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

[printf42]

I just checked what TSLAQ is talking about, and seems some of them got the movie “The big short” out, as emotional support.

But they seems to ignore the guy invented the ultimate leveraged tool to short the market(CDS), with limited downside and out of proportion monstrous upside.
And he managed to get arrogant fools to be on the other side of the trade.

What TSLAQ is doing is... quite different. Limited upside but unlimited downside for straight shorting stocks, and just handing money to MM for puts.
Even if TSLA is the right short, seems they are still doing it wrong.

 

[M3Rider]

This is why I get angry when I see people buying EVs from legacy automakers and Tesla owners saying we’re all on the same side. The truth is we’re not. Nobody here should be applauding any money going to these companies, even if it’s for an EV. The truth is it just helps them prop up their ICE business. So no, I’m not happy when I see a bolt, leaf, i3 on the road.....

Prop up or take away from it? Taking away some is better than nothing. Tesla can't supply all yet. Buyers of those cars might be a lost cause to Tesla for a while if they were affected by Tesla FUD.

Owners of those cars like them better than ICE, so they are getting used to some of the EV perks like home charging and cheaper maintenance and are less likely to buy ICE in the future.

Tesla meanwhile ramps up as fast as it can and sells everything they make, so those other EVs are not a competition.

I mean, what other better outcome do you see?
Those companies stop making ICEs completely, but unable to make EVs in volume. What will people buy? They could invest more in EVs, but they dont want to.

Meanwhile, Tesla increases its tech/efficiency moat and making those ICEs obsolete and too expensive to be of value as fast as it can.

It will take several years to raise awareness to the level, which will Osborne those ICEs.

Maybe some like VW could survive if they move fast, others seem to be content on going out of business.

OEMs want slow and smooth transition, they don't want to write off their ICE business, but they won't have as much time as they'd like to have.

Look at UAW workers making a deal to not make EVs, because some of them would be fired due to less workforce needed to assemble EVs.
They kinda see what's coming, but choosing to exploit what they know best as long as it's feasible. Btw, some hostility towards EVs is coming exactly because those involved in the oil economy understand that they will lose their jobs.
I see this as a conscious complacency.
It's like being a coachman in 1915 who doesn't have the money or the skill to convert into a car driver, they will ride their horses as long as they can and then see what happens(workers). Businesses could be more proactive with their resources, but short term CEOs choose to reap short term rewards and golden parachutes.

You could force them with stricter policies penalizing ICEs more, but we have half the country aligned with oil industry, so voting isn't going to be easy either.

So, seems like everyone chose their fate and things are moving along as fast as they can under the circumstances.

 

[ElectricOrgan]

When are you going to read Tesla's answer to that question?

Master Plan, Part Deux

Yeah, I read that. Soooo.... When are they going to make the "less expensive" vehicles?

I still think Tesla won't be able to grow quickly enough by using the compounding of reinvesting their profit mostly because the profit just isn't high enough. So far there have been essentially no profit in any year and this year isn't looking to be the year this changes.

As a rule of thumb, to cut the price of a car in half requires a 10 fold increase in volume. 245,240 in 2018, likely 340,000 in 2019 for about a 40% increase. This will take about 7 years for a 10 fold increase if they keep up the same rate of increase, or 2026. By then there will be so many competing cars from so many companies Tesla will be inundated with competition. In reality there is no reason to believe Tesla will continue to grow at such a rate.

They've done great because everyone else has been watching, expecting them to fail. Tesla hasn't, so they started to ramp up their own production of EVs. Tesla has awoken sleeping giants.

 

[ElectricOrgan]

LOL! That's like saying Mercedes, Lexus, or Maserati need to be selling a $15,000 car to survive! A car company doesn't need to compete in every segment to be profitable. Besides, why do you think GM and others have abandoned the $15,000 sedan market to the Koreans and Japanese? Because there's no profit in it! IMO, Tesla should continue to focus on the high profit EV vehicles, and let everyone else fight for the scraps. You are also totally ignoring the TCO.

