TSLA Market Action: 2018 Investor Roundtable

[Thekiwi]

By being advisors to Tesla, Elon got Goldman Sachs and Morgan Stanley to indirectly admit Tesla is worth $420 privately.

GS & MS will get in bed with anyone for the chance to earn consulting/investment banking fees.

 

[gringotuanis]

Happy to help, but do you have any instructions on HOW to help for those of us not schooled in Twitter warfare? I've liked your (and others' that I agreed with) posts in that thread (and congrats on getting a great reply from Elon). What else can I do?

Write xommesco

You now have H2 stations all over CA. Royal Dutch Shell is building pumps at exisitng stations as fast as they can in the UK. Japan and China are both growing H2 capabilities.

But we are getting off topic of this thread. Feel free to PM me and I can link you to Keith Malone who heads up the California state Hydrogen movement. His newsletters are fascinating with all of the stuff going on around the world.

And for those that may not know, every H2 vehicle is an EV. So if you any of you think I am pro ICE you have definitely not been following my articles.

It's more that H2 is a joke and will be useless. I don't know why you're so supportive of it...but it's not gonna go anywhere. Japan is a tiny island with super dense population so it's pretty easy to make that H2. California is California. In the Midwest we have almost no hydrogen stations. Riddle me this...why not skip Hydrogen and fo straight to electric? The electric range will soon be plenty far with quick charging...plus you're not adding another complex system to the car (loke an ICE engine) .Simpler is better.

 

[Fact Checking]

1) First. If there are no profits there is nothing to "put back in the business". You are just burning cash.

This is a blatantly false statement, and coming from you it's also a lie, because you've been pointed this out many times yet you keep repeating the same falsehood.

It's narrowly true that for a company with a single product line if that product is not profitable then there's probably nothing to put back into the business.

(Let's ignore intangible value created for a minute - which shorts are all too happy to ignore when it comes to Tesla. Did Apple "burn cash" when they spent millions and tied up many key employees on developing the first iPhone, going from one prototype to another, in a process that took years? Or was Apple creating massive amounts of intangible value that paved the way for them to become the trillion dollar company they are today?)

But Tesla doesn't have a single product line, they have multiple product lines with largely segregated manufacturing infrastructure and costs, which makes it rather straightforward to look at per product profitability and they do: Tesla even publishes the gross profit margins on the Model S/X which is close to 30% currently.

Here's a CleanTechnica article that explains this concept in detail: how Tesla would look like if it was internally split into 5 companies.

It is clear at this stage that the Model S/X lines are now generating serious amounts of cash that are helping the other parts of the business. Tesla could have spun off the Model S/X into a separate company or a subsidiary and could show them to be profitable - instead they are putting that generated cash back into the business. So your claim that 'there's nothing to pub back into the business' is false.

But instead of you acknowledging old falsehoods, correcting them and apologizing for them, you are writing new falsehoods, again and again, perhaps in hope to run out the clock by spamming new disinformation. Which is really additional proof that what you are doing is not some sort of honest disagreement over Tesla's financials, what you are doing here and on Seeking Alpha is probably illegal market manipulation called "Stock Bashing", with a goal to help your short position in Tesla, by intentionally creating and spreading false or misleading information about Tesla.

But the clock is ticking, Tesla's Q3 production letter is only 5 weeks away, the Q3 quarterly statement is only 9 weeks away.
Tick-tock.

 

[renim]

So ur saying there are as many truck stops as there are gas stations? Wrong. How do you know there won’t be a sleeper version of Semi? You don’t. Is 600 nonstop miles not long distance? It is. Really, hydrogen+fool cells? Why even bother. Is a hydrogen network built out yet? No. Is the whole of North, Central and South America, Europe, Asia, Australia wired for electric already? It is. If a mega charger needs to be located in the middle of no where, PV/WIND + Powerpack... boom megacharger no deliveries needed.

Donn... Please....

Fire Away!

yes, hydrogen is difficult to make viable, financially impossible if its renewable.
but
600 nonstop miles is definitely not long distance. any any distance which is nonstop with a single driver is not long distance. whats permitted varies between jurisdictions, but 600miles is not long distance.

 

[gringotuanis]

Why?

