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

[AquaMan]

2. Given the revelation they have more CT orders than they can deliver in 3-4 years, which I think means line and delays, I'm gonna hate those of you who put the order in front of me

I am almost certainly such a person. I ordered one of each trim level the moment Elon said "You can order now if you want." ...and I don't have room for even one. I did this because the deposit was small and refundable, and I thought maybe I could somehow sell my place in line, or that I might acquire an "early and rare" unit and sell it profitably.

My apologies to any who feel this is dastardly. I just figured "why not" and got caught up in the moment.

On-topic, I think it's likely there are a lot of folks like me. The 250K+ orders surely won't result in as many actual deliveries. I hope they are doing their best to determine how many of those who ordered actually want one, and planning accordingly.

Off-topic, since I am unlikely to actually be able to keep a Cybertruck, any advice on what should I do with these 3 orders?

 

[xhawk101]

Yeah, I'm in the FSD skeptical camp. I mean, I use AP all the time on the freeways, but even that has me taking over even now from time to time for various reasons. Urban driving? They aren't even close. But maybe that'll be an upside surprise for me.

Use it all the time on most all roads. They are not far from feature complete in my view.

 

[Green Pete]

I am almost certainly such a person. I ordered one of each trim level the moment Elon said "You can order now if you want." ...and I don't have room for even one. I did this because the deposit was small and refundable, and I thought maybe I could somehow sell my place in line, or that I might acquire an "early and rare" unit and sell it profitably.

My apologies to any who feel this is dastardly. I just figured "why not" and got caught up in the moment.

On-topic, I think it's likely there are a lot of folks like me. The 250K+ orders surely won't result in as many actual deliveries. I hope they are doing their best to determine how many of those who ordered actually want one, and planning accordingly.

Off-topic, since I am unlikely to actually be able to keep a Cybertruck, any advice on what should I do with these 3 orders?

Are you not planning on buying an island or 200 acres in 3-5 years? With a price target of 6k from ark that's still 10x whatever you've got now.

 

[Cosmacelf]

I'm disappointed we didn't get more clarity on this during the call.

For me things became more confusing. On one hand, yes, if the other report of M3 and MY sharing lines is also true, this could indicate that 10k / week (or maybe slightly more like 12k) is the maximum capacity of Fremont.

However, they were previously targeting volume production mid 2020 in excess of 1k/week for MY, so it's entirely possible they've now achieved this, and their production capacity is simply 350k M3 + 50k MY as of right now, and mid 2020 it will be at 350k M3 + 150k MY.

Most importantly, I'm very skeptical that they decided to build MY at Fremont if production capacity is going to be so limited. They say they don't expect cannibalization to affect M3 demand, but even if it dropped to 250k/year from Fremont, MY demand should far exceed that, suggesting that 500k annual 3+Y capacity at Fremont is going to seriously insufficient.

I'm not convinced either way right now, and will be keeping an eye on this.

They didn't say it, but I suspect they are modelling that Model 3 demand to drop as Model Y gets delivered.

An analyst actually asked that direct question: What do you expect Model 3 demand to do once Model Y ships? The answer was "I don't know", which is a 100% accurate statement if Elon interpreted it to mean, what will actually happen? Of course no one knows, but I am 100% certain that they have internal predictions, since they have to plan for it.

In the end, it'll be some sort of mix of Model 3 and Model Y adding up to 420K units worldwide, and they have probably planned to be flexible to produce more of one or the other as the year goes on.

Remember that at that level, they will be battery cell constrained, so even if the demand is there, they aren't likely to produce significantly more than that.

 

[Singuy]

I'm disappointed we didn't get more clarity on this during the call.

For me things became more confusing. On one hand, yes, if the other report of M3 and MY sharing lines is also true, this could indicate that 10k / week (or maybe slightly more like 12k) is the maximum capacity of Fremont.

However, they were previously targeting volume production mid 2020 in excess of 1k/week for MY, so it's entirely possible they've now achieved this, and their production capacity is simply 350k M3 + 50k MY as of right now, and mid 2020 it will be at 350k M3 + 150k MY.

