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

[EVNow]

It is possible that Tesla are ramping up hiring admin and management in its China HQ which would come under SG&A.

I'd expect that to be minimal in terms of $, given the lower wages. Also, almost all construction and its management would be contracted out, which would go under capex.

 

[Causalien]

For some reason, reading the news, I don't feel anything at all. Even in the face of FUD.

Got a sense of "They are at it again". What is it, the 40th time? A week before ER where things will have to be revalued by fundamentals. News cycle of negativity and pure speculation. I have a hunch that this is how people turn into traders that position based purely on technicals.

So based on RSI, we have fallen to 30. Usually a good buy point. then we got some high and sweet volatility at above 0.80 (1 was TSLA's historic record) 0.80 happened like 2~3 times in its life. An earnings warning and layoff does not equal to the crisis of Q3 where 420 gate and verge of bankruptcy from model 3 ramping was a bet a farm day. Yet the market somehow manage to make it just as volatile while managing to lower the RSI to the same level.

So my 3rd tranch is in, but this condition makes put selling perfect. I also usually save a 4th tranch for the catastrophic event where they mange to bring RSI down to 20. Probably managed to execute that once in TSLA's life time.

 

[Carl Raymond]

Radar is "vision" too in the broader sense: just it's using lower frequency photons, which the human eye doesn't see.

Elon is a physicist, and I'm pretty sure he includes "radio frequency" and "infrared" spectrum in "vision" as well.

Can’t like that. Vision is generally accepted to refer to frequencies our eyes can see. If we muddy the waters with radar, then ditto for lidar, then we really set the cat among the pigeons. Radar, like lidar, emits the radiation then detects the echo. When Musk talks vision, he means cameras detecting reflection from ambient sources, is my take.

 

[reddit_tl]

Can’t like that. Vision is generally accepted to refer to frequencies our eyes can see. If we muddy the waters with radar, then ditto for lidar, then we really set the cat among the pigeons. Radar, like lidar, emits the radiation then detects the echo. When Musk talks vision, he means cameras detecting reflection from ambient sources, is my take.

Even as a physicist, there is a fundamental difference here: human vision is passive while radar and lidar are active. i.e. they send out their own energy to see things. human vision doesn't do that.

having said that, radar and lidar can be useful to enhance capabilities of human vision.

 

[bdy0627]

Well, well, well. The Street sure loves TSLA sequels. They run them over and over again. Just when you think things might be different for TSLA (profitable Q3 ER with positive cash flow), they are exactly the same. Ever seen Groundhog Day?. Even the trolling shorts show up during each dip right on cue. TSLA is dropping like a rock. Obviously, everyone is selling, right? Sure, just like last time. Right up until they are buying hand over fist.

 

[Thekiwi]

I think it should be confusing to us all, at least for now. Laying off SX lines staff and elimination of 60% of SX production requires some next step. Are they rebuilding the line for a new SX and combining the production lines? Are they making space for model 3 production? Their needs to be some plan, cause you don’t cut the 75 SX when they are 60% of sales just to drive some percentage of those users to a higher margin model 3.

Tesla did provide some more colour on dropping the 75 in their statement to press today:

“We recently announced that we are no longer taking orders for the 75 kWh version of Model S and X in order to streamline production and provide even more differentiation with Model 3. As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly. At the same time, these changes, along with continuing improvements, give us the flexibility to increase our production capacity in the future as needed. We'll be providing more details on our earnings call next week."

​

 

[sundaymorning]

It’s the best selling luxury vehicle, beating Mercedes and BMW S class & 7 series combined. Why would anyone think about discontinuing it, unless it was just FUD.

 

[Drumheller]

Speculation on the S and X:

Musk has said the S/X are moving to the Model 3 naming format. In order for that to work, there has to be at least two battery sizes available. Musk has also recently said the S/X are not being discontinued in the next two years.

The Model P3D can be purchased now for $62,000. It's rated for 310 miles of range, has a 0-60 of 3.3 seconds, has a higher efficiency than the Model S P100D, has superior battery tech to the Model S P100D with a higher possible charge rate, and has a cheaper recommended maintenance cycle than the Model S.

The Model S P100D can be purchased now for $133,000 (more than double the price of the Model P3D). It's rated for 315 miles of range, has a 0-60 of 2.5 seconds, has double the cargo space of the Model 3, has the hatchback, and has two screens instead of one.

I own a 2013 Model S P85+. I noticed the sound system in the Model 3 seemed superior to my premium sound option in my Model S.

So, looking at that, I'm of the opinion that the high end Model S is not sufficiently better than the high end Model 3 to justify that price difference, especially when I consider the more advanced battery in the 3. I would be swayed to the Model S if a larger car with more storage space and having the second display in front of the steering wheel are major features to me. But is that worth the price difference?

Looking at it that way, I think there has to be some upgrades coming to the S/X and very soon. I anticipate the 100 battery becoming the low range S/X. I wouldn't be surprised to hear the longer range version is using the 2170 cells and has a non-performance rated range of 420, since Musk keeps dropping that number and it's in his style to do that. I would be surprised if Tesla moved the new pack to 2170 and kept the 100 pack on the old format. I suspect they will move all cars to 2170s.