Tesla is in a phase where they are growing their revenue way faster that most manufacturers of any product. So far they've put all of it back in to the business. On top of that they've raised money several times as you are well aware of. We all know that they are now aiming for sustained profitability, but why is that really important? If profitability comes in 5 more years, but they keep executing well and growing, what's the rush?

You know as well as the rest of us that the big reason why they want to be profitable and have self-sustained growth is to become less dependent on the markets for capital. It wasn't for nothing that Elon wanted to de-list Tesla from the stock market…

Why not just be profitable now? The M3 needs to be. I appreciate the intent of the argument that it's like an Amazon...but one of these cars needs to be profitable. If one factory isn't profitable why would Shanghai be, etc. At some point you have to prove the money is there. Whether that's now or in 3 (or 5) years it doesn't matter much you are right about that...but they really should try to be profitable now. The billions eventually will dry up if they're not.

Especially with the M3 being mass market, I think it's important to prove it here and now.

 

[SW2Fiddler]

I am still unclear how these can be sold as new. We could not have done that in California.

Hi,
Your logical fallacy is
Personal Incredulity.

 

[beachbum77]

So ur saying there are as many truck stops as there are gas stations? Wrong. How do you know there won’t be a sleeper version of Semi? You don’t. Is 600 nonstop miles not long distance? It is. Really, hydrogen+fool cells? Why even bother. Is a hydrogen network built out yet? No. Is the whole of North, Central and South America, Europe, Asia, Australia wired for electric already? It is. If a mega charger needs to be located in the middle of no where, PV/WIND + Powerpack... boom megacharger no deliveries needed.

Donn... Please....

Fire Away!

Dave, Hey this is fun!

1) Of course not. Trucks can travel much farther than cars. But many are becoming combos stops. Pilot/Flying J, TA, and Love's to name a few.
2) Never said there would not be a Tesla sleeper. Just not until batteries achieve better results. I think Tesla picked the right market segment starting out where they can give the best bang for the buck and minimize upfront infrastructure costs.
3) 600 miles is good for 250 out and 250 back with a cushion for headwinds or hills. It is useless for OTR long distance runs without a sleeper. No one would buy it since it forces drivers out of the truck for their 10 hr break periods or 34 hr resets.
4) The H2 network is about where the Megachargers are.
5) Why would you place a Mega charger in the middle of nowhere?

We are headed out for dinner so I will any response later.

 

[defc0n]

You now have H2 stations all over CA. Royal Dutch Shell is building pumps at exisitng stations as fast as they can in the UK. Japan and China are both growing H2 capabilities.

But we are getting off topic of this thread. Feel free to PM me and I can link you to Keith Malone who heads up the California state Hydrogen movement. His newsletters are fascinating with all of the stuff going on around the world.

And for those that may not know, every H2 vehicle is an EV. So if you any of you think I am pro ICE you have definitely not been following my articles.

Physics & economics have already proven hydrogen as a fuel source for commercial or civilian vehicles is DOA. A very small amount of research is needed to know it’s a stupid idea from a cost perspective. This has been known now for quite a long time.

 

[winfield100]

If you go back and read, I saw (and still do) the Nikola as the long-distance winner. Tesla is not building a sleeper/long distance semi. If you look at all of the BEV semis in development they are all day cabs which makes sense. That way they go out and return to their hub at the end of the shift. Without improvements in battery technology, the weight will not work for long distance hauls. The Megacharging network would have to be larger than the Supercharger network. As it is the Tesla Semi is being planned for only specific hauls within its planned capabilites. The same goes for the Nikola One. But with the much longer range of 1,000+ miles they will need fewer refill stations along its initial runs.

