TSLA Market Action: 2018 Investor Roundtable

[tivoboy]

Same date but different post it note.

Had no money, was poor student with 2 jobs. But when I saw my roomate's 1st gen ipod, I knew it was revolutiobary. The jealousy was real too. And it feels good in my hand

Okay, first gen ipod was announced fall 2001.. ;-)

 

[supratachophobia]

Electricity is already taxed, just like gas is. Now, governments may need to direct more electricity tax toward road work, but there does not need to be a special tax on EVs. We are already being taxed on our fuel.

My solar isn't taxed.... I'm good with an EV registration fee.

 

[beachbum77]

It has nothing to do with being "auto companies" or "tech companies", The reason auto companies are valued so low is that most of them are bloated with debt (at 70-100% of revenue) and have next to no revenue growth (0-4%/year for the last decade).

Tech companies are valued high because they have rapid revenue growth, not necessarily because they are "tech"... Tesla has rapid revenue growth. 70% per year so far, and probably at least 30%/year going forward.

Agree. That is why I think Tesla will end up with a P/E ratio of 30-40.

 

[The Blue Owl]

Quit blaming the OEMs and put the blame where it belongs; on the consumer. I can go to my local stores and find unsold inventory of Bolts, Volts, and a selection of Tesla products ready for immediate sale [my note: not the same thing]. Why is that? Because the darn consumer (at least here in the U.S.) is not motivated enough to care to buy BEVs yet in large numbers. Until $10/gal gasoline changes that attitude the big OEM's have little incentive to build a radically different product that not enough people want. That is just the sad reality. So they are going to steer the ship slowly in the EV direction.

Other than insinuating that Tesla sits on unsold inventory in the same way and for the same reasons as the incumbents, which is a disingenuous argument and you know it, you are wrong about the consumers, too. The consumers are the same for all car companies. Out of those companies, somehow Tesla manages to serve their needs with their EVs. That puts the lie to the notion it is the fault of the "darn" consumer.

 

[Off Shore]

In WA we not only pay a yearly tax - we some of us also got sales tax exemption (that works out to about 30 years of yearly tax)

FTFY.

We missed it both times!

 

[dqd88]

Revenue does not reflect market share. The measurement is number of units sold. When they report global total sales they talk about 95 million units. Not "x" $ in sales. The same applies to the U.S. at about 17 million estimated sales this year. No one compares revenues to determine market share.

Revenues would be gamed with Tesla since they are the only OEM that sells at retail. All the others sell wholesale to dealers. So using revenue is apples and oranges.

Nope. Num of units sold without context is not very meaningful. Much better to sell few units at high cost than many units at low cost. So it's the opposite of what you believe. You have a one-dimension view of it all. Think more deeply. Fortunately T is selling high price at high-med volume, so best of both worlds.
Much better margin in capturing high % of rev share (high priced goods) at medium to low volume. Ie - premium segment. Much better margins. Think iPhone.

 

[X Fan]

I think we’re largely saying the same thing, just with a different emphasis. Yes, Tesla can’t do this alone. It’s just a question of who is going to be able to turn in time, who won’t, and what new boats are going to be launched pointing away from the iceberg. Anyone who doesn’t will sink, and the new players(Tesla, but also others) will take their places.

For what it’s worth(and to make this interesting), based on current trajectory, I’d predict Ford is toast and GM will be a near miss. Mercedes and Audi are near misses, BMW is a toss up, Toyota is a goner and no idea about Honda or Hyundai. But, to be clear, this is going to be immensely painful for all of the above, and I see Tesla rapidly becoming the leader and keeping hold of that in the long term.

I tend to agree with much of your thesis except I see Toyota making it.....

On the other hand, it's possible the survivors include: only one strong German Company (VW or Mercedes), one strong Japanese company (Toyota), 1 strong Chinese company, 1 Korean company, Tesla & maybe GM. The French & Brits will go by the wayside.

 

[wipster]

Agree they don't NEED advertising, but what if $900M in deposits turned into $1.5B in the Jan Call? (And makes EM cry again over customer appreciation which is alone enough reason for me.) But it's not a typical ad that I see. More a Thank You + awareness of the problems facing the planet + how Tesla is working against all odds in hopes that we get there in time + a link to FAQs (to sponsor more ads). Promote the Tesla Mission with Energy (and all it's products) as just one part of the solution.... is where's I'd take it.

