TSLA Market Action: 2018 Investor Roundtable

[jhm]

And electricity prices are $.36 per kWh (average retail for residential customers, industrial customers get a break).

Or 3x the US average.

Additionally in an electric car it takes about 8 kWh to replace (get the same miles as) a gallon of gas. So cost of electricity is about $2.88 per displaced gallon, a savings of $3.4 to $3.8 per displaced gallon. In the US the savings per displaced gallon is much less because fuel is so cheap.

 

[jhm]

What’s your explanation for Chanos covering his short?

He has?

 

[Menifeer]

We're told that something like 400,000 reservations exist and everyone can now configure their Model 3. I would assume most have already done that.

The website says a person ordering now (who will, presumably, be at the end of the line) can have any configuration except the SR battery in 5 months (be generous and call it the end of December - about 24 weeks).

Maybe my math skills are lacking, but something doesn't seem to compute unless they'll be making a LOT more than 5,000/wk.

 

[mongo]

We're told that something like 400,000 reservations exist and everyone can now configure their Model 3. I would assume most have already done that.

The website says a person ordering now (who will, presumably, be at the end of the line) can have any configuration except the SR battery in 5 months (be generous and call it the end of December - about 24 weeks).

Maybe my math skills are lacking, but something doesn't seem to compute unless they'll be making a LOT more than 5,000/wk.

Reservation count is world wide and includes SR. New configurations are LR in US/Canada. So the lead time is a balance between production rate and existing US/Canada LR orders, a subset of the 420k.

 

[Sudre]

Maybe my math skills are lacking, but something doesn't seem to compute unless they'll be making a LOT more than 5,000/wk.

A bit puzzling to me too but maybe that gives us an idea of how many people want the short range battery. By now Tesla has a really good idea of what that percentage is.

Also others might be waiting on some other option that is not offered yet. Are they still requiring PUP or anything like that?

 

[mershaw2001]

What’s your explanation for Chanos covering his short?

Wait- chanos covered his short? Where did you hear that? I thought he was still short tesla. Or are you talking his short on China?

I just did a google search and found no indication that chanos covered his short on tesla.

 

[ZsoZso]

Wait- chanos covered his short? Where did you hear that? I thought he was still short tesla. Or are you talking his short on China?

I just did a google search and found no indication that chanos covered his short on tesla.

You are missing the context!
The post you replied to was in reply to the bird's question which itself was based on a false premise: why was tesla not able to ever produce a profitable quarter ? Hint: they had 2 profitable quarters: one in 2013, another in 2016.

So the same pattern was applied in the response question -- asking a 'why' on a totally unsubstantiated statement.

 

[RobStark]

Additionally in an electric car it takes about 8 kWh to replace (get the same miles as) a gallon of gas. So cost of electricity is about $2.88 per displaced gallon, a savings of $3.4 to $3.8 per displaced gallon. In the US the savings per displaced gallon is much less because fuel is so cheap.

Because fuel is so cheap US cars are much less fuel efficient.

And European cars are more fuel efficient because of expensive fuel.

Arguing that Model 3 should only be compared against high performance sedans of equal size undermines the notion of very large demand in Europe. Here you are talking niche not mass market.

So when comparing fuel cost of typical European ICE hatchback to Model 3 the savings approach US levels.

 

[mershaw2001]

You are missing the context!
The post you replied to was in reply to the bird's question which itself was based on a false premise: why was tesla not able to ever produce a profitable quarter ? Hint: they had 2 profitable quarters: one in 2013, another in 2016.

So the same pattern was applied in the response question -- asking a 'why' on a totally unsubstantiated statement.

Thanks for the explanation! I get it now, though I see someone else had the same assumption so at least I wasn't the only one lost.

 

[scaesare]

Reservation count is world wide and includes SR. New configurations are LR in US/Canada. So the lead time is a balance between production rate and existing US/Canada LR orders, a subset of the 420k.

What's more, the ramp continues. They may be at 10K/wk by end of this year or early next... certainly they will be >5K long before they work through the backlog...

 

[TrendTrader007]

$TSLA now shorts've had their week of fun I totally 100% believe based on charts they're on verge of sustained relentless tsunami of margin calls w $TSLA rising exponentially over next several days to weeks to months 2018 will be the year of squeezing $tsla shorts dangerously

 

[Todd Burch]

$TSLA now shorts've had their week of fun I totally 100% believe based on charts they're on verge of sustained relentless tsunami of margin calls w $TSLA rising exponentially over next several days to weeks to months 2018 will be the year of squeezing $tsla shorts dangerously

TT007, I love your enthusiasm for TSLA. I love how your predictions always make me feel, for a brief time, like I'm going to be a multi-millionaire within a week or two.

But having said that, I will only tolerate your ambitious posts if you agree to start using a period every once in awhile. Please. My eyes need a brief pause occasionally so they can breathe. Like. This.

Thank you.

 

[Do It]

I'll quote you as you were the last to post...

