TSLA Market Action: 2018 Investor Roundtable

[avoigt]

Absoutely disagree. I think Maye can do basic math as well as many of us on the board, and can tell from public information that Tesla will have huge positive cash flow in Q4, and I think that's all there is to it. If I can tell that Tesla will have large positive cash flow, and so can luvb2b, then so can Maye. She's a smart woman, not a Wall Street "analyst".

Its been speculative on my side and you may be very well be correct.

 

[Krugerrand]

1. 17h17 hours ago
   Maye Musk Retweeted Ross Gerber
   
   
   
   
   
   
   @GerberKawasaki Staying on top of @Tesla news
   
   
   
   #CleanEnergyWillWin #Pravduh
   
   
   Ross Gerber‏Verified account @GerberKawasaki
   Maybe I read this wrong. But Jonas at MS just put out a note that Tesla will do over $700 mil in cash flow Q4. That’s huge. The tide has turned folks. $tsla
   
   
   With Maybe Musk now actively supporting Elon on Twitter there are two options possible, either its Elon writing at least partly with her account or what she writes is coordinated with him. I would rule out that she is commenting without his knowledge and support.
   
   Looking at where she agrees to for instance at more financial oriented information from MS about CF and looking what Made Musk field of expertise is I'd say this is rather Elon holding the pen from time to time.

I don’t know what your relationship is with your mother and perhaps that’s why you think this way but my own mother (and every other mother I know - from a healthy relationship) will support their child unequivocally, eat crap on their behalf, clear the way and whatever else she deems necessary.

Maye Musk is an intelligent woman. She knows exactly what’s going on with all her children and seems to simply be doing what mothers do best; stand up for, protect and fight back.

 

[Sudre]

Speculation. Note that I was the only person who pointed out the negative margin impact, which the market priced in today.

Lol. And you are speculating they are selling Model 3 at a loss.... or “negative margin”. But then again you are worried about short term trading and not long term investing. Normal I would not point that out because this is supposed to be the Market action thread but now days this is just a babble on thread about everything so all,sides have to be mentioned.

 

[Electroman]

Adam Jonas is an idiot.

Either that, or he thinks we, the investors, are all idiots.

Well, I disagree with him about Trump -- but I agree with his assessment of the Wall Street "analysts" -- they are mostly idiots who can't do math and don't understand the first thing about any business whatsoever. (There are exceptions.)

Definitely not. They are smart but greedy and evil, and make the rest of us as fools.

 

[ZachF]

The transition will be very different based on location. In some European countries and California ICE sales could plummet in less than 5 years. In Norway it's already happening. The various rebates provided by goverments does make a difference. EV transition would be slower without them. Politicans are doing something right even though they should be doing a lot more.

Damn, I whish that Sweden had some spare billions from an oil fund like the Norwegians have. Instead we have Volvo churning out diesels like there's no tomorrow with no EV's in sight despite all the promises.

Eventually, when it becomes obvious to a critical mass of people that ICE automobiles are heading toward impending obsolescence, the depreciation rate on ICE automobiles will begin to increase dramatically and it will tank ICE sales.

The collateralization model of automobile financing is dependent on a certain depreciation rate, so that at any given time most loans are not underwater. If depreciation starts to increase massively, say goodbye to no down financing, low APR, and longer term debt notes (ie 72 months), Trade-in value collapses, etc.

Put simply, the amount of ICE car that a perspective new car buyer can purchase with a set level of monthly payments will plummet as the "amount" of EV they can buy goes up and up. A lot of people getting put upside-down on ICE debt will leave bad tastes in their mouths for ICE automobiles. I personally believe this will create a small financial crisis in the not-to-distant future.

I think this will begin at around EV sales of ~3 million a year, and it will tank overall US sales to around 9-10 million a year (from 16 million).

Autonomous cars are also a monkey wrench that could turbocharge this effect, because one autonomous car can replace several owned cars, leading to a giant surplus of used ICE vehicles (And autonomous ICE cars are uncompetitive from day one). This is why I also think that sales will stay at the 9-10 million range, as a good chunk of those will be fleet autonomous cars replacing the capacity of several personally owned ones.

A lot of people don't realize how market reflexivity can massively increase the death spirals of old technology.

The total demand for motor vehicles will drop worldwide by about half, IMHO. Less so in developing countries because low-cost autonomous ridesharing will lower the cost ceiling of transportation and grow the user base by larger amount than the drop in individually owned demand decreases it. Large exporter of ICE automobiles will probably get rekt economically in this circumstance (Japan, Germany, etc.).

My own personal opinion is that the car market of the 2030s will resemble the phone market of today. Tesla will occupy Apple's spot, it will control it's supply lines and software, and dominate the higher end of the market, and the lower end of the market will be dominated by cheap Chinese EVs using third-party (Google, Apple, etc.) software.

