Announcement that there will be no China EV subsidy cuts this year has also been picked up by Reuters
China will not cut new energy vehicle subsidies in July, minister says
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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Announcement that there will be no China EV subsidy cuts this year has also been picked up by Reuters
China will not cut new energy vehicle subsidies in July, minister says
I'm almost mad. There goes my chance of reincreasing leverage on Monday at bargain prices. Oh well
I have an odd feeling Tesla can be successful in China...
Haha no my hope is the world marvels at China’s adoption to EV’s and the positive effects of doing so are seen far and wide. In the US I think we will be hit by waves of EV adoption, state by state will have to make room for them. Things are about to get crazy to. The next 5 years we will likely see huge increases in range, infrastructure will be seen by all drivers, and the benefits will be irrefutable.
Although a friend of mine was arguing with me over Tesla having a larger market cap than ford and GM combined and I told him it’s simple, Tesla doesn’t even have 1% of the auto market, their growth over the next decade is why the evaluation is there. They will be eating everyone else’s lunch for the next decade while every other auto maker decides if they want to be like Tesla or appease their existing base. Plus we haven’t even factored in solar/energy on any scale, Tesla semi, Tesla robotaxi will likely be a thing in major cities within the next two years with or without autonomy. The other issue is I believe people want Tesla’s, the EV thing is just a bonus. Essentially Tesla can disappear tomorrow and 99% of people wouldn’t notice, but as time goes on that number is shrinking and when you have that level of upside your evaluation is always too low.
Haha no my hope is the world marvels at China’s adoption to EV’s and the positive effects of doing so are seen far and wide. In the US I think we will be hit by waves of EV adoption, state by state will have to make room for them. Things are about to get crazy to. The next 5 years we will likely see huge increases in range, infrastructure will be seen by all drivers, and the benefits will be irrefutable.
Although a friend of mine was arguing with me over Tesla having a larger market cap than ford and GM combined and I told him it’s simple, Tesla doesn’t even have 1% of the auto market, their growth over the next decade is why the evaluation is there. They will be eating everyone else’s lunch for the next decade while every other auto maker decides if they want to be like Tesla or appease their existing base. Plus we haven’t even factored in solar/energy on any scale, Tesla semi, Tesla robotaxi will likely be a thing in major cities within the next two years with or without autonomy. The other issue is I believe people want Tesla’s, the EV thing is just a bonus. Essentially Tesla can disappear tomorrow and 99% of people wouldn’t notice, but as time goes on that number is shrinking and when you have that level of upside your evaluation is always too low.
HG Wells
Martian Embassy
I'm almost mad. There goes my chance of increasing leverage on Monday at bargain prices. Oh well
Karen, I am sure we will see headlines like.
China extends EV incentives due to poor sales.
Didn't know that, thanks. If I'm reading it right, they bought about 5x as much as they originally held. Positive indeed.
Let’s hope it’s an OTA updateJust thinking about the endless rows of ID.3s sitting outside until this fall, unplugged, awaiting a software update:
Beyond the fact that I worry about their batteries (I seriously hope someone is recharging them occasionally!), it's got me thinking about the EU emissions credit scheme. Are compliance-related fees accrued on an annualized, quarterly, or monthly basis? Were ID.3 sales volumes intended to eliminate all of VW's noncompliance fines, or just a fraction? I'm curious as to whether this delay is a double whammy on this front, or whether the delay just means more fines upfront, less later in the year.
How ironic it is the parking lots full of bought back diesels in the USA and around the world and now iD3 sit as well
I can tell you having any new car sit that long is very bad , 12 v batteries , flat spotted tires , bird droppings ,paint damage , rodents , insect infestation,all become issues. Then there is the whole HV battery degradation.
Not a good start VW
Nope - OTA is one of the features not yet working. I guess they will wear out a memory stick instead.
As both investor and owner I am not super happy to see that the S/X comes with free, unlimited supercharging in at least in several sampled markets, US, Canada, UK, Germany, France.
I guess this is to reduce the Model 3 (and Y) cannibalizing S/X sales.
Short-Sellers Took on Elon Musk and Tesla in 2019 and Lost
Sorry if this was posted, but it’s a pretty informative look at short selling and their current state.
I’m excited to see how Q4 earnings turn out for father and son Corp.
“I put on a small short condition [Wednesday] that for an investment firm my sons and I run,” Brad Cornell, emeritus professor of finance at UCLA and managing director at global consulting firm BRG, tells Fortune. “We thought at $488 it was so wildly overvalued, how long could it go on?”
