TSLA Market Action: 2018 Investor Roundtable

[DragonWatch]

I live in a redneck part of California, I’ve been surprised by the reactions of these human like creatures to our model X and ev’s In general. I was shocked when a family friend who owns one of the busiest well drilling companies in California told me he can’t wait to get a Tesla truck. I get asked a million questions by the locals anytime I’m in the coffee shop. My personal opinion from first hand experience, zero worries they will all convert in time, some faster than others.

Design possibilities are limitless, and I’ll wager anyone here any amount of money that everyone won’t be happy with it, any takers? I will also bet that Tesla will once again be production constrained. This is hopefully my next Tesla (not counting a 3/Y for my daughter).

I’m looking forward to it, I’ve had quite a few confrontations with these creatures after being coal rolled when cycling. They sure act tough in their pickem up truck but I’ve yet to have one accept my invitation to step out of their vehicle so I can kick their ass.

Regarding fwd on model X, I like them but I feel they made one mistake, “door handle” for fwd should have been placed towards rear side of door, not the front. It slows entry process with both front and rear passenger pressing open then having to avoid each other and both auto doors. No problems with exiting. They came in very handy transporting a disabled family friend home from hospital.

I am sorry for your living environment. While my ability to encourage a truck driver to step out of his or her truck is or has been gone for many years, not to mention my being short in stature, I still have my hair rise on the back of my neck ~ or at least that which is left. I usually had to, in the old days, rely on my evil look (stink eye) that usually scared the holy living daylights out of most would be freelance bullies Though my wife found me attractive, and one of a kind

FYI ~ Found a Model S in Rome; from FO-09 ~ no supercharging from this perspective Love spending my tax incentive though ~ yes, it is my wife’s fault

Oh yeah, loved your comment and I too (wife included) really want that truck bad

 

[lklundin]

CNBC would have us believe the downturn in ICE luxury sedans is due to consumers shifting to high end pickups. Lol...god forbid they admit Tesla is eating their lunch.

Luxury car owners trade up for American pickups as Ford, GM and Dodge trucks dominate market

Right, only once did the article fail to ignore that Tesla is a leading car maker:

"A near Tesla-sized touchscreen display on top-line Ram models"

 

[avoigt]

CNBC would have us believe the downturn in ICE luxury sedans is due to consumers shifting to high end pickups. Lol...god forbid they admit Tesla is eating their lunch.

Luxury car owners trade up for American pickups as Ford, GM and Dodge trucks dominate market

Some German media does acknowledge now as the October numbers are out that Tesla is creating some trouble for BMW and Audi in the US.

Sales of BMW 3 series down 23% and Audi A4 down 21% (...) the three German top models down 17% in the US.

Tesla did slightly less in October but still a few times what the gas competition from Germany did.

Wait until the 3 comes to Europe.... Sedans are more used and more popular here and people will learn quickly how superior it is.

Still waiting for the release of the GF4 in Europe to be announced to supply enough cars.

Tesla Model 3 bereitet BMW und Audi in den USA Sorgen - electrive.net

 

[BioSehnsucht]

Some German media does acknowledge now as the October numbers are out that Tesla is creating some trouble for BMW and Audi in the US.

Sales of BMW 3 series down 23% and Audi A4 down 21% (...) the three German top models down 17% in the US.

Tesla did slightly less in October but still a few times what the gas competition from Germany did.

Wait until the 3 comes to Europe.... Sedans are more used and more popular here and people will learn quickly how superior it is.

Still waiting for the release of the GF4 in Europe to be announced to supply enough cars.

Tesla Model 3 bereitet BMW und Audi in den USA Sorgen - electrive.net

Do you know if that is comparing Oct 17 to Oct 18, or Sep to Oct? I google translated the article but it doesn't seem to be stated ...

 

[avoigt]

Do you know if that is comparing Oct 17 to Oct 18, or Sep to Oct? I google translated the article but it doesn't seem to be stated ...

They have later a sentence that clarifies it:

From January to October only 117,000 of the three middle class models have been delivered. In comparison to the year before that is a minus of 18%

If you take the spreadsheet of insideevs and the Audi/BMW October numbers (BMW 3,445, Audi A4 2,267) you should be able to find out where the other % ages come from.

