TSLA Market Action: 2018 Investor Roundtable

[mongo]

Long shot/tinfoil hat theory but could Elon be planning to use this to fund a merger/take private?

Bloomberg - Are you a robot?

Nah, SpaceX needs that to build their Starlink constellation and launch it in time to meet the FCC requirements.

 

[HG Wells]

25k RWD the last week?
am i reading that correctly?
lemurs?

Well Lemurs tend to multiply, exponentially.

 

[Thumper]

I certainly hope Fact Checking is not Elon. He spends way too much time on this forum. Elon should be busy managing three companies and enjoying himself.

 

[hacer]

To save those the trouble, the case is based on the argument that "Tesla is liable because its production ramp is six months behind."

Yes, and with the actual trading price of the notes and interest rates, there won't be any damages to show.

 

[Beltsbear]

Well, I don't think they are going to build Y in Fremont, at least not only in Fremont. They're not going to build 10k/week+ in Fremont. I think they need another NA GF for Y+Pickup at minimum, possibly two if they can't do some production at Fremont. Those GF's will get their own cell lines with enough capacity to feed them. GF1 only has to feed Fremont (3, S/X after switch to 2170, anything else that gets built there) and GF1 (TE, anything else that gets built there).

Building the pickup on S/X line is a bad choice, at least without a major overhaul to the S/X platform (which arguably they're due for anyways), and even then I don't think there's really a good argument for sharing S/X/pickup. Just because other makes share SUV and truck lines doesn't mean you can easily build a truck on the S/X platform. Certainly if they did share a platform, S/X should switch to 2170 before or at the same time, not be running a mix - and then your argument to make a paltry tends of thousands of high priced trucks to take up slack in the production capacity (due to cell supply) would be solved by just building more S/X anyways.

What I'd like to see is that GF3 (China) and GF4 (Europe) move ahead on their own schedules, financed through local debt (like China), first doing GA of Model 3 and possibly Tilburg style assembly for S/X, and planning ahead to have the cell capacity lined up not only to bring up 3 production but also Y production at each location.

Separately, in parallel, I'd like to see construction for GF5 and possibly GF6 (if Fremont/GF1 can't handle the added production) somewhere in North America, someplace where housing workers isn't such a problem - perhaps targeting someplace where some existing manufacturers will be failing so that it's easy to pick up labor. GF5/6 should be georaphically spread apart - perhaps one in the rust belt, the other in the south. These will produce Y and pickup to start with, perhaps Semi. These may have to be built from cash (rather than debt) unlike GF3/4, so likely have to start one at a time. I would get Panasonic to install 1-2 lines ASAP and start with making TE cells and growing TE output. Once almost ready to start Y and/or pickup production, switch one or more cell lines to vehicle chemistry for a short while (perhaps a week or two?), then switch back to TE. This brief output will be enough to do initial start of ramping, and once you get close to needing a whole cell line's output, switch it over to vehicle output again, and have Panasonic install another pair of lines. The new lines may not even go to TE initially, depending on timing, may already have switched to pure vehicle output from the cell lines and need more.

Ideally, Panasonic cell line installation should stay ahead of the product curve and TE should consume the excess, which ideally should cover the costs (even if margins aren't great compared to vehicles) of the Panasonic lines, so that less cash is needed overall. As production ramps, switch cell lines as needed, and keep adding more cell lines. Eventually TE production will be plentiful once lines are ramped at all GF's as the total cell production capacity should be well beyond vehicle needs.

TL;DR : Pickup and Y should be high volume, and probably need at least two North American production locations (GF5 and either GF6 or what's left of Fremont+GF1), necessitating at least one if not two new NA GF's to be built. I think that by intelligently building cell lines ahead of production and using them for TE that a good portion of the costs can be covered, reducing the need for cash from Model 3/S/X sales. GF3 (China) / GF4 (Europe) should be largely funded by local debt and thus not impact this (but I assume Tesla still can't get favorable debt financing because Wall St and must use cash for NA growth). S/X line under-utilization will be fixed when they move to 2170 cells from GF1, and S/X are not good truck platforms. Semi may be built at any of the above locations, Roadster likely only at Fremont. At the rate of cashflow generation they're getting from Model 3 I don't think any of these are a problem in terms of costs, only in terms of timelines (time to build the building that houses the machine to build the machine ... ) if they want to get to volume production of any of Y/pickup/Semi in 2020. If they can get the buildings built in the next 6-8 months I don't see why they can't at least be doing initial start of production at the 10's or 100's per week range of Y/pickup/Semi by end of 2019, assuming they've been planning ahead and really learned from Model 3 this time (like they claimed to have learned from X, and S before it...).

The Semi should be built at GF1. It will use a lot of cells, they will make the cells there and the room is there too. It will require labor but not huge amounts of it. The Y will require more labor and it will be better built elsewhere as you say.

Tesla will probably work to get a sweetheart deal in another state, or flip an anti Tesla state (restrictions on selling) with a factory deal to build the Y. The pickup comes later and would be anyones guess what they do.

