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

[Artful Dodger]

Think we need another GigaFactory...

Second Q 2021 would be a good time to announce.

Where do you all think it should go?

India needs the cheapest batteries to be a go...is it doable? Actual auto production starting around 3nd Q of 2022...

When has Musk ever said it was not possible?

Next Gigafactory will be China, for the Model 2. Giga Berlin is already sized for 2M/yr capacity, but Giga Shanghai is only sized for 1M/yr. Obviously, both Europe and China will have localized version of their own Model 2. I do expect Tesla will seek another 50 year lease on a conveniently located watermelon farm...

India is the best suited for Model 1, that means a small car introduced at around the $15K price point, and trending toward $10K as production volume and economies of scale compound over the years. I predict Bangalore (Bengaluru) by 2025/6. Gotta have the cheapest LFP batts, and the simplest, most mature production tech.

Cheers!

 

[wipster]

Notes from the conference call

Elon

• First roadrunner battery line at scale in Berlin
• FSD:
  • somewhat wider release early next week, wide release "hopefully by the end of this year"
  • works offline, no high definition maps needed, works in places new to the Tesla fleet
• Berlin and Austin: expect to deliver cars next years, but initial production volume will be low due to new tech, 12-24 months to reach capacity
• never felt more optimistic about the future of Tesla

Zach

• credits stronger than expected, tracking more than double than last year
• excluding CEO grant and credit sales fair to get image of true profitability
• improved reliability across the fleet
• revised CAPEX expectations for 2021, 2022 up by $2-2.5B due to additional insourcing (batteries)
• aiming for 500k deliveries, possible with tight execution, but challenging

Energy

• Megapack large growth segments
  • more demand than supply for 2021
  • order book rapidly filling up to 2023
• very large backlog of powerwall orders
  • continuing to invest into additional capacity

Q&A

• 4680 into many applications across many products energy and storage, Kato Rd. can support Giga Berlin during production ramp
• limited impact of tabless on charge rate, more impacted by anode chemistry (lithium plating)
• Solar roof bottlenecks: getting enough installers main issue, improving material flow on job site
• "Solar roof is a killer product. This will become obvious next year." -Elon
• "Insurance could be 30-40% of the value of the car business" -Elon
• no plan to spin any business units off
• focus on robotaxis, no plans for uber-style product without autonomy
• heat pump in model 3 confirmed (again), works up to - 20-30°C
• no prototype or similar for HVAC, just an idea that makes sense for now
• push as much volume as reasonably possible, margins important but not top priority
• COGS, OPEX has fallen more quickly than ASPs, so more affordable with increased gross margins
• Ramping stationary storage rapidly. Double stationary storage in 2021 relative to 2020
• tried to de-risk 2021, almost no dependence on internal cell production, will support ramp in 2022
• 20m sales per year not a sure thing, but a good goal to have (replace 1% of global fleet annualy)
• cell production system fairly agnostic to anode, cathode, electrolyte
• switch to solid state not a big issue for internal production (contingency/insurance not a plan)
• Adam Jonas with a LiDAR question: would you use it if it was TOTALLY free? "Probably not" -Elon
• Cybertruck design being optimized in a lot of different small ways, some deliveries end of 21', high volume production 22' if things go well.
• production expectiations for 21' "in the vicinity" of 840k-1m
• Gross margin growth driven mostly by reduced production cost, FSD revenue recognition not very relevant
• prioritizing production for different markets, unable to fulfill demand with current capacity
• sounds like Tesla is working on a common charging standard for the semi?
• cell production main roadblock for significant semi production

Thanks Reductionist! Very good and succinct notes on what was discussed while I was otherwise occupied, much appreciated. And thanks a bunch to all of the rest of the Tesla longs for your discussion during the proceedings... I was able to read some and your comments were much appreciated, especially Elon's reply to Jonas (he just don't get it, do he).

Glad I had my shades with me as the future looks bright! Perhaps I can be an accredited investor some day soon and buy some SpaceX before it heads to Mars (or even Jupiter)!

