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

[dww12]

Not much more than two months left until the next production/delivery report. The bears lose the narrative if Tesla keeps delivering vehicles and meeting their guidance. Let's say 100k+ deliveries for Q3.

Remember that bears have been telling us forever that demand is going to go away and only cult-like fans want these cars. Yet Tesla keeps selling more cars.

My office parking lot went from 1 Model 3 last year (me), to 2 three months ago, to 4 last week out of maybe 100 cars. San Antonio, TX.

 

[StealthP3D]

It's a high-tech product. Someone will always feel betrayed. No getting away from that. But an exterior refresh is really only going to be a front and rear body style change. An interior refresh might be more intensive. My opinion is that right now would be the time to purchase an S or X because a major change just happened, and there likely won't be anything as major for some time.

Exactly. I will also point out that the styling of the Model S is extremely well received and quite timeless. Any "refresh" is likely to be viewed as less beautiful and harmonious than more so. It's an additional risk that I don't think Tesla will take before they have serious competition in the market or another 4 years has passed, whichever comes first.

 

[dc_h]

It took 2.5 quarters to get model 3 out of production hell. I am already being very bullish(following what musk is expecting) to have China gigafactory to be out production hell in one quarter. I am also accounting that Y will be out of production hell in a quarter. Even with these bullish projections, Tesla will bleed q1(due to model 3 Shanghai) and q2( due to model Y). Tesla business remain the same. Workers need to be trained, massive amount of new people hired in China..even with low labor cost they are taking a paycheck before the model 3 ramp. Lots of engineers need to be paid to optimize the robotic line. Lots of money needs to be spent on materials prior to production. And if batteries/power train are not being produced at scale from giga Shanghai, then add 3 weeks of working operational cost of producing power train from Nevada and shipping it to China. It is going to suck and musk said it's going to suck. I don't know why you are trying to paint it with a rosey picture.

Good to point out the risks of the new site. Even if everything falls into place, there is likely to be a quarter hit to profits as humans scale up before production and depreciation and expenses start to hit the bottom line. This could mean Q3 is 1 billion FCF, but Q4 will be lower FCF even as revenue starts to pick up from modest Shanghai deliveries. If Shanghai is late a quarter and Model Y new costs hit while Shanghai is still ramping, we could see a quarter or two of negative cash flow. Hopefully we see a few cars roll off the line in Q3 and they are ramping up in Q4, love to see the move past 10,000 a week this year.

The 1000 a week and 100 a week milestones were a big deal back once upon a time.

 

[Tim S]

JB is a huge EV fan. Biggest one you can find. Built his own EV-conversion Porsche before joining Tesla. JB is a huge fan of Elon. Elon is a huge fan of JB.

1. People don't work at companies forever. Expect everyone to eventually leave. Yes, some day even Elon will leave Tesla. It does not spell the demise of Tesla.
2. In this case, JB has set out on a parallel mission that continues Tesla's mission--dealing with battery recycling. If EV batteries can't be recycled, EV opponents will have that much more fodder to fight against EVs.
3. JB will get the battery recycling figured out. Then Tesla will contract with JB's new venture as their sole recycler.

This is a symbiotic relationship. Yes, JB is technically leaving the executive payroll at Tesla, but he is still very closely aligned and partnered not only with the company, but with Elon.

I am going to have to block you if you don't change your avatar.

 

[Paracelsus]

What was Gigafactory 1's target anyway?[/QUOTE]

35 GWh production "theoretical capacity" according to Elon, @UncaNed.

 

[KSilver2000]

With less tax credits, what’s the game plan to deliver record number cars in Q3 and Q4 in the US to reach 100k+ each quarter, and then to ~150k in Q1 2020? Is there pent up demand or are there markets not addressed yet in the US?
Or does Tesla plan to sell more abroad?

 

[azaz]

Can we talk about the fundamental difference between "We will be profitable every quarter going forward besides maybe q1 2019" and this new tone of downplaying profitability and stressing FSD?