I got pointed here from the 'Ban the Shorts' thread after pointing out I got down-voted into oblivion on an Ars Technica thread about the June numbers. The writer said the share price was rising on the news and the "market was responding favorably". I made the mistake of pointing out the price rose on very small volumes and that actually the market's expectations had not been exceeded and the price was definitely going down (I work in Finance, in risk specifically). It was $350 at that time, and ended the week at just above $300.

I can't read 900 posts, but as I'm sure everyone knows when they stop to think about it, shorting equity stock is a speculative bet on the share price in the immediate future (stock borrows are short term) and not a bet on the long-term viability of a company. In fact most trading done today (in terms of pure volumes) are very short term bets on the price, regardless of whether they're long or short. Given prices fluctuate significantly irrespective of fundamentals (which change very slowly and are highly predictable) no one should interpret this as the company being 'under attack' or people 'hating Elon'. It's not personal, it's just people trying to make money albeit in a rather negative way. Another way to think about it is, if you're really investing for the long term and want TSLA, the shorts are actually doing you a favor by keeping the price low.

Personally I would never recommend 'shorting' any stock, because it's actually extremely risky given losses can be theoretically infinite (although they never are) and the same is true of put or covered put options. It's risky enough if you're a hedge fund, but utterly cretinous if you're a day trader.

Anyway, sorry for the waffle... here was I really wanted to say. Tesla's real financial health is more accurately reflected in their bond price, particularly the spread against treasuries. now I can tell you bond traders are not in the game of short term bets. All they care about is their dividend and initial investment. Problems in the bond market are a much better leading indicator of a company getting into trouble than equities.

With that in mind, it's worth knowing that Tesla's spread is large but not dire... you definitely would not want to bet your mot Making cars is difficult. Making lots of cars is very difficult. Making lots of cars that are completely different from anything else currently being made is horrendously hard. And doing all of that while a trillion dollars worth of existing companies are chasing you, well... you can't blame people for being skeptical, can you?

TSLA short activity and stock movement have a strong correlation with timing and intensity of FUD attacks from various characters. This is strong evidence of bad intention not rooted from financial analysis. I see 3 types of people betting against tsla:

1. People who hate Tsla because of fear, envy, and anger of being proven wrong. These people spread FUD just because they hate tsla.
2. People who want to take advantages of the large number of haters out there to drive down the stock price for financial gains.
3. People who genuinely believe tsla would fail due to lack of ability

If I must guess the percentages of these people, I would put it at something like 60%-30%-10%. The last group would have been much smaller had not been for the first two groups of bad actors spreading FUD.

For people in the 3rd group, I want to point out the following:

1. “Making cars is difficult. Making lots of cars is very difficult. Making lots of cars that are completely different from anything else currently being made is horrendously hard.” - Tsla has already proven that it has overcome all these problems - it has built the best cars in the classes 3 times – model S, X, and 3, and they are building it at scale - 7k/week. If it has proven such extraordinary capabilities why one would bet against it not being able to solve routine tasks such as fixing panel gaps (already fixed), painting yellow lines to mark safety zones, or preventing the “tent” from being blown away by California wind.

2. “And doing all of that while a trillion dollars worth of existing companies are chasing you, well... you can't blame people for being skeptical, can you?” - Elon and Tsla has demonstrated extraordinary capabilities well beyond that of the industry norm more than enough times (SpaceX 3- 4 times, tsla 3-4 times.) I don’t need to go into the root of tsla’s competitive advantages (innovator's dilemma) but just want to point out the 8:0 score of head-to-head competitions of Elon/Tsla against industry norm in the last few years. With 8:0 score in mind, one would be insane to bet that next 8 rounds the score would be 0:8.

 

[bdy0627]

We're told that something like 400,000 reservations exist and everyone can now configure their Model 3. I would assume most have already done that.

The website says a person ordering now (who will, presumably, be at the end of the line) can have any configuration except the SR battery in 5 months (be generous and call it the end of December - about 24 weeks).

Maybe my math skills are lacking, but something doesn't seem to compute unless they'll be making a LOT more than 5,000/wk.

I don't understand why you would assume that. No one knows but based upon the data we have, it suggests a much smaller percentage have configured at this point. Obviously, right now we are only talking about LR, AWD, and Performance versions.

 

[bdy0627]

$TSLA now shorts've had their week of fun I totally 100% believe based on charts they're on verge of sustained relentless tsunami of margin calls w $TSLA rising exponentially over next several days to weeks to months 2018 will be the year of squeezing $tsla shorts dangerously

Please, please, please don't jinx it again.

 

[wipster]

What's more, the ramp continues. They may be at 10K/wk by end of this year or early next... certainly they will be >5K long before they work through the backlog...

Scaesare, has there been any confirmation that the ramp is continuing? We know they're capable for over 5K a week by going balls to the wall, but that was just a little over a week ago and we know the team had at least a day off since.

