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

[FS_FRA]

Looks like all objections against GigaBerlin are not significant enough to prevent Tesla from completing construction and starting production.

“After 813 objections: Authority sees "no significant obstacles to approval" for e-car and battery cell plant. Tesla is now allowed to build around the clock.”
Source: Tagesspiegel (German newspapers)

 

[jerry33]

Its wider than being just a Tesla thing. I am the only person I know who has an electric car. That includes all family, friends of family, and past friends and ex-colleagues who I am still in contact with on Facebook. I don't know if its different in the US but I get the impression over here that an electric car is something people think will happen in the future. For now it's a curiosity. Which underlines the potential future market.

That's true in places here too. Other than club members, I don't know anyone who drives a Tesla or other BEV. I believe this is mostly because there aren't enough locations for trips in areas where I usually travel. There are areas where it seems as if there are Superchargers every other block--just not where I travel. You can get almost everywhere on Superchargers if you don't mind taking a longer or less scenic route. There will also be one or more long charging stops because for some legs of the journey the car needs to be filled to almost full which ends up in the really slow charging range (above 80%). If one location happens to be down, alternate charging is required (or don't exceed 45 mph). Fortunately this is very rare, but it has happened to me a couple of times in the last couple of years. This is amplified for older or low range cars.

 

[jbcarioca]

You'll rarely or never see a Supercharger in the southeast Georgia, south South Carolina area with more than 2 stalls being used. This includes Savannah /Metter / Brunswick GA, and Hardeeville / Hilton Head, SC.

It's basically the same for all superchargers in Georgia except the ones in Atlanta.

That means the actual cars per stall at busy superchargers is far higher than the average.

Some of those, notably Hilton Head and Brunswick are very busy when the resorts and beaches are crowded but close to empty otherwise. Titusville, FL is quite similar but with a cadence launch- related. As you point out, major urban areas do tend to have more consistent heavy usage, which probably explains the Urban Superchargers that are slower, but more plentiful in shopping centers and city centers where stay times are larger so "charging speed is not of the essence".

Georgia is much like other places that have major urban centers, rural/small city and tourist centers. The more diverse Supercharger distribution reflects that well.

 

[StealthP3D]

I'm sorry, but whilst aspects of what you say are correct, it is extremely US-centric in its worldview. For most of the world Tesla is still in full-blast network build-out mode and so needs to be at the lower end of the contention ratio range (.... 40) rather than the higher end ( .... rising 67).

What you have written may - or may not - be a perfectly valid explanation of the Tesla build-out strategy in the USA. I simply don't know, though I suspect you are largely correct, but I know that I don't have the data to be sure. Tesla does have the data, so I let them get on with it, and I try to get better data whenever I can.

However outside of USA there are still huge gaps in the network that simply have to be filled at the same time as building density in the conurbations, even more so as Tesla increasingly accesses European and Chinese market segments that don't have their own driveway and/or parking place. Both the gaps and the density matter. And both contribute to contention ratio (which I can track) and other things that I cannot track - such as utilisation ratio; time per charge; kWh per charge; time of charge; diurnal/ weekly/ seasonal variation; SoC on arrival/departure; journey length/duration; vehicle model; occupancy; etc. Given all the things that I would dearly love to know, but do not know then inevitably I must fall back on the one metric that I can track with confidence.

As a for-example re the gaps let us consider northern European families that holiday in Greece via road-trip. This is quite common, the driving season is not just a US-phenomenen. I've just driven that road through the Balkans and it is not currently viable using the Tesla charger network. So for that family contemplating buying a Y as the high-end vehicle in what would be a typical two-car European family's car-mix, they simply will not press the 'yes' button on the Tesla Y purchase. Within 18-months we need them to be pressing that 'yes' button. Here in Europe, in China, in Canada, in Mexico, in Australia. And soon after in Brazil, India. So for the next several years we should expect/hope/anticipate that contention number to trend downwards rather than upwards.

I am very glad to see that as a company Tesla is not overly US-centric. On some things yes, but the balance is within the acceptable range, which is contributing to the success of Tesla. That matters to me as an investor, and it is why I watch things like contention ratios and connector styles and model development and etc quite closely.

I hear what you are saying, but no, building out new markets does not imply Tesla has to provide more connections per 1000 cars simply because now Tesla is shifting expansion to other markets. Tesla can maintain the current level of service and continue to expand to new markets while slowly decreasing the number of Supercharger stalls required per 1000 cars. Tesla has been expanding to new markets their entire existence while building the networks out simultaneously. As long as Tesla expands Supercharger production at a slightly slower rate than auto production, they can continue to expand the network and maintain and even improve the level of Supercharger access.

Tesla has a business model that appears to be working. New markets have lower car sales and thus lower geographic availability of Superchargers. Tesla expands Supercharger availability as needed to drive sales. Their model is working. People who criticize the overall model Tesla has been using don't know what they are talking about. Sure, Tesla has made small miscalculations here and there but they move to correct the situation. You can criticize the mistakes but not the overall model that works so well.