Can we really not expect Tesla to be consistently profitable till FSD robo taxi is realized?

 

[DurandalAI]

I don't know if anybody commented on it yet, but the planned TWH level of battery production mentioned yesterday is not unrealistic. But it's a very long term goal, likely ten years out to get to the full TWH level, with an initial hundreds of GHW in five years or so.

One TWH is 1000 GWH. Current capacity is about 28 GHW. So about 35x as noted by Electrek.

Now, Tesla is producing about 400k vehicle run rate off the current 28 GWH capacity, plus some relatively small energy storage capacity. Ignoring the energy storage, 10x (or 280 GWH) would give about 4M vehicle run rate. Elon estimates Model 3 and Y to be about 1.5 - 2M. Add in pickup, S, X, roadster, and semi, that gets you to almost 4M, not counting further future growth or additional vehicles.

Tesla has stated several times that energy storage business would eventually be as big as vehicles. So another 280 GWH energy storage. That's almost 600 GWH combined in the future. So 1000 GWH (or 1 TWH) is not unrealistic, especially considering further growth in autos (beyond 4M vehicles) and energy into the next decade and beyond.

I would expect the Tesla Semi to have a 1MwH battery. If they sell those in volume, that could consume as many batteries as they can produce, I would imagine.

 

[BOBTHEJOCKEY]

Strong "Organic Growth" moving forward was encouraging.
And my first Meme!

View attachment 433811

The power generation margins went from 2.4% to 11.6% WOW. Also the revenue from solar panels, roofs and powerwalls went up 13% from last quarter. Elon was saying that the power side of the business will make as much money as the car side. It's still all about autopilot in my opinion and that news is steadily more positive.

 

[Buckminster]

Extremely exciting. Waste management is generally underappreciated, but a huge business.

That new suit really has given JB more gravitas:

 

[StealthP3D]

With less tax credits, what’s the game plan to deliver record number cars in Q3 and Q4 in the US to reach 100k+ each quarter, and then to ~150k in Q1 2020? Is there pent up demand or are there markets not addressed yet in the US?
Or does Tesla plan to sell more abroad?

I see you are buying into the "lack of demand for stupid electric cars" theory.

Yes, there will be more sales abroad. Yes there is still pent-up demand. And, yes, Tesla's "salesforce" are their customers which are growing at an exponential rate. For every sale, there is an aunt or uncle, niece or nephew, brother or sister, brother or sister-in law, grandma or grandpa, coworker or friend who wants to know more about it.

That's how good the products are. There is no demand problem and the drop in income tax credits is now down to the level where it's all but insignificant. The story that you need government incentives to make EVs desirable has been proven wrong.

 

[voltronhb]

With the decline of Model S/X sales, the ASP has gone from $74k in Q4 to $56k this past quarter. With more Model 3 sales, the ASP will continue to decline. Tesla needs to continue selling higher margin Model 3s. Seems like they’re trying to do so buy discounting the Model 3P and introducing the Model 3P-. Shows that demand is softer than they want for these models.

 

[Nocturnal]

It's weird that the market would prefer a small amount of profit rather than the actual fundamental growth aspects of the business.

With less tax credits, what’s the game plan to deliver record number cars in Q3 and Q4 in the US to reach 100k+ each quarter, and then to ~150k in Q1 2020? Is there pent up demand or are there markets not addressed yet in the US?
Or does Tesla plan to sell more abroad?

Doesn't seem like the credits are a big driver. It's not pent up demand, it's organic demand growth. People are continuing to see how great Teslas are and this is obvious but some miss it, people buy new cars on a very long timeframe. If I decide I want a Tesla today, I may not be ready to buy a new car for another couple years.

 

[KSilver2000]

Can we really not expect Tesla to be consistently profitable till FSD robo taxi is realized?

For me, I’m calculating not until China GF3 is at/near full capacity utilization, which i don’t think will happen until end of 2020 realistically at best.