Or did you think the fight was already won?

Sheldon not needing a ride because of the new AI chip prototype with Tesla... that's really good.

We have only begun to fight! I'm all for it!

(I was going to say "Believe me..." but then I woke up!)

 

[elasalle]

Quit blaming the OEMs and put the blame where it belongs; on the consumer. I can go to my local stores and find unsold inventory of Bolts, Volts, and a selection of Tesla products ready for immediate sale. Why is that? Because the darn consumer (at least here in the U.S.) is not motivated enough to care to buy BEVs yet in large numbers. Until $10/gal gasoline changes that attitude the big OEM's have little incentive to build a radically different product that not enough people want. That is just the sad reality. So they are going to steer the ship slowly in the EV direction.

If millions of buyers turned their backs on ICE units, the OEM's would be falling all over themselves to build EVs. But sadly, that is not the case is it? I tried to get two of my relatives interested in BEVs in September. One, who can well afford any car out there did test drive a Model S and Model 3. She was impressed, but not enough to buy. So she leased a new Mazda CX-5 for 36 months, after turning in her leased MB S550. (She now thinks MB is too ostentatious and draws too much negative attention.) My other relative and her boyfriend have zero interest in any type of plug-in vehicle. That is the mass-market buyer today. Frustrating I know.

Motivation is not there because of
. unappealing EVs until Tesla came along
. FUD from existing car and oil etc etc spinning the narrative that EVs are bad etc.

Also, right now Tesla doesn't have leasing options. If folks can do lease, the number of people in US who will buy Tesla I think will go up at least 100% for M3.
+ Mazda etc are also offering very low interest loans as compared to Tesla. This is another financial decision that folks are taking into account

 

[beachbum77]

I will argue that today the Model 3 can stand on its own merits as at its retail price--it can be favorably cross shopped against a 3-Series or an A4 when comparing the things buyers typically care about--the fact that it is electric is irrelevant--they is no price penalty. The same is not true for most EVs, Taking the Bolt as an example, if you ignore the EV drivetrain, it shops like a $20K Chevy. Consumers are not dumb so they need the enticement to level the playing field.

Let's revisit that assumption in January-March. I am expecting Europe to be the sales driver in Q1 until the $35k Model 3 is available here. We will all learn a lot when the FITC is cut in half and how the lower price point can counteract the reduction. If the $35k unit does as well as I expect, the incentives will no longer have much of an impact on demand.

 

[Johan]

Revenues would be gamed with Tesla since they are the only OEM that sells at retail. All the others sell wholesale to dealers. So using revenue is apples and oranges

That's not what "gaming" means. Gaming means cheating. Bypassing the middle man as a business strategy and keeping that profit margin for yourself isn't "gaming", it's just common sense and smart businesses practice.

Comparing one car manufacturer's bottom line to another's is about as apples to apples as it gets.

Come on Donn, you can do better than this.

 

[Reciprocity]

It is too simplistic to assume continuous demand based on the first year.

It's not an exact science but there is also well a mountain of supporting data. Like the number of BMW 3 series sold in Europe. Or the number of cars sold at different price ranges or the number of Civic level cars traded in on model 3s. Or the number of Prius traded in on model S's. This is not an analysis made in a vacuum with no other data points.

But maybe your right. The will tell, tough historically demand had increased for Tesla after reservations were filled early in the cycle, which is well another data point that Tesla is uniquely positioned to know and understand.

Traditionally, people don't reserve a car, they go to a dealer and buy one.

 

[beachbum77]

No it doesn't. That's investor mythology. The market is forward looking. Far forward looking as things like Amazon and Tesla and Netflix prove (even given the fact they are subject to random 30% swings based on macro sentiment). When you understand that valuation is discounted DCF you don't have these arbitrary ideas that valuation switches suddenly to P/E.

Far forward looking? Tell that to Amazon and Google tonite. Tesla just had the best quarter in their history with a brighter future and look where the SP ended the day. I wish the markets were as smart as you make them out to be.

 

[Beltsbear]

Quit blaming the OEMs and put the blame where it belongs; on the consumer. I can go to my local stores and find unsold inventory of Bolts, Volts, and a selection of Tesla products ready for immediate sale. Why is that? Because the darn consumer (at least here in the U.S.) is not motivated enough to care to buy BEVs yet in large numbers. Until $10/gal gasoline changes that attitude the big OEM's have little incentive to build a radically different product that not enough people want. That is just the sad reality. So they are going to steer the ship slowly in the EV direction.

