TSLA Market Action: 2018 Investor Roundtable

[Cartegena]

Exactly. Tesla makes a relatively fixed number of S+X vehicles per year. The global EV market keeps growing. Therefore, by definition, Tesla is planning on S+X market share declining. They may change this strategy at some point, but so long as they're based on the 18650s, the plan is for them to lose market share.

Why, then, would Tesla be willing to absorb 12-26% less S & X gross margin percentage in China because of tariffs rather than diverting those vehicles to alternate markets where the demand garners the full GM%?

 

[john2415]

Aaaaaarrrrgh. I sold only ten January 2020 puts. Wish I had sold a hundred.

 

[HG Wells]

Why, then, would Tesla be willing to absorb 12-26% less S & X gross margin percentage in China because of tariffs rather than diverting those vehicle to alternate markets where the demand garners the full GM%?

To maintain their market in china until they start doing final assembly in china.
Also tarifs may be short lived. Small loss for short period of time.

 

[Fact Checking]

Both the 10x increase and that it would be enough is a claim by Musk/Tesla only.

Actually, no, that's wrong: Tesla benchmarked actual AutoPilot neural networks on old and new hardware, using field test units of the Tesla AI Chip. Also, it's not just Elon saying it, but also Pete Bannon who designed Apple's first 64-bit chip, among other chips. This is from the conference call transcript:

"Peter Bannon - Tesla, Inc.

My team is leading currently the Hardware 3 development. The chips are up and working, and we have drop-in replacements for S, X and 3, all have been driven in the field. They support the current networks running today in the car at full frame rates with a lot of idle cycles to spare. So, I think we're all really excited about what Andrej and his team will be able to do with this hardware in the future."
​

So the source of the ~10-fold speedup claim is that Tesla actually measured Tesla AI-chip performance on real, working hardware, and these numbers should be a lot more accurate than any forward looking guesses made in the past about software that didn't exist yet.

 

[AudubonB]

Why, then, would Tesla be willing to absorb 12-26% less S & X gross margin percentage in China because of tariffs rather than diverting those vehicles to alternate markets where the demand garners the full GM%?

The preceding is a fair candidate for the juiciest leading question in the past 100 pages or so.

HG Wells has it in a nutshell; the following rather rhetorical questions represent other reasons to consider why:

1. What country is the world's single largest automotive market?
2. What country has provided the most consistent and the strongest incentives for electric vehicles?
3. What company has demonstrated multiple times it is playing the long game, and will take a short-term hit to further its long-term goals every time?

 

[humbaba]

While the outlook for $TSLA is still rosy, this short term buying opportunities where $TSLA trails below NASDAQ are getting old. C'mon shorty shorts, I never did get my buy in at $240

 

[tivoboy]

The Audi will sell, but that’s not the issue. The question is whether it will sell in such quantities that Tesla will not be capacity constrained on th S/X models.

But that wasn't the statement made.

 

[EVNow]

TSLA trailing NASDAQ by 0.5% today.

Apparently Trump will meet Chinese premier during G20. Whatever they say afterwards will have an impact on the market. Generally Trump is nice and conciliatory in face to face meetings ...​

 

[humbaba]

Actually, no, that's wrong: Tesla benchmarked actual AutoPilot neural networks on old and new hardware, using field test units of the Tesla AI Chip. Also, it's not just Elon saying it, but also Pete Bannon who designed Apple's first 64-bit chip, among other chips. This is from the conference call transcript:

"Peter Bannon - Tesla, Inc.

My team is leading currently the Hardware 3 development. The chips are up and working, and we have drop-in replacements for S, X and 3, all have been driven in the field. They support the current networks running today in the car at full frame rates with a lot of idle cycles to spare. So, I think we're all really excited about what Andrej and his team will be able to do with this hardware in the future."
​

So the source of the 10-fold speedup claim is that Tesla actually measured Tesla AI-chip performance on real, working hardware, and these numbers should be a lot more accurate than any forward looking guesses made in the past about software that didn't exist yet.

Okay, so the part you are responding to is fair enough, but the claim that 10x speed up is enough for FSD... that is absolutely unproven. Disclaimer, I'm one of those annoying skeptics who don't believe Tesla (or anyone else) is going to have FSD any time soon.

