TSLA Market Action: 2018 Investor Roundtable

[sauce]

Since Tesla has their patents available for others to use, does that mean other companies can use Tesla’s technology without the R&D?

Yes they can. But in reality they will still need to invest almost as much R&D into their own EVs unless they carbon copy Tesla's products, which Tesla evidently would not allow to happen.

My understanding is that "all our patents are belong to you" is to help motivate and accelerate legacy automakers' shift to EVs, but for the sake of product differentiation for obvious competitive reason, no one would be satisfied with a replica of a Tesla, OEMs first.

Sadly, the refusal of even using those patents yield the results we see today: an inefficient I-Pace, a half-assed high-cost E-Tron, a promising Taycan but with upwards of 4 yrs of R&D and a throwback of an EV called the EQC.

 

[SO16]

The reason I strongly disagree with you is the following.

Gas taxes charge people more for driving a lot.
Flat fees on EVs charge people the same amount no matter how much they drive.
So *even in Washington* anyone who drives less than average is incentivized to buy a gas car. That's just wrong. Only high-mileage drivers come out ahead by driving an EV -- specifically the drivers who are doing the most damage to the road.

This is a totally unfair way to pay for roads: soak the people who drive the least for choosing EVs.

Anything proportional to miles driven would be tolerable.

It actually should be more heavily focused against semis. It takes thousands of cars to cause the same amount of damage to the road as a semi does. Of course those costs would just be passed on to the consumer As well.

Too Big for The Road

 

[SPadival]

@beachbum77, even your friend and serial short writer at Seeking Alpaca has written a postive article on Tesla !!

Tesla Q3 Smashes Expectations - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

If you cant beat em, join em

 

[RFernatt]

The reason I strongly disagree with you is the following.

Gas taxes charge people more for driving a lot.
Flat fees on EVs charge people the same amount no matter how much they drive.
So *even in Washington* anyone who drives less than average is incentivized to buy a gas car. That's just wrong. Only high-mileage drivers come out ahead by driving an EV -- specifically the drivers who are doing the most damage to the road.

This is a totally unfair way to pay for roads: soak the people who drive the least for choosing EVs.

Anything proportional to miles driven would be tolerable.

I get the flat fee being less fair than the per gallon tax, but there is no practical alternative to handle that currently other than averages. Until there is a better way, a $200/year registration fee vs a $50/year ICE registration is not worth the fight that gives a free sound bite to a politician wanting to paint EV owners as entitled rich people that won't pay to maintain roads at the expense of the common man. That isn't going to win friends and influence enemies, especially in a conservative state. IMO, EV promoters should go above and beyond to pull their own weight, even if that means a small (at least in WV) penalty up front. If it gets out of hand, of course, we should push back.

I am good at agreeing to disagree, however.

 

[neroden]

I think you're expecting law and rules to be fair, but the best you can expect is that they're reasonable..

I'd certainly like them to be fair, but at the moment I just want to make us stop promoting fossil fuel burning. Period. Any policy which financially promotes fossil fuel burning is helping kill humanity. And a flat fee on EVs does that.

 

[neroden]

I get the flat fee being less fair than the per gallon tax, but there is no practical alternative to handle that currently other than averages.

Odometer tax. In my state we have to report the odometer reading every year when we have the car inspected, so at least in NY that is NOT a problem. The fee can be charged along with registration based on miles driven the previous year, really easy, really really easy. I mean trivially easy.

I suppose it would be a problem in states which don't require an annual inspection, but there aren't very many of those...

 

[Words of HABIT]

This is the first quarter ever where analysts don’t need to trust the promises and look to Tesla’s future, but rather they can mainly look at the past quarter and it’s numbers speak for themselves.

I don’t think we’re headed under $300 again.

DaveT, all of us TSLA Longs here at TMC are going to hold you to that. Always enjoy your posts.

 

[tivoboy]

So you're lunatic enough to believe that Tesla will not have the sort of massive value creation which Apple had?

Apple's making a toy, albeit a nice toy. Tesla's replacing a third of the energy infrastructure of the world and half the transportation infrastructure. Which business is likely to create more value? I'll let you think about it for a few years....

We’ll see

I’m betting that I’m not going to see tesla go up 700x from here in my lifetime

 

[SpaceCash]

The remaining short theses on $TSLA are full-tinfoil-hat crazy talk. They have nothing at all to grasp onto anymore and are claiming inanities at best. According to them, it's all fraud and cooked books and aliens; they are truly ****ed. They haven't even really begun to cover the ~30 million shares they owe back to the market, and price will only be going up.

I'd hate to be em
And I 100% saw this coming
This is going to be a very awesome transfer of wealth. And vindication.

 

[Fact Checking]

So other companies will have structurally higher costs than Tesla -- for years. And since they don't have a Supercharger network, the cars will be perceived as inferior to Teslas so will command a lower sales price. Margin squeezed from both ends. This is not where they want to be during the Great Transition to EVs.

