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

[Fact Checking]

Found it on Twitter. Don’t see it posted anywhere else yet.

Dropbox - Stanphyl Capital Letter - October 2019.pdf - Simplify your life

-8.6%

Spiegel was still short on October 31, when TSLA closed $315:

So after losing on short puts Mark BS. Spiegel has started writing calls, presumably naked ones, because he has no stock nor call options to hedge them?

If true then that's a ... bold move, and I'd like to cheer him on for his sound financial planning and for his judicious use of unhedged short leverage, in best WSB YOLO tradition.

 

[Johann Koeber]

I’ll play the pessimist and say Dec 2021. Hope I’m wrong!

That is not the pessimistic view, it is the most optimistic. Here there are too many layers of bureaucracy. Even if the 'top' wants it done, public servants cannot be told how fast they are to work.

We shall see, but I hate getting the expectations unrealistically high. End of 2021 would be quite a feat!

 

[Tslynk67]

Yeah, we all need to respect @Fact Checking wishes for privacy, but I if this were not the case I would WAY rather know his identity than the Whistleblower.

"their", not his/her.

 

[FrederickBound]

Battery cost and density is the most important detail affecting EVs. That you don't know this shows you haven't even begun to do your research.

The fact that you seem to think a single feature dominates a class of cars means you aren't looking at the whole issue, just a part you choose to.

People don't buy batteries unless their flashlight has run down. They buy cars. As long as the important features in a car are adequate, they will consider all the other features. I just read an article today talking about how companies like VW make 10 million cars a year and in this case, VW will be spending 30 billion over the next few years to replace every car in their fleet with EVs. I think the goal date is 2023.

I think the math has been done before but there really aren't good data to estimate a growth rate. Tesla sold around 245k cars in 2018 and will likely sell perhaps as many as 350k in 2019. Assume they grow that much every year. 1.4^x = 10 to reach the 10 million the other major auto makers sell. It will take log(10)/log(1.4) years or 7 years if they can sustain this growth rate. So Tesla will continue to be an under dog until 2026.

Considering that every other major auto maker is pumping the same sort of money into converting to EVs and I don't see how Tesla will continue to grow at this rate. Heck, Tesla did some things early on like building a charging infrastructure, but they have not been growing as fast as they've been increasing production of cars. Maybe as the sales figures growth slows down the chargers can catch up.

 

[Artful Dodger]

Elon Musk on Twitter

"fomo 4 yolo"

...

He's literally telling us to buy up those $700 calls

Agreed with the 1st part. This is a near mirror inverse of the cyptogram sent via 'RIP Harube' b4Q1. Tks 4 posing. Something is up. Hmm...

Anybody know where Waldo Elon is now? Still in the Benelux/Wstrn DE region? How far is that from Wolfsburg? Car trip or BizJet? Or mabbe its just...

Cheers!

 

[LN1_Casey]

"their", not his/her.

"It's"?

 

[Artful Dodger]

OK. I think I've figured this out. @Fact Checking is not Elon. "He" is an AI. Yep, that's it, we've been talking to an AI the whole time. Thank you Skynet!

Like there is no way a human would at times get into detailed discussion on topics ranging from physics, to finance, various fields of technology and then also know obscure things like telling from a satellite image the type of forestry they are doing in a random block of German land.

Nah, AI ain't that good. And there are no timetravelling robots from the future, because if there were, this comment would be cuto

 

[Mike Smith]

Mercedes-Benz Cars to slash 1 bln euros in costs by 2022

Yikes, 1 billion euros in personnel cuts. That's over 10,000 jobs. Hopefully many of them can find work at the new Tesla factory.

 

[Singer3000]

Elon threw out that quote recently about wanting to get to the point of replacing 1% of the global fleet each year (so 20 million deliveries a year).

Assuming 40% annual growth rate and if you figure 500k units per factory, by early 2023 he'll need to have ramped up Fremont, Berlin and Shanghai to half a million each and have two more ready to open in the following year. Or more likely those three plus a new Giga5 in North America for the Pick Up likely to be announced around this time next year?

Giga 6 is in my view likely a PV/battery plant in Australia, Battery Day might tell us more.

Giga7 probably in Northern China (Beijing area) so long as its economy keeps plodding along.

