TSLA Market Action: 2018 Investor Roundtable

[Fact Checking]

This claim is indeed counter intuitive.

A dollar bill is an IOU issued by the USA. So when a lot of people in the rest of the world hold US dollars, it means that the US owes those money holders value equal to the amount they hold.

In other words: Every dollar held outside of the USA is a (small) interest free loan to the USA. Added up, this is a big advantage to the USA - and it is a disadvantage to the holders of that money, which loses value every time the US prints more money.

Anyone with a better understanding of this should feel free to reconcile the above two claims.

The reserve currency status of the U.S. dollar is way overrated: the estimated zero interest rate loan to the U.S. by foreign holders of $100 bills (mostly drug lords, tax evaders and other criminals) is estimated to be worth around 20-30 billion dollars per year, which is certainly not zero, but only a tiny 0.10-0.15% of U.S. GDP.

Being able to run trade deficits is not causally linked to reserve currency status: long term trade deficits require a country who is a good debtor and who offers good investment opportunities.

Australia is an example of a persistent trade deficit that is larger than the U.S. trade deficit:

So the claim that reserve currency status forces persistent trade deficits is not just counterintuitive but also wrong.

 

[aubreymcfato]

Just think what would happen if Tesla used their supercharger network (along a new minicharging one)
their market power, and the 2170 battery to "force" a new battery standard.
It could service a *lot* of new scooter/small vehicles companies.

Sascha Pallenberg on Twitter

 

[Carl Raymond]

Just think what would happen if Tesla used their supercharger network (along a new minicharging one)
their market power, and the 2170 battery to "force" a new battery standard.
It could service a *lot* of new scooter/small vehicles companies.

Sascha Pallenberg on Twitter

Last time I read about gogoro, it couldn't be home charged. Buyers need to beware of lock in. It's like buying a Nespresso coffee machine and being locked in to the overpriced pods.

 

[Buckminster]

Note that Tesla is currently selling about 0.2 million EVs in the U.S. per year.

A good chunk of the 16.4 million of annual ICE sales, about 80 times of the current Tesla sales, have to be cannibalized and displaced before EV makers will start competing with each other for demand in a meaningful fashion.

Globally there's ~80 million ICE sales to substitute. If Tesla manages to up-sell so many people to pay more for a (much) better car then the EV transition could be a big economic growth phase, expanding the global automotive market from the current ~3 trillion dollars to ~10 trillion dollars of revenue per year.

In terms of Rivian's effect on $TSLA market action:

• Rivian designed really nice cars, I love the design and in particular the quasi-retro yet futuristic look! While I think the Model Y is going to look substantially different, I think Rivian's pickup truck design is pretty close to what Elon had in mind for the Tesla Pickup Truck.
  
• Their 'late 2020' availability date might inevitably slip and Tesla will likely start selling the Model Y close to the date Rivian starts selling their first units.
• Tesla could also have earned 10-20 billion dollars of cash by late 2020 and reinvested it in various interesting ways.
• Even if Rivian executes absolutely everything in a picture-perfect way the Tesla Model Y and Pickup Truck will be a tough benchmark to measure up against - fortunately even in 2020 their main competitor will be Ford, not Tesla.
• Rivian certainly raises the bar for Tesla regarding the design and the specs of the Model Y and the Tesla Pickup Truck.
• Every Rivian pre-order delays an ICE sale and helps Tesla indirectly.

So IMHO there should be little direct effect on $TSLA market action from Rivian in the next ~2 years, and possibly not much effect up to 2025 or so, and I am certainly wishing them good luck!

18 months after this article:
Stop The "Tesla Killer" Nonsense | CleanTechnica
Rivian (who?) are the closest to being a Tesla Killer. Hilarious! The big manufacturers are going to get overtaken by some 16 year old working in his/her garage if they don't get their act together.

 

[lklundin]

Vicki likely cannot clarify further without getting into trouble.

Without knowing what exact kind of contract she has, I would say that it is in general not a career enhancing move to make public statements about your company when that is not in your job description, and she is way over my threshold. (but I also don't work at a place anything like Tesla).

So if she is a productive employee, if would prefer if she would cut back on the communication and just keep that production going (and keep her job).

