TSLA Market Action: 2018 Investor Roundtable

[avoigt]

We all experience a lot of FUD these days from the shorts and the already known manipulation from media and analysts trying to create a negative sentiment. The Fed decision is a catalyst for it.

Thats no surprise and we did see it in last quarter ends happening so its kind of business as usual. Its sounds like the new - old story story now is that demand for the 3 is weak which is backed up by actually nothing other than delivery in the US is very fast. In my view thats good news and only shows that Tesla has achieved a remarkable order to deliver cycle which will help a lot with cash and makes the operation agile. Agility is important if you bring new variants and models out.

If there would be any demand issue Tesla would have taken other levers they have but they did not. They can do any time so Tesla has control on demand and can manage it based on their needs. Once we have covered all markets globally, all 3 variants are out and all payment methods are pulled, all GF spitting out 3s rapidly we can talk about demand but certainly not today. This is a supply constrained market and the only challenge is how fast Tesla can deliver cars.

Looking at the astounding almost 68% of trading of shorts (I believe record level) in the yesterday market its just magic how strong Tesla was and is. For all to remember: all who sold short need to buy back and that is yet to come.

Date Short Volume Total Volume Short Percent
12-19-2018 2,557,663 3,775,770 67.74%
tsla | Volumebot

In the last weeks all so called competitors have consistently underperformed in key specs and if we compare what they said their cars will do and what private test drives did reveal we do see a pattern of overpromising and underdelivering.

I read lately the i-pace outselling Tesla in Norway but looking at the today news that seems not to be the case too. Great to see fast charging for the e-tron but without fast chargers that won't help much. All cannonball test show the 3 and Tesla as superior for the reasons that all elements fit together nicely. Audi did a nice job with the cooling system but thats just one element of many. Honda did a nice job with efficiency but thats just one element of many. I could continue....


Gerard Fianen‏ @gerardfianen
Tesla shorts : I-Pace is killing $TSLA in Norway Reality : in the first 19 days of December #Tesla delivered more MS/MX in Norway (1.150) than the total I-Pace sales in Norway in all 2018 (1.067) I am happy to see more EV’s and applaud Jaguar for doing I-Pace, but $TSLQ = FUD.

12:53 PM - 19 Dec 2018

Gerard Fianen on Twitter

Assuming that we see a cooling of the economy the question is what effect this will have on Tesla.

My answer is a rather positive one because the 3 particularly in the lower cost model makes a lot of economic sense looking at TCO. Its great to have low maintenance and energy costs to run you car if business is going bad isn't it. ICE manufacturers will see their demand fall of the cliff as even today people use their old car a few years longer to be able to get a good EV instead. Now OEMs can claim lay offs happens because of the bad economy diverting the public from them missed the BEV movement completely.

Mr Diess the CEO of VW said yesterday that politicians should be aware that the new CO2 goals for EU cars will lead to layoffs but they (VW) will manage the goals. So be prepared for further drops in ICE sales which FUDsters will use as an argument that Tesla is doomed.

Instead an economic downturn will likely bring some incumbents automakers faster into trouble. Diess said they need to invest now more and faster which is another issue on top of the issue about them still needing to learn to build an EV that people want to buy. Can VW, Audi, Daimler and others build a demand level that helps them to survive the shift from ICEs to EVS ?

Remember companies do go chapter 11 because of lack of cash flow. With ICE sales going down and EV sales not really going up but costs do on various levels and given the narrow margin they have today adding their debt level on top with increasing refinancing costs its a dangerous situation they are in.

Its all about speed now and I am certain that they regret heavily not to have started earlier. Daimler and BMW announced a cooperation today which is another indication that they have an issue.

VW and others talk a lot about how they are going to build supply but I ask myself where is the demand for VW BEVs they intend to satisfy?

Beside the FUD some journalists started to do a more balanced and fact based reporting.

Most positive report at Forbes about Tesla that I recall.

Tesla Could Be A Lone Success In 2019 As European Model 3 Sales Catch Fire

 

[Cattledog]

Out of curiosity, how much was the depreciation on the RWD after what I presume was only a few months of ownership?

It was low, $36.5K. Bought in March, VIN 68XX, 7,500 miles, no AP nor FSD, 18" wheels (w/some rim rash), grey. With sales tax offset, worth $39K to me here. Paid $49K with tax credit effective $41.5K. My 18 year-old daughter had major back surgery Friday so my focus was 'easy', not $.