Giga8 presumably another plant in Europe.

So that's 6 car plants to take you solidly beyond BMW in annual unit count, with an energy business theoretically the same size from 2.5 dedicated energy plants (half of GF1, GF2 and GF5). Then again, none of the analysts have bothered to ask what the planned total capacity of Fremont will be (S,X,3,Y). Perhaps they are targeting 750k+ per site?

The 20 million per year mark would be reached in around 2030 at a 40% compounded growth rate, which feels about right.

Either way seems to me there's going to be plenty of love to go around to the cities/countries that have missed out so far. Interested too for Battery Day to see how realistic the 40% growth rate really is.

 

[Frank Einstein]

I'd say that outright bankruptcy is unlikely - even the German coal industry with unionized miners wasn't allowed to go bankrupt, and the German auto industry and its dependencies are like 100x times larger.

But big ICE carmakers being reorganized, down-sized, bailed out, reorganized again and down-sized, being sold shot-gun mergers to other, luckier automakers, combined with government job programs finding place for the unemployed workers, for decades and decades into the future, while the car brands live on but the machinery to make ICE cars is rusting away?

I'd say that's a 90% probable outcome for many of them, unless the EV transition is so viscous and so profitable, consumers are so anxious to get EVs, any EV, that they'll buy even the subpar ones, that the growth of their new EV business saves the declining ICE business. I.e. there's 1,000,000,000 new EVs to be made in the world, and survival of ICE industry heavyweights IMHO largely depends whether this will be done in 20 or in 10 years: at this point the faster the better for them.

In both scenarios Tesla will probably be fine.

Agreed. I think the German government sees the key advantage of Tesla setting up in Germany (beyond the obvious investment and jobs that come with a major new factory being set up) in terms of forcing their own domestic auto sector to face reality before it's too late. Germany wanted Tesla to come in order to save their own industry.

 

[FrederickBound]

Why do you assume they can catch up? They have all been promising the Tesla assault since 2012 and collectively have nothing impressive to show for it. You think GM and BMW can iterate as quickly as TSLA?

Yes, I do. First, it's not like the majors are starting at ground zero right now. They already have programs well underway and both companies have produced various EVs. But more than anything, the major auto makers have tons of money to throw at the problem and tons of experience in making cars. Look at the troubles Tesla had trying to ramp up production of the model 3. The difference is if GM or BMW have a delay in ramping production of a new model, they have no fear of running out of money and going out of business... in fact, GM did have a similar issue with the Bolt, slow getting out of the gate. Things seem to be going smoothly with the model 3 factory in china so that bodes well. We'll see how well the model Y comes online.

 

[LN1_Casey]

Has anyone else noticed that the Used Tesla section on Tesla.com has removed the ability to look for vehicles with EAP/AP1?

 

[FrederickBound]

Do you honestly think Tesla is standing still?

I've already seen discussion on how Tesla is limited in how fast they can grow. Even by 2022, Tesla will have the S, X, Y, 3, Truck and possibly the Semi. That's it, 5 consumer vehicles and one industrial vehicle. By then the major auto makers will each have that many models in production and growing much faster than Tesla can.

I've never said Tesla is doomed or can't survive. But I think it is a real possibility that Tesla will be hurting once the competition heats up. It's not like they are destined to take over the world. If nothing else not everyone wants to drive a cell phone. Some people like automobiles with knobs and buttons and don't want to have to learn seeming endless menus and features. Heck, I'm driving a loaner and the same model as mine, but it has a totally different feel and I can't figure out where the settings are to make it more familiar. For one the autopilot won't start from a stop behind traffic at a red light until I punch the gas. My car doesn't do that. There are lots of people who will feel very alienated by the complexity of a Tesla and will never buy one. Other auto makers don't have Elon Musk wanting to land all their customers on Mars.

 

[RobStark]

I'd say that outright bankruptcy is unlikely - even the German coal industry with unionized miners wasn't allowed to go bankrupt, and the German auto industry and its dependencies are like 100x times larger.

But big ICE carmakers being reorganized, down-sized, bailed out, reorganized again and down-sized, being sold shot-gun mergers to other, luckier automakers, combined with government job programs finding place for the unemployed workers, for decades and decades into the future, while the car brands live on but the machinery to make ICE cars is rusting away?

