2017 Investor Roundtable:General Discussion

[Intl Professor]

You might want to back out Ford Credit's debt and then reassess which company's balance sheet is stronger. Ford Credit finances car purchases, earning arbitrage profits between its borrowing rate and the rate they charge the car purchasers. Tesla has no equivalent financing profit center. Tesla Finance only leases vehicles and guarantees the residual values to the Warehouse Lenders who are assigned the security interest in the vehicles. The problem is Tesla has to title the car initially, and adds the Federal Income Tax credit back on top of the projected market (residual) value of the car at the end of the lease term in order to make the monthly lease payments attractive/comparable to "banking affiliate" and/or true 3rd party leases. The banking affiliates and 3rd party lessors can use the credits because they are profitable and pay income tax. Tesla gets no benefit from the tax credit since it has billions of tax losses to carry forward (for the next several decades). This practice (along with the rate of obsolescence in EV auto technology) virtually assures the lessees will not retain the vehicle by buying the car for the lease's termination value at the end of the lease term because it will be about $7,500 over the true market value. The Warehouse Lenders are not in the used car business so they dump the returned vehicles back to Tesla. Check the quantitative data in the MD&A section of the 10Q's to see how much Tesla is losing at the gross profit level on "pre-owned" cars.

Similarly, Tesla has no capability to extract profits from non-Tesla vehicle trade-ins. It might not have been that big of a value leak when selling $100k+ vehicles to wealthy individuals with garages full of cars, but IMO buyers of the M3 will not be that cavalier about how much they get for trading-in (or wholesaling) their prior ride.

With all due respect (don't you just hate that phony, condescending expression?) your expectation that the capital funding spigot is open for the next five years regardless of whether Tesla can deliver the M3 in volume, profitably, amounts to hopium. In any event, I will adjust my positions dynamically tomorrow based on the information disclosed; I suspect many here won't but that's what makes a market

PS. If there is indeed a recession, owners of over-valued, profitless enterprises will be take to the woodshed.

I'm not that sophisticated. Read somewhere an analysis Ford has a lot of debt, probably because they survived by borrowing a hell of a lot before our recent market crash so they didn't have to be bailed out by the government like Chrysler and GM. You're right about the hopium. We shall see although I can't count on living five more years, hope you have many, many multiples more than that.

 

[larmor]

When ER looms, true sentiment is revealed.
Wish the stock price was as predictable.

If the market was waiting for execution on M3, now would be the time to act, as the market believes panasonic, and will now buy into the tesla large market ev story.

 

[Intl Professor]

Can't say I've ever been scared. Curious, excited, even confused at times, but not scared.

It's not so scary, but my most unpleasant experience is when my wife puts me in the freezer when she gets really mad. Seems to happen less frequently when she realizes on cold nights she really likes to have a warm pillow to hug. I suffer such elder abuse.

 

[Yggdrasill]

One just can't make this stuff up:

6% in 2040... They need to fire their analysts.

 

[Cobos]

6% in 2040... They need to fire their analysts.

Yes especially since China is setting a minimum target of 12% EV in 2019 wasn't it? Most of Europe will have forbidden any sale of diesel og petrol cars by then. Now I know, they just read the graph upside down. They probably means 6% ICE in 2040.

Cobos

 

[vgrinshpun]

6% in 2040... They need to fire their analysts.

I am ok with Exxon keeping them a little longer...

 

[vgrinshpun]

Yes especially since China is setting a minimum target of 12% EV in 2019 wasn't it? Most of Europe will have forbidden any sale of diesel og petrol cars by then. Now I know, they just read the graph upside down. They probably means 6% ICE in 2040.

Cobos

 

[sweter]

If the market was waiting for execution on M3, now would be the time to act, as the market believes panasonic, and will now buy into the tesla large market ev story.

I don't know. I don't like that Panasonic said "the production will soon be automated". How soon is soon? Why wasn't it automated yet? They had plenty of time since the announcement of 2170 to do this. Is "soon" next week or in 2 weeks or this month? Does it mean the ramp doesn't happen until the batteries mature and we won't see too many Model 3's delivered in November either?

So I'm holding my breath while waiting for more buying opportunity between tonight and the 15th

 

[aubreymcfato]

At the end of the month, we now know that in Norway October was the second best "non-end-of the-quarter" month in a year:
294

October 2016 was 125.