Hopefully it’s an expensive lesson
Sorry if this was posted, but it’s a pretty informative look at short selling and their current state.
I’m excited to see how Q4 earnings turn out for father and son Corp.
“I put on a small short condition [Wednesday] that for an investment firm my sons and I run,” Brad Cornell, emeritus professor of finance at UCLA and managing director at global consulting firm BRG, tells Fortune. “We thought at $488 it was so wildly overvalued, how long could it go on?”
Hopefully it’s an expensive lesson
Firstly, a correction, I misremembered the GAAP profit @luvb2b is estimating for Q4: it's +$295m.
Secondly, Q3 was arguably an outlier, it was profitable despite a 10% increase in production and an only 1.8% increase in deliveries and price reductions, because:
Neither of which could be reliably modeled. If just two of those factors were included (storage margin improvement and FX effects), his model would have shown a small profit for Q3.
- a significant improvement in efficiencies: my guess is that the primary driving factor was that Tesla re-negotiated the battery purchase contract and its pricing formula in particular with Panasonic, to better tie cell prices to the (dropping) world market prices of key raw materials,
- this can be suspected from the fact how 'storage' margins improved from near zero to 20% in a single quarter,
- excellent opex control - historical weak area of Tesla under Deepak as a CFO - Zachary seems much better at this,
- there was a ~$100m GAAP income from foreign exchange shifts - it's real income but almost impossible to model due to how it shifts randomly between quarters.
More importantly, these improvements from Q3 are now included in the Q4 model.
It also makes sense to take a broader look at the GAAP income track record of luvb2b's model:
[TD2] GAAP income luvb2b est [/TD2] [TD2] Tesla reported [/TD2] [TD2] luvb2b "miss" [/TD2] [TD2] TMC source [/TD2] [TD2] -$740m [/TD2] [TD2] -$717m [/TD2] [TD2] -$23m [/TD2] [TD2] Near-future quarterly financial projections [/TD2] [TD2] +$260m [/TD2] [TD2] +$311m [/TD2] [TD2] -$51m [/TD2] [TD2] Near-future quarterly financial projections [/TD2] [TD2] +$308m [/TD2] [TD2] +$140m [/TD2] [TD2] -$168m [/TD2] [TD2] Near-future quarterly financial projections [/TD2] [TD2] -$611m [/TD2] [TD2] -$702m [/TD2] [TD2] +91m [/TD2] [TD2] Near-future quarterly financial projections [/TD2] [TD2] -$325m [/TD2] [TD2] -$408m [/TD2] [TD2] +83m [/TD2] [TD2] Near-future quarterly financial projections [/TD2] [TD2] -$238m [/TD2] [TD2] +$143m [/TD2] [TD2] -$381m [/TD2] [TD2] Near-future quarterly financial projections [/TD2] [TD2] +$295m [/TD2] [TD2] ? [/TD2] [TD2] . [/TD2] [TD2] Near-future quarterly financial projections [/TD2]
quarter Q2'2018 Q3'2018 Q4'2018 Q1'2019 Q2'2019 Q3'2019 Q4'2019
As you can see there's no inherent bullish or bearish bias in the model, it's been missing in both directions. Also note that all 6 predictions of him got the direction of the quarter-to-quarter shift in GAAP income right, and only a single quarter (Q3'2019) got the sign wrong - and this was over an extremely challenging 1.5 years of Tesla's history, with a lot of strategic and operational shifts going on within the company.
More importantly, in quarters where opex and cost structure was mostly unchanged, luvb2b's model had very good accuracy. He was pretty much the only modeler who expected Q3'2018 to be profitable, and got within 16% of the final profit, which was amazing.
I expect Q4 to be a similar quarter to Q3 in terms of cost structure and opex control: Model 3 production was up 10% from Q3, total deliveries were up 15%. In Q4'2018 Model 3 production was up 15%, deliveries were up 9%.
In Q4'2018 @luvb2b's model overestimated GAAP profits by $83m, so I don't think there's much basis to suggest that his $295m estimate for Q4'2019 is overly bearish. If you click on the link above luvb2b also lists a few wildcards that could improve Q4 results, but again those are hard to model.
In any case I'd warn against too bullish expectations for Q4, in addition to the potential wildcards, there's various potential headwinds as well:
The threshold number is $266m Q4 profits IMO, because that would make even marginal $1m profits in Q1 trigger S&P 500 inclusion eligibility.
