TSLA Market Action: 2018 Investor Roundtable

[neroden]

A Microphone to hear someone honking around a blind curve isn't going to be very useful if nobody is using their horn correctly in the first place. So slowly creep around the corner and hope for the best.

Identifying the road surface can probably be done with vision, though I'm not sure how well it can do so at distance (up close as it's driving over it, the side cameras should have a pretty good view).

But for both of these, if they could do it with audio cues, would probably be NN's and part of the sensor processing NN not part of the driving decision system (whether NN or not), and the information about horn honks and surface type would come out of the sensor NN.

Well, right, I think you missed my point, which is that you can't train the NN to sense and identify things until you know what you're training it to recognize, and if you don't have a sound driving decision system you don't know what you're trying to recognize. I mean, telling signs apart from people is a very basic minimum, but not really anywhere close to a working system.

 

[beachbum77]

So by your metric, there shouldn’t be any pent up demand for the Model 3. The Model 3 shouldn’t be outselling many gas cars and most likely will outsell all gas cars next quarter. After all, other manufacturers do have EVs on the market but people just don’t want them.

Is that right?

I would have purchased an EV long ago if they had the style, performance, range and high speed charging network of a Tesla. Tesla is the first car company to make an EV that checks all of those boxes. So yes.... I do blame the other manufacturers and oil companies for suppressing compelling EVs for so long.

Good grief. Where did you read me saying that? Of course there is pent-up demand for Model 3. People have been waiting for 2.5 years for the car.

So it was not just about an EV for you? It also had to check all of your boxes first. So you continued to drive an ICE long after a PHEV was available... Interesting

 

[Thekiwi]

Apparently the new bear thesis is that Tesla is cooking the book.
I kid you not.

Yup - I have been seeing this all year from otherwise seemingly intelligent people.

When all evidence is turning short theories to dust - the only avenue left for many is to claim the evidence itself is fake.

 

[neroden]

This reminds me of when AMD made a cheaper version of the Intel 486. From that day forward, the pricing changed for everyone. Let's see if Ford or GM can get ANY margins on an EV. Elon just repeated that Tesla has the lowest costs on Batteries. IMO, the big three are in deep deep trouble moving forward.

This is an important point. Tesla developed the most aerodynamic and efficient cars (lowest kwh/mile, only Hyundai comes close), and the cheapest batteries (lowest $/kwh). This was a lot of R&D. Other companies will have to reproduce that R&D to achieve the same pricing, and it's not going to be done quickly. So other companies will have structurally higher costs than Tesla -- for years. And since they don't have a Supercharger network, the cars will be perceived as inferior to Teslas so will command a lower sales price. Margin squeezed from both ends. This is not where they want to be during the Great Transition to EVs.

 

[dqd88]

That is Donn Bailey, former Ford dealer and author of low quality and self-serving Seeking Alpha hit pieces against Tesla when he was short TSLA, in a nutshell, blaming the customer.

BTW., your SA Article in April 2018, which made misleading and false claims about Tesla's inventory numbers, looks even more ridiculous today.

You never apologized to Tesla and Tesla investors for trying to harm them through misinformation in a crucial, critical moment of Tesla's corporate history.

It's insightful to know that Donn is a former Dealer. But not surprising. If I had to guess the % of bears who are former or current dealers I'd guess it's in the 20-30% range (that would include short fudsters who are bankrolled by said dealers).

I'd be curious if anyone had any guesstimates on the breakdown of bears by "motivation" --- ie what's the context that spurred their belief system on tesla. Car dealer? OEM employee? Auto mechanic? Or just pure numbers short seller?

 

[svp6]

Have to disagree on Ford and GM. They have $billions in cash to weather the change in course. But the Japanese and Korean automakers could be in trouble.

When did I last hear that argument? Oh wait, was that not some years before GM went bankrupt? I remember investor talk-shows reporting how GM is sitting on piles of cash... Hopefully they will be wiser this time around - although judging from the bet on gas guzzlers, probably not.

 

[Fact Checking]

I think 80% is an incorrect and skewed number considering prior RWD deliveries.

Well, it is true that prior RWD deliveries went on for a long time but were low unit count: 38k units total? Q3 deliveries were much more than that. Also, anecdotally I saw RWD owners state that they'd have bought AWD but just couldn't wait and pulled the trigger - so RWD had at least some skew as well.

Also, the AWD and Performance orders mix was consistently in the 70%+ take-rate range throughout Q3, in the (admittedly self-selected) survey in Troy's tracker. Still at 70% currently, and at 78% for Q4 deliveries (only 3 weeks of data though).

So while 80% might be pent-up demand in part - even 50% would be surprising, IMHO.

 

[neroden]

Thank you THANK YOU for taking me back to my unhappy place.

When I was twelve, I helped my daddy build a bomb shelter in our basement - wait wrong story.

Back in 1997, I bought 25K worth of apple at 30 CENTS (SA). I sold it in the next few years and paid for graduate school. On my trading wall I have a post-it that reads - "DON'T SELL THE NEXT APPLE EARLY".

