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

[VValleyEV]

Sounds somewhat fishy to me:

"Der Bauherr möchte in der gemeinsamen Tiefgarage mindestens 20 Ladesäulen für Elektroautos installiert haben. Eine entsprechende Ladesäule kann bei Schnellladung einen Strom von 32 A liefern. Das heißt, würden alle Ladesäulen voll in Betrieb gehen, müsste ich theoretisch 640 Ampere vorhalten. Das geht natürlich nicht."​

He is stating it categorically that allocating additional 640A max draw is not possible for a 20 homes apartment complex. Why not? He doesn't explain why, and it's not true, as later parts of the article make it clear.

32A extra capacity per apartment will cost extra money - but 20 new apartments complex with garage space is a big 7-8 figure construction investment already, and unless they are in a really problematic place (historic part of town with limited free power capacity left) a (3x) 32A requirement is basically the max draw of air conditioning, or of a heat pump - another (3x) 16A for home appliances, often more if it's large luxury homes. If any of the apartments can also be used for commercial purposes the power draw might be even higher.

I don't know the capacity prices and regulations for NRW, but power capacity is usually a one time sum paid to the utility during the permitting and connection procedure of the new power lines, with occasional requirements like having to lay a cable directly to the nearest transformer. Utilities also have a financial interest in increasing power consumption - more income to them. So they'll be accommodating, unless constrained by unusual circumstances out of their control.

So the extra power should usually not be a problem unless in historic quarters, and costs can be easily recouped through the significant home value increase of a high capacity home EV charging station. Apartment owners can also charge tenants extra for the charging capacity in the garage.

The pain he is describing with sharing power between charging columns sounds legit from an engineering point of view - but he should not have gone there and never explains why they didn't purchase enough power capacity for each apartment to begin with.

He explains some of this:

"Nebenbei bemerkt, auch für diese Leistung hätte ein kleiner Trafo installiert werden müssen, da sich das Grundstück zwar auf Stadtgebiet aber mehr auf der „grünen Wiese“ befindet. Bei Großstädten wäre diese Leistung – je nach Lage – aber noch im Netz vorhanden."​

So they'd have to have installed a small transformer. That's actually often cheaper and faster than getting permits and lay new ground cable to an existing transformer 1-2 km away...

He indicates that he couldn't convince the developer that more power is required:

„Das muss ich den Bauherren erklären und kann es nicht“​

TLDR: incompetence, ignorance. Competing developers will be able to sell their better equipped apartments at higher prices.

Thanks! IMHO not OT because this is FUD slowing the adoption of BEVs in Germany.

It looks not only like FUD but wrong-headedness about the nature of home charging.

Looking a bit closer at this:
“Now, in a new housing development (about 100 apartments in 12 houses) the following happened. The client wants to have installed at least 20 charging stations for electric cars in the common underground car park.”

So,

• Instead of including a dedicated outlet of some standard variety at each parking space, they planned to offer a small number of “charging station spots”, maybe 20 0f these for 100 apartments. Because one would have to move into and out of these spots instead of leaving the car there for the night, they wanted to make them “fast charging”.
• This seems altogether a terrible idea. No one wants to have a fueling station in the corner of a parking garage that you have to drive back and forth to from your assigned spot. The whole convenience of BEVs is tied to “park it for the night and plug it in”. It also probably means that the building owner would have pay for all use of these stations, instead of being able to bill the electricity to each apartment.
• I think they calculated that they would need 32a for each of these “common” charging stations to justify them being “fast” and therefore ok to share. Again that seems a stretch to call that “fast”, and why not 20a for every spot instead. More total capacity but can be billed to each apartment.
  
• I suppose it could be that they didn’t even plan to have assigned parking spots, just a key card to get in and out, and open parking. Note that this is “about 100 apartments” spread across 12 structures, so unclear whether it is one large underground garage under all of the buildings (probably 12 with 8 apartments each), or 12 separate underground garages, but I am assuming for cost reasons that it must be one big garage for all.
• Apparently it never occurred to the builder to just supply a moderately-powered outlet for each parking space, BUT the garage may be designed like a commercial shopping mall garage, where lots of spaces are out in the open and not near any support columns where power can be attached.
• ABOVE says to me that it is hard to claim that these are “luxury” apartments, which I am pretty sure I read somewhere, especially my suspicion that the garage is just a sea of open area with painted lines and unassigned spots.

So, FUD, incompetence, or both?

 

[neroden]

Counter to this is the problem of when to start. Prices keep falling so the impulse is not to invest but to wait for the better deal. Is there a tipping point?

