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

[mongo]

Is it possible, he never plans to make the $35k Model 3 in USA ?
Maybe all cheap versions will be built in China (GF3) for WW consumption ...

No, US and Europe will produce low cost 3 locally per this tweet:

Shanghai Giga output is just for greater China, not North America. Affordable cars must be made on same continent as customers.

 

[jhm]

Note what Elon says in this panel.
View attachment 366909

"higher cost versions of Model 3/Y will still be built in US for WW market, incl China."

It may mean they will be reducing the costs for 3's built in China by limiting options and other cost savings..
IE MASS production on a scale we have not seen yet.

This is helpful. Seems it will take a while to ramp up capabilities in China. So focusing on low complexity, high throughput manufacturing makes sense at first. It this plants proves itself highly capable, then there remain opportunities to expand beyond base products. This may be Musk's way to motivate the new manufacturing. My outlook is that the Shanghai team will work very hard to prove that they are worth to build the higher end products as well.

 

[HG Wells]

Is it possible, he never plans to make the $35k Model 3 in USA ?
Maybe all cheap versions will be built in China (GF3) for WW consumption ...

Not for US.
Possible for region. IE Australia, New Zealand etc

But China will take the first few years of production.
It's a BIG market with a LOT of incentives.

 

[Fact Checking]

This is helpful. Seems it will take a while to ramp up capabilities in China. So focusing on low complexity, high throughput manufacturing makes sense at first.

Also, announcing it now makes sure future GF3 output won't hurt current sales of Model 3 Performance in China.

BMW does it similarly: the highest performance versions are all made in Germany. (Well, a lot of them are assembled in Austria technically, but you get the point: premium performance versions have a single, well-maintained global brand image.)

 

[Fact Checking]

Premarket has dropped nearly 1% in the past half hour; we're only 1% up now. Any clue why? No macro changes.

Not that premarket is super-meaningful, but it's not worthless data either...

It was macro IMHO: AAPL pulled back similarly, then rose again.

 

[lklundin]

So a US program called "60 minutes" did a segment on a breakthrough project to solve climate change that has been in the works quietly for 25 years or so involving a breakthrough method of extracting sugars from plant cellulose much more effectively. Potential replacement for coal and fossil fuels as it develops. Bunch of MIT PhDs on the board.

Easy transition for cleaner ICE vehicles but an unknown scale-up timeline. Probably get some wall street discussion as to impact on stocks related to climate change solutions.

Well, to extract sugers and anything else from plant cellulose you first have to get plants - and they rely on photosynthesis to grow.

Photosynthesis has an efficiency of about 1%, so for anything energy related solar panels are much more efficient.

 

[lklundin]

It takes quite some time to install a battery production factory, with lots of specialized machinery that has long lead times.

Likewise a full car factory takes time as well: stamps, molding machines, paint shops, lines with hundreds of robots - Grohmann programs/automates them but doesn't make the robots AFAIK. All of that takes time.

So I'd expect battery packs to come from the U.S. initially - maybe even full body-in-white chassis with final assembly in the Shanghai Gigafactory.

Even that partial level of assembly would allow Tesla to avoid the 25% import tariff and shorten the logistics chains though - and every incremental step of bringing more and more GF3 equipment online would improve the economics of it.

That sounds like how GF1 managed to get production started so quickly, by making battery packs (for stationary storage) from already finished cells.

 

[lklundin]

I just did. Waste of time, to put it bluntly.
To answer your other question- it was done probably at the beginning of 2018. There was a slide showing 2017 data and TSLA related numbers didn't have Model 3 share in them.

They are long Hyundai, so there is that.

Oct. 2017:

Antipodes Partners: Why we’re shorting Tesla

May 2018:

https://www.smh.com.au/business/com...orting-elon-musk-s-tesla-20180529-p4zi4w.html

 

[ReflexFunds]

Does anyone have an estimate for current Model 3 reservation count in the US and Worldwide?

We've got a lot of data to try to estimate this, but it still needs a lot of assumptions.
On my numbers Tesla finished Q4 with 348k reservations and still has 143k in the US.
Remaining US reservations are likely mostly waiting for non premium interior, short range and lease options. There are also likely some waiting for their current leases to finish/get finances together to purchase currently available 3 options.

On these numbers: 597k total gross reservations, 79k deliveries to non reservation holders, 68k deliveries to reservation holders, 180k total cancellations.
In the US this is: 285k gross reservations, 75k deliveries to non reservation holders, 65k deliveries to reservation holders, 117k total cancellations.
This means c.70% of non cancelled US reservation holders are still waiting to order.

Key information used:

• 455k net and 518k gross at the start of August 2017.
• Q4 and Q1 net reservation count broadly stable QoQ. Q1 count >450k.
• Q2 net reservation count c.420k.
• As of 24-Oct-18, <20% of the 455k Aug-17 reservations had cancelled.
• >75% of Q4 Model 3 orders came from non reservation holders

Key assumptions used:

• At Aug-17 c.55% of reservations were from the US. (Broadly in-line with 2016 and 2017 volume mix)
• c.59% of Q3 deliveries and c.73% of Q4 deliveries were to non reservation holders. This is using Troy's model 3 tracker survey data, with a different sample rate for reservation vs non reservation holders. This method predicted Tesla's >75% Q4 orders disclosure, so I think these are reasonable assumptions.
• 5% of deliveries have been to Canada
• c.20% increase in US cancellation rate QoQ in Q4 with max tax credit missed for lower priced options. (This number could be higher, but I'd have thought most people would have known this already and cancelled before Oct-24)

 

[Pezpunk]

uh did the stock just instantly shoot up $5?