 

[Fact Checking]

More likely a bunch of puts were closed out and the market makers had to unwind their hedges against them -- the market makers hedge by short-selling the stock, so they have to buy a bunch.

I agree that it was possibly options market makers closing out PUT delta hedges, but I don't think the PUTs were sold before the closing tick: it was simply MMs closing the hedges, full stop. After the close there's no risk to hedge against anymore.

Friday showed strong downward volatility, which could have delayed the MMs reducing their TSLA short inventory. There were much fewer CALLs, so the delta hedge inventory of PUT writer MMs dominated the end of the day.

 

[neroden]

Either that, or he thinks we, the investors, are all idiots.
Definitely not. They are smart but greedy and evil, and make the rest of us as fools.

Ah, the age-old debate over whether someone is *maliciously lying* or *a complete fool*. It's so hard to tell from the outside. And of course someone can be *both* lying *and* a fool, like Donald Trump.

Mod: Much as I agree about Trump, this belongs in Market Politics thread which I would move to but don't know how. So, for record keeping, I'm reporting this. Don't respond here. I shall delete.

 

[humbaba]

Put simply, the amount of ICE car that a perspective new car buyer can purchase with a set level of monthly payments will plummet as the "amount" of EV they can buy goes up and up. A lot of people getting put upside-down on ICE debt will leave bad tastes in their mouths for ICE automobiles. I personally believe this will create a small financial crisis in the not-to-distant future.

I like your post, I just want to point out that some people (I know some) will blame EV, not ICE, for their difficulties and dig in even harder. It doesn't change the overall effects really, just a nuance in terms of how individuals react.

IMO once the crunch happens there will in short order be one US manufacturer selling ICE to the hold outs as a niche market at premium prices due to low volume. I hadn't considered the other factors you raise, such as lack of ready financing. Which will make this conjectural group of holdouts all the more bitter and given to acting out. Anyone who thinks coal rolling is bad isn't accounting for how vicious and nasty people can be when they feel that the world is against them...

 

[Fact Checking]

The collateralization model of automobile financing is dependent on a certain depreciation rate, so that at any given time most loans are not underwater. If depreciation starts to increase massively, say goodbye to no down financing, low APR, and longer term debt notes (ie 72 months), Trade-in value collapses, etc.

Also note another big problem: current outstanding ICE auto loans in the U.S. are more than a trillion dollars.

Any jump in expected depreciation rates is going to affect those too. Even if the rate of non-performing auto loans doesn't change significantly, their rating will become worse and they can be used less as sources of financing - at a time when ICE carmakers need sources of financing the most, to pay for the painful conversion into the EV era.

Just check auto loans:

That's over 1.1 trillion dollars, growing rapidly - and 98% backed by ICE cars...

If depreciation speeds up then the securitization of these loans will suffer retroactively, which, considering the trillion dollar value, might create a bigger financial shock than the reduction of new loan originations.

Note how this is helping Tesla: relative improvement in depreciation rates will make Tesla purchase financing less expensive and ICE financing more expensive. Given that 85% of new car sales are financed, and the average new car loan amount is over $30,000, we are not far away from the point where you can get a $35k-$45k Tesla with very little down payment and a lower monthly rate than an ICE vehicle with the same price and better future expected resale value.

Once that happens it's checkmate for large sections of the ICE industry, IMO.

 

[MarcusMaximus]

Ah, the age-old debate over whether someone is *maliciously lying* or *a complete fool*. It's so hard to tell from the outside. And of course someone can be *both* lying *and* a fool, like Donald Trump.

Poe’s law in action.

 

[dc_h]

I don't think we can make that link. We do know that the Tesla chassis/body has been heavily engineered compared to what Munro sees as normal (Munro stated it in his report and Tesla has not denied it), and we know that the 3 has excellent crash results (from NHTSA). But we don't know how much of a correlation there is between these two points. Could Tesla still receive the same safety ratings with a more simple and lighter design? I have no idea and am not an engineer. Other posts have said that Tesla fired the engineer responsible for the 3 chassis which also gives this statement some pause for thought.

Before becoming a globetrotting banker, I grew up on a farm in Australia and used to fabricate (to use the word loosely, it was more hillbilly engineering) many items that required fairly heavy load capacity (stock crates, feeders that would hold a few tonnes of grain, ramps, etc) and intuitively I would say that the more metal you put into something the stronger it gets. But I am sure someone who knew what they were doing could achieve the same outcome with far less material.

It would not be surprising if traditional automakers have better expertise in efficient chassis/body construction as that is one of the only areas they have designed in house (along with ICE drivetrains).