If millions of buyers turned their backs on ICE units, the OEM's would be falling all over themselves to build EVs. But sadly, that is not the case is it? I tried to get two of my relatives interested in BEVs in September. One, who can well afford any car out there did test drive a Model S and Model 3. She was impressed, but not enough to buy. So she leased a new Mazda CX-5 for 36 months, after turning in her leased MB S550. (She now thinks MB is too ostentatious and draws too much negative attention.) My other relative and her boyfriend have zero interest in any type of plug-in vehicle. That is the mass-market buyer today. Frustrating I know.

The bolt is overpriced by about $4000. If they dropped that from the price it would sell. Or if it had a supercharger network it would sell. As is even with incentives it is not a good deal. Of course GM can’t drop $4000 from the price because they pay too much for the batteries. And if they did, the supplier can’t make 2000 a week anytime soon. So no, it is NOT the consumer who is the problem.

 

[Fact Checking]

100k Model 3s sold over roughly he last year. If the entire market is split like S/X about 50/50 with the rest of the world, that would imply 200k is the market size for the $55k+ model 3s.

Agrred, and I think it might be even better: in this post I tried to estimate the addressable market of the Model 3 in the U.S. alone, about 600k units at $45k, 1,200k units at $39k and 1,800k units at $35k.

That's U.S. only and sustained - and if the Model 3 takes 30% of that it's huge.

But I do agree with Elon's approach of "measuring" demand by actually selling:

• No amount of market research would have told them the overwhelming preference for AWD (80% take rate initially) for example - reservation holder surveys didn't indicate this. Often customers don't know what they want, up to the point they click on "confirm order".
• Also, there was some early pushback against the minimalist interior - Tesla couldn't assume that it's such a hit with U.S. customers.
• The Model 3 was a "bet the farm" product, and the path to the summit of high-tech success is littered with the corpses of companies who assumed too much about what their customers wanted.

So I fully approve of Tesla's conservative approach, and I 110% approve of their low-latency, agile, feedback driven approach to vehicle options, bundling and pricing.

Even in a recession, people still buy cars, just less of them. Tesla is so overwhelmingly supply constrained, that they could be growing very quickly through a recession.

Yeah, I too think that Tesla owns the very lucrative, high-margin franchise/monopoly of premium EVs with no credible competition in sight, and such natural monopolies tend to be countercyclical and can grow even faster in recessions.

Now that Tesla doesn't depend on external sources of financing or equity sales anymore, because they are making 1.4 billion dollars of internally generated cash per quarter, their resilience to recessions has increased even more.

 

[Johan]

I can go to my local stores and find unsold inventory of Bolts, Volts, and a selection of Tesla products ready for immediate sale.

"A selection of Tesla products ready for immediate sale"???

Please ban this troll (post reported for trolling).

 

[Causalien]

Okay, first gen ipod was announced fall 2001.. ;-)

Yep. About that time. Never heard of apple before then.

 

[beachbum77]

That's not what "gaming" means. Gaming means cheating. Bypassing the middle man as a business strategy and keeping that profit margin for yourself isn't "gaming", it's just common sense and smart businesses practice.

Comparing one car manufacturer's bottom line to another's is about as apples to apples as it gets.

Come on Donn, you can do better than this.

Okay wrong word. How about apples and oranges? Or skewed?

You just can't compare the two sets of numbers was my obvious point.

 

[beachbum77]

"A selection of Tesla products ready for immediate sale"???

Please ban this troll (post reported for trolling).

I was just at the Tesla delivery center Tuesday. They have all three models available. Call your local showroom yourself. At the end of September you could buy the showroom floor Model 3s. You can find that on the threads here on TMC.

You cannot ban someone for telling the truth. Good grief.

 

[AWDtsla]

The bolt is overpriced by about $4000. If they dropped that from the price it would sell. Or if it had a supercharger network it would sell. As is even with incentives it is not a good deal. Of course GM can’t drop $4000 from the price because they pay too much for the batteries. And if they did, the supplier can’t make 2000 a week anytime soon. So no, it is NOT the consumer who is the problem.

Bolt is overpriced by about $17,000.