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

[22522]

Unlike other rich people, or at least the stereotype, Elon simply wants to accelerate the advent of sustainable transportation and make life interplanetary. Money is a means to that end and it is absolutely nothing more. And he knows he has enough to that as well as him being a good human being.

My first meeting with him proved this. We were designing the autopilot system when he says, our first priority is to ensure the system will be safe as in it won't hit things it shouldn't and it will be able to not hit things even the best human driver couldn't avoid. Man, he sold me, proved to me he was the right guy for me to work for and that continues to this day. Yeah he's quirky, eccentric and flawed to a point, but he is relentless in his primary pursuits.

For what it is worth, I think the first versions of autopilot were better.

1. In Feynman's book he talks about knowing what a bird does as being more important than knowing the exact name of the bird. The early versions of autopilot were more like that.
2. I think the labeling of everything to the last detail is for customer acceptance - screen rendering. If it just ran on physics and first order labeling, few would trust it, even if it worked.
3. Won't fly without market acceptance. Much of the market is verbal -i.e. needs words for brain function, particularly most who write code.

So this is a compliment, with what appear to be immutable facts 1, 2 and 3 above, that explain why it needs to be the way it is today.

 

[22522]

Doesn't matter since you still can't sell any more than you make. When production is the Limiting Factor (TM) why not optimize for margin / revenue? This does not mean it is wrong to enhance sales by introducing lower price models as long as that won't cannibalize production of higher margin ones, for instance using different batteries. Not a new thought at Tesla HQ.

You lose goodwill when you can be labeled as a luxury goods maker whose main understood purpose is to demonstrate divisions in class.

People see things with different resolutions.

If the Build Back Better Bill passes as is there will be tax credits that work on PHEV and EV offerings (treated as comparable). Telsa can paint themselves as a money grubbing company that makes cars for rich people, and takes money off the table every chance they get. Just like solar companies that raise their prices to make sure all incentives accrue to them.

People see through this.
People remember this.
It destroys goodwill and causes demand lulls in the future, and people will buy something else the first chance they get, because they do not see Tesla as on their side.

People often forget that Tesla only works with persistent demand. If Tesla is viewed in ways that I will let others put names to, the whole thing falls apart and traditionally trained business people wonder why.

 

[Singuy]

TLDR, Tesla made a mistake and required one stalk intervention confirmation. However there were no disengagement and got to the destination faster than waymo.

 

[The Accountant]

Exactly. Even if the copycats match the styling (easy enough) and somehow match all the performance numbers (probably not gonna happen), they're still at a major cost disadvantage.

. . . .and there's more! This was part of what Clayton Christensen was pointing out when he wrote his book The Innovator's Dilemma.

Let's say Tesla makes $10k on each car while Legacy makes $2k on their Electric vehicle.
But for every electric vehicle sold an ICE vehicle sale is lost. If Legacy was making $10k on the lost ICE vehicle sale, they are down $8k ($2k less the $10k)

I worked a large company that held significant market share and we brought in Clayton Christensen to take us through the innovator's dilemma theory.
Bringing him in was meant to get us to think about changing our strategy (as startups were starting to disrupt our industry). When the session with Clayton was over, instead of motivating us to change, we walked out of there thinking, "We're Screwed".

 

[mongo]

For what it is worth, I think the first versions of autopilot were better.

1. In Feynman's book he talks about knowing what a bird does as being more important than knowing the exact name of the bird. The early versions of autopilot were more like that.
2. I think the labeling of everything to the last detail is for customer acceptance - screen rendering. If it just ran on physics and first order labeling, few would trust it, even if it worked.
3. Won't fly without market acceptance. Much of the market is verbal -i.e. needs words for brain function, particularly most who write code.

So this is a compliment, with what appear to be immutable facts 1, 2 and 3 above, that explain why it needs to be the way it is today.

1. Drivable space plus route planning is the base function. But birds die due flying into windows. The system must be known enough to determine that will not happen. Bird also do not have to deal with laws nor lane markings.
2. Yes, one can drive with horrible vision and rule 1, but identification is still critical. Trolley vs bus vs truck. Traffic cone vs debris. Right side up vs upside down stop sign held by crossing guard. Bike on back of car vs bike being ridden. Car being towed backwards by wrecker vs car facing you. Semi turning behavior and blind spots.
In order to reliably detemine what something most likely is, the final layer needs to have coverage to say what it is not (differentiation). It is not X because it is most likely Y. Once those categories exist, it's fairly trivial to put them on the UI.

