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

[Ogre]

Presumably the Street buys calls as they back out of their short positions? They’ll be maneuvering to reap the dumb shorts while trying not to lose control of the share price and trigger a short squeeze I guess.

They have the ability to continue to short of course. There must be practical limits to the ability to naked short even if the SEC turns a blind eye. There likely may also be actual shares floating around earmarked to sell to cool things off if need be.

Or am I missing something in how this shell game works?

The practical limit is they have to cover at some point.

If they are short and sell shares during a rally to slow down a short squeeze, what happens is the other shorts buy those shares to cover their short and the sellers end up holding the bags.

That’s why it’s called a squeeze. All the shorts are trying to get out at the same time and avoid being the last one out. Selling shares moves you away from the exit, not closer to it.

 

[capster]

The practical limit is they have to cover at some point.

If they are short and sell shares during a rally to slow down a short squeeze, what happens is the other shorts buy those shares to cover their short and the sellers end up holding the bags.

That’s why it’s called a squeeze. All the shorts are trying to get out at the same time and avoid being the last one out. Selling shares moves you away from the exit, not closer to it.

I was thinking more that even if the Market Makers could pull arbitrarily many synthetic shares out of their backsides, the stock price still would not get to zero: Others would buy at some point and in quantity. There must be a practical limit even in the absence of proper policing (otherwise they would never have to cover).

That raises the question of how one determines how near or far that limit is at any given time.

I would think the dynamics become hairy near and especially beyond that limit for those who are short and those trying to manage this price suppression.

I’m assuming the Street is trying to fleece both the weak longs (on the way down) and the dumb shorts (on the way back up) as well as the amateur options traders (all the time).

Obviously timing wrt that limit is a factor when trying to turn the tables on the other shorts. I was thinking there may be other tactics besides straight up buying shares , e.g. calls, assuming they want to catch out the dumb shorts yet want to maintain some semblance of control over the stock price (which might involve a mixture of buying and selling in their various forms and be indicated by high volume).

 

[capster]

I was thinking more that even if the Market Makers could pull arbitrarily many synthetic shares out of their backsides, the stock price still would not get to zero: Others would buy at some point and in quantity. There must be a practical limit even in the absence of proper policing (otherwise they would never have to cover).

That raises the question of how one determines how near or far that limit is at any given time.

I would think the dynamics become hairy near and especially beyond that limit for those who are short and those trying to manage this price suppression.

I’m assuming the Street is trying to fleece both the weak longs (on the way down) and the dumb shorts (on the way back up) as well as the amateur options traders (all the time).

Obviously timing wrt that limit is a factor when trying to turn the tables on the other shorts. I was thinking there may be other tactics besides straight up buying shares , e.g. calls, assuming they want to catch out the dumb shorts yet want to maintain some semblance of control over the stock price.

Fascinating stuff really.

We have so much discussion of the various numbers yet there are these other aspects too—Gamesmanship, PsyOps/Information Warfare, the Fog of War, etc.

 

[NicoV]

I have been waiting since 11/2020 for my Tesla Powerwall for backup power in my mountain house ... i did not even shop around ... primarily because i am an investor in TSLA .. but also because Tesla has the best reputation/brand for battery mgmt ... not even going to bother with some other battery company that won't be around in the future ... and some installer looking to gouge me ....

they did system design and are working on permits in a matter of a couple of days once i sent in my photos of my power setup ... lets see how the rest of this plays out ... so far i am very satisfied with the process...

so i don't agree with "Tesla have blown it (I think) in domestic storage."

View attachment 892439

I’ve been looking at the residential storage options available to me and there’s 1 big difference in specs of the Powerwall versus the Chinese competition: The Powerwall can be installed outside, while all of the Chinese competition are cheap plastic boxes that need to be installed inside.
I’d prefer outside installation because:
- I don’t really have the space in my home
- I’d rather not hear the inverter noise 24/7

Still waiting for the rumoured Powerwall with integrated 3-phase inverter.
Even if it would be available there’s still the question if there is any economic reason (in my specific case) to install it.

 

[petit_bateau]

I get all your concerns but there is data that says Tesla has a backlog for almost 2 years for a product they plan to scale to 40 GWh / year. Do you think this is not the case? It seems, and Musk states that Energy growth will be 100% YoY. Don't you expect say 15 GWh of Energy products this year and say 30 GWh next year? What am I missing?

https://twitter.com/x/status/1610710673897684992

What you are missing is the differentiation between domestic and utility storage product segments. I have been at pains to make the difference, so why is it so difficult.

 

[Matias]

That I do not know. I have wondered the same thing myself.

There are a lot of strategic issues and it is a difficult problem to analyse, because it depends on truthfullness in understanding the current constraints and the future constraints. I don't think shareholders are being given full access to the truth in either respect. Full candour is unlikely for obvious reasons.

