2017 Investor Roundtable:General Discussion

[Reciprocity]

and he also used the word "hope".

How would Elon use any other word? Has Tesla ever made 10,000 in a week? Of course they hope they can get there sooner then later. If they had been doing this for decades and had contracts with suppliers for just as long and were basically building the same car they did the prior year with a few new nobs and LEDs, then it wouldnt be hope, it would be a guarantee. This is what we call humble honesty and lack of hubris. I know its not Elon's style, but maybe the Model X taught him something. But this is not a company that just changes a nob and adds an LED, they are literally changing what automotive transportation means by become the Manufacturer, the gas station and the dealership.

 

[myusername]

I agree to, the stock price should go up from that ASP being 50k. This shouldnt even be hard for @myusername to add up. If you have a billion people who want something, but you can only make 30K of them this year and 380K of them next year, you can charge what ever the funk you want to. Supply and Demand. Its basic economics 101. Stock price should double on this fact alone.

not if you told a billion people a year ago that you'd sell them the car for $35k and asked them to give you $1k up front... and then said... "yeah... i meant $50k"... i mean... who does that?... most of the "billion" you refer to are about to get totally pissed off.

 

[Reciprocity]

Warranties matter too. Both Bolt and Standard have 100k mile warranties on the batteries, LR Model 3 has 120k. So on a per battery warranty mile basis we've got Bolt at $0.366/mile, Standard at $0.35/mile and Long Range at $0.367/mile. So this is all very close. Honestly, I think Tesla would do well to increase the warranties, say to 120k for Standard and 160k for LR. This would imply $0.30/mile and $0.275/mile, which would give the Model 3 a decisive edge for any buyer who needs substantial warranted miles. Think fleet operators. Of course, Tesla can step this up any time the competitive need arises.

Brovo, great analysis. I think Tesla will eventually change the warranty once they have enough data to show that the warranty reserves do not need to be very large. Jeff Dahn's improvements already being put into use and we know some coming that will improve the life of the batteries means that the warranties could change over time. Fleet owners could also buy extended warranties as well.

 

[ValueAnalyst]

Elon's "$42k ASP" is ridiculously low. And this is before dual motors and performance versions are out. As a customer, I'm disappointed in that, but as a shareholder it is likely good news. Maybe he was referring to $42k as the ASP for only the RWD standard pack size or something.

Yes, this is very positive for shareholders, but it is also important to note that customers have option to buy a very compelling $35k car. Just like Elon always said for a decade, which is very impressive.

Yes, overseas deliveries will only begin late 2018. So Tesla only needs to fulfil US demand by end of year to meet Elon's prediction. Guessing: 300k?

Tesla clearly wants to maximize the number of US persons who will receive full federal tax credit. This is in-line with 2H18 start for int'l deliveries.

They no longer feel they have unproven technology from an unproven company that requires much more warranty than the competition. Just needs to be competitive.

Precisely.

Regarding the battery 100k mile coverage, I can pretty much say without any doubt, that if your battery fails at 110k miles or more, Tesla will ABSOLUTELY replace the battery for free. They don't want ANY negative press about batteries failing.

The warrenty coverage ending at 100K miles is simply about limiting their financial requirements for carrying big accounting risk exposure. That's all

In general, these batteries will last for many hundreds of thousands of miles

My MS has 88k. I'm not concerned about the battery. Not even a little bit

This is a very important point. The longer the warranty, the higher the accounting accrual, which lowers gross margin. Tesla does not need to offer extremely long warranties, Model 3 already has too much demand, so why Osborne Model S sales more than you need to and sacrifice on gross margin?! Tesla is making smart business decisions, which benefit long-term shareholders as well as Tesla's mission to accelerate world's transition to renewable energy by generating more cash now with the higher ASP that will internally fund subsequent Gigafactory buildout.

 

[Ugliest1]

EXACTLY... this is just fine for the luxury market where people have disposable cash... but it is NOT fine in the mass market Tesla was targeting...

how many of you had 10m/year expectations for 2024 or whatever?... how about 1m/year expectations for 2020?

$45k to $50k ASP was not what this stock has been priced for... and you know it.

You have no idea... and you know it, though you do tend to state your speculations as fact even when disguised as a lame question. You've been doing more of that the last few months... are you perhaps at your wits' end that Tesla is actually executing their plan, that you've been so vocal against for years? Whatever the reason, I've had enough.

