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

[Unpilot]

SP is in a nice EKG pattern.

 

[Pezpunk]

Can't resist pulling out all the stops on this over-optimistic promise from 2017 - can you? I think you should be focused on the reality that Tesla is delivering on a promise of a $35k Model 3. No, you probably wanted Tesla to blow another $2 billion in a vain attempt to raise Fremont production from 7,000 a week to 10,000 a week. Instead they decided to fast forward the Shanghai assembly plant since it made sense to make Model 3s for China in China - given our President started a trade war...not anticipated in 2017...

short sighted fools have cried "YEAH BUT" at every step of the way as Tesla marched from 0 to 5,000 to 50,000 to 500,000 vehicles sold per year. it's really precious. imagine being so sour and blind that you couldn't see the scope of Tesla's amazing set of accomplishments. haha.

 

[neroden]

OT

Mod: You're right, in that the now-vaporized was OT.

You're wrong, in that once again you post in a demeaning, rude and reprehensible fashion.

You have demonstrated that you have the ability to bring insight into this forum. You also have a tedious history of suggesting that you are the only one with the right answers.

In brief: wrong.

 

[FirebirdAlpha]

Can't resist pulling out all the stops on this over-optimistic promise from 2017 - can you?

It was a promise they raised 1.8B in debt financing, and according to the WSJ last October, is the subject of a Department of Justice investigation.

I think you should be focused on the reality that Tesla is delivering on a promise of a $35k Model 3.

Yes. It's weird there doesn't appear to be more demand.

You can walk into any Tesla store in the United States - they promise they can deliver a $40k Model 3 same-day. What's the plan to sell the $40k Model 3s they have in inventory?

you probably wanted Tesla to blow another $2 billion in a vain attempt to raise Fremont production from 7,000 a week to 10,000 a week. Instead they decided to fast forward the Shanghai assembly plant since it made sense to make Model 3s for China in China - given our President started a trade war...not anticipated in 2017...

No, I expect them to raise capital for the Semi, Roadster, Pickup, Solar Roof, and Supercharger expansion.

 

[Causalien]

Wow, ron batron and I have the same taste in stocks. We both saw the same future for Iridium.

Another interesting info from the ron barron interview. He brought to my attention the fact that tsla's revenue is approaching 30b per year. Had a doublebtake as I remember tesla's market cap as around 50b. (60b currently). So we have an innovative company valued at 2x revenue....

Reminds me of something my mentor once said. You see a company at less than 2x revenue valuation, you buy it out. If you don't let me know and I will so I can prove the point to you.

 

[neroden]

It would matter for S & P 500 inclusion, right?

Actually, no.

S&P 500 inclusion:
(1) The sum of the last four quarters should be positive;
(2) The most recent quarter should be positive.

There's no way for Q1 2018 profits to be large enough to cancel out the huge losses from Q2 2017. So S&P 500 inclusion will happen after Q2 results are published, not before.

So it doesn't matter exactly what the Q1 number is, but it's very important that the Q2 number be positive.

 

[KarenRei]

Refers to deleted content

1) No, it hasn't. What "fully automated cars in tunnels structured like highways with onramps" system are you thinking of to make such a claim?

2) The issue is not "capacity per tunnel", it's "capacity per unit cost". The unit cost of which, for Boring Company's first tunnel, was tiny - and that was just with their first generation TBM, which doesn't contain the vast majority of the improvements they're working on.

No further discussion in THIS thread. You are welcome to take it where it belongs

 

[Silent Ludicrosy]

New home sale for Jan down 6.9%. I guess the prospective home buyers decide to keep the down payment for the new Model Y instead

More likely due to release of camper mode for model 3 .

Just bought a few more shares. Feeling bullish. If stock price dips I’m buying more. If it jumps I’m buying AP/FSD this weekend.

 

[Johnny Ma]

Yes. It's weird there doesn't appear to be more demand.

You can walk into any Tesla store in the United States - they promise they can deliver a $40k Model 3 same-day. What's the plan to sell the $40k Model 3s they have in inventory?

Ordered SR + AP + FSD the day SR was announced 2 weeks ago. Changed to LR + AP (which costs $3k more than my original order, total of $46k). Delivery estimate was within 2 weeks for LR. I finally got a reply from my delivery advisor and I still don't have a VIN. They are getting slammed with orders and there's a lot of upselling...How weird is that?

