TSLA Market Action: 2018 Investor Roundtable

[humbaba]

Market size of 50 million in the US? As much as most of us on here wish Tesla success....let's be realistic.
You do realize the US population is about 330 million.

Agreed that the number is fairly arbitrary, but neither is the total population all that informative on its own. Not all of the population can drive, nor are all interested in a sedan.

IMO if you are trying to estimate markets it is more instructive to consider the existing market size. While this is not perfect either it at least gives a reasonable estimate to scale.

For sedans, the top four are all fairly close and the M3 trails well behind. If you believe that the M3 is competitive against them it could grow to four times the sales volume without claiming every sale (and that is only considering the top four, not the tail). The main limiting factor (other than scaling output) is the sale price. But even if an M3 SR can't really compete with a Camry on price it may not have to -- all it really needs to do is compete on the price accounting for time of ownership.

Market action? I think the addressable market is significant to the future valuation of $TSLA. In the end game, an entry model for $25k (in today's dollars) would I think allow Tesla to own the entire new sedan market. And, naturally, they are aiming for the CUV and pickup markets. If they can scale before real competition emerges they will definitely be the 800-pound gorilla. Current stock price would then look like an incredible bargain.

 

[graphix25]

I echo the thankfulness for the awesome Tesla Daily Podcast with Jimmy_d, it really was great. Hope they do a part 2. After the Q3 conference call and listening to Jimmy_d I've been thinking about AP 3.0 hardware. AP 2.0 began shipping in Q4 2016 and based on my estimates Tesla will have shipped ~500k Model S/X/3 with AP 2.x hardware by the end of Q1 '19. As they transition into AP 3.0 and the new larger neural net it's going to cause a development fork between AP 2.x cars and 3.0 cars for the base visual neural net. If you combine that with Tesla removing the $3k FSD software enabler from their ordering pages it got me wondering what Tesla is going to about the 2.x cars. I suspect they will be highly motivated to get all customers to 3.0+ AP hardware asap.

I wonder if Tesla is going to offer up some kind of one time upgrade option to 3.0 hardware for existing customers. Could be a big boost to Q2 cashflow and earnings if they do so. With ~500k cars if they offer a one time $3000 upgrade to the 3.0 hardware suite with software FSD entitlement. That could equate to up to $1.5b upside over their normal business cash flow. It's important Tesla gets everyone to 3.x hardware for the future of the autonomous network and software development efficiency. I also think they will repackage Autopilot into a single software title that includes both AP and FSD once they get some FSD working in Q2 next year when they release the 3.0 hardware suite.

 

[MP3Mike]

Or one positive quarter of 6.66 (I kid you not).

Wouldn't you need at least 6.67 to show a profit? (Or do they consider $0 a profit?)

 

[mongo]

I echo the thankfulness for the awesome Tesla Daily Podcast with Jimmy_d, it really was great. Hope they do a part 2. After the Q3 conference call and listening to Jimmy_d I've been thinking about AP 3.0 hardware. AP 2.0 began shipping in Q4 2016 and based on my estimates Tesla will have shipped ~500k Model S/X/3 with AP 2.x hardware by the end of Q1 '19. As they transition into AP 3.0 and the new larger neural net it's going to cause a development fork between AP 2.x cars and 3.0 cars for the base visual neural net. If you combine that with Tesla removing the $3k FSD software enabler from their ordering pages it got me wondering what Tesla is going to about the 2.x cars. I suspect they will be highly motivated to get all customers to 3.0+ AP hardware asap.

I wonder if Tesla is going to offer up some kind of one time upgrade option to 3.0 hardware for existing customers. Could be a big boost to Q2 cashflow and earnings if they do so. With ~500k cars if they offer a one time $3000 upgrade to the 3.0 hardware suite with software FSD entitlement. That could equate to up to $1.5b upside over their normal business cash flow. It's important Tesla gets everyone to 3.x hardware for the future of the autonomous network and software development efficiency. I also think they will repackage Autopilot into a single software title that includes both AP and FSD once they get some FSD working in Q2 next year when they release the 3.0 hardware suite.