 

[StealthP3D]

What are your thoughts on associated costs for energy storage? Would like to see those start coming down.

Did you know batteries make up the bulk of energy storage costs? How does 59% less sound?

 

[MC3OZ]

In relation to Tesla building a factory to make batteries and solar in Australia.

Once the road runner production process is fully ramped and proven a factory to make LFP and possibly LMNO batteries for energy storage should be possible. Local mines should be able to provide a a fair chunk of the raw materials.

For solar, I suggest a different route:-
Australian researchers say “unusual” breakthrough may solve perovskite solar instability

Multiple Australian Universities, in particular UNSW have a long history of solar research and have a proven track record of good results.

It is hard to beat the Chinese on price for conventional silicon based solar cells, Perovskite is getting closer to commercialization.
Tesla could spin up a Sydney based skunk works to work with Australian Universities in particular Sydney University and UNSW, there are suitable industrial locations which would be no more than 15-20 minutes drive from both Universities.

Tesla already has a service center at Alexandria which is close by as is the airport.

Perovskite is the Solar version of Dry Battery Electrode, when it works it will slash manufacturing costs.

 

[Artful Dodger]

After-action Report: Wed, Oct 21, 2020: (Full-Day's Trading)

Headline: "Shortzes Dwell Deep in Denali"

Traded: $13,867,821,673.25 ($13.87B)
Volume: 32,381,242
VWAP: $428.27

Close: $422.64 / VWAP: 99.00%
TSLA closed BELOW today's Avg SP
Mkt Cap: TSLA / TM $393.82B / $185.298B = 212.53%​

CEO Comp. Status:

TSLA 1-mth Moving Avg Market Cap: $397.66
TSLA 6-mth Moving Avg Market Cap: $274.16
Nota Bene: 4th tranche of CEO comp. likely unlocked Oct 06-07​

'Short' Report:

FINRA Volume / Total NASDAQ Vol = 53.1% (53rd Percentile rank FINRA Reporting)
FINRA Short/Total Volume = 41.8% (46th Percentile rank Shorting)
FINRA Short Exempt Volume was 0.49% of Short Volume (45th Percentile Rank)​

Comment: "Earnings Deer-in-the-headlights"

View all Lodger's After-Action Reports

Cheers!

 

[Beltsbear]

Next Gigafactory will be China, for the Model 2. Giga Berlin is already sized for 2M/yr capacity, but Giga Shanghai is only sized for 1M/yr. Obviously, both Europe and China will have localized version of their own Model 2. I do expect Tesla will seek another 50 year lease on a conveniently located watermelon farm...

India is the best suited for Model 1, that means a small car introduced at around the $15K price point, and trending toward $10K as production volume and economies of scale compound over the years. I predict Bangalore (Bengaluru) by 2025/6. Gotta have the cheapest LFP batts, and the simplest, most mature production tech.

Cheers!

I am predicting the next announced GF will not be China. In fact it will be a place that would not be the first choice except there will be some form of government support that pushes it to the top place. That could be the UK. India. Australia. Or America if there is a change in government that would allow for a new federal credit for Tesla.

 

[strangethingintheland]

What other CEO, when asked a question about factory production would say "It starts off exponential, becomes linear, then turns logarithmic. It's like sliding 10,000 S curves onto the x-axis"?
I have no idea what he's talking about, but I love it.

Well, I love his technical background, but I actually cringe a little bit each time he says that for a small technical reason. The classic S-curve is a solution to the logistic growth DEQ, which, on inspection of its symmetry, starts off exponential, then linear, then turns inverted exponential, not logarithmic (s-curves ramp to an asymptote, and logarithm has no asymptote.) He keeps repeating that same mistake, time after time. Minor point, but just sayin'

OTOH, I've realized better than 50x gain on my 2012 investment, so still a fan of Elon

 

[Curt Renz]

The Tesla Q3 earnings report conference call begins at the 2:44-minute mark. Dave Lee's analysis of the event begins at 1:03:39.

 

[StealthP3D]

Elon, stop talking about how slowly the new factories will start making cars in the beginning. Bears will use this for FUD.

