TSLA Market Action: 2018 Investor Roundtable

[ZachF]

ICE auto sales are down from about 17.4 million in 2015/6 to ~16.5 million this year. EV sales have more than doubled over the same period, to over 300k this year. Next year US EV sales will probably hit 500k, and ICE sales will likely drop to ~16.0 million.

Good point.

And if Tesla were to consider buying a GM plant in Michigan, as part of the deal the state may have to allow Tesla stores and service centers.

The plants they are closing are:

General Motors to close Detroit, Ohio, Canada plants

Lordstown, Ohio, that makes the Chevrolet Cruze compact; the Detroit-Hamtramck plant, where the Chevrolet Volt, Buick LaCrosse and Cadillac CT6 are produced; and its plant in Oshawa, Ontario, which makes the Chevrolet Impala. The two transmission plants are in Baltimore and in Warren, Mich.

Buying up factories that ICE manufacturers are closing would also be big PR wins for Tesla.

 

[RFernatt]

Yikes...what do you have hidden down there - Mark Spiegel’s soul?

Nah, I have an abandoned WV coal mine for the poor unfortunate souls of short sellers - they get to shovel unwanted coal for eternity. I keep the really interesting trophies locked away in the basement ... mwahahahaha!

 

[Dwdnjck]

The plants they are closing are:

General Motors to close Detroit, Ohio, Canada plants


Trump’s tax cuts at work.

 

[gora321]

Tesla effect is late but coming definitely!

 

[mtndrew1]

I believe that now would be the perfect time for CNBC to interview Bob Lutz with the conclusion that range-extended EVs such as the Volt are the only way forward for Tesla, otherwise they’ll be out of business and shutting down their factory.

 

[mongo]

Good point.

And if Tesla were to consider buying a GM plant in Michigan, as part of the deal the state may have to allow Tesla stores and service centers.

That's hard, since it is state law that prevents OEM owned dealerships along with preventing sales without a dealership.
New Governor, Secretary of State, and Attorney General may help though. Wonder what will happen with current lawsuit.

 

[Fact Checking]

But yes, the price will collapse - at least for a good length of time - which is why I accounted for the mean price per barrel being $40 rather than $70 The industry will lose an order of magnitude in size.

If we match up marginal costs of crude oil extraction with a 90% demand filter sliding down to 16% in a few years then there's oversupply even at $40:

This process will accelerate as the price drops: some of the cheapest to extract sources of crude oil are rate limited - so once demand drops below 50% they'll be able to outprice competitors.

Note the decades of supply even at $30 price levels.

The true bottom is probably between $25-$30 - but maybe lower: current extraction techniques are not very well optimized in the low extraction cost regions and costs are probably overstated.

 

[Chocochip]

Probably but I hope not. The Volt is a great car in many respects..and a great segway into pure electric.

Sorry to nitpick, but the word you're looking for is 'segue'.

Best regards,
Your friendly grammar Nazi

 

[RobStark]

Since we're all excited about how Toyotas and Hondas are common trade-ins for Model 3, I think their market share is very relevant.

I am not excited by trade in data.

What is much more relevant is what Model 3 buyers would have purchased if Tesla did not exist.

That is not necessarily the same car/brand.

People tend to buy more expensive cars as they get older.

 

[M3Rider]

One of the factors that I've long thought would help accelerate the move to EVs is when new car buyers start to really consider the resale value of an ICE car being less than they are used to. Even though we talk about environmental impact many people need to feel it in their wallet before actions change. Perhaps this GM news helps move this process along.

This plus the process described by @neroden in the The Doom Of Fossil Fuel Investments | CleanTechnica

Accelerant: Gas Station Closure
Gas stations are already closing; there are fewer every year. Gas station retailers make tiny, almost nonexistent margins on gasoline and use it as a loss leader to bring people into their convenience stores. As gasoline demand drops, this will become an ineffective retail strategy; so gas stations will close. After enough gas stations close, this will make gasoline cars much less attractive and cause people to rush to get electric cars as soon as possible.

