TSLA Market Action: 2018 Investor Roundtable

[EVNow]

OT :

We keep hearing that corporations have bought our Congressmen. But here is the "proof". If this happens after every election, how come we have never heard of it ? I think we are going to get the level of transparency we have never got before - since some of these freshmen are not dependent on corporate lobbyists and big donors. This is the relevant portion from incoming fresh congress person Rashida Tlaib.

This month, along with my colleagues, I attended a “bipartisan” program at Harvard University billed as “the preeminent educational and preparatory program” for incoming members of Congress.

But, instead of discussions about implementing an agenda for the American people, the program consisted of speeches from corporate CEOs and lobbyists from companies like Johnson & Johnson, Boeing, and General Motors -- which is in the process of slashing thousands of jobs in my district by closing its Detroit plant; a devastating hit to our community.

Oh yes, the obligatory Goldman Sachs guy.

Among the presenters at this event for incoming Congress people was Gary Cohn -- Donald Trump’s former economic advisor and former president/CEO of Goldman Sachs -- who told us that “you guys are way over your head” and “you don’t know how the game is played.”

 

[Esme Es Mejor]

What's missing a clarification about the abuse of the term - "full employment".

They believe that when the number of people receiving unemployment insurance is low, the nation is enjoying "full employment". What they're failing [on purpose?] to realize that this insurance program is time-limited. It's only good for a short span of time, and when it runs out, you're no longer counted in that figure.

That isn’t how the unemployment rate is calculated. It’s based on whether you’ve looked for work within the past 4 weeks, not whether you’re receiving unemployment payments. A more realistic number, which includes marginally attached & discouraged workers, is also calculated— it correlates pretty well with the official number, but is higher.

Not Everyone Who Is Jobless Is Unemployed

 

[CorneliusXX]

Engineering Explained has a very detailed delivery video up. Unfortunately there were some scrapes and panel gap issues. Nothing too serious, but i would be disappointed to receive a vehicle in that condition.

 

[Dreadnought]

I'd be OK with this if the fossil-fuel subsidies were removed. At least in Belgium, and I suspect many other European countries, cars are taxed primarily on their CO2 emissions, I think with an element of the engine power included. It's not perfect at is doesn't take into account the NO emissions, but these are now beginning to be dealt with, tangentially, buy the banning of older cars from many city-centres.

While this is a first step, it's still based on test cycle emissions that are rarely achieved in real-life and OEMs try to game if not outright cheating. It does not take personal driving styles nor mileage into account. A hummer sitting idle in the garage all year is doing no harm. An X5 doing 50k miles per year is emitting a multiple of a compact car doing 15k. All taxes should be on fuel and they should be significantly higher in order to capture the externalised costs. Why nobody is pushing in this direction (while lowering carbon-neutral taxes) is beyond my comprehension.

@CorneliusXX:
Too late to edit my reply but that was unwarranted, got carried away with the argument there, my apologies. Your arguments are entirely reasonable and I agree with everything you wrote about 2008-2009 - it was different and in many ways worse than today's environment.

I do think there are car industry specific risks today, but the magnitude of them is hard to quantify.

I'd also add an additional counter-argument against my own points: 2008-2009 car OEM bankruptcies were all about their inability to react to fast drop in demand. It seems unlikely that just 10 years later they wouldn't be significantly more resilient against a similar scenario - and you cited a few aspects that make it less likely.

The same kind of recession rarely repeats, partly because institutions and market participants are much more aware of the reasons of the last recession. It's the drivers of recessions long ago that tend to get cleared from institutional memory ...

So I agree with you in two points: same magnitude of drop of demand is very unlikely today, and the car industry is probably also more prepared to intelligently react to lack of demand than in 2008-2009. This is probably going to make the EV transition a rather interesting and possibly protracted affair ...

While the drop will not be so sharp as in a recession, your point that those sales are gone and not coming back is the more important one IMHO. A manufacturer who saved up for a rainy day may withstand a year of low demand. But if revenue is going downhill year after year in accelerating fashion, you can only hope that your downsizing efforts are keeping up.
Once demand for BEVs has reached a critical mass, I expect to see another round of consolidation. Government bail out is an option to save jobs in the aftermath of a recession. It's way harder to negotiate when the business model is no longer sustainable.