The $35k starting price was important for just that reason -- it's a STARTING price, just like every other car company and dealer publishes. People walk in to a dealer saying "I want the advertised base model" and 90% of those who purchase walk out with at least some kind of upgrade because "we don't have that model but for only a few dollars more...", or financing tricks, or other BS the dealers add on. You can't even order dinner at a restaurant without the server trying to upsell you something -- something that makes the restaurant more profit. At least with Tesla, you'll get what you order and you'll know the price.

And I'm betting there won't be very many who don't upgrade something, even if just the colour. There *will* be many who go for the increased range, and Autopilot, and likely the heated seats. And that's what will move the ASP up to the mid-$40's at least (mid-$50's in Canada).

No need to reply, @myusername. I won't see it.

 

[myusername]

Bolt has 238mile range starting at $36,620. That is $154/mile. So on a per range basis the Bolt is right between the Standard Model 3 at $159/mile for 220 miles and Long Range Model 3 at $142/mile for 310 mile.

I think for the heavy commuter who intends to put a lot of miles on the car, the LR Model 3 is the clear winner. The Bolt and Standard Model 3 are pretty close on price, but I think Supercharger access really tips the scale for anyone who might want to use it at least occasionally for long trips.

Warranties matter too. Both Bolt and Standard have 100k mile warranties on the batteries, LR Model 3 has 120k. So on a per battery warranty mile basis we've got Bolt at $0.366/mile, Standard at $0.35/mile and Long Range at $0.367/mile. So this is all very close. Honestly, I think Tesla would do well to increase the warranties, say to 120k for Standard and 160k for LR. This would imply $0.30/mile and $0.275/mile, which would give the Model 3 a decisive edge for any buyer who needs substantial warranted miles. Think fleet operators. Of course, Tesla can step this up any time the competitive need arises.

Of course there are many other points of comparison, but here I'm focused on the value proposition for someone who wants to minimize cost for heavy driving.

Here's how the Tesla Model 3 stacks up against the Chevrolet Bolt EV

I keep getting confused by the points on range...

so which is it?...

a) you don't need that much range because typical driving is done on commutes and charging can be done at home?

b) or you need Supercharging stations and long range?

the Chevy Bolt completely meets the "a" argument you guys have been making for years... and now you're saying it's not the clear choice because of range?... and the clear choice is a $9k upgrade?

you can't argue both A and B at the same time and keep flipping back and forth when it's convenient for you.

 

[Reciprocity]

not if you told a billion people a year ago that you'd sell them the car for $35k and asked them to give you $1k up front... and then said... "yeah... i meant $50k"... i mean... who does that?... most of the "billion" you refer to are about to get totally pissed off.

Elon does that. Did it with the Model S. You know the car that was only supposed to sell 20k per year and start at $52,500 for the S40? That sure has stopped the Model S dead in its tracks. It cant seem to manage over 40% market share in the large luxury sedan market. I hope the same ill effects do not befall the Model 3.

 

[Reciprocity]

I keep getting confused by the points on range...

so which is it?...

a) you don't need that much range because typical driving is done on commutes and charging can be done at home?

b) or you need Supercharging stations and long range?

the Chevy Bolt completely meets the "a" argument you guys have been making for years... and now you're saying it's not the clear choice because of range?... and the clear choice is a $9k upgrade?

you can't argue both A and B at the same time and keep flipping back and forth when it's convenient for you.

You cannot drive Bolt long ranges, period. No charging network. You could I guess drive 5 hours and stop for 10, then drive another 5. Its just not an option for bolt owners to go on long trips.

The bolt is not a luxury car and should not be compared to the Model 3. Maybe compare it to a Prius or a Nissan Leaf.

$9k for 90 miles of range is cheap, people were paying $10k for 10KWh or less then 30 miles of range for the S. If you give the market what it demands, you can charge a fair price and people will buy it. I dont see them selling many of the smaller batteries, maybe 10% in the US maybe 20% world wide.

 

[jhm]

The only things that happened today that matter to me are:

1). The car mag reviews. Not a single negative, and they are all lusting for the car.

2). The ASP is going to be much higher than I anticipated, giving me more confidence on their margins.