You mentioned “negative wealth effect behavior” as I would assume a macro effect. Love to hear a bit more as to specific behaviors.

Good stuff.

Oh. Basically I was referring to the opposite of the wealth effect. When people's investment account balances appear lower, they start getting stingy and spending less money.

The Wealth Effect Definition & Example | InvestingAnswers

Seeing it in the US and China according to reports.

 

[pnungesser]

So to explain the trillions of dollars part a bit: there's hundreds of indexes, new indexes get defined all the time in the hope of them being picked up, and the primary 'customers' of index committees are index funds who make a particular index popular or not.

So let's suppose Tesla posts a surprise Q1 GAAP profit of say $400m late July or early August. There's a few (low probability) scenarios under which that could happen in principle, despite the price cuts across all products. The moment they report this, all the passive index funds will assume that TSLA will be part of the S&P 500 sometime in September, and they'll be obliged to own up to ~10 million shares of TSLA, and another 10 million from various other entities that typically try to mirror S&P 500 behaviorally. Stock price will go up significantly, well beyond the crash and burn factor of most TSLAQ thesis elements. Major short squeeze adds to the buying frenzy, TSLA of $420+ secured.

The index funds will be buying TSLA (options) almost immediately to at least avoid some of the index arbitrage losses they'd be exposed to.

While the S&P 500 is a historic institution that doesn't require any promotion, if the index committee then mysteriously decides to change the rules retroactively, or to openly discriminate against Tesla based on the small print that is present in the index definition document, then the stock price would crash, and the passive index funds would sit on big losses unless there's a stupendous amount of illegal insider trading to warn all of them in advance.

I.e. while I can see Chanos and the rest of the TSLAQ cult having broad influence to create volatility, they are nobody compared to the influence of the buy side.

Anyway, this is probably academic because Tesla guided for a GAAP loss, and this is not advice whichever way you interpret it!

The S&P500 is limited to 500 companies. For TSLA to get included, someone would have to be dropped from the index. Who to drop and why may be a big part of the decision process. What are your thoughts on how this might work?

 

[Fact Checking]

So, FUD, incompetence, or both?

Depends on the source. If this is a random, genuine guy who is posting on other topics as well and if this is a little known article then it's probably just incompetence - or rather, incompetence of the developer.

If this is a widely shared article, with the guy appearing on TV and being quoted for opinion in other articles, then the probability that it's targeted FUD is higher. The German automotive industry and their lobbying and PR firms are absolutely not playing with kid gloves and with Dieselgate they have blood on their hands - but not everything that is anti-EV is automatically FUD, and very little of it is actually intentionally constructed FUD.

It's more like a molasses of disinformation, from which various weird smelling weeds are growing.

 

[VValleyEV]

It's 32A @ 230V and three phases, while yours is 400A @ 120V single phase I suppose? So a bit closer in kW terms, but still true.

Note that it is 100 apartments spread across 12 structures (I think “houses” came up in the translation rather than “structures”), and the plan was to have a total of 20 charging stations in the common underground parking.

One charging station for each 5 apartments. And they would plan for 32a at each of these charging stations because, well, they would have to be “fast” so you could move your car in and out of the station and back to your assigned spot instead of blocking the station all night. Gosh, that sounds like fun. What could possibly go wrong?

This means, then, that the power for these stations would not come from the apartment power allotments, but from the building owner allotment for the garage, probably calculated for lighting etc. And I suspect that one underlying reason is that the garage was designed to be an open area with lines painted for spaces, no way to easily add power for each spot, maybe not even assigned spots. Luxury apartments? That sounds like a stretch.

 

[neroden]

Thanks! IMHO not OT because this is FUD slowing the adoption of BEVs in Germany.

It looks not only like FUD but wrong-headedness about the nature of home charging.

Looking a bit closer at this:
“Now, in a new housing development (about 100 apartments in 12 houses) the following happened. The client wants to have installed at least 20 charging stations for electric cars in the common underground car park.”

So,

• Instead of including a dedicated outlet of some standard variety at each parking space, they planned to offer a small number of “charging station spots”, maybe 20 0f these for 100 apartments. Because one would have to move into and out of these spots instead of leaving the car there for the night, they wanted to make them “fast charging”.
• This seems altogether a terrible idea. No one wants to have a fueling station in the corner of a parking garage that you have to drive back and forth to from your assigned spot. The whole convenience of BEVs is tied to “park it for the night and plug it in”. It also probably means that the building owner would have pay for all use of these stations, instead of being able to bill the electricity to each apartment.

Agreed.

