TSLA Market Action: 2018 Investor Roundtable

[ZachShahan]

Zach, thanks for all your work on Clean Technica and all your other sites.

He was clear in the Tom Randall interview that model Y is top of mind after model 3.

I would appreciate any thoughts about the model Y 'dilemma'.

Mid sized SUV's are among the hottest vehicles in the US, while mid sized sedans are among the weakest.

I really think the Tesla team was surprised by the number of model 3 reservations. The demand may have caused them to push model 3 production harder than they would have otherwise. This push was not all positive.

What if they recreated this with the model Y? Since the size of the market is so much bigger, is it possible they get 1,000,000 - 2,000,000 reservations? Or even more? I'm thinking they don't want another trip to Hell, either with money or manufacturing.

So maybe they are mulling over their options, and don't have a plan yet? Here are a few changes I could see them contemplating:
1) Announce the car after they are farther along? If the care is closer to production, this could reduce a number of risks.
2) Announce a higher end model Y first? They could always bring out a lower end model whenever it makes sense. They get a lot of unwanted press about the lack of the $35K availability for the model 3.
3) Ask for a higher deposit? This could reduce the craziness of many people getting in line to get in line.

I remember reading that when Sears sent out their first catalog, they got so many orders, they ended up taking a bunch of them out back and burning them. Too much demand can be overwhelming.

Any thoughts? Please let me know.

Thanks a ton. Tom's interview was freakin' amazing. Elon is so insanely candid and I love that so much. He could have just sugarcoated all of the manufacturing troubles and mistakes they made and he did the opposite. I truly can't understand how some people are convinced he's a lying fraud. They're out of their mind in envy, imho.

Yeah, I recall how much focus was on the Model X while the Model 3 was the real beast under development. Of course, both deserve the attention they get, but the lingering thought all the time for me now is what is going on with Y and how that rollout will play out. I figured Elon had thought a bit about how to change the Y reservations & rollout to not have so much consumer bitterness risk as with the Model 3 (and let's be frank, many of the people reserving the Y — if it's the same process — will be in the mainstream rather than Tesla fanatics focused on the underlying mission). Hope he thinks it through really carefully and has a new approach. As much as I love nearly every decision Tesla makes, I'm with @neroden on the need to think through and revamp customer communications.

I think you and @Words of HABIT have some superb ideas. Love these. Will do our bit to try to get them in front of Tesla's/Elon's eyes.

Of course, I'm apparently an ungrateful & greedy f***er, because even after getting a precious 10 mins or so Q&A with Elon, I keep wishing I had Tom's long one-on-one interview opportunity! Anyhow, will write some articles about this and any tweeting Elon to think about these options would be appreciated. I think none of us want to sit through a sequel of Production Hell — that would actually be the 4th movie in the series, no? (Do we count Roadster?)

 

[1101011]

... 4x5k for EAP is better than 3x5k for instance, but 4 SR base cars would only be 140k in gross revenue.

And results in one more happy customer. Spreading the word.

 

[MP3Mike]

And results in one more happy customer. Spreading the word.

But they already can't build them fast enough.

I think the point to start making SR versions is when either demand drops or cell supply becomes the limiting factor.

But which will come first, the SR PUP or the LR non-PUP?

 

[Opus BC fan]

My fantasy is that TSLA does a stock split once it has gone past 500 per share. I think the psychological effect of a reduced cost per share would increase the smaller "buy and hold" investors that want to support the Tesla mission. I am an amateur in this arena. Any opinions on if and when this might happen? Thanks.

 

[dc_h]

Here is how it works in my opinion. Roadster with 2000 vehicles year will be produced in Fremont. Largely manual and leveraging whaterever it can from existing infrastructure of S/X/3 for stamping, welding,paint and assembly. Roadster drivetrain in GF1 should not big deal.
Semi in my opinion in GF1 with production of 5k.
Now model Y is big mystery. The way I see it Model Y will be million vehicles program. So it will be built in GF1 , China and Europe. It will start in GF1 and when production process is stabilized it will move to China and Europe. China and Europe GFs in my opinion first will start with production of S/X/3 and then move to model Y , semi and pickup.