 

[neroden]

While I'm sympathetic to this point, especially in hindsight, it occurs to me that we should all be grateful that Musk didn't look up the rules on how to propel and sell cars and instead threw out the rule book.

But you're factually wrong! He did look up the history of how to propel and sell cars.

I think it was Marc Tarpenning who gave a lecture explaining that in the early days of Tesla they researched all the startup car companies of the late 19th century and figured out which business models succeeded and which failed. Of course, most of this 19th century history is long-forgotten by most people now -- they did their homework.

This is why Tesla started at the top of the market, not at the bottom of the market like all the other -- failed -- EV startups (which were run by people who didn't do their homework). Because Musk, Straubel, Tarpenning, and Eberhard did do their homework. They figured out you had to start at the top of the market.

 

[jeewee3000]

1) No, it hasn't. What "fully automated cars in tunnels structured like highways with onramps" system are you thinking of to make such a claim?

To be fair, cars/trains in tunnels in one layer has proven to be a low-capacity system.

The truly disruptive idea behind the Boring Company is not putting cars (or cars on electric skates) in tunnels, but decreasing the cost of tunneling by a factor of 10 or more so that it would be cheap to dig a vast amount of layers.

Personally I see the most potential in combining the Boring Company technology - if they succeed in driving costs down as much as they intend to - with building additional subway lines in cities that currently can't afford subway systems. The luxury personal vehicle market would be secondary to that IMO. (edit: wrong layout)

Mod: Barely acceptable here. Yes: Vetinari's on a roll.

 

[humbaba]

Still OT, but I think that (despite being tangential) this is relevant to Tesla as representative of Musk being a capable leader/engineer/visionary

Refers to deleted content.

Just a thought about boring company and tunnels: Musk's vision doesn't seem to be that "a tunnel" will be sufficient, but that "many tunnels" would, which would explain why he is interested in making it cheap and quick to build out tunnels. He was dismissive of electric planes due to energy weight density, but felt that the 3D advantage of anti-congestion of flying could be achieved underground.

Note, I'm not trying to argue that the tunnels will solve congestion (for example, I'm unconvinced that it will have a high enough area density at the surface) or that electric planes won't happen -- but I do think he has given this some thought.

 

[neroden]

The amount of misinformation is amazing. Case in point...I was talking with a colleague yesterday while I was in my car in the parking lot. We got to talking about the car and she made the comment "Yeah, but electric cars a really slow, right?" I was flabergasted. I told her to get in the car. After a few launches with her squeeling she says, "What does this thing have, a V8?" She just couldn't accept the fact that the car didn't have an engine. This is not a dumb person by the way. She is a 20 year teacher with 3 degrees.

Wow. I thought that particular misinformation had been fully debunked a decade back. Amazing that you met someone who didn't know that EVs have the best acceleration, in this day and age.

This is the kind of stuff we have to battle.

Dan

You're probably right that it's a lot more common than I think. I'm spoilt living in Ithaca, everyone knows EVs are fast here (though they didn't 10 years ago -- I heard the "EVs are slow" nonsense a lot 10 years ago)

 

[Fact Checking]

Actually, no.

S&P 500 inclusion:
(1) The sum of the last four quarters should be positive;
(2) The most recent quarter should be positive.

There's no way for Q1 2018 profits to be large enough to cancel out the huge losses from Q2 2017. So S&P 500 inclusion will happen after Q2 results are published, not before.

So it doesn't matter exactly what the Q1 number is, but it's very important that the Q2 number be positive.

Two corrections:

• You meant "Q1 2019" and "Q2 2018", right?
• Levels of GAAP net income for the last 3 quarters were: -$717.54m, +$311.52m, +$139.48m, their sum is -$266.54m.
  
• If Q1 2019 profits are larger than $266.54m then the "sum of the last four quarters" becomes positive.

Now obviously +$267m of Q1 profit is incompatible with Tesla guidance and with a general expectation of a lot of vehicles in transit, but technically it's between Q3 and Q4 levels, and production was much higher in this quarter and a lot of Model 3's were shipped to China and Europe, with a heroic end of quarter push in all markets.

