TSLA Market Action: 2018 Investor Roundtable

[ThereAre4Cars]

More like "but try not to starve any of the product categories too much". PowerWall and PowerPack are woefully starved now, and already the only other product line using those cells is also wobbling its battery size configs around the limited cell supply. Put another way, it will be a good day when Tesla satiates Model 3 demand.

As someone who thinks TE is worth about 10% of the market cap, I am glad Tesla is doing what they are doing. And why is it so hard to get Panasonic to deliver more equipment if TE is ready to deliver profitability? FLAME ON!

 

[Fact Checking]

More like "but try not to starve any of the product categories too much". PowerWall and PowerPack are woefully starved now, and already the only other product line using those cells is also wobbling its battery size configs around the cell supply. Put another way, it will be a good day when Tesla satiates Model 3 demand.

Absolutely, but arguably the last ~12 months were a one-off situation: the Model 3 ramp-up was a do-or-die "bet the farm" effort, which kind of bet Elon said they won't ever enter into ever again.

So I'd expect both the Tesla Semi and the Tesla Model Y to be introduced carefully and not in a crazy over-leveraged expansion attempt with substantial existential risks...

 

[WentOffGrid]

Nothing will make Left right however...

I was always taught "3 lefts makes a right" but 3 of him is a horrible thought with this creep people call a snake.

We need a different animal to describe him, snakes are good; an essential balance in nature. You know, eating rats and that sort of stuff... Looks like some rats are getting eaten by that snake anyway

 

[ThereAre4Cars]

Boy I bet we go right back to -100 on Nasdaq futures just like yesterday. Why do I get the impression the illuminati are working their thing to manipulate the Fed? We're gonna need a VIX spike to 30 probably before this is over.

 

[neroden]

Why do some people put “not an advice” on their posts? Is there some sort of mandatory disclaimer for financial advisors posting on discussion boards? Also why not just say “not advice”. Sorry if this is a stupid question. * Not an apology.

It's an in-joke referring to one well-known poster who put that on his posts.

 

[ThereAre4Cars]

It's an in-joke referring to one well-known poster who put that on his posts.

Why are you assuming comments from 8 hours ago weren't answered later? lmfao

 

[neroden]

disclaimer:I am far from an expert.
If you expect your shares to get called away, then couldn’t you buy different calls that you intend to execute. Instead of buying back the oct. 26 $295 at $15 you could buy some extremely DITM calls (like the 230’s or 240’s),

The US tax consquences are that you lose your old stock position (full tax on sale) and get a new stock position (which is short-term until a year from now). In a retirement account or in the 0% capital gains bracket or your stock is in a loss position, it might make sense; if you're sitting on appreciated TSLA stock and are in a bracket which pays capital gains tax, it doesn't make sense. Closing the calls outright has better tax consequences, which should be considered.

 

[Fact Checking]

As someone who thinks TE is worth about 10% of the market cap, I am glad Tesla is doing what they are doing. And why is it so hard to get Panasonic to deliver more equipment if TE is ready to deliver profitability? FLAME ON!

Panasonic is a ~50b market cap firm and the kind of equipment able to build 10s of GWh cells per year is a significant capital expenditure and substantial business risk on their part. So it was entirely reasonable for Panasonic to make future expansion conditional on Tesla meeting production goals.

Also, right now automotive is a +400% value-add on top of every cell made, while Tesla Energy is maybe a +50% value-add - so while cell supply is the main limit it makes sense to focus on automotive and mothball any TE expansion.

But the eventual expansion space of Tesla Energy is much larger, and the income streams are much more stable (no fickle retail customers), so I'd say in the 5-10 years time horizon TE is at least 50% of the corporate value.

Also, there's a very useful feedback loop of economies of scale: by increasing cell output the per unit price drops, which improves automotive margins as well.

 

[neroden]

For those of you who don't already know this, Halloween is the in the top five largest holiday in the USA. Crazy. In years past, it was top three.

What, it's declining? That's blasphemy! Halloween should definitely be the biggest holiday in the US!

(Always was the biggest in my social circle.)

 

[ThereAre4Cars]

But the eventual expansion space of Tesla Energy is much larger, and the income streams are much more stable (no fickle retail customers), so I'd say in the 5-10 years time horizon TE is at least 50% of the corporate value.

