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TSLA Market Action: 2018 Investor Roundtable

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I'm really curious how Tesla will be able to build factories in China and Europe given that they're still cash flow negative, they're still struggling on Model 3 gross margin, and they're not planning to refinance 1B in loans due over the next several months.

The China factory costs 5 billion by Tesla's estimate. Where does the money come from?

On the short side, it is stunning to see the equity markets react the way they have. The bond and CDS markets didn't flinch from their pre-earnings pessimism, while equity did.
Point 1-Wrong: they are now cash flow +. They emphatically said q3 will be cash flow +. News flash: we are in q3.
Point 2-Wrong: they are not struggling with model 3 GM. Last quarter GM went positive: a fact. They will deliver 3-4x as many model 3 this quarter.
 
I think the stock is done with big movements for a little while and will rather drift sideways in a narrower band.

Let's break out and hit $360 today!

I'm thinking there will be major resistance at $360...at least that's how I'm playing it right now. Sold some $325 August puts and sold some $370 Sept covered calls yesterday. More than happy to rewrite the calls though If i'm wrong. /Not advice.
 
Sorry I can't keep up with everything Tesla says.

Why Tesla Is Investing $5 Billion in a New China Factory, Its First Outside the U.S.

Apparently now the price tag is 2B? Down from 5B? Seems unrealistic given prices of other lines.

Sorry, can't keep up with all the bullshit Elon says.

My favorite from their letter...

Elon says gross margin of Model 3 is "slightly positive," but the Q1 letter says positive gross profit "excluding non-cash items." Quite a caveat.

...You can't keep up with all things Tesla, even if it was one of the big talking points on the call, but you can do an estimate in your head on what is a reasonable cost of current lines being replicated in China...sure bud.
 
I'm really curious how Tesla will be able to build factories in China and Europe given that they're still cash flow negative, they're still struggling on Model 3 gross margin, and they're not planning to refinance 1B in loans due over the next several months.

The China factory costs 5 billion by Tesla's estimate. Where does the money come from?

On the short side, it is stunning to see the equity markets react the way they have. The bond and CDS markets didn't flinch from their pre-earnings pessimism, while equity did.

Well it’s good you’re really curious, the information you are curious about is all in the earnings call. Also, bond markets have reacted since the earnings call as well.

It’s always good to encourage curiosity so let me give you some tips. There are websites that track stocks, earnings calls, and bond prices. Easily findable with another website called google.

Now you’ll need to have an analytical mindset to discern accurate information since there can be a lot of inaccurate analysis on those websites. You’ll also see people posting “legitimate questions” worded in a way meant to lead people to a specific conclusion by inferring incorrect information to support what looks like a logical train of thought on the surface.

It only takes a few minutes to fact check the assumptions inferred in those questions. Hope this helps!
 

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I would not expect Tesla selling their processor on the market to be a thing for a couple of reasons.

Primarily, today, this kind of software is written specifically to a particular chip—you cannot simply swap out on processor for the next, so for a company to pick the Tesla processor, they are essentially handcuffing themselves to Tesla and Tesla’s direction and developing what Tesla may eventually consider to be a competitive product. Regardless of how advanced the Tesla chip is today (and bear in mind that folks constantly leapfrog each other), its a risky move to give up architectural control like that. Folks like NVDIA are a safer choice in that they don’t have skin in the final product but do have incentive to make sure you are successful.

The second issues is that selling your chips to external customers is a lot of work—its not just popping your chips in a box and strolling to FedEx. You need to clean up your SW libraries so they a suitable for external consumption, you need to create docs and training, you need to hire engineers who will work with your customers to help them adapt their SW to your HW and you need a support organization. You need to do this if you want to be a successful chip purveyor because one big thing potential customers will evaluate is how easy is it to develop for you chip because that represents opex and time to market for them. Doing this well will burn opex at Tesla that could probably be put to better use somewhere else.
 
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Tesla isn't going to sell anyone their chip. It's a key part of their IP and their competitive advantage. Google/Waymo aren't selling theirs either, neither will GM/Cruise. This is why everyone else who isn't doing it themselves is buying from Nvidia because the only meaningful competitor would have been MobilEye but now that Intel owns MobilEye we can expect them to be very late to the party.
 
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Sorry I can't keep up with everything Tesla says.

Why Tesla Is Investing $5 Billion in a New China Factory, Its First Outside the U.S.

Apparently now the price tag is 2B? Down from 5B? Seems unrealistic given prices of other lines.

Sorry, can't keep up with all the bullshit Elon says.

My favorite from their letter...

Elon says gross margin of Model 3 is "slightly positive," but the Q1 letter says positive gross profit "excluding non-cash items." Quite a caveat.