 

[avoigt]

Europe September EV Registrations:

#1 Tesla MS
#2 Renault Zoe
#3 Tesla MX

Quite impressive looking at the price and buyer segment Tesla is in versus VW,BMW,Renault and Nissan. Just imagine what will happen once M3 shows up....

 

[Buddyroe]

EM sure has been very quiet on social media lately.

Anyone care to guess if that's good or bad?

 

[Paracelsus]

Nice article on the benefits of all-electric buildings:

Designing the Tesla building

 

[Mkorpal]

EM sure has been very quiet on social media lately.

Anyone care to guess if that's good or bad?

Elon's social media presence should never be used to predict the inner workings of Tesla.

 

[Buddyroe]

Elon's social media presence should never be used to predict the inner workings of Tesla.

There is always someone out there that has to state the obvious.

The question was really meant as a light conversation piece on a slow day - not really anything that someone would go make an investment decision on. At least I hope no one would.

 

[Waiting4M3]

Europe September EV Registrations:

#1 Tesla MS
#2 Renault Zoe
#3 Tesla MX

Quite impressive looking at the price and buyer segment Tesla is in versus VW,BMW,Renault and Nissan. Just imagine what will happen once M3 shows up....

or after MS revamp

 

[Waiting4M3]

EM sure has been very quiet on social media lately.

Anyone care to guess if that's good or bad?

In general, the less twitter activity by everyone, the better off we're as a whole, on a country, society, global level.

 

[Mkorpal]

There is always someone out there that has to state the obvious.

The question was really meant as a light conversation piece on a slow day - not really anything that someone would go make an investment decision on. At least I hope no one would.

Unfortunately, I suspect there are some who do.

 

[DurandalAI]

I absolutely could see him passing up the best site when the state in question has been as scummy as Michigan... Have to take into account relative "best-ness" of a site. Some site in WI or another state isn't likely to be so much worse than Durand, MI that they'd consider sinking billions into a state that still won't let them sell a car...

I agree, MI is an uphill battle. From the time I spent there, talking to people about Michigoners, which are people who left MI for better opportunities elsewhere due to job stagnation and other reasons. Crony capitalism politicians and just generally corrupt politicians are par for the course, just look at Detroit’s mayoral history for a great primer. Speaking of Detroit, a city with an income tax since so many people who worked there didn’t live there to buy things or pay property taxes. What a racket.

 

[DurandalAI]

Yes especially since China is setting a minimum target of 12% EV in 2019 wasn't it? Most of Europe will have forbidden any sale of diesel og petrol cars by then. Now I know, they just read the graph upside down. They probably means 6% ICE in 2040.

Cobos

Also seeing that one of their largest competitors, Shell, has purchased the NewMotion EV charging networks and has been deploying charging stations at their gas stations, I think Exxon fully has their head in the tar sands. They’ll come around in 5 years when we pass that 6% level in 2022, if not earlier. Even PHEVs will put a huge dent in FF demand.

 

[Paracelsus]

In general, the less twitter activity by everyone, the better off we're as a whole, on a country, society, global level.

While I agree that it could certainly be used more responsibly - particularly by leadership, I also believe that it represents a tremendous tool for sharing information in real-time. That is ultimately what led to the Arab Spring...........and that was a good thing IMO. My bigger concern of Twitter is the campaign of 'socially conditioning' by media and politicians to discount everything we might hear through real-time information sources unless they verify it first for us. And too much of that social conditioning in the form of repetitive messages from privately owned & privately funded news sources has stuck. Are they concerned that the US Spring is next? Are their donors afraid we might really take action on Climate Change instead of just create debates around it while the existing paradigm continued to frack-away? Would Tesla even have a fingerprint in the South Australian transformation of fossil fuels to renewable energy and storage if it weren't for Michael Cannon-Brookes and Elon's famous Twitter exchange. Not a chance IMO. Would the world know that Puerto Rico and the VI's were more interested in a renewable distributed grid than Whitefish Energy and fossil fuels without Twitter? Doubtful. The opportunity to spread unrestrained socially and environmentally responsible concepts in real time is a significant and necessary force in disrupting the existing paradigm, as Elon's 14,100,000 Twitter followers would suggest. I agree the content of Social Media needs to be elevated, but I do not like the idea of limiting any source that allows citizens to share information in real time.

“To learn who rules over you, simply find out who you are not allowed to criticize.” - Voltaire