TSLA Market Action: 2018 Investor Roundtable

[brian45011]

Oh look, it's another article with a question as a title. So the answer is probably no.

Maybe check out the substance and get some more perspective on when the $35k version will be available?

 

[EVMeister]

Maybe check out the substance and get some more perspective on when the $35k version will be available?

I don't need to. I'm clever. I follow Elon on Twitter. What new information will this article present to me? Exactly, none... Did anything in Elon's Tweet suggest that they had 'abandoned' the mass market? There is a difference between making a clever financial decision by DELAYING a product vs. abandoning it completely.

 

[brian45011]

I don't need to. I'm clever. I follow Elon on Twitter. What new information will this article present to me? Exactly, none... Did anything in Elon's Tweet suggest that they had 'abandoned' the mass market? There is a difference between making a clever financial decision by DELAYING a product vs. abandoning it completely.

OK. So when--what month and year-- in NA? In EU? In Asia (LHD)? In Asia (RHD)?

 

[CuriousSunbird]

"Over the weekend, Chief Executive Elon Musk announced a new, $78,000 version of Tesla's car for the people, the Model 3. More important was his admission that his promised $35,000 version would cause the company to "lose money and die" if built right away."

Is Tesla Abandoning the Mass Market?
MARKETWATCH 11:18 AM ET 5/21/2018

I think this tweet is important. It validates the shorts' long-held belief that Tesla cannot build the cheaper version at a profit, although I acknowledge that Musk indicates that he's hoping to change this. When you combine it with the various news in the conversion rate over the last couple of weeks, there is considerable additional support for the theorem that "if they price it high enough to make a profit, it won't sell, and if they price it low enough to sell, it won't make a profit."

 

[Tslynk67]

I think this tweet is important. It validates the shorts' long-held belief that Tesla cannot build the cheaper version at a profit, although I acknowledge that Musk indicates that he's hoping to change this. When you combine it with the various news in the conversion rate over the last couple of weeks, there is considerable additional support for the theorem that "if they price it high enough to make a profit, it won't sell, and if they price it low enough to sell, it won't make a profit."

As I understand it, the "won't make a profit" is only valid during the production ramp, once this is achieved the lower-price car become profitable.

And of course, Tesla are just continuing the strategy they've always followed - higher-priced cars to subsidise the cheaper one to come.

 

[elasalle]

.

I think this tweet is important. It validates the shorts' long-held belief that Tesla cannot build the cheaper version at a profit, although I acknowledge that Musk indicates that he's hoping to change this. When you combine it with the various news in the conversion rate over the last couple of weeks, there is considerable additional support for the theorem that "if they price it high enough to make a profit, it won't sell, and if they price it low enough to sell, it won't make a profit."

OR, As first mover, based on demand they price it high enough to recoup all their costs, and then start selling the 35K version once the costs have been recovered.

as for competition, should they target the 78K or 35K, now that is a dilemma ...IMHO

 

[theschnell]

I think this tweet is important. It validates the shorts' long-held belief that Tesla cannot build the cheaper version at a profit, although I acknowledge that Musk indicates that he's hoping to change this. When you combine it with the various news in the conversion rate over the last couple of weeks, there is considerable additional support for the theorem that "if they price it high enough to make a profit, it won't sell, and if they price it low enough to sell, it won't make a profit."

The first part of the theorem is the part that as a bull I believe to be incorrect. The second part is correct today, but is irrelevant today if I am correct on part 1.

There will be plenty of demand for higher end versions for quite some time.

 

[mutle]

As I understand it, the "won't make a profit" is only valid during the production ramp, once this is achieved the lower-price car become profitable.

And of course, Tesla are just continuing the strategy they've always followed - higher-priced cars to subsidise the cheaper one to come.

It would just take longer to become profitable if they instead started with building the low end version first. Margins are lower so it would take more sold cars to offset the costs for production equipment. I think most of the misunderstandings from the shorts boil down to not understanding fixed and variable costs.

 

[Tslynk67]

I guess this isn't helping the SP right now - perfect timing, strange...

Tesla Model 3 Falls Short of a CR Recommendation

 

[Esme Es Mejor]

I think this tweet is important.

It is important. It confirms that they can profitably sell the $35k version once they’ve achieved sustainable full production, which is what they’ve said all along. 3-6 months is late ‘18 - early ‘19, which is exactly what the current delivery estimates say.

 

[CuriousSunbird]

It would just take longer to become profitable if they instead started with building the low end version first. Margins are lower so it would take more sold cars to offset the costs for production equipment. I think most of the misunderstandings from the shorts boil down to not understanding fixed and variable costs.

The problem is that fixed costs come back to bite you, notably when you have to cover the debt you incurred in paying them. That, I suspect, is why Musk said Tesla would "die" if it made the cheaper version now.