The S/X are great vehicles, but they need to differentiate enough from the 3 to justify the significant increase in price. If I were to buy a car tonight, it would be the Model P3D.

 

[printf42]

My take on why Q1 profits are projected to be “tiny”.

1. They are going to ramp up GF3 much faster than expected, which requires huge upfront investments that starts depreciation immediately.
2. Production of HW3 chips and boards could have huge upfront costs too, I am not sure how those are usually GAAP accounted, but I imagine it would also hurt short term profit before it ramps to full scale.
3. Larger scale Super Charger expansion and upgrades.

My theory is Q1 profit is not going to be hit by lower delivery(caused by filling the overseas transit queue, which itself is a one time thing), or lower margin.

It would be caused by aggressive investments, not at the “bet the company” scale, but at a pace most long term bulls would like to see.

 

[Buckminster]

OT

Good post.

One alternative is they simply want to split the 75D market to either the higher margin 100 SKU, or the high end model 3 performance variants. Either model is more higher margin than the 75D correct? If that all washed out to the same or more gross profit from vehicles sold - then this is a non-issue from a net income perspective. Even if it is only the same amount of total profit (from those buying 100D or P3 instead), the higher amount of M3 units would make the entire model 3 line conceivably more profitable as it scales higher, as well as bringing more efficiencies to a simplified S/X lineup.

(Although I would wonder if S/X dropping shipments by a third - hypothetically - woud have some negative margin consequences on the S/X line that offsets the efficiency gained? Maybe it’s a wash there)

Agreed.

OT

Exactly, things that could improve 100D demand:
1) CHINA CHINA CHINA - tariffs temporarily low?
2) No 75D available
3) Minor price reduction
4) Minor spec improvements - include AP for free, extra supercharging etc.
5) Build inventory - drive away today - the colour you want wtg in every City in Europe and China
6) Fleet sales - hire cars - AVIS, Hertz?, taxis, company cars - deals we haven't heard of

It makes sense to do all the Engineerings now in one go. Interior and battery have knock on effects - wiring and system synergies. In addition, get the Engineering / CAPEX out of the way now so that it doesn't conflict with Y development.

Additions to above:
Regarding 5) - Inventory:

a) I can order whatever I want and receive in Jan/Feb - All options are on a boat today.
b) Slim pickings. Only 15 new Model S available in entire UK (just 1 red and 1 has 7000 miles..). Zero Model X available.

There is definite scope to sell more from inventory. China particularly.

Rather than offering price reductions to keep S/X demand high(ish), the better solution is to offer EAP (and FSD from March/April) for a reduced price on inventory stock. Margin would actually improve further! They are doing this now but FSD combined with having the correct spec for you will assist.

Whether a refresh/120 comes soon or not, Tesla will make as much profit from 100Ds for several months if not indefinitely.
Elon has thrown us another curveball but as in 98% of cases, you just have to sit back and say "genius".

 

[Buckminster]

OT
Let's count how many partners VW have doing their autonomous work for them.
https://driving.ca/volkswagen/auto-...ore-cooperation-efforts-for-self-driving-cars

1. Audi
2. Aurora
3. Baidu
4. Ford most likely
5. Mercedes?
6. Continental?
7. Bosch?
8. BMW? who are partnered with
9. FCA
10. Intel
11. Mobileye

The question is, do any of these even have any broth for the others to spoil?

 

[Causalien]

Well, well, well. The Street sure loves TSLA sequels. They run them over and over again. Just when you think things might be different for TSLA (profitable Q3 ER with positive cash flow), they are exactly the same. Ever seen Groundhog Day?. Even the trolling shorts show up during each dip right on cue. TSLA is dropping like a rock. Obviously, everyone is selling, right? Sure, just like last time. Right up until they are buying hand over fist.

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One of the benefits of this forum. Introduces me to good twitter accounts to follow. HFTAlert is very knowledgeable about HFT.

 

[oneday]

My take on why Q1 profits are projected to be “tiny”.

1. They are going to ramp up GF3 much faster than expected, which requires huge upfront investments that starts depreciation immediately.
2. Production of HW3 chips and boards could have huge upfront costs too, I am not sure how those are usually GAAP accounted, but I imagine it would also hurt short term profit before it ramps to full scale.
3. Larger scale Super Charger expansion and upgrades.

My theory is Q1 profit is not going to be hit by lower delivery(caused by filling the overseas transit queue, which itself is a one time thing), or lower margin.

It would be caused by aggressive investments, not at the “bet the company” scale, but at a pace most long term bulls would like to see.

I would say it also might have something to do with Semi, Roadster II, TE and/or US model Y behind the scenes. For example, if they build a GWh of TE products that won’t be recognized until q2 that’s $100M in cost. I’m obviously just speculating here, and my accounting knowledge is lacking, but I could see a combination of all of the above having large expenses other than Capex that could hit the P&L statement.

Edited to add: Tesla chip costs

 

[ggr]

Even as a physicist, there is a fundamental difference here: human vision is passive while radar and lidar are active. i.e. they send out their own energy to see things. human vision doesn't do that.

having said that, radar and lidar can be useful to enhance capabilities of human vision.

