver2000]

You should read this article. Very thorough and provides a good perspective on the costs of the solar roof compared to a regular roof:

Why Tesla's Solar Roof Is A Bargain, 53% Of The Price Of A Roof + Electricity — CleanTechnica Analysis | CleanTechnica

I posted my numbers for calculations here as well. Not sure whether the $37,000 metal roof cost is a good comparison when you can get comp roof (3x) to last ~60 years for ~$17,000. Tesla was comparing cost parity with comp after all, right?

It really depends on materials. A slate roof of that size can easy cost over $30k.

And $30k for 9.45kw is lower than the average cost per watt for a solar installs in California (which in 2019 was $4.07/watt)

Maybe over $30k from a whole-paycheck type of dealer. But, you’re not shopping around then.

$3.00/watt was my local installers’ prices 2 years ago with CSI brand for my clients. $3.00/w for LG 370 Rs right now.
Edit: Mot sure what wattage the Tesla panels are, but the website is quoting even $2.75/watt pre-tax credit for an 8 kW system. So, definitely nowhere close to being as expensive as the $4.07 you mentioned. You may need to shop around a bit. These are pre-tax credit prices as well. I’m in California, too.

 

[RFernatt]

Elon could have been talking about Maxwell, but also about the very significant cobalt reduction they achieved in their cell chemistry in about that time frame.

A lot of the bears were certain Tesla will be limited by cobalt shortages, and the price of cobalt experienced a speculative bubble in 2017.

Could be, but that statement was Aug 2017 and the note about cobalt reduction came in early May 2018. So, possible, but I would think they would have been further along than promising lab results 9 months earlier.

 

[humbaba]

apologies if already posted (I did look back a few pages before posting), but I felt a disturbance in the force when I read this:

Bob Lutz Talks Panel Gaps, Tesla, and Why Every Detail Matters

He doesn't quite come out and say that Musk is a good leader, but "...excellent fit and finish also requires leadership focus and will, something that Tesla clearly has."

Maybe I need to retire "Bob Lulz" as his nickname?

(I had to triple check that the date wasn't April 1st)

 

[Nocturnal]

You should read this article. Very thorough and provides a good perspective on the costs of the solar roof compared to a regular roof:

Why Tesla's Solar Roof Is A Bargain, 53% Of The Price Of A Roof + Electricity — CleanTechnica Analysis | CleanTechnica

Their thesis is that Q2 and all quarters beyond will be awful:

• If Q2 deliveries are good they'll pivot to be "concerned" about margins,
• if Q2 ER falsifies it they'll immediately pivot to dropping July U.S. sales in Q3,
• if that is falsified they'll pivot to bad Q3 margins,
• etc. etc.

The Tesla bear thesis is infinitely flexible and will only be falsified by the bull thesis strengthening in an unstoppable fashion, which likely requires multiple quarters of solid growth - which will be hard after Q3 and Q4 2018.

A short squeeze to $300 this summer looks possible - assuming Tesla delivers in Q2, literally.

But not advice.

They are also pushing the same old narrative about the tax credit "going way" in July (which we know it doesn't) as a reason why sales up good right now.

I wrote something similar to Sheetz, but haven't received a response. Encouraging everyone to send a supportive, positive message to the companies that host Tesla chargers.

For sure. A local grocery chain here has 2 locations with SCs and several with chargepoint chargers. Any company will be shocked when they receive positive feedback and I made sure to thank them and noted that I shop there more because of this.

**My skepticism partly stems from the fact that I wasn’t pleased with the SC acquisition to begin with. Tesla cars are a new market entry with little competition. There’s a following, easy to understand. But solar is a crowded industry where the brand/technology does not matter too much IMO like toilet paper. Consumers care more how much it costs and how much electricity they’re generating.

Yes but don't underestimate the network effect. Tesla owners are fanatics, solar tiles and power wall tech aside, we are very likely to favor Tesla solar systems. I also think that this is a market with major potential so the competition isn't all that important, it's about pulling in new customers to the market. ​

 

[MarcusMaximus]

Maybe over $30k from a whole-paycheck type of dealer. But, you’re not shopping around then.

$3.00/watt was my local installers’ prices 2 years ago with CSI brand for my clients. $3.00/w for LG 370 Rs right now. I’m in California.

Given that what was given was the average, it doesn’t sound like that matters much. Tesla may have too high of prices for your clients, but apparently not for most PV buyers in CA(yes, I know, mean vs median, my point still holds).

 

[EVNow]

May 2018 had record shares shorted of about ~40m - the sharp increase in borrowing rates predicted the ceiling of short interest and preceded the short squeeze in June.

In 2019 the shortable shares pool appears to be maxed out at around ~50m shares.

The big uptick we see after Mar 1st I think correlates with the big drop in SP from 340 to 240 between 3/12/18 and 4/2/18. There was a quick rebound to 300 - but the push to nearly 380 came in June. So, most shorts held on to their position as SP bounced between 280 and 300. Then in June the SP started going up / they started covering. I think it is like a chicken/egg situation - did the SP started going up and they started covering or did they start covering so SP went up or was there some bullish news which caused both.

