TSLA Market Action: 2018 Investor Roundtable

[SO16]

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.

600 miles in a single driving session.

 

[juanmedina]

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.

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?

Hydrogen fuel cells are not efficient and you still need a battery pack. It just makes the whole system more complicated and unreliable; something that is not desirable for vehicles that travels 45,000-100,000 miles per year. Also it takes a huge amount of energy to extract hydrogen making it expensive; it cost about $80 to fill the tank of a Toyota Mirai with 312 mile range.

 

[UnknownSoldier]

Can Tesla semi and Nikola not coexist? Why does it seem like “all or nothing” with shorts for their thesis?

Shorts believe the market for alternative fuels vehicles is a fixed value and size that will not expand. Therefore a sale of 1 thing will necessarily deprive a sale of another thing.

Meanwhile, even the infamous Bob Lutz said in 2008 that the electrification of transport was inevitable.

I wonder who will be right in the end?

 

[Fact Checking]

Did this actual point ever occur? Is it detailed anywhere and is the report available? From the reports and postings, it doesn't really seem like by Friday anything too "formal" had occurred. If it did, wouldn't some/all of that be available to public shareholders?

My summary was inaccurate, I edited it based on your comment.

The NYT article says the following:

On Thursday morning, Elon Musk and Tesla’s board gathered for a meeting on the factory floor of the company’s manufacturing plant in Fremont, Calif., people with knowledge of the events said. They were joined by representatives from the investment bank Goldman Sachs and the private equity firm Silver Lake, which were advising on a deal.

After a Silver Lake representative made a presentation expressing confidence in their ability to manage the process of taking Tesla private — a transaction that could have required $24 billion or more — the Wall Street representatives left the room, and the floor was given to Mr. Musk.
​

So my reading: GS and SL looked at the funding and the process and estimated costs at around $24 billion - about 57 million shares from 170 million, or a 33% buyout at $420.

They thought it is possible to perform the going-private buyout - obviously to be based on months of due diligence, precise planning and a shareholder vote.

I.e. the ball was in the Tesla board's court: whether to start the process, or reject the offer outright.

This BTW seems to explain last week's price action: Wall Street firms probably didn't know about the decision for 3 days.

After market close on Friday the refined announcement of staying public was released.

Note that it was released after the After-Market NASDAQ trading session, to give a weekend for everyone to evaluate the news. That was a good call too IMO.

Edit:

From the reports and postings, it doesn't really seem like by Friday anything too "formal" had occurred. If it did, wouldn't some/all of that be available to public shareholders?

Details of confidential plans, negotiations and rejected offers generally don't have to be reported. Plans that don't get turned into reality don't directly affect shareholders. Tesla could have done this in full secrecy and we wouldn't have learned about it - the exceptional thing was Elon's transparency.

Had the Tesla board agreed to start anything they'd probably have filed an 8-K.

(Note that IMO they'll probably file an 8-K about dissolving the going-private committee, because they filed an 8-K when they formed it. They have 3 business days to file it - but I see no reason for them to delay that beyond Monday.)

 

[BenPrice]

Can Tesla semi and Nikola not coexist? Why does it seem like “all or nothing” with shorts for their thesis?

The number of semis on the road is absurd. I can’t recall the figures, Googlable.

There is room for everybody.

5% of that market will support a very very successful business.

 

[Fact Checking]

The number of semis on the road is absurd. I can’t recall the figures, Googlable.

There is room for everybody.

5% of that market will support a very very successful business.

Truck manufacturing is operating in a ridiculously large market: in 2015, around 250,000 Class 8 trucks were sold in the United States alone.

If the U.S. market is about 20% of global demand then that's a 1 million heavy trucks per year market.

With average sales price of over $100k that's a trillion Mod: $100 billion dollar market with healthy margins - and most customers are clueful businesses less susceptible to FUD, so the EV barrier should be lower.

Enough of a market for everyone, for the next 5-10 years.

 

[BenPrice]

It's a ridiculously large market: in 2015, around 250,000 Class 8 trucks were sold in the United States.

If the U.S. market is about 20% of global demand then that's a 1 million heavy trucks per year market.

With average sales price of over $100k that's a trillion dollar market with healthy margins - and most customers are clueful businesses less susceptible to FUD, so the EV barrier should be lower.

Enough of a market for everyone, for the next 5-10 years.

My thing about the Semi, and pardon no links - on phone.

They’ve stated they’re going to install solar panels for these semi stations. If they can turn the sun into .08$Kw/h or whatever rate they said with a bunch of solid state devices ..that’s the core business, not the sale of the vehicle itself. That is gigantic amounts of money.

