TSLA Market Action: 2018 Investor Roundtable

[cheshire cat]

Guess what!? I also ordered mine the morning of March 31 2016, lining up at the Tesla store early in the morning and also had a Model S for 4 years. And I do not give a rats ass if I have to wait another few months before I get it. I was perfectly fine and did not expect it before Christmas (since my estimated delivery window was Sept-Nov and applied Elon-time adjustment to that), UNTIL the delivery specialists (4 different one) started to contact me and started telling me each a different fairy tale with imaginary locations and time-frames. Yet, I was willing to jump through all the hoops they threw at me trying to give them my money before Q3 ends, but they managed to lose my car somewhere in delivery logistics hell....

TLDR: I do not want your or anybody else's sympathy, I do not even need the car for at least another year (we have 3 other cars for a 3-driver family).

For the last time people, try to understand: I am NOT screaming because I did not get my car.
I am worried about Tesla losing a very nice advantage over other manufacturers: the much better buying experience, which was an extra advantage (on top of better cars) Tesla used to have.

There wasn' t any sympathy, just get sick of people with the privilege of being able to afford a Tesla throwing a fit, like a bunch of kindergarten kids. It isn't easy doing what these guys are pulling off EVERY day, and I don' t think we have to worry for Tesla, they're big boys now and can look after themselves. My model S is running just fine-thanks for asking

 

[Fact Checking]

Re-posting the "shorts over at Seeking Alpha are livid about the SEC settlement" post from @KarenRei:

thedyslexicephelant
Comments19 | + Follow
So nothing came of the suit. There is no justice in the world.

georgefelix75
Comments238 | + Follow
Agree $20M is nothing compared to the loses from his antics. It was deliberate and willful. Make a joke out of the SEC.

samdehne
Comments1562 | + Follow
The SEC proves that it is in cahoots with Tesla/Musk and the ilk of evil.
When you see what was done to Skilling and Madoff.. doesn't this demand
the highest punishment possible.. times 5?
Skil and Mad were peanuts in comparison to the broken laws here...

Diesel, Contributor
Comments3420 | + Follow
In other words Elon Musk gets away with fraud.
Well, what did you expect? In America if you are wealthy and powerful you are a god who is beyond law and no one can touch you. If you want to become untouchable, beyond law and a god in America, just become rich.

Thirst 4 Yield
Comments312 | + Follow
Money always wins

412Bob
Comments161 | + Follow
Cannot believe the SEC settled for such a small amount. They will certainly have earned any criticism of their lack of effectiveness that undoubtedly will ensue.

uptick_rule_now
Comments1396 | + Follow
shows the SEC does not want to work criminal cases. how anyone that evil and corrupt was allowed to buy their way out of this offense is a slap in the face of Justice. at least we still have the BK filling coming soon to take stock to zero

deercreekvols
Comments12802 | + Follow
Reminds me of the "settlement" that Elizabeth Holmes was able to reach.
Resign as chairman but remain CEO. Got it.Nice work by the SEC. Collect the fine money and move on to the next case.Thanks for nothing.

Teddy Monster
Comments111 | + Follow
Musk got away with his crimes. This is unbelievable. He got away with it.

Jacjon0108
Comments433 | + Follow
Complete joke of punishment by SEC

Buddha1010
Comments1095 | + Follow
I've lost respect for the SEC enforcement division. Looks like Elon played them for the wimps they are. Really sad.
The likelihood of a DoJ action is now nil. The rich, white and entitled ruling class wins again. Just like gravity, there's no escaping this truism.
​

 

[RobStark]

One thing I wonder about is the effect of the incentive phase-out. Shorts I think embellish the effect, but I do believe the effect will not be zero. Have you or anyone else discussed/quantified this? thanks

The elimination of the credit will obviously move the demand curve to the left.

Test drives, the network effect, leasing availability, in stock vehicles ready for immediate sale will move the demand curve to the right.