Everything else is chatter.

The stock price will continue to be volatile, but we are now only a few months away from confirmation that the ramp up of production is happening, and what the margin on the car will be given the ASP. That information, together with more glowing reviews, should be enough to attract serious money to this stock.

I think the car mag angle is worth considering. Over the years as Tesla presses for 1M sales per year for the Model 3, they are going to want a long stream of positive reviews. The car media as well want lots of new, exciting content to publish along the way. Tesla coverage can sell car mags. So the relationship between the two is quite mutual. Looked at over the span of years, we're off to a great start with a basic product. In time, Tesla can release new content: Dual motors, Performance version, range/battery upgrades, gains in autonomy, etc. So it is helpful to spread this out over the years. Right now Tesla needs to get a handle on high volume production. So it is good to hold back on demand drivers until they can actually be delivered at scale.

We need to think the long game. Model 3 needs to look like it just gets better year after year. This is ultimately what will win over late adopters. We need years of positive coverage.

 

[myusername]

You cannot drive Bolt long ranges, period. No charging network. You could I guess drive 5 hours and stop for 10, then drive another 5. Its just not an option for bolt owners to go on long trips.

The bolt is not a luxury car and should not be compared to the Model 3. Maybe compare it to a Prius or a Nissan Leaf.

$9k for 90 miles of range is cheap, people were paying $10k for 10KWh or less then 30 miles of range for the S. If you give the market what it demands, you can charge a fair price and people will buy it. I dont see them selling many of the smaller batteries, maybe 10% in the US maybe 20% world wide.

you have no idea the type of consumer Tesla was supposed to target with a $35k M3... they do not just drop $9k on extra range. the Tesla fanbase lives in a bubble and you are a prime example of it.

 

[Yonki]

Did they mention what the price penalty would be for buying AP / advanced AP after purchasing the car? A friend reasoned (via a Murphy's Law variation) that if we pay for self-driving now, it will never get released, but if we don't pay for it now, it will be a win/win (either we don't waste $3k or we end up spending $1k extra and have an effing SELF DRIVING CAR!).

 

[DurandalAI]

I think you will see that the $35k car is not what people want. Same thing happened with the S40. No one wanted it, they wanted bigger, better, farther and faster. We should know more soon but I would guess that less then 10% in the US want the base bare bones car. Maybe more world wide, but here in the US I would expect $45-50 ASP on the very low end.

Also as usual your assumption is wrong, model 3 info. Com has accumulated data on what people expect to pay and it was north of $49k almost everyone in the world and over $50k in the US.

Compared to the Bolt as an example, the base model 3 trumps the features of the Bolt when you consider autopilot safety features such as AEB, access to the supercharger network, styling, and the ability to upgrade to EAP and FSD if you so choose. (Increases residual value.) Anyone who seriously would consider a Bolt, would seriously consider a bare-bones Model 3. In fact, as my wife isn't too sure on the value of EAP, she probably would take a base model 3 and not want anything more. However, since we probably cannot get another Model 3 until 2019, the Model 3 would become our primary road trip vehicle when possible, so we would probably elect for the LR version. I want autopilot, but given that we can upgrade that at a later time, we probably will not purchase it at time of configuration unless it causes us to get our car earlier in the queue.

Since I had made a few WAGs on the forum, I will say I was wrong about a few of them. I anticipated that the base Model 3 would surpass the Bolt in range to enable bragging rights. I was wrong, and I was surprised. I anticipated that AEP and FSD prices would drop for the Model 3, and they were not. Maybe not until a demand lever needs to be pulled, I suppose. An alternative idea that I had speculated on was a subscription for AEP or FSD, which didn't happen. It looks like the only WAG on Model 3 I made that so far is still standing (for now) is that roughly 25-30k Model 3 vehicles will likely ship in 2017.

 

[anticitizen13.7]

you have no idea the type of consumer Tesla was supposed to target with a $35k M3... they do not just drop $9k on extra range. the Tesla fanbase lives in a bubble and you are a prime example of it.

This is just way off the mark. Anyone who is in the market for a BMW 3-Series, Audi A4, or Mercedes Benz C-Class knows that options cost money, and sometimes a lot of it.

Tesla isn't in the business of selling econoboxes.

