TSLA Market Action: 2018 Investor Roundtable

[Ellec]

Wtf did I just read. God damn it Elon, how stupid can one be? Very nice to give more FUD to the shorts. I really do not want to know that

1. Tesla would have died nearly and the only reason it didn't was you working 120 hours a week
2. That you call that very painful and you regret doing it.

Wtf? How should I, as an investor, now look forward for GF3 production ramp and Model Y ramp. What if you die, Elon or what if you just aren't able or willing to work 120 hours anymore???

I see Stock testing 300 today God damn it

It's up $5 pre-market. The market doesn't care about the past if it's no longer relevant.

 

[Analyst007]

It's up $5 pre-market. The market doesn't care about the past if it's no longer relevant.

Ellec, of course does the market care about what Elon is speaking about - even if its about the past.

This essentially means to me that the credit fault risk is A LOT HIGHER than I expected it was some months ago. And I am worried about further production ramps.

The past does always also influence and determine the future - my friend.

 

[Ellec]

Ellec, of course does the market care about what Elon is speaking about - even if its about the past.

This essentially means to me that the credit fault risk is A LOT HIGHER than I expected it was some months ago. And I am worried about further production ramps.

The past does always also influence and determine the future - my friend.

The bond/stock prices reflected that risk at the time, there were hundreds of articles, posts, tweets predicting they would run out of money and go bankrupt, this should be no suprise to anyone.

 

[Analyst007]

The bond/stock prices reflected that risk at the time, there were hundreds of articles, posts, tweets predicting they would run out of money and go bankrupt, this should be no suprise to anyone.

To me it is a very huge surprise that Elon thinks that they were so close to death and that he thinks they would'nt have made it without him. To me that know implies a huge risk - also for the future - to me as an investor in Tesla as it reminds me of the fact that Elon is KEY for Tesla and without him they're bankrupt.

 

[Artful Dodger]

Nasdaq 100 Futures - Dec 18
Real-time CFD
6,640.25 +109.25 +1.67%
05:24:45 EST


S&P 500 Futures
2,660.25 +30.75 +1.17%

 

[jbih]

To me it is a very huge surprise that Elon thinks that they were so close to death and that he thinks they would'nt have made it without him. To me that know implies a huge risk - also for the future - to me as an investor in Tesla as it reminds me of the fact that Elon is KEY for Tesla and without him they're bankrupt.

Apple does fine without Jobs. But it only got to be what it is with Jobs.

 

[Fact Checking]

This essentially means to me that the credit fault risk is A LOT HIGHER than I expected it was some months ago.

Being forced to sell equity isn't a credit fault risk.

Technically Elon was right that had the ramp-up been stuck at its most unprofitable Model 3 output rate of around 1k-2k/week for a couple of months that would probably have consumed a lot of cash. It didn't: Tesla went from 0.5k/week to 5k/week within less than 6 months so this phase cost less than it could have, and production isn't going to drop below that rate ever again barring a magnitude 10 earthquake.

I believe a slower ramp-up and forced equity sale was really what Wall Street was rooting for, and that's why they were shorting Tesla (ignoring the bankwuptcy clowns like Spiegel who are useful idiots): had the ramp-up been further delayed in Q1-Q2, Tesla would have been forced to get cash from a position of weakness at unfavorable terms - either from the Saudis or from the market - Wall Street would have gotten their temporary drop to $150-$200, the short PUTs and straight short positions would have generated tidy profits, they'd have reversed their positions and Wall Street would then have realized that Tesla is now the next Apple. (They might even have gotten a board member on their own terms and diluted Elon enough to control Tesla.)

Tesla doing fine in Q2 (yes, the good cash margin was already visible in the Q3 numbers) and spectacularly over-executing in Q3 without any 'tricks' was very much not according to plan.

I'm sure the institutional shorts will manage: my proposed solution is to just liquidate those short positions, don't throw good money after bad.

 

[Artful Dodger]

Oil is going down because deflationary pressures are taking hold due to rising interest rates.

Oil is down because of a supply gut, after Iranian sanctions failed to reduce the supply of oil due to exemptions within the sanctions regime. Meanwhile the US is now pumping 11M bpd and is a net exporter. Saudis have not yet cut production.

Supply > Demand

Oil Prices Tank As Supply Glut Fears Return | OilPrice.com

 

[RobStark]

Is this limited to some premium segment?! I can´t believe Mercedes is selling more cars in California than Honda and Toyota, which are not even in the table. Also, I looked throught the PDF and don't find this table there at all. (Rated the orignal post disagree because I find it misleading not mentioning the segment/selelctiion criteria)

Your disagreement is retarded.

