TSLA Market Action: 2018 Investor Roundtable

[humbaba]

Let's see. 27K S&X (balancing out low quarters in Q1/Q2), 10 effective weeks of production (holidays jam things up), that's 7300 Model 3 per week. It's certainly possible, even likely, though I wouldn't bet on it.

I wouldn't bet on that either. I think more likely to have 5.5k M3/week which would give 55,000 for the quarter -- or about the same as the rest of the year altogether. Which is likely somewhat optimistic but should be do-able.

Put another way, if insideev's numbers (alright, those are sales not production, but it was what I had handy and for this level of estimation should be sufficient) for August are correct and sustainable (no growth, no loss) that is ~23,000 S3X per month or ~70,000 in a quarter. To hit 100,000 in a quarter would require about 50% growth which just doesn't seem likely this year.

In short, 100,000 for the year is almost inevitable (M3 alone might well exceed that) but 100,000 for Q4 alone seems more than a bit optimistic.

At the same time... no other electric manufacturer has anything like this production volume. When the model Y is out the low end market is liable to the same end as the luxury car -- dominance by Tesla.

 

[1208]

Did they go back on the never making money from repairs thing? That would be disappointing.

As an American, I view Jaguars, Astins, and Land Rovers that way at least compared to a Lexus or something Although those taxi cars are seem pretty solid. We had numerous Fords and for the most part they were no frills but fine. I'm not very interested in what they make anymore but the F150s are surprisingly nice/comfortable. Are Fords expensive to fix in the UK? I've thought it might be fun to get a Land Rover but in the US they are kind of a luxury/import so repairs are expensive and they don't have a good reputation for reliability.

You are right about Jaguars and Land Rovers compared to lexus.

Jaguar is failing now,
Jaguar workers put on three-day week until Christmas, as demand slumps

Even though they have the ipace, they seem archaic compared to the Hybrid Lexus's now.

Land rovers are known in this country to be the least reliable car brand in the world, even Clarkson from topgear admits it. I think fords might be one of the easiest to fix, but I prefer cars that don't need fixing like the Japanese cars Toyota Lexus Honda etc.

I can't comment on f150s, the only pickups in this country are small ones, mostly Toyota's or VW. The only fords I have been in feel tinny and cheap.

I'm not a fan of any mass produced British car, hopefully Dyson will change that.

 

[winfield100]

Well... I followed the story. There's a reason there are five people officially listed as founders. All five of them tried to convince Alan Cocconi to commercialize the T-zero. He refused. All five of them asked if they could start their own companies to commercialize it. He agreed... and said something along the lines of "Maybe you guys should talk to each other".

@neroden

 

[lklundin]

That's good news. Those 27 Models by 2022 don't even include the first 2 Audis and the Taycan. Assuming only 40k-50k per model per year that should get them to a million cars per year, which seems to be a decent start.

Excuse me, but if we modestly assume 50 kWh battery per car, then that would require 50 GWh of batteries annually.

This is more than double the current annual, global automotive battery production.

Unlike for supplies of transmissions and similar ICE-components, the VW group cannot just call some local company which will then deliver this enormous amount of batteries right on time at almost zero margin.

So I am very curious to learn how the supply of battery cells (or packs) for 1 million cars annually will be secured. Automotive cell production in Europe is currently non-existing and for a production on that magnitude even securing the raw materials will be a challenge.

So while the goals are good news, I am not yet sure regarding the execution.

 

[KarenRei]

Here in Germany the e-tron starts at 80k€ and a reservation can be had for 2k€. The non-small print does not state whether it is refundable, so I am assuming it is not. So I just signed up for their e-tron newsletter, to see what progress they make.

For acceleration, they promise 0 - 100 km/h in less than 6 seconds, top speed 200 km/h and WLTP-range (better than) 400km.

Hopefully they will be able to improve on that.

Wow, is that a joke? 80k€? For that?

Paging P.T. Barnum....

 

[shlokavica22]

They already saying that it's gonna be the one time thing, they did it already in 2016 and it's fake etc.

This reasoning (and the overall media manipulation) works on retail investors.
Current institutional TSLA investors continue adding to their positions. Future institutional investors just wait to see the numbers. Once the balance sheet turns green, money will start to flow in. The temptation is just too much- not so many fast growing companies around.

