TSLA Market Action: 2018 Investor Roundtable

[Tslynk67]

FOMO got me a little

Should've waited :-D

 

[Chickenlittle]

You can‘t run a car factory on two shifts á 12 hours and 7 days sustainably. No way.

They are "manufacturing" burst rates which are not realistic (if real at all)

You should read the Reuters report more critically. The negative comments on paint shop were made by a gigafactory employee. The paint shop is in Fremont factory. Not even knowing more info 1 of the 3 sources is bs

 

[Reality]

I really hope that shorts are hanging their hats on this demand notion. The more shorts, the better IMHO. Here are the facts for you that should scare shorts, but they are not so smart:

1) It is all but illegal for Tesla to sell in several states in the US. At some point this will end.
2) Tax incentives are nice, but Tesla does not need them. 3 simple moves could allow Tesla to negate any tax credit losses. a. 2170 cells at 35% less expensive. b) Refresh of S/X to bring in simplified Model 3 automation. 1 Screen, HUD and A/C system from Model 3 while improving, moving up market the S/X interior. c) Killing S/X 75D at low margins and replace with S/X 120D based on 2170. 75D replaced by 3/Y LRD at MUCH higher margins and value. All of these things would allow Tesla to drop the price while further differentiating S/X from 3/Y giving more Value for roughly $5k less sticker price and higher margins due to higher ASP product mix of 100D+
3) Tesla has 90% rate of return, which means that people who bought Tesla 3-5 years ago are returning at a 90% rate. This number continues to grow ever as fast as Tesla grew sales, about 70% a year. Tesla only just hit 100k/Y S+X, this means that Tesla has at least another 30% headroom for existing customers alone. More demand than they can make cars.
4) Tesla still has 450K reservations, even after fulfilling 20,000 orders. Tesla cannot fulfill the demand that is there faster than they can get new orders.
5) Macro. Trump is crazy, no debating, but he is just crazy enough to get Tariffs dropped on US cars imported to China and Europe. For every $5-10k in price drop, the size of the market doubles. That means China is a $4B market just for S/X and $20B market for 3/Y. There is a good chance that Tesla could sell 100,000 S/X outside the US alone. now they just need to figure out how to make more.
6) Fed Tax credits are going away, but states are adding incentives. Recently NY.
7) Lack of legitimate Competition. Ipace is nice, but very expensive and small. All these 2020 Tesla killers are on par with the 2013 S60D in terms of range and battery tech. There is no serious battery supply yet for all the 2020 Tesla killers and Jag will only make 20k Ipace because its not profitable and they have no battery supply. This means Tesla will soak up all that demand for another decade as the surviving OEMs play catch up.
8) Tesla has one of the most valuable brands on the planet. In China, they love Tesla. Maybe more than we do here in America.

I could do 100 more reasons, but this should just about do it.

can we all agree that shorts are better at spacing in their posts?

 

[Unpilot]

Should've waited :-D

In a few years it won't matter!

 

[Tslynk67]

In a few years it won't matter!

Well, if Elon's correct, a few weeks, more like...

 

[Zhelko Dimic]

I'm not 100% TSLA anymore.

 

[Unpilot]

I'm not 100% TSLA anymore.

99%?

 

[Yonki]

99%?

I'm guessing 108.6%...

 

[DragonWatch]

Oh good, just plugged in Xena and the stock went green

 

[Waiting4M3]

We also can assume that Reuters picked the lowest shift production rate they heard from the employees as they always report the negative and it supports their narrative.

Only 2 shifts have been reported on so the other will be definitely higher otherwise they would have been reported on those. If many shifts had the low reported volume they would have reported the amount of shifts with a low number.

Assuming the really have talked to 3 employees they should have been working in many shifts and not only one or two that week.

Average should therefore be higher.

Obviously Elon and Tesla can't be trusted when they extrapolate a production rate, but the bears and medias can extrapolate all they want.

 

[Waiting4M3]

He was talking about two shifts with 12 hours. Three shifts at 8 hours each are done in some plants in the automotive industry. But usually the night shifts have lower output because cleaning, maintenance re-tooling and such take quite a bit of time. The only realworld data i found is quite old (~15-20 years), but automotive plants maxed out at 6000 operating hours per year back then. (page 29)

https://www.iat.eu/aktuell/veroeff/am/lehndorff00de.pdf

The average operating time per day with 6000 hours a year would be around 16.5 hours a day. Of course that's just an example and a rough guess, but it seems to indicate that it's either not possible or simply to expensive to run a plant much more than that. Otherwise they'd probably all do it, since it would allow to spread fixed costs about a bigger number of cars.

If you listen to Elon on conference calls he often refers to chip fabs in terms of production. Modern chip fabs run 24/7, often with 4 12-hr shifts doing 3-day/4-day rotation every 2 weeks. I think this is the direction that Elon wants to go. In some automated process like GGF, it may be easier for them to implement this.

 

[Waiting4M3]

Not that I know much about this, but I would presume that the machine that builds the machine needs regular maintenance - can this be done without interfering with production?