 

[myt-e-s-l-a]

I always use market orders whenever buying or selling a stock with healthy trading volume. I learned a long time ago it wasn't worth trying to scalp a few pennies on the purchase/sale. That's not why I'm buying the stock. If using a limit buy order, you are likely to acquire the stock if it changes direction and goes down. But, if the thing is really hot (meaning you really want to own it) then you never get your shares. I do time the trade to hit a favorable point in the price fluctuations but it's always a market order for me.

Using Market orders in a fast moving market where the spread is wide, can lose you a lot of money, depending on how many shares are traded. I would not recommend this practice. I only use market orders in the last 5 mins of the trading days.

Tried to grab 100 more @225, but was a bit too greedy. Raised to @227. I may be chasing a moving target but that's okay.

If I wanted to grab 100@225, I would have sold 1 230 PUT @ $6.5 at the open. Then convert it to stock or let it get exercised on Saturday. I always do most of my trading in the first 30 mins. of the day. And I use the MACD and RSI indicators to initiate my trades.

 

[capster]

I'm starting to see a fundamental change in Elon/Tesla's strategy over the past 6-12 months.
I think this has likely been triggered by a huge in-house battery cell breakthrough as well as frustration at the continued feet dragging of the Auto OEMs in the EV transition.

Previously Elon just wanted Tesla to accelerate the transition to electric vehicles and renewable energy. He would do this through multiple innovations and tech breakthroughs to bring down the cost of batteries and EVs. He would also show there is demand for EVs. He really just wanted to pave the way for EVs and show what is possible, but planned for the rest of the industry to copy Tesla's designs and strategy and build most of the infrastructure.

I don't think this is the case any longer. I think Elon has lost patience with the world and the slow pace of its clean energy transition.
Now he wants to cause the auto OEMs pain, he wants to destroy them.
I think he is putting plans in place for Tesla to transition the world to clean energy on its own. If anyone else joins them, so much the better, but he doesn't want to risk reliance on anyone else to prevent global warming.

Tesla has now fully embraced the Amazon model. Cash flow, growth and market domination is king. Profit is much less relevant. It will be very difficult for the ICE OEMs to make a profit or survive in this new world.

Wasn’t that around the time Larry Ellison showed up?

Definitely wouldn’t want to bet against the both of them.

 

[dww12]

Where does the deferred FSD income go on the balance sheet? Have they ever said what % of what was paid that is or what the total amount deferred is?

 

[CorneliusXX]

But still falling, people are really scared

I must admit at a high level it is a bit scary in some ways. Tesla produced and delivered a record number of cars and they still lost money.

There is also no one reason you can point to that explains why they aren't making record profits off the back of those deliveries. It's all lease accounting treatment, inventory flushing, additional expenses while ramping, etc, etc. No one point is worth more than about 100m but together it looks like Tesla can't make big money selling cars.

If I didn't have high conviction in the inevitability of EVs and the strength of the Tesla team/strategy, and been willing to do a lot of research I'd be thinking about selling too.

 

[KSilver2000]

Doesn't seem like the credits are a big driver. It's not pent up demand, it's organic demand growth. People are continuing to see how great Teslas are and this is obvious but some miss it, people buy new cars on a very long timeframe. If I decide I want a Tesla today, I may not be ready to buy a new car for another couple years.

I agree, I don’t think the credits are a big driver either at just $1,875 now. Actually l, I think a reduction in car price by $1,875, or even slightly less at $1,500, would be more of an incentive than a credit of $1,875. How many of us prefer to deal with a small mail-in-rebate that takes up to a year?
And, I also agree, that not everyone who looks into a Tesla now are immediate buyers.

So, that goes back to my question how Tesla gets to ever increasing record sales for the next 4 quarters (2 quarters with no credits)?

 

[StealthP3D]

Wasn’t that around the time Larry Ellison showed up?

Definitely wouldn’t want to bet against the both of them.

Good point. And let no one forget that Larry Ellison has a net worth of $71.6 Billion USD. And he believes strongly in the mission. I would say that might be enough to fund a little battery manufacturing facility or open a small mine.