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

[Artful Dodger]

Did anybody else notice that Elon said that Starship Mk1 uses 4x100 kWh Tesla battery packs and Model 3 motors to drive the hydraulic pumps which actuate its 4 fins?

Well we've known about the SpaceX edition Roadster2 for some time, but this is the first mention of the Tesla Edition Starship!

Elon went on to mention in his impromtu Q&A with Tim Dodd (the Everyday Astronaut) that CURRENT TESLAS WILL WORK ON MARS.

That's got to be worth something on the SP wot?

Cheers!

 

[Antares Nebula]

I have many heroes, including Elon. But heroes are not Gods. They are human and make mistakes. While I can and have been critical of my heroes, including Elon (as everybody knows here), I can never be mad at my heroes because they have given me and the world so much. This is why I say idol worship can be dangerous, especially if you're making financial decisions based on such characterizations.

Folks trading and *expecting* results based on what Elon says or does on a daily basis are setting themselves up for disappointment. Either buy and hold for the long term; OR trade with reasonable expectations and risks.

I was not surprised one bit by Elon's email last week. My expectations for Q3 at the start of the quarter were right around 100k (with a 95-105k range). The stock should never have went down to 220 in the last week in the first place. So Elon's email just fixed that (not purposely of course) and put it back at 240. It was neither here nor there. Anything was possible, 95k, 100k, even 90k or 105k. I bought (and traded) puts and calls starting last week up till yesterday. At close of market yesterday, I was willing to lose all those options. I was not willing to make any large bets based on that email.

If you want to trade such events, the best way is with options so you know your total risk upfront. Buying a 1000 shares of stock (again depending on your portfolio size) and hoping for a 250/260 close by Friday, only to be disappointed and mad at Elon/Tesla is not the way to live life. Check your expectations. Know your risks. Elon is Elon. There is going to be more crazy stuff going forward. Just look at the history of other trailblazers, like Steve Jobs and Apple (esp back in the 80s/90s).

 

[jerry33]

This fad of white-bashing is still in vogue. Give it a couple years and people will find their center again. It is a disgusting trend, though.

What's really meant is our elected officials, who almost to a man or woman fit that description (with a few notable exceptions), not the general public of that category.

 

[MartinAustin]

Even when the retrofit becomes available, I doubt many people would upgrade at current pricing, which is about $3,000 for a failed MCU out of warranty. That’s a lotta dough just to watch Netflix or YouTube, or play a limited number of games, on a bigger screen than your phone or tablet.

Are you kidding? If it's $3000.... sign me up. And NOT for the games... for faster operation

 

[Antares Nebula]

Where do we go from here? It's anybody's guess. But I will say that folks expecting a quick move above 250 or 300 need to be cautious. Not saying that it can't happen -- can in fact happen, even by year's end. Like everybody else here, I absolutely believe that TSLA is undervalued. It should be trading well above 300 or even 400 right now. But stocks can remain undervalued and overvalued for a very long time as history has shown.

The stock had a major technical break last spring when it went under the 240/250 support level that it held for many years. It is going to take a significant effort to get back above that level. There is a lot of so-called supply above 250/300, that is a lot of buyers left holding the bag that would be happy to just break even and will sell the first chance they get. This supply has to be worked through either through time or through a very significant development or news.

So it is possible that we could bounce around between 180-280 for a longer time (like we did years before). It is not even impossible that we can visit 120 (if 180 support breaks). Not saying this will happen, but as an investor, one certainly should be aware of all the risks, lest they throw a temper tantrum when such risks materialize. What can cause such a drop? Besides its own internal, intrinsic risks, there are many external risks. Macro risks include the trade war, Brexit, Hong Kong protests, elections, and of course recession. Also there are Tesla specific external risk factors, like regulatory risks. For example, the SEC taking action on Elon's solar tiles tweet, or the NHTSA taking action against autopilot (see the news today*) -- not saying I agree with these actions, but that doesn't mean it can't happen (life is not fair, right?).

