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

[anthonyj]

Seriously, who pays attention to advertising? Did you ever buy car because of an advert? I didn't. Mostly it has been because of recommendation or just seeing something in the streets that I liked the look of and then researching it.

95% of people I meet in real life don’t have a clue about Tesla. They think it only has an 80 mile range, a backup gas tank, can’t road trip, unreliable junk, don’t know about how it is low maintenance, don’t know about OTA updates or autopilot, think the company is going to go bankrupt, etc. it’s not about traditional advertising, it’s about educating.

 

[Svetlin]

Definitely need a new battery pack with improved cooling. I still can't believe they announced 250 kW for Model 3 and left S/X twisting in the wind. Musk is one of the best marketers of all time, but this was boneheaded. Unless there's a "one more thing" out there...

A 115 kWh Model S pack with Model 3-style PMSR motor and updated power electronics should get 400 miles EPA. Maybe even 110 kWh with more aerodynamic wheels (not ugly ones!) and a couple other aero tweaks. That would re-establish Model S as Tesla's flagship and set a new bar the ~240 mile Jaguars, Audis, Porsches, etc. can't touch.

As you say, it's about consumer perception. Make 400 miles the standard at the high end.

Completely agree with everything except the last sentence. Make 420 miles the standard at the high end.

 

[azaz]

95% of people I meet in real life don’t have a clue about Tesla. They think it only has an 80 mile range, a backup gas tank, can’t road trip, unreliable junk, don’t know about how it is low maintenance, don’t know about OTA updates or autopilot, think the company is going to go bankrupt, etc. it’s not about traditional advertising, it’s about educating.

yeah I can vouch to having a similar experience mostly. I've said it before but they need an "I'm a Mac" style ad campaign.

 

[JRP3]

Definitely need a new battery pack with improved cooling. I still can't believe they announced 250 kW for Model 3 and left S/X twisting in the wind. Musk is one of the best marketers of all time, but this was boneheaded.

Yeah, I'm sure that just slipped by him Or, just maybe, they can't do it at this time for various reasons...

 

[azaz]

I have a different interpretation at least for model 3 - with the launch of SR/SR+ they are now certainly production limited and will remain so for many quarters when they expand these models to the rest of the world.

in most zip codes SR+ shows as "within two weeks" aka its on the lot or in route. SR has been stuck at "6-8 weeks" even though none have been delivered yet really.

I don't see the evidence for some big production back log.

 

[CyberDutchie]

I don't think they need a cap raise because they aren't production limited right now. it's demand in the US at least.

Don’t you think if they had started a GF project in Europe the story would have been a lot different right now? I don’t believe US demand was the issue in Q1, it was ramping production to satisfy demand oversees.

It feels like they are still struggling reaching steady production rates in Fremont. Could it be that the output goals for that plant are were just too optimistic and a lot of money is being wasted that could perhaps been better invested in production capacity elsewhere?

 

[Remus]

FUD inflicts temporary damage (which is why the FUDsters are active), but I disagree that it's irreversible, because most of the FUD is shallow and self-defeating against just a little bit of exposure to a Tesla product.

This can be seen in yesterday's episode of Tesla trolls descending on Cheryl Crow when her Model 3's screen went dark, to which in the end she responded:

Sheryl Crow on Twitter

"Problem solved! LOVED all of your creative responses. Best one was suggesting my kids take a look... which would have been helpful since my kid was the one who changed the settings / caused it to go black in the first place! I knew I should have interrupted school..."

"Also, for the haters: I love my @tesla, and have very few problems. I got the basic model, nothing overly fancy, and it was cheaper than my minivan!"​

These are powerful testimonials from owners, and while it's slower than buying favorable media treatment, it demonstrates that the FUD is not irreversible.

There were a lot of Apple haters as well when iPhone market share was still small and growing, and media treatment of Apple was dominantly unfair and biased as well - despite Steve Jobs communicating in an almost picture-perfect way. There's just no pleasing of biased observers if attacking a company is in their financial self-interest.

