TSLA Market Action: 2018 Investor Roundtable

[humbaba]

That's what I meant. Their capacity for LRD was greater than purchase demand. (whether due to underestimating AWD demand or overestimating LRD demand) I see lots of people poo pooing the price difference between MR and LR RWD, $4k is not insignificant to many car buyers, especially in the 35-40k range.

Yeah. It doesn't make financial sense for me to buy a car at this time, but I've been seriously thinking about a Tesla (I want that EAP!) and it might never make better sense. Right now I'm really, really torn between doing an off menu order of LR RWD or going getting a L3MR. The LR range would be better for trips I take, but the price savings is a big deal to me.

 

[bdy0627]

More on the MS note:

 

[MP3Mike]

How many cells do they need to make a Medium Range vs a Long Range? We can calculate how many more vehicles this allows them to sell. At first I was going to say we can also guess how much of these cells will be sent to Tesla Energy instead of Long Range Model 3's, until I reminded myself that they use a different chemistry and dedicate whole cell manufacturing lines to each chemistry, so that probably isn't shifting; we can presume that the cells being made will go into Model 3's.

We won't know until the EPA test results come out. But you can guess ~20% fewer cells. So you can make 5 Model 3 MR cars instead of 4 Model 3 LR cars. So if they can make 5k LR/week and they go with a 50% LR/MR mix they could make about 5,500 Model 3s per week. (This is assuming that the only bottleneck to getting to that rate is cell supply, which is what we have heard.)

 

[skybluecgreen]

I think long term this is a positive development. I would expect it to improve the overall model 3 ASP. In the short term, I understand the negative take on it. The one particular thing that I don't currently understand is that I thought Tesla was all sold out through the end of 2018. Now, with the delivery estimate of 6-10 weeks for the mid range 3, Tesla is indicating they are not. Did they not get enough orders for the long range vehicles to take them through the end of Q4? On the other hand, 6 weeks is the soonest someone could receive the mid range 3. In reality, it may well be that these are not delivered until 10 weeks, after the end of Q4. I'm guessing the 6 week timeline is a little optimistic and it will be closer to 10 weeks than 6. I don't think Tesla is guaranteeing anyone ordering the mid range 3 that they will receive it by the end of the year. There is a valid argument to be made about short term cell supply constraints that this move addresses in a positive way.

I spoke with a Tesla rep yesterday about the MR and he did assure me I would get it before Dec. 31 if I ordered it now. I live in CA. and he said that makes a difference. He told me 6 weeks for CA and maybe 8 for East Coast. He also said I could get one directly from Fremont in 4 weeks.

I don't recall Tesla saying they were sold out for the year but they are obviously not. I think the window is closing though and that there will be a rush in the next couple of weeks of buyers trying to get in under the deadline.

 

[tivoboy]

Also, as @FactChecking posted earlier, there are a huge number of puts expiring today. Many hedge funds want this stock lower. There is a lot of money riding on it. If they are able to keep it down today, my WAG is that the heavy selling pressure may well let up early next week.

Careful, max pain is a LOT lower than where we are.

 

[avoigt]

To me the "low LR demand in NA" does not make sense for a couple of reasons.

• If LR demand was falling off the cliff, the last thing they would do is make it even more expensive. By mandating AWD they did just that.
• If LR demand in NA was a problem, they could open up Europe a few months early. I don't think the homologization process is a real issue and it also seems like Tilburg already has the facilities. They may need to accelerate staffing though. Still Europe is a huge untapped market for the Model 3. If they started delivering early, people would storm the gates. Especially in countries where incentives are in danger of running out by the time Model 3 arrives.

It is more likely to me that they see this as a way to skim some of the SR holdouts and direct them towards a good deal: you can either wait for the SR and pay 35,000-3,750 for base / 40,000-3750 for premium in Q1 as the incentive runs out, or you can order today and get a bigger battery too for 37,500. If you wanted to pick the premium package anyway, it means you can get the +40 miles of range for $1,250 extra. Deal of the century if you ask me.

Agree, I am in Europe and wait urgently for my P3D with all specs which means there is quite some margin on my car. I know thats the case with many other people here as well. Don't even believe a second that this car is in low demand in Europe and I sit in Germany with slow EV adoption so you can guess what is happening in Norway and Netherlands. We starve for it .....

That Tesla is pushing the MR out now is a sign of confidence that they don't have to go for the high margin models any more to show healthy profit and CF+ be it in NA or Europe.

Thats the only explanation I have for that move. Its a strong positive signal.

 

[Nocturnal]

Yeah. It doesn't make financial sense for me to buy a car at this time, but I've been seriously thinking about a Tesla (I want that EAP!) and it might never make better sense. Right now I'm really, really torn between doing an off menu order of LR RWD or going getting a L3MR. The LR range would be better for trips I take, but the price savings is a big deal to me.

MR isn't guaranteed to receive the full tax credit I don't think. You probably need to factor in resale value too. In 5 years will people place a huge premium on a (degraded) 300 mile range vs 220? Or by that point will it be due for a replacement pack that gives you 400 miles of range for $5k? Lots of variables.