I just want to say that there is little about the Tesla that puts it in the same class as a Mercedes or a Lexus other than the drive line. Once everyone is making EVs there won't be much to differentiate a Tesla and with their various issues, won't be able to sell against the established makers. Do you really think Mercedes will sell a car where over half of the features are "beta" including service and support?

 

[ElectricOrgan]

I don't doubt that some other car makers can ramp up volume, but I also expect Tesla to ramp up volume and have sufficient models to satisfy say 25% of the EV market, one day soon 25% of the EV market is 20% of the new car market, and that is probably more cars than Tesla can make...

Why do you think Tesla can ramp up production at any rate they choose? They are limited by their starting size. The bigger players don't have that limitation.

So the problem for Tesla and others isn't demand, it is making the batteries... end of story...

For Tesla, sure. Why do you think this is the bottleneck for everyone else? Are you referring to global limitations? I've read that at some point there may be a problem with supply of some elements used in batteries, but no one is saying that is certain since the expected point in time is far enough out the supply is not so certain.

 

[Off Shore]

My list grows. I'm afraid I'll be leaving the course presentation to others. In the interests of SNR, please be brief. Thank you.

 

[ElectricOrgan]

Nowhere did you mention that the ‘majors’ have to destroy their current business to truly compete with Tesla. Completely and totally. Every single one of them. And that none of them are close to Tesla’s battery management or production.

Ford has already stopped production of many sedans which is likely a part of the move to EVs. Dump the less profitable product lines to be leaner for introducing the new EVs. Yeah, they will have to phase out ICE, but not until they sell at lower volumes. Ford isn't dropping the F150 any time soon. It's not like Tesla's 100,000 trucks a year is a threat to Ford's 900,000 a year any time soon.

Enough people have figured out how this BEV thing works for essentially unlimited demand for Tesla, since the demand will grow as a function of the number of BEVs on the road, which thanks to Tesla, is exploding.

Yep, but while Tesla can't meet the demand, others will be filling that. No? That's my point. Tesla can't grow fast enough to stay competitive once the major car makers start production of the many lines of cars they are designing and bringing to production in the next few years. Especially once the competition causes a slow down in Tesla numbers they are so extended they might just collapse. But that will be a while out and Tesla can see it coming and reign in their expansion some if needed.

 

[M3Rider]

Tesla has awoken sleeping giants

Why does this sound like 'Big Iron' something something (I forgot) by the troll from the Prigozhin's/Putin's troll factory?

Your problem is that you haven't driven one, so you simply can't understand what you're talking about.
In Russia, mostly only members of the establishment=organized crime can afford one and everyone else cannot, because pretty much any independent business is destroyed by the same establishment, so that they can get everyone employed in the oil business privatized by them vote the way they like you to vote, even though that doesn't work very well lately, so they are forced to falsify the results, but, anyway, courts will rule as they're told against anyone who objects. So, they are ok for now.
Guess who enables them? Yes, police, riot and otherwise, but also people working at the troll factory dumping falsehoods all over the internet - about Tesla, about oil, and about voting results.

Do you believe it is fair to take away the right to vote for what they want from people?

 

[ElectricOrgan]

The issue you failed to grasp is that there are significant baggage attached to those capital. Usually the old times heroes of those companies, the people who worked hard achieved great financial success for the company in the old way, they're the backbone of the management, for a good reason.

They're, unfortunately, the overwhelming force against big changes. Even very innovative companies such as Intel fell in this trap. How they missed the mobile train completely?

There are, throughout history, only two once successful companies ever turned around their ship, Apple and Microsoft. Both cases lots of head rolled from top level management team.

The car companies have a even bigger problem, not only they have to fight with their entire management team whose members have ICE background, they also have to fight with their distribution channel.

Try understand the case with Intel first before coming back here peddling the nonsense about "competition"

You seem to think that the other auto makers aren't planning to make EVs. That battle is over and done with. I really don't get your point. All the major automakers have announced new EVs. It's not a matter of IF, it's just a matter of WHEN.

 

[CuriousSunbird]

Return of the bird! What do we owe it to?
Do I remember correctly you changed orientation from short to long?

Only during the 420 period.