 

[vikings123]

And, if I had to guess, I would say it's more likely than not that Elon's sales would end before that.

I would also guess that the sales might finish off with a bang rather than taper off. If I was looking to buy more shares here I would be inclined to jump in if it was starting to dump hard figuring that might be the grand finale. Kinda like a fireworks show in reverse.

Agreed. Institutional ownership for TSLA is currently at 40% which is very low compared to AAPL or AMZN at 60%.

Now that we have an established pattern of slow selling by Elon it is possible that these institutions front run each other creating a dynamic that should be interesting to watch.

 

[ZachF]

A billionaire paying more taxes on purpose. The first in all human history. Elon will be remembered as the greatest human of all time.

The Rob Reichs of the world will still use their taxpayer and student loan funded sinecures and $50k jet setting speaking engagements to spread the word how he should pay everything he owns.

 

[ZachF]

Dude the share price has historically always been not about fundamentals. Tesla is one stock where traditional methods of valuation fail.

Tesla is trading at 6-10x my projected 2030 earnings, vs ~20 for the market as a whole.

 

[ZachF]

Will Elon claim the record for highest tax bill ever?

“Steve Cohen had to pay $3 billion in taxes.

And that is the largest amount of money ever paid in taxes by an individual.”

Who Paid The Largest Individual Tax Bill Of All Time?

No one likes paying income taxes. What's the worst tax bill you've ever gotten? As a freelancer, mine aren't pretty but they are nowhere near some...

www.celebritynetworth.com

Elon will pay $15 billion to the federal government this year. That’s literally more than many states will pay in combined taxes of all forms. Bernie’s home state of Vermont with a gdp of ~$35b will probably pay around $6b in total taxes of all types to the federal government.

 

[Lessmog]

You lose goodwill when you can be labeled as a luxury goods maker whose main understood purpose is to demonstrate divisions in class.

People see things with different resolutions.

If the Build Back Better Bill passes as is there will be tax credits that work on PHEV and EV offerings (treated as comparable). Telsa can paint themselves as a money grubbing company that makes cars for rich people, and takes money off the table every chance they get. Just like solar companies that raise their prices to make sure all incentives accrue to them.

People see through this.
People remember this.
It destroys goodwill and causes demand lulls in the future, and people will buy something else the first chance they get, because they do not see Tesla as on their side.

People often forget that Tesla only works with persistent demand. If Tesla is viewed in ways that I will let others put names to, the whole thing falls apart and traditionally trained business people wonder why.

Yes, there are all sorts of aspects to weigh against each other. Perhaps it is more important to build a good image? Or to build capital for expansion? Or to address different markets and sectors? Which is better for the overarching goals?

Ultimately that is for Tesla corporate to decide, of course, under the various constraints that we know less about than they.

 

[Sudre]

Daimler suppliers are facing job cuts due to electricmobility being the future of transport.

Daimler-Zulieferer: Jobs von über 7000 Mitarbeitern bedroht

Während der wirtschaftlichen Krise und der Umstrukturierung droht schon der nächste Albtraum wahr zu werden...

www-karlsruhe--insider-de.translate.goog

A bit sarcastic but.... how about, "Assembly line workers face tough unemployment because Tesla is not allowed to open their factory."

 

[22522]

Yes, there are all sorts of aspects to weigh against each other. Perhaps it is more important to build a good image? Or to build capital for expansion? Or to address different markets and sectors? Which is better for the overarching goals?

Ultimately that is for Tesla corporate to decide, of course, under the various constraints that we know less about than they.

Yeah, I am scared of the "corporate" word, as that is how all of Tesla competitors got to where they are today. I know a lot about how company greed invites "competition" and destroys the habitual infinite demand assumptions a business is based on. Ford loyalty today may be based on how Model T prices went down for common man alignment - over the objection of business types of the day. Tesla may be choosing the wrong side of history.

 

[Fred42]

Yeah, I am scared of the "corporate" word, as that is how all of Tesla competitors got to where they are today. I know a lot about how company greed invites "competition" and destroys the habitual infinite demand assumptions a business is based on. Ford loyalty today may be based on how Model T prices went down for common man alignment - over the objection of business types of the day. Tesla may be choosing the wrong side of history.

Henry was able to rapidly expand production to make the many millions of T's the public wanted and to lower costs and prices. Tesla can't expand faster than they are. Elon is serious about affordability as an objective, but today demand for their products exceeds supply. If they priced lower, part of the profits would go to middlemen-resellers. When 4680's are ramped up and they have good chip supply, it might work for them to make more affordable versions of existing models and also the upcoming smaller vehicles that will be affordable for more of the market. In the meantime lower prices would be throwing away money.