Every business has overhead, tool maintenance is a normal part of factory production, and overhead is planned in. For example in semi-conductor chip fabs you shoot for 80% utilization rate, and allow the other time for tool downtime for maintenance, changing recipes, waiting for parts to arrive, etc. You also have redundant tools for each task so even if one tool experience catastrophic failure you're not completely screwed. I'm sure Tesla's guidance of 5kwk has these overhead baked in.

 

[Waiting4M3]

Do you think it's possible they release them earlier than usual since there doesn't appear to be the usual mad end of quarter rush to deliver due to the 200k threshold. It seems like this quarter it should be much easier for them to calculate the numbers. Could we see them Sunday night/Monday morning?

Possible, but they're still doing deliveries on 6/30, some have been pulled in from 7/1.

 

[mershaw2001]

Historically, Tesla has waited till friday to release bad news. This way the market can digest the news without a gut wrenching move that stems from an instinct to sell when bad news is released. I don't think they have waited till Friday to release good news.

So I would assume if the number is not super positive we might see it at the last possible moment before the fourth of july. And if it's good we might see if earlier or right after the fourth of july. I'm assuming we will be waiting till after the 4th because it gives us a clear 2 day window to trade it.

Plus as much as elon pushes his team- remember, everyone at the headquarters has been over at the factory. They may need a few extra days to catch up.

 

[Krugerrand]

I think the production rates are less important now.

And yet you led with that.

Just so you’re aware, you’re not fooling me.

 

[Tslynk67]

So, them shorts having a last hurrah, or are we just tracking the macro, waiting, waiting, waiting...? Going to be a long weekend!

 

[jhm]

You underestimate the power of sustained buying. During the first quarter of 2017, Tencent bought 5% of Tesla. In the run-up before and after, Tesla's share price increased about 50%.

Overall, I agree with you that on a 10-year time horizon, even a monumental short squeeze should have no impact on our thinking, leaving aside the possibility that Tesla could take some funding from the market on advantageous terms.

But with the Tencent investment, nobody had any advance notice to front-run them. With short sellers, we know what they are doing at least once every half-month and we will hear their wails 24-7. Meanwhile, Tesla into the S&P 500 will create additional buying pressure.

The sort of hypothetical I'm talking about is where buying is meh and shorts walk away. As that happens the supply of shares available to be held long shrinks. So you have an increase in share price that is strictly based on the anti-dilutive effect of shorts exiting.

The point of entertaining that hypothetical was to argue as you do that it is really the sustained buying pressure that generates substantial lift in share price. Shorts create a lot of drama that captures our attention, but steady accumulation of shares by long-term investors is what matters most but gets the least attention.

 

[callmesam]

BP purchased Chargemaster for $200M. 6500 (mostly slow) change points in one country Only 140,000 EVs in the UK. Whereas, Tesla has 320 Supercharging Stalls. Estimating 300-600 Destination Charging locations (perhaps with multiple stalls)

So how does that help us to value the Tesla Supercharging Network and does this transaction move the share price needle? Should it?

So far, June 2018, Tesla has installed ~300 Supercharging Stalls bringing the network to 1300 locations and 10k+ stalls. 10 new stalls, every single day. An unknown number of destination charging stalls.

I think the Chargemaster network is even less valuable than the Tesla Destination Charging Network. By way of example, Norfolk VA installed 100 chargers in 10 different municipal parking lots in one project. There is nobody and nothing comparable at work in the United States. Nobody is giving away chargers and paying for installation.

Has anyone seen a count lately? Elon stated that destinations would outnumber superchargers "by an order of magnitude".

Does anyone else think this is getting overlooked in our review of share price movement? Or by the share-buying public? This doesn't seem to get the press or attention.

 

[jhm]

BTW, I'm no longer worried about hype going into the news next week. The price range has been quite sober minded. Buying under $350 is a pretty good deal. My subjective impression is that if there is some downward price action Monday or Tuesday (news nullification of the quarterly numbers), it will be mild, maybe falling as low as $340. Of course, more severe stuff can happen. But if you can accumulate shares today near $345, I don't think you will do much better early next week.

I'm just relieved the stock did not climb to $365 or higher, which would have been an easy swat down for shorts.

Remember leave the rocket in the bottle to launch. Don't try to pull it up while the fuse is lit. Just step back and watch it do its thing. Here's to some fun and safe fireworks.

 

[wipster]

7.5) Infrastructure, infrastructure, infrastructure. Fast charging options for other manufacturers’ EVs are abysmal and it’s a chicken-and-egg problem with no one giving more than lip service to a universal solution.

7.6) Dealership. none of the traditional auto manufacturers have dealerships that even want to sell electric cars. They don't have any in stock, they can order one for you, but they just as soon have you buy an ICE vehicle that they have in stock. I don't know how they're going to get past that in their current independant dealership model. Only way to do it is to create an entirely new, company-owned brand, somewhat Saturn like, that only sells electric cars... You know like that company Tesla?