TSLA Market Action: 2018 Investor Roundtable

[KarenRei]

That graph looks very wrong.

2011 - numbers add up to roughly 100%. 2018 they add up to 195%

Besides, most reports say EV sales in Norway are about 37% of the market, not 58%. Where are these numbers from?

Some of those lines encompass multiple categories. Try adding up for example gasoline, diesel, and "all plugins".

My issue is with the logic:

1) New sales != replacing all vehicles on the road. The average vehicle lasts about 2 decades.
2) The global demand for cars is growing. Particularly for cheap cars, in the third world.

It's going to be quite a while before we can get rid of all of these things. Of course, that's the side that matters to the oil industry. For makers of ICE vehicles, it is indeed new sales that matters.

 

[The Blue Owl]

It's also not the task of unions nor employees to enforce regulations.

Unions should absolutely protect employees from management pressure to break the law. They shouldn't be there just to increase pensions. Licensed engineers have a legal duty to refuse to sign off on unsound and/or unsafe designs. The principal engineers at VW including the head of the department (a manager, but also an engineer) violated that duty.

You are right about incentives in general, but I wonder if participating in decision making via a formal union-management arrangement might lead to the blurring of some lines that should probably be brighter. Sort of analogous to how QA, development, and ops departments are separated in software companies. Maybe there are certain interests that shouldn't be too closely aligned.

Anyway, this is off-topic so I'll shut up.

 

[AudubonB]

Potentially interesting, though even more Off Tapioca than usual, addendum here:

TSLA Market Action: 2018 Investor Roundtable

 

[cheshire cat]

The same could be said about engineers with hefty stock options. In the end, every employee (and union member) has a stake in the well being of the company and may therefore be tempted to 'look away'. It's also not the task of unions nor employees to enforce regulations. Personally, I think, it's more the result of collusion between the government and corporate why European carmakers felt they could get away with cheat devices and the like.

Diesel gate ---a result of know-all (F***_all) (democratic) politicians and spineless "Higher Management" s' It's the "€uropean" way. Everything is fine as long as everyone takes orders and the poor old Germans (and Brit's) just keep signing the cheques. Sorry slow typer

 

[ItsNotAboutTheMoney]

That graph looks very wrong.

2011 - numbers add up to roughly 100%. 2018 they add up to 195%

Besides, most reports say EV sales in Norway are about 37% of the market, not 58%. Where are these numbers from?

Electrified powertrains are in multiple categories.

PEV: 47.9%
HEV: 58.6% - 47.9% = 10.7%
Gasoline (not HEV): 22.8%
Diesel: 18.6%

About ACEA | ACEA - European Automobile Manufacturers' Association

ACEA has a quarterly press release.

2018 Q1:
https://www.acea.be/uploads/press_releases_files/20180503_Fuel_type_Q1_2018_FINAL.xlsx
2018 Q2:
https://www.acea.be/uploads/press_releases_files/20180905_Fuel_types_Q2_2018_FINAL.xlsx

2018 Q1:

Type	2018Q1	2017Q1	18Q1%	17Q1%
BEV	9,694	6,993	28.7%	18.3%
PHEV	6,488	6,496	19.2%	17.0%
HEV	3,613	5,426	10.7%	14.2%
Diesel	6,286	9,630	18.6%	25.2%
Gasoline	7,711	9,695	22.8%	25.4%
Total	33,792	38,240	100.0%	100.0%

2018 Q2:

Type	2018Q2	2017Q2	18Q2%	17Q2%
BEV	10,451	7,812	24.3%	19.7%
PHEV	9,156	5,901	21.3%	14.8%
HEV	5,165	5,180	12.0%	13.0%
Diesel	7,292	10,515	17.0%	26.5%
Gasoline	10,877	10,334	25.3%	26.0%
Total	42,941	39,742	100.0%	100.0%

It's going up, and with the Kohhhna, Niro, iPace, Leaf+, Model 3 and others to come, there no reason to suggest that the trend is going to stop any time soon.

 

[gringotuanis]

(Firstly: not advice, secondly if you get hooked on options you are going to lose everything eventually so never ever write options and don't buy them from margin, make sure your wife knows and approves of the worst-case loss beforehand or is of the forgiving type, etc., etc.)