The year to date number make BMW and Audi even look better than they are. If you look at October alone its a bloodbath for them....

 

[Fact Checking]

2) Here's what developing Model X did to Tesla's balance sheet (gap between the greens):

I believe you are seriously misreading and misinterpreting the history of the Model X expansion in 2014-2016.

Here's the delivery levels of the Model S and Model X over that time period:

      quarter    S-deliveries      X-deliveries
      2014/Q1           6,470                 -
      2014/Q2           7,570                 -
      2014/Q3           7,772                 -
      2014/Q4           9,824                 -
      2015/Q1          10,030                 -
      2015/Q2          11,507                 -
      2015/Q3          11,580                 -
      2015/Q4          17,192               208
      2016/Q1          12,420             2,400
      2016/Q2           9,745             4,625
      2016/Q3          15,800             8,700
      2016/Q4          12,700             9,500

What we can see is that at the beginning of the Model X expansion Tesla had a production capacity of about 30,000 vehicles a year. The "Model X expansion" was also a 300%+ capacity expansion of the Fremont factory: Tesla went from 30K/year to the current 100K/year output levels (limited by Panasonic 18,650 cell supply) - and the real current limit is probably closer to 120k/year so the factory capacity expansion was probably closer to 4x.

Much of the capex spending you cite was not "Model X R&D", it was the new robotic assembly lines, the new paint shop, the new stamping presses, the new injection molding lines, warehousing capacity expansion, etc. etc.

That's a massive lost opportunity cost that I, as an investor, don't want to see repeated. Tesla doesn't need to beef up its luxury chops; they're already well established. It needs to improve the low end and expand its market. Rapidly. It doesn't need a diversion to suck money making a toy. They've already got a (far wider appealing) halo car project in the works (Roadster).

I think you are misinterpreting Elon's intentions here as well - and admittedly he doesn't make it easy to read it. I believe his plan for the Tesla Pickup Truck is the following:

• Do the (very) low capex but time consuming product planning and prototype development R&D.
• Have a low capex 'default plan' in place which is essentially a very low capex GA4 'Tent' assembly line work-alike but inside a permanent building: GA4 is essentially a very long conveyor belt with manual work stations. This is I believe similar to how Hummers were made in Fremont.
  
• Introduce the product, see pre-order rates and spec the factory based on that.
• Based on experiences with the v1 premium product spec the mass-manufacturing factory for the smaller, F-150 competitor v2 mass market product.
• Edit: another viable pathway would be to also make an F-150 class pickup truck on the Model Y manufacturing lines. The F-150 is already a unibody design (like most other trucks at that price level) and the Y is likely going to be unibody as well.

Furthermore, unlike in early 2014, today 5 years later Tesla has acquired and vertically integrated both industrial robotics and industrial tooling companies and they can build their own factories and assembly lines at a significantly lower cost than their original Model X expansion.

As Elon said it very clearly: no more bet-the-farm Tesla products anymore.

 

[HG Wells]

déjà vu, feels like it was already 1am...

Spoiler

daylight savings time and self adjusting cell phone clocks can really mess with your head...

Sorry about that.
That's my time machines equivalent of rolling coal.

 

[lklundin]

Driving a big pickup truck is neutral, not closer to nature not further from it.

In Europe, where hardly anyone but farmers own land that takes a vehicle to cover, where public roads are pretty good and where it is typically forbidden to drive around in state owned nature, driving a big pick-up truck with its high energy consumption and rarely needed capabilities is generally seen as detrimental to nature.

Unlike in the US, a deer hunter will often use their daily driven hatch-back or SUV (with a large plastic tub in the back) and a farmer often uses a similar vehicle, when not actually going into their fields.

The big pickups imported from the USA are really quite rare here - where they appear enormous to the point of being out of place - and are probably bought to make some kind of statement, rather than for an actually considered use case.

 

[CorneliusXX]

All of North America prefers F150 sized trucks.

It is unknowable if rural China,Brazil,Russia,Scandinavia, and Australia prefer a Hilux sized truck or specifically a Hilux sized truck's fueling cost.

