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

[Causalien]

I have to take several days to digest this. It's just terrible planning by management to allow a quarter like this to happen. And then when it happens, lots of excuses are given. Management seems to execute well in certain areas but terrible in others.

Folks here can accept the excuses and that's up to y'all. But to me, it just sounds like excuses and skirting responsibility for poor/wrong decisions.

I'm reminded of a Steve Jobs story.

Steve Jobs told employees a short story when they were promoted to vice president at Apple. Jobs would tell the VP that if the garbage in his office was not being emptied, Jobs would naturally demand an explanation from the janitor. "Well, the lock on the door was changed,' the janitor could reasonably respond. "And I couldn't get a key."

The janitor's response is reasonable. It's an understandable excuse. The janitor can't do his job without a key. As a janitor, he's allowed to have excuses.

"When you're the janitor, reasons matter," Jobs told his newly-minted VPs. "Somewhere between the janitor and the CEO, reasons stop mattering."​

LOL, reminds me of this one time I was used as the scapegoat for burning $100k of cash down a project. The reason why the failure was on me was because it took me two years. The reason why it actually failed was because I was called back to headquarters after only 3 months in the field to attend an inquisition on why I have no results after 2 years. To which my reply was "2 years? I just started 3 months ago!"

Apparently that was the wrong answer and I should've started interviewing employees as well as planning the whole thing with permits all lined up while I was still being interviewed for it.

I am smarter now and I realized that it was because I didn't have a scapegoat and actually want to take the project to its proper completion.

 

[Causalien]

No. Producing a car that only delivers next quarter has no influence on the profit/loss statement, only on the balance sheet. I still need to listen to the call myself, but I still cannot square 100k deliveries with a loss except with truly dramatic margins.

Regarding the wave unwinding, I’ll believe it when I see it. Not the first time Tesla promised the same. But, for what it is worth, skabooshka (yes that one) reported that the factory was switching much faster between international and domestic production in Q2. So that does sound like undoing the wave. Was there any indication if they’d unwind gradually over multiple quarters of just take the full hit in Q2? Also curious how this will work together with regional incentives ending like at the end of Q2 in the USA.

I agree with you. Remember hearing about the wave ending before, but not sure.

The last time, I believe it was thrown out the window when they needed to show result and then once stock price popped, a equity raise happened. I expect this unwinding of the wave to be thrown out the window once Capital raise mode gets activated.

 

[Causalien]

There's disagrees because that's how things roll here.

Somehow folks here will find a way to spin this earnings as something good.

Nah, ppl just haven't seen the result of the damage. Once it happened, nobody will disagree with you

There were other quarters before where shitty earning report didn't cause an immediate drop like this quarter. I need to remind people that TSLA released ER very late. It was waaay past most AH trading time and only a very selected few brokerage can trade that late. Tomorrow morning we will see the real response to what this ER is like.

 

[schonelucht]

Have you accounted for the lease accounting, which always gives me trouble?

Only 2 % of cars were subject to lease accounting this quarter, so that is at best a rounding error.

 

[Singuy]

If I understand correctly M3 ASP of $50k w/20% = $10k profit on $40k cost. Assuming the same values but cutting cost by 50% would translate to 60% GM. That would be incredible.
Interestingly, at this point, the SR+ must be very close to breakeven? I suppose playing the long game to get FSD feature complete by accumulating autonomous miles is worth it...

Why would Tesla want to undersell LR and up sell the SR+ when it's just breaking even?

 

[schonelucht]

Yes, but it's full service...

Meanwhile Tesla has the best FSS (Full Self Service) at their pump stations.

 

[kengchang]

Why would Tesla want to undersell LR and up sell the SR+ when it's just breaking even?

Doubt SR+ is breaking even only, Model 3 still having 20% margin. Also, Tesla can sell 3 SR for 2 LR worth of battery.

 

[Zhelko Dimic]

I wish you did the backseat driving in your own “mega” thread. Thanks in advance

Moderator closed it.
I thought that was very unfortunate and frustrating decision.

 

[schonelucht]

Panasonic may upgrade Japan plant to make advanced Tesla batteries: source

Not really good news, since if it is indeed a switch, it will lower the capacity ceiling for the S/X (currently at 100k).

 

[dqd88]

I have to take several days to digest this. It's just terrible planning by management to allow a quarter like this to happen. And then when it happens, lots of excuses are given. Management seems to execute well in certain areas but terrible in others.

Folks here can accept the excuses and that's up to y'all. But to me, it just sounds like excuses and skirting responsibility for poor/wrong decisions.

I'm reminded of a Steve Jobs story.

Steve Jobs told employees a short story when they were promoted to vice president at Apple. Jobs would tell the VP that if the garbage in his office was not being emptied, Jobs would naturally demand an explanation from the janitor. "Well, the lock on the door was changed,' the janitor could reasonably respond. "And I couldn't get a key."

The janitor's response is reasonable. It's an understandable excuse. The janitor can't do his job without a key. As a janitor, he's allowed to have excuses.