I did not claim to post all the brands. Obviously, Toyota,Honda, and Chevrolet sold more than zero cars in California in 2018.

I posted a link for anyone that wishes to see all the numbers.

Like I told another poster I posted brands just above Tesla and those below.

Market share for Toyota, Honda, Ford, and Chevrolet etc are not relevant to a discussion of Tesla's competitive position at the moment.

Perhaps some day in the distant future.

 

[dondy]

Elon is needy, but he should stop giving those interviews that reveal his inner thoughts and Tesla "secrets". This type of interviews only hurts Tesla and his own image.
Cannot see anything good coming out of telling the world that Tesla was weeks from death due to the model 3 production ramp. Yes, it's another therapy session for Elon. But there are several repercussions.
1. It validates the Tesla death watch attack from the media and shorts, and hence encourages future speculation-based attacks.
2. It painted a picture of vulnerable Tesla. Tesla was close to "die" twice. So why not the third time?
3. It contracted April Fool's bankruptcy joke. Elon specifically said that he only did the joke because Tesla had zero chance of going bankrupt. Not good for Elon's own credit.

He is saying that Tesla was running out of operational capital. In his eyes "dying".
In the real world it would require refinancing with strings attached. i.e. slowing down company's progress.
Musk was going for the best possible case in their situation and got it at "the last minute". Pretty typical situation for his companies.

It is just usual dramatic Musk with usual posturing. Nothing to see here, move on.

It still does not beat his claim about "spacex last chance".
In boring reality SpaceX got credit for another 2 attempts after 3 flight. In the eyes of creditors 3d flight was "partial success" which actually secured SpaceX big NASA contract. But full success of 4th flight of course helped to secure "equal" position of SpaceX vs. NASA and satellite providers.

 

[lklundin]

Wtf did I just read. God damn it Elon, how stupid can one be? Very nice to give more FUD to the shorts. I really do not want to know that

1. Tesla would have died nearly and the only reason it didn't was you working 120 hours a week
2. That you call that very painful and you regret doing it.

Wtf? How should I, as an investor, now look forward for GF3 production ramp and Model Y ramp. What if you die, Elon or what if you just aren't able or willing to work 120 hours anymore???

I see Stock testing 300 today God damn it

After the Model 3 ramp Elon stated that that was the last time he would bet the company on a new model.

So while I cannot predict today's SP, I still think you should take it easy.

PS. If the SP hits 300 today, then I am going to find some money and buy more stock...

 

[Scuttlebutt]

Lol, I took up arms on behalf of carsonight because of the use of the term 'scuttlebutt'. I always thought it meant malicious rumour. I've just looked it up and it means nothing more than rumour or gossip, with no negative connotation. Apologies - my bad.

No offense taken.

 

[Fact Checking]

Market share for Toyota, Honda, Ford, and Chevrolet etc are not relevant to a discussion of Tesla's competitive position at the moment.

Perhaps some day in the distant future.

BTW., while I agree with the points you made, we probably disagree on this one: I believe Toyota, Honda, Ford and Chevrolet are not relevant mainly not because Tesla isn't at their sales level "yet" to be able to compete, but mostly because they are not building enough of an EV manufacturing infrastructure to survive the EV transition with their current market power even remotely intact.

I.e. I think it would be fair to leave them out of the list because they literally do not matter, by choice Toyota, Honda, Ford and Chevrolet are competing in the mostly detached, dying market of ICE vehicles that has only tenuous connection to the fledging EV market by way of superficial and entirely deceptive similarities between Teslas and ICE vehicles. In reality there's probably more of a product and technology overlap between Dyson vacuums and Tesla cars than Toyota cars and Tesla cars...

In reality the iPhone never competed with Blackberry phones either, it superseded and killed them without much of a competition.

The ICE vehicle market is 'big' in the sense of the Titanic having been the largest ship floating on the seas, before that iceberg came along.

 

[bhtooefr]

Toyota does have two potential aces up their sleeve to survive the transition: automotive industries are far larger and far much more of a point of national pride and therefore are more likely to be bailed out, and their partnership with Panasonic (although see @neroden's post about Panasonic potentially angling to sell their battery division off, although there is the whole thing where Japan tends to only let that kind of thing happen if a company is in dire financial straits).

Ford's also got one - simply piggybacking on Volkswagen's transition, and Volkswagen is IMO the best-positioned of the ICE manufacturers to make the transition thanks to Dieselgate and the reprioritization that came in its wake. (That's something that came about after I bought a put option against Ford... should've sold my most recent purchase right before Ford's earnings, but oh well.) That said, Volkswagen's got a tough road - Electrify America seems to be the same sugar as the existing third-party DCFC networks, just more of it, and there's still not a good answer for batteries for VW.

