TSLA Market Action: 2018 Investor Roundtable

[Words of HABIT]

Fair enough.

After all, people of similar trade or culture tend to develop their own jargon.

Not only does this give them ease of communication, but what they share also separates them from others, providing them with further bonding.

The metric system is all about avoiding that.

In that system an account's million and an engineers million are the same, so that they may communicate with less risk of misunderstanding each other.

Happy non-market action week-end to all.

OT
Differences are good. That's what makes us unique. If we were all the same, life would be pretty boring.
In Canada, all major financial institutions use M for thousand and MM for million. We can thank the Romans for that.

 

[PhaseWhite]

Very significantly, it looks like this is for the 300MW/1,200MWh project won by Dynergy/Vistra and not the previously announced Tesla 182.5MW/730MWh PG&E project. So it looks like Vistra has chosen Tesla to build its battery too, and Tesla will actually have a total of c.2GWh PG&E battery projects.

What does this mean in terms of future Tesla Energy revenue from these projects? My very rough back of napkin math says that 2 GWh of batteries at the same cost as the Australia project would be about 1B in revenue. 2000/129MWh = 15.5X $66M (Cost of Australia install) = $1.02 Billion.

Edit: This also means that at 17% GM, Tesla might need ~850M in capital tied up to manufacture the batteries until they receive full payment.

 

[PhaseWhite]

Weekend OT:

How does Hyundai sell this for $37k? Selling at a loss or break even/?

My take is they are selling at a loss. They've priced it cheaper than the price in their home market by about $3K. That makes no sense financially since they have to ship each Kona here first before they can sell it. Unlike Tesla, existing manufacturers can afford to sell EVs at a loss, at-least temporarily and at low volumes like they are doing here.

 

[Sunlight]

@neroden
Please consider your own thread. I for one would happily ready it diligently and be thankful I didn't have to scrounge for worthwhile analysis in the mountain of noise. I only agree with you some of the time but I very much appreciate your posts. I say the same for Audie and a handful of others.

That's a good idea for one so irritatingly interesting - often like a dog with a bone!

"The world according to Neroden"...………...

 

[AudubonB]

In deference to the wishes of Mr Brush, I suppose that I could alter post #1 to say "Welcome to the discussion of Tesla's activity in the marketplace plus whatever catches this magpie's own private fancy as well*".

Somehow, I must have forgotten to write it that way.





*But not Neroden's!

 

[Unpilot]

My take is they are selling at a loss. They've priced it cheaper than the price in their home market by about $3K. That makes no sense financially since they have to ship each Kona here first before they can sell it. Unlike Tesla, existing manufacturers can afford to sell EVs at a loss, at-least temporarily and at low volumes like they are doing here.

Like all the rest (except Tesla) it looks like a nice city car. Forget long distance travel until the nationwide charging network is available.

 

[KarenRei]

My take is they are selling at a loss. They've priced it cheaper than the price in their home market by about $3K. That makes no sense financially since they have to ship each Kona here first before they can sell it. Unlike Tesla, existing manufacturers can afford to sell EVs at a loss, at-least temporarily and at low volumes like they are doing here.

Bingo. And the plan is to only provide inventory to dealers in ZEV states. Gee, I wonder why that might be the case...

Within weeks of opening up orders in Norway they had booked out two years in advance. That's what happens when you keep production volumes low enough for them not to affect your bottom line when you sell it at a loss.

If they actually were making a reasonable profit on it, they'd have scaled up production by at least an order of magnitude. Because obviously a manufacturer isn't going to choose to not sell a profitable vehicle when there's ample demand "just because". They haven't, and have no plans to. Therefore, they're not making money on it. Exact same story as with the Ioniq.

 

[EVNow]

a Question for you MaxPain folks: Do I understand this correctly, and are the points of my thesis then sound?

• MaxPain demonstrates where MarketMakers will most easily (cheaply) satisfy the expiring puts and calls (T/F?)
• Therefore, it behooves them to Make The Market as close to the MaxPain point as possible, right at 4pm Friday (T/F?)

AND THEREFORE -

• That closing stamp is "artificial", in that it does not truly represent what buying and selling investors consider a market-clearing price (T/F?)
  • And to test whether or not the preceding is correct, then
    • Once we're into AfterMarket trading, the price naturally will tend to shift upwards or downwards to a "true" market-clearing price. (T/F?)