 

[adiggs]

I have it. Neither English nor German is my native language, so there might be some funny phrases. Also, it's a veeery long article. I have condensed it a lot, though it may not look like it:

Spoiler

...
The end.

Kudos @Khamul - that might be the most brilliant bit of humor I've read this year, or this decade.

 

[Carl Raymond]

Nobody here should be applauding any money going to these companies, even if it’s for an EV. The truth is it just helps them prop up their ICE business. So no, I’m not happy when I see a bolt, leaf, i3 on the road.....

If they hope to compete with Tesla, without scale, they will have to drop the price of their EVs below cost. So the propping up is the other way around, ICE will be propping up EVs for legacy car makers.

I don’t get upset when I see a Leaf, Bolt or i3. If I saw a threat to Teslas dominance, I would [get upset]. Without Tesla the mission would collapse and we’d be back to compliance cars only. That’s the most satisfying part of the past week; the certainty we now have that Tesla are unstoppable.*

*which brings with it an inevitability that the stock will, in the main, rise and rise

 

[ElectricOrgan]

Elon said that he hopes to make a $21,000 Tesla by the year 2021. Not sure where and when I heard him say that.

Elon hopes for a lot of things and I hope to lose 20 pounds before Christmas. What's your point? It ain't happenin'. In 2020 they are going to sell the model Y (with mostly model 3 parts) at a price higher than the model 3. That's not a trend toward a $21,000 car by 2021.

 

[30seconds]

The idea that traditional automakers can “beat” Tesla once they focus has been exposed as pure fantasy over the last few years.

Bolt
Leaf2.0
I-Pace
Taycan
Etc.

Each are very compromised compared to Tesla’s cars. Despite the best efforts of legacy carmakers. At this point they are just fighting among themselves.

And with the Y Tesla is just going to take another massive step forward - 48v architecture, reduced wiring, robotic wiring installation, new subframe manufacturing techniques and probably a few other things we don’t know about.

 

[adiggs]

I just want to say that there is little about the Tesla that puts it in the same class as a Mercedes or a Lexus other than the drive line. Once everyone is making EVs there won't be much to differentiate a Tesla and with their various issues, won't be able to sell against the established makers. Do you really think Mercedes will sell a car where over half of the features are "beta" including service and support?

I agree. Merc is unlikely to sell a car where even 1 of the features is 'beta'.

That, by the way, to be clear is a shortcoming (IMO) of Merc's. But hey - the inability for their cars to change over the months and learn new tricks also ensures that they generate maximum revenue from each sale. From my point of view, it pretty well ensures that Merc is either late to the party, or arrives after the party is over and everybody's left. Some of these new features are hard and will need a LOT of input, input that is only economically feasible when your customers provide it for free.


I also agree that the perception of Tesla's service will be an impediment someday when the cars are approximately competitive. My personal experience has been overwhelmingly good, but it also started 6 years ago (I met employee 1 and 2 that started the Portland SC, when they started it up). More recently are some worrying signs - harder to talk to somebody, parts take 2-6 weeks and that's just considered normal (customer car being laid up for an extra month or 2 isn't a good look; even if it's shared by everybody in the industry).

 

[Yuri_G]

I just want to say that there is little about the Tesla that puts it in the same class as a Mercedes or a Lexus other than the drive line. Once everyone is making EVs there won't be much to differentiate a Tesla and with their various issues, won't be able to sell against the established makers. Do you really think Mercedes will sell a car where over half of the features are "beta" including service and support?

Is there a way to put "new" posters in a forum purgatory where they have to read every general investment thread from 2012 onward before posting? That's basically what it's like for folks that have been here for over a year. Having to read the same tired argument over and over again. Yeah, Tesla is screwed when the legacy auto makers catch up. When will it happen? Never.

Look at what Tesla has done in 7 years versus everyone else.

 

[dc_h]

Yeah, I read that. Soooo.... When are they going to make the "less expensive" vehicles?

I still think Tesla won't be able to grow quickly enough by using the compounding of reinvesting their profit mostly because the profit just isn't high enough. So far there have been essentially no profit in any year and this year isn't looking to be the year this changes.