Most importantly, I'm very skeptical that they decided to build MY at Fremont if production capacity is going to be so limited. They say they don't expect cannibalization to affect M3 demand, but even if it dropped to 250k/year from Fremont, MY demand should far exceed that, suggesting that 500k annual 3+Y capacity at Fremont is going to seriously insufficient.

I'm not convinced either way right now, and will be keeping an eye on this.

In my view Fremont Y production is beta testing for future lines WHILE they have a massive cell supply wall. Elon said currently due to cell supply constraint, it's just shuffling products around but coming out with the same results.

My hunch is that initially, Elon wanted to massively build out the model Y line at giga since it has more space, however the team convinced him that cell supply is constraint so might as well do smaller runs at Fremont where parts and suppliers are already set up. This way he can solve production hell easier with most of the Model 3 expertise there already anyways. I believe once Maxwell ramps up, they will start scaling Ys massively at Giga 1 most likely.

 

[Green Pete]

They didn't say it, but I suspect they are modelling that Model 3 demand to drop as Model Y gets delivered.

An analyst actually asked that direct question: What do you expect Model 3 demand to do once Model Y ships? The answer was "I don't know", which is a 100% accurate statement if Elon interpreted it to mean, what will actually happen? Of course no one knows, but I am 100% certain that they have internal predictions, since they have to plan for it.

In the end, it'll be some sort of mix of Model 3 and Model Y adding up to 420K units worldwide, and they have probably planned to be flexible to produce more of one or the other as the year goes on.

Remember that at that level, they will be battery cell constrained, so even if the demand is there, they aren't likely to produce significantly more than that.

Given that the model y is built with a ton of parts from the model 3 I doubt it really matters. And given the plans for the model y frame and wiring harness you could almost imagine the increased margin would make it preferable to sell 420k model Ys. But because the supply chain for both has so much overlap it the ability to scale one down and scale up the other is probably pretty amazing.

 

[JustMe]

yeah of course, but it was weird hearing Elon say they couldn't ramp Semi up sooner because there wasn't enough battery supply, and in the next breath saying they can't spend money faster as there was nothing to spend it on (when obviously more battery supply is something they could be spending it on).

Almost seems like they are paying an opportunity cost to wait while Maxwell tech is ready (otherwise they would have invested more last year in battery lines)

I agree with this. Tesla is getting its ducks in a row for something hard to imagine. This is what he said on the conference call about Maxwell and battery day:

“A lot of these questions wlil be answered. I think it’s going to be a very compelling story that we are going to present, it’s going to blow people’s mind. It blows my mind, and I know it. It’s going to be pretty cool,”

We may fret over the potential loss of a few tens of thousand cars that could be squeezed out by expanding the battery production faster. But the view from 10,000 feet (or from orbit?) this is inconsequential to the task of scaling up to 10-20 million vehicles per year PLUS the equivalently sized energy storage business.

I think Tesla should sell limited release safety hats for moments like battery day to minimize cleanup after they blow our minds.

 

[omgwtfbyobbq]

yeah of course, but it was weird hearing Elon say they couldn't ramp Semi up sooner because there wasn't enough battery supply, and in the next breath saying they can't spend money faster as there was nothing to spend it on (when obviously more battery supply is something they could be spending it on).

Almost seems like they are paying an opportunity cost to wait while Maxwell tech is ready (otherwise they would have invested more last year in battery lines)

That's my guess. More to the point, they saw what happened when they went too far/fast with the 3 and had a few quarters with a bunch CAPEX on the books and minimal 3 production volume to show for it. I think they want to be absolutely sure they can get cell production down reliably first and then invest in a bunch of battery factories.

 

[Cosmacelf]

And yet there were two clearly defined jumps from 580 to 620 on report release then to 650 an hour into AH trading (before the earnings call).

Can anyone explain those tight step movements? TIA.

Maybe because after hours has much lower volume?

 

[tschmidty]

I don't watch CNBC much so I don't think I've seen Tasha before. Pretty + Smart = swoon.