While in this bull camp we have to be careful not to be just like the bears, picking up positive rumors yet tuning out all negative news.

 

[shrspeedblade]

LMAO- if the stock keeps it current steady rate of climb (it probably won't) we'll close not far from yesterday's finish!

Never a dull moment with $TLSA!

 

[TheGrimSweeper]

They definitely need 3 gigafactories, one on each continent. China one sounds like it will be finished super quick.

 

[azaz]

Don’t you think if they had started a GF project in Europe the story would have been a lot different right now? I don’t believe US demand was the issue in Q1, it was ramping production to satisfy demand oversees.

It feels like they are still struggling reaching steady production rates in Fremont. Could it be that the output goals for that plant are were just too optimistic and a lot of money is being wasted that could perhaps been better invested in production capacity elsewhere?

yes, in the sense that EU demand will safely at the least 2-3x with a locally produced vehicle with cheaper costs. however US demand in Q1 was really, really bad. Tesla gave out discounts more than any other quarter. we have evidence of this in that inventory leak from Tesla's site showing 11k+ cars in inventory as of like February 11 (keep in mind they had stopped making any Model 3's for US in early January). Anecdotally the MR3 I bought was produced two months before I took delivery of it. it's why half the quarter's entire deliveries were done in the last ten days. Tesla dialed down production on S/X and probably temporarily the 3 also for financial reasons. shrewd for sure and why Q1 financially might even beat a little.

 

[jbcarioca]

...
In case i missed it, tesla non sold inventory is not piling up like boeing 737 max.
.

....

FWIW, Boeing has sold every one of those planes. They remain to be delivered. They will be too, because the only competitor is sold out for years.

 

[humbaba]

Can someone clarify the uptick rule? Since it's in effect right now, short selling is restricted until trading hours begin on Monday.

This to me says:

1: The price action is likely to be neutral-to-positive for the rest of today and tomorrow, since the SP will only decrease from existing shareholders selling, and I would imagine many are not eager to sell on a down day.
2: The SP is likely to drop on Monday as short selling resumes.

Is this correct?

To be clear, short selling is still allowed: the restriction is that they can only sell on upticks. The net effect of this is to moderate the downward pressure from shorting, but it still allows shorting to reduce any upward climb.

So any decrease will necessarily come from longs selling, but due to the capping effect of short selling the such losses are not offset by the longs buying.

Also note that a smart investor that wants to keep $TSLA down will have slowly accumulated shares when $TSLA was even lower so as to dump them at times like this to force the stock down and shake loose more weak longs.

Will $TSLA plummet again when the uptick rule is no longer in effect? Quite possibly, but predicting the future is always troublesome. For example, if the judge smacks the SEC down hard that would do a lot to offset any shorting attempts -- especially at these discount levels.

Not that I expect the judge to do so, but my point is we know of pending events that could cause significant movement down or up. And then there are the events we don't know of that could happen. Brexit. Trade war. Rocket Man vs Tariff man escalating to armed conflict. We don't know.

But strictly in terms of the uptick rule expiring, sure, further drops would be expected. But you cannot ignore other market forces.

 

[MarcusMaximus]

FUD inflicts temporary damage (which is why the FUDsters are active), but I disagree that it's irreversible, because most of the FUD is shallow and self-defeating against just a little bit of exposure to a Tesla product.

This can be seen in yesterday's episode of Tesla trolls descending on Cheryl Crow when her Model 3's screen went dark, to which in the end she responded:

Sheryl Crow on Twitter

"Problem solved! LOVED all of your creative responses. Best one was suggesting my kids take a look... which would have been helpful since my kid was the one who changed the settings / caused it to go black in the first place! I knew I should have interrupted school..."