So the problem with say the March 2019 calls is their huge implied volatility cost which comes mainly from their huge long-term time value - much of which time you'll spend waiting for no event you truly expect - i.e. between quarterly reports.

For example the $350 strike calls are $27 currently, so for a single contract you'd have to pay $2,700 cash, plus if you keep them until expiry the stock would have to hit at least $377 for it to be break-even.

So if your thesis is good Q3 results, the timing should match that: i.e. be as close after the Nov 1-2 Q3 report as possible, i.e. Nov 02 expiry or Nov 16 expiry:

• Nov 02 is quite risky in that while the Q2 update letter was released on Aug 1, often Tesla delays their quarterly report to the 2nd or later day of the month and you might just miss it and the option expires without benefiting from any price action. This might explain why the total open interest is less than ~5,000 options and spreads are wide open.
• Nov 18 is much more crowded with 110K options and good liquidity, and say the $350 strike price trades at $10.

In terms of ideal strike level: depends on many things, but with a lottery ticket kind of jackpot-or-total-loss bet I'd go for max leverage without assuming a ridiculous price spike: say a mild short squeeze could spike to $400. With such a scenario and cashing out at $400 the $350-$370 strike levels look the most efficient at a quick glance.

If you want maximum leverage then you have to observe that option pricing drops sharply once the strike price goes outside the all time high: that's the historic range that current pricing assumes, and the price bounced from the ATH a couple of times so it is expected to be strong resistance.

But that 'bounces at $380-$390' is an argument based on technical analysis, if the breakthrough is fundamentals driven or short squeeze accelerated then that takes precedence over technical analysis and the price won't significantly bounce and you could trade on that hypothesis: in this case I'd go for a strike price around $440.

If you think the short squeeze is going to be unstoppable due to the magnitude of exposed short interest, i.e. the "milk Chanos to the max" lottery ticket, then I'd go for the highest strike price where you are not paying ridiculous spread to the market maker yet: for example $480 strike with a spread of ~20% looks acceptable, and the $0.50 price offers ridiculous leverage. These will most likely be lost though so buy them as if you bought really expensive ice cream or other luxury consumables. Write them off as a total loss mentally, the day you bought them.

You could also do a mix: if the first tier triggers you probably are in the green already in the end, with a nice profit. If the second tier triggers it's payday, if the third tier it's "set for life" day.

Note that if you think that either Q3 or Q4 results are going to be the day then it might still make sense to buy two expiries: the March 2019 $350 strike is trading at 2.7x the 2018/Nov $350 strike price. So if you first buy the Nov strike price, and then if it does not work out buy the March strike price (btw., April would be better), you are still only at a ~2x cost point instead of ~2x.

I.e. the best thing in the case of Tesla is to only pay the minimum time premium: which in this case would be to buy the options shortly before the delivery letter, and ride it through to shortly after the quarterly report. Note that at that point if the positive surprise happened as you expected it to, but you think the improved fundamentals have not yet fully been realized, or the short squeeze has not yet run to completion, you can still roll forward your calls week by week, with as much time value paid by your existing profits as you think is justified. (As long as you are certain that there won't be strong corrections, i.e. the fundamentals truly improved and it's not a so-so quarter with some question marks.)

But I could be wrong about any of this - maybe others want to chime in?

I think this advice is decent but as a holder of many call options on TSLA some for Nov, Dec, March, etc...(and who hasn't lost all of it on options trading). The one major thing seeming to be missing out of the above analysis is that I would buy strike prices more deep in the money. Banking on a $400 or even $350 strike price by mid November to me is risky. I would buy them with a Delta of like .6 or .8 and I generally go multi months out to play it safer. I am not an options expert but I like being ITM. If it doesn't hit $350 or $400 strike by the expiration, you will lose all your premium. I'd look to do as much as you can afford...like $290 or $300 strikes or even lower. You automatically have intrinsic value that way in the option so you might still take home some $$$ even if you lose money.

 

[Tslynk67]

Classic big sell order to stop the climb - serious manipulation!

I'm wondering what's to have stopped a bunch of shady characters having accumulated several million shares over the last year, so they can then just dump a few 1000's when they want to stop progress?