If there is anyone on this board with expertise in this area it would be great to hear your opinion.

Quick Edit: If the 3 Chassis/Body is not yet optimally designed and Tesla are already making a positive margin then this is quite a positive outcome as we know that they continue to optimise their vehicles on an ongoing basis. Real margins on the 3 may be even better than they initially forecast if there is room to simplify the current design.

All the car engineering is going away at Ford. It will be interesting if they pick up some legacy talent for some best practices on body construction. They’re reinventing the electronics but perhaps needlessly relearning or reinventing body construction. I hope they hire Munro for consulting to improve the 3 and save some struggles on the Y rollout.

 

[N5329K]

Either that, or he thinks we, the investors, are all idiots.



Definitely not. They are smart but greedy and evil, and make the rest of us as food.

Fixed it for you.
Robin

 

[shrspeedblade]

I like that you all aren’t even factoring in oil prices- if they spike it leaves people underwater with their ICE loan AND with a much larger cost of operation. You can be philosophically opposed to something, but people become far more accepting of things when it is in their financial self-interest to be so!

 

[dc_h]

The German tear down came to the results that

• the 3 chassis has only 10% of the over-all weight which is in line with the light construction of the S which they call impressive
• That does bring the costs down and the construction is very smart as its a design to produce where robots can easily handle the parts

That alone is fully against to what Munro found and said. I said it before and say it again. The findings from Munro do not fit to what the German engineers found.

I do not know who is right but there is one information we all know for sure:

The 3 has the highest safety ratings every measured and the efficiency ratings are just impressive and hard to beat.

Look at this two facts what Munro called bad obviously has led to a fantastic combination between safety, efficiency which includes weight and costs.

Don't know why anybody ever talks about Munro. All points he tried to make has been proven wrong.

With regards to expertise of ICE automakers in EVs. Show me one who brought that combination of safety, efficiency and costs together and I call myself wrong.

If they could they would but they don't know how!

Tesla Model 3 für 40.000 Euro: Der Beginn der Massentauglichkeit?

Last earnings call Elon said the body shop and paint were the productivity keys. Improving body fabrication is/was the top productivity opportunity. Munro is smart, he’s not a short slamming Tesla and sounded like he looked forward to working with them. I think Munro could be a big help, not Grohmann big, but could help 3 going forward and get the Y production off the ground faster.

 

[MarcusMaximus]

Do we have any insight into what’s going on with Munro being sued? I noticed his comments being pushed out again this last week, but didn’t see anything actually new there and few news orgs seem willing to write about or investigate the lawsuit.

 

[neroden]

I like that you all aren’t even factoring in oil prices- if they spike it leaves people underwater with their ICE loan AND with a much larger cost of operation. You can be philosophically opposed to something, but people become far more accepting of things when it is in their financial self-interest to be so!

And weirdly, they seem to be spiking. (Nobody's entirely sure why; I've heard conflicting theories, none convincing.) Those of us who've been analyzing the long-term shift (over on the "shorting oil" thread) think that oil prices will enter their final permanent decline by 2023. How they move before then is not something I can predict.

 

[keydiver]

Yes, if I recall my 70D is around 360 volts.

Actually, slight correction: According to Tony Williams everything under 85 kWh is 354 volts:
Model S Battery Voltage?

 

[dc_h]

We actually don't know this. We knew this when they gave the "Orders placed by October 15th will be delivered by the end of the year" statement, but then they took that away.

Tesla's current claims on their website... well... um. They're giving estimated delivery dates with no promises and we know how well THAT has worked out in the past.


Except it doesn't. We still know that they're planning to ramp up production, *and* that they're notoriously optimistic. This does *not* tell us how long it will take to satisfy the waiting list. I advise you, do not be surprised if they end up mailing $7500 checks to a bunch of people who ordered before October 15th and didn't get their cars until the new year.


That's certainly true.

Maybe Tesla could setup some charter flights for east coast and mid west customers to do local pickup in California or sparks? If you can’t get 5000 cars across the country, maybe they can get 5000 customers across the country? A couple hundred dollar flight for the worlds biggest delivery celebration?

 

[neroden]

Last earnings call Elon said the body shop and paint were the productivity keys.

I'm pretty sure they can speed up the body shop stuff.

I am not at all sure that they can speed up the paint. Even with baking, you can't make paint dry faster than a certain speed (without damaging it) and you can't spray it faster than a certain speed (without getting bad results).

I think they may have to bite the bullet and build additional paint shop, which is both expensive and slow -- and worse, where the heck will they put it? I don't think they'll admit this need until Q1.

 

[MarcusMaximus]

and worse, where the heck will they put it?

In a tent, of course.