TSLA Market Action: 2018 Investor Roundtable

[geneclean55]

Based on VIN registrations?

Production and delivery flow on Troy's spreadsheet

 

[BioSehnsucht]

Conservatives tend to buy very large vehicles if they need them or not as long as they can afford them.

There many Hillary Clinton voters that buy brand new full size pickups. Much less often to commute solo. They do it for work, because they are tradesmen or they own a ranch/farm. Or they can afford a small car to commute and a full size pickup when they need it. Putting a tow hitch on a compact car and renting a small trailer doesn't cross the mind of 99% of Americans. What if you need to haul 5k lbs? Like that one time ten years ago?

So yes there is a minority of full size pickup owners that would be favorably disposed to Tesla and a Tesla pickup. It might start that Tesla conquers Toyota and Nissan full size pickup owners first.

Then with demonstrated practical superiority and lower running cost you start conquering Detroit loyalist.

A small portion from one end of the truck market, as you said, but also a portion from the commercial fleet market (the Semi should help sell fleet operators on EV trucks across the board). As more see the benefits, more will move, and eventually you'll just have the coal rolling holdouts, and those who really need the flexibility to go anywhere and denser source of energy (i.e., driving into the wilds, easier to bring several tanks of gasoline in the bed versus Elon's Semi extension cord). Though it might take a good decade to get down to the coal rollers and truly only practical options people. First we'll see the slow erosion of the "only practical options" people as they discover that in fact, an EV is more practical ...

A nibble here, a nibble there, from most of these demographics of truck buyers should, while tiny percentages, make for easily as many sales as Model 3, if not Model Y or more ... at least in terms of NA. It'll be nearly unwanted elsewhere, since trucks are generally not in favor anywhere outside of NA.

 

[CorneliusXX]

Meh. If you just read it as an employee email, then there’s no issues. Stop trying to read it as something it isn’t and then there’s no problem.

And you know the only reason it got on the website was because someone who can’t follow a simple NDA was going to leak it.

If they change it, now it’s no longer the email sent to employees. It’s an amended email, ‘omg, what did the original say?!?!’ And so on.

So you want to damn Elon and Tesla regardless of their actions. Awesome.

Once Tesla publishes it then it needs to be more accurate than an internal email. As far as I know, lying to employees around production volumes doesn't break any laws while lying to investors does.

 

[beachbum77]

Agreed. He can not say the words 'reckless growth' enough times as we move forward for your's truly.

Here is the timeline since Jerome came in:

1) Sometime Thursday Jerome was promoted to President - Automotive. I am sure a mandate to move inventory came with it. As an insider we know he knows where the problems are and what needs the most attention first.
2) Less than 24 hours later an email goes out announcing an inventory sale in Fremont beginning 9AM the next morning. Whether the email was intentionally vague is unknown but it was out in a hurry while at the same time they needed to set up people, cars, and the facility for a sale the next morning.
3) Cars got sold on Sat and today. Probably not 400 but more than otherwise would be down the road today. Tesla buyers are a forgiving bunch once they drive away and the smiles replace the frowns.
4) Will they do better each day? I think you can count on that.
5) While some went away this weekend unhappy the consensus was the staff did a great job and tried their best to be helpful even searching inventory at other locations.
6) A subsequent email on RWD units being available is also out today.

The new president is throwing back the curtain and getting down to the business of selling cars by admitting there are cars available for immediate sale he wants gone by 9/30. This is the kind of transparency Tesla has desperately needed.

That is a pretty amazing start. I think it is too bad Jerome was not in place months ago, but I guess the timing and BoD mindset was not right then.

 

[Fact Checking]

Production and delivery flow on Troy's spreadsheet

Ok. That would mean that at 5k/week output they'd be consuming 8,333 motors, which might be a bottleneck at the Gigafactory.

But if that's the case, why didn't they increase AWD price?