Without thorough market research you can't even begin to quantify the shift of Model 3 demand due solely to the elimination of the US Federal credit.

My guess it will shift demand from 500k per year to 300k per year in the US.

 

[gora321]

There are so many wrong doings in this world!

Jailed Audi CEO Stadler could get big pay out

 

[NicoV]

I ‘m going to play the extended edition on Spotify at 15:24:50 Brussels time!

 

[avoigt]

Re-posting the "shorts over at Seeking Alpha are livid about the SEC settlement" post from @KarenRei:

thedyslexicephelant
Comments19 | + Follow
So nothing came of the suit. There is no justice in the world.

georgefelix75
Comments238 | + Follow
Agree $20M is nothing compared to the loses from his antics. It was deliberate and willful. Make a joke out of the SEC.

samdehne
Comments1562 | + Follow
The SEC proves that it is in cahoots with Tesla/Musk and the ilk of evil.
When you see what was done to Skilling and Madoff.. doesn't this demand
the highest punishment possible.. times 5?
Skil and Mad were peanuts in comparison to the broken laws here...

Diesel, Contributor
Comments3420 | + Follow
In other words Elon Musk gets away with fraud.
Well, what did you expect? In America if you are wealthy and powerful you are a god who is beyond law and no one can touch you. If you want to become untouchable, beyond law and a god in America, just become rich.

Thirst 4 Yield
Comments312 | + Follow
Money always wins

412Bob
Comments161 | + Follow
Cannot believe the SEC settled for such a small amount. They will certainly have earned any criticism of their lack of effectiveness that undoubtedly will ensue.

uptick_rule_now
Comments1396 | + Follow
shows the SEC does not want to work criminal cases. how anyone that evil and corrupt was allowed to buy their way out of this offense is a slap in the face of Justice. at least we still have the BK filling coming soon to take stock to zero

deercreekvols
Comments12802 | + Follow
Reminds me of the "settlement" that Elizabeth Holmes was able to reach.
Resign as chairman but remain CEO. Got it.Nice work by the SEC. Collect the fine money and move on to the next case.Thanks for nothing.

Teddy Monster
Comments111 | + Follow
Musk got away with his crimes. This is unbelievable. He got away with it.

Jacjon0108
Comments433 | + Follow
Complete joke of punishment by SEC

Buddha1010
Comments1095 | + Follow
I've lost respect for the SEC enforcement division. Looks like Elon played them for the wimps they are. Really sad.
The likelihood of a DoJ action is now nil. The rich, white and entitled ruling class wins again. Just like gravity, there's no escaping this truism.
​

Surprisingly I found half a sentence that if you take it out of context I can fully agree to: Just like gravity, there's no escaping

 

[lklundin]

Not to mention that every other google phone perks up and eavesdrops. LOL

It's Google's business to know everything about you, so why would the eavesdropping not be continuous?

 

[MXWing]

I don't think Elon will sell the SR until he can sell it profitably. He is more disciplined than people give him. He is working on a cheaper battery design and I suspect that once that is finalized is when they'll greenlight the SR. He's pushing the SR out as far as possible to maximize COGS reduction.

One thing I wonder about is the effect of the incentive phase-out. Shorts I think embellish the effect, but I do believe the effect will not be zero. Have you or anyone else discussed/quantified this? thanks

There is no question a lack of subsidies relative to the competition is going to hurt Tesla.

Hurt however has a pain scale of 1-10. Shorts are going to think it’s a 13-15 where I believe it will be 2-3.

Shorts believe Tesla’s are completely price demand elastic. More Etrons, more Bolts more ipaces with full tax credit is going to eat Tesla’s lunch.

Price elasticity of demand only works when products are perfect or near perfect substitutes. Since a Bolt is not a perfect substitute, the extra subsidy will not help it more than shorts think.

Rational agents would see things how I see above. Unfortunately in the real world, people are irrational and think 3750 is a lot of money that COULD swing a decision if they are not strongly familiar with Tesla. It’s not even 3750 as the tax credit is limited to a percentage of that anyway based on your marginal tax rate.