 

[KarenRei]

Excuse me, but if we modestly assume 50 kWh battery per car, then that would require 50 GWh of batteries annually.

This is more than double the current annual, global automotive battery production.

Unlike for supplies of transmissions and similar ICE-components, the VW group cannot just call some local company which will then deliver this enormous amount of batteries right on time at almost zero margin.

So I am very curious to learn how the supply of battery cells (or packs) for 1 million cars annually will be secured. Automotive cell production in Europe is currently non-existing and for a production on that magnitude even securing the raw materials will be a challenge.

So while the goals are good news, I am not yet sure regarding the execution.

Indeed. Battery supply is the key figure to watch. And 50kWh in that timeframe is very pessimistic - look at how quickly low-end EV battery packs have been growing in capacity.

 

[ItsNotAboutTheMoney]

You are right about Jaguars and Land Rovers compared to lexus.

Jaguar is failing now,
Jaguar workers put on three-day week until Christmas, as demand slumps

Even though they have the ipace, they seem archaic compared to the Hybrid Lexus's now.

Land rovers are known in this country to be the least reliable car brand in the world, even Clarkson from topgear admits it. I think fords might be one of the easiest to fix, but I prefer cars that don't need fixing like the Japanese cars Toyota Lexus Honda etc.

I can't comment on f150s, the only pickups in this country are small ones, mostly Toyota's or VW. The only fords I have been in feel tinny and cheap.

I'm not a fan of any mass produced British car, hopefully Dyson will change that.

It's nothing to do with JLR quality or anything like that. It's mainly a combination of the collapse of the diesel market and Chinese import taxes.

 

[humbaba]

Here in Germany the e-tron starts at 80k€ and a reservation can be had for 2k€. The non-small print does not state whether it is refundable, so I am assuming it is not. So I just signed up for their e-tron newsletter, to see what progress they make.

For acceleration, they promise 0 - 100 km/h in less than 6 seconds, top speed 200 km/h and WLTP-range (better than) 400km.

Hopefully they will be able to improve on that.

So in trying to find some information I ran into 2019 Audi E-Tron revealed with $74,800 starting price which has the lead line of "Audi’s all-electric SUV will take on the Jaguar I-Pace and Mercedes-Benz EQC when it arrives in US showrooms in 2019."

Which I found interesting -- are they tacitly admitting that it does not compete with a Tesla? Granted, in the body the first competitor they mention is the Model X. And of course it ends that sentence with "run for their money" which may well be true of the other EVs they mentioned, but a 5.5s 0-60 time does not seem competitive against the X. Naturally, when stating that acceleration they don't compare it to any other EV, just saying that it is "respectable" for a midsize SUV. Which, compared to legacy SUVs, I suppose is accurate.

As for range, they say that Audi's initial release did not provide an estimate so they just assume it should go 240 to 295 miles on a charge "because competitors do". This is another tacit admission that the EQC's alleged range (NEDC) is fictional. Given a 95kWh battery pack one would certainly hope it gets that sort of range, but I don't know how efficient its motors will be.

With a release of second quarter 2019 and an $75,000 USD price tag it should see some reasonable sales, even without a charging network (vague hand waving about "select public charging stations" fails to reassure). It will be interesting to see what their production numbers end up being.

 

[Hogfighter]

Just watched the Audi e-tron unveiling. Wow.....impressive show, drones and lasers and what-not.

The bottom line is that the e-tron starts at over $75k. The Audi Q7 starts at $50k. Why would I pay $25k more for the same type car, from the same manufacturer? Perhaps I’m wrong, but this has been the dilemma for OEM’s all along.

 

[Fact Checking]

No it won't. They already saying that it's gonna be the one time thing, they did it already in 2016 and it's fake etc.

I'm not worried about the noisy ones at all - their noise has an effect only because Tesla's main currency is future potential right now.

The whole idea with positive cash flow is reasonable only for companies with established business cycles and sufficient capitalization reserves. Companies which don't need public money anyway.
It is very wrong principle to use in companies with big capitalization cycles.