There's also other, significant structural disadvantages ICE OEMs have:

• Car dealer networks are sales channel middlemen that drain margins further,
• Car dealers also have opposing economic interests: EVs can be profitable to OEMs, but dealers have substantial income from maintenance of ICE cars, especially in the higher price segments - which maintenance costs are significantly lower with EVs. So dealers will resist EVs as much as possible, slowing adoption.
• ICE OEMs also have a near impossible to resolve manufacturing capacity trade-off: selling an EV is a lost sale from an ICE factory - which idles the ICE factory and worsens economies of sale. This self-cannibalization is extremely serious due to the very long time current automotive capital investments are expected to return their investment costs. It's much worse than cannibalization in the high-tech space which had much faster product cycles. This "ICE Paradox" was highlighted by recent public statements by BMW and VW executives, but it's also obvious from the starkly different EV conversion strategies of the three biggest German carmakers. It's easy to quote Steve Jobs about cannibalization, who brought an entirely new phone to the market every year. ICE cycles are more like 5 years, with the most profits made in the 5th-10th year of a vehicle platform. But it's exactly these established but aging money makers that are cannibalized by EVs first ...
• ICE OEM shareholders want the profits of the recent past to continue into the near future, and will likely revolt at the extremely high EV transition costs. Classic short term vs. long term conflict.

At this point I genuinely don't see a single viable path forward for most ICE carmakers at this point. (!)

If I was an ICE carmaker executive I'd tell the board to liquidate all assets and buy Tesla shares, because the most profitable way forward is to start from scratch - which suggestion would get me fired.

 

[MP3Mike]

Gas taxes charge people more for driving a lot.

The gas taxes also have a problem of not having a MPG adjustment for cars. So people with a Prius get charged less for driving the same number of miles as someone driving a gas guzzler. (Which is OK as a pollution tax, but not for road maintenance.)

Odometer tax. In my state we have to report the odometer reading every year when we have the car inspected, so at least in NY that is NOT a problem. The fee can be charged along with registration based on miles driven the previous year, really easy, really really easy. I mean trivially easy.

Oregon is testing having an odometer tax to replace the gas tax but it isn't that easy because they can only tax the miles you drive inside Oregon, not what you drive in other states. So they have to use a GPS device, which people don't want.

And we don't have an inspection, but there is a bi-yearly emissions test, though you can do that yourself remotely via a OBD-II device. (Of course EVs are exempt from having to participate in the emissions test, so they never need to have an inspection of any kind.)

 

[Zhelko Dimic]

I'd certainly like them to be fair, but at the moment I just want to make us stop promoting fossil fuel burning. Period. Any policy which financially promotes fossil fuel burning is helping kill humanity. And a flat fee on EVs does that.

I feel that effects of $100-$150 yearly fee are negligible, and that you're being overtly pedantic. However, I don't claim to be expert on mid or lower economic class mindset. Yet, one experience I have is that Toronto introduced additional local tax that is $70 (or $140? I've forgotten). Seems to go up every year. I have several cars that I pay this fee for. After being upset first year, I just accepted it as a fact of life; and I'm actually unusually thrifty most of the time... There will be people that will object/not like it, but most of population won't notice, if they want EV, they'll get EV. Just an opinion, not a fact, so I could be wrong

 

[mongo]

There's also other, significant structural disadvantages ICE OEMs have:

• Car dealer networks are sales channel middlemen that drain margins further,
• Car dealers also have opposing economic interests: EVs can be profitable to OEMs, but dealers have substantial income from maintenance of ICE cars, especially in the higher price segments - which maintenance costs are significantly lower with EVs. So dealers will resist EVs as much as possible, slowing adoption.
• ICE OEMs also have a near impossible to resolve manufacturing capacity trade-off: selling an EV is a lost sale from an ICE factory - which idles the ICE factory and worsens economies of sale. This self-cannibalization is extremely serious due to the very long time current automotive capital investments are expected to return their investment costs. It's much worse than cannibalization in the high-tech space which had much faster product cycles. This "ICE Paradox" was highlighted by recent public statements by BMW and VW executives, but it's also obvious from the starkly different EV conversion strategies of the three biggest German carmakers. It's easy to quote Steve Jobs about cannibalization, who brought an entirely new phone to the market every year. ICE cycles are more like 5 years, with the most profits made in the 5th-10th year of a vehicle platform. But it's exactly these established but aging money makers that are cannibalized by EVs first ...
• ICE OEM shareholders want the profits of the recent past to continue into the near future, and will likely revolt at the extremely high EV transition costs. Classic short term vs. long term conflict.

At this point I genuinely don't see a single viable path forward for most ICE carmakers at this point. (!)

If I was an ICE carmaker executive I'd tell the board to liquidate all assets and buy Tesla shares, because the most profitable way forward is to start from scratch - which suggestion would get me fired.