This would satisfy their employment needs in Buffalo as well. Each station would need a giant solar array, but that same array could backfill the local grid generating further revenues. It would not need to be like feet away, but installation cost would increase the further away it is.

In regards to the Tesla Semi, it is just the iPhone - Apple’s bigger income driver is the App Store, and the Semi’s bigger income driver will be turning the sun into money...stupid fast ROI and minimal expense while ridiculously scalable.

 

[Krugerrand]

No position so I'm fine thank you!

Yes, you do in fact have a position.

 

[Krugerrand]

I think most of us, even bulls like myself, see this recent private saga as evidence of instability. That is a bad thing and should negatively affect the stock price. The complicating factor is that model 3 is over the hump which is an unexpected positive. By pushing Tesla to reach 500k model 3s per year by 2018, it looks like Elon has ensured that Tesla will crush its original target of 500k per year by 2020. Now we really need to see that the cars can be made profitably and with high quality requiring little repair, service, and warranty expense. If tesla can become an expert at manufacturing reliable products which do not in turn burden its limited service capacity, then it will thrive.

In no way do I consider recent events as evidence of instability. In fact, if anything it demonstrated like-mindedness and focus. Elon wants Tesla to be healthy and thrive, as do all long investors. A unified path has been established and we move on.

 

[Fact Checking]

They’ve stated they’re going to install solar panels for these semi stations. If they can turn the sun into .08$Kw/h or whatever rate they said with a bunch of solid state devices ..that’s the core business, not the sale of the vehicle itself. That is gigantic amounts of money.

That's an interesting take.

It will take time to scale it up:

• If we take average Semi consumption of 500 Wh/mile,
• Distance: 50,000 miles/year (lower due to them not being super long haul),
• That's 25,000 kWh per year consumption,
• Which is $2,000 per vehicle per year at $0.08/kWh

I think the $100k-$200k purchase price is more significant, at least initially. The MegaChargers will also require investments.

I think they'll approach it like SuperChargers: near zero margin initially, with incremental improvements as the market matures. Expansion of MegaCharger network is more important than profit from MegaChargers, because it unlocks new customers.

If I was Tesla I'd also sell "life time free MegaCharger" access, to increase vehicle fleet value, and to tie in owners to Tesla infrastructure.

Owning a truck with life time fuel paid up front - businesses would pay for that, because it removes one of the biggest sources of trucking cost uncertainty: fuel prices, and allows the fuel costs to be amortized instead of expensed.

 

[Skryll]

That's an interesting take.

...I think the $100k-$200k purchase price is more significant, at least initially. The MegaChargers will also require investments.

I think they'll approach it like SuperChargers: near zero margin initially, with incremental improvements as the market matures. Expansion of MegaCharger network is more important than profit from MegaChargers, because it unlocks new customers.

But the real kicker will be Tesla Semi as Trojan Horse into the core energy infrastructure of large corporations.

First step: Sell a bunch of Tesla Semi to industries that use lots of electricity, i.e. Coca Cola (done).

Next step, provide onsite charging stations with solar and battery for peak shaving.

Next step: Show the data of how much money that saves tesla compared to paying peak prices for electricity, and project as proof of concept onto model of production energy consumption data.

Next step: Sell a shitload more solar and batteries that saves the company paying peak electricity prices when they need it the most.

 

[Unpilot]

That's an interesting take.

It will take time to scale it up:

• If we take average Semi consumption of 500 Wh/mile,
• Distance: 50,000 miles/year (lower due to them not being super long haul),
• That's 25,000 kWh per year consumption,
• Which is $2,000 per vehicle per year at $0.08/kWh

I think the $100k-$200k purchase price is more significant, at least initially. The MegaChargers will also require investments.

I think they'll approach it like SuperChargers: near zero margin initially, with incremental improvements as the market matures. Expansion of MegaCharger network is more important than profit from MegaChargers, because it unlocks new customers.

If I was Tesla I'd also sell "life time free MegaCharger" access, to increase vehicle fleet value, and to tie in owners to Tesla infrastructure.

Owning a truck with life time fuel paid up front - businesses would pay for that, because it removes one of the biggest sources of trucking cost uncertainty: fuel prices, and allows the fuel costs to be amortized instead of expensed.

I like your thinking on this......but the assumption of 500 Wh/mile can’t be right...can it?