 

[mrdoubleb]

I expect the Model 3 to be a run away success in Europe for the following reasons:

• The median wages are lower than in the U.S., with average new car prices about 10% lower.
• Most Tesla Model S models in Germany cost +20%-40% compared to U.S. prices - AutoPilot is 40% more expensive. Part of it is the 19% VAT, but also logistics costs.
• I.e. the relative price levels are 30-50% higher than in the U.S., which reduces the effective Model S addressable market dramatically - it's about half of that as in the U.S.
• The Model 3 changes all that:
  • LR AWD starts at around €58k, versus €108k for a 100D with similar range.
  • Performance Model 3 at €68k versus €145k for a P100D.
  • BMW is in trouble: the highest performance BMW M2, which is a smaller 2-door coupé, costs €74k+ in comparable configuration, the M3 and M4 cost €70-80k in Germany - and none comes close to the acceleration and handling of the PM3.
  • The Model 3 also offers features unmatched by any BMW:
    • Remote start/heating is illegal in most of Europe for ICE cars
    • AutoPilot is unmatched,
    • Interior is generous even for tall people and there's no drive shaft running in the middle like on AWD ICE cars,
    • Remote cooling is unmatched and will be a hit as non-garage street parking is a lot more common in Europe, so hot cars in the summer are a real problem in all but Scandinavian countries.
    • Frunk space.
    • Frameless doors look "luxury American car" and are impressive AF. Only the highest end European sedans are frameless, and it's a rarity in general.
    • Tesla back seats are foldable flat, offering camping sleeping space with air conditioning and dehumidification. "Camper Mode" under a Glass Roof is something most Europeans don't even know exists, but will value a lot, because the denser urban environments are more removed from nature than the more generous living spaces in most of the U.S.
  • There's a few luxury and convenience features BMW offers that the Model 3 doesn't (such as surround camera view or high end luxury interior trims) - but none is major.
  • I.e. the Model 3 expands the addressable market much more in Europe than it did in the U.S., even at the current $66k+ entry price for the LR AWD.

I expect European Model 3 sales to be crazy strong in 2019-2020. Tesla won't be able to make enough of them.

Some of you know that I regularly write for a local EV site and, unsurprisingly, mostly about Tesla. I have just finished a 3 piece article on how the Model 3 stacks up compared to the competition. I`ll refrain from too much detail here as this is the Market Action thread, but here are the highlights:

• Compared to the German premium ICE competition (Audi A4/A5, BMW 3/4, Mercedes C) it looks very good. When it comes to the high end sport variant (Performance vs. RS5 vs. M4 vs. C AMG) it matches them or beats them on performance coming in at the low end of their price range. Standard LR AWD vs the rest: if you would like to bring the Germans to the Model 3 Premium Package Dual Motor trim level, they match or exceed it on price before incentives (also match on curb weight!), but do offer some perks like cornering matrix LED lights Tesla does not have. Of course none have the entertainment/nav system that matches Tesla in screen size, features, or UX.
• Compared to other EVs on sale: the Performance and LR Dual Motor are unmatched on the market on range and performance, but their prices are also higher than anything else out there. The Medium Range, if they will offer it here as well, is kind of where most others top out for range (like the Kona EV) and Model 3 would be OK on price with the caveat that most traditional brands put their EVs absolutely chock-full of extras and gadgets to justify the price, like driver assistance features (e.g. adaptive cruise control, self parking) Tesla only offers with the AP upgrade.
• The real interesting bit will be Short Range, which would clean-up the low-mid part of the EV market, offering roughly 1,5x the range the others have for about 5K EUR more. Depends on how price sensitive buyers will be, but it could hit the sweet spot just above the Leaf.

One thing is for sure, once SR comes out, RIP i3 and e-Golf. Even the latest i3s with the 120Ah battery is a second slower to 100kmh, has 40 kmh less top speed, 100km less range, charges slower, yet costs 3-4K Euro more. The Golf costs 3K less, but has 40% less range and accelerates like a school bus compared to the Model 3, while topping out at 50 kmh less speed.

 

[Artful Dodger]

Tesla has this pattern of sliding $100 after hitting $380. What causes this? Panic, fear, herd mentality. I’m praying that this won’t be the case but I can seriously see us at $290 again with a scheduled fud and bear raid

Hi Anthony.

Based on your Avatar, you might be too young to have seen this series of famous documentaries from 1960s. They explain systematically what goes on, and provide crucial insight into the tactics employed by the oppostion:

Older hands will know this well (it'll pass). Next: Wascally Wabbits.

Cheers!

 

[avoigt]

Good to see that Daimler starts investing in ads for the EQC. In fact they advertise actually all BEVs with their ad. Good one.