However, proper overnight 0-to-full charging of a Tesla does require about 40 amps at 230 volts -- people who drive a lot aren't happy with less than 32 amps. Suppose -- overkill -- every single renter had a Tesla and wanted to recharge it from zero to full overnight. For 100 apartments, that's 3200 amps at 230 volts. But German three-phase power is 400 volts, so this would actually be a 1840 amp industrial three-phase install, with some transformers. Of course it's seriously unlikely that everyone would be trying to charge from 0 to full simultaneously, and even Tesla doesn't design its Superchargers to allow that.

I checked. 1200 amp and 1600 amp service entrance panels seem to be off-the-shelf items costing under $20K -- not expensive at all compared to building apartment buildings or parking garages. I was looking at various utility company specs for installing services up to *4000* amps. This is totally feasible. If the electrical grid in the area is particularly weak, then there might be an issue which would call for the installation of batteries to peak-shave, and to time-shift some the load from night to day.

If he were building *luxury* apartments, he'd just figure out how to get the electrical service. I'm sure it's available; industrial and commerical buildings use far more power than that.

 

[sixela]

20 stations for 100 apartments? That sounds luxurious and future proof...and even that little and the guy says it's impossible?

Gee...he must have shares in hydrogen fuel production companies.

 

[neroden]

Macro

I partly agree. I think the EV revolution (with Tesla as the main catalyst), is certainly a force that is stimulating to the economy. But I also think, at a high level, that we are exiting a "classical economics" phase (1700s - today). Just my own theory - but what I see is a much shorter "distance", and fewer barriers, between the core ingredients to start businesses (idea, investors, management, labor, capex, materials, etc) Capital is a commodity. Risk aversion is replaced with bold ventures fueled by billionaires who, aware of their own mortality, see macro opportunities and existential threats and, instead of hording capital, and preserving it for their offspring, want to put it towards these really big ideas.
Not only are the big fish deploying capital more freely, but the small aspiring entrepreneur is much more able to pursue their ideas/access capital than at any point in the past.

I have to disagree on this point because of the number of entrepeneurial ventures I've personally seen fail for lack of capital recently. Most people are way too impoverished to finance a business. Wealth inequality is so high that it is suppressing entrepeneurship -- it was a lot easier to start a business in the 1950s, frankly.

Also, zoning-type restrictions on construction have meant that prices for a *good location* have gotten worse than ever -- though a "storefront on the web" is cheap, if your startup starts expanding to the point where you have a lot of employees, they're driving to work at some horrible location surrounded by fields or abandoned buildings which was the only location you could afford.

 

[SW2Fiddler]

Tesla loses another exec: HR vice president and head of diversity Felicia Mayo
(author is Lora Kolodny for CNBC)

Not much info, though (also: quite a fair article).

The FAIRness of the reporting cannot be completely determined by the article’s content alone. It can’t be called fair, no matter how good the research and writing, if departures of similar-level execs from OTHER companies get no ink.

Anyone have an objective read on that?

 

[neroden]

well, yeah, just because a company meets the criteria, doesn’t entitle them to automatic inclusion. they still have to be selected

therefore i’d say that any company that meets criteria that isn’t in s&p is 86’d at that time for whatever reason

They COULD leave a company out which met all the criteria. However, in the entire history of the S&P, they never have. IMO, they would only do it if something really weird was going on with the company where it seemed obvious it wasn't really appropriate (for instance, a company which was effectively a conduit or ETF which was somehow technically meeting the requirements anyway due to accounting oddities). In which case they'd add a new criterion to exclude it.

I don't see anything like this happening with Tesla -- there's no precedent. If it meets the criteria they'll add it. It meets every criterion except the profitable-over-sum-of-last-four-quarters criterion.

 

[tschmidty]

Sounds somewhat fishy to me:

"Der Bauherr möchte in der gemeinsamen Tiefgarage mindestens 20 Ladesäulen für Elektroautos installiert haben. Eine entsprechende Ladesäule kann bei Schnellladung einen Strom von 32 A liefern. Das heißt, würden alle Ladesäulen voll in Betrieb gehen, müsste ich theoretisch 640 Ampere vorhalten. Das geht natürlich nicht."​

He is stating it categorically that allocating additional 640A max draw is not possible for a 20 homes apartment complex. Why not? He doesn't explain why, and it's not true, as later parts of the article make it clear.

32A extra capacity per apartment will cost extra money - but 20 new apartments complex with garage space is a big 7-8 figure construction investment already, and unless they are in a really problematic place (historic part of town with limited free power capacity left) a (3x) 32A requirement is basically the max draw of air conditioning, or of a heat pump - another (3x) 16A for home appliances, often more if it's large luxury homes. If any of the apartments can also be used for commercial purposes the power draw might be even higher.

