TSLA Market Action: 2018 Investor Roundtable

[Analyst007]

@ Fact Checking: What do you think of the competition coming from VW (in coooperation with Ford) currently?

They are planning to prodcure mass-market EV's for below 22'000 USD in Germany. What do you think about that possible competition (timing-wise, quality-wise?)

My question is based on this article: New subcompact VW all-electric I.D. Concept vehicle could start at $21,000

I am afraid of the competition from VW (I see this as the most dangerous competitor atm).

 

[McMountain]

New EVs are mainly competition to existing ICEs.

The EV market will expand with additional competitive vehicles arriving. Additional EVs will also helpt expand the charging networks and other infrastructure (although this is not a Tesla problem, Teslas are well supplied with Super- and Destination chargers).

Finally, the 21,000 $ Volkswagen has to materialise before it can cause anybody to be "afraid".

 

[Fact Checking]

I was hoping to caption it, "why is it wrong to piss into our drinking water supply, yet okay to release carcinogens into our air supply?"

True, Diesel exhaust contains soot, arsenic, benzene, formaldehyde and nickel which are all carcinogen when breathed in. Globally diesel and gasoline exhaust is causing far more cases of cancer than secondhand cigarette smoke...

Also note that the damaging effects of gasoline and diesel exhaust go way beyond causing cancer:

• Diesel and gasoline exhaust also contains nitrogen oxides which can trigger asthmatic attacks and other respiratory diseases and can trigger allergic reactions as well.
• Diesel exhaust can irritate the eyes, nose, throat and lungs, and it can cause coughs, headaches, lightheadedness and nausea.
• Fine particle exhaust also endangers people with various forms of heart disease and the elderly in general.
• Children are exponentially more exposed: not only are they smaller and thus more vulnerable (the body mass to lung surface ratio is lower), but they also breathe and live at much lower heights, which has even higher concentrations of exhaust.
• Pets are the most exposed: they are often the smallest and breath right at the exhaust pipe level.
• The 'carbon dioxide dome' around inner cities is decreasing cognitive performance of everyone exposed to that air.
  
• There's significant property damage as well:
  • diesel and gasoline exhaust contain aggressive chemicals that degrade real-estate, adding billions of dollars of building maintenance cost per year,
  • diesel and gasoline exhaust pollutes and damages animals and plants and other agricultural products.
• Not to mention the slow moving wrecking ball of global warming, with hundreds of billions of current damages and costs, and trillions of future damages and costs.

I know I'm preaching to the choir here, but diesel and gasoline exhaust are not just carcinogens, they are literal 'poison gases' with a huge range of negative externalities which costs and damages are not billed to Exxon Mobile or Koch Industries ...

 

[shlokavica22]

Bottom line, we've got not many years left to reach zero emissions. I'd rather see two ZEVs at $35K than one at $70K, because it will take twice as long to get there via the latter.

Edit: Yeah I'm a TSLA investor, but my primary investment, and everybody else's primary investment, is in planet earth. It has to come first.

That's shortsightedness. High margin models make sure TSLA has the funds to accelerate it's production, whilst at the same time forcing the other automakers to go in this direction. If VW/BMW/etc. lose some market in the cheaper models they won't care that much. Losing the high margin sales really hurts and forces their hand.

Besides, the impact of the Semi will be much more significant.

Here is the IV vs HV as of today. HV is at a very high of 90% - but IV is at 50%. That's a big difference. This has made calls not as good as what they could have been given the raise in SP. After the earnings call usually the IV drops - but seems to have dropped prematurely as the effect of earnings is still playing out.

View attachment 350993

I assume you talk from the perspective of calls seller?

 

[avoigt]

Interesting to see where the general auto industry is heading.

Seriously, The economics are going to change fast. Germans are going to take huge hits on the 3-series level sedans and Q5 level SUVs from Teslas in the $50-60k range and the Japanese are going to take hits on the Camrys and Accords with $35-40k Teslas.

Here are my predictions for 2023.