I stopped doing that math about 20 million ago.

And yet you're swing-trading Tesla? *cough*

 

[neroden]

So this is pretty unpopular, but you deserve to have an EV tax. We all do. Since we aren't buying gas, than the portion of the gas price that would go into road maintenance wouldn't be paid. And since we are using the roads..... you get the idea. Now, the rebuttal to this is of course, "semi trucks should be paying the majority of road repair because they damage it exponentially more than cars do!". And this is very true, but not the way the system is setup right now. We use the roads, we pay to maintain the roads. That is fair.

The problem is that, so far, every specific "EV tax" has ended up being far more than what you would pay in gas tax, unless you drove a ludicrously large number of miles a year. They are all, in effect, punitive fines for buying an EV.

 

[SO16]

Good grief. Where did you read me saying that? Of course there is pent-up demand for Model 3. People have been waiting for 2.5 years for the car.

So it was not just about an EV for you? It also had to check all of your boxes first. So you continued to drive an ICE long after a PHEV was available... Interesting

You seem to want it both ways. You state that the public in general don’t want PHEVs . Then you say of course there is pent up demand for the Model 3. The vast majority of those owners are previous gas car owners.

To your second point that is correct. I didn’t buy a PHEV just to say I owned a PHEV. They had to be compelling. Not sure what’s “interesting” about that.

 

[beachbum77]

My family owns two ICE vehicles. We will not purchase another ICE vehicle again despite the fact that they have served us well. With that said, I do not find the Bolt or Leaf compelling, and I would view money spent on leasing or purchasing one as money that I could be saving or putting towards a Tesla instead. In other words, I would view it as a waste. Bolts/Leafs require too many compromises that don't make the switch worth it, whereas Tesla vehicles do not require nearly the number of compromises, and, on the contrary, offer a number of substantial attractions that make the switch quite compelling.

The only thing keeping is from buying a Tesla right now is financial responsibility, and even that is a daily struggle lol.

On a personal anecdote, and I know this is way off-topic for this thread, my wife was not on board the Tesla bandwagon - until she drove one. Instantly converted. Wants a Model X so badly -- and she is a frugal, no-nonsense individual. This is a revolutionary product, and I am convinced that more and more people will come to understand that as they experience these vehicles for themselves. It's why I'm invested in this company.

Yet in the meantime you will continue to drive your two ICE vehicles even though a Volt, Bolt, Leaf or Prius are affordable on a budget but you are not willing to compromise (on range?) for the benefit of the environment. Welcome to the majority of car buying consumers. This is precisely why the OEM's have no incentive to move any quicker than they are on EVs. Not enough people are demanding a change right now.

What would you buy/lease if one of your cars was stolen tonight?

 

[SO16]

Tesla sells cars under 50 miles as new "in the wrapper". Showroom models have almost zero miles. I was not talking about test drive or loaner cars with hundreds or thousands of miles that are also sold as "new" but discounted.

According to reports on the threads here on TMC in Atlanta, Charlotte, and up in NY cars are available (RWD) for immediate sale that are new and sitting on the lot. The waiting room threads are a great source of information.

I thought Tesla offers “showroom discounts”.

 

[beachbum77]

You seem to want it both ways. You state that the public in general don’t want PHEVs . Then you say of course there is pent up demand for the Model 3. The vast majority of those owners are previous gas car owners.

To your second point that is correct. I didn’t buy a PHEV just to say I owned a PHEV. They had to be compelling. Not sure what’s “interesting” about that.

Interesting, is that we all say we want to improve the environment, but it has to be on our terms. A PHEV was to improve the environment, not to be able to say you owned one. I am just as guilty. I can afford any Tesla. But I am driving my MB's until I can buy the $35k model for a commuter car because as a former dealer I hate buying new cars (rapid depreciation). And like you I do not find the other EVs compelling. That is the challenge we face in turning the corner on ICE to EVs.

For the OEM's profits are job protectors since everyone works for the shareholders who love their dividends.

 

[neroden]

As we watched in Hong Kong, and Ontario, Canada, when the subsidies end so does the demand for EV's.

You're either extremely stupid or deliberately lying, Donn. Which is it?

It's documented in Hong Kong, Denmark, and elsewhere that subsidies ending *pull demand forward* -- people buy the cars *early*. So in the case of Hong Kong, *18 months worth* of car demand was bought in *two months*. 18 months later, sales are recovering. Denmark's case is further in the past and even clearer case of demand being pulled forward. Ontario's demand pullforward was somewhat smaller but was still many months' worth. A boom in demand right before the subsidy ends is telltale, and it happens every time.

I expect the same thing to happen here in the U.S. unless Congress makes a change to the FITC.

You expect this either because you don't even understand what happened with the end of subsidies in other places, or because you're pretending not to understand.

So EVs are not able to stand on their own yet.

Stop writing bullshit, Donn.

 

[Krugerrand]

So you weren't agreeing with me, you were just responding with a non-sequiteur. That's not exactly better. You don't respond to someone in order to talk to some third party.