If you buy the FSD upgrade after delivery, you will get HW 3.0 once FSD SW is ready.

 

[Singuy]

I echo the thankfulness for the awesome Tesla Daily Podcast with Jimmy_d, it really was great. Hope they do a part 2. After the Q3 conference call and listening to Jimmy_d I've been thinking about AP 3.0 hardware. AP 2.0 began shipping in Q4 2016 and based on my estimates Tesla will have shipped ~500k Model S/X/3 with AP 2.x hardware by the end of Q1 '19. As they transition into AP 3.0 and the new larger neural net it's going to cause a development fork between AP 2.x cars and 3.0 cars for the base visual neural net. If you combine that with Tesla removing the $3k FSD software enabler from their ordering pages it got me wondering what Tesla is going to about the 2.x cars. I suspect they will be highly motivated to get all customers to 3.0+ AP hardware asap.

I wonder if Tesla is going to offer up some kind of one time upgrade option to 3.0 hardware for existing customers. Could be a big boost to Q2 cashflow and earnings if they do so. With ~500k cars if they offer a one time $3000 upgrade to the 3.0 hardware suite with software FSD entitlement. That could equate to up to $1.5b upside over their normal business cash flow. It's important Tesla gets everyone to 3.x hardware for the future of the autonomous network and software development efficiency. I also think they will repackage Autopilot into a single software title that includes both AP and FSD once they get some FSD working in Q2 next year when they release the 3.0 hardware suite.

I don't believe anyone is going to pay for FSD until its fully activated, the law has past, and it's fully working. By that time if Tesla is the first to get this thing enabled, it doesn't even matter if they can make an extra x amount of money. SP will shoot straight to 4k.

 

[Fact Checking]

It's important Tesla gets everyone to 3.x hardware for the future of the autonomous network and software development efficiency.

Up to 300,000 manual upgrades in service centers is quite some workload though, plus their HW3 lines might not have the capacity, at least initially.

 

[mongo]

Up to 300,000 manual upgrades in service centers is quite some workload though, plus their HW3 lines might not have the capacity, at least initially.

While a lot of cars, it's less cars/effort than some recalls. Worst case, they can use one (or more) of the third party rework firms.

 

[SpaceCash]

Here ya go SpaceCash. We want you around for awhile, you've captured the spirit of TT007!

Hahaha big thanks!! Yum yum

 

[ggr]

I believe the rule of thumb is that light speed is reduced by about 1/3c in fiber... so the speed is about 2/3c or twice as fast as you suggest.

Yes, that's what I meant. You should have read what I meant, not what I wrote .

 

[Chickenlittle]

I don't believe anyone is going to pay for FSD until its fully activated, the law has past, and it's fully working. By that time if Tesla is the first to get this thing enabled, it doesn't even matter if they can make an extra x amount of money. SP will shoot straight to 4k.

Many already have. Both my model3s were bought with it without any regret. Have blind spot detection and significant discount with no cost cpu update

 

[shootformoon]

Twitters EPS four quarter prior to being added in June 2018

March 31, 2018 0.08
Dec. 31, 2017 0.12
Sept. 30, 2017 -0.03
June 30, 2017 -0.16

So the sum is +0.01, so they made it just.


Teslas last 3 are

Sept. 30, 2018 1.75
June 30, 2018 -4.22
March 31, 2018 -4.19

So need another 2 positive quarters (dropping Q1 2018 out of the sum), adding up to 2.47

Twitter Inc EPS Diluted (Quarterly) (TWTR)

Sorry I did not make myself clear. I meant not 4 consecutive quarters. The sum was.