Sort of like headlights.

 

[Thekiwi]

Apple lays off 200 people from its autonomous car R&D team

Apple just dismissed more than 200 employees from its autonomous vehicle group

 

[NicoV]

Working backwards from Tesla’s statement that the China gigafactory would build Model 3 AND Model Y next year: you don’t want to do this without trying this out in the USA first:
Meaning Fremont needs to build both 3 and Y:
Fremont is ‘full’, which means some existing production needs to be cut to make space for at least on Model Y line:
Sacrifice the least profitable old product: the 75 S/X. This means you need less than half the production S/X capacity so you can shutdown the oldest S/X production line and keep production on the newest one.
Panasonics contract for Japanese cells ended on 1/1/2019. Replace the battery pack with a battery pack built in the gigafactory. This frees up more production space in Fremont. Not sure if the S/X motors are still built in Fremont, but if they arent’t, move that too to Gigafactory 1k freeing up more space in Fremont. You now have a lot of free space in Fremont, probably enough to build a new Model S/X line with more automation/efficiency than the old one, in less space. While you’re at it, build that new S/X line to build a S/X refresh.
When the new S/X line is ready, eliminate the other S/X line, and build a new line in that space for Model Y.
So its obvious that during this transition period you need less S/X personel, and you still won’t need those after the transition because the new line will be more automated.
So in a year or so would expect Fremont to have 1 new S/X line, current Model 3 lines, and a new Model Y line. Gigafactory would do what it’s best at: building battery packs and motors.
This is all speculation but fits perfectly with what Tesla already has publicly announced recently about GF3 and the layoffs.

 

[Buckminster]

6 more sleeps.

 

[Unknown_Wizard]

Working backwards from Tesla’s statement that the China gigafactory would build Model 3 AND Model Y next year: you don’t want to do this without trying this out in the USA first:
Meaning Fremont needs to build both 3 and Y:
Fremont is ‘full’, which means some existing production needs to be cut to make space for at least on Model Y line:
Sacrifice the least profitable old product: the 75 S/X. This means you need less than half the production S/X capacity so you can shutdown the oldest S/X production line and keep production on the newest one.
Panasonics contract for Japanese cells ended on 1/1/2019. Replace the battery pack with a battery pack built in the gigafactory. This frees up more production space in Fremont. Not sure if the S/X motors are still built in Fremont, but if they arent’t, move that too to Gigafactory 1k freeing up more space in Fremont. You now have a lot of free space in Fremont, probably enough to build a new Model S/X line with more automation/efficiency than the old one, in less space. While you’re at it, build that new S/X line to build a S/X refresh.
When the new S/X line is ready, eliminate the other S/X line, and build a new line in that space for Model Y.
So its obvious that during this transition period you need less S/X personel, and you still won’t need those after the transition because the new line will be more automated.
So in a year or so would expect Fremont to have 1 new S/X line, current Model 3 lines, and a new Model Y line. Gigafactory would do what it’s best at: building battery packs and motors.
This is all speculation but fits perfectly with what Tesla already has publicly announced recently about GF3 and the layoffs.

Additionally, Model Y production will be another Level of automation. Therefor, it is just plausible that some workforce has to be cut to build the whole process at max efficiency.

 

[SOULPEDL]

My take on why Q1 profits are projected to be “tiny”.

1. They are going to ramp up GF3 much faster than expected, which requires huge upfront investments that starts depreciation immediately.
2. Production of HW3 chips and boards could have huge upfront costs too, I am not sure how those are usually GAAP accounted, but I imagine it would also hurt short term profit before it ramps to full scale.
3. Larger scale Super Charger expansion and upgrades.

My theory is Q1 profit is not going to be hit by lower delivery(caused by filling the overseas transit queue, which itself is a one time thing), or lower margin. It would be caused by aggressive investments, not at the “bet the company” scale, but at a pace most long term bulls would like to see.

1. Nope, GF3 is funded by China.
2. New boards are cheap to make, and not all vehicles will need them. AI Chips (TRIPS) maybe not.
3. Still waiting for these....

I would say it also might have something to do with Semi, Roadster II, TE and/or US model Y behind the scenes. For example, if they build a GWh of TE products that won’t be recognized until q2 that’s $100M in cost. I’m obviously just speculating here, and my accounting knowledge is lacking, but I could see a combination of all of the above having large expenses other than Capex that could hit the P&L statement.

Consider that shipping to EU puts about 2 weeks inventory on the water. That's a huge loss, but only a one time hit. Also, smaller mix of performance vehicle sales also hurts Q1, but starts to pick up in China maybe. Recall Elon's comment: "Don't wait to get a Tesla performance vehicle out of China GF3, we will only build the low-cost versions there." (Hmmm, I wonder if the $35K version will be before US import taxes? Guessing it's the only way this year to get that ball rolling.)

 

[mrdoubleb]

Apple lays off 200 people from its autonomous car R&D team

Apple just dismissed more than 200 employees from its autonomous vehicle group

I assume SP will drop?! /s