You have to remember, the Supercharger network exists, not to serve you personally, but to serve the company's mission (to accelerate the world's transition to sustainable transport and energy). People said it was economically impossible for Tesla to ramp both car production and have enough money to buildout a charging network simultaneously. That it was a foolish move that would bankrupt the company. That Tesla should leave the charging infrastructure to third parties. But Tesla followed the data in a pragmatic manner, did it their own way, and look at the result: Tesla has a long waiting list for new cars even as their production levels continue to hit new highs and the number of cars per charge stall continues to ever so slowly increase. This trend (more cars per stall) will continue until it gradually levels off at a roughly steady state. From there it may slowly fluctuate up/down with changes in consumer travel habits and other factors that are too far distant to accurately forecast.

 

[StealthP3D]

It seems so bizarre (to me) that in 2021 there are still people with such limited Tesla vehicle knowledge. I do appreciate that they were openly and genuinely curious.

Well, to be fair, they were subjects of the Queen.

 

[jbcarioca]

Gee, I’ve never encountered a full Supercharger in Alaska either. Not in its entire width and breadth.

Get real, sir. You've never even been to a Supercharger in Alaska. Ford F350's do not need them anyway, do they?

 

[jbcarioca]

Agreed, building up inventory when the wait times are so long would go against the mission.

And they can count any car which isn't finished, due to missing parts.

...

Actually the accounting rules leaves unfinished vehicles in a work in progress account. They enter inventory when they are eligible for sale. Missing parts tend to make vehicles not available for sale.The economic cost fo carry is not materially different, but the classification is a Big Deal.

 

[StarFoxisDown!]

Troy's final number for the quarter has many times been better than mine. However, he tends to start low with his first forecast and then revises them up.
Troy takes an admirable approach to forecasting . . . he takes the demand approach . . . looking at VIN registrations, insurance registrations, ships, etc.
That's a lot of work when you have to track demand and deliveries in dozens of markets.

I take the lazy-forecasters Production approach. Since I believe Tesla will sell everything it can produce, I generate my forecast computing production for 2 factories and then I keep an eye out for any logistics issues . . .and try to determine if the cars produced will get delivered on time.

It's easier to forecast production for 2 factories than demand for dozens of markers.
I do appreciate Troy's work as it can help validate some of my work.

Sorry but Troy's method for data collection is outdated and becomes more and more outdated the more mainstream Tesla becomes. His final estimates for each quarter so far have been off, and not just slightly off. Anyone going off of theoretical production rates to estimate quarterly P/D has been way closer than Troy has been all year.

He can only get VIN registration from a couple states here in the US on a monthly basis. He goes off a lot based on people inputting their data into places like these forums. The reality is as Tesla becomes more mainstream, you're going to have more Tesla owners that aren't diehard Tesla fans. They're not going to bother to put their information forums and the internet. The rest of the registration data is what we all see (from China, Europe, etc..)

My other big issue with Troy's estimates is that while he says he's going off of data, he clearly is making assumptions based on his own view, not data. Key example is what you pointed out. Completely illogical that Tesla is building inventory and we have multiple anecdotal evidence points that counter Troy's thinking. He did this exact same thing in Q1 and Q2 and each time it bit him in the butt.......and yet he continues to make these "gut assumptions".

I appreciate the effort Troy makes but his stubbornness in addressing the clear issues with his methods makes me amazed people still go off of his numbers as religiously as they do.

 

[StarFoxisDown!]

Thanks - yes, I did see the UBS notes. I have factored for all of the items in my forecast but I did so conservatively.

For example,
I have the Model Y average selling price flat as the price increase in US is offset by the introduction of the Y SR in China.
I also have the Model 3 pricing flat when that should be higher but I was worried that the 3SR could drag down pricing.
On cost, I have the Model Y decreasing $300 per car vs Q2 despite more Ys coming from low cost Shanghai and cheaper cost Y SR sales.
Cost per vehicle on the Model 3 is only $100 lower - it can be much better than $100 - just the saved logistics on the Fremont production being delivered locally would more than provide the $100 savings.

My financials were so strong, I found it difficult to take more aggressive assumptions.

Using an American Football analogy, I threw a deep bomb with my financials but I didn't step into the throw . . . it's possible the ball will fall short.

For Model Y - I don't see how the Y SR in China would effect anything. I don't believe any of the Y SR have even been sold yet (I'm assuming they will in September in China). But as we're seeing on the Europe registrations, all Y's going to Europe are LR. Based on the surprising amount of Y's that have been exported from China and considering they're all LR combined with US all being LR and having the price increase, I expect a very material increase in ASP of the Y in Q3. The MIC SR Y will cut into that increase in ASP a bit, but I overall still expect a material increase in ASP

Also on Model 3, if you've been following the European registrations, especially Norway, the amount of LR and P versions of the 3 being registered has actually noticeably increased. The percentage of 3's going over to Europe that are LR/P are quite a bit higher than we saw in Q1 and Q2.

 

[Todd Burch]

So, um...they appear to be looking for $750 for tomorrow. Umm, just a hunch.

 

[lafrisbee]

Just think about the rides.
Being in a chair on the end of a robot arm. Swinging around as it tries to throw you off.