As I write this, today's chart shows a consistent rise upwards from that Close-to-MaxPain level. I've not gone back to other Fridays to see other examples.


??????????

Market Makers accused of Market Manipulation ?

This has obviously happened before - and you guessed it - Goldman Sachs was the culprit. But that was in the mortgage securitization saga, rather than the stock market.

When Does Market Making Become Market Manipulation?

Whereas traditional market makers promote price and market efficiency, a firm like Goldman, as an active trader for its own account, can maximize its opportunity for profits by promoting price and market inefficiency.

 

[Zaxxon]

Proposal for next year's thread title: 2019 TSLA Market Action, Inaction, Market-Adjacent Discussion, Random Price Movement Onomatopoeia, Concern Troll FUD Dumping, and Topic Relevance Moaning.

 

[UncaNed]

Here we go, the Megapack is indeed Mega!

(...) Tesla is listing the project as having a total capacity of 1,200 MWh, which would mean that each Megapack has a capacity of 2,673 kWh. (...) The total capacity of those 449 Megapacks represents more energy capacity than Tesla Energy deployed throughout its first 3 years of operation – all Powerpacks and Powerwalls combined. (...)

Tesla’s new Megapack to debut at giant energy storage project in California

... I cannot wait for the moment Wall Street finally wakes up and considered TE as a part of Tesla they need to add to their assessment....

Dumb question... Is the Megapack made by the Tesla that we theoretically own a part of as TSLA stockholders, and it's success therefore adds to my stock value? Or is the Megapack made by a Tesla division the success of which does not directly affect my stock value?

Of course, I'm just as big a supporter of the Megapack and all other things Tesla, equally as much if it affects my stock value or not has no effect on my enthusiasm, I was just... um, AFAF...

 

[KarenRei]

Dumb question... Is the Megapack made by the Tesla that we theoretically own a part of as TSLA stockholders, and it's success therefore adds to my stock value? Or is the Megapack made by a Tesla division the success of which does not directly affect my stock value?

Yes. It's Tesla Energy. You know, that division that the markets have been generally writing off as worthless so far?

 

[Hock1]

Market Makers accused of Market Manipulation ?

This has obviously happened before - and you guessed it - Goldman Sachs was the culprit. But that was in the mortgage securitization saga, rather than the stock market.

When Does Market Making Become Market Manipulation?

You can count on GS still being one of the many "culprits", There are NO traditional market makers. All brokers and many hedge funds (through sponsored access), have market-maker status and thus have the ability to manipulate through naked-shorting.

 

[EVNow]

Bingo. And the plan is to only provide inventory to dealers in ZEV states. Gee, I wonder why that might be the case...

Within weeks of opening up orders in Norway they had booked out two years in advance. That's what happens when you keep production volumes low enough for them not to affect your bottom line when you sell it at a loss.

If they actually were making a reasonable profit on it, they'd have scaled up production by at least an order of magnitude. Because obviously a manufacturer isn't going to choose to not sell a profitable vehicle when there's ample demand "just because". They haven't, and have no plans to. Therefore, they're not making money on it. Exact same story as with the Ioniq.

Hyundai / Kia action on EVs has been very curious. They made fairly decent EVs, priced well - but they invariably sell very few. At one time I was looking at getting a Soul EV, but backed out because the lease price was so high.

The lease price was so high because the dealer had only a handful of cars available and could wait for someone to offer more.

In this case, I think it is a compelling EV that will probably make Bolt uncompetitive, if they can sell atleast 3k+ per month (in US).

 

[KarenRei]

In this case, I think it is a compelling EV that will probably make Bolt uncompetitive, if they can sell atleast 3k+ per month (in US).

3k/month is double the average rate that they budgeted for producing them this year for the entire planet. It's a bit under their entire next year's entire global production, just for one market.

That's a fancy way of saying... don't count on it.

 

[Intl Professor]

The overwhelming majority of manufacturers lose money on their EVs. Which is the reason they generally make them in small numbers with limited availability. Hyundai's goal for this year was making Konas at a rate of 18,6k per year annualized. If I recall correctly they plan to double that next year, but it's still tiny volumes for the whole world.