"Also, for the haters: I love my @tesla, and have very few problems. I got the basic model, nothing overly fancy, and it was cheaper than my minivan!"​

These are powerful testimonials from owners, and while it's slower than buying favorable media treatment, it demonstrates that the FUD is not irreversible.

There were a lot of Apple haters as well when iPhone market share was still small and growing, and media treatment of Apple was dominantly unfair and biased as well - despite Steve Jobs communicating in an almost picture-perfect way. There's just no pleasing of biased observers if attacking a company is in their financial self-interest.

That’s great for those who read Crow’s twitter feed, but from what I saw, public-facing articles on the topic either weren’t updated with the new information or selected it out to avoid mentioning that the problem was actually solved and was user error.

 

[shlokavica22]

Hopes of total dominance of the EV market (and $1000+ share price in a few years) have been dealt a big blow today. I do no longer see a chance of us reaching $400 any time soon, and will have to adjust my own expectations and rethink my investment in TSLA all together, unfortunately.

How so?
Is the EV the future or no?
What company/companies expand EV manufacturing capabilities with the fastest pace?
What is the most desirable EV brand?
List the top 3 EV models selling with a positive margin?

Then we have all the wild cards that conveniently are not really included in the valuation:
- Semi
- FSD progress
- Energy

Mid/short term- yes, people who swing trade, or play options should re-evaluate their approach.
Long term- nothing changed. You are going to end in the top of the S curve sooner than later.

 

[jhm]

Seriously, who pays attention to advertising? Did you ever buy car because of an advert? I didn't. Mostly it has been because of recommendation or just seeing something in the streets that I liked the look of and then researching it.

No offense, but this is a fallacy of personal observation. It's a bit like saying, "What global warming? It's pretty cold this winter." As individuals, we are inclined to think that we make our consumer choices independently, that advertising does not influence us much, if at all. However, advertiser are very careful to measure market response to each and every campaign. They know when they are getting a solid ROI on advertising spend, and when they are not. In short the only reason why massive spending of advertising persists is because it actually works. To extend the metaphor, advertising changes the information and perceptual climate within which consumers do make what feels them independent choices. Climate change does not mean there won't be a few really cold days in winter; it means the average temperature over the whole globe and over the whole year is shifting ever so slightly. So advertising moves the average consumer response, even if it is barely determinative in any single case. Moving the averages is what matters to advertisers, and it can generate substantial ROI if done well.

 

[Fact Checking]

Maybe. They still had a lot of 75D inventory to sell, though. Look at Norway's daily reports, about half were 75D even in late March.

True.

True, but severance tends to offset that the first quarter.

True, but they had layoffs in previous quarters as well, which would now benefit Q1.

AR was 949m on 12/31, not 1.2b.

Indeed.

DSO is typically two weeks using the standard calculation, but Tesla sales ramp massively at the end of the quarter. I model AR as the final week or so of deliveries. It probably should be just the last 4 days or so. We'll see.

In addition to the points you raise, I didn't account for Tesla's 170m ABL availability on 12/31. In theory they could borrow as much as 670m more on the ABL in Q1, not my 520m. That assumes they had enough collateral. They have a lot of inventory in China, which I don't think qualifies.

Other cash factors:

• ZEV sales - but it's unclear whether the market still exists.
• Model Y deposits would improve net cash flow - every 10,000 orders by $25m.
• In China Tesla has apparently called $500m of the total $2b loan offers, for phase 1 of GF3. It's unclear whether this can be commingled with general funds though.
• Capex outflow has been going down, and Model Y outflow is still discretionary. So Tesla possibly had $100m-$200m leeway in Q1 to defer capex.
• They stopped the sales commissions and the referral program - both of which would have some cash effects.
• There's some reports of Storage ramp-up - which would use any excess GF1 cells and generate some cash. $50m upside at most though I think.
• As the fleet gets older the warranty expense shifts into a steady stream of service income. It's unclear how much effect this had in Q1 though.