She is smart, young and looks hot

Nothing like a nice rise in stock prices to get the old men's blood racing. Can you save the sexism for another forum? Or at least comment about how Gali looked hot with that cute little laugh in those glasses? /s.

Nobody mentioned this news here?
Wonder how is it gonna impact tomorrow’s SP
Tesla temporarily closes Shanghai factory over coronavirus concerns – TechCrunch

Answer: Not at all.

IIRC, the ultracaps would help with the active suspensions.

As a matter of fact, a quick googling for "ultracapacitors for suspensions" shows this:
View attachment 505816

text, in case the image doesn't show:
"On the system level, active suspension requires high power and low energy. Maxwell's ultracapacitors are specialized for high power and repetitive cycling, providing rapid power boosts for the actuator's continuous reaction to tight turns and uneven areas of the road."

Funny enough, the google link gets redirected to maxwell's redesigned page without ANY reference to that posting from earlier.

Edit: Sorry Tesla, but this detail is too relevant to retail investors to embargo.

Tesla is already using Maxwell's ultracap suspension unless I am remembering very incorrectly. In any case, capacitors != batteries. I have tried to figure out how this could help in an EV, but Li-ion batteries already take a charge and release a charge really quickly, which would be the only advantage of a capacitor, except in some edge case "super ludicrous" mode. For Tesla, it is the fact that the dry electrode technology has the potential to greatly increase production efficiency and cost. It was still unknown if their process can scale to industrial levels. Elon sounds confident, which makes me confident, but given previous undeserved confidence (at least as far as time tables), a little skepticism wouldn't be unwarranted. But I am actually really confident.

...
As to the battery development, I got the impression that nobody, not even the genius retail investors on TMC, realized just how deeply Tesla is diving into the details of how to optimize battery performance and production. It’s clear that the competition is going for “good enough as cheap as possible“. Ain’t nobody else scaling to thousands of GWh - especially for vehicles.

This all gives me more confidence than ever that Tesla will mop the floor with the competition over the next five years.

Cheers-

100% agree. It has been really apparent to a lot of people here that batteries are the stumbling block as far as both BEVs and utility level storage (my personal 10x bet if they get battery production truly scaled).

If it is that apparent to us, I am 1000% sure Elon has thought a lot more about it, and has a plan to make it happen.

Can we reflect on how incredible the rise of both Tesla and Elon Musk has been? Point 2 in his "release an affordable car" was a 100K Model S (!), which to be fair at the time was a pretty amazing price for an electric car (since no one had seen a real one before!). And Elon thought he was just going to show the old guard how it was possible and they would take the reins from there. So here we are in 2012, Elon has this upstart that was stuffing batteries in a Lotus Elise, now releasing a luxury car, that was electric! And then, no one did anything to even try to compete. So Elon took the hard road again, kept going, and has created the SECOND MOST VALUABLE CAR COMPANY IN THE WORLD. Not second most valuable electric car company, but second most valuable car company, period.

Yeah, I am not buying 1.2M worth of $300 puts betting against that guy...

In case anyone needs a reminder of how cool Tesla

What it's like to own a Tesla Model S - A cartoonist's review of his magical space car - The Oatmeal

 

[M3Rider]

Once again, Tesla's future growth prospects revolve around battery cell supply. They've got a game plan for the rest of the year, but they intentionally aren't bringing up Tesla semi production because of battery cell supply. So we really aren't going to see positive surprises this year. Q1 results are going to be rough since Model Y won't have started ramping yet, and it looks like China GF ramp is still on going.

I think Elon is picking April for battery investor day because it'll be just before Q1 results. Elon will no doubt wow us with advanced technology and wave his hands fast enough about manufacturing capability.

Elon is saying he is hoping for 50% annual growth every year. Which probably means they'll hit around 40%. Which is still pretty damn good for such a large company. I suspect they can indeed grow cell capacity that fast.