I don't know the capacity prices and regulations for NRW, but power capacity is usually a one time sum paid to the utility during the permitting and connection procedure of the new power lines, with occasional requirements like having to lay a cable directly to the nearest transformer. Utilities also have a financial interest in increasing power consumption - more income to them. So they'll be accommodating, unless constrained by unusual circumstances out of their control.

So the extra power should usually not be a problem unless in historic quarters, and costs can be easily recouped through the significant home value increase of a high capacity home EV charging station. Apartment owners can also charge tenants extra for the charging capacity in the garage.

It's not a one time charge though to add extra capacity. Power companies will bill commercially for having to maintain that equipment to provide that MAXIMUM capacity at any time, and those charges are recurring. So the apartment complex would be paying some amount per month extra whether the charging is utilized at all, maybe 10-15% of the overall charges IF it was used to max capacity. So if it were only used 10-15% of the time the energy would cost twice as much.

Small, napkin calc at 0.10 x Kwh says $50 a month per unit so not at all insignificant.

 

[mongo]

I don't see anything like this happening with Tesla -- there's no precedent. If it meets the criteria they'll add it. It meets every criterion except the profitable-over-sum-of-last-four-quarters criterion.

Well... it currently doesn't meet the GAAP profitable last quarter metric either.
I'm optimistic both issues will be resolved shortly. Recent quarters have been low on ZEV and high on one time costs. Q1 had 30 days of inventory (including in-transit and service fleet) hanging out there. Much opportunity to emulate Q3/Q4 as a base and recover the lost revenue of Q1.

 

[tschmidty]

Exactly right, Fact Checking.

Given that I have a 400 amp circuit to my house (320 A continuous), and anyone in this area can get that installed as a right, 20 houses here would be able to get 6400 A continuous, a lot more than 640! So I don't know what's going on in that part of Germany, but he appears to be talking nonsense.

Residential is different than commercial and Germany may have altogether different laws. Power companies can almost certainly "oversell" capacity for residential use

 

[RoadsterPlease]

$tsla stronger than the market today, if Powell cuts rates we go to 250 in no time

 

[EVNow]

That is quite a run from 221 to 226. Any news we are missing ? There was a 120k buy at 9:58 that started the big run up from 223.

 

[EVNow]

$tsla stronger than the market today, if Powell cuts rates we go to 250 in no time

All the articles say none is expecting a cut - but are looking for a cut later this year.

Anyway, Trump is trying to demote Powell - so, there's that.

 

[Fact Checking]

I don't see anything like this happening with Tesla -- there's no precedent. If it meets the criteria they'll add it. It meets every criterion except the profitable-over-sum-of-last-four-quarters criterion.

Well... it currently doesn't meet the GAAP profitable last quarter metric either.

If in Q2 Tesla's GAAP profit meets the ">$260m" threshold to make the sum of the last four quarters positive, then it automatically is profitable in the last quarter (Q2), because of mathematics.

So there's really just a single independent criterion to meet:

sum(q3+q4+q1+q2) > ~$251.14m​

Someone please fact-check the $251.14m threshold I calculated. I'm unsure whether the S&P committee uses net GAAP income or per share earnings. I assumed net GAAP income.

Also, if someone here is connected to Elon's inner circle please let them know about the S&P 500 inclusion criteria and the likely market reaction: the timing of the early January profit warning via Elon's leaked email was awful to longs, and was a ~$1b windfall for shorts, which negative news was released shortly before the January 18th expiry of record volume of LEAP short PUT option positions...

 

[ggr]

A profit of $251 million is needed in Q2 for a positive result over the last 4 quarters. That is unlikely. Q4 had a lower profit than that ($139 million), with probably around the same number of deliveries but a lower number of Model S/X and high margin Model 3.

It's more likely to happen later this year or in 2020. But I'm pretty sure the TESLAQ crowd will stick around until then.

There is a possibility that Elon and Zac have thought about this number and could game the FCA deal to bring in revenue in Q2. That deal is big enough to move the needle.

 

[EVNow]

There is a possibility that Elon and Zac have thought about this number and could game the FCA deal to bring in revenue in Q2. That deal is big enough to move the needle.

They will have to bring in >$400M.

 

[AndyH]

Chanos is an ass...

This is exactly the fair and unbiased reporting of fact that's missing in traditional media. If it walks like a duck and quacks like a duck then it most certainly is a duck(or an ass in the case of Chanos).

CNBC should report this: "Tesla stock handled it's mid morning dip quickly today and it's already 1 point into the green ... In other news Jim Chanos is an ass."