 

[SW2Fiddler]

I hate putting the CHAdeMO/3 discussion in this thread but putting it in the CHAdeMO Adapter threads hasn't reached you. Sorry everybody.

Yes but it doesn’t work with the model 3 unfortunately.

Forever? For ever EVER?

The model 3 is limited to the Supercharger systym.

Whattt? No it isn't. Only if you don't count the whole damn electrical grid everywhere. You mean "in the realm of DC Fast Charging." and, "For Now."

I think for most people that isn’t a problem but in our province the Chademo/CCS locations outnumber Tesla locations 10 to 1 and growing fast.

That's good work by those networks. We should work on getting adapters placed at those locations (esp. when 3-compatibility is rolled out) so any Tesla can utilize them, not just Teslas with a CHAdeMO adapter in their frunk.
Unrealistic you say? Here's one I placed in New Orleans that fills a need until there's a SC there. I scouted out where there was a need, talked to the management. I have never even used it. It stays at the station, like a good adapter should.
I'll get it updated when there's an update to cover M3. I don't want anyone to roll up to Rouses in a 3 counting on a DCFC and not be able to DCFC.

Superchargers are awesome but they don’t cover areas that we have to travel.

Are you ready to roll up one sleeve? Make the metamorphosis from EVpassive to EVactive? Yes? Let's GO! Read on...

To @Webeevdrivers , I have no doubt an update will happen, to enable the adapter to feed a 3. What I don’t know is if it’ll happen by your fall road trip. In the meantime, since you know the route pretty well, and are courteous as well as articulate, you could suggest the best locations to Tesla and suggest Tesla to the best locations.

And I just have to add... Did you know that a Twitter account is free? I pledge to retweet any of your tweets to help visibility, and rest assured many here will do the same. Sincerely. The “3deMO” needs to happen, but you can state the need better than I can!

I renew my pledge. Please link your Tweets and I will retweet and my very low numbers of followers may, also... but some of THEM are noticed by Elon.

 

[azaz]

No offense, but this is a fallacy of personal observation. It's a bit like saying, "What global warming? It's pretty cold this winter." As individuals, we are inclined to think that we make our consumer choices independently, that advertising does not influence us much, if at all. However, advertiser are very careful to measure market response to each and every campaign. They know when they are getting a solid ROI on advertising spend, and when they are not. In short the only reason why massive spending of advertising persists is because it actually works. To extend the metaphor, advertising changes the information and perceptual climate within which consumers do make what feels them independent choices. Climate change does not mean there won't be a few really cold days in winter; it means the average temperature over the whole globe and over the whole year is shifting ever so slightly. So advertising moves the average consumer response, even if it is barely determinative in any single case. Moving the averages is what matters to advertisers, and it can generate substantial ROI if done well.

I look at the great American companies of our time like Nike, Apple and both have had iconic ad campaigns "I'm a Mac" or "Just Do It" that help shape the brand legacy. they definitely matter and like you astutely said, companies spend because it works.

 

[larmor]

Won't be long before Gigafactory N is built to produce Gigafactory N+1

That is an interesting concept. Sometimes it can take up to one year just to build a single family home, albeit custom. I remain surprised that overall making a GF in China in one year, start to finish, seems to be meh to the general market/media. And presumably it would be making cars/batteries. What about yellow paint? Didn't the market have a massive reaction to use (non use, low use) of yellow paint in the reno factory.

Would be a good question to ask at the next CC, will there be a factory that makes the factory components?

 

[2virgule5]

in most zip codes SR+ shows as "within two weeks" aka its on the lot or in route. SR has been stuck at "6-8 weeks" even though none of been delivered yet really.

I don't see the evidence for some big production back log.

Agree that we do not have hard evidences yet so we are guessing. One thing we know for sure is that timing on the website does not represent anything close to reality. In most of the US if the model you want is not in inventory you are going to wait much more than two weeks - many more people still waiting for their SR/SR+ and we are past the initial delivery window.