2017 Investor Roundtable:General Discussion

[Krugerrand]

First principles: customers who have a great experience with a product (in the auto world, style, performance, reliability, total owning cost, etc) buy them again. Honda and Toyota have done pretty well by this. Customers (other than early adopters and enthusiasts) who don't have a great experence will look elsewhere.
Robin

Don't be disingenuous. This isn't an all or nothing game. Customers who love and adore a product will buy it again or another from the same company even if that product has a flaw or they've had a bad experience. Honda and Toyota aren't immune to issues and plenty of people were quite happy with their Priuses (or is it Priui?), but are driving Tesla's now and are even happier.

We know Tesla has made mistakes. They've also fixed them in a lot of cases. We know that customers LOVE their Teslas and most would buy one again despite growing pains, mistakes and the like because they've said so.

 

[dc_h]

There are press lines in GF1?

Freemont, but GF2 is planned on being an integrated battery and auto mfg site.

 

[Krugerrand]

Freemont, but GF2 is planned on being an integrated battery and auto mfg site.

Ah, I see where you're going with that. At that point in time, they'll build another set. They won't do it now. Not cost effective and they simply don't have the extra time if we all want our cars on time.

 

[dc_h]

Ah, I see where you're going with that. At that point in time, they'll build another set. They won't do it now. Not cost effective and they simply don't have the extra time if we all want our cars on time.

We'll see--not soon enough for most of us. GF2 will need to be announced by end of 2017, perhaps at the same time as the Model Y.

 

[Crowded Mind]

After a tour of gigafactory, Whitney Tilson decides Elon and J.B. are the real deal and would never bet against them again.

Whitney Tilson Was THIS Close To Shorting Tesla .... Again - ValueWalk

Good article, first half at least, thanks. I don't often spend waste time reading bear theses anymore, but holy sugar, these "thoughts from a friend" are insane.

Here are my favorites.

- The quality of his products have yet to be proven (fires, autopilot failure, etc.). The man is hurting people in my opinion by essentially beta testing his products (autopilot) using the public. I find this absolutely criminal and am shocked no regulator has done anything about this. There are several videos which show how poor autopilot is. Also a test drive car caught fire this year and looking at the forums there are a ton of issues with brand new Tesla cars.

- As I was driving today, I remembered something Pat Dorsey from Morningstar said. “Perceived product differentiation” vs “Real product differentiation” and at this point in time, I think that suits Tesla well. (Similar to Tiffany and Abercrombie). How long that last will be an important factor.

- The Tesla Model 3 will be a good car. However, it won’t make Tesla a penny of net profit in any year for the company as a whole. Ever. Why? Because laws force the other automakers to produce far more electric cars than for which there is demand. What does that mean? That they will have to sell them at a loss.

Friend #2 is also hilarious.

2) Another friend’s comments:
I read your piece about Tesla following the visit to the Northern Nevada Gigafactory.
The main fallacy in this pro-Tesla case is by way of this analogy: Two companies sue each other for some breach-of-contract issue. One company sues, and the other company counter-sues.

...snip...

PS – I would be wary of analogies with Amazon, Netflix and SpaceX. Analogies don’t rule, especially if there is a fundamental flaw in the analogy.

 

[larmor]

Did you catch this disclaimer in the P100DL+

"I want my mommy" vs. "Bring it on"
This may be a harbinger for what tesla is planning on disrupting, and for those who don't get it, press the blue button.

Kudos for posting the q&A on the GF tour. Again the slides in the pictures are all about manufacturing-- so they get it. Just like the slides for MX debut was all about crash worthiness.

 

[AcesDealt]

Seems are buddies in Australia and Canada have enough.

And possibly new friends in Cuba have some too.

Sounds like you are trying to dismiss the cobalt question by referring to reserves. It's more complicated than that.

 

[AcesDealt]

Friend #2 is also hilarious.

I liked when Friend #2 warned about the danger of analogies by using an analogy to an analogy.

 

[racer26]

Don't be disingenuous. This isn't an all or nothing game. Customers who love and adore a product will buy it again or another from the same company even if that product has a flaw or they've had a bad experience. Honda and Toyota aren't immune to issues and plenty of people were quite happy with their Priuses (or is it Priui?), but are driving Tesla's now and are even happier.

We know Tesla has made mistakes. They've also fixed them in a lot of cases. We know that customers LOVE their Teslas and most would buy one again despite growing pains, mistakes and the like because they've said so.

Every company makes mistakes - its how they stand behind their product to make it right that counts.

How many people aren't buying a particular make of car again because of Takata air bags?

 

[AcesDealt]

Nothing makes me more angry than an unreliable car. I travelled last year internationally so I sold my '03 V8 4runner which I had PROBLEM FREE for 8 years for a paltry amount because it was 2WD in a 4WD state. I should have kept it in a garage. When I got back to the states and decided to try something different and went with the seemingly popular 2013 Subaru Outback. The thing sucks ballz. The engine sounds like a diesel from the 70s and burns 1 qt of oil every 5,000 miles. The backup camera goes out whenever there is foul weather. The nav system takes a random interval of 2 to 5 seconds to zoom out one step on the map and is generally pointless. I can't really use any of the features of the bluetooth system because it's powered by a pentium ii equivalent. Also I'm told it's a car for lesbians which is only half right in my case. I've got a 250hp H6 engine but it's vastly inferior to the '93 Nissan Maxima V6 I had at one point in both mpg, responsiveness, and acceleration. These people deserve to lose and Subaru is a well performing company?!