 

[MarcusMaximus]

Diesel gate ---a result of know-all (F***_all) (democratic) politicians and spineless "Higher Management" s' It's the "€uropean" way. Everything is fine as long as everyone takes orders and the poor old Germans (and Brit's) just keep signing the cheques. Sorry slow typer

I don’t think there’s a whole lot of democrats in Germany, the UK, or the rest of Europe...

 

[bdy0627]

I think one of the hallmarks we see with this low volume churning of shares where shorting has a strong influence on the stock movement is the heavy covering at both ends of the day. Papafox discusses it on his thread. It's certainly a consistent feature lately.

 

[Tslynk67]

I'd also add that Samsung survived/thrived by basically copying the Iphone.

And as far as I can see, all the knock-off Android devices are still inferior to the iPhone.

I wouldn't dream of wasting my money on an Android smart-phone, I have many friends with them and they have nothing but issues. Sure, they're all "hey, I can install and tweak whatever I want", yeah sure, including a bunch of viruses at the same time. They stink.

I just bought a new iPhone end of last week. It cost me €1329 - for a phone, but it's a cost I'm prepared to pay for the quality of the device and the ease of use.

I see Tesla following a similar path. Many competitors, but they'll all be inferior.

 

[Duffer]

Classic big sell order to stop the climb - serious manipulation!

I'm wondering what's to have stopped a bunch of shady characters having accumulated several million shares over the last year, so they can then just dump a few 1000's when they want to stop progress?

View attachment 338040

Morals, ethics.... Oh wait, we're talking about Wall Street where manipulation is the key to success.

 

[dgodfrey]

It will be interesting to see if the DOJ/SEC will make public any findings around the time of the ER. Have to wonder how much influence the MM have at that level. No matter the findings, I'm certain it will be spun in a negative light unless they raise Elon on their shoulders and announce, "now this is how you make an announcement of a potential market moving statement that's fair to all".

 

[Tslynk67]

Haha, true. I have to tailor my jokes to the audience.

I've three teenage kids, one of whom is bonkers about BTS. I must be bonkers too because I'm taking her to see them in Paris and I could buy a Tesla shares for the cost of the tickets

 

[MarcusMaximus]

And as far as I can see, all the knock-off Android devices are still inferior to the iPhone.

I wouldn't dream of wasting my money on an Android smart-phone, I have many friends with them and they have nothing but issues. Sure, they're all "hey, I can install and tweak whatever I want", yeah sure, including a bunch of viruses at the same time. They stink.

I just bought a new iPhone end of last week. It cost me €1329 - for a phone, but it's a cost I'm prepared to pay for the quality of the device and the ease of use.

I see Tesla following a similar path. Many competitors, but they'll all be inferior.

More importantly, I think: none of the competitors have really taken away from Apple’s success. It’s a >$1 trillion company, almost entirely on the back of that phone, with much of its rise happening after the advent of Android.

 

[Zaxxon]

We've discussed the Model 3 and which class(es) of vehicles it competes,with, but this is the first head-to-head I've seen of the P3D ($72.5k) vs a BMW M3 ($82k as tested with Competition Package, although it can be configured in the mid-$70s). Spoiler: the Model 3... well, you know how it ends.

 

[CorneliusXX]

Yeah, so that baseless assumption is a big, gaping flaw in your logic.

It only took 10 years in Norway:

... and they did it while ICE cars were still largely superior in many areas, most of all price, so despite generous incentives EVs were a leap of faith for many - 10 years ago it was also painful to use an EV as there was very little infrastructure.

I'd not be surprised if this transition happened much faster in other advanced economies, less than 5-6 years in the U.S. for EVs to have a majority market share in new car sales (depending on how fast Tesla can build their Gigafactories).

This might be further accelerated by the ICE car companies going bankrupt from the sudden drop in ICE demand and increasingly delayed/deferred/cancelled ICE purchases by customers who are aware of EVs and are waiting for the right one, which scenario ICE carmakers are not prepared for, at all, I think.

And that drop in demand is already happening.

I think the answer is somewhere between yours and wooly's. I cant see a way for 100m BEV vehicles to be produced annually in less than 1-2 decades. The infrastructure costs and changes to resource extraction for that shift are mind boggling. EM said that we would need around 100 GF globally. That alone will take 20 years.