As Tesla investors, we've endured a lot, and may have to endure even more. We have to be hearty and smart. Ultimately, everybody is different and will have to make their own decisions. I, for one, am only holding shares and no long term options (but I do play very small short term weekly options occasionally and around events). I am prepared whether we make a V shaped recovery, dip further, or stagnate for a long time. All outcomes are possible. If one really believes in a V recovery, then go for it and buy some short term options. I did this successfully and repeatedly when it was bouncing between 250-380. But after the technical break last spring, I don't feel confident in the future movements to play monthly or yearly options. If/when we do finally break above 400, I may get back into the longer term options.

Well, that's my not-advice for the week. GLTA.

*Tesla's new Smart Summon feature is drawing scrutiny from US traffic safety agency as people use it in crowded parking lots
Troubles with Tesla's automated parking feature summon safety regulators

 

[KarenRei]

sorry i cannot agree... basic economics tells us, when demand is higher than supply, the price goes up, and now apparently tesla is using all kinds of price reductions and promotions to make sure it uses most of its production capacity (without working overtime though). how could tesla cut price and offer free charging etc when the demand is high enough and the production capacity is the bottleneck?

Tesla's base US cuts were half the amount of the US tax credit decline going into Q3. The net effect to the consumer was a base price increase. The LR AWD cuts were rough equal to the tax credit decline. Only P cuts were significantly more, in order to encourage upsell, since P earns the company a lot more money.

Remember that, unlike other manufacturers (except GM), Tesla is weaning itself off of US federal tax credits once valued at $7500 per vehicle. Fun times ahead for Nissan, for example, once their phaseout starts.

Furthermore, it's advantageous for Tesla to delay expansions, as expansions add an ongoing overhead cost for every quarter that you're serving a given market, as well as higher EoQ inventory levels and initial localization and setup costs. It can be advantageous to put off expansion as long as you can, if you can get by on just selling to your current markets.

Lastly, every quarter Tesla has to deal with the particularly difficult challenge of forecasting. Most automakers don't face this nearly as much as Tesla - they maintain months worth of inventory at all locations, so they can resupply just based on rates of consumption. Tesla, with almost no inventory maintained, has to forecast the rates in which new orders will be made, across both A) specific locations, and B) specific models / trims / configs. Correcting your misallocations may take a week or two in North America, but over a month in Europe. It's exceedingly easy to screw up in a way that you cannot correct during the quarter.

This will get much, much easier once Tesla has a Gigafactory in each of its major markets. Each market's lag time will go down to a matter of weeks. Things will heavily de-wave and EoQ inventory will be greatly reduced.

 

[Artful Dodger]

Schadenfreude

Tesla Gigafactory China: Mud, "Basically An Open Field," Not Gonna Happen — Skeptical Claims Revisited | CleanTechnica

 

[Tslynk67]

What's really meant is our elected officials, who almost to a man or woman fit that description (with a few notable exceptions), not the general public of that category.

Indeed. It was my post that triggered this whole thing and of course I'm referring to the "ruling elite" (or unruly idiot in at least one case) by that phrase who are, for the most part, old and white.

I hasten to add that I'm 53 yo caucasian, so

 

[KarenRei]

@KarenRei

Tesla, Inc. (TSLA) Q1 2019 Earnings Call Transcript | The Motley Fool



Tesla, Inc. (TSLA) Q1 2019 Earnings Call Transcript


Pierre Ferragu -- New Street Research -- Analyst

Hey, thanks for the call. My first question is really on the Model S and Model X. And Elon, you said, you're comfortable with them. You see -- based on what you saw in April, do you think that the 25,000 units per quarter is the level of demand that is where you see the market coming back already or are we not there yet? And more specifically, in the US, the pull forward in Q4 probably hurt a lot of demand for S and X. Is it that something that we still see in the numbers today in recent weeks or is that behind us? And I'll have a follow-up on Q2.

Elon R. Musk -- Chief Executive Officer

Yeah. I mean, I think something like the -- returning to the 100,000 a year annualized demand for S and X is what we anticipate. That's to the best to my knowledge. We don't have a crystal ball, but that's probably our best guess. And sorry, what was the other point?