 

[Unpilot]

Nice pre-market action.

360 by EOW.

 

[Artful Dodger]

Nasdaq 100 Futures - Dec 18
6,746.25 +33.75 +0.50%
07:22:45 - Nov 28, 2018

NASDAQ-100 "Movers+FAANG by % Change" - 07:22 am EST:

• TSLA moving with the pack
• NVDA leads the FAANG equities
• entire FAANG group up in pre-market

Have a great day everyone!

CH3ERS!

 

[elasalle]

Without knowing what exact kind of contract she has, I would say that it is in general not a career enhancing move to make public statements about your company when that is not in your job description, and she is way over my threshold. (but I also don't work at a place anything like Tesla).

So if she is a productive employee, if would prefer if she would cut back on the communication and just keep that production going (and keep her job).

Given that all employees have signed NDA etc, I think she has green light from Mgmt to communicate to negate the FUD. ...

 

[dgodfrey]

Have to disagree here. Went to Buffalo for medical school some time ago and rotated through eight hospitals, did not see huge drug problems. Grew up in upstate NY, and yes there is snow, but at the cross roads to Canada. Very strategic location. FWIW, some time ago, Buffalo had the highest number of MRI scanners per capita-- close to Canada.

The only thing that is curious is that d/t snow and overall fewer sunnier days, that they have a solar cell factory. This is ironic.

From a market perspective, locating a solar factory in a lower cost city, near seaway access-- great lakes, and near Canada, whose large land area is conducive to solar installations due to upkeep of long transmission lines and isolated communities makes for an interesting prospective for solar cell production...

There's a rich history in upstate NY regarding the electricity industry. Probably irrelevant to GF2 being in Buffalo but interesting just the same.
There is the Nikola Tesla statue in Niagara Falls (I think there's 2 actually) where he teamed up with Westinghouse to harness the falls.
There's also Schenectady which was the birthplace of General Electric and also tagged with the moniker "Electric City"
Many leaders in the industry spent time there such as Edison, Alexanderson, (father of radio and television) Steinmetz (he signed my grandmothers high school diploma as he was president of the school board in 1925ish.)

 

[kbM3]

Note that Tesla is currently selling about 0.2 million EVs in the U.S. per year.

A good chunk of the 16.4 million of annual ICE sales, about 80 times of the current Tesla sales, have to be cannibalized and displaced before EV makers will start competing with each other for demand in a meaningful fashion.

Globally there's ~80 million ICE sales to substitute. If Tesla manages to up-sell so many people to pay more for a (much) better car then the EV transition could be a big economic growth phase, expanding the global automotive market from the current ~3 trillion dollars to ~10 trillion dollars of revenue per year.

In terms of Rivian's effect on $TSLA market action:

• Rivian designed really nice cars, I love the design and in particular the quasi-retro yet futuristic look! While I think the Model Y is going to look substantially different, I think Rivian's pickup truck design is pretty close to what Elon had in mind for the Tesla Pickup Truck.
  
• Their 'late 2020' availability date might inevitably slip and Tesla will likely start selling the Model Y close to the date Rivian starts selling their first units.
• Tesla could also have earned 10-20 billion dollars of cash by late 2020 and reinvested it in various interesting ways.
• Even if Rivian executes absolutely everything in a picture-perfect way the Tesla Model Y and Pickup Truck will be a tough benchmark to measure up against - fortunately even in 2020 their main competitor will be Ford, not Tesla.
• Rivian certainly raises the bar for Tesla regarding the design and the specs of the Model Y and the Tesla Pickup Truck.
• Every Rivian pre-order delays an ICE sale and helps Tesla indirectly.

So IMHO there should be little direct effect on $TSLA market action from Rivian in the next ~2 years, and possibly not much effect up to 2025 or so, and I am certainly wishing them good luck!

I think we need to look separately at the market in which Models S&X compete ($70k+) and Models 3&Y (Sub$40k+). As you yourself have pointed out often, the Models 3&Y market is much, much larger. Therefore I do not see Rivian being a factor to Model Y (or raising the bar as you put it) at all.

