TSLA Market Action: 2018 Investor Roundtable

[EngRyan]

Why doesn’t anyone start a go fund Tesla campaign to raise cash for Tesla’s bottom line? I bet it’ll raise millions since there are a lot of people truly believe in the company and willing to help out Elon Musk. Though I’m sure they don’t really need any cash, but it’s still nice to have and can shut the shorts up about Tesla’s ability to raise cash without Wall Street.

Pretty sure that was a joke post for us 'cultist'. But as cdub said, if I want to support Elon, I'll take a car or a rocket launch in return.

 

[Richgoogol]

That's a bad idea. If you want to support Tesla.... Buy one.

I already own a MX and have majority of my wealth invested in Tesla. I am already doing everything I possibly can.

 

[Richgoogol]

Pretty sure that was a joke post for us 'cultist'. But as cdub said, if I want to support Elon, I'll take a car or a rocket launch in return.

Umm I did not mean it as a joke. I'm just thinking out loud here. But if it comes down to it, this can be a last resort or something.

 

[mongo]

Umm I did not mean it as a joke. I'm just thinking out loud here. But if it comes down to it, this can be a last resort or something.

There is historical support for giving Tesla large deposits on future vehicles....

 

[UnknownSoldier]

Currently:

-15.0% FCAU
-07.4% GM
-03.8% F
+01.4% TSLA

It helps to give context here instead of assuming we all know why.

RIP Sergio Marchionne, CEO of Fiat Chrysler Automobiles. He turned that company around from bankruptcy as Chrysler and saved one of the Big 3 Detroit automakers. There is no succession plan in place as he was only 66 and not planning on retirement. FCA basically exists today because of his management of their turnaround so the stock is getting slaughtered on news of his sudden and tragic passing.

 

[Esme Es Mejor]

Well I don't think that matters that much. Plus if Tesla is not directly involved, it won't affect anything, at least in the long run. The shorts can spin it whichever way they want, but after all, money is money, more is always better.

The money would be better spent buying a Model 3 Performance & giving people rides in your spare time. Or even using it as an Uber/Lyft car, if you wanted more people to see it.

 

[mongo]

There is no succession plan in place as he was only 66 and not planning on retirement.

According to Reuters:

Altavilla, along with Jeep brand head Mike Manley and CFO Richard Palmer, was among the top candidates to succeed FCA’s longtime CEO Sergio Marchionne when he stepped down next year.
But after Marchionne fell seriously ill due to complications following surgery, the company accelerated the succession plans and on Saturday appointed Manley to succeed Marchionne.

 

[MikeC]

Wow: Tesla bear apologizes to clients after releasing inaccurate TSLA note

Similar to other critics on Twitter, Johnson framed his narrative on the assumption that Tesla had admitted to misleading investors. His note was headlined as “TSLA may have Admitted to Actionably False Statements.” As it became evident that he had committed an error, Johnson opted to correct his note, revising his note with a headline stating “ERRATUM.” Johnson also included an apology in his revision.

“We apologize for the inconvenience,” he wrote.

Now he just has to apologize for all of the dozens of other inaccurate notes he’s written over the last few years.

 

[jhm]

Why doesn’t anyone start a go fund Tesla campaign to raise cash for Tesla’s bottom line? I bet it’ll raise millions since there are a lot of people truly believe in the company and willing to help out Elon Musk. Though I’m sure they don’t really need any cash, but it’s still nice to have and can shut the shorts up about Tesla’s ability to raise cash without Wall Street.

If you make a $49k donation, you are entitled to a Model 3 LR as a premium!

 

[Curt Renz]

It helps to give context here instead of assuming we all know why.

RIP Sergio Marchionne, CEO of Fiat Chrysler Automobiles. He turned that company around from bankruptcy as Chrysler and saved one of the Big 3 Detroit automakers. There is no succession plan in place as he was only 66 and not planning on retirement. FCA basically exists today because of his management of their turnaround so the stock is getting slaughtered on news of his sudden and tragic passing.

Actually Marchionne was already known to be gravely ill. Jeep division head Mike Manley was tapped as new Fiat Chrysler CEO on Saturday. It appears that the FCAU share price decline today is due more to a poorly received Fiat Chrysler earnings report and outlook published this morning. Indeed, RIP Sergio; he was a good man.