 

[Stretch2727]

. . . .and there's more! This was part of what Clayton Christensen was pointing out when he wrote his book The Innovator's Dilemma.

Let's say Tesla makes $10k on each car while Legacy makes $2k on their Electric vehicle.
But for every electric vehicle sold an ICE vehicle sale is lost. If Legacy was making $10k on the lost ICE vehicle sale, they are down $8k ($2k less the $10k)

I worked a large company that held significant market share and we brought in Clayton Christensen to take us through the innovator's dilemma theory.
Bringing him in was meant to get us to think about changing our strategy (as startups were starting to disrupt our industry). When the session with Clayton was over, instead of motivating us to change, we walked out of there thinking, "We're Screwed".

View attachment 732896

Agree with this. What is surprising is that the legacy automakers did not move sooner.

The auto industry has a relatively slow clock speed giving them plenty of time and the investments required normally exclude startups. The Model S hit in 2012 and they did nothing. Investment in a few decent compelling models then, even if unprofitable would have put them in a much better position to be profitable on EV's today. Having worked in a legacy manufacturer I know they will usually not invest in anything that does not have a strong clear path to profitability.

It will be interesting to see how this all plays out and I am sure there will be future books written about the total disruption of the auto industry.

Tesla's target of of 20M vehicles by 2030 is 4-20x times the EV target of any single large legacy manufacturer. I think GM's target of 5M by 2030 is the highest, but I doubt they will actually hit it.

By that point Tesla will continue to dominate and only your EV share will matter moving forward.

 

[hacer]

I predict there will be a high proportion of "Short Exempt" trades reported by FINRA today at 5:30 p.m. ET.

That's the Reg SHO Rule 201 which allows Options Market Makers to sell shares naked short even when the Uptick Rule is in effect. That's a.k.a. the "Madoff Rule",

FTFY

Paging @hacer. Predicting the future is Science. Arguing past events is litigation.

That's pretty funny because I've been (fruitlessly) trying to explain to you that the marking of "short exempt" means it is exempt from the uptick rule, (Reg SHO Rule 201) so you finally seem to agree with me!!! Anyone who correctly understands that would also predict short-exempt marking would be most often seen when the uptick rule is in effect since it is the only time that it actually matters.

But you have always previously (and before my strike-out above) claimed that "short exempt" means it is exempt from Reg SHO Rule 203 (the locate rule) and thus naked. Which is wrong. But if it wasn't wrong, why would it make any difference when the uptick rule is in effect? Rule 203 is always in effect but it does have some exceptions that are unrelated to the uptick rule or price movements.

My presumption has always been that you can't wrap your brain around why any trade would be marked as exempt from the uptick rule when that rule was not in effect. So you kept insisting it means something else. As I've previously explained, marking trades short exempt when the uptick rule is not in effect is likely because some market makers want their cheat tools instantly ready should a flash crash occur. Still others who actually trade "baskets" of securities mark them this way routinely just in case any security in the basket could be subject to the uptick rule because trading "baskets" provides an exemption to the uptick rule.

 

[mongo]

FTFY

That's pretty funny because I've been (fruitlessly) trying to explain to you that the marking of "short exempt" means it is exempt from the uptick rule, (Reg SHO Rule 201) so you finally seem to agree with me!!! Anyone who correctly understands that would also predict short-exempt marking would be most often seen when the uptick rule is in effect since it is the only time that it actually matters.

But you have always previously (and before my strike-out above) claimed that "short exempt" means it is exempt from Reg SHO Rule 203 (the locate rule) and thus naked. Which is wrong. But if it wasn't wrong, why would it make any difference when the uptick rule is in effect? Rule 203 is always in effect but it does have some exceptions that are unrelated to the uptick rule or price movements.

My presumption has always been that you can't wrap your brain around why any trade would be marked as exempt from the uptick rule when that rule was not in effect. So you kept insisting it means something else. As I've previously explained, marking trades short exempt when the uptick rule is not in effect is likely because some market makers want their cheat tools instantly ready should a flash crash occur. Still others who actually trade "baskets" of securities mark them this way routinely just in case any security in the basket could be subject to the uptick rule because trading "baskets" provides an exemption to the uptick rule.