But all this means Tesla isn't going to be that exciting for the next couple of years. They will be strained to produce enough cells for 500,000 cars this year. Next year, demand may soften a bit for Model 3/Y which will allow them to start selling semis. Towards the end of 2021, it'll be the cybertruck and if we're lucky, the Roadster. Sometime in 2021, we'll see the next cool thing Tesla will make. But 2020 will be kinda boring

Pana is upgrading 35gwh(which I'm not sure was ever 100% ramped) to 54 gwh.
That is +54% on 3/Y Fremont only, don't know about S/X. GF3 will be making its own LG-based batteries, that is in addition to 54%.

So, 40% looks low to me.

Edit: on the other hand, we don't know how soon Pana will ramp. You might be right.

 

[madodel]

am I bart simpson at the chalkboard?

I will not buy a roadster
I will not buy a roadster
I will not buy a trimotor cybertruck
I will not buy a trimotor cybertruck

So how many Roadster 2.0s did everyone earn today? This keeps up and even my wife won't object to my buying one with less than half of what I made today. She certainly won't object if I settle for the CT instead.

 

[tschmidty]

And yet there were two clearly defined jumps from 580 to 620 on report release then to 650 an hour into AH trading (before the earnings call).

Can anyone explain those tight step movements? TIA.

This is almost certainly all bots trading with each other Here is a really interesting article about a guy who managed to rig the system, and also informative about how the MMs actually make money (olds news to some I know)

How the 'Hound of Hounslow' helped trigger a $1tn crash

I am almost certainly such a person. I ordered one of each trim level the moment Elon said "You can order now if you want." ...and I don't have room for even one. I did this because the deposit was small and refundable, and I thought maybe I could somehow sell my place in line, or that I might acquire an "early and rare" unit and sell it profitably.

My apologies to any who feel this is dastardly. I just figured "why not" and got caught up in the moment.

On-topic, I think it's likely there are a lot of folks like me. The 250K+ orders surely won't result in as many actual deliveries. I hope they are doing their best to determine how many of those who ordered actually want one, and planning accordingly.

Off-topic, since I am unlikely to actually be able to keep a Cybertruck, any advice on what should I do with these 3 orders?

But they won'y be making 250K the first year as Elon explicitly said. They will sell every one they make whether you buy one or not.

Just means I get to move up the queue OK, that's my 5 posts for the week I am done.

 

[AudubonB]

Q: Maxwell plans?

Elon: Will talk about this in April. Will blow people's minds. Actually it blows my mind. Retail investors have put together most of the puzzle pieces. The questioner ended by saying he needs to read the blogs more. Too funny.

Bang! Bang!

This was my favorite snippet from the conference call. I'm sure I'm not the only one who thinks that Maxwell's hammer is going to come down on some shorts' heads.

ICEs, too.

 

[Cosmacelf]

Pana is upgrading 35gwh(which I'm not sure was ever 100% ramped) to 54 gwh.
That is +54% on 3/Y Fremont only, don't know about S/X. GF3 will be making its own LG-based batteries, that is in addition to 54%.

So, 40% looks low to me.

Pana just recently got to 35 GWh I believe? Did they hit that number yet? And their ramp to 54 GWh won't happen overnight. Which means they won't produce 54 GWh in 2020.

 

[FrankSG]

I woke up this morning with the goal to read the ER before checking the SP movement, and then making up my own opinion of the results before looking at how the market interpreted things.

Excluding the expenses on the CEO award and a few other small hard-to-predict line items, the ER was very close to what I expected, and slightly higher than Wall Street expectations. Considering a lack of real surprises, and (in my eyes) quite conservative 2020 guidance, I expected the SP to move very little, and probably be somewhere in between $500 and $600 (keep in mind it was at $560 when I went to sleep).

Therefore, I was very surprised to see it at $650. Although I thought the report was good enough to maintain the SP or maybe continue a slight further run up (macros-allowing), I definitely did not expect it to be up this much. I wonder if I underestimated the amount of funds waiting to buy, and the amount of shorts waiting to cover, if Q3 turned out to not be a one-time thing.

I also did not expect sentiment on this forum to be this positive. I'm now wondering if people here are just excited by the market's reaction to the ER and the money they made, or if I'm missing things. Don't get me wrong, the ER is good, but is this not pretty much what we expected?