I am starting to worry whether Model S will start to feel some competitive pressure from all of the Europeans. Taycan and the eTron GT (to be unveiled today I believe) may start to put a dent in Model S demand. I'm sure they will steal some ICE share, but I feel there's no guarantee they won't put pressure on Model S sales (depending on complete specs/pricing/production volume).

I do believe Models 3&Y have a much longer time before any companies can launch competitive products. I am unaware of any announced viable competition to these 2.

 

[Krugerrand]

Given that all employees have signed NDA etc, I think she has green light from Mgmt to communicate to negate the FUD. ...

That doesn’t make sense. Who is she compared to any other production employee that would allow her to break NDA but not them. I’d say she’s very close to her walking papers.

 

[humbaba]

I think you may be comparing apples to crescent wrenches there...

You mean because Rivian is marketing a truck? My point was that the high torque and extended range are in the future and Tesla has the same in their own product future. Greater range and nearly the same torque. There's absolutely no reason to think a Tesla truck won't have similar (or better) specs. Which, with the gushing on the Rivian specs, I thought was being lost. Which is why I said I thought it was being lost.

Every new entrant in the EV space is going to face more and more of a challenge in establishing the brand and finding customers. So, the challenge is not just execution, but it is also getting customers to trust the new entrant and buy. They need to get extremely good reviews - like Model S got. It helps to have a charismatic CEO, too.

10 years back when there were no EVs, enthusiasts were ready to buy from all kinds of bit players - Zenn, Aptera, Reva etc. Now with multiple established players making EVs it is much more difficult to find customers. Even Apple with gazillions in the bank is finding it difficult to enter EV space.

One option of course is to come up with a different form factor. Mitsu Oulander PHEV and Chrysler Pacifica PHEV are examples. But from established players.

Very true. And to your last point about form factor, I do think this is why Rivian is targeting a truck -- because Tesla does not currently have one. I believe they are trying to put out the premier truck. Trying to do that with a sedan would be foolish given Tesla's lineup.

Note that Tesla is currently selling about 0.2 million EVs in the U.S. per year.

A good chunk of the 16.4 million of annual ICE sales, about 80 times of the current Tesla sales, have to be cannibalized and displaced before EV makers will start competing with each other for demand in a meaningful fashion.

Globally there's ~80 million ICE sales to substitute. If Tesla manages to up-sell so many people to pay more for a (much) better car then the EV transition could be a big economic growth phase, expanding the global automotive market from the current ~3 trillion dollars to ~10 trillion dollars of revenue per year.

In terms of Rivian's effect on $TSLA market action:

• Rivian designed really nice cars, I love the design and in particular the quasi-retro yet futuristic look! While I think the Model Y is going to look substantially different, I think Rivian's pickup truck design is pretty close to what Elon had in mind for the Tesla Pickup Truck.
  
• Their 'late 2020' availability date might inevitably slip and Tesla will likely start selling the Model Y close to the date Rivian starts selling their first units.
• Tesla could also have earned 10-20 billion dollars of cash by late 2020 and reinvested it in various interesting ways.
• Even if Rivian executes absolutely everything in a picture-perfect way the Tesla Model Y and Pickup Truck will be a tough benchmark to measure up against - fortunately even in 2020 their main competitor will be Ford, not Tesla.
• Rivian certainly raises the bar for Tesla regarding the design and the specs of the Model Y and the Tesla Pickup Truck.
• Every Rivian pre-order delays an ICE sale and helps Tesla indirectly.

So IMHO there should be little direct effect on $TSLA market action from Rivian in the next ~2 years, and possibly not much effect up to 2025 or so, and I am certainly wishing them good luck!

Excellent points (as always). As to your last about "little direct effect on $TSLA market action" I won't argue, but I do see them as competitors once the Tesla truck is released. Not for EV sales -- as you say there is way too much demand for that -- but for having the best truck. Which I think is a good thing. Not that Tesla really needs it, IMO, but having a rival keeps you on your toes and pushing for something even better. And, in the longer term, Tesla will need rivals. I welcome them.

And, while likely to have little direct effect, I think that having a rival does affect market action.