 

[KarenRei]

I get back to my desk. The song Autopilot came up on my random playlist and is playing. The stock is over 2% up, while the voice is singing, "You're only going up tonight ... Cruising on Autopilot..."

Well played, playlist.

 

[HG Wells]

I get back to my desk. The song Autopilot came up on my random playlist and is playing. The stock is over 2% up, while the voice is singing, "You're only going up tonight ... Cruising on Autopilot..."

Well played, playlist.

Makes you wonder if there are independent AI's out their just playing with us.

 

[Zaxxon]

Can't wait until the concrete starts getting poured. The spy shots out of the place are going to be a constant stream of minor good news. Seeing a bunch of muddy flattened fields surrounded by a fence is one thing, but watching concrete and steel rise up is another, from a psychological point of view.

You weren't around [here] for the GF1 initial build-out. Prepare yourself for lots of POTEMKIN VILLAGE shouting.

Didn't Elon promise...

And he promised it...

Oh yeah, that was a promise he made...

Why would anyone trust ANY Elon timelines...

I said try harder, not increase your ardor.

 

[Artful Dodger]

i think somebody just sold off a *sugar* load of NASDAQ big caps to buy a boat load of TSLA

Big counter-move to the Index for TSLA just in the last 5 min. Also upward attractors from the Technicals:

• mid-BB $335.53
• MA(50) $339.25

CHE3RS!

 

[EVNow]

This is helpful. Seems it will take a while to ramp up capabilities in China. So focusing on low complexity, high throughput manufacturing makes sense at first. It this plants proves itself highly capable, then there remain opportunities to expand beyond base products. This may be Musk's way to motivate the new manufacturing. My outlook is that the Shanghai team will work very hard to prove that they are worth to build the higher end products as well.

Atleast for China - I think they will continue to make higher trims in US - because US made cars command a premium in China ?

 

[kbM3]

hmm, does this also mean that the factory would be able to save money by modifying the design of Chinese-built Teslas to (for example) omit safety features that are required in the States, but not in China, or use methods or materials (glues / paints / lubricants / gasses etc) that are banned in the States but allowed in China?

Elon values safety very highly. He has a true passion for saving lives, and went to much effort to make Teslas the safest vehicles around even to the point of not just designing for a high safety rating.

I can’t see Tesla compromising this.

 

[SteveG3]

CNBC aired an interview of the head of sales of Toyota North America done by Phil Lebeau. This video basically tells you all you need to know about Tesla’s biggest moat. (fwiw, it has the added bonus of Phil doing very solid journalism... ~“do you mean pure EVs or plugin hybrids, hybrids when you say these goals?” (~”broad spectrum”) ~”but, Tesla’s taken the mantle with pure EVs... why aren’t you out with these?”)

Toyota exec is partly correct... global incumbent supply of EVs (if you add caveat for him of -outside of China-) will be much closer to 4-6% of the market in the 2025-2030 time period than many people think.

What Toyota exec doesn’t say, but, I think he and most auto execs do actually know, is demand for EVs will be over 50%.

Toyota aims for electrified option for every model by 202...


They may not be ‘totally smart’ but, they are actually not ‘totally stupid.’ Transition to EVs can be foot-dragged by the global auto suppliers as Blockbuster and Barnes & Noble had no chance of foot-dragging what Netflix and Amazon have done.

Discussed in much more detail here.

 

[KarenRei]

And we break +3%...

 

[printf42]

One thing smart about announcing this: it avoids the risk of current Chinese demand for high perf model 3s falling off a cliff. There's no reason to wait.

And segments nicely the show off market that’s price insensitive, actually they want their stuff to be more expensive and exclusive. All it takes for Chinese M3P demand to explode is an exclusive color or wheels option.

 

[ReflexFunds]

this video basically tells you all you need to know about Tesla’s biggest moat.

Toyota exec is partly correct... global incumbent supply of EVs (if you add caveat for him of -outside of China-) will be much closer to 4-6% of the market in the 2025-2030 time period than many people think.

What Toyota exec doesn’t say, but, I think he and most auto execs do actually know, is demand for EVs will be over 50%.

Toyota aims for electrified option for every model by 202...


They may not be ‘totally smart’ but, they are actually not ‘totally stupid.’ Transition to EVs can be foot-dragged by the global auto suppliers as Blockbuster and Barnes & Noble had no chance of foot-dragging what Netflix and Amazon have done.

Discussed in much more detail here.

Incumbent OEMs and their suppliers can, have and will foot-drag their own business transition, but no one can foot-drag the EV transition. Somebody will always invest to meet demand, even if it is not the incumbents. Only 10-20% of components of EVs are shared with ICEs and the traditional ICE supply chain, so traditional auto suppliers don't have much leverage.

If current auto OEMs don't step up, then the market will be taken by Tesla and other vertically integrated EV startups. Eventually some OEMs will break ranks though, copy Tesla's business model and genuinely commit to 100% EVs.