I agree with your premise. Use the tent for short term need to get past 5000, but as production gets past 7000 or so, they can redeploy the tent as the Roadster line. This will maximize margins for the 3 and enable a lower production model not needing so much automation. GF1 makes sense for the semi. The plant is not requiring as many people as originally thought, automation is just starting to pay off and it seems likely to hit the employment requirements of the incentive deal, they need more than the battery production. From a shipping perspective it also means stamped parts can be sent from Fremont to Sparks and packs from Sparks to Fremont. With 10,000 packs a week, they’ll probably need about 25-35 trucks a day, assuming up to 75 packs per load. That’s plent of capacity to bring parts to Sparks for assembly. 5000 a year sounds high in year one but hopefully low by year 3 or 4.
For model Y, I’m hoping it can be built on the model 3 line. This would allow a long term production of 250,0000+ Model 3 and Y for the US/Americas markets, and then combined 1,000,000 3/Y production in China and Europe to be distributed rest of world. They should still be production constrained and can focus on the pickup to follow the Y.
The long term question may become, will Elon be engaged in a competition any that is just firing on all cylinders, or will Deepak or someone need to take over more day to day? My takeaway from the earnings call is that is already happening, both to improve the brand of the company beyond the twittering ceo, but also to allow Elon to focus on the design and engineering work that he loves.

My IT hat says to worry when all appears well, but it really finally appears Tesla is executing and no one is seriously stepping up yet. Back in 2015 I thought 2018 was going to be the year they’d start seeing competition. Now I don’t see anything serious before 2020. Sad for Porsche, they’re building a Model S killer and won’t beat the Roadster to market, so they’ll be squeezed by practical luxury buyers wanting charging and range from the S/X platforms on one side and the ultimately sexy performance supercar Roadster on the high end.

 

[22522]

Is it though? Tesla benefits from gross margin, not from number of units sold. If (rough numbers) LR is 75 kWh and SR is 50 kWh, then they can sell 4 SR or 3 LR with the same battery supply. SR w PUP is 40k, LR w PUP is 49k. 160k gross price vs 147k, with one less body to pay for and assemble. So the profit advantage may go to building less of the higher end cars.

Note this shifts based on what option content is ordered. 4x5k for EAP is better than 3x5k for instance, but 4 SR base cars would only be 140k in gross revenue.

Tesla benefits from contribution dollars.

 

[22522]

LOVE this. I also wonder if they shouldn't limit such reservations/deposits to whichever continent(s) they will start producing on. It is a painfully long wait for people in Europe (I was there ) and elsewhere to sit with their reservations unfulfilled while cars roll into tens of thousands of homes. I just figure the cash isn't worth the hard feelings that inevitably develop. (Also, I'm a little sick of reading gripes from Europeans and Australians waiting on their cars. )

Yeah ... there are a lot of people buying or potentially buying a Model 3 who would rather have a Model Y. I was a little concerned when Elon said they'd reveal the vehicle in March. Seems too early. But he typically knows best.

The Model 3 matches the existing use model (less than 2 people per car) with a low frontal area and efficient motor.

From a green perspective, the Model Y will not be close unless it can change the use model to 3 people.

 

[JRP3]

Because of demand and the expectation for the Y to be less efficient they might not do a low cost SR version.

 

[neroden]

Then he should stop playing-dumb.

At least that @CuriousSunbird skulked off, he/she was even worse.

The only bear around here with adding to the discussion is @YasB

Agreed. Wait a sec, where is YasB? They seemed nice, hope they aren't trying to meet a margin call or something...

Mod: Or maybe he is aware that this is a weekend, and there isn’t any market activity on weekends. Mods like that! of course, Mods NEVER post off topic on weekends. I’m sure of it.

 

[BioSehnsucht]

If this is true, I completely support Tesla.

The Osborne effect is real.

Even a 10-20% reduction in model S and X orders would make a noticeable dent in the 3Q results.

edit for clarity.

Strangely, it's entirely possible to have a reverse effect, since some may have been happy to wait another year or two before buying an S/X (i.e., they have an older one, weren't in a hurry to trade up) but might prefer the current interior to the 3 style (even if it has a mini-binnacle) S/X. They might get a rush of orders from the people who want the old style interior but otherwise newer vehicle. Might then be a rush of orders from people who prefer the 3 style interior but want the larger vehicle, etc once it's available.

The interior styling of the 3 (and 2020 Roadster, and apparently '2020' S/X, assumed Y as well) is quite polarizing.

I was assuming this interior change would happen some day, but I had figured Tesla would announce it before hand (unlike most changes) in order to drum up "last chance" sales before the changeover. Granted if it's a year away I wouldn't expect it announced now, but perhaps as a "one more thing" to the Y reveal (giving ~6 months notice).

 

[TrendTrader007]

$TSLA breakout of a long term trend line with inverse head and shoulder. Based on my research of evey single $TSLA breakout I bet we start going up really hard and fast starting tomorrow and minimum target $430 in 7 weeks Maybe better Time to load up on super high risk calls

 

[UnknownSoldier]

My fantasy is that TSLA does a stock split once it has gone past 500 per share. I think the psychological effect of a reduced cost per share would increase the smaller "buy and hold" investors that want to support the Tesla mission. I am an amateur in this arena. Any opinions on if and when this might happen? Thanks.

