TSLA Market Action: 2018 Investor Roundtable

[Chickenlittle]

I’m not in the ‘lack of demand’ camp for end-of-year. I think they’re doing what they did last quarter....trying to get everything out the door. Next quarter is all about Europe, but you’ll see the shorts point to fewer cars delivered in the US as slowing demand.

And china

 

[Fact Checking]

This may turnout to not be a problem for companies such as Nissan since their costumers are now used to high degradation, but in my opinion may affect VW group sales negatively if after some time people find out that they lost 20% of their range in the first year.

In most cases pack degradation takes years to become severe, and I think VW is playing for time: bully and lie their way into the EV market, while quietly paying for replacement packs for the 1-2% worst-case outliers.

I believe their hope is that by increasing volume they can reduce battery prices and step forward from there.

They are not wrong regarding battery economics, but I think they are underestimating the negative effects their own EVs are going to have on their ICE bottom line. Even 1 million EV sales by 2025 won't mask the drop in profitability of the 9+ million ICE cars they hope to still be selling at that point in time...

To VW every converted ICE customer, every deferred purchase by a previous ICE customer is a reduction in margins and a reduction in ICE demand. The growth of their EV sales comes at the expense of ICE sales.

Pure EV carmakers are in such a superior competitive position: to them every new EV sale is a new customer in an expanding EV market.

 

[jbcarioca]

And china

Not to mention all the other countries that have Model 3 reservations open and will appear just as soon as production volumes permit:

RHD: UK, Japan, HK, Australia, New Zealand, South Africa, India
LHD: Korea, Mexico, Taiwan, Brazil...

All these countries will absorb lots of vehicles other than Model 3, including S and X, not to mention the future. Several of them as good candidates for some version or another of CKD also.

 

[mongo]

OT

slower as well. Weak motor means weak braking regen and lower efficiency.

One note to your excellent post. Telsa regen is acceleration limited to (I think) 0.26 G or so. Having a smaller motor that performs regen at 100% capacity could produce equal power. Also, the peak power number will differ from the rated/ continuous one.

 

[Navin]

Any thoughts on which automaker is least prepared for electrification + autonomy?

Why would we discuss that question here in the market action thread?

 

[KarenRei]

Any thoughts on which automaker is least prepared for electrification + autonomy?

I seem to recall that there used to be an automaker named... what was it... Furd? Fard? Something like that...

There's actually a number of automakers that have been putting off electrification and autonomy plans. But they'll just partner with other automakers for this. Their partners will largely reap the rewards, but it's an option that they'll always have available to them.

 

[tivoboy]

Here's how it works:

1) I sell some stock that's held at my bank. The bank takes me 1-2 days to get me cash from the sale.
2) I try to initiate a SWIFT transfer, and inevitably fail, because my bank sucks at SWIFT transfers.
3) I spend a couple days in a frustrating interaction with tech support until they finally get it to go through.
4) I sit around waiting for the cash to post.

As for "transferring 50% of your assets on each buy": not long ago, it was 100%. This is only my third transfer, so obviously it's going to be a large percentage of the total. It was a particularly large sale last time, and the value of my IB account is down due to TSLA being down, so... this is the result.

I'm not sure who or what you're talking about when you write "icelandic brokers don't leave cash in brokerage accounts". At my bank I have an account denominated in krónur (for my personal needs) and an account denominated in dollars (for my investments). I lose money on every dollar / króna conversion (a lot), so I avoid these conversions like the plague. E.g. technically it would be possible for me to sell stock (denominated in dollars), and then instead of waiting for it to post to my dollar-denominated account, I could "borrow from myself" from the króna-denominated account to initiate a SWIFT transfer. But then I'd be facing extra króna-dollar conversions.

You talk about whether the bank could use my króna-denominated account as collateral and do direct SWIFT transfers to IB for me. Um... maybe? But they seem to have trouble with anything even remotely complicated, so I doubt it. It was a multi-week process just trying to establish a way to do limit orders with them.

Regardless, it's all a moot point now (well, this time at least) because the transfer posted this morning. Now to try to get a good price on the buy... annoying that the stock is surging premarket :Þ

Unless you were going to buy puts sounds like the bank may have saved you ohhh about 7%. ;-)

 

[KarenRei]

Unless you were going to buy puts sounds like the bank may have saved you ohhh about 7%. ;-)

Heh. But no, the upper $350s was what I targeted for buying with the "spare change" in my account (and which I got early in the day). I was targeting the lower $350s with the transfer (probably would have gone in around $353 or so). I buy in increments down from a starting point, usually $4-7 increments. I do the same thing with selling - in increments up from a starting point. That way, if the stock exceeds my expectations in either direction, I always average a buying or selling point at the average between the peak and my starting point. Unless I run out of liquidity during a buy This transfer will fully tap out my liquidity (unless the deals get *really* good, wherein I may be tempted to toss in some of my personal cash that I prefer not to put in the market). So if it gets much lower than this... my loss.

That said, you're right that it probably saved me some money, given that premarket is only at $352 Although if it had arrived late in the afternoon yesterday when it was under $345 that would have been amazing.