I disagree. Right now Tesla's cash generation ability is masked by ~650m quarterly capex outflow. They will possibly be cash flow positive in Q3 already, despite still having 1.2b of outflow until the end of the year.

2019 is going to be the year of crazy cash generation.

Tesla is not capital constrained either: they already raised $650m in China for the Shanghai Gigafactory, without having to issue a single new corporate bond or equity raise through Wall Street.

The notion that Tesla depends on Wall Street financing is false, and Q3/Q4 is about proving that. If Elon is wrong about it then they might need to go to Wall Street again, but that's not the plan right now and I think his plan makes sense.

 

[Fact Checking]

Here in Germany the e-tron starts at 80k€ and a reservation can be had for 2k€. The non-small print does not state whether it is refundable, so I am assuming it is not. So I just signed up for their e-tron newsletter, to see what progress they make.

For acceleration, they promise 0 - 100 km/h in less than 6 seconds, top speed 200 km/h and WLTP-range (better than) 400km.

Hopefully they will be able to improve on that.

Wow, is that a joke? 80k€? For that?

Paging P.T. Barnum....

I think now I understand why the Volkswagen board wants to mandate all top VW managers to drive an electric car: that would instantly double the addressable market of the Audi E-Tron. Clever!

 

[humbaba]

Just watched the Audi e-tron unveiling. Wow.....impressive show, drones and lasers and what-not.

The bottom line is that the e-tron starts at over $75k. The Audi Q7 starts at $50k. Why would I pay $25k more for the same type car, from the same manufacturer? Perhaps I’m wrong, but this has been the dilemma for OEM’s all along.

But it isn't the same type of car: it is an EV vs ICE. Given that fundamental difference I think it is better to compare it to other EVs -- otherwise shouldn't the >$80,000 Tesla X be compared to the $50,000 Q7 and wondering why anyone would buy it?

I suspect that it is no accident that it slightly undercuts the Tesla X price. So the question is, what does the Tesla price differential get you? A charging network, faster acceleration, higher top end, easy enter/exit doors, more seating...

If it arrives on time and if they can manage production at a reasonable volume I think it will be an interesting vehicle. On paper its specs are even close-ish to Tesla's model X. What remains to be seen is if they can make enough money off of it to cover their future ICE sales decline in order to afford designing and producing other EVs.

This is the Tesla advantage: they already have a charging network (that is expanding), a functioning autopilot (that is improving) and reasonable sales volume (the M3) without the dead weight of ICE manufacturing costs.

France was an early adopter of computer networks and built out a national network early on (minitel). This was a benefit at first, but unfortunately it was not TCP/IP which made it painful in the long run. Having established infrastructure is not always helpful.

 

[loky]

To stay on topic, my theory is that Elon got concession in turn to give up taking private initiative, i.e. some institutional holders promised to increase theirs stock position and protect SP. Looks like they finally woke up on August 7th and next Monday started to take care of SP. So we witnessed vacuum cleaning of practically all short attacks, with, I believe, really big trailing orders, and a clear accumulating trend. Even in premarket trading, when shorts like to dump SP as base for early morning big sell, we can see now protection with fixed orders. Acc to Ihor Dusaniwsky‏ , last shorting episode started on August 27th and short sold shares increase is about 4M, but they dump SP from 320$ trough the deep and back to 295$, only cca 8%, with average short position of about 290$. Fast covering of 4M shares, at this moment before Q3 numbers, will spike the price to sub 400$, and they can not cover with profit. Also, believe that availability of shares for shorting is reduced now, i.e. it is lower then historical cca 40M.
Whatever would be shorts action, I think that vacuum cleaning of short shares will continue up to 360$ price, with possibility of short squeeze, as we witnessed yesterday that some shorts were covered probably.
Also suspicious tweet recently:
twitter.com/elonmusk/
Ask myself what wold I like to witness, a big one or multiple teflon ones?
Today prediction closing SP 300,4$, no link available.

 

[EinSV]

Trying to dodge potential engagements with the SEC and lawsuits... He normally tries to imply it to reap the benefits without the cost...

That seems to be the intent. Saying things like "it looks to be a lemon" may cross the line into actionable false statements though.