Stock splits are dramatically out of fashion these days unfortunately. It's why AMZN is valued at $1800 a share and GOOG is $1200 a share. I just don't think they care anymore like they used to. One thing I always respected about Apple is they regularly did and do stock splits to ensure that AAPL is affordable and now look at them, America's first $1 trillion company. I'm not saying that's because just about anyone can afford shares of AAPL but it can't hurt. But really doing stock splits is so low on the priority list for Elon right now that I'm not surprised it's not on his radar. He has about 9,573,638 more important things to worry about.

 

[Curt Renz]

Stock splits are dramatically out of fashion these days unfortunately. It's why AMZN is valued at $1800 a share and GOOG is $1200 a share. I just don't think they care anymore like they used to. One thing I always respected about Apple is they regularly did and do stock splits to ensure that AAPL is affordable and now look at them, America's first $1 trillion company. I'm not saying that's because just about anyone can afford shares of AAPL but it can't hurt. But really doing stock splits is so low on the priority list for Elon right now that I'm not surprised it's not on his radar. He has about 9,573,638 more important things to worry about.

Indeed. It used to be that specialists/market makers would normally trade round lots in 100-share increments. A fee was added if a round lot had to be broken into smaller numbers. Now that trades are done electronically, there are no extra fees for smaller lots. Hence greatly reduced motivation for companies to split their shares to entice smaller investors.

 

[ZachShahan]

Short burn of the century in 3 weeks maybe, 6 weeks definitely.

Tesla shorts have ‘about 3 weeks before their position explodes’, says Elon Musk

Perhaps I'm wrong, but I took that to mean that is the point where Tesla starts making money on the Model 3 and shorts us thus doomed.

I still expect the squeeze to happen when Tesla reports a quarterly profit.

Though, I'm also amazed by the idiocy of anyone still shorting the company (or how powerful and effective the bear echo chamber is).

 

[Starno]

Hopefully tomorrow TSLA will confirm the upward trend.

 

[aubreymcfato]

Indeed. It used to be that specialists/market makers would normally trade round lots in 100-share increments. A fee was added if a round lot had to be broken into smaller numbers. Now that trades are done electronically, there are no extra fees for smaller lots. Hence greatly reduced motivation for companies to split their shares to entice smaller investors.

Question from a newbie: I was thinking that Elon could enjoy having much more retail, buy-and-hold investors, especially since he likes having control over Tesla. For him, better a vast platitude of small investors than few big ones. But maybe there is no way that retail investors can put a dent on institutional ownership, because their numbers are indeed too small. Am I right?

 

[winfield100]

Indeed. It used to be that specialists/market makers would normally trade round lots in 100-share increments. A fee was added if a round lot had to be broken into smaller numbers. Now that trades are done electronically, there are no extra fees for smaller lots. Hence greatly reduced motivation for companies to split their shares to entice smaller investors.

@Curt Renz
Has investor perception changed that much?
I knew folks whom would totally freak out at buying 2 shares for $350/share, but were not overly hesitant at 10 shares for $70/share.
Perhaps I've become feral for too long.

 

[UnknownSoldier]

Hopefully tomorrow TSLA will confirm the upward trend.

If Elon wants another P3D sale let's hope this happens. I have it almost planned out, trading my S for a P3D. I'm waiting for Track Mode to roll out via OTA and find out if only P3D+ has it, or if P3D will also have it.

 

[Dan Detweiler]

If people make a thing out of this then they're just sad losers. TBH the business with Miley was overblown too (but I have to say that)...

We all have to realize that at this point, EVERYTHING is going to be a "thing". People are desperate. They are seeing the possibility of what Tesla being a success might just do to them financially and they are going to see anything the company does and especially anything Elon says as an opportunity for attack. It ain't going away anytime soon I'm afraid. At this point, nobody has a sense of humor.

Dan

 

[Dan Detweiler]

Perhaps I'm wrong, but I took that to mean that is the point where Tesla starts making money on the Model 3 and shorts us thus doomed.

I still expect the squeeze to happen when Tesla reports a quarterly profit.

Though, I'm also amazed by the idiocy of anyone still shorting the company (or how powerful and effective the bear echo chamber is).

Sure seems like a lot of the shorts are doubling down over the weekend judging from many of the interviews and articles I have seen. Many of them are now convinced that Tesla is somehow cooking the books and are suggesting as much publicly. Crazy stuff. I think the fight continues tomorrow with more short attacks. I hope I'm wrong but I could see the price come down $10-15 tomorrow.

Dan