 

[UnknownSoldier]

According to Reuters:

Sergio Marchionne, CEO Who Steered Fiat Chrysler, Dies Aged 66

You're right, looks like he was already planning to step down in 2019. The market is clearly not taking this well though. The bad quarterly results from GM aren't helping either.

 

[bdy0627]

The FUD tide is suddenly going out - doesn't mean it won't come back in again in a few days, but for the moment... Maybe they've just run out of creative ideas and they're on an off-site, residential brain-storming together...

The articles are being written now for release around the ER next week. Angles have already been selected to focus on. "Cash burn far worse than expected." "Revenues fall short of expectations." "Upcoming debt obligations looming large." They won't be pretty, that's for sure. But, none of it is a surprise - neither the Q2 financials nor the negative articles.

 

[CuriousSunbird]

The money would be better spent buying a Model 3 Performance & giving people rides in your spare time. Or even using it as an Uber/Lyft car, if you wanted more people to see it.

Be careful. I have heard using Tesla for ride-sharing invalidates your warranty.

Tesla 3 Warranty Exclusions for Ride-Sharing Drivers

Pls read the fine print on your documents.

 

[Esme Es Mejor]

Be careful. I have heard using Tesla for ride-sharing invalidates your warranty.

Tesla 3 Warranty Exclusions for Ride-Sharing Drivers

Pls read the fine print on your documents.

This was in the context of donating money to Tesla. I am not suggesting this is a good business idea— for one, most Tesla owners have more financially rewarding things to do with their time than driving people around.

But if you’re doing it to help Tesla, they get immediate profits & long-term increased awareness. And you get an amazing car as a side effect.

 

[BrianZ]

The short Thesis has very few legs left. 1) Competition. 2) Cash Flow/Cash on Hand. 3) Demand Fears

For number 1 above I am going to coin a new phrase based on a scientific theory:

The Competition Paradox, based on the Fermi Paradox which states that if Advanced civilization existed in the the galaxy, we would have seen some evidence, or they wiped themselves out long ago, which is scary because it could mean that civilization tend to grow to a certain point and destroy themselves. So my theory is the Competition Paradox.

The math math is simple:

If the Model 3 is arguably the best car on the road for the money. Meaning it's better then most if not all comparable cars at the same price point.
And If competitors could make a better EV, it would mean that the car they made would be better then every other ICE car they make.

Don't you see.. It's a paradox. If this happened, traditional autos would collapse in on themselves like a dying star collapsing into a black hole.

The real point that always gets lost on bears is that If BMW could make a dramatically better car for the price, they would have done so year ago to crush Daimler and vice versa.

Another way to look at this is compare Model S 2012 to Model X 2015 and Model 3 in 2017. Some basic metrics like range, rate of growth, AP features from none to today, sales from 0 to 50k and so on. Then take the same approach when looking BMW for example. I think a lot of people have a hard time understanding complex ideas like Tesla is better than everyone else. They just cant understand it if they have never driven a Tesla and did not experience a 2012 S vs a Model 3P today.

Your average BMW 3 or 5 or even 7 Series has not materially changed in the last 6 years. Small refinements and improvements to tech as well as some better fuel economy when not cheating. Now compare that to a Model S 60 from 2012 vs a Model 3P today. Similar price. Similar cabin space, though definitely a smaller package. Tesla does not have the luxury have having 10 different platforms yet, so they are now at 3, which covers a large portion of the market, but I still think its fair to map the improvements from model to model to show the progress even though there is not a direct correlation to BMW.

The 2012 Model S 60 had these specs, roughly:

210 mi range, 382 hp, 5.5 0-60 22KWh/100km
Production volume around 20k/year, eventually topping out around 60k/year
No AP. Single motor.
Tesla Model S - Wikipedia

The 2018 Model 3P specs:

310 mi range, 283+197hp or 480hp, 3.5 sec 0-60 18KWh/100km
Production volume around 300k/year pace at 6k/w and 500k sometime next year.
Tesla Model 3 - Wikipedia

This is not meant to directly compare cars, only the progress over the last 6 years.

For BMW, the cars are fairly indistinguishable over the last 6 years in terms of styling. The interior is a bit more refined with a larger screen in 2018:
BMW 5 Series (F10) - Wikipedia
BMW 5 Series 2010 - 2017
BMW 5 Series (G30) - Wikipedia
BMW 5 Series 2018

With the exception of the $100k+ M5 which is at 3.4s 0-60, the performance is mundane at best.