However I'm not sure that that is a meaningful issue. What Tesla brings to the table are compelling features that are not present in competitor solutions. The current entry-to-exit highway driving (I forget the proper designation) that is currently being proven out. The improved summon that is close enough to release to be taken at least somewhat seriously.

In other words, talk about Tesla (or anyone else) having FSD is IMO not of immediate concern. What matters are (the somewhat related) autonomous driving features that either currently exist or are on the near horizon.

(And debate as to FSD feasibility, progress, hardware, whatever really belongs in its own thread -- I think there are several)

 

[Krugerrand]

The tone of this thread has changed the past month toward hyper-optimism. The obvious reason - Where's the FUD? Very few arguments against Tesla now. Are they quietly waiting with ammo loaded if Q4 profit hiccups? Did they lose their sponsors? True that Shorts are fewer, but there's still significant pressure out there, maybe focused on a plan to escape without complete loss. So I would expect one more last call before the door closes tight and this "squeeze" actually materializes. Early Q1 will be their last chance, plan on the dip IMO or just ignore it and ride it out long.

To the newcomers, if you go back in time just a couple months, you'd be seriously concerned about the future of Tesla. Now it's all bliss. For the record, we all knew it was fine. But also just a couple months ago, my neighbors thought I was crazy and the most common story was that Tesla had factory issues and was going to die soon. Although Elon did come close to having to borrow a bit more to get over the hump, a BK was never mentioned from his mouth. His stress IMO was all about NOT proving the Shorts right. We knew he was serious in Q3 when Home Depot contracts ended, Suppliers where pushed on for discounts, and production volume kept growing in hell. Clearly not the behavior of a spoiled kid from California. He grew some ___ there.

Myself, I never doubted the mission or the stock price. Absolutely everything for the past 10 pages is spot on regarding competition. However, like the Shorty-shorts taunting which I thought unnecessary, I also feel for the autoworker (even a little for the sales force at dealerships). The impact from Tesla's breakthrough is going to be a painful migration for the world. I wish them all the best because it hurts to see whole families and towns lose their jobs on the news. It's sad for many, but I don't see any other outcome.

It is sad that so many will be affected by the auto industry shift that’s in progress and picking up steam. Here’s the thing, though, if you’re in the industry you should be aware of what’s happening and be taking steps to align yourself for the future. Yes, even 30/40 year career workers. It’s never too late to reinvent yourself. I’ll have little sympathy for those too stubborn to change and move forward or those that keep themselves willfully ignorant.

 

[Krugerrand]

The Audi will sell, but that’s not the issue. The question is whether it will sell in such quantities that Tesla will not be capacity constrained on th S/X models.

That’s a rhetorical question, right?

 

[Intl Professor]

BLONDWUPTCY To be driven to bankruptcy by marrying a blond bombshell.

Trumpwuptcy?

 

[john2415]

That "myth" exactly matches my experience in the trenches in a union environment plus the experience of others I have talked to and read about. Nothing is universal, but progressives (which many would label me) are not being completely honest with themselves with some of the fundamental flaws in labor unions in the United States today when paired with this highly litigious society. It probably stems in part from unions being strong contributors to Democratic candidates. We would completely agree I suspect that U.S. corporations now hold too much sway over national policy and have used it to harm organized labor, but to pretend that the decline isn't also linked to the way those unions have conducted themselves is to indulge in cognitive dissonance.

In regards to Tesla, in this forum of investors, that is why you see so much negativity in regard to unions. I can think of absolutely no way they would benefit the company at this point in their history, and am dubious that would be the case anytime in the future. There is only a litany of U.S. industries, companies, and civic governments to support this position.

****I love the term "cognitive dissonance". I will use it several times today in conversations with family and acquaintances. I believe it deserves the acronym CogDis.****
There are many dedicated, hard-working, honest blue collar workers out there, but what modern unions are doing is betraying these people by protecting the awful ones at their expense. I've seen bad apples spoil the whole bushel basket, and I don't want it at Tesla.

 

[Fact Checking]

The Audi will sell, but that’s not the issue. The question is whether it will sell in such quantities that Tesla will not be capacity constrained on th S/X models.