Tesla is ready for that fight. Tesla is raising prices now so they can potentially lower them later to give the perception of them “eating” the subsidy loss.

While I hope the EV subsidies are reworked to not punish successful first movers like Tesla it’s not something we can plan for.

The only thing in Tesla’s control is a compelling product that is price demand inelastic that people want regardless of credit.

I would not drive an ICE vehicle even if gas was free to me. I hope the EV movement can have the same passion.

 

[gora321]

Re-posting the "shorts over at Seeking Alpha are livid about the SEC settlement" post from @KarenRei:

thedyslexicephelant
Comments19 | + Follow
So nothing came of the suit. There is no justice in the world.

georgefelix75
Comments238 | + Follow
Agree $20M is nothing compared to the loses from his antics. It was deliberate and willful. Make a joke out of the SEC.

samdehne
Comments1562 | + Follow
The SEC proves that it is in cahoots with Tesla/Musk and the ilk of evil.
When you see what was done to Skilling and Madoff.. doesn't this demand
the highest punishment possible.. times 5?
Skil and Mad were peanuts in comparison to the broken laws here...

Diesel, Contributor
Comments3420 | + Follow
In other words Elon Musk gets away with fraud.
Well, what did you expect? In America if you are wealthy and powerful you are a god who is beyond law and no one can touch you. If you want to become untouchable, beyond law and a god in America, just become rich.

Thirst 4 Yield
Comments312 | + Follow
Money always wins

412Bob
Comments161 | + Follow
Cannot believe the SEC settled for such a small amount. They will certainly have earned any criticism of their lack of effectiveness that undoubtedly will ensue.

uptick_rule_now
Comments1396 | + Follow
shows the SEC does not want to work criminal cases. how anyone that evil and corrupt was allowed to buy their way out of this offense is a slap in the face of Justice. at least we still have the BK filling coming soon to take stock to zero

deercreekvols
Comments12802 | + Follow
Reminds me of the "settlement" that Elizabeth Holmes was able to reach.
Resign as chairman but remain CEO. Got it.Nice work by the SEC. Collect the fine money and move on to the next case.Thanks for nothing.

Teddy Monster
Comments111 | + Follow
Musk got away with his crimes. This is unbelievable. He got away with it.

Jacjon0108
Comments433 | + Follow
Complete joke of punishment by SEC

Buddha1010
Comments1095 | + Follow
I've lost respect for the SEC enforcement division. Looks like Elon played them for the wimps they are. Really sad.
The likelihood of a DoJ action is now nil. The rich, white and entitled ruling class wins again. Just like gravity, there's no escaping this truism.
​

These are sheep who will pay the bill by following smart shorts which are probably all out!

 

[Fact Checking]

Test drives, the network effect, leasing availability, in stock vehicles ready for immediate sale will move the demand curve to the right.

Other demand levers that Tesla can pull to increase demand:

• Introduction of the Model 3 in other markets: Europe, China, Asia, right-hand traffic countries. This could roughly triple demand and Tesla is going to be able to walk down the demand ladder step by step in those markets as well: Long Range and Performance versions first, PUP included, etc.
• Enhanced AutoPilot (EAP) take rate for new deliveries is currently over 78% (!), and with V9 this could climb to 90%. This turns a $35k base model with a 20% margin into a high volume software feature delivery platform that sells for $40k, where the software feature has a margin of 100%, increasing the gross margin from $7,000 to $12,000, from 20% to 30% (!). This is a huge, very large, gigantic factor, which explains why shorts and competitors have been trying to attack AutoPilot so ferociously: it's a game changer in terms of gross margins.
  
• The increase of 2170 cell production from 20 GWh/year to 35 GWh/year by the end of this year is going to further improve economies of scale and allows Tesla to introduce lower and lower priced variants. The expansion of the addressable market is exponential at this point: the reduction of the base ASP from $50k to $40k increases the addressable market by 40-50%. (!) The further reduction to $35k adds another 30% increase in demand.
• In late 2019 the Model S/X refresh, on a 2170 base, is going to generate a new wave of sales on the higher end of the revenue spectrum.