I disagree! The FUDsters are going to do what FUDsters do. You can't stop them by projecting strength or claiming the ramp will be the fastest ever - it just makes it worse. I love Elon's new way of managing expectations. Under promise, over deliver. This is what MSFT had perfected to a "T" in the 1990's. Quarter after quarter after quarter was a solid and surprising beat! The analysts could not get ahead of the game. You should have been there! This is like MSFT 2.0 only more amazing because Tesla is replicating it with software AND hardware!

 

[uujjj2]

Pretty sure that just because the pack is "structural" doesn't mean it is not modular/replaceable.

Indeed. The car would be designed so it has enough rigidity with the pack removed to keep it from flopping over, but not enough for spirited driving or crash protection. The pack would be both a structural part and replaceable.

 

[Cosmacelf]

The question I find so hard to understand is....how can it be that more people can't see what is standing right in front of them?

I mean sure the ones paid to not see it...or see it and know it is inevitable so their only hope is delay.

But are there really that many of those?

Part of the answer is that TSLA seems expensive. Let me ask YOU a question. Do you own Amazon stock? If not, why not? They still have lots of growth ahead of them. It wouldn't be that the stock price seems expensive, would it?

 

[uujjj2]

As long as Elon doesn't go on an embarrassing rant about the coronavirus, I'm happy with the earnings call.

 

[Rockster]

The only difference would be that the person might have paid ~$5k for FSD and current price could be ~$10k. And you wouldn't get the full $10k value in trade-in, so it would potentially reduce FSD revenue.

I think the net would be positive because more people would be compelled to buy FSD in the first place.

 

[MP3Mike]

Nota Bene: 4th tranche of CEO comp. likely unlocked Oct 06-07

Yep, from looking at the Q3 numbers he has unlocked 4 of the Operational Milestones. And we are obviously past the $250B market cap, so 4th is unlocked.

Q4 might unlock another EBITDA, but it looks like it might take to 21Q1 to me. It looks like the next Revenue goal is more likely for Q4.

So I'm guessing 5th tranche recognized in 20Q4, 6th in 21Q1, 7th in 21Q2.

More than halfway through the, 10-year, performance award in only 3 years.

 

[StealthP3D]

Ah okay... that makes a lot more sense. Still ~1k shares avg. per vote... so the avg. retail investor voting has a ~$500k exposure to $TSLA.

Makes sense. That's how much you would have if you put $50K in last June (or even last August).

 

[MP3Mike]

I think the net would be positive because more people would be compelled to buy FSD in the first place.

I don't understand why. It is like they all think that having FSD on their existing Tesla adds no resale value. Which is proven false.

I understand it depreciates, but then they are willing to pay a fee, $1k?, to transfer it. It just makes no sense to me.

 

[StealthP3D]

If they got in 14 months a couple years ago, that's about a $50K investment which isn't that crazy

FTFY.

 

[Rockster]

If I'm remembering this right, Tesla said they expect to recognize like 500-600 million in FSD deferred revenue in the 2nd half of 2020. On the earnings call, Zach said they only recognized an additional 10 million in Q3. So if they get this FSD build out to wide release before the end of the year, it's correct to assume Tesla will recognize an additional 500 million or so in profit, correct?

Someone here suggested that they’re going to defer that income to the usually soft Q1.

 

[wipster]

The Tesla Q3 earnings report conference call begins at the 2:44-minute mark. Dave Lee's analysis of the event begins at 1:03:39.

Thanks for posting the link Curt! Much appreciated, as are all of your posts!

 

[Rockster]

I think Jonas just likes to ask the sorts of questions that get Elon to say something that the drive-by media can use. For example if Elon had said "Jeff Bezos can go take a running jump" you can guarantee the news cycle would be ignoring the awesome Tesla financial numbers and focusing on the crazy stuff Elon said... perpetuating the "Tesla wacky CEO not to be trusted" messaging.

Elon has learned to avoid giving AJ what he wants

I would love to be a fly on the wall just to see the facial expressions and hand gestures that the Tesla folks make in response to questions from idiots like AJ.