But that wasn't the statement made.

That statement was certainly what you implied in your first comment, not sure why you are denying it now. Here's the comment chain, as a reminder, with your initial response in bold:

Audi e-tron revealed, a non-worry for Tesla.

So, it'll take some of the Tesla S sales for sure and it won't be 1-3%,

Tesla is supply constrained, not demand constrained.

What you wrote is simply wrong: the E-Tron can only "take" Tesla Model S sales if Tesla is demand constrained, which it doesn't appear to be.

A very quick example of this "demand > supply" mechanism in action: Tesla was able to redirect dropping sales from China (where they were passing through the up to 65% of tariff overhead to customers) to other regions, without any drop in deliveries - in fact Model S/X deliveries rose and might hit new records in Q4. I.e. the extremely steep China tariffs didn't crowd out Tesla's demand to push sales below available supply of new vehicles.

Audi will only "take" Model S sales if Tesla becomes demand constrained, i.e. if demand drops below available supply. Which is a possibility, but you falsely portrayed it as a certainty resulting from E-Tron sales alone, which is a fundamental misunderstanding (or a deliberate misrepresentation) of how supply & demand works.

The more probable outcome right now is that both the Model S/X and the E-Tron will "take" ICE sales: in particular the E-Tron might be cannibalizing part of their own ICE sales, because existing Audi ICE car owners are the most likely ones to consider another Audi model first. This kind of cannibalization is certainly not what Audi wants, but they'll have to muddle their way through that phase and get to much higher EV production rates if they want any hope of surviving the EV transition.

While what you wrote might not have been FUD, it's pretty obtuse and a pretty boneheaded style of discussion to intentionally not recognize people's very valid counter-arguments ...

 

[elasalle]

While the outlook for $TSLA is still rosy, this short term buying opportunities where $TSLA trails below NASDAQ are getting old. C'mon shorty shorts, I never did get my buy in at $240

If

It's a nice looking car, for sure, but the range is a bit low. As any others have stated, you won't get one until 2021 - likely to be delayed further is history is any guide - by which time Tesla will have double that range in some of their cars.

But no doubt some hard-core Audi fans will buy one and maybe there's better, and more simplified, public charging infrastructure out there by then.

Personally I would never buy an Audi. It's not that I don't like the cars, I think they're excellent, but I don't at all like the brand image. Here in Europe, Audi drivers seem to think they're something special and are often very inconsiderate and arrogant on the road - not all, of course, but a good %age.

The vehicle supports fast charging up to 800 volts. There are charge ports on either side of the bonnet so no matter how you park, you're not dragging a charger cable across the front of the car. Plus, the E-Tron supports charging via both ports at the same time. That might not make other folks at the charge station happy, but your car will be ready sooner. Audi says it will charge from zero to 80 percent in 20minutes.

Does this mean 80% in 20 mins using both the charge ports

 

[Unpilot]

So little volume...I'm tempted to buy a few shares just to see what happens.

 

[EVNow]

This kind of cannibalization is certainly not what Audi wants.

That may not be completely correct. They are more likely to think, better customers buy Audi EVs than others' EVs.

TSLA now trading 1% below NASDAQ. It has been bearish compared to NASDAQ ever since the October China sales hugely dropped story started.

 

[Krugerrand]

I'm talking about discretionary spending.

This forum is such a valuable learning place. Where else can you learn that
- pointing out that trillions are wasted in wars while nothing is spent on ev charging infrastructure is grating political zealotry
- all union workers are lazy
- colonization was beneficial to the victims

Don’t be dramatic, passive aggressive and put words in people’s mouths. Nobody said all union workers are lazy.

 

[ZachF]

Here's what will happen re: Audi etron IMHO.

Tesla Model S will take some more sales from Audi
Audi etron may take some sales from Tesla
Audi etron willl take lots of sales from Audi ICE lineup

net effect: little on overall Audi sales, even more pressure on their declining ICE lineup, Tesla still sells enough to be production constrained.

 

[shrspeedblade]

So little volume...I'm tempted to buy a few shares just to see what happens.

I was thinking the same thing, but lets not drive down the price any more than it already is today!