Honda... Honda's never been good at anything that didn't have an engine in it (and lately they're not even good at engines).

GM is too dependent on LG to supply them with their EV technology. They have some homegrown tech, but...

 

[Artful Dodger]

Can you cut n paste Carsonight's words pls. I've just been up and down his feed and cannot find it. Carsonight is a troll fighter; a good guy.

carsonight a day ago

"I can tell you as a fact that at GF1 they are consistently above 5k Model 3 packs per week. What employees are hearing there is that they need to be at 7k by Christmas if they want that day off.

"In the auto industry, if demand is falling off the factory or factories slow down. Shifts are cancelled and employees are laid off. What I am hearing is just the opposite. The factory ran right through Thanksgiving, employees can work overtime any time they feel like it, and the factory is going to run full blast right through the holidays.

"You can pick your rumors wherever you want to, but I can tell you what is going on."
​

Nothing really newsworthy here, carsonight is just playing whack-a-mole with one of the most disingenuous trolls on DISQUS.

CH3ERS!

 

[KarenRei]

I look forward to the time where oil becomes "just another major commodity", rather than the commodity of everyone's interest. With a mean oil price falling from, say, ~$70/barrel to ~$40/barrel, and demand falling to 16% of what it is (after losing the transport, power and heating markets), that's cutting demand by over an order of magnitude - putting its global market at under 1/4th that of steel (but nearly double that of alumium).

Its demand will of course continue to grow, as demand for petrochemicals will continue to grow. Actually the steel comparison really shows a good way forward for the oil industry if they want to regain market share for their assets in a post-transportation-fuel world: research into advanced composites production and manufacturing techniques to try to take steel's place as the raw material of choice for bulk construction and manufacturing. Even in concrete - CFRP rebar is way better than steel rebar in most respects (it's just more expensive and there's vastly less experience with using it). CFRP rebar lasts basically forever, regardless of how hostile of an environment the concrete is in.

(I'm actually building my home with BFRP rebar. Would much rather CFRP, but it's much more expensive. But BFRP is better than GFRP!)

 

[KarenRei]

That said, Volkswagen's got a tough road - Electrify America seems to be the same sugar as the existing third-party DCFC networks, just more of it, and there's still not a good answer for batteries for VW.

Would wager good money on it being LG. Their European expansion plans seem to strongly mirror VW's.

These days, concerning EV batteries from outside A) China and B) Panasonic, the market is dominated by LG.

 

[Fact Checking]

Toyota does have two potential aces up their sleeve to survive the transition: automotive industries are far larger and far much more of a point of national pride and therefore are more likely to be bailed out,

One problem is:

• The EV industry is far more of a high-tech industry than an automotive industry. Teslas are 70% about the batteries and the high-tech included - there's literally less than 100 moving 'automotive' parts in a Model S - while thousands in an ICE vehicle.
• High-tech products have significant first mover advantage and those who lead by chance or by virtue gain various 'moats' that are difficult for competitors to cross. Having your own computer infrastructure manufacturing base was a source of national pride as well, not to mention that of a justified national security necessity, yet just a few U.S. firms quasi-monopolized the market for decades, both on the hardware and on the software side.
  
• A ~120 years ago carriage makers and horse breeding was a source of national pride and of profound economic military importance - yet Studebaker Brothers Manufacturing Company was the only wagon and carriage making firm that survived the automobile age in corporate form, up until the 1960s-70s, and horse breeding isn't that strategic anymore either.

I.e. I can very much see the German and Japanese government bailing out the biggest ~3 carmakers if they manage to get themselves bankwupt, to preserve employment and national pride. Germany did that in 2008-2010 with great success. There's a lot less appetite for bailouts in the U.S. and in the U.K. on the other hand, especially with narrow/split pairlamentary majorities. Any major bail-out would require a lot of funds and bipartisan support - of which there is very little in the Trump era.

The other problem with bailing out the ICE industry is that unlike in 2009 when there was a temporary drop in demand and the bail-out basically bridged a crisis of liquidity, in the 2020s they'd be bailing out a structurally broken industry with a permanent drop in demand, where for example BMW's leading executives are still deluding themselves that in 2030 70% of their vehicle sold are still going to include ICE engines ... If they are doing investment decisions today on such a flawed basis that creates a lot of future structural deficit down the road ...

Bail-outs are fundamentally about preserving the status quo - I don't think there's been many historic examples of bail-outs where a fundamental change in direction of an industry was forced. In fact I cannot think of any such major, historic bail-out: arguably bail-outs reduce the speed of industry conversion.