 

[Cattledog]

Tesla will probably work to get a sweetheart deal in another state, or flip an anti Tesla state (restrictions on selling) with a factory deal to build the Y.

We're ready. I just don't think there is the political vision to look past the next election. Shame on us if we can't make it happen in Texas, 2nd largest US car market, largest truck market, made in Texas, etc. Come on Abbott, grow a pair.

 

[neroden]

Tesla currently owns almost 4.5 square miles at Sparks so they are planning something...

(a) the land was cheap
(b) they were planning a massive solar and wind farm around the facility

 

[neroden]

Do I really need to keep going?

No, because none of this is remotely relevant. Remember, this is in the context of *trying to build a company town* because there isn't any *housing*. And trying to secure water rights to build the company town, because housing is *currently* limited by water rights. (You think the developers would let themselves be limited by that if water was cheap for them!?!?)

This is all wildly more expensive than buying vacant land in Buffalo (you have probably never looked at how cheap it is) and not having to build your own housing development (which is actually pretty expensive) because there already is housing in Buffalo and there already is a city water supply.

Water is not and will not be an issue. Want me to get specific? Look downstream on the Truckee River, starting at Fernley, or upstream at Sparks. Note the farms on the river. Tesla could buy them with pocket change.

Good luck with that. I suggest you try it. This is one of those times I know you're not from the US, because you've never looked into the politics of buying out farmland or water rights.

Basically, you have no idea how expensive that would be. (Among other things, water rights are often *use specific*, and diverting it from farmland to residential would probably require a change to state law.)

Since you don't know much about US land prices, US water rights law (I admit I don't know every state's law -- they vary), I didn't find anything relevant in your post. It was an extremely low quality post which ignored the primary issue -- it is far more expensive to build company housing in Sparks to support the necessary factory labor than it is to put a factory in Buffalo which already has infrastructure (and *still* has cheap land).

The difference in *future* solar panel costs doesn't even come close to making up for it.

It's not normal for you to write such poorly-thought-out posts.

I also suggest looking up the average cost of a house in Reno vs. in Buffalo. Or you could look up the cost of a vacant lot in Reno vs. in Buffalo. Point is, Buffalo is either the same price or cheaper.

 

[brian45011]

That's not what the settlement says. The nomination has to be within 45 days, but not the vote, and there's nothing about the person having to be confirmed in the agreement.

Tesla's charter lets it operate without a chairman. No ambiguity. If there's no chair, the CEO takes on the duties of the chair.

The Board not shareholders vote on the Chairman.

 

[neroden]

Testify!
I don't want to go all-out Nathaniel in this forum, but give me some time to explain to Kimbal how aquaponics uses juuuust about one-tenth the water of trad farming and pollutes infinitely less than Hydroponics... we'll (I and my Aussie buddies) wrap this sucker up all neat and tidy. "The Martian" could have just stayed on Mars and waited out the next expedition...

Don't get me started on the way water is wasted in Western farming. It's absurd. But it's much, much harder to change than you'd think; it's politically entrenched. It's much harder to oust with economics than it ought to be.

 

[neroden]

Wondering how Musk would handle that sort of response.

Not enough water to support a town of 10,000 people.

So does the cost of importing water daily by truck to support 10,000 people stack up on a cost/benefit basis?

I'm not saying it's not doable, I'm just saying it's long-term cheaper to build the factory next door to Niagara Falls.

Musk is a genius not at ordinary engineering, but at cost engineering. Ordinary engineers come up with wonderful designs that cost more and more as they get more and more complicated. Musk cuts out all the expensive bits without removing functionality.

Why do you think he bought a disused auto factory, and reused auto manufacturing equipment? Why do you think he maintained the SolarCity deal with New York State? He's planning to locate factories on every continent to eliminate *shipping* costs. Building his own frickin' city and having to import the water for it is... not cost engineering.

To put it bluntly, there's a half-vacant, already constructed city available cheaply in Buffalo. And the local government in Buffalo will bend over backwards and give him *anything* if he creates a bunch of jobs.

 

[EVNow]

Isn't the worst case that nothing changes? As a foreigner I'm not understanding why markets would be suppressed when on "nothing to a win".

I don't understand what you are asking - but, in general what the market considers "worst case" is not what either of the parties might consider bad.

Obviously for Dems, the worst case is status quo (with Republicans picking up seats in the Senate). For Republicans the worst case is losing both House & Senate - and a bunch of Governor's races.

The market would have already taken the expectation (House to Dems, Senate no change) as a given. If that happens, the uncertainty would be lifted and that should lead to atleast a modest bull run absent any new bad news.

If something unexpected happens - its not clear how the market would react. Most probably, continue the bear phase - or if Republicans keep the house (and Senate) - a big jump up in the hopes of another tax cut ?

Qualitatively there is no difference to the market whether Dems pickup House or both House and Senate. In both cases, probably not much legislation would get passed (even though, it is possible Trump will sign some of the bills Dems send him, because he likes making "deals"). But most probably, next 2 years will be like Obama's last 6 years. Nothing gets done because of a divided government. Apparently the market likes nothing gets done - so they like divided government.