Come on Donn, get a grip. Free -->Hydrogen for 1,000,000 miles, is ridiculous. If you add in the fracked CH4 and gasses, then steam refine at 1,100Deg C, then squeeze and freeze it in a triple step process into a leaky, brittle container, turn it back into electricity at a 90% at best loss, worse than fossil fuels into a fuel cell vehicle that is a complex rube goldberg device at best, fueled with a non existant network of vaporware hydrogen fueling stations, vs an existing electrical grid w/superchargers, how can I believe you? Do the math and physics and chemistry. The Fuel cell network is non existant, and the fuel isn't free, is extracted, not manufactured like electricity. You are a truck guy, re-run your numbers.
Your fuel cell vehicle is an electric vehicle, modified to keep the fossil fuel and repair industries in business, and extremely inefficient

 

[Johan]

Why not just be profitable now? The M3 needs to be. I appreciate the intent of the argument that it's like an Amazon...but one of these cars needs to be profitable. If one factory isn't profitable why would Shanghai be, etc. At some point you have to prove the money is there. Whether that's now or in 3 (or 5) years it doesn't matter much you are right about that...but they really should try to be profitable now. The billions eventually will dry up if they're not.

Especially with the M3 being mass market, I think it's important to prove it here and now.

There's really no real right or wrong answer here. IMO as long as the goal of sustained profitability doesn't trump Tesla's growth then I'm all for it of course. Yes it does seem like their leadership team believe that now is the right time. If so, great. I've always appreciated Deepak's thoughtful comments on how to thread the needle with regard to cash flow management, and if he says it's possible to go profitable and keep growing the business as planned then yes please: I would ike to have my cake and eat it too!

 

[beachbum77]

Hi,
Your logical fallacy is
Personal Incredulity.

Huh?

I was referring to calling cars with 10,000+ miles "new". Dealer laws in CA did not allow that.

 

[Dan Detweiler]

Okay.
1) First. If there are no profits there is nothing to "put back in the business". You are just burning cash.
2) It becomes important when investors decide they have thrown enough money your way.
3) The markets have served Tesla much better than staying private ever could have. That is why everyone strives to go public. It is all about access to cash. The only reason I know to go back private is to eliminate the vast majority of shareholders and concentrate ownership and future profits among a much smaller group of investors. Dell is a perfect example.
4) The business schools are full of files on companies that had explosive growth and then imploded almost overnight. You need balance. Tesla is feeling this right now. The current infrastructure cannot support 5,000 deliveries a week. That should be obvious to anyone reading the forums and threads. It is hurting the wonderful delivery experience early buyers enjoyed and wrote about. Now the threads are full of cancellations, rejected cars, and over-flowing lots at the DC's. 75 DC's across the country cannot keep up. So Tesla is between a rock and a hard place. To get the numbers to reach a profit it was expected to be 5,000 M3.
5) Many have stated this and I have to agree that the "pros" of going private did not exceed the "cons". That is why this was such a head-scratcher to many. As a CEO you need to be thick-skinned. It is right there in the job description. Same as posting on this thread! LOL

Dude...go away...seriously.

Dan

 

[Thekiwi]

Why not just be profitable now? The M3 needs to be. I appreciate the intent of the argument that it's like an Amazon...but one of these cars needs to be profitable. If one factory isn't profitable why would Shanghai be, etc. At some point you have to prove the money is there. Whether that's now or in 3 (or 5) years it doesn't matter much you are right about that...but they really should try to be profitable now. The billions eventually will dry up if they're not.

Especially with the M3 being mass market, I think it's important to prove it here and now.

The Model 3 is already profitable, that debate is over. Agree that profits should and will come now. Being profitable doesn’t mean Tesla can’t reinvest those profits into capex (which is initially a balance sheet/cashflow transaction and doesn’t have an immediate impact on net profit).

From last quarters results:

“Model 3 gross margin turned slightly positive in Q2 even though we were still ramping production and did not yet deliver any All- Wheel-Drive or performance models. This was a significant achievement in the ramp of Model 3, as a result of dramatic reductions in manufacturing costs through lower labor hours per unit, reduction in ramp cost, higher leverage of fixed costs and lower material costs.”

 

[beachbum77]

Come on Donn, get a grip. Free -->Hydrogen for 1,000,000 miles, is ridiculous. If you add in the fracked CH4 and gasses, then steam refine at 1,100Deg C, then squeeze and freeze it in a triple step process into a leaky, brittle container, turn it back into electricity at a 90% at best loss, worse than fossil fuels into a fuel cell vehicle that is a complex rube goldberg device at best, fueled with a non existant network of vaporware hydrogen fueling stations, vs an existing electrical grid w/superchargers, how can I believe you? Do the math and physics and chemistry. The Fuel cell network is non existant, and the fuel isn't free, is extracted, not manufactured like electricity. You are a truck guy, re-run your numbers

Win

Come back to California for a visit. At last count there were 36 stations all over CA. They are now building stations up in New England. Oil companies are trying to cover all the bases it seems. You can Google all of it.