US: Ford - pickups, GM - bailout
Japan: Toyota, Nissan - head in sand waiting for bailout; Mazada - bankruptcy; Subaru - takeout
Germany: BMW - bankruptcy / takeout; Mercedes - maybe can make it + bailout; VW - maybe can make it + bailout
Italy: Fiat - bankruptcy

I agree only a few companies will make it into the new world of EVs. Porsche can be one of them but they are a luxury sports car company and not a mass producer like VW or Toyota. BMW will be under stronger pressure early on but they have at least some experience with EVs and I wish them best luck with their push into the e.g. i4. Daimler is under stronger pressure as well and not well positioned to make it.

However its IMO nothing to love or like about that some may get bankrupt. Its actually not in the interest of Tesla too.

What we need to see is them faster transitioning into EVs to help accelerate the transition.

VW, Daimler and others are doing now what they did in the past. They put big discounts out in order to keep sales numbers up. Diesel cars are extremely cheap now and they likely sell them with no profit. With that they can overcome regulation pressure about emissions and keep their factories running. They actually buy time with that effort. Profits will go down and they hope to keep the revenue kind of stable. Shareholders will not like that.

All of that I understand but what makes me wonder is that there seems to be no credible EV coming out in the next 2 years from them. I-Pace, e-Tron and Taycan will not cut it. Most have been disqualified with presented specs that do not hold to customer expectations or are just for a nice market like Porsche.

Its almost like the big automakers pretend the 3 will not come into Europe in the next 2 years. All the have to do is to look up the NA statistic. I predict that the 3 will cut very deep into their most important mass market in EU and China and that likely will bring them close to a bankrupt scenario in 2020.

Diess (VW CEO) was correct when he said such a company can faster be bankrupt than most think. A high asset utilization is needed to make them profitable and given their small margin its a question how to finance the transition.

Also most still believe its just a question of money and time and do not realize its more a question of innovation and EV know-how. I believe with Engineers that have been building ICE cars for decades you will not be able to build a successful EV company where SW is the largest piece and not HW. That thinking is not present in those companies.

So with them still not waking up and pushing more on EVs, in 2020 some of them may be forced to ask the Government to stay alive and not fire people in masses. Governments will give them money to keep operating but the issue will remain. Right now its a bet that somehow they will manage to build a great EV that can stand up to a Tesla.

 

[Fact Checking]

@ Fact Checking: What do you think of the competition coming from VW (in coooperation with Ford) currently?

They are planning to prodcure mass-market EV's for below 22'000 USD in Germany. What do you think about that possible competition (timing-wise, quality-wise?)

My take is that it's a huge win for Tesla:

• Apparently VW was working on a Model 3 competitor - but changed plans in the last minute to create a VW Seat, low end VW Golf, Skoda and BMW i3 competitor instead.
• So the VW "I.D" is going to take sales away from VW's smaller form factor ICE offerings - and is going to put pressure on other ICE makers who are competing in that form factor.
  
• At that price point I'd expect low range, low mass and no proper battery management system. Low range also means comparatively low effective engine power.
• I.e. VW decided to lower the price by reducing battery size and range. A $10k drop in entry price suggests a very significant drop in range. Base configuration could be as low as 30 kWh - which might not be market acceptable in 2020. Tesla dropped 40 kWh pack size plans in 2014 already ...
  
• Like the BMW i3 the I.D. is still going to sell like hotcakes: the 200k units per year VW plans for "sometime after 2020" is going to be a single drop of water hitting the glowing hot lava of EV demand in 2020/2021...
  
• I'd expect very little effect on Model 3 sales: even in 2020 only about 2-5% of the sales are going to be BEV, 95-98% of the sales are ICE cars. The VW I.D. is primarily going to cannibalize ICE sales.

The problems VW has:

• The Model 3 is going to eat premium models of the VW Golf and Polo for lunch, which is going to hurt margins and market perception of VW's flagship compact/sedan models. I'd expect VW Golf GTI sales to nosedive like BMW M3 sales are nosediving. VW has no answer to the Model 3 for the next 2 years at minimum.
  
• It appears VW is retreating from Tesla towards lower price segments - hoping that Tesla won't be able to follow.
• Capex is still going to be significant, and investors are going to be able to extrapolate the costs of the EV conversion from the 200k unit count I.D. experiment.
  