 

[Right_Said_Fred]

I see this has now become the political action thread. I'll be back when markets open tomorrow.

 

[ZachF]

That's true, but there's these additional factors you keep not acknowledging:

• There is now growing uncertainty about the future of ICE cars specifically - which existential uncertainty didn't exist back in 2008-2009. That gives extra reason for people to not invest ~$40k+ into an asset they expect to be using for over 7 years.
• In 2008-2009 every knew that this is a recession and that the drop in demand was temporary. Transition of customers to EVs is permanent in over 90% of the cases.
  
• There's a significantly higher and more uncertain interest rate environment today than in 2008-2009. Financing is more expensive and will probably get more expensive in the future. With over 70% of new car purchases financed this is is a significant factor.

Is the sum of these two factors as large as the economic uncertainty in 2008? Certainly not yet, we'd be seeing ICE car sales plummet otherwise.

My point is, it's a fundamentally volatile scenario, the moment ICE carmakers start the transition and start selling EVs for real they might set off a chain reaction of customer behavior they don't have control over: they'll start waiting for EVs, defer buying a new ICE car, or buy a used ICE car.

If we look at historic examples, transitions in demand for new technologies tend to be very, very quick:

Literally every transition there shifted demand by about 5% per year - 10% in the peak years. While those products had faster replacement cycles, this is counter-acted by the fact that new car purchases can realistically be delayed by 3-5 years, while for example an old smartphone becomes too painful to use with contemporary software after 2 years already.

The other problem is, premium sales are lost first, which tend to have the highest profit margin content. So in terms of lost cash flow, the first 20% of lost sales could be the most damaging, wiping out most of the positive cash flow - leaving very little to invest into the EV transition ...

This isn't hypothethical at all - U.S. sales of the BMW 3-series effectively collapsed in 2018:

BMW 3-series US car sales figures​

I believe one of the main forces behind that is competition from the Model 3: November 2018 sales were only 3,218 units versus 6,181 units in November 2017.

I think there are many companies in the ICE industry that will get into serious trouble after losing 5-10% of their most lucrative sales in a single year, permanently.

Damn, I haven't looked at 3 series sales recently... looks like 2018 is headed for <45,000 after selling over 100,000 in 2014

Put differently, Tesla sold more Model 3s last quarter than BMW sold 3 series in the entire year!

 

[winfield100]

Went by Rockville Maryland USA, Gude Drive Tesla service center. Noticed they have another building with vehicles.
Counted 42 Tesla 3 Sunday afternoon, and around another 40+ Tesla’s and a tent outside. Bad photos tho.

 

[ggr]

I went to volunteer at the San Diego delivery center. Nowhere near as busy as last quarter, and they are not accepting volunteers. I hope most of the cars are simply going elsewhere.

 

[AudubonB]

The Arizona delivery center is Tempe, and they actively recruited members of the Tesla Owners Club to assist this weekend.
On a similar vein, we stopped in the Scottsdale "Showroom" this afternoon. Some of the staff there were positively giddy that an hour earlier, between the time someone entered the store to his deciding not only to purchase a Model 3, but actually drive it away as a new owner.....37 minutes elapsed. Go Gary! Go, Go, Go!

 

[Reciprocity]

I’ve had to eject from a fighter jet, flew 40 combat missions off of aircraft carriers, and got ran over by a car (twice) resulting in 20 broken bones, both lungs collapsed and a third of my skin gone.

This ain’t nothing

First, thank you for your service. Second, are you sure your not actually a Terminator, come from the future to hunt down Sarah Conner?

 

[Reciprocity]

To be more precise: Hit me, then ran over my face, then stopped the car, took a look at me, decided he had to kill me as now I could identify him (illegal immigrant, didn’t want to get shipped home....his words later on), then got back in the car, ran over me again in reverse, then dragged me 50’ as my body got wedged under the engine bay.