 

[ggr]

Early Saturday morning, and the Tesla web site is extremely slow, but there... I think a LOT of people are looking at it.

 

[vgrinshpun]

Forget about Bolt. Model 3 is after BMW 3 series and the like. The task that GM was trying to accomplish with the compact Cadillacs for ages, never ever getting there. Tesla did it on the first try.

Mark my word: GM will have an egg all over their face with the Bolt. How many people will choose it over the Honda Fit at ***more than 2x the price***, and extra ***1000lbs*** of weight?

Model 3 undercuts BMW 3 Series on price, driving dynamics and technology.

Only people out of their minds or desperate to validate their bear thesis can possibly mention Bolt and Model 3 as competitors.

 

[myusername]

This is just way off the mark. Anyone who is in the market for a BMW 3-Series, Audi A4, or Mercedes Benz C-Class knows that options cost money, and sometimes a lot of it.

Tesla isn't in the business of selling econoboxes.

why not?... i thought the primary objective was to save the world... the more cars sold the better... or am I way off the mark on this too?

if Tesla completely replaces BMW with the M3... what do you think its market cap should be? 10X BMW?... right now it's 1X BMW... but they'll just keep growing, right?... that was the whole argument for for why TSLA trades at current auto company's value... because Tesla's sales will just keep growing right past BMW and beyond...

but wait... you just pinned the M3 in the 3 series market. so... when will Tesla justify that $1000 share price ($200b market cap) with 10m/year (Toyota sized sales)?

now is where you start talking about the Model Y, right?... and Tesla Energy, Solar Roofs, etc., right?

so, again, I guess I was off the mark on this one too... it turns out the Model 3 wasn't the product that would save the world and justify TSLA heading to $1T... I'm just supposed to keep believing.

man... i've had this all wrong.

 

[ValueAnalyst]

Please stop allowing perma-bears leverage TMC to spread their FUD.

Responding to FUD detracts from quality of the discussion, not add to our collective knowledge of the company.

 

[Matias]

EXACTLY... this is just fine for the luxury market where people have disposable cash... but it is NOT fine in the mass market Tesla was targeting...

Approximately 80 million cars are sold in the world in a year. If Tesla sells 800 000 a year, it is one percent market share. So I think it doesn't need to be on 5he mass market to sell 800 000 cars in a year.

 

[myusername]

Approximately 80 million cars are sold in the world in a year. If Tesla sells 800 000 a year, it is one percent market share. So I think it doesn't need to be on 5he mass market to sell 800 000 cars in a year.

if you think Tesla's target is 800k/yr... then you'd better dump all of your holdings in TSLA in minute one of premarket on Monday.

 

[austinEV]

The same Ars article says this:

Eventually, Musk said on Friday, Tesla wants to put out 500,000 Model 3s a year, although he predicted about 50,000 Model 3s will hit the streets next year. At the factory on Friday evening, the first 30 vehicles were delivered to Tesla employees. Deliveries will be made slowly over the next year, starting with customers that already own Model S or X vehicles.

If true, very disappointing.

Well relax because that isn't true. The article you reference has clearly made an error. The S curve diagram shown has a target of 5k/week so unless next year is 10 weeks they botched the quote. He may have been saying 50k for 2017 or 500k for a future year.

I'd be very very surprised if reservation count isn't ~550k+ already. The unofficial Model 3 reservation counter is also showing nearly 550k. I suspect Elon is sandbagging with 500k. Frankly, we want people to continue to buy Model S and Model X, anyway, until Model 3 production rate reaches 10k/week.

Search data for "Order Model 3," although not conclusive, shows consistency throughout 2017, corroborating Elon's "rising week by week" comment, and a surge around when P1 pics were relesed. I'm sure last night's event also caused another surge (we'll see the search data for that by tomorrow).

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On the reservation number: I bet the net number is high (reservations - cancellations) and I also bet the turnover is high. Like to pick an example, they have had 2M reservations and 1.5M cancellations or something. And after the event, they turnover might be nearly 100% again as new people pile in for reservations and others give up due to controversial design choices and/or pricing. The list might just need to sort itself out now to hold people who want *this* car at *this* price whereas before it had a lot of speculative reservation holders. All this is fine and healthy and I wouldn't show a tally either. People would data mine it to death. Any time there was a week-on-week decline the press would lose its mind with articles.