In 5 years the autopilot and TaaS component will be on it's path to being the dominant driver of business valuation and I say that being even more skeptical than you on that subject (I'm half between you and Neroden on that). That's why automotive is priority #1 and TE will always be less important than people think (also there are substantial resource limitations if the cobalt-free battery doesn't materialize).

 

[neroden]

I was referring more to the fact that the full 7500$ tax credit will be in place for all other manufacturers (save for maybe GM) for all of 2019 and probably much of 2020. Whereas for Tesla, the amount will drop to 3750 for H119, and 1875 for H219. So, for a car a in the 35-50K range the after tax credit price comparisons will be signifiant.

Sure. As Musk explained more than once, the credit goes away just when a company starts making significant volume. (Toyota, Ford, and BMW have burned large portions of their credit allowance on small-battery junk, too.)

So this advantage will only last as long as the other manufacturers aren't making meaningful numbers of cars. Doesn't help much. Demand is high enough that everyone will sell all the cars they make.

GM is one quarter behind Tesla on the phaseout (this is confirmed now) so they'll have advantages in Q1 2019, Q3 2019, and Q1 2020, and that's it. The slowpokes will probably have advantages until sometime in 2020, but the credit might be rationalized before then, because "everyone but Tesla and GM get a credit" looks really bad in Congress.

 

[ThereAre4Cars]

Panasonic is a ~50b market cap firm and the kind of equipment able to build 10s of GWh cells per year is a significant capital expenditure and substantial business risk on their part.

Yeah but they don't have to install it in 10 GWh chunks.

 

[neroden]

Maybe a strange time to ask, but does anyone have any clue what happened with the large amount of projects going on in Puerto Rico? Has Tesla already received revenue from that?

No news out of Puerto Rico. I surmise that Tesla has received some revenue but there is more to come. It's clear the demand for Powerwalls and Powerpacks in Puerto Rico is *extreme*, to the degree that it's displacing deliveries to other locations, but there just isn't much news on it.

 

[dqd88]

I'm less concerned with the legacy OEM's ramping much more modest BEV vehicle numbers into their pipeline than I am about Teslas balance sheet and cash flow situation.

Sure, they can ramp modest BEV vehicle numbers. The problems I see are more about what do they do with increasing ICE inventory, exactly how much do they invest in BEV and what is their future vision (just getting consensus on these things in ICE bureaucracies will be difficult), and will they have to nix dividends?

 

[neroden]

I'm guessing Speigel bails before Wahlman.

I don't think Wahlmann takes positions. He just talks.

 

[Singer3000]

I've been through a lot of TSLA earnings reports over the years. My favorite of all time was May 8, 2013. Tomorrow's earnings likely won't top that one, but I'm hoping tomorrow's earnings report starts a huge multi-year run for TSLA.

Kid on Christmas Eve feeling right?

 

[Fact Checking]

In 5 years the autopilot and TaaS component will be on it's path to being the dominant driver of business valuation and I say that being even more skeptical than you on that subject (I'm half between you and Neroden on that).

Transportation-as-a-Service needs to be grown from zero and might have some roadblocks.

I'm optimistic about FSD and if Tesla wins that race combined with their newfound chip manufacturing prowess then I think most of these valuation discussions are immaterial, we'll be arguing about whether a single TSLA share will be worth $100k or $150k.

That's why automotive is priority #1 and TE will always be less important than people think (also there are substantial resource limitations if the cobalt-free battery doesn't materialize).

I'm pretty sure they'll do it. Reading between the lines I got the impression that they already have their cobalt-free li-ion chemistry, but are iterating it to maximize thermal stability vs. performance, which needs 1-2 years to complete.

Also, after the tear-downs earlier this year everyone else started copying Tesla's and Panasonic's NCA chemistry, which has put significant pressure on cobalt prices this year:

That's a price reduction from ~$42 to ~$27, a nice %35% reduction this year alone. It appears the market doesn't think that cobalt is going to be a problem.

 

[neroden]

DeBord
Matthew DeBord

smh

Author of the 2017 book "Return to Glory: The Story of Ford's Revival and Victory at the Toughest Race in the World." When will BI fire him?

DeBord's actually written some glowingly positive articles about Tesla too. He's no Linette Lopez.