• When selling the I.D. they'll have to stop with most of the anti-EV and pro-ICE FUD - this is going to help Tesla as well.
• Unit count is still only 200k/year, which Tesla is already twice that of. When VW will start ramping up the I.D. Tesla will be on the verge of 1 million vehicles a year. Battery tech economies of scale will be on Tesla's side.
• By 2021 I'd expect Tesla to announce their own compact car with a $20k-$25k entry price and start making them in 2022 perhaps. That gives VW perhaps a single year of time before the big dog enters that segment.

My question is based on this article: New subcompact VW all-electric I.D. Concept vehicle could start at $21,000

I am afraid of the competition from VW (I see this as the most dangerous competitor atm).

I think the biggest danger is to the BMW i3: a $21,000 entry price is way lower than BMW i3's current $40,000-ish entry price.

 

[Artful Dodger]

TSLA Max Pain Nov 9, 2018 $340

 

[Analyst007]

I understand the concept of "Max Pain" in terms of Put/Call Options and where they meet each other (where the lowest possible income is generated for both Call and Put Holders combined) - But - how does this affect share price? Can someone scientifically explain the concept of Max Pain?

If you say max pain is 340$, does that mean that the stock will now go to this direction?

What does it scientifically mean, when:

Stock price > Max Pain?
Stock price < Max Pain?

 

[Fact Checking]

However its IMO nothing to love or like about that some may get bankrupt. Its actually not in the interest of Tesla too.

What we need to see is them faster transitioning into EVs to help accelerate the transition.

I agree with much of your post, but here I disagree a bit:

• Workers won't be affected other than changing employers: the EV transition is going to start a huge boom and demand for automotive experience is going to be significant.
• ICE power train specific know-how is going the way of buggy whip making skills, but there's a huge range of other worker expertise that's valuable in EV making.
• Automotive parts industries not related to the ICE power train will boom: there's literally a billion units of ICE vehicles to replace.
• Automotive electronics is going to increase 10x in size: instead of a small lead-acid battery EVs are moving mobile homes with near limitless amounts of always-on electricity in comparison. We've only scratched the surface of possibilities ...

I.e. ICE bankruptcies will cause anxiety and drama, but not much real disruption in the long run.

Germany could boom: think of the millions of automotive jobs outsourced over the past few decades - they'll have to be brought back home again to be able to compete with vertically integrated Tesla.

It would be good for Tesla as well: automotive workers for hire in the European Gigafactories, more factory buildings to purchase and convert.

The EV transition might be catastrophic to many shareholders of ICE companies, and I'm sure there will be drama and bailouts - but other than that it's a huge economic opportunity even for ICE specialized Germany.

 

[BioSehnsucht]

Former Tesla Employee Charged In Embezzlement Scheme At Tesla

That's a really large barnacle.

 

[shlokavica22]

Diess (VW CEO) was correct when he said such a company can faster be bankrupt than most think. A high asset utilization is needed to make them profitable and given their small margin its a question how to finance the transition.

If TSLA continues with the current profitability and growth, I can hardly see how VW/Daimler/BMW can survive.

They are like heavy tanker moving in the ocean. They can withstand rough waters easily (just look at the total VW expenses surrounding the Dieselgate saga), but the problem for them is that they now face an iceberg. They are too big and too slow to react to change. And they had to change the course like yesterday.

 

[jeewee3000]

That's a really large barnacle.

Indeed. Good riddance.

Side-note on this publication: big difference between the USA and European continental law (= excluding UK) in that the names of the prosecuted are freely posted online. In Belgium the most you would read is "Mr. S.P." instead of his full name, as to respect privacy and avoid repercussions from vigilantes and the like.

 

[Tslynk67]

True, Diesel exhaust contains soot, arsenic, benzene, formaldehyde and nickel which are all carcinogen when breathed in. Globally diesel and gasoline exhaust is causing far more cases of cancer than secondhand cigarette smoke...