My wife put a sticker on my car (the black S) that says ‘no bad day’, because I haven’t had a bad day since leaving the hospital. Sorry for OT...but ya know, weekend and all

Yup, definitely the Terminator. Run Sarah, run!

Damn that's a crazy story. Glad you made through and I guess something like that makes for appreciate life that much more. We can all learn from that. Cherish what you have because someone or something could end it all in a blink of an eye. That's why I love my family in a Tesla, at least I know they to be as safe as possible.

 

[SteveG3]

Also note that VW cited WLTP range standards which are obsolete even today. EPA ranges are 30-40% lower - so the real I.D. range is probably 120-140 miles and 190-220 miles.

I believe the only thing the I.D. is going to compete on is entry price and the smaller form factor, as Tesla is unlikely to be offering a Model 3 variant with just 130 miles of range. The Standard Range Model 3 might even beat the higher specced VW I.D. on price, while offering similar or higher (220 miles) EPA range.

While I agree with your overall point, I don't think the EPA range will be quite as low as 120-140 miles and 190-220 on the two battery variants VW is suggesting today.

The I-Pace's EPA range is 234 miles, and its WLTP is 292.

Using that as a rough guide implies EPA ranges of 165 miles and 250 miles for the ID, using Fully Charge's reporting of 206 miles and 312 miles of expected WLTP range.

Again, your main point does make sense to me... I don't have demand concerns for the Model 3, but, unless the I-Pace is very unrepresentative of how WLTP converts to EPA, it's going to be a bit different of an entry into the market if its range is 25% higher than the 120-140 mile/190-220 mile ranges. If VW delivers, the base VW ID might be a worthy upgrade to today's Leaf... a $25K 165 mile EV vs. $30K for 150 miles (using round EPA numbers).

 

[SteveG3]

Engineering Explained has a very detailed delivery video up. Unfortunately there were some scrapes and panel gap issues. Nothing too serious, but i would be disappointed to receive a vehicle in that condition.

Yup.

A week or so back, I was happy to see the video Jason made announcing his purchase of a Model 3... but, disappointed to see he had not bought AP. It continues to be the feature that most blows me away about what Tesla is doing. Jason gave his reasons for not getting it (basically, I love to drive), but, if it were available to him for more than a test drive (as he's done in the past), I think he'd be blown away by AP and it's improvements. In the few videos I've watched, I found him to be an intelligent, straight shooter, genuinely motivated to help the public understand science. That, and the fact he has over 2 million subscribers, makes me really wish he had AP (well, FSD too, as I think the new chip will lead to a big leap in capability next year).

I would happily donate to a kickstarter or gofundme campaign to buy Jason AP and FSD for his new Model 3.

Any other interest in this? Jason has 2 million YouTube subscribers... I don't think $10K would be such a high hurdle. Tesla actually would be wise to stealthily push such a campaign over the top ; )

 

[Carl Raymond]

People are often short sighted and mostly uninformed.

It gets worse. The people who get hurt by short sighted ill informed decisions is not limited to the people who make them. It extends to passengers, others in cars they collide with, and people who do nothing more than breathe the air.

 

[gene]

In case anyone missed this fan made commercial:

 

[Buckminster]

Happy Christmas to you all!

May you all receive a little something from Santa in the Tesla Quarterly Updates.

 

[Bet TSLA]

Anyway, I explained that as a fellow TSLA stockholder, I want them to move as many units as fast as they can out the door, and would NEVER tell a customer stranger to inspect their car without paying for it, first.

This is disgusting. If you aren't going to help customers by telling them the truth you should stay far away from the delivery center.

** I really hope I misunderstood what you wrote. **

 

[SpaceCash]

** I really hope I misunderstood what you wrote. **

you did

Merry Xmas!

 

[Artful Dodger]

Merry Christmas and Happy Holidays to Everyone!

 

[erha]

If Tesla drops another 10% I will get a margin call. I knew I took on extra risk when using margin, but this market scares me right now...

I’m not the person that gets pissed over things like this. But I assume there are tons of stock traders and GOP donors that’s had enough of the orange idiot.