People do it all the time. Now put your nose back into its joint, it’s not personal so stop trying to make it so.

Back to what I was actually writing. We've never seen any indication that stamping at Fremont can't handle its 10k/wk design spec. So if vehicle production at Fremont is at 7k/wk due to GA/paint limitations, then they can produce 3k parts for an extra per week. These can be routed to GF3, either raw or in the form of BIWs.

And you have no indication that they can produce 3k parts for an extra per week because it’s NOT 3k. It’s 3k of EVERY body panel they make for that vehicle. That’s 33,000 for an 11 body panel vehicle.

That requires revamping of production scheduling, maintenance scheduling, die repair and maintenance, additional racking etc., etc...

We’ve done maths here before and it’s actually unclear what capacity stamping has at Fremont. There is no ‘designed spec’ information available.

They have only two press lines big enough to do most of the body panels and they’re doing 3 different sets of body panels. One press line is old and slower, the other specifically designed for Model 3 die sets (though I’d expect they could retrofit some of the S and X die sets into it). A third, smaller press line might be doing one or two panels or it might be doing other parts. We have no way of knowing.

We also have no idea what their efficiency rates are, if all of M3 die sets are in the new press line or just most, or if they’re running other body panels in there for S or X, or if they’re making other parts (ie., I think I remember mention that they also make the battery casings which would require a large press line to make) and a thousand other questions.

We agree with the fact that it's unlikely that Tesla is going to acquire a new press line and dies and have them churning out parts by Q4 2019, unless this was started previously. I'm pointing out that unless something has changed at Fremont, there's no need for GF3 to have its own press line by Q4 2019.

Yes and no. But not worth quibbling about our differences on the subject.

GF3 can start producing vehicles - albeit by robbing production at Fremont - as soon as they have nothing more than a GA line and its supporting infrastructure. Add in a paint shop and it should be able to produce 3k/wk without hindering Fremont production. Getting this done by the end of Q4 2019 appears quite plausible.

Meh. I think it’s more logical to make sure battery line gets put in and up and running first, ahead of everything else and send otherwise completed bodies there to have their batteries added.

If they decide to and can instead also paint and GA there, so be it. Awesome. But I wouldn’t take that bet in the time frame given.

 

[ggr]

AMZN and NFLX MASSIV PE ratios.

If you give TSLA AMZN's PE ratio of 141

Wow, I hadn't looked at AMZN's P/E ratio. I had no clue it was that high, if someone asked I'd have guessed 40-50. No wonder the market is hammering them, any indicator of slowing (or reversing) revenue is a disaster for such a growth company. (Which is exactly why Donn's argument is ridiculous.)

 

[RFernatt]

The problem is that, so far, every specific "EV tax" has ended up being far more than what you would pay in gas tax, unless you drove a ludicrously large number of miles a year. They are all, in effect, punitive fines for buying an EV.

I recently had a similar discussion with another EV owner in WV, a state that recently adopted a $200/year annual EV "tax". He was of the mindset that EV owners shouldn't have to pay extra and that it was punitive. I argued that we should have to pay and ran the numbers. Using average annual driving miles and average fleet economy, the annual amount paid in state fuel taxes by ICE drivers was basically the same as the state EV tax. This breakeven did not include federal fuel taxes, so we're technically still ahead on fuel taxes. We are both EV adopters and promoters and my opinion was that if we fought the tax, the opposition would spin it as "EV owners think they're entitled to use the roads without paying their fair share" and they wouldn't be wrong. I argued that it would be better to not fight the tax and lobby for better EV services funded with those dollars. The state could use those funds to install charging stations at state maintained rest areas on the interstates, install charging for the public at convenient state facilities frequented by the public (DMV locations, etc.), or use the funds to provide tax breaks to businesses that install charging infrastructure. I think that would be a more positive way to go about and not provide free ammunition to the opposition.

 

[neroden]

In CA you can lease a Bolt or Leaf for around $300 a month and still the cars are sitting.

Maybe because GM insists on stuffing the Bolts in California rather than my part of upstate NY (where my GM dealer can't keep them in stock for more than 24 hours) and my local Nissan dealer refuses to carry Leafs (despite them being super popular here)?

And because *neither car has a long enough range to drive back from California to New York without a Supercharger*?

 

[tivoboy]

And yet you're swing-trading Tesla? *cough*

Sadly this type of value creation won’t be happening to tesla.

 

[M3Rider]

I dunno, 360K+ remaining reservations and this chart might belie that statement.

Where did this number come from?
According to Q3 letter,
"Of the 455,000 net reservations that we reported in August 2017, less than 20% have cancelled. We are expecting most of the remaining reservations to gradually convert to orders as we launch more versions of Model 3, introduce other financing options, and begin sales outside North America."

I read this as 455,000*0.8=364,000 reservations were not cancelled and this number was reduced by some % like 80-90% of the ~100k deliveries that happened so far.

So, the remaining should be under 300k.