Also note that the damaging effects of gasoline and diesel exhaust go way beyond causing cancer:

• Diesel and gasoline exhaust also contains nitrogen oxides which can trigger asthmatic attacks and other respiratory diseases and can trigger allergic reactions as well.
• Diesel exhaust can irritate the eyes, nose, throat and lungs, and it can cause coughs, headaches, lightheadedness and nausea.
• Fine particle exhaust also endangers people with various forms of heart disease and the elderly in general.
• Children are exponentially more exposed: not only are they smaller and thus more vulnerable (the body mass to lung surface ratio is lower), but they also breathe and live at much lower heights, which has even higher concentrations of exhaust.
• Pets are the most exposed: they are often the smallest and breath right at the exhaust pipe level.
• The 'carbon dioxide dome' around inner cities is decreasing cognitive performance of everyone exposed to that air.
  
• There's significant property damage as well:
  • diesel and gasoline exhaust contain aggressive chemicals that degrade real-estate, adding billions of dollars of building maintenance cost per year,
  • diesel and gasoline exhaust pollutes and damages animals and plants and other agricultural products.
• Not to mention the slow moving wrecking ball of global warming, with hundreds of billions of current damages and costs, and trillions of future damages and costs.

I know I'm preaching to the choir here, but diesel and gasoline exhaust are not just carcinogens, they are literal 'poison gases' with a huge range of negative externalities which costs and damages are not billed to Exxon Mobile or Koch Industries ...

Lovely post, FC, I'm going to snip and Tweet the whole lot...

And, voilà: Lycanthrope on Twitter

 

[Tslynk67]

@ Fact Checking: What do you think of the competition coming from VW (in coooperation with Ford) currently?

They are planning to prodcure mass-market EV's for below 22'000 USD in Germany. What do you think about that possible competition (timing-wise, quality-wise?)

My question is based on this article: New subcompact VW all-electric I.D. Concept vehicle could start at $21,000

I am afraid of the competition from VW (I see this as the most dangerous competitor atm).

It's an indication that we are winning - don't forget that our Mission is to transition the world away from fossil-fuels and this is indicative of the shift.

The addressable market for EV's is huge. As more and more cities and countries ban ICE vehicle, there will likely be a short-fall in production to meet the demand.

Put another way, imagine in 5 years time, buying an ICE will not only be commensurate to smoking, socially unacceptable and very expensive. Everyone will want an EV. All the existing manufacturers could convert their whole existing production to EV and still would sell every vehicle made. And still not be enough.

Of you see what I mean.

In the EV space, more is better, for everyone.

 

[Tslynk67]

That's a really large barnacle.

Could also account for some suppliers that claimed they weren't being paid...?

 

[Analyst007]

Electric cars on Switzerland’s roads will be required by mid-2019 to make an artificial noise as a safety measure for the blind, reports the Sunday newspaper NZZ am Sonntag.

Out of the 4.5 million cars on Switzerland’s roads in 2017 only 15,000 were electric and 67,000 hybrid. However, the government is pushing for a significant increase by 2022 as part of efforts to meet climate targets.

Switzerland adopts EU rules on electric car noise

 

[Mich]

Electric cars on Switzerland’s roads will be required by mid-2019 to make an artificial noise as a safety measure for the blind, reports the Sunday newspaper NZZ am Sonntag.

Out of the 4.5 million cars on Switzerland’s roads in 2017 only 15,000 were electric and 67,000 hybrid. However, the government is pushing for a significant increase by 2022 as part of efforts to meet climate targets.

Switzerland adopts EU rules on electric car noise

Can you help me how this is related to the market action thread and the investors forum?

This is not the place to do smalltalk on any Tesla related thing which comes into your mind... i know you are not alone but I don't like to scroll over 100s of off topic posts every day. Create your own thread for this!

 

[gora321]

Is it possible today to talk about global restructuring of one big ICE producer without mention of EV?

Yep...

Fiat Chrysler should mull selling Europe business, spinning off Maserati, Alfa, investor says

 

[Tslynk67]

Ron Baron was on CNBC this morning - as CNBC video doesn't play for me, might be the same for others, so here's the YT link:

 

[avoigt]

"A federal grand jury issued an indictment against Salil Parulekar, a former manager in Tesla’s Global Supply Management group, and he was charged with “nine counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.”

According to the indictment, Parulekar was in charge of the relationships with some of Tesla’s suppliers and he “allegedly used his role to initiate a scheme wherein he diverted money owed to one Tesla supplier and caused it to be paid to another supplier. (...)”

Tesla got defrauded of almost $10 million in embezzlement scheme by a manager, says DOJ