Have a look:

 

[replicant]

I haven't seen anything about Tesla opening their Superchargers in Europe to other manufacturers. Only that they were adding a CCS cable for the Model 3.

A Tesla employee (who organize test drives in Paris) told me recently that Tesla will probably open some chargers to other manufacturers in each SC station, and that the wait time for these ones would end up much longer than those reserved for Tesla vehicles. This way, they would be open but keep a clear advantage.

 

[HG Wells]

European markets recovering nicely.

 

[Sunlight]

Good to see that Daimler starts investing in ads for the EQC. In fact they advertise actually all BEVs with their ad. Good one.

Have a look:

Pity Mercedes didn't take the opportunity to show the driver unplug from a charger casually as they left the food stop!

 

[cheshire cat]

Pity Mercedes didn't take the opportunity to show the driver unplug from a charger casually as they left the food stop!

Here' some more free advertising- I think

"I'll get me coat"

 

[KarenRei]

Pity Mercedes didn't take the opportunity to show the driver unplug from a charger casually as they left the food stop!

That's really the key part, and the part that they left out: showing that yes, you can road trip on an EV if it's a type that charges fast enough / is efficient enough. Most people think of road tripping in EVs as impossible, which stops them from even bothering to learn about them.

 

[KarenRei]

Yes, this is somehow overlooked in this thread.

E.g. current Dutch pricing

• Euro 95 (petrol) : € 1,61 / liter = US$ 1.84 / liter = US$ 6.96 / gallon
• Diesel : € 1,385 / liter = US$ 1.583 / liter = US$ 5.99 / gallon

Yeah, they get their fuel cheap in the Netherlands. Current Icelandic pricing:

• Petrol / gasoline: Median price = 221,4kr / l = $1,86 / l = $7,04 / gallon
• Diesel: Median price = 223,2kr / l = $1,87 / l = $7,08 / gallon

 

[HG Wells]

Yeah, they get their fuel cheap in the Netherlands. Current Icelandic pricing:

• Petrol / gasoline: Median price = 221,4kr / l = $1,86 / l = $7,04 / gallon
• Diesel: Median price = 223,2kr / l = $1,87 / l = $7,08 / gallon

Just wait till you get to Houston for Christmas.
It's just $ 1.91 a gallon.

Perhaps you can take some home duty free ?

 

[Fact Checking]

Post FOMC statement macro Update:

The Federal Reserve trying to tweak the "rate of change" of interest rate hikes. They know they have big effects on the market, so they are trying to signal changes as slowly as possible, to reduce transients.

The 0.25% hike was widely expected, the question was the trajectory for 2019 hikes. The Fed reduced the number of 2019 rate hikes from an expected ~3 to ~2 on the weaker data today - but the market expected a more "dovish hike" - hence the correction.

Today's U.S. housing data was good, so housing recession is mostly off the table now.

I'd still declare today a macro-positive day, cautiously.

Looks like all the major investment banks came to a similar conclusion in their freshest analyst notes and there's now cautious optimism in the markets: Fed chairman Powell made it pretty clear yesterday that they will stop the rate hikes in 2020 and will only do two more hikes in 2019 and maybe even scrap one of them if the data worsens. Given that current data is running a bit below Fed expectations this would suggest the Fed will allow more growth.

The dollar reacted accordingly (by weakening a bit), European markets are green, U.S. futures are looking cautiously optimistic as well. There's been a few really large buys as well on the index futures markets.

So IMO yesterday's negative market reaction to the Fed was mostly unjustified, and I'd not be surprised to see a green day on NASDAQ and some $TSLA recovery as well, assuming there's no negative event.

 

[Drax7]

I expect the Model 3 to be a run away success in Europe for the following reasons:

• The median wages are lower than in the U.S., with average new car prices about 10% lower.
• Most Tesla Model S models in Germany cost +20%-40% compared to U.S. prices - AutoPilot is 40% more expensive. Part of it is the 19% VAT, but also logistics costs.
• I.e. the relative price levels are 30-50% higher than in the U.S., which reduces the effective Model S addressable market dramatically - it's about half of that as in the U.S.
• The Model 3 changes all that:
  • LR AWD starts at around €58k, versus €108k for a 100D with similar range.
  • Performance Model 3 at €68k versus €145k for a P100D.
  • BMW is in trouble: the highest performance BMW M2, which is a smaller 2-door coupé, costs €74k+ in comparable configuration, the M3 and M4 cost €70-80k in Germany - and none comes close to the acceleration and handling of the PM3.
  • The Model 3 also offers features unmatched by any BMW:
    • Remote start/heating is illegal in most of Europe for ICE cars
    • AutoPilot is unmatched,
    • Interior is generous even for tall people and there's no drive shaft running in the middle like on AWD ICE cars,
    • Remote cooling is unmatched and will be a hit as non-garage street parking is a lot more common in Europe, so hot cars in the summer are a real problem in all but Scandinavian countries.
    • Frunk space.
    • Frameless doors look "luxury American car" and are impressive AF. Only the highest end European sedans are frameless, and it's a rarity in general.
    • Tesla back seats are foldable flat, offering camping sleeping space with air conditioning and dehumidification. "Camper Mode" under a Glass Roof is something most Europeans don't even know exists, but will value a lot, because the denser urban environments are more removed from nature than the more generous living spaces in most of the U.S.
  • There's a few luxury and convenience features BMW offers that the Model 3 doesn't (such as surround camera view or high end luxury interior trims) - but none is major.
  • I.e. the Model 3 expands the addressable market much more in Europe than it did in the U.S., even at the current $66k+ entry price for the LR AWD.

I expect European Model 3 sales to be crazy strong in 2019-2020. Tesla won't be able to make enough of them.

Did you leave out the cost of gasoline in Europe, which is a multiple of
That in the USA, making electric in general very desirable.

 

[Fact Checking]

Just wait till you get to Houston for Christmas.
It's just $ 1.91 a gallon.

Perhaps you can take some home duty free ?

Ask about this on the DHS toll-free hotline: easiest way to get lifetime membership on the U.S. no-fly list!

 

[Hock1]

Did you leave out the cost of gasoline in Europe, which is a multiple of
That in the USA, making electric in general very desirable.

Anyone. What is the range of electricity costs, on a Kwh basis, across Europe? TIA.

 

[Fact Checking]

Anyone. What is the range of electricity costs, on a Kwh basis, across Europe? TIA.

Here's an older but intuitive price map:

It's 5 years old so a bit dated, prices have come down a bit in some of these areas, but this map shows the general distribution of cost of electricity. 20-25 cents per kWh is a good rule of thumb for residential electricity, in western Europe.

Note that in many markets you can get cheaper overnight electricity plans in the $10c range (sometimes less), which will skew these costs. Nothing will beat the almost-free Texas overnight wind electricity prices though.

This also suggests that the Model 3 will be non-linearly more popular in Eastern Europe, which has similar gasoline prices with high tax content, but much lower (often subsidized) electricity prices. The main barrier to EV adoption there is the high cost of the cars - the Standard Range Model 3 will be a big hit there.

 

[hacer]

This is how it works AFAIK:

• Pretty much any commercial bank has access to the Fed discount window lending facility, including foreign banks, not just the 12 member banks of the Federal Reserve.
• Banks only earn on excess reserves if the rate is positive. With negative rates they lose.
• Negative interest rates are a tool to penalize excess reserves, i.e. they are used to force banks to lend.
  
• The Fed never actually had negative interest rates, ever.

Negative rates were used in a highly successful fashion in Sweden, where most of commerce is cash-less and banks are not allowed to evade negative rates via excessive vault cash.

Usually the central bank deciding to go negative try to not really explain the borrowing part (because it's really bad press), but they DO give free money to banks that borrow from the central bank. Like @neroden said, it is a prop-up program for banks.

This NYT Sweden Imposes Negative Interest Rate and Plans Bond-Buying Program articles explains:

The decision means that Swedish commercial banks will be able to take out loans from the central bank at a negative interest rate. When the loans are due, banks will pay back less than they borrowed.

It's true that the Fed has never gone negative and hopefully they never do. But if they do, you can be assured they will create new money and give it away, never to be returned, to at least the member banks. It's possible that all banks would have access to free money as well, but its hard to imagine that foreign banks would be eligible. The hoi polloi won't like it either way.

 

[ggies07]

Good to see that Daimler starts investing in ads for the EQC. In fact they advertise actually all BEVs with their ad. Good one.

Have a look:

haha. What. the. ****.

 

[Causalien]

Guys,

I believe it is a good idea to stop putting 100% of your free cash flow into stocks. I've reduced my additional stock investment to only 5% of the free cash flow. What's coming is up to the orange one. Solve the trade war before election then we avoid recession. Fed stop hiking before election, we avoid recession. Whether or not we avoid it in 2019, 2020 will still cause a recession.

Tesla is actually doing something right in terms of where to invest. Emerging market got hammered real hard compared to US. It is a great time to start getting in. It might get hammered even more, but no one is perfect at timing this. Tesla did the car manufacturer's equivalent of investing in emerging market by having a plant in Shanghai producing for asia.

Cheers,
Back to surfing.