TSLA Market Action: 2018 Investor Roundtable

[dc_h]

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.)

Is he on our list of independent directors? That would be hysterical to have him sit in on an earnings call or sit in with mark speigal

 

[neroden]

In a tent, of course.

Rated funny because I think you know that that's the one part of car manufacturing which is seriously sensitive to dust.

 

[ZachF]

Here is my own personal feeling on how the transition is going to look (In the US):

Traditional S-curve adoption.

Collapse in ICE sales hits at the 20% of total sales range... This will also leave huge unused manufacturing capacity that EV manufacturers can snap up for a fraction of the price of creating new capacity.

Most of the ICE cars in the late 2020s will probably be hybrids and/or plug-ins as well, IMHO, and relegated to buyers with special circumstances.

Total ICE sales in the US already peaked forever in nominal terms in 2015-2016, IMHO.

 

[MarcusMaximus]

Rated funny because I think you know that that's the one part of car manufacturing which is seriously sensitive to dust.

Fairly sure it would also be illegal in CA. Maybe they could dig a pit?

 

[AndyH]

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.

Yes, we live in exciting times! Autonomous cars will make the whole industry topple over and implode. I think that holding shares in Tesla during the next decade will be very interesting. Very interesting.

 

[ZachF]

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.

Painting in tunnels underneath the factory?

 

[SW2Fiddler]

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

[Huh? Button] As an offset for a lost tax credit? Wouldn’t the difference between Dec 2018 delivery and Jan 2019 be half that? Tree Seben Fitty?

Unless some of it is for the fact that the former’s credit gets realized say “April 15th 2019” and the latter in 2020. - In which case never mind...

 

[dc_h]

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.

Paint seems tough. Not sure if they could build a second story above the paint shop or have a mobile encloywhile the car goes through the paint shop so you can paint more cars simultaneously. A mobile enclosure over the sprayer and around the car would also reduce fumes and paint loss.
Not my field, so may not make sense, but from what I’ve seen it seems like only one car can be painted at a time. If you could isolate each car and the paint, you could at least double if not quadruple your throughput.

 

[MarcusMaximus]

Painting in tunnels underneath the factory?

Hey! My pit idea was supposed to be a joke! Stop taking my jokes and turning them into good ideas!

 

[electracity]

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.

The most likely reason they pulled the "order now for 2108 delivery" was because it suddenly generated a lot of orders. The MR model also probably generated significant orders. They know that there are a lot of people who believe that they will probably order a model 3 that need a push off the fence.

Both were intended as demand stimulators. The thought of Tesla using demand stimulators for the model 3 in North America is apparently horrific.

With the S and X they built demo and inventory cars to smooth production. Building extra model 3's to make efficient batches or cars, for both production and delivery, probably has not worked well due to a maxed out system. The alternative is a deeper order queue.

They need a solid couple of months of orders to optimize production through to delivery. It's suboptimal to run

 

[dc_h]

Fairly sure it would also be illegal in CA. Maybe they could dig a pit?

Paint them in the boring tunnel on they’re trip to Richmond rail yard. /s

 

[ZachF]

Hey! My pit idea was supposed to be a joke! Stop taking my jokes and turning them into good ideas!

In all seriousness though, painting is one of those things that is pretty much entirely automated... Is there a reason it couldn't be done in tunnels underneath the factory?

 

[dc_h]

The most likely reason they pulled the "order now for 2108 delivery" was because it suddenly generated a lot of orders. The MR model also probably generated significant orders. They know that there are a lot of people who believe that they will probably order a model 3 that need a push off the fence.

Both were intended as demand stimulators. The thought of Tesla using demand stimulators for the model 3 in North America is apparently horrific.

With the S and X they built demo and inventory cars to smooth production. Building extra model 3's to make efficient batches or cars, for both production and delivery, probably has not worked well due to a maxed out system. The alternative is a deeper order queue.

They need a solid couple of months of orders to optimize production through to delivery. It's suboptimal to run

Seems like they want to stimulate RWD more than orders, or as much. All AWD puts pressure on motor and drive train capacity. Increasing RWD to at least 1/3 should increase capacity by as much as 1/6, if drive train/motors are a bottleneck.

 

[dc_h]

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.

I think Tesla advantages are batteries, brand, ride, overall tech appeal and AP today and promise. It’s the best car out there. That said, sounds like they have process opportunities. Not a dig, just an opportunity to get better. If the 3 had gone seamlessly think where Tesla would be? This would be the second or third quarter of profit and the Shanghai plant might already be under construction.
Even great can be better.

 

[30seconds]

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.

Disagree. The window on the website goes into next year. Plus disclaimers.

 

[ggies07]

this Swedish study calls for smaller EV batteries, finds Tesla more polluting than an 8-year-old car | Autovista Group.

I know we all know that's BS. You might have read this report when it came out a couple of years ago, and I'm sure several others on here did as well, but for those that missed it:


https://www.ucsusa.org/sites/defaul...ner-Cars-from-Cradle-to-Grave-full-report.pdf

In other words, the extra emissions associated with electric vehicle production are rapidly negated by reduced emissions from driving. Comparing an average midsize midrange BEV with an average midsize gasoline-powered car, it takes just 4,900 miles of driving to “pay back”—i.e., offset—the extra global warming emissions from producing the BEV. Similarly, it takes 19,000 miles with the full-size long-range BEV compared with a similar gasoline car. Based on typical usages of these vehicles, this amounts to about six months’ driving for the midsize midrange BEV and 16 months for the full-size long-range BEV.

6-16 months....that's it! And with Tesla - the Gigfactory is slowing going all renewable, so another positive which shrinks these pathetic lies.

 

[KarenRei]

I think Tesla advantages are batteries, brand, ride, overall tech appeal and AP today and promise. It’s the best car out there. That said, sounds like they have process opportunities. Not a dig, just an opportunity to get better. If the 3 had gone seamlessly think where Tesla would be? This would be the second or third quarter of profit and the Shanghai plant might already be under construction.
Even great can be better.

Shanghai plant is already under construction.

But yes, we'd probably already have had the Y launch, much higher supercharger deployment, Giga 2 and Tesla Energy being flush with the cash they need, Model 3 launch launch in more countries, all versions of the 3 for sale, etc etc etc.

 

[UrsS]

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.

If you read the comments from Tesla about the NHTSA crash report you can read how they set out to designed the most crashworthy/safest car. There is apparently no other car manufacturer that can design a better car body. So, Tesla has the best engineers who 'invented' the best car body. Neither Munro nor Ford or anybody else has shown that they can do better - because nobody has done better.
Perhaps the Y will be better? Or will it be the Ford F150?

 

[kbM3]

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?

There’s the additional fact that the Model 3 weighs the same as 3 series et. al. in spite of the very heavy pack.

 

[Krugerrand]

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.

There may be growth seen in ‘classic’ cars for some of todays ICEs.