Google "SimpleFuel". They are in operation in Japan at Toyota. I want a unit down here in Florida to test to fuel a farm tractor. New Holland builds one that runs on H2. Haven't you and I talked about this before?

 

[Chop110]

I think you are word-smithing. When I say unsold it is to differentiate from in-transit. Now yes part of the unsold new units are floor units and test drive cars. but 8,000? At the end of Q4 all three models had just over 2,000 unsold inventory units around the world accumulated since Q3 2016. That produced a big bump in revenue, but the discounting hurt the bottom line.

If Tesla was firing on all cylinders almost every car should have been in transit as they opened the flood gates on July 1. Many should have been accumulated at the DCs waiting to go out at the stroke of midnight. On July 1 my local DC had zero S & X units waiting to be delivered. Inventory has since been growing.

As a former dealer, inventory was important because it ate up our flooring line and increased interest expense. That is why I was surprised no one seemed to care about Tesla's growing inventory until McNeill was given that $700,000 bonus. So much focus was being directed at production it seemed no one was watching the rest of the operation. And I am seeing that again this year.

Tesla just added hundreds of new cars to their website inventory. Most are 100D and P100D models with discounts up to $22,000 and lots of miles. I am still unclear how these can be sold as new. We could not have done that in California.

Having a large number of inventory in staging areas does not automatically equate to situation that these cars are not wanted by somebody in the waiting list. To me, it seems like Tesla is having a logistical problems with the distribution/delivery side as a result of the ramped production. As before, that too will be resolved. Also, I will concede that a large chunk of the July production had issues that had to be resolved before delivery, so that probably added to the number in limbo. Even with the few anecdotal cases you reference, I see nothing that translates into a drop of demand scenario. If BMW, Mercedes, and Audi can sell thousands of of their higher end entry level sedans month after month, I don’t see Tesla having the same problem. Sometimes, I think bears really underestimate the potential size of the market for these kind of cars.

 

[beachbum77]

Write xommesco

It's more that H2 is a joke and will be useless. I don't know why you're so supportive of it...but it's not gonna go anywhere. Japan is a tiny island with super dense population so it's pretty easy to make that H2. California is California. In the Midwest we have almost no hydrogen stations. Riddle me this...why not skip Hydrogen and fo straight to electric? The electric range will soon be plenty far with quick charging...plus you're not adding another complex system to the car (loke an ICE engine) .Simpler is better.

Correct me if I am wrong, but isn't this exactly what people were saying about Tesla and BEVs a decade ago?

 

[Unpilot]

This s an easy bet. One thinks trucks in the future will run on H2 the other batteries.

Plop your money down and see in ...say.. 5 years.

I already placed my bet.

 

[Zhelko Dimic]

Dude...go away

Dan

That's rude.
I value his input.
EDIT: removed content of the third line.

 

[Right_Said_Fred]

If you read the TMC threads one buyer placed an order on Aug 1 (I believe) and took delivery seven days later on Aug 8.

That happens when someone cancels, for whatever reason, after the car has alteady been built. It gets delivered to someone else who ordered the same configuration (and at the moment there are no more than a few dozen configurations, so there are plenty of people who will qualify).

 

[winfield100]

You now have H2 stations all over CA. Royal Dutch Shell is building pumps at exisitng stations as fast as they can in the UK. Japan and China are both growing H2 capabilities.

But we are getting off topic of this thread. Feel free to PM me and I can link you to Keith Malone who heads up the California state Hydrogen movement. His newsletters are fascinating with all of the stuff going on around the world.

And for those that may not know, every H2 vehicle is an EV. So if you any of you think I am pro ICE you have definitely not been following my articles.

All over california. Hydrogen stations, are actually clustered in La/Sandiego and Sanfrancisco (35), expensive vehicles, barely anywhere to charge, basically local transport confined to two areas of california

however, Superchargers, already in existance or being bulit, in California, so it kinda looks like electricity wins