They might just prefer F150 sized vehicles with fueling cost below that of a Hilux over a compact electric truck with only marginally cheaper fueling cost.

I agree that demand is to a certain extent not provable. But I grew up in rural Australia and have seen the odd converted F150 driving around the area. The general consensus is that they are too big and cost too much to run, even in a place as big as Australia. The only person I know who had purchased an F150 in Oz did so because the larger size allowed him to cart a piece of equipment without a trailer and it was something he used daily. However he said he didn't like it much as it was very expensive to run.

Moving away from anecdotal responses, Ford has a very strong, but waning, franchise in Australia. When full sized sedans were popular they were one of the top two brands. Their dealerships are ubiquitous. Do you think they would not be screaming for a big money maker like the F150 if they thought there was enough demand for it?

In Europe, it would be virtually impossible to use in many areas. The back roads of even the developed western part are narrow and many have hard shoulders. I could not imagine trying to drag a monster vehicle through many of these areas. There may be certain pockets of land with wider, flatter driving conditions but, generally speaking, an F150 would be very limited around where you could go.

Perhaps South America would be more amenable to larger pickups, but If they were profitable to sell in SA then why aren't they already being sold in large numbers? I doubt Ford would leave money on the table like that. SA even drives on the same side of the road as the US so little work would be required to homologate the vehicles.

 

[KarenRei]

I believe you are seriously misreading and misinterpreting the history of the Model X expansion in 2014-2016.

Tesla was already green with respect to free cash flow before starting tooling for the Model X - despite being in the process of expanding Model S production. Model S expansion was planned from the beginning. It did not cost billions of dollars.

"I'm not sure anyone should have made this car. We probably should have just [modified the Model S]. There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars." -- Elon Musk

Ever notice that there was nothing resembling the Model X in Tesla's original Master Plan? The company was supposed to go straight from the S to the 3. Musk fell in love with the idea of making his big complicated robot car, and Tesla was significantly set back because of it. (Should I even bother to mention that its effect on Tesla's reliability rankings is still being strongly felt?)

Much of the capex spending you cite was not "Model X R&D"

Let's not confuse "R&D" (your words, not mine, despite you putting them in quotes) with prototyping, testing, tooling, retooling, contractor wrangling, and generally going through production hell.

* Have a low capex 'default plan' in place which is essentially a very low capex GA4 'Tent' assembly line work-alike but inside a permanent building: GA4 is essentially a very long conveyor belt with manual work stations. This is I believe similar to how Hummers were made in Fremont.

Vehicle production is not simply a GA line. Obviously.

* Based on experiences with the v1 premium product spec the mass-manufacturing factory for the smaller, F-150 competitor v2 mass market product.

This would be my "best case scenario" that I listed above. Yet that would put the mainstream pickup half a decade away, unless they're planning to make the first pickup a "near-term" project, wherein that's taking valuable money away from far more critical projects.

Edit: another viable pathway would be to also make an F-150 class pickup truck on the Model Y manufacturing lines. The F-150 is already a unibody design (like most other trucks at that price level) and the Y is likely going to be unibody as well.

This is what I've been supporting - common front end, having the body shop be adaptive for the rear-end, having the engineering be designed for distributing the loads properly in either config, and with a beefed up rear suspension for the pickup. Yet here we are talking about a titanium luxury sports unimog instead.

Furthermore, unlike in early 2014, today 5 years later Tesla has acquired and vertically integrated both industrial robotics and industrial tooling companies and they can build their own factories and assembly lines at a significantly lower cost than their original Model X expansion.

Remind me, how well did the scaleup for Tesla's most recent vehicle go?

As Elon said it very clearly: no more bet-the-farm Tesla products anymore.

Nobody's talking about "betting the farm". Tesla has enough money to survive any folly. We're talking about lost opportunity costs. Capital is critical right now, for so many things.

There's nothing wrong with manufacturers playing around with new concepts for vehicles, even if they're not practical. That's normal - it happens all the time. The problem is when one becomes Elon's "favourite project", the one that causes him to feel "Oh, my heart!", which invariably means "We must do this, and go crazy overboard, even when it's a bad business decision".