So I'd not rule it out - but it's probably a 10-20% probability type of outcome. The delivery report due in two weeks could clarify the odds greatly.

 

[neroden]

For even more context, note the 'hope' qualifier, which definitely marks the statement as forward looking and cannot be mistaken by any reasonable investor as a definite promise. He also said, in another tweet:

"Def. no forced sales. Hope all shareholders remain."​

Anyone who looked it up would know that forced sales would have been a necessity. Canadian retirement funds are the most obvious one, since they're not allowed to invest in US unlisted equity! I mean, I figured this out in less than ten minutes.

But there are a lot of other problems involving the limit on number of shareholders to avoid filing 10-Ks, the restrictions on non-accredited investors investing in anything that doesn't file 10-Ks, etc.

Musk didn't understand the nature of the funds which are used to invest in SpaceX, or why they don't actually work for keeping all shareholders in Tesla. He had not done his homework. Hell, if he'd bothered to ask the finance guys at SpaceX, they could have told him. Or if he'd asked some of the existing SpaceX investors, who actually know why this wouldn't have worked.​

The SEC's filing/complaint back in September only makes the following argument about those tweets:

Musk [...], had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a “special purpose fund,”​

Yes, the SEC didn't work very hard on arguing that point, did they? And then they settled. And the settlement doesn't even require Musk to look up the law before making claims about what's legally possible! (Musk can still make incorrect claims about what's legally possible, as long as they're not material to investors!)

The SEC's work in these cases was sloppy and unprofessional.​

 

[KarenRei]

To be fair, cars/trains in tunnels in one layer has proven to be a low-capacity system.

1) Cars/trains in tunnels are famously high capacity systems, not low. The main difference between a train/subway and fully automated PRT being that in the former the "cars" are physically joined together (and thus all forced to go to the same destination, requiring more total traffic due to people going "the wrong way" and then back), while in the latter they maintain separation through software, and exit as needed.

2) That's comparing a system which either has to make frequent stops, or excessive overtunneling, with a system utilizing onramps and offramps - the latter being undeniably superior for throughput for a given amount of track.

STOP.

 

[Causalien]

Yeah, I also would like to see money being poured into R&D instead of ads.

The problem is that so many consumers are uninformed or even misinformed. I think we've all seen too many examples in our lives, not just related to Tesla. But when it comes to Tesla, to quote Elon, for most consumers, I think it's "stupidity squared".

Hopefully, the word of mouth effect gets even stronger as Tesla delivers more cars to more owners. We get a lot to do.

The thing with R&D is that throwing more people and money at the problem doesn't work after a while. And the pace is also limited by how fast tesla can establish new manufacturing lines. It doesn't make sense to have faster R&& that churn out new models while tesla is unable to ramp up existing models.

So a completely new levee that has not been used and scale up is advertising. The multiplier effect of this will be higher than others.

 

[ReflexFunds]

I think we will see this below (and not the other more careful approach):



Here is why: the way I look at this is, from the perspective of Tesla speaking to a) customers and b) their competition (and not to investors).

So if my theory is right, tonight we will get:
1) An awesome car that many people will want to own.
2) The opportunity to pre-order / register (I think this is pretty much a given now)
3) Lots of (very credible) details on manufacturing/production/assembly: I would love to see some innovation like "no more 12V battery required", or "fully automated wiring harness assembly", or specific other numbers that will shock/annoy/horrify the legacy car makers.
4) Something about how this time production ramp will be different
5) Maybe some videos / live demo of some particularly difficult aspect of the production (robot installing wiring harness? or similar).

Also of course:
6) Advanced summon + AP3 if it is ready
7) Something (could e.g. be AP3) to buy immediately right now for new and existing customers
8) Less likely but still on my list: a (small) interior refresh of Model S/X e.g. GUI, water cooling for AP3, CCS for Europe etc.

What do you think? What could be announced that would really get the legacy car makers blood boiling?

I agree with these points.

One thing I'm unsure on is if we will be given a timeline for targeted start of production and targeted volume production. Also I wonder if we'll be told a final location for manufacturing.