At $35k ASP Tesla will have an addressable market of 50% of all new car purchases by unit, and about 75% of the revenue:

Now that the Model 3 is shipping in volume and is ramping up 2170 production, Tesla is not going to run out of demand for at least 2-3 years.

So if 'no demand' is the only element of the short thesis left they are in for a nasty surprise.

 

[Fact Checking]

These are sheep who will pay the bill by following smart shorts which are probably all out!

So, according to S3 Partners more than 33 million TSLA shares were still short at the end of Friday:

i.e. they are fully exposed to the current rally.

The recent peak in short interest was around 34 million TSLA shares - so only about 1 million net shares of shorts covered before the delivery report - about 3% covered, 97% remained short.

 

[Artful Dodger]

There is no question a lack of subsidies relative to the competition is going to hurt Tesla.

When two American Companies, Tesla and GM, have both lost customers to foreign EV makers, I expect Congress will change the terms of the EV Tax Credit.

 

[SpaceCash]

It's gonna be a good day

 

[MXWing]

When two American Companies, Tesla and GM, have both lost customers to foreign EV makers, I expect Congress will change the terms of the EV Tax Credit.

Absolutely. I’ve touched on that with the current structure punishing effective first movers like Tesla and GM.

It wouldn’t be rational to try and bank on the terms changing but I really hope it does. Support all EV manufacturing equally..

Edit: Tesla I hope would be lobbying based on what we discussed above. Tesla however would want to not show their cards as the credit phase out is a VERY effective demand lever at the moment. I expect delivery purgatory after people decide on Model 3s after talking it over thanksgiving dinner.

 

[Fact Checking]

It's gonna be a good day

There are very good macro conditions as well: NASDAQ futures gapped up almost 50 points and are now in all-time-high territories.

 

[Fact Checking]

When two American Companies, Tesla and GM, have both lost customers to foreign EV makers, I expect Congress will change the terms of the EV Tax Credit.

How far away is GM from the 200,000th EV sale in the U.S.?

 

[gora321]

The recent peak in short interest was around 34 million TSLA shares - so only about 1 million net shares of shorts covered before the delivery report - about 3% covered, 97% remained short.

Ratio 3%:97% is probably ratio smartshort:sheep

 

[Tslynk67]

Frankfurt trading heavily, never seen it this busy!

NASDAQ pre-market going to be super-interesting in 3, 2, 1 minuets from now...

 

[RobStark]

How far away is GM from the 200,000th EV sale in the U.S.?

Through August 2018 GM sold 189,758 PEVs.

AUGUST UPDATE - 5 Automakers Closest To Losing The Federal Tax Credit

 

[Artful Dodger]

In late 2019 the Model S/X refresh, on a 2170 base, is going to generate a new wave of sales on the higher end of the revenue spectrum.

Hi. The 2019 refresh will probably be interior only for the Model S (X already has door pockets). The 2170 based battery pack will be a longer wait:

1. it is a significant engineering redesign for S/X according to J.B.
2. it requires increased GF1 battery cell capacity (~10GWh annually), which will be a limiting factor for quite some time, since they are already diverting resources away from potential Powerwall/pack production
3. Semi production is a higher priority than a refreshed S/X
   
4. the Japanese 18650 cell supply + Fremont bty pack production combo is well coordinated with other exisiting S/X supply constraints, so upsetting a well-oiled and profiable production regime is unthinkable while demand > supply

In summary, expect the new 2170-based S/X model sometime after the Model Y has ramped, GF1 is in full production, GF2/Shanghai is operational, and lastly the Model S/X are getting long enough in the tooth for demand to begin to wane. My guess is 2022. That's a 10 year run, pretty good for any auto product.

Cheers!