I'm not asking for weekly reports or anything, but it would be nice to have knowledge that they now can sustain production of M3's at a weekly rate of 4,000 to 4,500 and what the planned increases are over the next 5 to 6 months. Perhaps that will be provided in the quarterly report, but in the interim we shouldn't just assume it's happening until we know for sure. And when we do know for sure, won't that be nice?

 

[jhm]

Because fuel is so cheap US cars are much less fuel efficient.

And European cars are more fuel efficient because of expensive fuel.

Arguing that Model 3 should only be compared against high performance sedans of equal size undermines the notion of very large demand in Europe. Here you are talking niche not mass market.

So when comparing fuel cost of typical European ICE hatchback to Model 3 the savings approach US levels.

You seem to be objecting to more points than I was attempting to make. I think the Model 3 will do well on both continents. Perhaps the Europeans will appreciate the higher power that the Model 3 will deliver. That can be just as compelling as saving money on fuel.

 

[hacer]

"Promised" ? Sound like a Tesla bear.

European electricity prices are also sky high.

Also heard they don't like sedans very much.

Sedans sales are less than SUVs in Europe.

Take all the different type of hatches and they dwarf sedan sales. MPVs SUVs hatchbacks etc.

Driving electric in Europe does not reep higher savings than in the USA.

Model 3 will not have free Supercharging.

Like everywhere, once BEVs become significant in number free charging at government buildings and places like shopping centers begin to evaporate.

Who sounds like a bear? Seriously, I'm pretty sure you're not a bear but many people think that model 3 will be a hit in Europe (myself included). It seems like you think otherwise. I'm guessing you don't own a model 3 or you'd probably think different.

I said trade war with China will not have a significant impact on the US economy.
Didn't say it can't hurt Tesla. If demand for Model S and Model X is as high as many here think then the ~15k or so S/X that would have been purchased by Chinese customers will be purchased by someone else.

Except the origin of the conversation was about trade wars (plural) in general, not China specifically. You've left the impression that you' are a proponent of trade wars, so you ought to recognize that such wars are brewing with not only China but Mexico, Canada, the EU, Japan and maybe South Korea. Since this is a TSLA investor forum I at least was discussing how it might affect Tesla mostly (including parts from foreign suppliers) and the US generally only because a US-wide economic downturn will in fact affect Tesla. I agree that if only the China market is affected Tesla will sell them elsewhere since they are still production limited not demand limited. But if the larger world economy is hit that might be harder. Hopefully Tesla doesn't source many parts from China.

Full disclosure: I'm long 350 shares of TSLA, presently short two TSLA puts (an effectively long position) and own 3 TSLA calls which is to say I'm exclusively long. I did one time make the mistake of selling a (covered) call and lost out on about half of a nice upward move for 100 of my shares. I probably won't do that again.

 

[scaesare]

Scaesare, has there been any confirmation that the ramp is continuing? We know they're capable for over 5K a week by going balls to the wall, but that was just a little over a week ago and we know the team had at least a day off since.

I'm not asking for weekly reports or anything, but it would be nice to have knowledge that they now can sustain production of M3's at a weekly rate of 4,000 to 4,500 and what the planned increases are over the next 5 to 6 months. Perhaps that will be provided in the quarterly report, but in the interim we shouldn't just assume it's happening until we know for sure. And when we do know for sure, won't that be nice?

They took last week off, and today is... Tuesday.

Not sure how quickly you are expecting stats?

 

[Zhelko Dimic]

Because fuel is so cheap US cars are much less fuel efficient.

And European cars are more fuel efficient because of expensive fuel.

Arguing that Model 3 should only be compared against high performance sedans of equal size undermines the notion of very large demand in Europe. Here you are talking niche not mass market.

So when comparing fuel cost of typical European ICE hatchback to Model 3 the savings approach US levels.

I feel you're missing the context. In USA no one really, really thinks about price of the gas. Yeah, it's a something one notices at the pump, occasionally is subject of conversation, but it's not real consideration. Not like in Europe.
In Europe, it's a real consideration in a way that it drives decision (of everyone) which engine to get (small and/or diesel), and that people will consider driving/no driving as a genuine choice for many a trip (even when they have a car).
Gold standard in operating car inexpensively was diesel, to the point that German sport sedans were being sold (and bought) with asthmatic 1.6l diesel engines. Many of my friends (until couple of years back) would have never considered anything but diesel.

And electric is still more economical than diesel. That's all that buyer will care about. Is there a cheaper way to drive? Nope. They'll calculate that it costs them equivalent of 3-3.8l per 100km on electric, even less with M3, with diesel 5-7l, small gas car 7-10l, and Tesla MS sized car 10-15l, and they'll be happy. Funny thing is, I feel(I'm not sure, but anecdotally) European buyers will overpay for future savings. Diesel engined cars always (used to?) sell at the premium to slightly more powerful gas engine.

Again, this mindset does not present itself in the same way in NA*. I've lived it, and my brother still does, so I get it.

*Decades of cheap gas have conditioned us one way, and decades of even more expensive gas have conditioned Europeans another way. Gas price gap used to be even wider in the past.