For 3 series it doesnt get much better:
BMW 3 Series (F30) - Wikipedia

BMW M3 - Wikipedia

• 248 kW; 338 PS (333 hp)
• Torque: 355 N⋅m (262 lb⋅ft)
• 0-60 mph (97 km/h) – 4.8 s for manual and SMG

However they do have some limited edition versions that perform in 3.9 0-60 range. The E92.

After all of that, do we think that BMW can come out with an EV that matches or surpasses their ICEv specs and do we think they would do that if they could? Would BMW come out with a Series 3ev and M3ev that had specs better than those listed above? If they dont, then they cannot compete with the Model 3. Since the model 3 is a mass produced product, it can consume the sales of the 3/4 series which in 2016 was:

WW: 411,844
Sold in the US: 106,221

Or even eat into the 5 series sales: (notice the drop in the US specifically but also WW:

2012
WW: 359,016
US: 56,798

2013
WW: 366,992
US: 56,863

2014
WW: 373,053
US: 52,704

2015
WW: 347,096
US: 44,162

2016
WW: 331,410
US: 32,408

I am sure there is more up to date sales data, but those numbers above were from the Wikipedia pages linked originally.

So there it is, the Competition Paradox. If they could compete, they would have done it long ago to spite each other. Why are they doing it now? They are being forced to by Tesla who is eating into their market share from the Top Margin down. 7 Series, S class first, X5, GLX and now 3 Series/C Class but also lower end 5 Series and E Class. Not to mention the Audi and Porsche that have been displaced.

I wont go into demand here, but needless to say, when you look at the market as a whole, the Demand for Tesla's is nearly infinite and the competition is lacking. Its lacking the will and the capability. They can make a lot of cars at very high quality, but they cannot make a better car, or they would have by now. Its a simple fact of nature. Tesla is forcing them to make hard decisions and eventually they will make progress and those that survive might even catch up. But by then, Tesla will be a 500B company with a dozen models and manufacturing world wide.

Lastly, the Cash on Hand/Cash Flow. I know there are those who disagree, but I think this is something that should be improving from July 1 going forward. I think Tesla has cut back dramatically on Capex and pulled all the deposits forward as a mini/interest free cap raise that will bridge them until Q4 when the real profitability and FCF occurs. Lastly, dont forget that most of the cars being delivered in the next 6 months will be in the US, this will create pent up demand world wide. While Tesla is delivering the $35k Version in the US, they will be delivering the $80k vs in the rest of the world and all with 10k/w efficiency. After that, I assume Tesla will duplicate Fremont and GF1 in China and Europe at the same time while piloting the Model Y production in the US. As soon as production for Europe and China is shifted to those countries, the Y can start rolling off the line in Fremont and a new East Coast factory can be built to focus on Model Y in the US. Once that vehicle is being produced in China, Europe and the East coast, then Tesla can pilot the Pickup in Fremont.

Fantastic post! Please allow me to expand on your reasoning, and then use that to kill thesis 3: Demand.

Your post talks about in order for any legacy carmaker to compete in the EV space, they have to release a car that is better than their own ICE model of similar price range. Therefore, each EV they produce will replace an ICE that they would have sold.

This actually puts the legacy carmakers in a lose lose situation.

Situation 1: Transition to EV. They would face the same huge capital expenditure as Tesla as they ramp up their EV production. That means they will face profit margins on EVs that is almost guaranteed to be lower than their equivalent price range ICE. Not only that, but because they lose an ICE sale for every EV sale, the gigantic fixed costs of ICE production is spread over fewer cars, which increases their costs for their ICE cars, which means their ICE profit margin decreases. Lower margin from EV + lower margins for their ICE = Lower profit margins overall.

Situation 2: Don't transition to EV. Since EVs are simply better than ICEs of the same price range, they will slowly lose ICE sales as EV production from other companies ramp up and steal sales away from their ICE's. That again means greater fixed costs per ICE sold, leading to lower margins, and even worse, no future.

Now let's see why Tesla will never have a demand problem.

Bears like to say once legacy carmakers start making and mass producing EV's, Tesla's demand is going to drop. Or more extreme, legacy carmakers are going to use their 100 year expertise in building cars to make EV's even better than Tesla's, and no one will want to buy Teslas.