 

[Krugerrand]

Absolutely correct. Most hotels and motels do not have Semi parking. The Tesla Semi is not designed as a sleeper unit. So by design it cannot be used for OTR operations. By law, drivers are not allowed to sleep in the seats. You must sleep in a "sleeper unit" or a hotel/motel and be able to show receipts. But truckers could not make any money sleeping in motels every night. That is why the sleeper unit was created.

Guess you missed the part where they said they were also going to build sleeper semis. Yes. Yes, you did.

 

[Krugerrand]

You can call it what you like. But the numbers are taken directly from the Tesla quarterly reports. I am not making up the numbers. If you disagree with my numbers show us where I am wrong.

Last August Jon McNeill was offered a $700,000 bonus to reduce inventory. I wrote then I believed it was really retention bonus to keep from leaving right as Model 3 was getting off the ground. So the bonus would keep him at Tesla until year end. He was gone by the time Q4 was reported in February. He did an awesome job reducing inventory from 8,000+ to just over 2,000 by year-end. So far in 2018 we are now right back up where we were this time last year. Only no one seems to be making the same effort this time.

You should get out of the numbers business and into fictional writing. The latter is really where your talent lies. (Yeah, I meant to do that.)

 

[Foghat]

That's an interesting take.

It will take time to scale it up:

• If we take average Semi consumption of 500 Wh/mile,
• Distance: 50,000 miles/year (lower due to them not being super long haul),
• That's 25,000 kWh per year consumption,
• Which is $2,000 per vehicle per year at $0.08/kWh

I think the $100k-$200k purchase price is more significant, at least initially. The MegaChargers will also require investments.

I think they'll approach it like SuperChargers: near zero margin initially, with incremental improvements as the market matures. Expansion of MegaCharger network is more important than profit from MegaChargers, because it unlocks new customers.

If I was Tesla I'd also sell "life time free MegaCharger" access, to increase vehicle fleet value, and to tie in owners to Tesla infrastructure.

Owning a truck with life time fuel paid up front - businesses would pay for that, because it removes one of the biggest sources of trucking cost uncertainty: fuel prices, and allows the fuel costs to be amortized instead of expensed.

The big tectonic shift is transitioning from fossil fuel based economy (and dollar) to a solar/renewable based economy and dollar...

Which when trucking and logistics makes the switch to solar/energy storage ecosystem, it will transform the entire economy as we know it. What would the price of goods and services be with predictable fuel costs that only become cheaper with tech innovations and scale?

Tesla is at ground zero of this.

Just makes me see the value of Tesla far exceeds any legitimate estimates in my opinion.

With this in mind, it is of utmost importance to prevent corporate hijacking or takeover by a competitor or nefarious group.

It is right for Elon to be “paranoid” since the stakes are well beyond a little ol car company in Silicon Valley.

 

[TrendTrader007]

Anyone has access to WSJ
Article out this evening confirming Elon had $30B funding secured including VW
Thanks
Twitter

 

[Fact Checking]

I like your thinking on this......but the assumption of 500 Wh/mile can’t be right...can it?

Only back of the napkin math: I was assuming a loaded semi with higher consumption and some elevation.

Does anyone have better estimates about what consumption to expect?

 

[Krugerrand]

I certainly think some do. Many small investors do.

But as I have tried to explain I am not a stock "short". I am an options trader as far as Tesla and a few other highly volatile stocks are concerned. I play the swings in both directions. Bottom line is I think Tesla's products have HUGE potential. It is how the company is operated that concerns me. There is little doubt their electronics, batteries and drive motors are way ahead. But if Tesla cannot get sustainably profitable fast, it may all be for nothing. For years Musk and everyone else ignored the word "profit". No one cared. Suddenly, in the last 6 months, that is now the focus. Why? I have my theory, but I'd like to hear what you all think.

Oh, stop. The likes of you bears have been yelling not profitable for YEARS not just the last 6 months.

FYI, Tesla products are already spectacular. So save the blah, blah, blah huge potential bs. The potential has long since been being realized.

 

[TrendTrader007]

I don’t want to give WSJ my $12 for subscription
According to article Elon apparently could have easily done the private deal if he wanted to since he had the initial financial backing lined up
My interpretation: bullish for tomorrow

 

[Foghat]

I don’t want to give WSJ my $12 for subscription
According to article Elon apparently could have easily done the private deal if he wanted to since he had the initial financial backing lined up
My interpretation: bullish for tomorrow

Based on the non stop negative Tesla tweets by our favorite coal hedgefund manager, this WSJ article hit a nerve of fear and loathing in the short thesis.