- the FX gods could move against Tesla this time around,
- Tesla could have more opex from China and from the accelerated Supercharger expansion,
- they could also be recognizing some costs now instead of Q1 to help Q1's results,
- or they could decide to not sell any ZEV credits or recognize FSD revenue in Q4 but save them all for Q1, etc.
- they might write down any remaining 75D inventory with steep discounts.
Anyway, not advice.
Interesting.
While trivial, it is notable that Tesla has a much better overview of Q4 than we do, especially while it was still evolving.
So if they could see that Q4 GAAP profits could likely approach or even exceed 266M $, then they would have an incentive to try and shift some of that expected profit to Q1, to ensure that also Q1 yields a net positive result in order to qualify for S&P 500 inclusion. Even without taking into account Tesla management's share ownership, S&P 500 inclusion is a positive for Tesla, since it makes (US) financing easier to get.
The next few months with Tesla will (also) be very exciting...
PS Edit: So while the shift of delivery of up to 1k MIC Model 3s from 19Q4 to Q1 has already received plausible explanations, it makes even more sense now.
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Just thinking about the endless rows of ID.3s sitting outside until this fall, unplugged, awaiting a software update:
Beyond the fact that I worry about their batteries (I seriously hope someone is recharging them occasionally!), it's got me thinking about the EU emissions credit scheme. Are compliance-related fees accrued on an annualized, quarterly, or monthly basis? Were ID.3 sales volumes intended to eliminate all of VW's noncompliance fines, or just a fraction? I'm curious as to whether this delay is a double whammy on this front, or whether the delay just means more fines upfront, less later in the year.
All good questions, and I’m in the process of posting a response to @Aeon and @Fact Checking where answers may affect when we might see FCA payments to Tesla.
First question: when are the EU penalties assessed? Accurate sales figures for fleet model mixes would need to be reported for officials to compute the actual emissions and the resulting penalties. Monthly, quarterly, annually? In the latter case, 2020 penalties wouldn’t be assessed until 2021.
Second question: what is the penalty payment schedule? Payment due upon penalty assessment plus x days? Can the penalty be paid in installments? Either would further delay or spread the actual dates that FCA has to pay the EU.
Third question: how do these answers affect the schedule of payments from FCA to Tesla for sales of pool ZEVs? The “value” of the Teslas sold will depend on the actual emissions calculation. Will payment timing be tied to that, and are installment payments possible? If so, then it’s possible that FCA payment to Tesla for 2020 sales won’t occur until 2021. At the other extreme, a projected value based on estimates may be part of the pooling agreement, to be paid to Tesla after monthly Tesla EU sales reports - a minimum delay scenario.
EU compliance penalties are "all engineering topics (out of main)"? Seriously? We can't talk about EU compliance penalties here?
Even on a weekday this would be highly topical, let alone a weekend.
Even on a weekday this would be highly topical, let alone a weekend.
Another way of seeing that is that the S/X customers have paid all their supercharging in advance.
They cost a bit more than TM3 giving Tesla more profit per car - and most of the cars will still charge at home. So I guess it's not a big cost for Tesla.
My old TMX has free supercharging and I live 1/2 mile from a supercharger. Still charge at home since it's more convinient. And on trips I prefer destination charging to supercharging - and also pay to use my Chademo adapter where other chargers are more conviniently located even if they are not free of charge.
Off Shore
Off Topic Member
Does that float number include the shares shorted? They're artificial, but they're real
The Supercharger can't tell if it's powering the HVAC (unless there is some way for the car to tell it, but I haven't seen anything like that). It just knows how many kWh have been used.
Why? They already exchange all sorts of data, bidirectional, and the software on both chargers and vehicles are updateable.
Good to know. It seems Tesla is trying to give accurate wait time for each zone. After serving OUS, they probably will first deliver to east coast and mid west, Overall Q1 demand should be very good.
The new Supercharger payment is great for Tesla in terms of covering actual costs. It also serves as incentive to not let your car sit at the charger longer than needed. Rather than the long time period 90- 100% taper (by adjusting limit after charge starts) only costing one a small amount of kWh charge, it costs charge plus vehicle overhead plus cabin climate control (if preconditioning, doggo mode, or people finishing an episode on Netflix).
Not sure why, but if I had to guess it happened because a discussion about VW storing its ID3s until fall and the effect that has on EU compliance penalties quickly turned into a technical discussion about what cold storage for a long time in general does to battery life. Discussion about EU penalties is very relevant to investors so not off topic.
This is great news. The big picture is China really want to switch to 100% EV, to curb pollution and to save money. China is running out of oil. China will encourage Tesla to build more Gigafactories.
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