TSLA Market Action: 2018 Investor Roundtable

[Artful Dodger]

I estimate an extra 1,000 Model 3s per week (L3MR's) sold at $44K and @ 15% G.M. produces about $6.6M / wk add. profit for Tesla by Nov, totalling over $50M add. profit in Q4 2018.

Any other options sold to raise ASP over $44K is pure gravy.

Well played, Sir, well played.

 

[Krugerrand]

I think the more relevant question is what will happen to the FSD portion of Deferred Revenue.

Vaporware relegated to the Potemkin Village in Nevada. Never happened and is never going to happen. Spread the word. Tell your editor.

 

[mongo]

Sure it isn't directly about FSD, but the premise of the lawsuit is that Tesla mislead about capabilities and timeline.

My understanding:
AP1 had certain features
Due to breakup of Tesla and MobileEye, AP 2 did not have these features at the beginning.
Later, AP 2.0 had most of the features.
The settlement provides compensation for the time period when the EAP was less than AP1 (loss of expected/ previous functionality)

 

[Artful Dodger]

TSLA Open now
267.51 USD +3.60 (1.36%)
Oct. 19, 9:30 a.m. EDT

 

[Krugerrand]

I wish he would make the falcon wing doors an option. I think that would open the X up to many others who just don't want those doors. Those who want them can pay an extra $15k or something. (for the record I like them, but I have seen others feel stand off-ish about them)

Won’t happen. First of all that would be a major redesign requiring resources (time, money, manpower) Tesla can not afford. Secondly, there are no batteries for more Xs. This was explained almost a year ago. S and X production will remain at 100kish/year due to 18650 battery constraints. No, those vehicles can’t get the new batteries as also has already been explained by Tesla - also requires major redesign. It’s in an ER, can’t remember which one but 3-5 quarters agoish.

 

[Nocturnal]

Consensus on the MR move? Seems like LR RWD was lagging in sales and this is a bridge to the SR car.

 

[humbaba]

My understanding:
AP1 had certain features
Due to breakup of Tesla and MobileEye, AP 2 did not have these features at the beginning.
Later, AP 2.0 had most of the features.
The settlement provides compensation for the time period when the EAP was less than AP1 (loss of expected/ previous functionality)

sure, but by focusing on the specifics of the suit I think you are missing the overall point -- a class action lawsuit over expected functionality not provided in the anticipated timeline. Remember, you don't need to have a winnable suit, you just have to have enough resources to wear the target down to a settlement. And Tesla has been settling. It makes sense to avoid the nonsense as much as possible.

 

[jeewee3000]

Consensus on the MR move? Seems like LR RWD was lagging in sales and this is a bridge to the SR car.

How can a vehicle only released in North America "lag in sales"? Just give Europe access to any Model 3 version and Europeans (such as myself) will gobble it up!

 

[humbaba]

Consensus on the MR move? Seems like LR RWD was lagging in sales and this is a bridge to the SR car.

If it was lagging in sales it was only because they missed the appetite for AWD. You could get an LR RWD with 4 week delivery time, unlike any AWD vehicle. They clearly were able to supply them readily to any buyer.

However, the L3MR allows them to pump out even more units thanks to the reduced cell count in the pack. Obviously, Tesla is expecting there to be higher demand. One can argue that this is about price (LR RWD was too expensive) or more rapidly consuming the excess rear wheel drive units, or whatever else, but at the end of the day we don't actually know anything other than:

1) L3MR output should be greater than LR RWD
2) Tesla expects to sell them

[edit: stupid typos]

 

[KarenRei]

I estimate an extra 1,000 Model 3s per week (L3MR's) sold at $44K and @ 15% G.M. produces about $6.6M / wk add. profit for Tesla by Nov, totalling over $50M add. profit in Q4 2018.

Any other options sold to raise ASP over $44K is pure gravy.

Well played, Sir, well played.

View attachment 345176

Um... L3MRs start at $45k. Before options $40k base+$5k PUP mandatory. Options can push it up to as much as $55k.

Do you think they can get a 15% margin on say a $50k ASP L3MR? Overall margin this quarter was forecast (in the Q2 call) to be 20% this quarter, so if they're sticking to that, they'll to balance out L3MR margins with LR options, but is only $5k of options enough to pull out a hat trick like that?

 

[Krugerrand]

Is this part true?

View attachment 345141

Anyone here have it?

It’s akin to where’s my other sock? Oh, on my foot, behind the washing machine, in the wrong drawer...

Yes, Tesla just ganked all those people you and your flock said, who didn’t prepurchase FSD, for 3k. All 1% of vaporware sales of Model 3 - because no demand for the car let alone FSD, which will never happen except for Cadillac, GM, Ford, Google, Waymo, Uber and everyone else not Tesla.

Here’s my $64,000 question - never mind against forum rules.

 

[mongo]

sure, but by focusing on the specifics of the suit I think you are missing the overall point -- a class action lawsuit over expected functionality not provided in the anticipated timeline. Remember, you don't need to have a winnable suit, you just have to have enough resources to wear the target down to a settlement. And Tesla has been settling. It makes sense to avoid the nonsense as much as possible.

I see the major difference between EAP in this suit and FSD is that the vehicle never had FSD. Whereas a Model S purchased in the AP1 time frame had features that an AP2 S did not.

FSD: Doesn't exist yet, will, don't know when.
EAP: Exists, has these features, wait, what do you mean my car doesn't have these features???

Do you think they can get a 15% margin on say a $50k ASP L3MR? Overall margin this quarter was forecast (in the Q2 call) to be 20% this quarter, so if they're sticking to that, they'll to balance out L3MR margins with LR options, but is only $5k of options enough to pull out a hat trick like that?