 

[Carl Raymond]

It seems many bears are short sellers due to entrenched emotions; they have financial stakes in the ICE world. For ex, perhaps they are a car dealer. They hate Tesla's biz model and fear it will hurt their business.
Their approach is to damage Tesla, fight against it. It's a reasonable reaction; try to harm something you hate. While in reality what they should be doing is hedging their possible decline by investing in Tesla, the way the Saudi's did. Someone should write an article on SA, with this contrarian, yet logical, view. Maybe it would help some of these particular bears switch up their strategy and go long as a hedge.

To summarise: if can't beat 'em, join 'em.

 

[Singuy]

Many already have. Both my model3s were bought with it without any regret. Have blind spot detection and significant discount with no cost cpu update

No I'm saying those who skipped out on FSD to begin with like myself. It may be free upgrade just to help Tesla train with a software lock. In that case then I'm game.

 

[MP3Mike]

Up to 300,000 manual upgrades in service centers is quite some workload though, plus their HW3 lines might not have the capacity, at least initially.

You just load up a Model X with as many HW3 modules as fits and have the Nav on AP drive it from one Tesla to the next and install them in the field. At ~45 minutes a piece a person could only do about 11 in a normal 8 hour day. That would be 225,000 man hours, or 28,125 man days, to complete the retrofits. So if you wanted it complete in one month you would need ~1,300 people working full time, M-F, on the retrofits. You could probably speed the process up a little by setting up a retrofit "clinic" at Superchargers and allowing people to set an appointment.

 

[graphix25]

While a lot of cars, it's less cars/effort than some recalls. Worst case, they can use one (or more) of the third party rework firms.

Between their mobile units, 300+ services centers and a upgrade taking 30 minutes it doesn't seem like a challenge. Agreed on the note that capacity of the new computer could be a limiting factor. Why not capture $1b+ in revenue as they prepare for Model Y and Semi Launch. This would compliment the reservation cash for the Model Y and help offset the debt payment in Q1.

 

[mongo]

Between their mobile units, 300+ services centers and a upgrade taking 30 minutes it doesn't seem like a challenge. Agreed on the note that capacity of the new computer could be a limiting factor. Why not capture $1b+ in revenue as they prepare for Model Y and Semi Launch. This would compliment the reservation cash for the Model Y and help offset the debt payment in Q1.

It's not bottom line revenue until the FSD SW is done. Until then, it's increased cash offset by deferred revenue.

 

[EVNow]

ahem. I have a house and three vehicles. Still working on getting an M3 -- it certainly is not easy despite meeting your criteria. Naturally, my house is modest, as are the vehicles, but such a glib claim deserves a reply. Not sure where you pulled the 50 million figure from either.

[edited to add: owning a house really doesn't mean anything without knowing location. There's a huge variation in value for what amounts to the same property depending on where its at.]

Note, I said EV. Not necessarily 3. I also didn't say they can all do so immediately.

The households with 2 or more cars come from Transportation department (?) surveys. It's been a few years, so I'll lookup to refresh my memory.

 

[NicoV]

Everyone I talk to at work are interested and all of them can easily afford a $50k car. Several, BTW, know I've been driving an EV for years. Infact some even drive Leaf because of that.

People near my home have been commenting on my 3 too.

I've been saying this for years. Middle Class Americans who have a house and 2 cars can easily replace one of the ICE with an EV. That is a market of some 50 Million.

And then they replace the other one with an EV too. Like my wife and I will do when the 3 comes to EU.

 

[SpaceCash]

You know you got under a bear's skin when he quintuple posts in response to you

I don't feel bad. These guys should feel bad.

 

[MXWing]

Everyone I talk to at work are interested and all of them can easily afford a $50k car. Several, BTW, know I've been driving an EV for years. Infact some even drive Leaf because of that.

People near my home have been commenting on my 3 too.

I've been saying this for years. Middle Class Americans who have a house and 2 cars can easily replace one of the ICE with an EV. That is a market of some 50 Million.

$60,000 is the average household income in the United States.

It's a big stretch between a Civic that's been paid off for 10 years versus the 3MR.