1) Elon gives no timeline on that.
2) Q1 call is superceded by Q2 call:

============================
Joseph Osha -- JMP Securities LLC -- Analyst

And just as a follow on then, could we see you manage to make 8,000, 7,500, 8,000 Model 3s in Fremont by the end of the year, you think?

Elon Musk -- Chief Executive Officer

Yes.

Joseph Osha -- JMP Securities LLC -- Analyst

Okay. Thank you very much.

Elon Musk -- Chief Executive Officer

I mean, I feel confident, it's -- let's just say that the trend is very clearly toward being able to get to 10,000 vehicles a week, of which that would be -- there is rough numbers like 8,300 to 8,600 Model 3s and the balance in S and X. So there's sort of 1,600 to 1,800 S/X. In round numbers, 8,500 3s, 1,500 S/X per week, but probably a bit more than that.
============================

His "round numbers" for end of the year weekly production rates are very different from his non-round numbers. But even 1800 only extrapolates 93,6k per year. 1500 is 78k per year.

Note that these - 93,6k/yr and 78k/yr - aren't forecasts for this year's sales. They're for the weekly rate at which Tesla might be producing at the end of the year. Really, I'd think they could produce even higher than 1800/wk if they wanted to; surely there's ample cell supply to go back up at least to their old 100k/yr annualized rate.

Further down:

============================
Colin W. Rusch -- Oppenheimer & Co Inc. -- Analyst

Okay. And can I have a follow-up question around Model S and Model X saturation? Obviously, you guys have some ideas around how big that market is? How should we be thinking about sustainable volumes and pricing on those volumes? Obviously, we're seeing some lower numbers here, and I think that's a core element of what's going on with the story that as we see pricing drop and volumes drop, what are the right numbers to think about you guys from a planning standpoint in terms of sell-through on both the Model S and Model X?

Elon Musk -- Chief Executive Officer

Yeah, I think it's probably too much focus on S and X. And the S and X are -- and they are nice, but they're not -- and it's like without them, we couldn't spell sexy. So the main reason the reason -- well, it's not the main reason, but a reason, is we want to keep spelling sexy. So that's not a reason, I should say not the main reason but to keep going with the S and X. But the story for Tesla future is fundamentally Model 3 and Model Y and I think like my guess is like long-term sales of anything a couple of years, I think. The demand for -- sales demand for 3 is like in the order of 0.75 million units a year, and it's probably 1.25 million per year for Model Y and combined like it's maybe 2 million from those two vehicles and then S/X is like may be 80,000 to 100,000 a year. So it's like 4% or 5% of the volume in 3 and Y. And then truck throw a truck in there, pickup truck and a semi, it just gets smaller and smaller. So there -- there are great products, but there -- from a volume standpoint, they're not all that important in the long term.
============================

"Long-term" sales in "a couple years" = 80-100k.

This is AFAIK our most recent guidance.

 

[Antares Nebula]

Also, for those that are trading around these events and getting frustrated, I would recommend the TMC trading thread:

trading

Group support and discussion can be helpful, especially for beginners; but traders of all skill levels benefit from discussion.

I would also suggest to the mods that the trading thread be put in the main sticky threads category. After all, this is the TMC "Investor Discussions" forum, and trading is certainly a part of investing (oh, let's not get into arguments here -- I'm a long term investor too).

Moreover, I would suggest that the trading, TA (Technical Analysis), and options thread be merged into one single unified sticky "Trading (and TA)" thread. While TA can be also be used for long term investing, it is especially useful for trading. So TA and trading kinda go hand in hand. And if you're an active trader, chances are you're trading options as well as shares. So, options, TA, and trading would make sense to be in one thread. It's especially frustrating when you have to post TA stuff in the TA thread and then come back to the trading thread to talk about your trades. I no longer do this; I post all my TA stuff now in the trading thread.

 

[Tslynk67]

Are you kidding? If it's $3000.... sign me up. And NOT for the games... for faster operation

Buy FSD, then you get the new MCU thrown-in, no?

 

[jerry33]

I hasten to add that I'm 53 yo caucasian, so

So you're still young.

 

[SO16]

Buy FSD, then you get the new MCU thrown-in, no?

no. You get the new autopilot computer. MCU is the main large screen in S/X. Unrelated.

would be nice though.