Fun for ALL !

Already a done deal...started in Austin TX?
(I kept it PG)

 

[st_lopes]

Actually the accounting rules leaves unfinished vehicles in a work in progress account. They enter inventory when they are eligible for sale. Missing parts tend to make vehicles not available for sale.The economic cost fo carry is not materially different, but the classification is a Big Deal.

Unless my US GAAP is a little rusty, Work In Progress (WIP) is a sub-account to Inventory. Both get reported as Inventory on Financial Statements. Even though WIP may not appear on the P&D reports as a produced unit until are parts are added, for financial reporting purposes it would still be part of Inventory.

 

[elasalle]

Low volume
Low drop
And ARK put on the brakes

looking bullish to me …

2 weeks for Q3deliveries
3 weeks for shareholders meeting and Giga Berlin fair
And some Jewish festival ends today

have some Oct 8th 780 calls but timing of purchase wasn’t that great

 

[Tslynk67]

You can’t miss something you never had in the first place.

Well having an XP100DL+ is about as close as it gets...

Interesting fact, today is that last day of my 4 year warranty on my MX, the lease finished on the 12th September and I made the final payment, so now I own it too, will PX against the Plaid when it comes

I've never had the same car for four years, closest I got was my Model S which lasted 3.5y - when the only car you would replace it with is the latest version of the same, well...

 

[jerry33]

Well having an XP100DL+ is about as close as it gets...

Interesting fact, today is that last day of my 4 year warranty on my MX, the lease finished on the 12th September and I made the final payment, so now I own it too, will PX against the Plaid when it comes

I've never had the same car for four years, closest I got was my Model S which lasted 3.5y - when the only car you would replace it with is the latest version of the same, well...

I thought I was replacing rapidly when I traded in the 2013 S for the 2020 X.

 

[EnzoXYZ]

Questions:

How many total vehicles in Il?
How many new vehicles bought per year in Il?
How many vehicles are currently EVs in Il?
How many EVs purchased per year currently in Il?

Once those questions are answered then we can determine if 1,000,000 EVs by 2030 (8+ YEARS!!!) from now is an admirable goal.

First impression is it’s not really much of a goal and just political posturing - look at me care about the environment, but make the transition as comfortable as possible and it doesn’t really matter if the goal is reached.

However, if Il only buys 200,000 new vehicles per year and the whole state only has 3,000,000 vehicles, then bravo.

The rebate should definitely help, but it just seems to me another not very urgent goal.

From 2019 data 4.3M on the road
2020 data IL ranked 20th with 0.28% adoption of EVs
2019 data IL purchased 6321 EVs
*not including PHBEV*

IL looking for ~1/4 EV on the roads by 2030. Not really admirable? Majority needs to happen by 2030!

 

[dmvevguy]

Anyone seeing the Evergrande default in China? They were heavily invested in many Chinese EV companies. Should be good for TSLA, but wondering if it has any broad macro implications overall to the US market? I noticed many US banks owned their stock like Vanguard etc.

 

[StarFoxisDown!]

Low volume
Low drop
And ARK put on the brakes

looking bullish to me …

2 weeks for Q3deliveries
3 weeks for shareholders meeting and Giga Berlin fair
And some Jewish festival ends today

have some Oct 8th 780 calls but timing of purchase wasn’t that great

Just took a look at options open interest and volume.......I really don't know what to expect to end the week. Max pain is 700 but if you look at the open interest and volume, its clear that's not what is being targeted. The interesting thing to me is that there's no clear call wall. I guess 750 but it's not a huge call wall by any means. Looking at the options volume, there's nearly just as much volume on 750 puts as calls. Friday could really go in any direction, though I think 735 would be the lowest the stock could go tomorrow

 

[StarFoxisDown!]

Have you read the latest notes from UBS’s meeting with Tesla Investor Relations (Martin Viecha)? See Tesla Daily’s latest Youtube video from Rob Maurer.

Among the points:

1. Most of the recent price increases were not yet visible in Q2 and will show up in Q3/Q4. Should add several hundred million straight profits to Q3 vs. Q2.

2. MIC cars sold to the western world (Europe) are the most profitable cars. There was a LOT of that in Q3.

3. High point for China demand starts in Oct, so no concerns for domestic demand there. (Perhaps leading to additional price increases in China?)

4. Elon sees opening up the Supercharger network in Europe as a revenue opportunity, so anticipate Tesla looking to bank on that starting in 2022. Thus Superchargers will directly become a revenue stream for Tesla.

5. Tesla is starting to feel FSD/AI will be more proprietary/exclusive tech into the future, vs previous views showed they felt it would be more of a commodity. This implies Tesla could have a longer high revenue stream with both exclusivity and/or selling FSD to other automakers for a longer time.

All of these things affect both long and short-term forecasts to the positive, although I imagine you’ve probably modeled for them all. Just curious if this new official info adjusts your forecasts at all. Certainly makes TSLA appear even more attractive as a longer-term investment…

Do you have a link to the UBS note by chance?

 

[Buckminster]

Worth a watch: