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

[Grifon]

Until there is a charging network in the US as ubiquitous and reliable as the Tesla Supercharging network, other EV makers, no matter if they are US, German or Chinese, will have a very tough go of it. Your average American is not going to be willing to tolerate the kinds of long distance charging problems that exist for the non-Tesla buyer.

 

[HG Wells]

NICE run up in pre market.
Thought we would have a small retreat today.

NOW UP 16 ! 7:50 AM EST

 

[jw934]

Until there is a charging network in the US as ubiquitous and reliable as the Tesla Supercharging network, other EV makers, no matter if they are US, German or Chinese, will have a very tough go of it. Your average American is not going to be willing to tolerate the kinds of long distance charging problems that exist for the non-Tesla buyer.

I just drove my SR+ M3 from Victoria, Vancouver Island to Seattle, Washington, to Flagstaff, Arizona, then to Texas then Buffalo, New York, then back home to Toronto on Dec 23. Took 9 days. Charged about 3-4 times a day and $10-12 each charge (best guess). Zero issue with charging or anything. My biggest complaint, if I had one, would be with phantom breaking.

 

[jbcarioca]

You'll find that Chinese made products do pretty well everywhere except the big first world countries.

I expect this to continue on forward. There's an inherent bias against Chinese made products(being poor, copy cat clones, cut corners, full of lead). Also you add in a dose of "it spies on you" and Americans would rather not embarrass themselves with an unknown brand with zero service infrastructure. Unlike cellphones, you can't ship a car back to a distribution center for repairs nor can you use pep boys (even so, Americans didn't buy any Chinese made cells phones even though they are the best bang for the buck).

Also consider that it took over a decade for Americans to warm up to the new Korean car brands on the block. People found their cars to have more features for the same priced luxury car with an aggressive warranty. However, I really don't think BYD can import a car into the U.S and sell it with more features and CHEAPER than a Tesla...ever. Tesla will continue it's lead on price per performance. That's kind of their thing...the original plan was to out compete the Chinese before they can even copy..now we find that they just are copying Tesla's manufacturing process just to keep up as Musk wanted it to be.

Not quite 100% . Chinese products dominate highest end smartphones with Apple iPhone, perhaps we all know it. The Buick Envision plus some Tesla Model Y are built there. BYD sells EV busses are doing well, assembled in California, though: Bus - BYD USA

Most of what you post is true, but the inherent bias is that the ‘cheap Chinese knockoff’ idea persists in purchasing behavior. As with iPhones, people barely know the origin of their products. After all Volvo is doing ok and few buyers even know it’s Chinese, or care.

Even then the ‘cheap knock off and patent/copyright infringement of the 1960’s was from Taiwan more than the mainland.

So around the world vehicular products like Chery (highest quality rating in Brazil), BYD and JAC are becoming normalized. In other categories some Chinese brands command superior price and reputation due to proven product excellence: Photovoltaics example: Longi, Jinko, Trina, JA are the world’s largest in order for 2020.

What distinguishes those from all the others? Mostly high investment in R&D, production technology and efficiency.

I may be biased. After all my closest physicist friend just completed his graduate studies in photovoltaics, principally working with perovskites. Just check academic papers in photovoltaic-related subjects. The check the names of authors. Spoiler: almost all of them are Chinese names.

All this is simply to point out that much of the advanced work in renewables is happening in China. Informed people often now are selecting Chinese products for superior quality.

Now the mantra of lagging Westerners is about cheating. If Huawei makes better and cheaper 5G equipment and can deliver faster with better support; they must be cheating!

And so it goes. I will not argue that anywhere is perfect, least of all the China modernization drive. There are severe problems.. Who invests more in renewables?

Obviously it takes quite a while to overcome consumer prejudice. Hence Canadian Solar, Volvo, MG, Buick Envision etc.

Finally, if you have the choice of the same Tesla built in US, China or Germany which would you choose? Which will have the lowest warranty costs? Which will have the best quality control?
How long will it take for consumers to know what manufacturers already do? It may have begun with unit costs. Now it is quality, efficiency and delivery.

 

[SOULPEDL]

From a US perspective it’s hard to see what is happening with BEVs. BYD has fleet sales of trucks, busses, delivery vans, cars and battery storage in many countries. Most
of that is invisibly to non-enthusiast. JAC is selling BEV small trucks quite widely, and a range of cars. Almost all of that is largely invisible to the general populace. Then there are tiny urban delivery vehicles, many of them being BEV replacement of tiny polluters. That one is widespread in Europe too.

We at TMC naturally see big cars and pickups and ignore the BEV revolution actually happening elsewhere. FWIW much of this is not even reported, after all they are not sexy.

Agreed. Another relative works for Walmart here - they purchased a couple dozen only. And the charging stations are only 7kw with just 1 or 2 at 28kw. The BYU cars were given to management for their routine commutes to visit all the stores (many smaller ones purchased from the locals). Sound like a good headline anyway.

 

[nativewolf]

So you say but GM sold a lot of EVs with no charging network at all.

I think many here are overly ...complacent. In fact many sound like people in Detroit in 1970 when Japan first started making inroads. They were ready to exploit the OPEC crisis and did so while Detroit was flat footed. @jbcarioca has highlighted real competition while Sandy Munro feels that China is a huge threat to Detroit, certainly in the EU these companies are making headway too. If I were critical of one aspect of Tesla in the last 2 years is that there seems to be lack of capacity development geared to allow scale in 2024 and beyond. In particular, battery capacity. Either they are pulling the rabbit out of the hat with the 4680 and the Berlin and Austin facilities will be self supporting ( battery plant close to Berlin able to support Berlin) or we fail to significantly impact global automotive for quite a while. Just not enough battery facilities. Maybe LiFe production in the US next year will take off and provide inexpensive capacity for stationary capacity (huge need with CA new requirements). In any case, for the EU and NA market and for developed portions of the East Asian/Oceania market this is going to be challenge. China is offering solutions for niche, low end, non sexy day to day drivers and work vehicles. They often have safety and/or regulatory challenges that may hamper adoption but I am sure they'll be overcome quickly.

Rivian in particular seems to be blowing it on the new EV company front. Years to get going and still...NOTHING. Bezos needs to light some fires, shocking how Rivian has not moved while Amazon has.

 

[CitizenKane]

I cannot wholly avoid buying from China but when reasonably possible I will refrain from it. It is an awful dictatorship where lives and rights mean very little to the rulers. Governments and corporations are afraid to criticize China due to its economic power, but as an individual I can make a choice not to support oppression.

 

[HG Wells]

Agreed. Another relative works for Walmart here - they purchased a couple dozen only. And the charging stations are only 7kw with just 1 or 2 at 28kw. The BYU cars were given to management for their routine commutes to visit all the stores (many smaller ones purchased from the locals). Sound like a good headline anyway.

Wonder if Walmart.com could sell cars ?

 

[22522]

The adoption of EV's is going to be a lot faster than many expect but China dominance will take a long time (if it happens at all).

I see some incomplete thinking going on here. Japanese brands made rapid inroads because domestic makers lagged in many areas. Specifically, the big three lagged in ICE technology, manufacturing skill (quality) and cost of manufacture (a big factor) and didn't have the high MPG solutions consumers wanted when the oil embargo happened. The later competition from Koreans (and others) had some success due to cost of manufacturing advantages but they did not gut sales like the Japanese cars did. The big three were vulnerable to disruption in a way that Tesla is not.

The dynamics now are very different. In order to make big inroads into the N. American market, Chinese EV makers will need to establish supply and service networks and that takes years. More importantly, they will need to ramp production beyond levels that can absorbed in China and all other markets more convenient to China. That's going to take a lot of time considering the likely fast rate of EV adoption globally. It's more profitable to sell the cars they can make closer to home as long as those markets have not become saturated yet. They will also need to establish brand recognition and trust, something Tesla started doing over a decade ago.

Another factor with consumer trust is that the state of modern EV technology is still in its infancy relative to ICE technology in the 1970's, 80's and 90's. Catching up to Tesla is a fast-moving target that Japanese and Korean manufacturers didn't have to contend with because domestic makers were stagnant. Innovation for them was a bigger engine or new styling every year. The Koreans could copy Japanese ICE technology that was a few years old and still have a modern product. EV technology that is even three years behind the leader must sell at a discount. The consumer doesn't know how long the batteries will last or what the resale value will be. This means the imports will need a lower cost of manufacture to make inroads. It might not be as easy to compete on price with Tesla in N. America as one might assume, simply because they are manufactured in China (which is actually a disadvantage in many ways). Even Polestar doesn't have but 4 locations in N. America and they were one of the first Chinese companies with eyes on N. America.

I think the Chinese will likely be very successful auto makers, even globally, but I would caution against thinking big inroads into Europe and USA could happen quickly - they need to ramp fast enough to meet the quickly growing demand of local markets and, even in those home markets, they will need to produce at a lower cost than Tesla to gain market share which is far from a given if you want to compare products that are comparable. Expanding globally will take a decade or more to become a force to be reconned with. In the interim the market is wide open for Tesla to continue to expand. Tesla is constantly lowering the cost to produce. Comparing this situation to that of foreign ICE compacts in the '70's, 80's and '90's will not turn up many parallels.

"Your margin is our opportunity." Some amazon reference.
Elon needs to meet his margin goals, then after that the mission (maybe) says,"Make as many as you can."

Typically China does not have margin requirements and can be priced lower even though COGS may be higher.

 

[SOULPEDL]

Stereo makes things way more complicated for little to no gain. That's why Tesla's don't have 2 identical cameras, but 3 different looking ahead (fisheye, narrow & far)

Depth from image (not stereo or video. Single static image) is a well-established research area
And it usually works better than humans.

404s for me

I respectfully disagree. As I understand it, Tesla 3d is created from the vehicle motion, frames at different locations. This is why I assume it can’t start self driving until the car rolls some, why it creeps at intersections for the depth data, and why cats bob their heads up and down when about to attack. So that’s why I think this puts a drag on the FSD timeline until context is understood, and why Real World info was even brought up last year by Elon.

But as u say, let’s return to our regular station, nice green in premarket!

 

[jbcarioca]

Adjunct on price/quality and learning experience. All mine:
1966 Datsun 1600 SPL (;an MGB that worked!
1966 Toyopet Corona- lousy design, cheap, ‘reliable’
1967 Honda S600 coupe- brilliant, exciting, reliable, cheap (my first ever investment: Honda ADR). Bought it because my motorcycle was excellent)
1977 Hyundai Pony- bought because it was cheaper than a taxi for my weekly trips to Kuwait)
ran perfectly sold later for a gain. Dealer ended out very wealthy.

The list goes on. The point is that all of those were bought at the beginning and all were ridiculed, except for the Datsun, everyone who knew MG or Triumph applauded a car that worked, even the lights.

Really the entire point is that really early adopters in new products tend towards first movers With high price. Copiers move in cheaper and better. Next comes category differentiation.
There are endless academic studies of product and producer lifecycles. Country of origin is an easy but silly target.

TSLA is doing it’s own disruption, few others have been successful doing that. Now we’re betting that the Tesla trajectory will continue. It took Toyota forty years to perfect the Toyota production system. That was their innovation, the products never really have had durable technology advances. The Prius is still spawning internal mimics, but they aren’t yet actually understanding that innovation cannot support unchanged distribution and support.

Tesla understands that they must have simultaneous innovation in manufacturing, distribution, support and product. Is it any wonder that nobody else apart from other startups can really disrupt Tesla growth?

So what are the risks now? I think it is three things: 1) Customer service; 2) Refinement in operator ease; 3) The combination of wider geographical distribution and wider range of product choices.

In short Tesla needs to grow up FAST. Both vehicles and TE are not niche products anymore.

 

[dmvevguy]

If a Chinese corporation buys out the Dodge and Ram brands, will anyone in the US even notice?

Most people don't realize that most of the general aviation companies in USA (Cessna, Diamond, etc.) are all owned by Chinese.

 

[jbcarioca]

Yeah except the Japanese were known to be the most meticulous detailed oriented people in the world who obsess over perfection. The Chinese are known to be the opposite. Being in the culture its clearly evident why the stereotype exist. Not saying BYD cuts corners as I expect their EVs to be as good as their cellphones...however the bias against made in China anything is extremely strong and I don't see them turning this around. Brand power is a thing which the China made products are pretty much ranked last in desirability. Same goes with Chinese food, Chinese TVs, Chinese anything. It's always the budget option with low desirability vs the rest.

Prejudice always leads to incorrect conclusions. We’ll do I remember my first Chinese factory visit in 1978, a chocolate producer in Beijing. It fit all your prejudices.

It ain’t the remains of the Cultural Revolution any more.

 

[Singuy]

Not quite 100% . Chinese products dominate highest end smartphones with Apple iPhone, perhaps we all know it. The Buick Envision plus some Tesla Model Y are built there. BYD sells EV busses are doing well, assembled in California, though: Bus - BYD USA

Most of what you post is true, but the inherent bias is that the ‘cheap Chinese knockoff’ idea persists in purchasing behavior. As with iPhones, people barely know the origin of their products. After all Volvo is doing ok and few buyers even know it’s Chinese, or care.

Even then the ‘cheap knock off and patent/copyright infringement of the 1960’s was from Taiwan more than the mainland.

So around the world vehicular products like Chery (highest quality rating in Brazil), BYD and JAC are becoming normalized. In other categories some Chinese brands command superior price and reputation due to proven product excellence: Photovoltaics example: Longi, Jinko, Trina, JA are the world’s largest in order for 2020.

What distinguishes those from all the others? Mostly high investment in R&D, production technology and efficiency.

I may be biased. After all my closest physicist friend just completed his graduate studies in photovoltaics, principally working with perovskites. Just check academic papers in photovoltaic-related subjects. The check the names of authors. Spoiler: almost all of them are Chinese names.

All this is simply to point out that much of the advanced work in renewables is happening in China. Informed people often now are selecting Chinese products for superior quality.

Now the mantra of lagging Westerners is about cheating. If Huawei makes better and cheaper 5G equipment and can deliver faster with better support; they must be cheating!

And so it goes. I will not argue that anywhere is perfect, least of all the China modernization drive. There are severe problems.. Who invests more in renewables?

Obviously it takes quite a while to overcome consumer prejudice. Hence Canadian Solar, Volvo, MG, Buick Envision etc.

Finally, if you have the choice of the same Tesla built in US, China or Germany which would you choose? Which will have the lowest warranty costs? Which will have the best quality control?
How long will it take for consumers to know what manufacturers already do? It may have begun with unit costs. Now it is quality, efficiency and delivery.

I can't believe they get away with naming a brand "Canadian Solar" and has nothing yo do with Canada.

Brand trickery is the only way the Chinese can make some inroads with products that have a bit of "lifestyle " element to them. Products that express who you are or your wealth/lack of. Personal transport has this element unlike transport utility vehicles like commercial trucks or even taxis as ROI is all that matters.

 

[Buddyroe]

I'm not sure if anyone has mentioned this before, but I sure wish Tesla would STOP providing the delivery numbers at the end of the quarter, and instead, release them at the ER. It really seems like most analysts and other non-professionals haven't gotten really good at predicting the revenue and profit from the deliveries. So, everyone ends up running their estimates up so high that by the time the ER comes out, it looks like a meet, and not a beat.

Would be so much better to keep everyone guessing about the deliveries also.

 

[jbcarioca]

I was told by someone who grew up in the Eastern block and spent time in the DDR that the Trabant, as awful as it was, had a multi-year waiting list to purchase. People buy what they can afford and what they can get.

I still see online a lot of hate for Tesla because people can't afford them.

True! When there is minimal choice one attempts to survive.

 

[Singuy]

Prejudice always leads to incorrect conclusions. We’ll do I remember my first Chinese factory visit in 1978, a chocolate producer in Beijing. It fit all your prejudices.

It ain’t the remains of the Cultural Revolution any more.

I absolutely agree, however its useful to asset the demand for their products or lack of.

The right doesn't like adversely communist, the left believes they have human right issues, those who can afford premium priced cars rather want brand names, those who are poor has plenty of cheap ICE offerings from established brands. It's very hard for me to see where they can make inroads beside using brand trickery/many joint ventures as their reputation is badly damaged from just multi decades of prejudice and attacks.

 

[CorneliusXX]

If I were critical of one aspect of Tesla in the last 2 years is that there seems to be lack of capacity development geared to allow scale in 2024 and beyond. In particular, battery capacity. Either they are pulling the rabbit out of the hat with the 4680 and the Berlin and Austin facilities will be self supporting ( battery plant close to Berlin able to support Berlin) or we fail to significantly impact global automotive for quite a while. Just not enough battery facilities.

It's too early to start construction for 2024 growth, however we already have a pretty clear roadmap. Austin/Berlin will start stage 2 expansions in 22/23 ready for 24 (if not earlier), Shanghai has a dirt pile they will likely turn into a factory for 23/24, Fremont has promised capacity expansion too. Then there is the Semi facility in Nevada that will likely only hit it's stride in 23. Going with each of these factory expansions is likely to be a 4680 facility (as we've seen with Austin and Berlin, cell factories go up with vehicle factories).

There's also rumours of LFP plants from CATL in both Shanghai and the US going into construction over the next 1-2 years.

That's a lot, and it's only what is obvious. I wouldn't be surprised if there's more LFP plants in the works to support energy storage by 24 too.

Elon has said they are targeting 50% growth per year and that they will do the "obvious" thing. There's zero chance they haven't planned cell production to facilitate this growth.

 

[jbcarioca]

I can't believe they get away with naming a brand "Canadian Solar" and has nothing yo do with Canada.

Brand trickery is the only way the Chinese can make some inroads with products that have a bit of "lifestyle " element to them. Products that express who you are or your wealth/lack of. Personal transport has this element unlike transport utility vehicles like commercial trucks or even taxis as ROI is all that matters.

Wrong! Canadian Solar is owned by Chinese immigrants to Canada twenty years ago and is based in Southwestern Ontario in Guelph

Canadian Solar – Global

Dr. Shawn Qu, Chairman, President and Chief Executive Officer founded Canadian Solar (NASDAQ: CSIQ) in 2001 in Canada, with a bold mission: to foster sustainable development and to create a better and cleaner earth for future generations by bringing electricity powered by the sun to millions of...

www.canadiansolar.com

No trickery involved. I put it on the list because it is a true Chinese-origin success story.
Many similar stories exist in many other places, rather like the country of Singapore, for example.

TSLA executives and managers are frequently widely travelled and many have multiple citizenships, just as Mr Musk has three himself. That diversity helps them avoid simple tropes and look for core reality. They call it First Principles, don’t they?

 

[jbcarioca]

There’s limits. Polestar is relatively unknown. US consumers could easily fall for the notion that its Swedish made and not really bother to look into it because there’s no association there.

Something like Dodge/RAM is too much name recognition for the Chinese to buy. It would kill whatever value the brand has the moment the public becomes aware that Dodge is owned by the Chinese. It todays age where things like this can be put in the spotlight in the matter of minutes, no way a Chinese company could get away with that

Good points. Still Polestar is owned half by Volvo, which itself is now partially public and listed. Most Polestar are built alongside the Volvo XC-40 in Ghent, Volvo’s largest plant since the 1970’s. It is an odd corporate structure. Both the Polestar 2 and XC-40 are in the same CMA platform developed jointly by Geely and Volvo.

The Stellantis story is similar for certain. Most consumers have no idea. They still think Jeep, Fiat, Peugeot etc. it becomes slightly humorous when Jeep and Fiat have the same dealers in some markets so chose between identical versions with different badges. Shades of GMC and Chevrolet!