I still think the main bottleneck is batteries and delivery: and doing these delivery events is something that would also have the lowest delivery latency - ideal for end of quarter pushes when they want to have as low inventory and as few "cars in transit" as possible.

 

[CorneliusXX]

This is essentially a technical legal filing. Tesla has a long time before they actually have to put that money in. Don't misinterpret it as meaning that the money is already there.

I'm just starting to look up the details. But from what I can tell so far, what this is is basically the amount which has to be put in as *equity* (not immediately, either), and it determines how much *leverage* the factory is allowed to have in terms of local loans.

Calculators for Registered Capital and Total Investment in China - China Briefing News

Basically, it seems like it means they have to put up $680 million in equity (sooner or later) in order to be allowed to borrow up to $1.3 billion in local loans. If I'm understanding this correctly. They can borrow less if they like.

The weird part is, if you're injecting capital from abroad, you promise to *eventually* -- not immediately -- put in the registered capital. If you want to put in more foreign equity than the registered capital, it's actually *hard* -- you have to file a lot of paperwork and it takes a while.

So this should basically be thought of as the MAXIMUM amount of cash Tesla is planning to put in in equity. (And they have to put it in *eventually*, but they can choose to spread it out over 20 years.)

This is my understanding from 10 minutes of Googling, so if someone is an expert on Chinese corporate finance law, please correct me.

I am always impressed by your google fu. Finding a relatively simple explanation for what could, at face value, be a significant capital movement in a jurisdiction very foreign from the western world in just a couple of minutes.

 

[geneclean55]

Ok. That would mean that at 5k/week output they'd be consuming 8,333 motors, which might be a bottleneck at the Gigafactory.

But if that's the case, why didn't they increase AWD price?

I still think the main bottleneck is batteries and delivery: and doing these delivery events is something that would also have the lowest delivery latency - ideal for end of quarter pushes when they want to have as low inventory and as few "cars in transit" as possible.

Original price for AWD was 5k. Then they reduced it to 4k in June but put it back up to 5k in August.

 

[Fact Checking]

Original price for AWD was 5k. Then they reduced it to 4k in June but put it back up to 5k in August.

Still to low I think, as most of the (ex-pre-)orders would have been placed with a 5k price.

If they wanted to shift demand they could make AWD $6k, while keeping Performance the same - and maybe gradfather in existing orders.

 

[geneclean55]

I think, for reasons that I don't fully understand, a ton of people want the AWD, and playing with the AWD price plus/minus a grand or so isn't really going to change that.

 

[Intl Professor]

Actually, you may be surprised, but I see your point.

I'd recruit from a military with a history of competence, though. We don't have anyone left in the US military who was involved in winning WWII, and the US military has become a back-and-forth between military contractor jobs and senior officer jobs (this is well documented; the rot started a long time ago, but became incurable in the 1970s).

If you can name a military which has actually been EFFECTIVE in the last couple of decades, I'd recruit from their senior officers immediately. But the last two decades seem to have been military blunders worldwide (not just in the US). A record of keeping your head down and obeying orders, right or wrong, is the *last* thing we need at Tesla. Due to the rot at the top, to really have a record of true leadership in the *US* military these days, you need to have filed formal protests and quite possibly resigned your commission in protest. There are some of those, who might be good hires.

My criticism has been quite specific to the present-day "military-industrial complex" military. Theoretically a well-run military would be a great place to recruit people from. Find me one.

Canada, maybe? They have an astounding record as the best peacekeepers in the world.


China, whose military is by all accounts massively competent on procurement and who has been highly effective? (But they won't let their upper military leave, of course.)

The old rule of thumb for militaries in the aggregate was the US had the best equipped forces, the UK had the best leaders, and the USSR had the best morale. I disagree with the latter. Might have been true during WWII when they were fighting for their lives on their own soil, but after the war, not so much. In the later period many examples of defectors, including a spectacular chase of a warship in the Baltic which might have defended itself against Soviet pursuit except only the officers knew how to operate (or start?) the fleeing ship's guns! That pointed up many studies and complaints in scholarly studies—maybe even some Russian studies, IDK, about hazing of recruits and gulf between officers and regulars. One study I remember said they really needed the buffer of non-coms as in other militaries.