Normally I'd target lower and leave myself more liquidity for opportunistic buying, but we're starting to run out of time. Yes, we certainly good get another bad run that makes even these prices look good (that's not at all implausible), but it's also very possible that we'd see another good run that lasts until the Q4 report. And I'd personally rather not risk that. Although it is admittedly a hard decision. If I were caught with free cash on-hand right before the Q4 report I'd need to buy in at whatever the prices were in order to not miss out.

 

[tivoboy]

Heh. But no, the upper $350s was what I targeted for buying with the "spare change" in my account (and which I got early in the day). I was targeting the lower $350s with the transfer (probably would have gone in around $353 or so). I buy in increments down from a starting point, usually $4-7 increments. I do the same thing with selling - in increments up from a starting point. That way, if the stock exceeds my expectations in either direction, I always average a buying or selling point at the average between the peak and my starting point. Unless I run out of liquidity during a buy This transfer will fully tap out my liquidity (unless the deals get *really* good, wherein I may be tempted to toss in some of my personal cash that I prefer not to put in the market). So if it gets much lower than this... my loss.

That said, you're right that it probably saved me some money, given that premarket is only at $352 Although if it had arrived late in the afternoon yesterday when it was under $345 that would have been amazing.

Normally I'd target lower and leave myself more liquidity for opportunistic buying, but we're starting to run out of time. Yes, we certainly good get another bad run that makes even these prices look good (that's not at all implausible), but it's also very possible that we'd see another good run that lasts until the Q4 report. And I'd personally rather not risk that. Although it is admittedly a hard call. If I were caught with free cash on-hand right before the Q4 report I'd need to buy in at whatever the prices were in order to not miss out.

Sounds like a good thought out personal strategy. Ever think of layering in in some put SALES to lower you per share price or scoop up at lower prices. If one is comfortable with a select price (and this number does need to move with time and events) then selling the puts over periods just lowers your average price per share or allows for the entry at a lower price.

 

[KarenRei]

Sounds like a good thought out personal strategy. Ever think of layering in in some put SALES to lower you per share price or scoop up at lower prices. If one is comfortable with a select price (and this number does need to move with time and events) then selling the puts over periods just lowers your average price per share or allows for the entry at a lower price.

Black swans scare me with puts, although I have thought about put spreads. May do so at some point in the future.

 

[humbaba]

I was thinking I could relax a bit, embrace the holiday spirit and suck back a vegan, lactose free, grande expresso double latte mochachino frappe with whip creme and sprinkles...then last Friday and today happened.

Now I’m forced to call upon my inner grinch. Everyone should consider this the official inner office memo to change avatars.

So let it be written, so let it be done.

Gotcha! Huntin' down dem shorts in da swamp!

 

[Chocochip]

My take on the VW I.D.:

• In a last-minute change VW repurposed it from a Model 3 competitor into a compact car - leaving the Model 3 effectively unchallenged by major incumbents up to 2021.
• The VW I.D. is:
  • Significantly smaller than the Model 3,
  • less efficient (bad CV),
  • slower as well. Weak motor means weak braking regen and lower efficiency.
  • It's unclear to me whether the VW I.D. is going to have a proper liquid cooled/heated battery management system - if not then European winters and summers are going to take a toll on cells (especially if combined with fast charging) and will create a lot of unhappy customers and bad resale value - a repeat of the BMW i3.
  • It's unclear whether the higher battery mass comes with a proper high strength chassis like the Model 3 - if they are trying to save on chassis mass or sophistication then safety will suffer.
  • Probably no self-driving sensor suite, hardware (autostreer) and computing hardware preinstalled like on the Model 3 - which cuts off the post-delivery revenue stream of a $5k AutoPilot and $5k FSD profit stream. Without those costs the Model 3 SR could probably be sold at $29k already - competing with VW I.D. entry prices.
• I believe the VW I.D. is going to cannibalize VW ICE sales primarily, blazing the trail and teaching customers about the benefits of EVs.
• The Model 3 will be cannibalizing VW's very profitable sedans and hatchbacks (frunk plus large trunk will convert many hatchbacks customers), especially premium and sport versions that are very popular in Europe: the VW Golf (GTI), VW Polo (GTI), VW Passat, VW Arteon - you name it. These sell over a million units per year combined and are at the heart of VW cash generation and brand recognition.
• I.e. the Model 3 will cannibalize everything VW offers in those price segments plus upsales from lower segments, except SUVs, pickups and low end mass manufactured compact cars.
• VW not offering a direct competitor to the Model 3 is a strategic blunder IMHO. VW is rushing into EV mass manufacturing without the experience and without the benefits of a track record of having built a real EV.

Some of the things in your post, I agree with.

Some of the others are speculation, for instance the (possible lack of) liquid cooling of the battery, from which you derive some serious downsides to VWs effort. Bobby Llewellyn and the Fully Charged team were recently invited to S. Africa for an exclusive (supervised) test drive of the proto-version of the ID (not sure this was mentioned here before) and he put up this blog post, where he mentions that the battery is water-cooled (probably a mistake on his part, tried to say liquid-cooled). I think a video of that drive will drop sometime very soon.