Would be nice if securities fraud lawyers actually started protecting investors and going after "short and distort" manipulators since the SEC seems to be falling down on the job. https://www.dlapiper.com/~/media/files/people/weiner-perrie/weinerweberhsu.pdf

 

[jhm]

What's interesting is that Chanos very carefully states that he doesn't think there's anything fraudulent about Tesla....

His last bear argument against Tesla seems to be that they aren't investing as heavily in future growth as they used to. It's not clear what he bases this on, however. Is it merely based on a lack of capital raises? That is sort of a damned if they do, damned if they don't criticism. Raise capital and it's "out of control cash burning." Don't raise capital and it's "they've stopped making investment in long-term growth." Of course, if Tesla really is at the verge of becoming cash positive, then you don't raise capital but you can quietly keep building the business.

For example, Tesla has huge investments to make in building out their sales, service, delivery and charging networks. A lot of this is in small bits that can absorb cash on hand. So it need not look like the big bets that Chanos thinks are lacking, but these small bets accrete into huge network advantages for Tesla. Recent talk of taking bodywork in house may in fact be reflective of Tesla having a little more cash with which to invest in building up network advantages. Tesla is increasingly selling more used Tesla and needs to be able to fix cars up for resale. Perhaps they too are tired of paying through the nose to third-party autobody shops to fix up these cars. If they make the investment into tooling their own autobody, they cut that cost and have greater capabilities that they can offer to customers as well. However, if they were starved for cash, there would be little point in taking on such an investment. Another clue here is that Tesla has moved away from lifetime Supercharging embedded in the premium vehicles. They are transitioning from cash upfront for building out that network to pay as you go. This makes sense if you have an abundance of cash to put into building out the network and can afford to wait pay as you go revenue to trickle in. If they were cash starved, I don't think they would be taking this tact right now. If they lower the price of Model S and X to reflect this change, that would confirm it in my mind. But what they are setting up is a cash generating machine. Also they are finally building out the solar on the roof of the Gigafactory. They don't need the cash upfront to make critical investments, but they want a steady stream of revenue that they can funnel back into growing the business.

I would also point out that critical investment goes to wherever the next bottleneck on growth may be. So the logistics and delivery network is becoming the next bottleneck. A lot of cash needs to flow into a lot of localities to build out this network. Also I would not be surprised if Tesla built out its own fleet of semis for delivery of their cars. Yep, that's a lot more capital investment that will strengthen their operating cashflow eventually. But it is also a strategic investment to gain critical experience building out a fleet of semis. So as a future manufacturer of semis, this could be a really smart investment.

So basically I want to reframe Chanos' claim that Tesla is not investing right now. I think they are, but it is more subtle investment in core capabilities and networks. I think investors need to be thinking much more deeply about the massive network value that Tesla is amassing. They are becoming an end to end transport and energy company. As the market moves toward autonomous vehicles, automakers need to get on board with transport as a service model. It's not about how many units your factory can crank out. That is the old model for automakers. Rather it is about how deeply you participate in the entire transport as a service value chain. So all of the network spending that Tesla does moves in this direction. This laying the foundation for where Tesla will want to be in 2030 when network value will be king in transport services.

 

[heltok]

$300

 

[Matias]

First one, who says “newer again below 300”, gets permanent ban!

 

[Don TLR]

Nice to see positive news here

UPDATE: Tesla has 'no credible competition,' analyst says

A small clip

"The Chevy Bolt doesn't even come close, Bernstein says

Tesla Inc. faces no competition at present, and when it does it will be able to hold its own, analysts at Bernstein said in a note Monday.

And all the hand-wringing about potential rivals for its electric cars glosses over Tesla's greatest long-term competitive advantage: its "unparalleled brand," they said.

The rise of competitors by traditional auto makers is often at the heart of a bear case for Tesla (TSLA).

"But let's make this clear: there is no actual flood of competition coming," the analysts, led by Toni Sacconaghi, said. "We tallied up every announced electric vehicle arriving in the U.S. between now and 2022, and the results were stark."

 

[Cartegena]

Tesla is not capital constrained either: they already raised $650m in China for the Shanghai Gigafactory, without having to issue a single new corporate bond or equity raise through Wall Street.

Source?