Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[InDaClub]

Elon lost all credibility

Nope, wrong again.

 

[SOULPEDL]

Tesla insurance rate will be based on the risk involved in the driving behaviour of the driver (which Tesla can monitor). That's a biggie.

Oh no...

 

[Cherry Wine]

no big SP move, IV goes down, options premiums goes down, pretty good for those that sold options

It's why I like to hedge with covered calls as opposed to puts (although I use some of those too).

 

[dc_h]

In retrospect, but M3 lines should have been designed for both M3 and MY ...

Since they moved final assembly to the tent, part of the original automated line space should be available for something else, since they still seem to be doing final assembly in the tent. It wasn't clear if the Model S&X lines were optimized with the changes as well. They updated the line to support the new motors. Did they run them on the same line, or a separate line?
They should also have added room with moving motor production to Sparks and out of Fremont. I thought that took up a lot of the second floor.

 

[neroden]

If they give guidance for Q2 S/X sales that is essentially back to normal, then we know the Q1 was a deliberate hold up, not really demand.

They did. Though they said production wouldn't really be fully back to normal until Q3 (apparently with the retooling there's some ramp-up time)

 

[Doggydogworld]

It's actually easier to maximize deliveries in a continuous delivery model,...

​

Absolutely. But there's a one-time hit in the quarter you do it because EOQ cars in transit resets to a new level. There were zero cars on boats on 3/31. If they stick to their guns, there will be 10k+ on boats on 6/30. The problem with eliminating the wave is for one quarter you take a hit in deliveries and revenue. It has a smaller, but still meaningful effect on profit. And you show lower EOQ cash for all succeeding quarters (intra-quarter cash will be higher, though).

The wave thing was always grossly inefficient. It was just pure optics. They've promised to stop doing it for a year now. Maybe this will be the quarter they finally put the crack pipe down for good. We'll see.​

 

[bdy0627]

I think we are speaking too soon.

Expect tomorrow morning to have a full on attack and as much fire as they can fund.

I wouldn't expect anything less. It will be very interesting to see how much of a dip they can cause tomorrow. Will longs who got on the sideline want back in right away? We'll see but I'm not really sure why they would be in a hurry.

 

[Remus]

love this. Elon giving political correct answer to all boneheaded questions, I am almost hear the slap on the face.

 

[neroden]

Let's try a little first-principles thinking.

For starters:

• What thrilled me about watching the FSD webcast yesterday was the discovery that there are teams within Tesla that are obsessed with learning and good uninterrupted communications -- hooray!
• Elon is deeply involved with these teams -- excellent!
  
• The essence of Neural Nets is learning, based on massive ingests of data which is then fine-tuned and tweaked.
• These teams have brilliantly seeded nearly the entire multi-hundred-thousand-car Tesla fleet with the ability to tell the mothership what's going on out on the road -- massive competitive advantage.
  
• Tesla's FSD/AI teams obsess over the fleet sending back data on driver interventions, which arguably are failures of the car to do something right on its own while in autonomous mode
  
• By having teams of annotators who go in, study the videos of what the car was doing when a driver intervened, and essentially teach the neural net how to do it right on its own, the NN learns, you avoid those types of interventions in the future
  
• The result is a smarter, SAFER self-driving car, arguably leaps and bounds above any competitor for years to come

Okay, now imagine if Tesla approached its currently-so-so Company/Customer Communications (CCC) with the same level of obsession and passion.

Want. Want want want want want!!!!!

Imagine if Tesla realized that:

• Every http request on the Tesla website is a customer intervention.
  
• Every tap of a button in the Tesla app is a customer intervention.
• Every visit to a store is a customer intervention.
  
• Every order by a customer is a customer intervention.
• Every email, phone call, text, etc. from a customer to an order specialist is a customer intervention.
• Every call to the trucker asking when the car will be delivered is a customer intervention.
• Every call to Tesla Roadside Service is a customer intervention.
  
• Every repair situation is a customer intervention.
• Every time a customer calls a service center to find out the status of their car: it's a customer intervention.
  
• Every inquiry from a customer, from email, phone, text, in-person, whatever, all day long, 24/7/365: it's a customer intervention.
• Every time a customer hangs up in frustration after being on hold for 30, 60, 90 minutes and not getting anywhere, it's a customer intervention.
  
• Every time you try the VIP/executive "escalation" feature to get a response from Tesla, it's a customer intervention.
  
• Every customer intervention is just as important, just as valuable (arguably moreso) than a driver intervention.

Now think about Tesla's corporate culture as just another neural net. One that right now is very dumb and running on the equivalent of a Pentium chip from 1994 with 16MB RAM.