 

[Tslynk67]

The problem is that fixed costs come back to bite you, notably when you have to cover the debt you incurred in paying them. That, I suspect, is why Musk said Tesla would "die" if it made the cheaper version now.

And, as a shareholder, I'm very pleased that Tesla management are fully aware of the situation and take appropriate action

 

[brian45011]

Soon!
Sometimes, the honesty is too much

 

[Esme Es Mejor]

I guess this isn't helping the SP right now - perfect timing, strange...

Tesla Model 3 Falls Short of a CR Recommendation

I find this very curious by Consumer Reports.

Tesla reports 133 ft stopping distance with base tires, 126 with upgrades. Motor Trend was able to achieve 119 ft. Now Consumer Reports says it took them 152 ft to stop. One of these things is not like the others...

 

[replicant]

I find this very curious by Consumer Reports.

Tesla reports 133 ft stopping distance with base tires, 126 with upgrades. Motor Trend was able to achieve 119 ft. Now Consumer Reports says it took them 152 ft to stop. One of these things is not like the others...

MotorTrends is just addicted to all the ads Tesla buy on their properties /s

 

[kingjamez]

I find this very curious by Consumer Reports.

Tesla reports 133 ft stopping distance with base tires, 126 with upgrades. Motor Trend was able to achieve 119 ft. Now Consumer Reports says it took them 152 ft to stop. One of these things is not like the others...

CR said it hit Tesla's spec of 133 ft on the first try in two different vehicles. Subsequent tests on both vehicles showed significantly worse results. The 152 was the average.

Brakes need to work well more than once. The guy who burned his Model 3 brakes out in 1 lap at Laguna Seca may have stumbled onto something.

-Jim

 

[dc_h]

The problem is that fixed costs come back to bite you, notably when you have to cover the debt you incurred in paying them. That, I suspect, is why Musk said Tesla would "die" if it made the cheaper version now.

He said it because making 3500 cars a week for 40,000 will kill them. Making 6000 cars a week with 2000 at 40,000 and 2000 at 50,000 and 2000 at 65000 will be a profitable mix. By that time overhead as a percent of costs will be 40% of today, overtime will be reduced per vehicle. If they are at 7000 in q4 they probably open SR configuration. I’m torn, I like VA’a 10,000 estimate, but it really depends on uptake at the high end and new order volume. Each new car seems to beget 2 new orders, so it may take a long time to catch up.

I do think 7000 a week by q4 is likely and will not require a second line. Possibly some added staff or robots and some segments, but not a line.

 

[shrspeedblade]

I think this tweet is important. It validates the shorts' long-held belief that Tesla cannot build the cheaper version at a profit, although I acknowledge that Musk indicates that he's hoping to change this. When you combine it with the various news in the conversion rate over the last couple of weeks, there is considerable additional support for the theorem that "if they price it high enough to make a profit, it won't sell, and if they price it low enough to sell, it won't make a profit."

I think you're correct- right now. They probably can't make much profit it at all without the economies in scale in place. Couldn't that be said for many consumer products especially cars? Anybody who has ever tried to buy a stripped, base model car knows this: there aren't many of them out there for a reason. And yet profitable automakers have been offering and selling these models for decades, so why is it different in the case of Tesla?

That was my whole point that brian didn't grasp. I had already read that information, but I speculate that in the future the Model 3 SR production will always to a degree be limited because why the hell would Tesla build and sell at $35 Model 3 (at a small profit- I have not heard once anyone claim it will be a big money maker) when they can build and sell a $45-50k one?

An important question: If all those $35k buyers ONLY add autopilot how much does the margin go up on each car? (Essentially zero extra production cost for Tesla.) You seem insightful enough to know right there they've just killed the margin of other automakers at the entry-level.

 

[Cosmacelf]

It would just take longer to become profitable if they instead started with building the low end version first. Margins are lower so it would take more sold cars to offset the costs for production equipment. I think most of the misunderstandings from the shorts boil down to not understanding fixed and variable costs.

Or in other words, the shorts aren't very bright. I keep going back to the theme of who knows more about Tesla: Elon or the analysts? To think that Tesla will run into a brick wall of unprofitability you'd have to believe that Elon isn't very smart himself. Or that he's deluding himself. Neither of which is even remotely backed up by evidence. Whereas there is tons of evidence that Elon IS smart and NEVER deludes himself, other than giving overly optimistic timelines (if he'd stop doing that, maybe people would believe him more, just saying, Elon!).

 

[Irishjugg]

OK. So when--what month and year-- in NA? In EU? In Asia (LHD)? In Asia (RHD)?

Answer:
Who gives a crap. 3-6 months from when they like the numbers. Anything more specific is only relevant if you want to be pedantic.