The biggest positive for me was the lower than I expected capex. Only $412M in capex while ramping both Giga Shanghai and Model Y is insanely impressive. Especially looking at $1.3B for the year after guiding $2B (or was it $2.5B even?) in capex at the start of 2019.

One other positive point that stood out to me and that I haven't seen mentioned anywhere yet, is the "Service and other" margin that continues to improve. Up from -18% to -14% QoQ, and from -38% to -14% YoY!

A short term slight negative point is the hit to GAAP income due to the CEO performance grant. $105M in net income and Tesla's conservative Q1 guidance, has changed S&P 500 inclusion from a near certainty after Q1, to a lot more uncertain for me. It doesn't impact the business much, but the individual/fund betting $2M on the $800 Jun'20 options is not going to be happy about this.

Energy margins were also disappointing. However, like somebody else mentioned I suspect this is due to Solar Roof ramp. This could very well continue to negatively impact Energy margins for another quarter or two.

It would've also been fun to hear more hype about 2020 and the next five years on the conference call, but I think it was probably wise to guide conservatively. I reckon that SP should continue to run up steadily as Tesla meets its own conservative targets for the year, and potentially spike a few times as it exceeds these (in my opinion) very conservative targets. Under-promise and over-deliver appears to be the name of the game going forward.

 

[SMAlset]

Once again, Tesla's future growth prospects revolve around battery cell supply. They've got a game plan for the rest of the year, but they intentionally aren't bringing up Tesla semi production because of battery cell supply. So we really aren't going to see positive surprises this year. Q1 results are going to be rough since Model Y won't have started ramping yet, and it looks like China GF ramp is still on going.

I think Elon is picking April for battery investor day because it'll be just before Q1 results. Elon will no doubt wow us with advanced technology and wave his hands fast enough about manufacturing capability.

Elon is saying he is hoping for 50% annual growth every year. Which probably means they'll hit around 40%. Which is still pretty damn good for such a large company. I suspect they can indeed grow cell capacity that fast.

But all this means Tesla isn't going to be that exciting for the next couple of years. They will be strained to produce enough cells for 500,000 cars this year. Next year, demand may soften a bit for Model 3/Y which will allow them to start selling semis. Towards the end of 2021, it'll be the cybertruck and if we're lucky, the Roadster. Sometime in 2021, we'll see the next cool thing Tesla will make. But 2020 will be kinda boring

Pretty sure both overseas Gigas will also have battery production, so as more cars come online those batteries needed would eventually be produced locally and save on costs that way.

 

[traxila]

I'll sleep on it, but I most likely will abandon my short straddle strategy and take the 150k~ loss.

God I wish I wasn't allergic to alcohol and can just drink this off.

Looking back at Elon's payout deal, he is aiming for 650b valuation by 2028. At this point, there's no point doubting whether or not he can hit that target. It will be hit. That'll put the stock price at around $3000 I think. I need to think about the best way to profit off of that. Maybe go back to far OTM LEAP calls again.

Make no mistake - by going to neutral I mean exit your short positions. Tomorrow might not be the best day, but honestly, I cannot promise you that this is not going to 1000 in short order. Hard to make a good decision now. Go to neutral and then assess.

 

[CanadaEV]

Elon: "I think some of the Retail Investors have put together the puzzle (on battery tech)"

Translation: "TMC Rules; Analysts Drools".

Word to your Mother.

Cheers!

The difficulty of battery tech is kind of the old Zen question, 'Who knows what's good and what's bad?'

If batteries were easy, Tesla wouldn't be five years ahead of the pack and writing the agenda. We would have a bunch of commodity EVs produced by big players that would have been working hard on ways to degrade their appeal in relation to ICE.

 

[Jayjs20]

Make no mistake - by going to neutral I mean exit your short positions. Tomorrow might not be the best day, but honestly, I cannot promise you that this is not going to 1000 in short order. Hard to make a good decision now. Go to neutral and then assess.

I think I have to get out of my positions tomorrow morning asap, and not risk any margin call jumps and/or analyst upgrades.