I'd say that's a 90% probable outcome for many of them, unless the EV transition is so viscous and so profitable, consumers are so anxious to get EVs, any EV, that they'll buy even the subpar ones, that the growth of their new EV business saves the declining ICE business. I.e. there's 1,000,000,000 new EVs to be made in the world, and survival of ICE industry heavyweights IMHO largely depends whether this will be done in 20 or in 10 years: at this point the faster the better for them.

In both scenarios Tesla will probably be fine.

Coal miners, Greeks, Portuguese pretty much everybody in Europe that needed a bailout was bailed out with German Auto Profits.

Who is going to fund German Auto Bailout? The only possible answer is future Generations of Germans. That is tough sell to voters with a genetic memory of the Weimar Republic.

 

[CorneliusXX]

Tesla out with their next securitisation.

Tesla charges up for third auto lease securitization | GlobalCapital

 

[FrederickBound]

Tesla uses NCA not NMC in cars. Best guess currently is Tesla uses Nickel 93% Cobalt 5% and Aluminium 2%.
If you are interested, I summarised Tesla's current battery and powertrain lead in the below post (click the red arrow to link to full post with images).
However Tesla's biggest advantage is that it has a culture and incentive structure built for first principles innovation. They are far ahead and moving fastest.
Beyond the below post there is a lot of evidence that Tesla has a lot of new battery chemistry and tech they are preparing to put into production, but whether this is within months or 1-2 years I don't know.

Interesting post. I can't reply to all of that due to the shear volume, but let me point out something that is notable. The drag coefficient is mentioned as being significant. That is a pro and a con in Tesla cars. Why don't all cars have such low drag coefficients? It's not rocket science, they've designed cars and other objects with low drag coefficients before. Heck, that's even a factor in bullets! It is hard to get such low numbers in cars because it's a trade off. Such low numbers make the cars hard to get in and out of. I've gotten model S cars as loaners several times and I find them very hard to get in and out of. I test drove a model 3 and the same thing. There are times when I hit my head getting into the model X if I don't do it right. This is because the windshield is so raked back that it reduces the roof line over much of the door opening. I literally can't get into the model S without folding rather like a pretzel. Not only do I need to watch my head, but my shoulders because the width of the door opening at the top is a fraction of the width at the bottom.

So while the drag coefficient helps get better range and faster quarter mile times, it makes it harder to sell the cars to middle America. The question is which impacts sales more, the improved performance or the reduced convenience?

 

[LN1_Casey]

How did the stock know I would be adding to my position tomorrow? How very thoughtful to give me this little dip in price. Saving me some money!

Dan

I know, right? I will be making my bi-monthly piddling addition to my baby hoard, so nice that it dropped a few dollars.

Of course, knowing my luck it'll be +10 at open and then go from there.

 

[Fact Checking]

Coal miners, Greeks, Portuguese pretty much everybody in Europe that needed a bailout was bailed out with German Auto Profits.

This makes no sense.

JFYI, German Auto Profits, are, to a great extent, auto purchases from the rest of Europe. To the extent those purchases were debt financed, it ended up being German banks financing the purchases of German car industry customers.

The primary motivation behind the EU shared market was for German industry and financial institutions to be able to expand to new European markets, unrestricted. The cost of that barrier free expansion were gigantic real estate bubbles in Spain & co, the shrinking of non-German local industry, and the raising of southern wages to uncompetitive levels. This was by design, this was what Germany wanted.

Germany sharing in the costs of Eurozone bailouts, after greatly profiting from a bubble and debt fueled spending binge, is only fair, right?

 

[Dan Detweiler]

I know, right? I will be making my bi-monthly piddling addition to my baby hoard, so nice that it dropped a few dollars.

Of course, knowing my luck it'll be +10 at open and then go from there.

Shhh...
It might hear you. It can spike all it wants after lunch!

Dan

 

[Artful Dodger]

I’ll play the pessimist and say Dec 2021. Hope I’m wrong!

Imagree. That's when the 2B Euro's run out kick in from the FCA deal (h/t f/c). I think by then Tesla has production fully wound up at GF4, INCLUDING bty cells.