If that includes EAP for 5k then yes (10% on its own at 50k sales price). Rounding up to 30k for LR cost from teardowns, and the base vehicle at 45k is 33% GM on its own... Even half of that is 15%.

 

[humbaba]

Um... L3MRs start at $45k. Before options $40k base+$5k PUP mandatory. Options can push it up to as much as $55k.

Do you think they can get a 15% margin on say a $50k ASP L3MR? Overall margin this quarter was forecast (in the Q2 call) to be 20% this quarter, so if they're sticking to that, they'll to balance out L3MR margins with LR options, but is only $5k of options enough to pull out a hat trick like that?

All obviously conjecture, but I can't see that many sales at $45k -- I know I won't buy a Tesla without EAP, and that anecdote is supported by their ASP (so far) being well over base. Since EAP is (apart from sunk costs) 100% profit (it is my understanding they are putting the hardware in all units regardless) that is $5k profit right there. Even if you argue out some reduction if they could hit 15% on $45k they will be over 20% with EAP and reasonable uptake will comfortably hit 20%.

 

[Krugerrand]

I thought that would be the more logical course in most circumstances. But if they are actually taking it out of people's accounts as the above quoted poster suggests, that indicates a more fundamental change.

Yep, you figured it out. Tesla service just emailed me to bring my car in and have all the related hardware removed from car. It seems I’ll be left just two cameras. On the bright side, they’re going to install an ashtray in my console at no additional charge. I’m expecting it’ll be a state of the art ashtray worthy of a 3k price tag. Can’t wait to show my friends and family.

 

[humbaba]

I see the major difference between EAP in this suit and FSD is that the vehicle never had FSD. Whereas a Model S purchased in the AP1 time frame had features that an AP2 S did not.

FSD: Doesn't exist yet, will, don't know when.
EAP: Exists, has these features, wait, what do you mean my car doesn't have these features???

And again, I'm not talking about the merits of a lawsuit, or how winnable it is. I'm talking about the defensive side of avoiding such frivolous lawsuits to start with.

Given that someone can sue for anything they are opening themselves up for a suit for pulling FSD -- but I would argue they felt that was less of an issue than this course.

To sum: you continue to focus on details of the prior lawsuit, ignore that lawsuits are not always about merit, and ignore the implausibility of other explanations.

In short: offer me a better explanation. I'm flexible.

 

[KarenRei]

Let's do a little math. Let's assume a 50-50 MR-LR mix, with a $50k ASP MR and a $62k ASP LR (now that much of the lower end will be going down to the MR). Margin in Q4 is supposed to be 20%. So

0,5*MR_margin + 0,5*LR_margin = 20%
MR_margin = ($50k - MR_base) / MR_base
LR_margin = ($62k - LR_base) / LR_base
LR_base = MR_base + $2k

Solving, I get:
MR_base = $45,6k
LR_base = $47,6k
MR_margin = 9,6%
LR_margin = 30,3%

I'm willing to bet that MR base is actually right about $45k, aka basically zero margin. And $5k of options makes it 10% margin.

 

[Artful Dodger]

Um... L3MRs start at $45k. Before options $40k base+$5k PUP mandatory. Options can push it up to as much as $55k.

Do you think they can get a 15% margin on say a $50k ASP L3MR? Overall margin this quarter was forecast (in the Q2 call) to be 20% this quarter, so if they're sticking to that, they'll to balance out L3MR margins with LR options, but is only $5k of options enough to pull out a hat trick like that?

Oh, indeed! But my conservative estimate already increases 2018 Q4 EPS by $0.31

That's some good stuff!

 

[ZsoZso]

I thought the Saudis were supposed to make a big announcement yesterday that may have been related to Tesla / renewable energy. Anybody seen anything ? I may have missed it in all the lemur activity...

 

[skybluecgreen]

If it was lagging in sales it was only because they missed the appetite for AWD. You could get an LR RWD with 4 week delivery time, unlike any AWD vehicle. They clearly were able to supply them readily to any buyer.

However, the L3MR allows them to pump out even more units thanks to the reduced cell count in the pack. Obviously, Tesla is expecting there to be higher demand. One can argue that this is about price (LR RWD was too expensive) or more rapidly consuming the excess rear wheel drive units, or whatever else, but at the end of the day we don't actually know anything other than:

1) L3MR output should be greater than LR RWD
2) Tesla expects to sell them

[edit: stupid typos]

And as someone mentioned yesterday evening, it will allow more people to get the $7,500 tax credit. Not caught up on the thread so this may have been mentioned but I talked to a Tesla rep yesterday and he told me that in Ca. delivery should be 6 weeks and maybe 8 weeks for the East Coast. Did not think anyone in the US ordering now would miss the credit.

 

[humbaba]

Let's do a little math. Let's assume a 50-50 MR-LR mix, with a $50k ASP MR and a $62k ASP LR (now that much of the lower end will be going down to the MR). Margin in Q4 is supposed to be 20%. So

0,5*MR_margin + 0,5*LR_margin = 20%
MR_margin = ($50k - MR_base) / MR_base
LR_margin = ($62k - LR_base) / LR_base
LR_base = MR_base + $1k

Solving, I get:
MR_base = $46,1k
LR_base = $47,1k
MR_margin = 8,4%
LR_margin = 31,6%

I'm willing to bet that MR base is actually right about $45k, aka basically zero margin. And $5k of options makes it 10% margin.

Thanks for putting numbers to it and showing your thinking. I am surprised that you think the battery difference is only $1k. I was under the impression that batteries cost more than that for an estimated 17% to 20% reduction (numbers I've seen in this thread). That would give the LR battery pack a cost of $6k to $7k? Or are you assuming a lot of the pack cost is in the externals?