 

[KarenRei]

And as far as I can see, all the knock-off Android devices are still inferior to the iPhone.

I wouldn't dream of wasting my money on an Android smart-phone, I have many friends with them and they have nothing but issues. Sure, they're all "hey, I can install and tweak whatever I want", yeah sure, including a bunch of viruses at the same time. They stink.

I just bought a new iPhone end of last week. It cost me €1329 - for a phone, but it's a cost I'm prepared to pay for the quality of the device and the ease of use.

I see Tesla following a similar path. Many competitors, but they'll all be inferior.

I can't comment on personal experience with I-Phones, so I can't talk about the software stack (I'm very happy with the Android software stack), but I can say this: their cameras are garbage in low light, particularly with video. I mean, the side-by-side comparisons with decent android cameras like the XZ2 Premium or the P20 are hilarious - on the former two (especially the XZ2P) it's like night vision, and on the latter it's like, "Who shut out the lights?". Heck, the I-Phone cameras aren't even that great in bright light, either - they've seriously fallen behind in the quality race.

I seriously hope that Tesla never turns into a "people buy it because they're used to it and because of its ecosystem" automaker, rather than a "it's simply the best, most capable vehicle for the money" automaker.

 

[The Blue Owl]

An excellent Financial Times article on the dilemma faced by the German car makers: how to prepare for large-scale production of EVs while managing transition risks? The big 3 are taking different approaches. Highly recommended read.

The predicament is how to produce electric cars optimally, giving them the best range and styling without over-spending on a technology that may or may not upend existing facilities devoted to cars powered by internal combustion engines.

This is a not a dilemma Tesla ever faced. Among its early competitive advantages was a vehicle architecture built specifically for an electric car. Its Model S saloon was designed to house large batteries that would give it the longest driving range possible. When it debuted in 2012, the middle-of-the-range Tesla model could drive for 335km— a range many rivals even in 2018 fail to match.

[...]

BMW, by contrast, is accelerating in the opposite direction to bring out 25 electrified models by 2025, including 12 pure electric versions.

While VW is focusing on “bespoke architecture” to create electric cars, the Munich-based luxury carmaker touts the merits of “flexible architecture” that can accommodate conventional, hybrid or electric engines. BMW’s plan is to enable customers from 2021 to order any BMW and specify what sort of engine they want.

“We can’t afford having two factories standing still,” says chief executive Harald Krueger. “With a flexible approach you can always manage the capacity of your plants. But if you have a specific EV architecture, what do you with the old one? What do you do with the people?”

Daimler, which is spending €10bn to launch more than 10 electric models by 2022, is taking a third approach: Like VW, the Mercedes parent is designing purpose-built architecture for its EQ marque of electric cars. However, like BMW, its production plants are being set up to accommodate all types of powertrains, including hydrogen fuel cell cars.

“We have hybrids, plug-in hybrids, electric cars and maybe robo-taxis tomorrow,” says Daimler production chief Markus Schaefer. “It’s hard to predict volumes for the best way in an uncertain world, so this is the most efficient approach to supply the market.”​

Electric switch poses existential challenge to carmakers

 

[JRP3]

And as far as I can see, all the knock-off Android devices are still inferior to the iPhone.

I wouldn't dream of wasting my money on an Android smart-phone, I have many friends with them and they have nothing but issues. Sure, they're all "hey, I can install and tweak whatever I want", yeah sure, including a bunch of viruses at the same time. They stink.

I just bought a new iPhone end of last week. It cost me €1329 - for a phone, but it's a cost I'm prepared to pay for the quality of the device and the ease of use.

I see Tesla following a similar path. Many competitors, but they'll all be inferior.

I'm still using a 4 year old Samsung S4 which has never given me problems. Replaced the battery about a year ago myself for $10.

 

[UnknownSoldier]

Morals, ethics.... Oh wait, we're talking about Wall Street where manipulation is the key to success.

Capitalism is inherently amoral. Applying normal societal expectations of morality and ethics to capitalism is why people get shocked by stuff like Enron and Lehman Brothers. There's nothing shocking about it. It's a natural result of capitalism.