Tesla never said $5bn. “a person familiar with the plans” did. You’re citing a rumor based on an anonymous statement as your baseline. It was unknown and is now $2bn. There have been no other prices.
 
I would not expect Tesla selling their processor on the market to be a thing for a coupe of reasons.

Primarily, today, this kind of software is written specifically to a particular chip—you cannot simply swap out on processor for the next, so for a company to pick the Tesla processor, they are essentially handcuffing themselves to Tesla and Tesla’s direction and developing what Tesla may eventually consider to be a competitive product. Regardless of how advanced the Tesla chip is today (and bear in mind that folks constantly leapfrog each other), its a risky move to give up architectural control like that. Folks like NVDIA are a safer choice in that they don’t have skin in the final product but do have incentive to make sure you are successful.

The second issues is that selling your chips to external customers is a lot of work—its not just popping your chips in a box and strolling to FedEx. You need to clean up your SW libraries so they a suitable for external consumption, you need to create docs and training, you need to hire engineers who will work with your customers to help them adapt their SW to your HW and you need a support organization. You need to do this if you want to be a successful chip purveyor because one big thing potential customers will evaluate is how easy is it to develop for you chip because that represents opex and time to market for them. Doing this well will burn opex at Tesla that could probably be put to better use somewhere else.
The chips they have been buying from Nvidia are really expensive. So just the cost savings alone of fabricating your own chip makes it worthwhile.

I agree with your sentiments. Down the road, a few iterations in, I would not be too surprised if they started selling their chips. But I think it’s a long way off, if ever.
 
Tesla isn't going to sell anyone their chip. It's a key part of their IP and their competitive advantage. Google/Waymo aren't selling theirs either, neither will GM/Cruise. This is why everyone else who isn't doing it themselves is buying from Nvidia because the only meaningful competitor would have been MobilEye but now that Intel owns MobilEye we can expect them to be very late to the party.

I get your point, but didn't Tesla used to patent their innovations and then give other companies full access to those patents in the name of catalyzing sustainable transport and preventing others from patenting their innovations and not sharing? Maybe this innovation does not fall under helping sustainable transport?
 
Sorry I can't keep up with everything Tesla says.

Why Tesla Is Investing $5 Billion in a New China Factory, Its First Outside the U.S.

Apparently now the price tag is 2B? Down from 5B? Seems unrealistic given prices of other lines.

Sorry, can't keep up with all the bullshit Elon says.

My favorite from their letter...

Elon says gross margin of Model 3 is "slightly positive," but the Q1 letter says positive gross profit "excluding non-cash items." Quite a caveat.

Considering you're invested in Tesla, albeit a short position, you seem incredibly ignorant of what's actually going on. IS this really the case or are you just acting this way in order to make FUD comments?
 
Sorry I can't keep up with everything Tesla says.

Why Tesla Is Investing $5 Billion in a New China Factory, Its First Outside the U.S.

Apparently now the price tag is 2B? Down from 5B? Seems unrealistic given prices of other lines.

Sorry, can't keep up with all the bullshit Elon says.

But apparently you can keep up on everything said by people other than Elon/Tesla. (Since neither Elon or Tesla ever said that the new GF in China was going to cost $5 billion.) That came from an anonymous tipster to Bloomberg.
 
Sorry I can't keep up with everything Tesla says.

Why Tesla Is Investing $5 Billion in a New China Factory, Its First Outside the U.S.

Apparently now the price tag is 2B? Down from 5B? Seems unrealistic given prices of other lines.

Sorry, can't keep up with all the bullshit Elon says.

My favorite from their letter...

Elon says gross margin of Model 3 is "slightly positive," but the Q1 letter says positive gross profit "excluding non-cash items." Quite a caveat.
And that was the last I’ll ever see from the @FirebirdAlpha account...
Have fun on my special list with all your friends.
 
The chips they have been buying from Nvidia are really expensive. So just the cost savings alone of fabricating your own chip makes it worthwhile.

I believe Elon said on the CC their new chip costs Tesla essentially the same as Nvidia. It was not clear if he was referring to the current low volume cost or a future cheaper high volume cost, though. Still I would imagine the cost of the hardware is a tiny percentage of capital gained from AP and FSD orders. What is really exciting is not so much the any cost saving as the potential to finally enable some FSD capabilities.
 
I'm thinking there will be major resistance at $360...at least that's how I'm playing it right now. Sold some $325 August puts and sold some $370 Sept covered calls yesterday. More than happy to rewrite the calls though If i'm wrong. /Not advice.
Next major catalyst I see, coming in approximately 4 weeks, major autopilot upgrade.
No idea what happens between now and then, but should be on the radar.
 
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