 

[lklundin]

Some German media does acknowledge now as the October numbers are out that Tesla is creating some trouble for BMW and Audi in the US.

Sales of BMW 3 series down 23% and Audi A4 down 21% (...) the three German top models down 17% in the US.

Tesla did slightly less in October but still a few times what the gas competition from Germany did.

Wait until the 3 comes to Europe.... Sedans are more used and more popular here and people will learn quickly how superior it is.

Still waiting for the release of the GF4 in Europe to be announced to supply enough cars.

Tesla Model 3 bereitet BMW und Audi in den USA Sorgen - electrive.net

While an interesting development, the above report is still just from an outlet that promotes electrical vehicles. The main stream media and their readers have only accepted that Tesla is a leading maker of _electrical_ vehicles and one that may still go bankrupt. So for them the "böse Erwachen" is yet to come.

In fact, when the literal invasion of the Model 3 happens here the shock and awe will surpass everything but the vaguely remembered "Panzeralarm".

 

[avoigt]

While an interesting development, the above report is still just from an outlet that promotes electrical vehicles. The main stream media and their readers have only accepted that Tesla is a leading maker of _electrical_ vehicles and one that may still go bankrupt. So for them the "böse Erwachen" is yet to come.

In fact, when the literal invasion of the Model 3 happens here the shock and awe will surpass everything but the vaguely remembered "Panzeralarm".

Thats a fair and correct assessment.

In particular in Germany most people although they like Tesla and consider them as a leading EV manufacturer their experience is if at all only with the S and X. The 3 will be the true game changer here and will change the perception dramatically.

 

[Fact Checking]

Model S expansion was planned from the beginning. It did not cost billions of dollars.

I disagree, the paint booth expansion alone was probably a billion dollars - but neither of us knows this for sure, because Model S and Model X related capex was never reported separately, and also a good number of the lines are shared between the S and the X. AFAIK only the chassis welding line is unique to the X.

Ever notice that there was nothing resembling the Model X in Tesla's original Master Plan?

There is a marked shift away from sedans to SUVs in America, in China and in parts of Europe, unrelated to fuel economy. Volvo's new compact SUV XC40 is a runaway success, one of the few growth stories in the ICE industry. I believe it was the right call to not ignore the SUV market - and it paved the way for the Model Y.

The Falcon Wing Doors might or might not have been a mistake - but by now it's all history, a done deal, and they are certainly iconic to the brand.

This is what I've been supporting. Yet here we are talking about a titanium luxury sports unimog instead.

Note that the two are not necessarily exclusive: Tesla could introduce the Model Y, the compact pickup truck and the full size pickup truck at once during the March unveiling. I believe the 'large', 'full size' pickup truck variant is basically required to be taken seriously in that market segment.

Or the compact pickup truck could be planned to be part of the Y manufacturing lines but introduction is delayed by a year and the full size pickup truck is used to build mindshare and gain experience with the form factor.

We'll see.

 

[hobbes]

While an interesting development, the above report is still just from an outlet that promotes electrical vehicles. The main stream media and their readers have only accepted that Tesla is a leading maker of _electrical_ vehicles and one that may still go bankrupt. So for them the "böse Erwachen" is yet to come.

In fact, when the literal invasion of the Model 3 happens here the shock and awe will surpass everything but the vaguely remembered "Panzeralarm".

I agree that Model 3 will be very successful here. But this is not a war, no need to stylize it that way.

 

[KarenRei]

I disagree, the paint booth expansion alone was probably a billion dollars

Tesla had positive FCF before the start of the X, despite scaling up the S. Model X production hell was the primary focus of the company for a long time, with long hours and heavy spending to try to get things back on track. It's revisionist history to try to pretend otherwise. No, you can't attribute the ~$4B in negative cash flow during that time period just to the Model X, but it sure as heck was a big chunk of it.