As a rule of thumb, to cut the price of a car in half requires a 10 fold increase in volume. 245,240 in 2018, likely 340,000 in 2019 for about a 40% increase. This will take about 7 years for a 10 fold increase if they keep up the same rate of increase, or 2026. By then there will be so many competing cars from so many companies Tesla will be inundated with competition. In reality there is no reason to believe Tesla will continue to grow at such a rate.

They've done great because everyone else has been watching, expecting them to fail. Tesla hasn't, so they started to ramp up their own production of EVs. Tesla has awoken sleeping giants.

You seem to be making a bullish case hidden inside a bearish case. The bull story is that Tesla could cut costs in half by growing to about 3.5 million cars. You think this will take 10+ years, which is a good story and bullish. But it’s better, since Tesla is growing closer to 60% by volume. Over 360,000 this year and Likely over 600,000 next year as Fremont exits 2019 close to 110,000 cars per Q and is expanding for model Y and Shanghai is on track for 3000 cars a week by end of Q1 and will expand through the year. At least one new factory due in 2021 in Europe and likely two, as they ramp the truck. They could be on track for 2 million rate in 2022, which could already mean another 40% reduction in COGS, meaning they’ll have money to fund increasing growth as they grow. Once the Y is selling, the risk of pickup will be minor compared to the Y and the Y is dramatically less risky then the 3. I don’t want to get overly excited, exogenous variables tend to slow trends down, but the trend is always the friend. I’d guess the trend should lead to 3 million plus cars a year by 2025 and that 50% reduction in costs. Right now only VW and BYD have any intent to grow at anything approaching this rate and only companies scaling up and driving down costs will survive. At this pace of change a model 3 will compete with Porsche on performance and a Civic on price.

 

[adiggs]

Why do you think Tesla can ramp up production at any rate they choose? They are limited by their starting size. The bigger players don't have that limitation.



For Tesla, sure. Why do you think this is the bottleneck for everyone else? Are you referring to global limitations? I've read that at some point there may be a problem with supply of some elements used in batteries, but no one is saying that is certain since the expected point in time is far enough out the supply is not so certain.

You might find it helpful to learn about the worldwide lithium ion battery industry.

Order of magnitude type numbers (10's of GWh), Tesla is the #1 manufacturer of battery (packs) with a scant 50 GWh of pack (and cell with Panasonic) capacity. The rest of the world, for all applications (phones, cars, etc..) is something like 100 or 200 GWh.

All of the other manufacturers of cells for auto purposes have buyers (at least approximately), so the only way that the big players don't have that limitation (can start manufacturing cars at any level they choose) is if they have battery capacity on par with the worldwide leader (at leas tin auto applications) hidden away but ready to leap into action when they finally decide to stop wasting capital and turn it loose.

And even then, that only enables them to manufacture at Tesla's volume - not any arbitrary volume of their choosing.

 

[M3Rider]

To people engaging trolls, I would like to remind that performance of a troll is measured by the number of responses he/she collects. I believe even "you're an idiot" counts as response. A controversy, that is.

To the troll, even though unlikely to succeed, I have following items to consider:
- you are not participating in a foreign policy of the country
- what Putin commits by impoverishing the Russia's population is genocide. You know full well that retired people do not receive sufficient pension to buy medication they need and they die prematurely on a regular basis. You know that young couples are afraid to bring children into the lawlessness and poverty. You know the money they need goes to dozens of documented palaces and yachts Putin and each of his cronies have and their offshore accounts.
Your are participating in this by providing informational cover and it is how future generations will value your "work", not by what you write about Tesla.

 

[StealthP3D]

Is there a way to put "new" posters in a forum purgatory where they have to read every general investment thread from 2012 onward before posting? That's basically what it's like for folks that have been here for over a year. Having to read the same tired argument over and over again. Yeah, Tesla is screwed when the legacy auto makers catch up. When will it happen? Never.

84 posts and 146 disagrees (and counting).

I do think legacy automakers will catch-up eventually. Probably right about the time it's starting to be considered a bit eccentric to actually own your own car.