And then some of the other points you make are just a clear attempt to directly and negatively compare the ID with the Model 3. This approach is not very constructive, I don't think, partly because I consider these to be different classes of vehicles - there is some overlap in the target demographic, but they're definitely not direct competitors - and partly because (and I can't emphasise this enough) more proper EVs from different manufacturers is a good thing for Tesla and for TSLA! It will bring EVs into the mainstream, it will increase wide acceptance of this transition of personal transportation, and it will emphasise the significant superiority of Tesla cars, while at the same time showing how superior EVs are compared to their ICE counterparts! Which means that my favourite quote from your post is this:

I believe the VW I.D. is going to cannibalize VW ICE sales primarily, blazing the trail and teaching customers about the benefits of EVs.

 

[KarenRei]

Yeah, 100kW charging would be pretty difficult without liquid cooling.

I don't write off VW at all. The amounts of money they're talking about are the sorts of investment needed to actually compete. I don't trust them, but I don't write them off.

The devil is very much in the details (actual charging curves, actual prices, actual ranges, interior quality / features and at what price points / trim levels, how CCS networks evolve, how LG's scaleup (and VW's other supplers) fare and at what price points, etc), and it's going to be a long time before these things clear up. All we can look at are the "goals", and simply make observations like "They're using a less efficient form factor which means more battery costs and slower charging", "The car is smaller", "The target horsepower is lower", "100kW is only decent for 2020 if they can maintain that to nearly full", etc. But also the comparison to VW's credit, that they're shooting for a very ambitious price target. Whether they actually hit such a target, and - the really critical question - do so at volume, unsubsidized - is the open question.

Keep your skeptics' hats on, but don't write them off. Tesla has gone from "quaint outsider" to "serious threat". Those who see the writing on the wall are not going to take this sitting down.

 

[Fact Checking]

I seem to recall that there used to be an automaker named... what was it... Furd? Fard? Something like that...

There's actually a number of automakers that have been putting off electrification and autonomy plans. But they'll just partner with other automakers for this. Their partners will largely reap the rewards, but it's an option that they'll always have available to them.

The problem I think is that while you can 'partner' from a position of strength in the market to develop new technologies for that market, because your partners will fear your market strength and want you on their side.

But you generally cannot 'partner' your way into a new, future market (such as EVs) where competitors are already in better positions - why would they want to give up their good initial positions? Partners will know this and will reap most if not all benefits.

The carmakers least prepared for the EV transition IMO: Fiat-Chrysler, Ford, Toyota (!). Most of these have good political support and a 'home market' so they'll get a bailout or two.

BTW:

I believe the VW I.D. is going to cannibalize VW ICE sales primarily, blazing the trail and teaching customers about the benefits of EVs.

How terrified Volkswagen is of cannibalization and deferred sales is the fact their carefully staged photo op in South Africa sported test mules with camouflaged outlines:

I don't think I remember a single case where market introduction to journalists was done via test mules. VW PR initially tried to market the photo op as "spy shots" - but the resulting reports from South Africa quickly belied that story - it was a staged event.

Volkswagen absolutely, utterly, totally doesn't want customers to realize that they VW is building competing form factors to their very profitable ICE line-ups, such as the VW Tiguan:

Which is one of the VW success stories that increased sales in the EU from 178k in 2016 to 236k in 2017, +32% in growth and another +10% growth possible in 2018.

If you look at the VW I.D. headlights, they are very similar to the Tiguan. The back of the car has the usual VW Golf/Polo design elements:

Very little has remained of the early VW I.D. renders:

(Which was actually a pretty nice design, if you mute some of the unnecessarily futuristic elements.)

 

[Fact Checking]

Some of the others are speculation, for instance the (possible lack of) liquid cooling of the battery, from which you derive some serious downsides to VWs effort.

It was part of my argument, and I marked it as speculative - the gist of my post still applies even with a liquid cooled battery pack.

But yeah, if they have a liquid cooled battery pack (which based on your comment they likely have) then my remarks about longevity do not apply.

 

[Unpilot]

Until designers finally GET THE IDEA most people don't want a scifi version of a car they wont sell many.
I was sold on the Model S looks as soon as I saw it. The VW future pod is fugly.

Unless they don't want to sell too many....hmmm?

 

[winfield100]

spaceX launch scrubbed 4 today, go maybe for tomorrow
Launch window @ 9:07 EST tomorrow wednesday, viddy live starting ~15 minutes prior

 

[anon]

Today both Goldman Sachs and Morgan Stanley re-iterated their bearish price targets, saying that the tax credit phase out will harm demand in Q1 and Europe may not make up for it.

 

[Unpilot]

They are going to do it! The bastages are going to make me buy more stock!

 

[EVNow]

TSLA bearish compared to Nasdaq today. Lagging by about 0.8%. Just turned red too.

Not sure how to trade today. Not sure what a intraday high & low may look like.

ps : 1.8% lagging now. Near yesterday's lowest.