There is a marked shift away from sedans to SUVs in America, in China and in parts of Europe, unrelated to fuel economy

To repeat:

"I'm not sure anyone should have made this car. We probably should have just [modified the Model S]. There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars." -- Elon Musk

The Falcon Wing Doors might or might not have been a mistake - but by now it's all history, a done deal

"Those who cannot remember the past are condemned to repeat it." -- George Santayana

Note that the two are not necessarily exclusive: Tesla could introduce the Model Y, the compact pickup truck and the full size pickup truck at once during the March unveiling

Contradicted by Musk's Recode interview, where he stated that they plan to introduce the giant titanium "oh my heart" pickup first, and then if people don't buy it in large enough quantities, build a more mainstream one.

 

[Fact Checking]

Tesla had positive FCF before the start of the X, despite scaling up the S.

Tesla had marginally positive FCF before the start of the X - they already had a significant capex drain, masked by cash generation from operations.

Also, capex in the cash flow space is typically not immediate but delayed over up to 1-2 years as you can see it from the graph. The reduction in capex outflow is not the end of capex outflow but the force of increasing volumes of S and X production.

Contradicted by Musk's Recode interview, where he stated that they plan to introduce the titanium "oh my heart" pickup first, and then if people don't buy it in large enough quantities, build a more mainstream one.

Fair enough. I do think the SUV and CSUV form factors in the $40k price range are essential to growth - pickup trucks are a bonus.

 

[Fact Checking]

The main stream media and their readers have only accepted that Tesla is a leading maker of _electrical_ vehicles and one that may still go bankrupt. So for them the "böse Erwachen" is yet to come.

Note that to German consumers it will be more of a moment of 'awakening' and 'enlightenment' - it will only be a 'nightmare' to ICE carmakers that don't move fast enough.

The mainstream German press might continue to be Tesla-skeptical due to the oversized influence on them by German carmakers - which I will believe result in the German public losing even more confidence in mainstream journalism.

 

[CorneliusXX]

Contradicted by Musk's Recode interview, where he stated that they plan to introduce the giant titanium "oh my heart" pickup first, and then if people don't buy it in large enough quantities, build a more mainstream one.

The difference in timing of release of the two vehicles is unknown at this point. Tesla could announce BR pickup at some time next year with normal pickup mostly developed in the background. If orders are not sufficient to warrant mass production of BR then there could be a pivot to normal pickup and only slowing things down by a year or so rather than a several year delay. This would allow Musk to test his concept while still progressing at a rapid clip with whichever vehicle is preferred.

 

[DragonWatch]

They have later a sentence that clarifies it:

From January to October only 117,000 of the three middle class models have been delivered. In comparison to the year before that is a minus of 18%

If you take the spreadsheet of insideevs and the Audi/BMW October numbers (BMW 3,445, Audi A4 2,267) you should be able to find out where the other % ages come from.

The year to date number make BMW and Audi even look better than they are. If you look at October alone its a bloodbath for them....

BDE FSO 09

From my perch, if Tesla came out with a smart car size vehicle, with a range TBD based on Italian needs, the conversion from fossil fuel to electric would be over ~ over night. Second part would be wireless charging everywhere to eliminate charging issues where parking is limited to first come, first serve. Just sayin. . .

Rained cats and dogs today:-(

 

[mongo]

Are you being serious? Have you not been listening to how many toys Elon keeps talking about adding to his "favourite project", the 500-mile titanium unimog-amphicar-all-in-one-worksite? It's another "Falcon Wing Doors" scenario, on overdrive.

Are you (being serious)? You've just strung together everyone else's assumed descriptions of the truck no one has seen.

You want to blame March '14 to June '16 purely on the X development/ ramp up?
What about:

Always - Supercharging roll out
14 - Destination chargers (free to businesses)
Sept 14 - Started including AP1 HW on all cars
Mar 15 - new paint shop
Jan 15 - Start of GF1 construction
Oct 15 - Y announcement (some R&D)
Jan 16 - Start of production at GF1
16 - semi development called out in Master plan
Jul 16 - Mobileye split (previous to this, much AP2 development)

Untill GF1 was to the point of high production of 2170 (future design intent), Tesla was limited to the supply of Panasonic 18650 cells. 100k ish cars a year. Making something super popular and low cost would not have helped. They needed ti diversify slightly with another high price point halo vehicle to fund the company.