If you look carefully at NSC-68 (c. 1950) which marked the militarization of containment, one major argument was creating a private constituency of arms suppliers to assure continued pressure for global involvement. See Jerry Sanders, Peddlers of Crisis: The Committee on the Present Danger. I knew my teacher was close to James B. Conant, President of Harvard, when he was a Niemann Fellow there. I learned after my teacher's death that he was on the staff of the original Committee on the Present Danger. Wish I could have picked his brains about this, especially as he was instrumental in converting me from a die-hard anti-communist into someone much more objective in my professional life. At MIT in the 50s we engineers called ourselves meatballs way before the movie.

My politics then were doubtless a throwback to my neanderthal ancestors, just to remind myself of genesis (small g).

 

[BioSehnsucht]

I think, for reasons that I don't fully understand, a ton of people want the AWD, and playing with the AWD price plus/minus a grand or so isn't really going to change that.

Many may still expect better range with AWD as the S/X get improvements with dual motor configuration. However the rear motor on the 3 is so much more efficient that adding the front motor actually reduces range.

Though officially all LR RWD/AWD/Performance models have the same 310 mile EPA rating, that is because Tesla voluntarily derated the EPA ratings to match. Realistically Performance and AWD shouldn't see any real range difference from each other, other than due to tires/wheels, as long as you don't drive like a bat out of hell (in which case Performance will do worse, on account of getting you there quicker), since the motors are the same. But one of the reasons the LR RWD does such a great job of generally meeting it's EPA range even under real world conditions (weather, speeds, etc) is that the EPA range should be much higher (since EPA range is at lower speeds and certain assumptions that don't represent reality for most drivers).

Plus, by all accounts, RWD Teslas are so much better than ICE RWD vehicles in traction limited scenarios that for the most part even in the snowy states a RWD Tesla is probably good enough for most, even those who are used to thinking they MUST have AWD due to winter weather conditions. Granted, AWD will do better here, but for most RWD would be good enough, if they knew / believed.

So while there's also those who want AWD / Performance for better acceleration performance, and those who want better traction for bad weather, a sizable portion that want the regular AWD model likely do so for perceived range improvements that just aren't there, and in fact they should be buying RWD instead if that's their primary concern.

 

[Wnuk]

Single data point:

Attended a NDEW event in Allentown, PA today. The model 3 outnumbered all other cars there including the S and X with a total of 7 in attendance. Most were early vins (6XXX and up) and they looked fantastic. This was my first opportunity to get up close to one (and also taken for a ride, thanks Ben!). I had my 13 year old son with me. His jaw drop at full acceleration was priceless. His comment was simply: "This was the best car I have ever been in."

This event his convinced me to place an order for a 3 soon (by end of year), as the car far exceeded what I was expecting.

 

[gringotuanis]

This is actually the fifth or sixth data point confirming something I figured out several weeks ago:

There's a major bottleneck in front motor production.

Tesla can't make as many AWD models as they can make total models. But RWD demand is saturated, unless they can convince some people to either
(a) switch from AWD to RWD to get their car much faster (and higher chances of higher tax credit, too)
(b) buy RWD now because they can get the car on short notice and they were waiting until they could do that. (This was a thing with model S. Some people really didn't want to be in the queue at all, but jumped in when the cars started being delivered quickly and they learned that -- these are the people who keep buying the demo models out from the stores.)

If anyone has any informed guesswork on what the front motor production is limited to and how long it will take to resolve, I'd love to know.

Could this be related to what some of the shorts were tweeting about last week regarding some module from Malaysia? SID? I can't recall the part they claimed was out of supply worldwide. Does that part affect the front motor assembly?