This rant is really about the forest through the trees. Tesla is running in a market of inept morons. No one should forget that when they criticize missteps. The bar is low.

 

[GBleck]

I liked when Friend #2 warned about the danger of analogies by using an analogy to an analogy.

That was my favorite part also.

One of the bear arguments was about all the other battery manufacturing plants coming on line. Samsung SDI and LG chem do have new plants in dev in Europe but I don't recall the scale be scary. Still might invest in Samsung his year though if the price was depressed by the note fire sale. Nope all time high now.

 

[Turing]

After a tour of gigafactory, Whitney Tilson decides Elon and J.B. are the real deal and would never bet against them again.

Whitney Tilson Was THIS Close To Shorting Tesla .... Again - ValueWalk

For what it is worth, calling out Musk for being late is getting old. It is a silly / easy excessive. OF COURSE he will be late. He has a LONG history of being late. EVERYONE doing anything ambitious is always late. Even the Apple earbuds were A LOT late when the company only makes a few products and even when it is a relatively simple product and even when they announced a date that was only a short time on the horizon.

Good point.

 

[Yggdrasill]

Interesting article. I think one of the biggest mistakes the shorts do is underestimate the "EV market". They look at how many have been sold in 2016, assume that is indicative of where the limits are, and make estimates for the future.

What they should be doing is assuming that in 20 years, 60-100 million EVs will be sold per year. That shifts the perspective from "How will Tesla be able to hold on to market share?" to "How fast can the competition scale up EV production to the extent that it would affect Tesla?"

And answer to the latter question is, we're talking about many years. I think that we will see the first Tesla competitor in 2018, and my money is on this car being the Jaguar I-Pace. But having a competing product on the market isn't the same as producing it in sufficient scale to affect Tesla. I don't know exactly how many cars Jaguar intends to produce, but probably not enough. Not many tens of thousands.

 

[Cobbler]

My Google agenda reported that Q4 2016 financial results would be published yesterday. Has this been rescheduled?

 

[mrdoubleb]

My Google agenda reported that Q4 2016 financial results would be published yesterday. Has this been rescheduled?

Tesla usually publishes quarterly results during the first (or maybe second) week of the second month in the next quarter. So expect this to happen on the week of February 6th, maybe a week earlier if we are lucky.

 

[schonelucht]

For what it is worth, calling out Musk for being late is getting old. It is a silly / easy excessive. OF COURSE he will be late. He has a LONG history of being late. EVERYONE doing anything ambitious is always late. Even the Apple earbuds were A LOT late when the company only makes a few products and even when it is a relatively simple product and even when they announced a date that was only a short time on the horizon.

Good point.

Is the Model 3 going to be late or isn't it ambitious?

 

[GoTslaGo]

My Google agenda reported that Q4 2016 financial results would be published yesterday. Has this been rescheduled?

Tesla usually publishes quarterly results during the first (or maybe second) week of the second month in the next quarter. So expect this to happen on the week of February 6th, maybe a week earlier if we are lucky.

Nasdaq agrees with @mrdoubleb

Tesla Motors, Inc. (TSLA) Earnings Report

 

[Turing]

Is the Model 3 going to be late or isn't it ambitious?

Will probably be a bit behind Musk's ambitious goals but not a year late like Wallstreet is assuming.

 

[NicoV]

After a tour of gigafactory, Whitney Tilson decides Elon and J.B. are the real deal and would never bet against them again.

Whitney Tilson Was THIS Close To Shorting Tesla .... Again - ValueWalk

Beautifull! We may have to introduce a new term for this reasoning: FOSO (Fear Of Shorting Out)

 

[mmd]

..so I sold my '03 V8 4runner which I had PROBLEM FREE for 8 years for a paltry amount because it was 2WD in a 4WD state. I should have kept it in a garage. When I got back to the states and decided to try something different and went with the seemingly popular 2013 Subaru Outback.
..
This rant is really about the forest through the trees. Tesla is running in a market of inept morons. No one should forget that when they criticize missteps. The bar is low.

If you want Tesla to be the Toyota of tomorrow, the bar is quite high. If you just want it to be a Subaru, the bar is low and so should be its valuation.
Missteps happen, but they aren't free. Made a mistake? Pay for it and learn the lesson. That's how it works.

.. "How will Tesla be able to hold on to market share?" to "How fast can the competition scale up EV production to the extent that it would affect Tesla?"

And answer to the latter question is, we're talking about many years. I think that we will see the first Tesla competitor in 2018, and my money is on this car being the Jaguar I-Pace. But having a competing product on the market isn't the same as producing it in sufficient scale to affect Tesla. I don't know exactly how many cars Jaguar intends to produce, but probably not enough. Not many tens of thousands.

This is a really funny comment. What's your definition of Tesla competitor? A sedan in the price range of $68k to $150k, fully electric, that sits 5 and has 208 miles to 300 mile range?
So, you agree that Tesla's EV/PHEV market share in your country evaporated even without any competitor? If that is true, Tesla must be doing something very wrong in Norway. This, with all the incentives an EVangelist can dream of.

Tesla's share of Norwegian EV market:
2014 20% 4040 total
2015 12% 4039 total
2016 6% (till Nov) 2793(1788 MS + 1005 MX) (Yes, this is S + X!)
EV Sales: Norway November 2016

BTW, some shorts might have exited after GF tour, feeling the same way as Tilson. Tilsom seems to have drunk somehting on the tour, and sent out an email to all his short buddies
Explains the high short volume shown on shortanalytics.com (~60%). Still don't know why they show total volume as half of daily volume, or what data they are actually showing.

Short interest also declined on Dec 30 by a million.