So it could be a series of bail-outs after which the automotive industry in that country shrinks to a level and political support drops to such low levels that there will be a point of no-bailout.

and their partnership with Panasonic (although see @neroden's post about Panasonic potentially angling to sell their battery division off, although there is the whole thing where Japan tends to only let that kind of thing happen if a company is in dire financial straits).

Yeah, that angle is always a possibility.

This is why I'm curious whether the Panasonic battery cell manufacturing lines in the GF1 are going to be fully owned by Tesla once their current capital lease is fully paid up. I believe the contracts suggest so, but key portions are redacted.

I'd be very disappointed in Elon if he didn't have contingency plans for if/when the relationship with Panasonic goes sour. Tesla is also rather systematic about in-sourcing almost everything strategic, and Panasonic is an odd exception to that, as @KarenRei noted it recently. They in-sourced seat manufacturing and electronics board manufacturing - to not do that for cells looks weird.

 

[Carl Raymond]

BTW., while I agree with the points you made, we probably disagree on this one: I believe Toyota, Honda, Ford and Chevrolet are not relevant mainly not because Tesla isn't at their sales level "yet" to be able to compete, but mostly because they are not building enough of an EV manufacturing infrastructure to survive the EV transition with their current market power even remotely intact.

I.e. I think it would be fair to leave them out of the list because they literally do not matter, by choice Toyota, Honda, Ford and Chevrolet are competing in the mostly detached, dying market of ICE vehicles that has only tenuous connection to the fledging EV market by way of superficial and entirely deceptive similarities between Teslas and ICE vehicles. In reality there's probably more of a product and technology overlap between Dyson vacuums and Tesla cars than Toyota cars and Tesla cars...

In reality the iPhone never competed with Blackberry phones either, it superseded and killed them without much of a competition.

The ICE vehicle market is 'big' in the sense of the Titanic having been the largest ship floating on the seas, before that iceberg came along.

I gave this comment top rating. But I'm surprised that in your immediately prior analysis of oil price factors you make no mention of EVs. I'll grant that it's too early for transport electrification to be affecting the oil price, but that day is not far off. And I suspect that the day where EVs affect the price of oil stocks arrived the day of Tesla's Q3 report. How many people on that day went "ah, the future has arrived"? Clearly some noticed - the ones who bid the price of TSLA from $260 up to $360. Every one of those people is now oil stocks shy.

 

[shlokavica22]

One problem is:

• The EV industry is far more of a high-tech industry than an automotive industry. Teslas are 70% about the batteries and the high-tech included - there's literally less than 100 moving 'automotive' parts in a Model S - while thousands in an ICE vehicle.
• High-tech products have significant first mover advantage and those who lead by chance or by virtue gain various 'moats' that are difficult for competitors to cross. Having your own computer infrastructure manufacturing base was a source of national pride as well, not to mention that of a justified national security necessity, yet just a few U.S. firms quasi-monopolized the market for decades, both on the hardware and on the software side.
  
• A ~120 years ago carriage makers and horse breeding was a source of national pride and of profound economic military importance - yet Studebaker Brothers Manufacturing Company was the only wagon and carriage making firm that survived the automobile age in corporate form, up until the 1960s-70s, and horse breeding isn't that strategic anymore either.

I.e. I can very much see the German and Japanese government bailing out the biggest ~3 carmakers if they manage to get themselves bankwupt, to preserve employment and national pride. Germany did that in 2008-2010 with great success. There's a lot less appetite for bailouts in the U.S. and in the U.K. on the other hand, especially with narrow/split majorities. Any major bail-out would require a lot of funds and bipartisan support - of which there is very little in the Trump era.

The other problem with bailing out the ICE industry is that they'd be bailing out a structurally broken industry, where BMW's leading executives are still deluding themselves that in 2030 70% of their vehicle sold are still going to include ICE engines ... If they are doing investment decisions today on such a flawed basis that creates a lot of future structural deficit.



Yeah, that angle is always a possibility.

This is why I'm curious whether the battery cell manufacturing lines in the GF1 are going to be fully owned by Tesla once their current capital lease is fully paid up. I believe the contracts suggest so, but key portions are redacted.

I'd be very disappointed in Elon if he didn't have contingency plans for if/when the relationship with Panasonic goes sour. Tesla is also rather systematic about in-sourcing almost everything strategic, and Panasonic is an odd exception to that, as @KarenRei noted it recently. They in-sourced seat manufacturing and electronics board manufacturing - to not do that for cells looks weird.

And the results are already showing. I have VW's price list from an year ago and compared with a "fresh" one I see 20% drop in the prices (new cars from official dealer).
An year ago, Lexus' leasing was based on 25% retained value after 6 years of leasing (and that was a main selling point). Now- 10%.
They know what's coming.