If you consider all the times a customer attempts to "intervene" with Tesla, especially when Tesla's been nonresponsive/noncommunicative, you realize how effed up the company still is from the customer experience perspective. Sure, lots of you out there have great, satisfied experiences. I get it. Especially if you live in California. Lots of other places, not so much. Some are downright horrible experiences.

Compare the standardized homogeneity of the FSD universe in Tesla cars with the heterogeneity of Tesla's corporate culture in terms of CCC. Compare what Tesla can and will achieve with the exact same constantly-improving neural net downloaded into its entire fleet of cars, with the random/uneven experiences customers have with Tesla company interactions around the country/world. Everything in the latter case depends on the initiative/dedication/training/attitude/skills of the individual Tesla person you interact with. Get a good one, great. Get a so-so one, awful. (Imagine if some Tesla cars were just stupid and never "learned". Imagine if the fleet had tons of such cars in it.) Problem is, in the customer experience world, you deal with multiple Tesla employees. Customer issues are handed off to multiple people. Maybe the first one you deal with is great. Next one you're handed off to, not so great. One after that, great. Then you're assigned a total dud. And the dud is the most important one in the chain, and you never get an email reply or phone call reply from them. Ever. (That's my general experience.) Poorly managed expectations. Frustrated, exasperated customers. Fail.

Imagine in FSD division of the company, they discovered the driver intervention-count stayed high, perpetually. Elon would freak out, wonder WTF they were doing wrong, maybe heads would roll. But imagine what the customer intervention count is with Tesla every day. Who's minding that count, Elon? Who's obsessing about getting it to zero? Or think of it this way, where is the "March of Nines" for customer experience? How do we get to 99.9999999% blissful customer experiences?

So, let's fix this puppy. Imagine applying some first-principle thinking Elon-style to CCC.

• Imagine every single Tesla owner, every one, including every would-be/wannabe future owner, those who are thinking about buying: they're all part of *the Tesla market*.
  
• Think of the Tesla Market as just another fleet.
  
• Tesla, you own this fleet too. But you're not doing much with it right now. Not efficiently anyway. Show it some love.
  
• Imagine every time there is a customer intervention, Tesla studies it just as obsessively as FSD driver interventions.
  
• Imagine every time there is a customer intervention, someone on this CCC "annotation team" studies why the customer intervened, and figures out how the company can avoid doing whatever it did that let to poorly managed expectations, unresponsiveness, 60+ minute on-hold experiences on the phone, etc., in the future, and feeds that back into the company DNA -- which one should think of as just another neural net, that is desperately eager to learn but is being starved of data.
  
• Imagine how many customer interventions happen every day.
• Imagine all the "annotations" Tesla would be faced with if they obsessed over them. Every day. It'd be a lot.
• But over time the onslaught would drop fast--why, I would bet exponentially.
  
• Imagine how fast they could cut down on the failures that triggered a customer intervention in the first place.
• The Tesla corporate culture "neural net" needs training now how to improve, by new management practices, standards of accountability, and new technologies and business practices installed wherever they're needed most, to streamline/improve communications and responsiveness and overall customer experience.
  
• The lack of accountability and the mismanaged expectations are what are triggering so much frustration on the customer side. Consider customer frustration or disappointment no different than a car operating under FSD having an accident.

There is a way to FIX the CCC problem at Tesla. So that the owner experience is as good, as brilliant, as game-changing, and as far out in the lead as the technology, the cars, and the software. THAT is what Tesla SHOULD BE. Tesla as a brand should mean EVERYTHING--products, ordering, service, app, the whole lifecycle of a customer, is way beyond every other automaker. You would have loyalty like you would not believe. Tesla's CCC experience is holding the company back from achieving this.

C'mon Tesla. You have to fix this. You have no choice. If you're betting the farm on a robotaxi future, face the reality: you have no robotaxi future if the customer experience of the robotaxi service sucks. And if you do nothing in the next 12-18 months, and launch the Tesla Network with today's CCC, the robotaxi service will suck, from a car-owner perspective and a passenger pespective. And you lose. We all lose.

Like Elon said yesterday about LIDAR: "Lame. Lame."

Don't be lame, Tesla.

 

[ZsoZso]

There is a problem guys...

Looks like the SEC has broken Elon!

He kept saying he doesn't have a crystal ball!
When did he lose it ???
He used to be relying on it very heavily (even though it never worked...)

 

[Troy]

I think Tesla wants to discontinue the cheaper Model 3s and use that production capacity for Model Y as soon as possible. Therefore they are considering Fremont instead of Gigafactory because it would move Model Y production sooner than the original end-of-2020 plan.