 

[neroden]

Here's the topographic map:

The Shanghai Gigafactory is in one of the highest elevation locations of the city, at least 4-5m high.

Hmmm. It's on land reclaimed from the sea! Recently!

I think it's fascinating that Shanghai has deliberately made its land reclaimed from the sea *extra high*, higher than the rest of the land. This has some serious overall risk, in that if waves overtop that first "border barrier", the whole darn city gets flooded -- so it's fine in smaller storms and then fails catastrophically.

So it should be protected from river flood and most historic tsunamis in the area: the risk of 2m+ waves reaching Shanghai appears to be lower than 10%, per century.

It'll be much higher risk than that thank you global warming.

Also, most tsunamis would come from the east, from which direction the Gigafactory is more than 10 km inland. Even major tsunamis don't reach that far inland. From the south it's about 3 km inland, protected by a 5m+ elevated buffer zone.

There's also big islands (10 km wide) shielding the southern part of the city.

This, however, is all very helpful.

 

[AlexS]

move today is so ugly, something is fishy here. Tesla please give us earnings date, and better it be in the beginning of November.

 

[azaz]

Also if demand was an issue they would’ve started leasing already

 

[Nocturnal]

So, question on the shorts' ability to depress the stock. That makes sense in the short term in that they can make it appear to be dropping and spreading bad info etc. Isn't there a point though where other big money realizes that it is a smoke and mirrors game and calls their bluff?

 

[bdy0627]

Careful, max pain is a LOT lower than where we are.

MP = $235. Yikes! With TSLA red while Nasdaq was up, and now Nasdaq falling, it is a nice opportunity to drive TSLA down.

 

[avoigt]

No need to construct a contradiction in my arguments. In that case there is none. You know other cars still exist and sell for a profit. Even cars that are un-like a Model 3.

So in other words despite from what you said previously you now agree that other manufacturers cannot produce a 3 .

Thats in line with what I believe but indeed contradicts what you said before. Not sure why you said it at start then...

But hey, we all make mistakes.

 

[Nocturnal]

Also if demand was an issue they would’ve started leasing already

It is going to be interesting when we start seeing corporate fleets. For example, my ex works as a sales Rep for Roche (they are based in the EU and are green focused) so all of their fleet cars are hybrids. Sooner or later prices/volumes of production will be at a point where an entire new market is available to Tesla.

 

[Cherry Wine]

So my guess on SP movement today is that the market views the mid-range release as a sign of weak demand, views the removal of FSD from the ordering process as a sign that Tesla is scrapping FSD plans, coupled with some classic shorting. That sound about right to others?

 

[humbaba]

Totally, because nobody is interested in maybe offering a competor to the best selling cars in terms revenue in the biggest car market in the world. And that's because they don't need to, since they are already building compelling cars making perfect good profits.

I mean you see when GM saw Ford's first mustang made a killing they never even though about building a mustang like car to prove they can build cars, because they were already profitable.

And Intel has never showed any interest in building an ARM competitor because Intel is perfectly OK with their vastly profitable business.

I mean, its not like GM is having battery sourcing problems in China. Or Ford is having to downsize and focus on their niche to delay going under. Not to mention the problems that Mercedes is not having.

GM Postpones Buick Velite Launch In China Due To Battery Supplier Quality Issues
Ford CEO seeks to rally dealers as stock sinks to new low
Daimler Slumps to 5-Year Low After Profit Warning Following Surprise Q3 Earnings

all top hits, but picked to avoid "biased" news sites like eletrek

 

[bdy0627]

So, question on the shorts' ability to depress the stock. That makes sense in the short term in that they can make it appear to be dropping and spreading bad info etc. Isn't there a point though where other big money realizes that it is a smoke and mirrors game and calls their bluff?

Yes - take a look at the charts for support levels. Big money has been strongly supporting the stock at the $250ish level. Things do change of course if the whole market looks like it's heading down. So far, it has not changed that support level for TSLA, but it looks like we may be heading for yet another retest.

 

[defc0n]

So my guess on SP movement today is that the market views the mid-range release as a sign of weak demand, views the removal of FSD from the ordering process as a sign that Tesla is scrapping FSD plans, coupled with some classic shorting. That sound about right to others?

Probably

 

[neroden]

I'm sure Tesla will do its best to ameliorate flooding risks as best as it can, but it doesn't control all the cards. It's an island in the middle of a much broader flood defense network, and its fate depends on what that network as a whole does; they can't build a whole Gigafactory on stilts.

Well, they probably *could*. They probably won't. I'm sure a good structural engineer could design a multi-story Gigafactory built entirely on stilts. The cost would be sufficiently high that I would never expect them to do it, but it is *possible*.

 

[SOULPEDL]

To those thinking a PR push would help stock price, I disagree. The consumer is buying like crazy already. Stock investors are a different crowd IMO with an axe to grind in many cases. So PR for what, picket lines? And how much $ for that PR campaign? Demand is just fine.