 

[MXWing]

Actually longs should be happy about this event for several reasons.

1) While the first day was a little bumpy and they have run out of AWD and P models for today's portion, it brings the inventory issue out into the open. Yes, there are inventory units that buyers can snap up.
2) More importantly, it shows Tesla is taking additional steps to get cars delivered ASAP in Q3. The word seems to be this warehouse event will be repeated next weekend (hopefully with a little more notice to buyers). It stands to reason they are probably looking to duplicate the event in Southern California too. It sounds exactly like what they did in Toronto.

Bears and shorts will get no traction from this at all. That should put a smile on all your faces

Here is the TMC thread for those interested: Model 3 Delivery Experience in Fremont

Yes, some of my humor is derived from sarcasm.

I will disagree however that it is an inventory problem. It is a logical belief that every Model 3 made is a Model 3 sold. The truth is self evident as they can be sending these cars anywhere.

The only argument that makes remote sense is a -production problem- problem in the sense that P and AWD may be lacking components to build. So between an idle production line and RWD units, you make RWD.

Between sending cars east or overseas and have them not count in Q3 might as well deliver them off the line to the east bay public.

When I showed you the lot of 3’s you said a company without inventory is a company about to run out of business.

Tesla HAS to stock inventory for someone to do same day drive off.

Bears who take a short position based on demand and inventory are either lying about the position or going to be homeless.

SA articles on Musk self immolating TSLA are about 100 times more credible than inventory and demand problems.

 

[Intl Professor]

technically, it wasn't a red line, just inaction.

Sanctions, just like Trump, except he meant them.

 

[gringotuanis]

I am sitting on $300 J 18 calls with deep losses and excited about the fact that we had a sharp 35% drop in SP over 4 weeks instead of a protracted gradual downtrend
all this means to me is that we are so much closer to the bottom and judging by historical drops of similar magnitude the probability of a sharp V shaped recovery is very real
i can not stand second hand smoke and i tell all my patients the dangers of using marijuana and alcohol so i am not impressed by Elon's lack of judgement in this regard although i watched the entire interview and i believe media blew it way out of proportion and Elon clearly is not a fan of marijuana. however, I am disappointed by his inability to do the right thing which was to tell the interviewer that he does not smoke weed and not to be sitting and drinking alcohol and inhaling second hand smoke. what kind of example is he setting for younger generations.
having said that only an idiot will sell $TSLA for this reason alone.
i am super excited to be able to trade this extremely volatile stock for the next several years and totally welcome the volatility

I've taken alot of hits on my calls lately as well. Here's to waiting out the FUD!

PS I don't think the weed thing was a big deal. He clearly said he doesn't do week due to effects on productivity. Media sure blew it out of proportion and no one seemed to post even contextual video. It was a good interview overall.

 

[Intl Professor]

Many may still expect better range with AWD as the S/X get improvements with dual motor configuration. However the rear motor on the 3 is so much more efficient that adding the front motor actually reduces range.

Though officially all LR RWD/AWD/Performance models have the same 310 mile EPA rating, that is because Tesla voluntarily derated the EPA ratings to match. Realistically Performance and AWD shouldn't see any real range difference from each other, other than due to tires/wheels, as long as you don't drive like a bat out of hell (in which case Performance will do worse, on account of getting you there quicker), since the motors are the same. But one of the reasons the LR RWD does such a great job of generally meeting it's EPA range even under real world conditions (weather, speeds, etc) is that the EPA range should be much higher (since EPA range is at lower speeds and certain assumptions that don't represent reality for most drivers).

Plus, by all accounts, RWD Teslas are so much better than ICE RWD vehicles in traction limited scenarios that for the most part even in the snowy states a RWD Tesla is probably good enough for most, even those who are used to thinking they MUST have AWD due to winter weather conditions. Granted, AWD will do better here, but for most RWD would be good enough, if they knew / believed.