The way I would pose the question is, "where can Tesla's (?? scarce ??) capital best be deployed so as to maximise growth towards the mission (sustainable vehicles) whilst minimising risk of Tesla company failure". Posed like that one might prefer to suck in the maximum amount of Somebody Elses Money to make the low value add LFP (ideally many people, so overcapacity results, with frantic sellers at low prices, all trying to keep their factories at high utilisation) whilst Tesla focuses its capital on the high value add tight systems integration intrinsic to a vehicle (whilst still keeping enough battery mfg in-house as to be able to put an internal cell-production counterbid on the table at any time). That would - I think - result in Tesla manufacturing between 1/6 and 1/3 of its own cells, so 15-30%. And if I were Tesla I'd focus that at the high performance NMC cells for now, maybe adding in a smaller % of LFP later. This seems to be Tesla's strategy.

I've seen similar games played in the oilpatch, for example when some majors broke Schlumberger's near-monopoly by creating / promoting downhole competitors. It happens all the time in defence/aerospace as well.

Those games go wrong when the 'tame' supplier of today vertically integrates and becomes tomorrows competitor. The Chinese know the playbook as well, so do Korea and Japan. Look at those BYD numbers I posted upthread.

What is the advantege of LFP over NMC in stationary storage? Price?

 

[petit_bateau]

Can you provide evidence that that Powerwall ramp was mismanaged?

The CEO gave a pretty clear explanation of what happened on the Q2 '21 earnings call:


Maybe I’m misunderstanding what he meant but it kinda sounds like curtailing the Powerwall ramp was a deliberate choice, not a failure. I seem to recall a bunch of other comments in recent years about allocating scarce chips to cars at the expense of Powerwalls and Megapacks.

Yes, competitors have been able to get the chips they require for their domestic storage product. That is why I can order from several (or more) different good quality storage suppliers today (at half the cost). So the evidence is that Tesla have fallen far behind the market in supply terms for domestic.

On utility scale I see no evidence that Tesla is building a stronger lead, and the balance of probability is that the lead they had is slipping.

Everybody in stationary storage has had to compete with automotive/etc for chips. If everybody else could do it, but Tesla could not, then that's evidence. Which is in my pile of quotes as there is one missing !

 

[insaneoctane]

Anecdotal story: my daughter's friend's father decided to invest in Tsla after seeing the tragic Tesla cliff crash and how the passengers survived. Terrible story and I hope everyone survives physically and mentally, but shows the marvel of Tesla engineering and design.

Also shows how well Tesla would do with genuine news articles.

 

[petit_bateau]

That would be a tough sell - unless Tesla brand trumps SolarEdge and noname Chinese brands. Personally I'd be weary of noname brands because of safety concerns.

Are there comparable systems in the US I can research ?

SolarEdge would be the biggest brand. They are the people who used to supply the inverter Tesla used to use in the original Powerwalls. You can get them in USA.

(Disclosure : I used to know the founders professionally, one sadly now deceased. We had discussed collaborating on a product design of ours/mine. They couldn't meet the specs we needed. So there is a possibility I have bias though I think not.)

 

[SmokyPeat]

What is the advantege of LFP over NMC in stationary storage? Price?

Price, longevity, and fire safety. Hospitals use LFP battery backups in critical equipment, probably mostly because of the longevity and safety factors.

 

[petit_bateau]

I think you may underestimate the moat that could be in place with use of Chinese firms’ product for what is defined as “critical infrastructure.” I haven’t studied the regulations for utilities deeply, but I know the US federal government is in the process of pushing out cyber security requirements for critical infrastructure providers. I know that the law in place banning Huawei telecommunications products from use in the US is a significant moat for other US based manufacturers. I see a similar parallel unfolding for power infrastructure. It is all about Supply Chain Risk Management. (random white paper if you are intetested to go deeper on the topic https://reciprocity.com/resources/what-is-supply-chain-risk-management/ ).

That said, I take your points as well founded in so far as Tesla not creating enough competitive advantage in this segment to sustain their growth for the long haul. They need to be pushed to do so. Thanks for calling it out.

On the Chinese access to US critical infrastructure, in practice they can't access bidding on the energy projects at all for US industrial policy reasons that were in place before the security issues were raised. Be in no doubt whatsoever that the US is not a free market economy. It is in fact deeply protectionist. Especially in some sectors. One can debate whether that is a good thing or not, but it is so.

With respect to the rest of the world, there is Chinese origin kit going in everywhere, both in storage, grid, and generation. Has been for decades. The important clients are well aware of the security issues and many of them have their own precautionary risk management measures in place. My observation (from my very recent HV grid days) is that US kit is simply uncompetitive, and so it often comes to a fairly 'straight' fight between European, LatAm, Chinese, and Indian sourced-kit. (many of which factories I am pretty familiar with).

By the way, what makes you think that Chinese kit is the only stuff that might be at risk of phoning home ?