 

[Jays200]

Buy FSD, then you get the new MCU thrown-in, no?

I'm hearin' ya

 

[Tslynk67]

So you're still young.

Actually yes, I look and feel younger than I was 10 years ago

 

[mongo]

Here is my estimate for 2019Q4 Model 3 Production: 988/day (86,944 tot. for Q4)

View attachment 462137

This is a purely naive statistical estimate based on an ordinary-least-squares fit of production data to a linear model for the 3 preceding quarters in 2019.

Notice the insane R^2 (R-squared) value of 0.9999996 Curves don't fit any tighter.

To me, these are the kind of numbers you get from production planning done months (or years) in advance, with a complicated and lengthy supply chain that reacts slowly, as you would expect for any large auto manufacturer.

I think these numbers are planned way in advance, and all the drama and intrigue is partly Kabuki theatre on the part of Wall St. analysts, and partly Tesla not wanting to reveal their hand too soon. Well howdy...

Per the table above, this model predicts 302,287 Model 3s produced in 2019. Adding in the YTD Model S/X production of 44,985 then that leaves just 12,718 Model S/X production required for Tesla to produce 360K total vehicles at Fremont in 2019. Easy-peasy.

A more reasonable estimate is that Tesla can at least maintain the Q3 Model S/X production rate, which then puts Fremont at 363,600 total vehicles produced in 2019.

Remember, GF3 production is a bonus. I've seen 2019 estimates here as low as 3K units by year end, and some at 5 or 10K. Let's be clear though: any number in those ranges puts Tesla total production for 2019 between 366K and 374K.

More projections for the GF3 + Model Y 2020 rampup to follow (maybe next week).

Cheers!

I hereby coin the term Dodger unit to mean a factory production rate increase of one car per day per day or c/(d^2).

Edit x 2: Note: that due to the use of averages for monthly rate in the curve fit, Fremont is currently operating at 2 DU.
Or du=(dc/dt)/dt=2

 

[jeewee3000]

Also, for those that are trading around these events and getting frustrated, I would recommend the TMC trading thread:

trading

Group support and discussion can be helpful, especially for beginners; but traders of all skill levels benefit from discussion.

I would also suggest to the mods that the trading thread be put in the main sticky threads category. After all, this is the TMC "Investor Discussions" forum, and trading is certainly a part of investing (oh, let's not get into arguments here -- I'm a long term investor too).

Moreover, I would suggest that the trading, TA, and options thread be merged into one single unified sticky "Trading (and TA)" thread. While TA can be also be used for long term investing, it is especially useful for trading. So TA and trading kinda go hand in hand. And if you're an active trader, chances are you're trading options as well as shares. So, options, TA, and trading would make sense to be in one thread. It's especially frustrating when you have to post TA stuff in the TA thread and then come back to the trading thread to talk about your trades. I no longer do this -- I post all my TA stuff now in the trading thread.

I see what you are saying, but the 'trading' thread was started for discussion regarding trading TSLA and other stocks+derivatives.

I agree a stickied trading/TA/options thread could be handy, but then it shouldn't be limited to TSLA and TSLA options.

 

[UncaNed]

I'm hearin' ya

Sure it's not an audio upgrade you're after??

 

[Antares Nebula]

Uh oh, we're already seeing the first downgrades:

Tesla downgraded to Market Perform from Outperform at JMP Securities TSLA - The Fly

This guy was/is a bull (previous Outperform rating), and somewhat level headed. I've seen him on CNBC. Coincidentally, it is the same analyst (Joseph Osha) that Karen cited from the Tesla Conference call transcript in her post above.

 

[Antares Nebula]

I see what you are saying, but the 'trading' thread was started for discussion regarding trading TSLA and other stocks+derivatives.

I agree a stickied trading/TA/options thread could be handy, but then it shouldn't be limited to TSLA and TSLA options.

That's fine. People can talk about other stocks too. But this being a Tesla forum is going to naturally lead the discussion to focus on Tesla, with occasional discussions on other stocks. Already in the current trading thread, folks are doing this. But the majority of the discussion is still on Tesla. Nothing wrong with a little variety.