So while there's also those who want AWD / Performance for better acceleration performance, and those who want better traction for bad weather, a sizable portion that want the regular AWD model likely do so for perceived range improvements that just aren't there, and in fact they should be buying RWD instead if that's their primary concern.

We ordered AWD mostly for greater regenerative braking. Haven't heard Elon praise electronic braking recently but I could imagine differential load on motors being utilized in addition to refinements in normal braking. Too bad load to each wheel not easy to do without substantial mod to axles. But then I got a D in a survey course in electrical engineering.

Edit: Could you have a split rotor in motor? (I know, sounds like a rap song. "I got a split rotor in my motor, but I'm just a hound dog,...." "I know ya got freckles on ya but yer nice, Babe," Etc.)

 

[wipster]

Here is the timeline since Jerome came in:

1) Sometime Thursday Jerome was promoted to President - Automotive. I am sure a mandate to move inventory came with it. As an insider we know he knows where the problems are and what needs the most attention first.
2) Less than 24 hours later an email goes out announcing an inventory sale in Fremont beginning 9AM the next morning. Whether the email was intentionally vague is unknown but it was out in a hurry while at the same time they needed to set up people, cars, and the facility for a sale the next morning.
3) Cars got sold on Sat and today. Probably not 400 but more than otherwise would be down the road today. Tesla buyers are a forgiving bunch once they drive away and the smiles replace the frowns.
4) Will they do better each day? I think you can count on that.
5) While some went away this weekend unhappy the consensus was the staff did a great job and tried their best to be helpful even searching inventory at other locations.
6) A subsequent email on RWD units being available is also out today.

The new president is throwing back the curtain and getting down to the business of selling cars by admitting there are cars available for immediate sale he wants gone by 9/30. This is the kind of transparency Tesla has desperately needed.

That is a pretty amazing start. I think it is too bad Jerome was not in place months ago, but I guess the timing and BoD mindset was not right then.

Nice post Bum!

 

[aubreymcfato]

let compare Temple Grandin with other names,
The world needs all kinds of minds
Look at her face: eye contact, level of facial mimics. Actually everything cloth choice included.
While eye contact is cultural feature she is from the country where eye contact is essential.
And I didn't go into what she was saying. (and she is very accurate in her presentation). Asperger are meticulous.
And take any Elon Musk speech, or whatever Steve Jobs, or any other name of entrepreneurs you choose. The level of chaos they bring is impossible to ignore.
To clarify: I had enough of Asperger colleagues in my life. Probably half of modern theoretic physics and quarter of modern programming advances is lifted by such people..

the difference in behavior between people who can not into social interactions, people who forgotten social interactions because of solitary work and people who refuse to follow social rules is trivial to spot.

I don't think she's an Aspie, or what her real diagnosis is¹.
But we agree that she's different, as a "type", from Musk (she wasn't even verbal in her early life!).
I'm still convinced that this doesn't exclude him from being the spectrum. Or maybe his diagnosis is just different (maybe he just has supernatural concentration, focus, drive, visual imagination...)
Not that this really changes anything, but sometimes it helps frame his actions or words.

¹ Temple Grandin - Wikipedia

 

[tander]

We ordered AWD mostly for greater regenerative braking. Haven't heard Elon praise electronic braking recently but I could imagine differential load on motors being utilized in addition to refinements in normal braking. Too bad load to each wheel not easy to do without substantial mod to axles. But then I got a D in a survey course in electrical engineering.

Edit: Could you have a split rotor in motor? (I know, sounds like a rap song. "I got a split rotor in my motor, but I'm just a hound dog,...." "I know ya got freckles on ya but yer nice, Babe," Etc.)

Are you saying regen requires heavier duty axles? Never thought of that. Been thinking about getting a softroader for getting to trailheads/snowstorms like a Subaru or something but wishing there was a hybrid that could take a beating because I like regen just for easier braking. Maybe this explains the highlander hybrid I recently saw muscling up a very rough section of service road (with offload tires).