 

[petit_bateau]

I have been waiting since 11/2020 for my Tesla Powerwall for backup power in my mountain house ... i did not even shop around

BMW owners exhibit similar symptoms as purchasers. They can be fine people, but they are not representative of the auto market as a whole. Ditto Apple in phones. In my opinion Tesla are building a similar brand position in some areas.

Waiting 25+ months and counting for a product tells me something about Tesla's care & attention to their domestic-storage product line.

 

[aubreymcfato]

So why has Tesla basically already given up competing in this (domestic) segment ......

As I would love to agree to the sentiment of all the replies, I think this is a fair statement from @petit_bateau.
The fact is: as of January '23, Tesla is selling very few Powerwalls all around the world. Competition has come and domestic storage is now populated with other brands and products. This is the present.

I have seen it firsthand also here in Italy: there was a new law a couple years ago that gave you 110% rebate on some huge energy renovation (please, don't ask...), and of course everybody and their cousin started installing panels, storage, wallbox, ecc.
Never met anyone getting Powerwalls.
Tesla has chosen not to sell them, until now, so we'll see what they'll do in the future.

 

[hobbes]

How curious.

Why the cut off of January 9. What is the significance of that?

Looks like Tesla is into using some levers to induce demand, which is fine.

But only for five days?

Would fit with speculation that a refresh is coming, and they want to clear out cars on ship that was meant for December that do not have the new features yet.

 

[UkNorthampton]

United Kingdom of Great Britain and Northern Ireland (UK) - December 2022 Official (kind-of) car figures are out Car Registrations

Tesla just under 13% of new car sales of any power type in December, 3.38% of all car sales in the 2022 year. Tesla have top two places in December (all fuel types) with 10,664 (Y) & 5,704 (M3) - number 3 is Nissan Qashqai (Rogue in North America?) at 3,506

They've added a new best seller BEV section for the yearly sales (Tesla Y at 35,551 & Model 3 at 19,071 top the list. Next best is Kia e-Niro at 11,197)

Spoiler: images-tweet

Tweet

https://twitter.com/x/status/1610925570660999168

 

[Artful Dodger]

because they have to tow the company line.

This statement passed mustard.

 

[petit_bateau]

How about I pose the question of Why you are talking about 10kWh for Tesla Powerwall when it hasn't been 10 kWh in years? Heck in 2016 it was 14 kWh. So the 10 kWh you are referring to must have been from 2015?

I have no idea what it costs in GBP but I do know it is 13.5 kWh now as seen below.

Did you also know that a powerwall after federal tax credit can be only $4900 to the consumer in the US?

* 12 kW solar no PW $16,882
* 12 kW solar 1 PW $24,932 ($8050 above prior option)
* 12 KW solar 2 PW $29,832 ($4900 above prior option)
* 12 kW solar 3 PW $34,732 ($4900 above prior option)

and so on up to 10 powerwalls, every one past the first is only $4900 (after credit). If you don't need 12 kW you can shrink the PV down to 4.8 kW and the powerwall price doesn't change.

View attachment 892466

1. The Powerwall product available outside the US is not the same as the product available inside the US. Outside is like two generations of product behind. In any case I am being general in the discussion to make a point, each of the other products also has more or less capacity (it varies by specific product). Nonetheless they are all broadly comparable domestic storage products of roughly equivalent size and functionality.

2. Relying on nakedly-protectionist subsidies doesn't seem a good way of building a long term sustainable advantage. The WTO court room must be a bundle of laughs. For sure the USA is not exactly covering itself in glory as a shining light and beacon for the concept of free market trade.

 

[petit_bateau]

Analysts and the rest of the investment community will be slow to assign value to the energy business, if and when it grows into interesting volumes. It's currently being valued at zero, so no great loss if it doesn't take off.

I think we are in agreement on the zero value bit

 

[Artful Dodger]

I haven't found verification of this anywhere else-and article seems pretty circumstantial, in spite of the headline.

Seems Tesla is now trading time <> money to accelerate the permitting process by 2 wks:

Tesla removes tax relief request for new $375M facility | AP Texas (1:22 PM CT Jan. 04, 2023)

Tesla withdraws tax relief request for $375M Texas facility

Tesla sold a record 1.3 million vehicles last year.

spectrumlocalnews.com

“The commissioners were happy to have those discussions even if we had to postpone them to the January 18th court meeting,” Nueces County Judge Connie Scott said. “It was Tesla that decided at the time that any further abatements were no longer necessary for them to move forward with the proposed refinery.”​

 

[deshkart]

It’s pretty funny that ppl are arguing about domestic storage when tesla has barely started producing batteries. Please refer to battery day presentation to understand Teslas plan. Elon has been clear than total market for transportation and energy is 300 Twh and Tesla will make 10% - 30 TwH. We are barely scratching the surface in terms of batteries needed and it’s too early to declare victory or defeat. I would reevaluate the Tesla energy in next 3 to 5 years.

Chevy bolt was release earlier than Model 3. Does it mean that Tesla has failed at EVs? We all know how this turned out.