Let's take the more extreme bear example, and see why that cannot be true by stretching the above bull argument to the extreme. Let's assume the best case bear scenario that every single legacy carmaker releases EV's that blow the M3 out of the water. What happens next? That means no one wants Teslas and they go bankwupt right?

No.

The Model 3 is still better than every ICE car in its price range. So unless the legacy carmakers can make enough EV's to fulfill all demand of new cars that no ICE cars are sold, there will still be people that will want a Model 3 since they're better than ICE's. Even if that extreme scenario becomes true, it would mean all ICE production of the Model 3's price range would be stopped, and the carmaker facing a write off of the century for all ICE production equipment.

Therefore, it is IMPOSSIBLE for Tesla to run out of demand. As long as there are still ICE cars sold in Model 3's price range, it cannot run out of demand. The only scenario that would cause Tesla to be demand limited would mean bankruptcy for all legacy carmakers from the complete elimination of all ICE production of Tesla car's price ranges.

 

[mongo]

Be careful. I have heard using Tesla for ride-sharing invalidates your warranty.

Tesla 3 Warranty Exclusions for Ride-Sharing Drivers

Pls read the fine print on your documents.

That is a forum post from 2017.
Online version: Vehicle Warranty | Model 3

only references to commercial/ business (note, free supercharging is not for commercial use)

Tesla hereby disclaims any and all indirect, incidental, special and consequential damages arising out of or relating to your vehicle, including, but not limited to, transportation to and from a Tesla Service Center, loss of vehicle value, loss of time, loss of income, loss of use, loss of personal or commercial property, inconvenience or aggravation, emotional distress or harm, commercial loss (including but not limited to lost profits or earnings), towing charges, bus fares, vehicle rental, service call charges, gasoline expenses, lodging expenses, damage to tow vehicle, and incidental charges such as telephone calls, facsimile transmissions, and mailing expenses.

NCDS resolves disputes involving this New Vehicle Limited Warranty which arise during the applicable warranty period specified in this New Vehicle Limited Warranty. However, NCDS will not arbitrate claims involving a vehicle used primarily for commercial purposes unless the “Lemon Law” of your state covers (1) vehicles used for commercial purposes, or (2) claims that an air bag failed to deploy or deployed when it should not have. You must file a request for arbitration with NCDS within 60 days (or 6 months in certain jurisdictions) of the expiration of the applicable warranty period, provided you sent written notice to Tesla, as specified above, of the alleged defect during the applicable warranty period.

Real world report:
The Tesla Warranty is Ludicrous

 

[Curt Renz]

Sergio Marchionne, CEO Who Steered Fiat Chrysler, Dies Aged 66

You're right, looks like he was already planning to step down in 2019. The market is clearly not taking this well though. The bad quarterly results from GM aren't helping either.

This morning both General Motors and Fiat Chrysler announced earnings and outlooks that were poorly received by the market. Ford did not report, but its share price appears to have been taken down in sympathy. Tesla's share price is up. It also did not report today.

My earlier posting of simply the movements in automaker share prices today was designed as a subtle hint to provoke thought about the future of Detroit ICE makers versus California EV maker Tesla.

 

[Causalien]

"Our supply chain checks in Taiwan and Korea indicate that Tesla is currently procuring Model 3 parts at a rate of over 6,000 per week (these parts include: temperature management solutions, wiring harnesses, brake cams, gears, and axles). "

Do you know how long does it take from procuring them in Taiwan/Korea to be able to use them in Fremont? It doesn't clarify for how long they have been doing it. I'm trying to figure out how close they are to 6K/wk. 2 weeks? 1 month?...

Shipping is about 1 month.

 

[Tslynk67]

There is historical support for giving Tesla large deposits on future vehicles....

And hysterical support giving small deposits on future vehicles...

 

[Boomer19]

This morning both General Motors and Fiat Chrysler announced earnings and outlooks that were poorly received by the market. Ford did not report, but its share price appears to have been taken down in sympathy. Tesla's share price is up. It also did not report today.

My earlier posting of simply the movements in automaker share prices today was designed as a subtle hint to provoke thought about the future of Detroit ICE makers versus California EV maker Tesla.

agreed
and they are blaming tariffs for the gm/ford/fiat
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