 

[Krugerrand]

You mean because Rivian is marketing a truck? My point was that the high torque and extended range are in the future and Tesla has the same in their own product future. Greater range and nearly the same torque. There's absolutely no reason to think a Tesla truck won't have similar (or better) specs. Which, with the gushing on the Rivian specs, I thought was being lost. Which is why I said I thought it was being lost.



Very true. And to your last point about form factor, I do think this is why Rivian is targeting a truck -- because Tesla does not currently have one. I believe they are trying to put out the premier truck. Trying to do that with a sedan would be foolish given Tesla's lineup.



Excellent points (as always). As to your last about "little direct effect on $TSLA market action" I won't argue, but I do see them as competitors once the Tesla truck is released. Not for EV sales -- as you say there is way too much demand for that -- but for having the best truck. Which I think is a good thing. Not that Tesla really needs it, IMO, but having a rival keeps you on your toes and pushing for something even better. And, in the longer term, Tesla will need rivals. I welcome them.

My thought is there is no chance Rivian truck specs will be better than Tesla truck specs, ever. I can see two scenerios at Tesla right now as Rivian truck specs being discussed:

Powwow 1 - round table chuckling then Elon asks, ‘What’s for lunch?’

Powwow 2 - quizzical looks, chin rubbing then Elon says, ‘Make it better. So let it be written, so let it be done.’

 

[Tslynk67]

That doesn’t make sense. Who is she compared to any other production employee that would allow her to break NDA but not them. I’d say she’s very close to her walking papers.

I have a vague recollection from a few months back, I think it was end of July, where she got a warning from Tesla about the Tweeting, so I'm surprised to see her at it again. Who knows, maybe she got some kind of go-ahead to send out some positive messages.

 

[Artful Dodger]

If the FED signals neutral today (speech by Fed Chairman Jerome Powell to be delivered shortly after noon ET), I think that will trigger a Santa Claus Rally.

Let's listen in to Brian Belski, BMO Capital Markets Chife Investment Strategist, speaking to CNBC yesterday:

The pre-market macros are salivating with anticipation:

Nasdaq 100 Futures - Dec 18
6,752.25 +39.75 +0.59%
08:47:50 EST - Real-time CFD Data

 

[Artful Dodger]

Gentle reminder folks if you missed this note from MODS yesterday:

MODERATOR:
Might be useful to remind all this is the TESLA thread. Lots of places elsewhere in TMC to discuss Other EVs.

==>No more discussion of Rivian here<==

Market opens in 33 minutes.

CH3ERS!

 

[gora321]

GF4 rumors:

James Stephenson on Twitter

 

[KarenRei]

If the FED signals neutral today (speech by Fed Chairman Jerome Powell to be delivered shortly after noon ET), I think that will trigger a Santa Claus Rally.

Let's listen in to Brian Belski, BMO Capital Markets Chife Investment Strategist, speaking to CNBC yesterday:

The pre-market macros are salivating with anticipation:

Nasdaq 100 Futures - Dec 18
6,752.25 +39.75 +0.59%
08:47:50 EST - Real-time CFD Data

The logical conclusion would be that if he doesn't, the markets would plunge. Since the market is based on expectations and thus will balance out the possibility of a rally with the possibility of a collapse. If a rally were assured, and the opposite possibility were merely "no rally, things stay the same", the markets would price in a half-rally, and would thus still go down in the case of the fed signaling worse than neutral.

 

[elasalle]

That doesn’t make sense. Who is she compared to any other production employee that would allow her to break NDA but not them. I’d say she’s very close to her walking papers.

I think a promotion

 

[ZachF]

So the claim that reserve currency status forces persistent trade deficits is not just counterintuitive but also wrong.

Nope. wrong.

It's very basic accounting.

Capital account + Current account = 0

This is not up for argument, it's an accounting identity. In order to supply the world with dollars, we must mathematically run a current account deficit.

Australia also runs a current account deficit because foreigners have been purchasing Australian assets (like Chinese buying large amounts of Aussie real estate). Capital account surplus = curren account deficit.

The fact that other countries have current account deficits does not disprove the fact that holding the world's reserve currency pushes the issuer towards a current account deficit. There are many reasons a country can have a current account deficit, and issuing the reserve currency is one of them.