 

[neroden]

Market traders are currently terrified by Trump's wildly erratic behavior, especially the randomized tarriffs, randomized sanctions, and frankly, the Presidential hints that he'll treat people better if they divert business to Trump-owned companies.

The Republicans are basically rolling over and doing absolutely anything Trump asks, even when he's acting nuts. If the Republicans retain the House, the market will crash.

Market traders would probably like some nice, stable government gridlock / checks-and-balances right now. The expected outcome would probably be the one the market liked best.

Markets often like governmental gridlock because it is highly predictable.

 

[EVNow]

That's not what the settlement says. The nomination has to be within 45 days, but not the vote, and there's nothing about the person having to be confirmed in the agreement.

Tesla's charter lets it operate without a chairman. No ambiguity. If there's no chair, the CEO takes on the duties of the chair.

I really hope Tesla doesn't try to pull a "sticking only by the letter" - not the spirit on this. They should just appoint a chairman and get him/her confirmed - if it is a simple board vote. End of story. Its simply not worth revisiting this - put it behind them and get on with the mission.

 

[EVNow]

Market traders are currently terrified by Trump's wildly erratic behavior, especially the randomized tarriffs, randomized sanctions, and frankly, the Presidential hints that he'll treat people better if they divert business to Trump-owned companies.

Yes, one would think so. But, there is no indication the market has actually taken into account the political risk. It has completely ignored it. It didn't even think a second about the raising Trump - North Korea heated rhetoric, for eg.

The Republicans are basically rolling over and doing absolutely anything Trump asks, even when he's acting nuts. If the Republicans retain the House, the market will crash.

Or not ! Because market loves their tax cuts ! They absolutely love tax cuts even at the risk of fascism or apparently even nuclear war.

This is the reason I think if Sanders or Warren win the Democratic primary (or if they look like winning it), the market will crash. They are hoping it would be a "business friendly" Dem like Kamal Harris or Joe Biden, who will go through the motions of saying stuff to get vote but it will all be business as usual at Wall St.

 

[neroden]

Historically the market booms when Democrats are elected. For whatever reason.

Yes, rich bankers also like to get tax cuts... but they aren't getting any more, regardless. There's nothing left to cut. I mean, you could blow an even bigger hole in the federal budget during a boom where the Fed is already raising rates... but at that point the Wall Streeters are gonna start worrying about inflation (which in fact they already are).

The tarriffs really are freaking out markets. They're often sanguine about war (maybe they think weapons sales will be big money?), but upset about tarriffs and sanctions (go figure).

It's been interesting over the decades figuring out what political things the markets react to.

The best summary is: stock market traders *hate uncertainty*. (This means they tend to like dictators and dislike elections, but they also hate *erratic* dictators. They like *predictable, stable* government.)

Beyond that, stock market traders have a very strong bias against tarriffs and sanctions -- you could say they're mostly free traders.

They also don't like it when central bank interest rates go up.

Those are actually the only three categories that they seem to react to consistently, AFAICT.

Odds are the market will go up after the election *regardless* of the result simply because of the removal of uncertainty; months of recounts would probably be the worst outcome for the markets.

 

[sundaymorning]

Hopefully we get a deal.

https://www.cnbc.com/2018/11/06/chi...ing-is-ready-for-trade-talks-with-the-us.html

 

[Joe F]

Tweety did not have the guts to put this article under his name

Who's Fact Checking on the Tesla club forum?

PREPOSTEROUS!

I, AM ELON!

MOD:
Everyone - you were already told to cut it out. It ends now or severe action ensues.

 

[Carl Raymond]

I don't understand what you are asking - but, in general what the market considers "worst case" is not what either of the parties might consider bad.

Obviously for Dems, the worst case is status quo (with Republicans picking up seats in the Senate). For Republicans the worst case is losing both House & Senate - and a bunch of Governor's races.

The market would have already taken the expectation (House to Dems, Senate no change) as a given. If that happens, the uncertainty would be lifted and that should lead to atleast a modest bull run absent any new bad news.

If something unexpected happens - its not clear how the market would react. Most probably, continue the bear phase - or if Republicans keep the house (and Senate) - a big jump up in the hopes of another tax cut ?

Qualitatively there is no difference to the market whether Dems pickup House or both House and Senate. In both cases, probably not much legislation would get passed (even though, it is possible Trump will sign some of the bills Dems send him, because he likes making "deals"). But most probably, next 2 years will be like Obama's last 6 years. Nothing gets done because of a divided government. Apparently the market likes nothing gets done - so they like divided government.

I see now, the threat is a continuing hung parliament. In Australia when that happens, and there's no way to deal around it, the Queen's representative dismisses the government and we have a fresh election. Happened once in 1975.
1975 Australian constitutional crisis - Wikipedia

 

[traxila]

PREPOSTEROUS!

I, AM ELON!

NO, I AM ELON!