I think Tesla are most likely internally aiming for pilot line in January 2020 and 3k per week production at GF1 by March/April 2020. This is so powertrain production exported to GF3 in China for Model 3s can immediately switch to Y production for GF1 when powertrain lines are ramped up at GF3 in March. Whether it is wise to disclose this ambitious timeline to the market given risks of delays I'm not sure.

In the Business Insider leak we were told:

• GF1 pilot line - 1 June 2020
• GF1 production - 1 August 2020
• GF1 2k per week - 1 September 2020
• GF1 7k per week - 1 December 2020

• GF3 Model Y pilot line - 1 October 2020
• GF3 2k per week - November/December 2020
• GF 5k per week - February 2021

These plans were reportedly sent to Tesla staff in September 2018, but at the time of the article at the start of December, Tesla said these were out of date. "The timelines and information shared here are outdated. When we have details to announce, we will certainly share them. In the meantime, we remain focused on Model 3, which we are excited to bring to Europe and China early next year," the company representative said."

One thing we know happened in this time period was a significant acceleration of the timeline for Model 3 production at GF3. This new timeline required ramping up GF1 powertrain production to supply GF3, potentially leaving excess production at GF1 once GF3 brings these components in-house. Therefore it seems logical for Tesla to accelerate Model Y plans to make use of this capacity. So i think it most likely the Business Insider timeline was accelerated rather than delayed.

As to where it will be produced, I don't think Tesla necessarily has to make a firm decision until October/November. They can still order all the necessary equipment, but don't need to immediately specify the delivery address. I think it makes sense for paint, body line & assembly to take place at GF1, however, some equipment for components at Fremont/Lathrop/Seat factory may be capable of ramping beyond 7/8k Model 3s per week, and with minor capex may be able to also produce for Model Y. This will be a capex efficient option, and the marginal cost of delivery from Fremont to GF1 will be relatively low given Tesla already have empty trucks heading back to GF1 to pick up more battery packs.

Elon's comments on Y production on the Q4 call also said first production in early 2020:

• "And we're most likely going to put Model Y production right next to - in fact, it's part of our main Gigafactory in Nevada. So it will just be right there. Batteries and powertrains will come out and go straight into the vehicle. So that also reduces our risk of execution and reduces the cost of having to transfer parts from California to Nevada. It's not a for sure thing, but it's quite likely, and it's our default plan."

• "As I mentioned earlier, the Model Y, we think, most likely will be produced at Gigafactory, but that's - unless we encounter some obstacle - that's the default plan that we're proceeding towards. And it's fast, low risk and also low CapEx. In terms of the - I mean, probably there's like initial production of Model Y, very low volume, early next year. But then it always takes time to ramp up any production system, and that's difficult to predict the shape of that S-curve. So we feel confident in saying there will be volume production of Model Y by the end of next year, but in between the beginning of next year with low volume, it always starts with very low and it grows exponentially - from beginning of next year to end of next year, it's difficult to break that ramp. So that's our expectation for Y."

For context, Model 3 first production was July 7th 2017, it took around 9 months to get to around 1k per week, then another 3 months or so to get to 4/5k per week (which I'd really call volume production). So Tesla took about 12 months to go from first production to volume production on Model 3 despite encountering huge difficulties, despite it being the first time they had ever mass produced a car and despite the vast majority of its components being unique and also having to ramp up for the first time.

In contrast, Model Y shares 76% of components with Model 3 - so 76% of the car is already in volume production. Tesla also now has experience of ramping to volume production and has learnt a lot from its mistakes. So I think it very unlikely it will take anywhere near 12 months to get to volume production from first Model Y production "early next year".

 

[FirebirdAlpha]

I finally got a reply from my delivery advisor and I still don't have a VIN. They are getting slammed with orders and there's a lot of upselling...How weird is that?

What area/region? Would love to follow up.

 

[30seconds]

Actually, no.

S&P 500 inclusion:
(1) The sum of the last four quarters should be positive;
(2) The most recent quarter should be positive.

There's no way for Q1 2018 profits to be large enough to cancel out the huge losses from Q2 2017. So S&P 500 inclusion will happen after Q2 results are published, not before.

So it doesn't matter exactly what the Q1 number is, but it's very important that the Q2 number be positive.

I think much of the downdraft was related to the Q1 profit warning delaying S&P inclusion more than an actual worry about Tesla financials.

The big funds do try to front run index funds for something like this