We are obviously seeing just the first signs, but how long before this turns into common knowledge?
I'm wondering if this could turn into "run on EVs" where people will buy anything decent in EV category and since there won't be enough, this can turn ugly... Anybody considers that it may become problematic to buy a Y once it comes to market? I mean, this is 1 yr later and in volume prob another year, so 2 years for public to change attitude towards EV/ICE.
For a while though, buying used ICEs for cheap even if paying more for gas will be a thing.

 

[SO16]

That's hard, since it is state law that prevents OEM owned dealerships along with preventing sales without a dealership.
New Governor, Secretary of State, and Attorney General may help though. Wonder what will happen with current lawsuit.

Sure as hell better! I have been sending my reps letters often to fix this absurd law.

 

[Cobbler]

Remember those legendary words from one of the most famous 'investors' about GM?
Just a reminder for those who don't remember it

 

[Hock1]

Partially true. However, TSLA also fell last week due to holiday week and very low volume creating increased opportunity for SP manipulation. Also up today because holiday is over and market unwinding the manipulation.

Precisely.

 

[tivoboy]

If we match up marginal costs of crude oil extraction with a 90% demand filter sliding down to 16% in a few years then there's oversupply even at $40:

This process will accelerate as the price drops: some of the cheapest to extract sources of crude oil are rate limited - so once demand drops below 50% they'll be able to outprice competitors.

Note the decades of supply even at $30 price levels.

The true bottom is probably between $25-$30 - but maybe lower: current extraction techniques are not very well optimized in the low extraction cost regions and costs are probably overstated.

It's cost of production not extraction. Saudi extraction cost is closer to 5$.

 

[JRP3]

Sorry to nitpick, but the word you're looking for is 'segue'.

Best regards,
Your friendly grammar Nazi

 

[Fact Checking]

And oil is used as a feedstock - rather than Fischer-Tropsch or any of the alternative techniques - because it's by far the cheapest form of feedstock, because it's already roughly in the chemical form that you want, as well as containing its own energy.

Even for feedstock use of crude oil extracting sulfur has significant process costs.

According to this study that uses pyrolysis (oxygen poor heating) to make bio crude, it's a simple technology that is break even with U.K. crude oil at relatively modest scales already.

The cost structure of bio crude is about 33% electricity and 66% biomass - both of which would further improve with scale and with time. If it drops below $10-20 per barrel it will price out even the cheapest mineral crude oil.

So Tesla's EV revolution might diminish mineral crude oil extraction very significantly.

 

[Krugerrand]

Not showing strength today...

This is why I never say a thing about what the SP is doing or going to do until after it does. The number of times people comment on premarket and what the stock is going to do after 30 seconds of trading and are wrong is not mouse nuts.

 

[Unpilot]

Sorry to nitpick, but the word you're looking for is 'segue'.

Best regards,
Your friendly grammar Nazi

I ain't so good at dis grammar and spellin stuff.

 

[Krugerrand]

I swear, that has to be one of the funniest pictures ever taken of someone trying to present themselves as a "serious" investment manager. It's meme fodder. What on Earth was he thinking, letting them (or worse, having them) take a picture of him like that? Talk about bad judgment...

Not everyone has or will have that perspective. There will be plenty of people who view it as dedication. Hey, I can’t help that humans are odd ducks.

 

[Curt Renz]

Good point.

And if Tesla were to consider buying a GM plant in Michigan, as part of the deal the state may have to allow Tesla stores and service centers.

That's hard, since it is state law that prevents OEM owned dealerships along with preventing sales without a dealership.

New Governor, Secretary of State, and Attorney General may help though. Wonder what will happen with current lawsuit.

Perhaps, but part of the deal to build the battery Gigafactory in Nevada, was repeal of the prohibition of Tesla stores and service centers.

That lawsuit against Michigan was filed by Tesla in federal court 26 months ago. It is somewhat puzzling that this has taken so long. If may be that the judge is hoping for a settlement, such as one that may develop to entice Tesla to buy a GM plant that's closing in Michigan.