You talking about this?
Division of Trading and Markets: Responses to Frequently Asked Questions Concerning Rule 201 of Regulation SHO

(MODIFIED! 06/04/19)
Question 5.4: When the short sale price test restriction is not in effect for a covered security, may a broker-dealer mark a short sale order in that covered security “short exempt” if the order would otherwise qualify for an exception under Rule 201(d)? If a broker-dealer is routing an ISO solely to facilitate its execution of a customer long sale or purchase order in compliance with Rule 611 of Regulation NMS, may such ISOs be marked “short exempt” when the short sale price test restriction is not in effect?


Answer: Yes. Rule 201(d) provides that a broker-dealer may only mark a short sale order in a covered security “short exempt” after the covered security has experienced a 10% or more intra-day price decline from its previous day’s closing price, as determined by the listing market pursuant to Rule 201(b)(3). However, given the nature of orders eligible for exceptions under Rule 201(d), we believe it would be reasonable for a short sale order in a covered security to be marked “short exempt” in reliance on Rule 201(d) at times when the short sale price test is not in effect for that covered security, as long as the broker-dealer has a reasonable basis to believe that the order meets the requirements of an exception under Rule 201(d) at that time.


In addition, broker-dealers may mark ISOs “short exempt,” provided they are routed solely to facilitate the broker-dealer’s execution of a customer long sale or purchase order in compliance with Rule 611 of Regulation NMS, at times when the short sale price test is and is not in effect for the covered security. See Rule 201 Adopting Release, 75 FR 11232, 11262 – 11263 n.423.


Question 5.5: When the short sale price test restriction is not in effect for a covered security, may a broker-dealer mark a short sale order in that covered security “short exempt” if the order would otherwise qualify under Rule 201(c)?


Answer: No.

 

[Drax7]

Yes and no. Elon does need cash to pay taxes, pay for living expenses, invest in Doge, etc. He could try to secure another loan against his new shares and repeat what he's done before.

However, one can get overleveraged with loans against the same security (too much wealth concentration in one asset). So rather than snowball his loans and snowball his leverage, taking some cash here makes all the sense in the world. He would maximize his total cash access by giving up the same shares now than later.

I'm sure Elon realizes that black swans that take out 500 million worth of market cap overnight is not impossible. He would not want to be sitting on 200 billion worth of debt when that debt is secured by his shares that lose huge amounts of value even on a temporary basis.

Twitter poll was still stupid though.

He should have just sold his 10% planned sales at a discount in one block to a big bank and kill all this drama / overhang in 5 minutes.

He still nets more shares overall, he just has less personal risk, which is better for shareholders, big picture.

With everything said - yes the government is getting a lot of money from Elon short term. They will unfortunately find ways to blow it immediately on dumb *sugar*.

Even if Elon were to not pay 1 penny of taxes on shares, add up all the taxes that Tesla pays a a whole. Think about all the taxes that come from Tesla existing.

Tesla pays a lot more taxes than Bernie Sanders. How much does Bernie pay in taxes again? Oh wait.. nothing. Actually, he lives off the back of tax payers.

Paying higher taxes to a corrupt government is the new new virtue.

like to think of it as protection

 

[The Accountant]

Agree with this. What is surprising is that the legacy automakers did not move sooner.

Yes, a slow transition from ICE to EV would have benefited Legacy Auto as they would have had time to slowly increase margins on EVs as it cannibalized their ICE vehicles. If they started in earnest in 2012, even just building their capability slowly and developing partnerships with suppliers, etc, they would be in better shape now.
They felt no urgency to get started as they likely thought the EV transition was years away . . . .not anticipating that a start-up like Tesla would accelerate the transition as it has.

 

[jerry33]

It will be interesting to see how this all plays out and I am sure there will be future books written about the total disruption of the auto industry.

It will be just the same as the tire industry. When Michelin brought in radial tires to North America, the "big four" (Goodyear, Uniroyal, BFG, and Firestone) did nothing and actively fought against radial tires. As Michelin's share grew, they introduced bias-belted tires (think hybrids), probably the worst type of tires ever made. Eventually they did start making radial tires, but for three of them it was too late (and the quality of all four wasn't good either). Goodyear only survived because of their other non-tire businesses (and government contracts for various rubber type products).

 

[Featsbeyond50]

TLDR, Tesla made a mistake and required one stalk intervention confirmation. However there were no disengagement and got to the destination faster than waymo.

What a sweetheart she is.
Tesla won because it's not limited to the geofensed area. Tesla also wins the ultimate challenge because; not limited to geofensed area, has a cost effective solution (no high cost, aftermarket gadgets), and has the ability to scale.