Imagine these four trim levels and their gross margins. This would be excellent:

• Model 3 Long Range AWD
• Model 3 Performance
• Model Y Long Range AWD
• Model Y Performance

I mentioned Fremont as a possibility a few weeks ago:

Because the production capacity at Fremont is now under-utilized and S/X production lines are not very efficient anyway, this increases the chances of Model Y production at Fremont

The only problem is, Model Y design is too close to Model 3. They should make the Model Y more SUV-like with a roof-line that extends more towards the trunk. The third-row seats would have more space then too.

 

[Skryll]

Also note how this effectively raises capital from owners: every 100,000 insured cars with a $200 per month insurance premium generates a cash inflow of $60m per quarter, $240m per year.

The cash outflow is delayed, and Tesla Insurance will be holding significant amounts of capital it can invest

Regular insurance companies invest in securities and gain market rate returns.

Tesla Insurance will invest in Tesla, obviously.

Share buy back program financed by tesla insurance contributions

 

[Remus]

Very impressed by the stock price holding up so well. This is what all the shorts were waiting for. They might get frustrated now.

Now it’s just for Tesla to keep improving production and keep delivering on full self driving. Then demand will pick up.

(Yes, I think they are downplaying the demand problem. It’s not a gigantic problem, but I think they are struggling a bit to get demand for the price points they want at the moment.)

sorry not mean to rain on your parade but there will be downgrades with co-ordinated short attack.

 

[MarcusMaximus]

Nope, wrong again.

This is the flip side of what the shorts/media have been doing. Sure, they managed to suppress the SP pretty effectively, but it also means that actual bad news has to be really bad to drive it down any further. As bad as this last quarter was, the constant screeching by shorts, CNBC, Bloomberg, Business Insider, et al made a whole lot of people think that Tesla was on the verge of collapse. With the $920 million in debt paid off and $2.2b in cash, there's essentially 0 threat of that happening anytime soon.

 

[Zhelko Dimic]

Frankly, this could be a big thing. They KNOW how you drive, they know WHERE and WHEN you drive. They KNOW where the car is at all times. They could probably tie this into the REPAIRS side of the business. So, it could be an opportunity to deliver something much better than in the marketplace and/or take some of that profit away from insurance co’s.

Ultimately, I’d like to see some creative features like TURN OFF TURN ON pricing and options. They will know if the car is active or not, and can re-enable on demand. At that point, it’s only having insurance exactly when you need it.

I agree with a lot of what you're saying, but ON/OFF won't happen if they have brains. That's like restaurant charging you per every bite, it interferes with your enjoyment of driving, I mean meal One becomes cost conscious beyond norm for no reason other than such metered use.

This based on research that company I worked for did when launching mobile service in US, and considering billing by the minute. Product/Psychology research showed that it's less stressful for consumer to have buckets of use, and our improvement to it was that there was hidden grace usage limit (5%) where you don't get overcharged if you cross bucket for greater of 1. 5% or 2. hard limit for small packages, 100Mb or something. This kind of policy delights the customer. While I'm not there anymore, company is still doing it rather successfully AFAIK, ting.com. While niche player, customers were fanatical in loving the product, NPS of 75+, something like it.

 

[BioSehnsucht]

Am I understanding this right?

GAAP operating loss $522M, GAAP net loss $702M

Paid off $920M convertible note.

So would that mean that if there hadn't been a huge debt repayment, they would have been at GAAP operating profit of $398M / GAAP net profit $218M ? If so, then the company is essentially profitable already even on a "bad" quarter, it just has to finish paying off any debts to be free and clear going forward...

 

[powertoold]

I found it very interesting that Elon just mentioned, not as an answer to any question, that they ordered the tooling for Model Y already....

 

[KSilver2000]

tesla insurance ... autopilot turns into suervisor that sees everything you do and knows what you did.
whp would openly oppose that ?

Since you say it that way, it does seem like it could be having a micromanager looking over your shoulder and recording everything you do. Then having a premium discount carrot dangling in front of you to make sure you drive calmly and steadily at all times. Once they can track your face with an inside camera, they’ll jack up the rates if you get caught looking down at your phone or grabbing something to drink. They may even use the steering feedback to see how often you’ve had your hands ready on the steering wheel.
I forget the exact words Elon used, but he did say something along the lines of “rates will be competitive or advantageous as long as you drive safely.”

I bought ours with Ludicrous mode.

 

[neroden]

OT

@neroden why did you disagree with this? They actually did say that.

Fat fingers

 

[Remus]

It would drive down deliveries but not production. They could deliver 500 million cars this quarter and it would still be a loss if they're producing 600 million.

got it! increased inventory/transit together with lowered margin.