I drove the $78,000 high-performance Model 3 — and it's now my new favorite Tesla

I drove a $57,500 Tesla Model 3 for a week to see if it's practical for everyday driving — here's the verdict

If you read his most recent article he's saying "Tesla isn't destroying the competition, because there is no competition". Which is.... true? He does spread the usual FUD idea that competition will arrive in the near future, but that's such a common and understandable belief that I barely pay attention to it any more.

 

[Tslynk67]

OK, that took a while to catch up... Some thoughts...

GF1 for MY & SEMI - seems obvious to me.

Why do some people put “not an advice” on their posts? Is there some sort of mandatory disclaimer for financial advisors posting on discussion boards? Also why not just say “not advice”. Sorry if this is a stupid question. * Not an apology.

First rule of Not an Advice Club...

Priced jumped up $2.00 in AH. Any thoughts on the move?

Yeah, why so little?

Hmm, did they get your permission to use your charts? If not that's a copyright crime because they used them for a commercial purpose. Could be big money suing them for infringment.

To buy more $TSLA, of course!

Not sure what all the euphoria today is for. If tomorrow's Earnings Call confirms sustained 5k/wk M3 and, and shows a profit, TSLA should be at its ATH and we are barely scraping $300. If it gets there tomorrow great. If not, it just means we need to be patient and wait a little longer. And for those who think they can time Mr. Market, today shows you why you can't. Buy long holders are rewarded. Don't give in to the FUD. Focus people. We are in the bottom of the third inning and the Tesla ball game is just getting started. View attachment 346481

I think it's mainly a big sigh of relief...

I worry that the FUD machine will go 100% after the ER, especially if there is still a small GAAP loss. They will ignore positive cash flow, and the headlines will read that Tesla still can't make a profit even with record sales....

They might try, but difficult to see what they can spin now, seriously...

Right, something we haven't discussed in a while is whether high Model 3 sales are leading to more S & X demand. Hmm ...

It think this is obvious. There must be masses of people totally unaware of Tesla who suddenly see all these M3's around the place, get drawn to the gallery, see the MS/X and fall in love.

I'm guessing Speigel bails before Wahlman.

I had to re-read that sentence three times before I realized the word was "bails" - crappy work laptop screen...

Would that make him right?

Takes three Lefts to make a right!

From the Citron report. I kept finding myself drawn to the bottom right number (penultimate table). When it comes from an old grizzly bear, $10,964 SP seems quite tangible. What is Elon doing? - get on and announce Giga 4&5 already.

Yeah, he's a bit pessimistic IMO

That is a massive load of crap.

In 1820 94% of the world's population lived in poverty.

In 2011 17% of the world's population lived in poverty.

That is a result of economic growth. Provided through capitalism.

On the other hand, stock trades are a zero sum game.

Maybe, but capitalism exists to move as much wealth into the hands of the rich as possible. Read Creating Freedom by Raul Forgot-his-surname.

Dyson's electric car - our vision of what it will be like | Autocar
To be built in Singapore.
Not sure if this is because I am a brit, or that I have an ex colleague working on it or for hopefully less superfluous reasons - but this is the only one I'm interested in. Shame that Apple aren't putting up a stronger fight - they really could do if they just got on with it (being 2nd best in the market wouldn't have to undermine their brand value as long as they have a unique angle). I was also hoping Dyson were going to go cheaper but it sounds more like they want to compete with Tesla. Colourful plastic panels on a back to basics Smart car rip-off will do well I'm sure whoever comes up with it.
Today will most likely be the last day that discussing Tesla competitors (killers) is relevant so I thought I would get this in before we all start stressing over tax bills...

A Dyson EV? I bet it sucks...

 

[neroden]

It wasn't on our list. And if we do get invited again, am supposed to ask based on writer and reader preferences. Vote on options here: What Would You Ask Elon Musk & Tesla On The Q3 Earnings Call? | CleanTechnica

But this seems like a good one to somehow slip in. I'm quite curious about this.

My top question is what Tesla is doing to improve the feedback loop from customers to the software team (which has been broken for years; software updates introduce bugs, they don't get fixed). Followed by what they're going to improve communications regarding deliveries, which are a notorious mess (see the Model 3 delivery forum).

But after the communications questions, "What's going on with the Puerto Rico projects" would actually be my top question.