Exact same thing that they did with the Ioniq.

Wait, a racist religious nut truck driver? Come on, I can't picture that....

Me too. How specialized can you get. Does another driver have a truck with the other part of the bolts? Or, does one truck tow the other? Please, stop screwing with my mind.

 

[EinSV]

That’s very interesting. Fred glosses over the even bigger story that it is Tesla who will be supplying the 1.2 GWh batteries for the Vistra project. To my knowledge the battery supplier for the Vistra project was not previously reported.

If Fred is correct that Tesla will be building the Vistra battery, that would mean that Tesla will be providing batteries for two GWh-scale projects for PG&E — the 1.2GWh Vistra project referred to in the Electrek article and the separate project PG&E will own of 730-1095 MWh.

Those two batteries are currently expected to be the two largest in the world when completed (deadline 12/2020 for each). Storage will replace 3 California gas plants as PG&E nabs approval for world's largest batteries

The language from Electrek quoted below implies that Tesla already has been chosen as the battery supplier for the 1.2 GWh PG&E project, owned by Vistra, since Tesla's original PG&E project is 730 MWh (up to 1.1 GWh possibly). But we haven't seen any public announcement of this.

@FredLambert can you clarify whether Tesla will be providing Megapacks for the Vistra project, or is it still at the proposal stage?

"Electrek has learned some exclusive information about Tesla’s Megapack, the company’s upcoming new stationary energy storage product.​

The big new battery system is going to debut at Tesla’s giant 1.2 GWh energy storage project with PG&E in California."

Tesla’s new Megapack to debut at giant energy storage project in California
​

 

[KarenRei]

Hyundai's (consistently) low EV production volumes are something that seems to have flown past many people:

Hyundai-Kia Motors to Increase Annual EV Production to 100,000 Units

According to industry sources on October 23, Hyundai Motor and Kia Motors set their annual production of the Kona EV and the Niro EV to be launched next year at 18,600 and 21,000, respectively. The figures grew 38 percent and 66 percent, respectively, compared to their earlier plans last year.

(The "100k" above also includes short-range EVs and PHEVs, which obviously have much smaller battery requirements)

Their monthly Kona rates have been well exceeding that 18,6k/yr goal recently (they blew away their record last month, with 4600 made in November), although it's not clear whether that's A) a way to annualize 18,6k/yr with fewer months, B) a premature upgrading to next year's increased production volumes, or C) simply due to batteries stockpiled during their production problems earlier in the year. Their production goals for next year are double what they were for this year.

 

[EVNow]

You can count on GS still being one of the many "culprits", There are NO traditional market makers. All brokers and many hedge funds (through sponsored access), have market-maker status and thus have the ability to manipulate through naked-shorting.

Sure, they have the ability to manipulate - but -
- Why would ALL market makers want the same price at the end of the week ?
- While, they can sell short, the risk exposures are limited through internal controls. So, the brokerage / money market side of the house can't take large positions. Infact they try to close positions on a daily basis.

If the market makers have been buying from shorts (though out the week), they may need to see at the end of the week to close positions. This can add to price pressure at the end of the week.

BTW, options can't be sold naked (atleast Wikipedia says so).

Market maker - Wikipedia

In most situations, only official market makers are permitted to engage in naked shorting. Recent changes to the rules have explicitly banned naked shorting by options market makers.

 

[brian45011]

What does this mean in terms of future Tesla Energy revenue from these projects? My very rough back of napkin math says that 2 GWh of batteries at the same cost as the Australia project would be about 1B in revenue. 2000/129MWh = 15.5X $66M (Cost of Australia install) = $1.02 Billion.

Edit: This also means that at 17% GM, Tesla might need ~850M in capital tied up to manufacture the batteries until they receive full payment.

The terms of the PG&E-TE contract are confidential. It's conceivable, if not likely, the terms will provide for progress payments by PG&E and Tesla will opt for Percent Complete accounting.

Percentage of completion method.

 

[UncaNed]

Yes. [Yes- which option?] It's [what's?] Tesla Energy. You know, that division that the markets have been generally writing off as worthless so far?

What? I'm still confused.