 

[Boomer19]

That's likely.

What about the raise after Mar '18 ? The int rate even stepped down in correlation with # of borrowed shares.

i think that increase in brokers featuring fully paid lending to their clients, in search of basically risk-free yield, could be a factor.

how much, i haven’t been able to determine.
i assume fully paid lending is a fraction of total lending (margin lending/shares bought on margin, to which broker uses at their discretion). what fraction, is unknown. depends on broker, their relationships with counterparts, their customers positions, etc

if i had to guess its probably 5-10% more impactful than before fully-paid lending market became ‘a thing’. but i’m pulling that number out of my a$$

and that wouldnt explain the huge increases in shares shorted - so maybe it’s more, maybe there’s something we’re overlooking, or maybe it’s just more speculation (margin trading) due to low rates, and fewer betting options to park bets in this low rate environment.

about 10 years ago is when FP lending started to gain traction. now many brokers are doing it. so that kind of jives with my theory that, generally, there’s more liquidity now within the stock loan market, than there was 5-10 years ago

 

[The Blue Owl]

There is a union vote underway at the VW plant in Tennessee. If the UAW succeeds there, they might feel emboldened to continue their underhanded tactics against Tesla.

Tesla isn't mentioned at all. The article makes it about foreign-owned producers, as if the UAW cares.

If the UAW prevails in unionizing the plant, it will be a historic win for a labor organization that has spent decades trying to build influence outside of Detroit and represent more factory workers across the car-manufacturing sector. The union’s membership, which hit a peak of 1.5 million workers in 1979, has fallen to about 400,000 last year as Detroit’s big three car companies have closed U.S. plants and moved more factory work to Mexico and other countries, where labor is cheaper. While the foreign-car companies build millions of vehicles each year in the U.S., none of their assembly plants are unionized. Most reside in right-to-work Southern states, where antiunion sentiment runs strong.​

 

[Skryll]

Rivian and ‘Free Solo’ star Alex Honnold team up to build solar microgrid with used EV batteries – TechCrunch

I wonder if those 135kW battery packs from their dev-vehicles are really second life quality already or if this is more of a proof of concept for later in a few years when they have actual production vehicles on the road. With teslas 8-year warranty on their battery packs that seems quite a bit forward looking?

Also does that mean they plan to launch their product with 135kW battery packs?

I guess if Tesla comes out with a Model F pickup truck they would go for 150kW battery pack size?

 

[⚡️ELECTROMAN⚡️]

My roofers could do that same size roof for ~$5,500.

I would love to borrow your roofers. I just had a bid for $14,000. $37,000 sounds pretty good for what you are getting. My neighbor recently had a sheet-metal roof installed for $50,000.

 

[banardnard]

Question!

Since the interest for borrowing is based on the number of floating shares.
If someone buys a big chunk of the float and disable these share from being loaned out, the interest for borrowing these share would technically increase. Cause more pressure to sell, causing a short squeeze. Is it possible that the interest rate was super high in the last short squeeze because a fund like fidelity did this?

 

[wipster]

Has hell frozen over?

Bob Lutz Talks Panel Gaps, Tesla, and Why Every Detail Matters

 

[EVNow]

There is a fight for 215 now. IMO this is all about MMs positioning for call/puts. SP went up against Nasdaq direction in the last 10 minutes.

ps : TSLA closes below 215 - at 214.92. Up 0.47% vs Nasdaq down 0.52%.

 

[Steve m]

10 minute job?!?! On a brand new car without scuffing/marring the interior? laying down protective material takes time, as well as removing them, you also need to protect both the new and old board to prevent damage while transiting your parking lot (oh and don't mix them up either) - because the factory is full and doesn't have enough space to store all the cars while the ecus are being replaced. Plus you forgot to factor in the swap over at the states. As much as it's a computer on wheels, the logistics of swapping a board isn't a 10-minute job, and it all costs money.

Although profitable production is a game of pennies, the board-swap idea is penny-wise, but pound-foolish.

I have double E degree and have designed built tested fixed much more expensive boards for mass production high tech test systems.

If you cant swap an ecu in under 10 minutes you are fired.

 

[Skryll]

I would love to borrow your roofers. I just had a bid for $14,000. $37,000 sounds pretty good for what you are getting. My neighbor recently had a sheet-metal roof installed for $50,000.

Asphalt shingle on 2250 sqft two story with two level roof home in california is about $12k on the low end iircc, electrical bill before putting solar on was about $2400/year, added 10kW worth of panels for $25k, after tax incentive that was $18k out of pocket, paying for itself even before both cars replaced with electric in 7 years. Today even with both cars electric, net-metering and EV-A plan bring this down to less than $100/year.

By the way, if you are a PG&E solar customer with electric car and have not switched to EV-A yet, do it TODAY because they are going to close the plan by the end of this month. I guess it was too good to be true to get credited 3 times the electricity overproduced at daytime for car charging at night.