Yah.
Longevity (million mile-ish drivetrain that is quickly replaceable along with pack) means less future sales also.

 

[Fact Checking]

The remaining short theses on $TSLA are full-tinfoil-hat crazy talk. They have nothing at all to grasp onto anymore and are claiming inanities at best. According to them, it's all fraud and cooked books and aliens; they are truly ****ed. They haven't even really begun to cover the ~30 million shares they owe back to the market, and price will only be going up.

According to Ihor Dusaniwsky shorts increased short interest to over 35.4 million shares going into the Q3 ER (!):

The mind boggles...

 

[neroden]

We’ll see

I’m betting that I’m not going to see tesla go up 700x from here in my lifetime

Oh, well, sure. You're right, Musk only expects it to go up 18x from here in the next decade. I did start investing at $30/share, but that means a mere 180x. Trivial gains, safe to swing trade without worrying about missing out.

 

[MP3Mike]

I feel that effects of $100-$150 yearly fee are negligible, and that you're being overtly pedantic. However, I don't claim to be expert on mid or lower economic class mindset. Yet, one experience I have is that Toronto introduced additional local tax that is $70 (or $140? I've forgotten). Seems to go up every year. I have several cars that I pay this fee for. After being upset first year, I just accepted it as a fact of life; and I'm actually unusually thrifty most of the time... There will be people that will object/not like it, but most of population won't notice, if they want EV, they'll get EV. Just an opinion, not a fact, so I could be wrong

Even if it was equal lower income people have a difficult time paying $150 once a year vs. $2.88/week.

 

[neroden]

There's also other, significant structural disadvantages ICE OEMs have:

• Car dealer networks are sales channel middlemen that drain margins further,
• Car dealers also have opposing economic interests: EVs can be profitable to OEMs, but dealers have substantial income from maintenance of ICE cars, especially in the higher price segments - which maintenance costs are significantly lower with EVs. So dealers will resist EVs as much as possible, slowing adoption.
• ICE OEMs also have a near impossible to resolve manufacturing capacity trade-off: selling an EV is a lost sale from an ICE factory - which idles the ICE factory and worsens economies of sale. This self-cannibalization is extremely serious due to the very long time current automotive capital investments are expected to return their investment costs. It's much worse than cannibalization in the high-tech space which had much faster product cycles. This "ICE Paradox" was highlighted by recent public statements by BMW and VW executives, but it's also obvious from the starkly different EV conversion strategies of the three biggest German carmakers. It's easy to quote Steve Jobs about cannibalization, who brought an entirely new phone to the market every year. ICE cycles are more like 5 years, with the most profits made in the 5th-10th year of a vehicle platform. But it's exactly these established but aging money makers that are cannibalized by EVs first ...
• ICE OEM shareholders want the profits of the recent past to continue into the near future, and will likely revolt at the extremely high EV transition costs. Classic short term vs. long term conflict.

At this point I genuinely don't see a single viable path forward for most ICE carmakers at this point. (!)

If I was an ICE carmaker executive I'd tell the board to liquidate all assets and buy Tesla shares, because the most profitable way forward is to start from scratch - which suggestion would get me fired.

The logical manufacturing path is to take an entire factory which is producing one of the "older" models (10-year-old platform), idle it as you discontinue that model, and then retool and reopen it as the all-new all-electric factory. Has anyone outside China done that? (I think BYD actually did.)

 

[MP3Mike]

Yah.
Longevity (million mile-ish drivetrain that is quickly replaceable along with pack) means less future sales also.

You think the ICE manufacturers are going to try to design a million mile drivetrain? Their dealers would kill them. They have to build in planned obsolescence, both for their dealers and themselves.)

Just look at how GM jammed everything into the "frunk" of the Bolt. No quick/easy/cheap drivetrain replacement there.

 

[neroden]

The gas taxes also have a problem of not having a MPG adjustment for cars. So people with a Prius get charged less for driving the same number of miles as someone driving a gas guzzler. (Which is OK as a pollution tax, but not for road maintenance.)



Oregon is testing having an odometer tax to replace the gas tax but it isn't that easy because they can only tax the miles you drive inside Oregon, not what you drive in other states.

That's nonsense! They absolutely can tax the miles you drive in other states. There's no federal rule against it. It's a registration fee for registering the car in Oregon; it can be based on the total number of miles driven, in any and all states, as a form of discouraging excessive driving in general, and there's no reason not to do it that way.

So they have to use a GPS device, which people don't want.

And we don't have an inspection, but there is a bi-yearly emissions test, though you can do that yourself remotely via a OBD-II device. (Of course EVs are exempt from having to participate in the emissions test, so they never need to have an inspection of any kind.)

 

[Krugerrand]

The guy sounds depressed.

Not depreessed enough for me. I’d like depression of the level that finally gets him to pack up his toys, move to another sandbox and shut up.

Hey, don’t look at me like that. We all have our dreams.