"When you're the janitor, reasons matter," Jobs told his newly-minted VPs. "Somewhere between the janitor and the CEO, reasons stop mattering."​

Cute story but not very relevant here. This is a long term story. There will be many ups and downs, even yet to come. If you are short term then yes, you'll be upset often. If you are long term, a quarter is not that important unless it points to long term problems. Q1 seemed to have some short term problems. What Tesla is doing (from a paradigm view) is mindblowing and near impossible, and there is no one in the world that would be able to steer this ship in a smooth fashion as you crave.
I didn't see anything super detrimental or out of the ordinary from the call. I do not believe they (management) are perfect. They have many areas they need to improve on, and it seems they will, but there is no template for them to follow, baptism by fire and we're along for the ride.

 

[KSilver2000]

Doubt SR+ is breaking even only, Model 3 still having 20% margin. Also, Tesla can sell 3 SR for 2 LR worth of battery.

Right, regarding the amount of batteries, they can sell 1 more SR. But, the profits from selling 2 LR is likely more than selling 3 SR. So, why purposely try to sell less LR?

 

[Anstandswauwau]

Right, regarding the amount of batteries, they can sell 1 more SR. But, the profits from selling 2 LR is likely more than selling 3 SR. So, why purposely try to sell less LR?

More robotaxis, man. Easy profit ...

 

[heltok]

Why would Tesla want to undersell LR and up sell the SR+ when it's just breaking even?

There is also FCA, FSD, DL and TN to mention a few acronymes giving advantage to having multiple SR+ over few LR.

 

[sundaymorning]

all signs point to battery as a bottleneck right now.

when the delivery numbers came out, i was pondering the possibility of energy side surprise because tesla auto didn't produce so many cars. now it appears that battery is the constraint.

maxwell acquisition is going to happen. this will help to release the pressure, but not immediately. I hope elon would do a round of raise and release the pressure this way. let the wall street boys have some fees. it's not a zero sum game. cannot loose sight of the big picture!

i'm pretty bullish on the long-term.

Oh he’s gna raise, don’t worry about that.

 

[Xpert]

Cute story but not very relevant here. This is a long term story. There will be many ups and downs, even yet to come. If you are short term then yes, you'll be upset often. If you are long term, a quarter is not that important unless it points to long term problems. Q1 seemed to have some short term problems. What Tesla is doing (from a paradigm view) is mindblowing and near impossible, and there is no one in the world that would be able to steer this ship in a smooth fashion as you crave.
I didn't see anything super detrimental or out of the ordinary from the call. I do not believe they (management) are perfect. They have many areas they need to improve on, and it seems they will, but there is no template for them to follow, baptism by fire and we're along for the ride.

This, and the fact that a bad quarter is fully priced in. $tsla went straight down from $300+ since deliveries came out. Price barely moved with $2M+ after hour volume is pretty telling. I fully expect short attacks tomorrow though so hard to say how far down it will go, but i also expect longs get get back in since most seem to have deleveraged or out prior to the call.

 

[sundaymorning]

I have to take several days to digest this. It's just terrible planning by management to allow a quarter like this to happen. And then when it happens, lots of excuses are given. Management seems to execute well in certain areas but terrible in others.

Folks here can accept the excuses and that's up to y'all. But to me, it just sounds like excuses and skirting responsibility for poor/wrong decisions.

I'm reminded of a Steve Jobs story.

Steve Jobs told employees a short story when they were promoted to vice president at Apple. Jobs would tell the VP that if the garbage in his office was not being emptied, Jobs would naturally demand an explanation from the janitor. "Well, the lock on the door was changed,' the janitor could reasonably respond. "And I couldn't get a key."

The janitor's response is reasonable. It's an understandable excuse. The janitor can't do his job without a key. As a janitor, he's allowed to have excuses.

"When you're the janitor, reasons matter," Jobs told his newly-minted VPs. "Somewhere between the janitor and the CEO, reasons stop mattering."​

Audi is having problems with etron, going from 50,000 to below 10,000 on future productions. For this reason I think the struggle is real. We’re not dealing with iPhones is my excuse

My second excuse is the tax credit thing.

Third excuse is that the oil companies didn’t spend millions on campaigning against iPhones per year.

From now till Model Y I expect more hiccups.

Let’s switch this question around, what’s apple’s excuse for the failure and very slow pace of project titan development? It’s been years and apple is still a no show here. In the past 20 years there’s been dozens of new phone companies popping up, in the last 100 years there’s been 1 new car company in America, the difficulty scale is way beyond apple’s iPhone league here.

 

[BioSehnsucht]

True, but winged, horizontal landing vehicles were baked into NASA's design space since the very beginning (think X-plane programs). The only vertical landing concepts NASA was involved with were the Chrysler SERV concept of 1970 (went nowhere) and of course the McDonnell-Douglas DC-X/Y flight test/concepts of the 1990s.

But NASA never took vertical landing seriously.

True, I should have clarified that I wasn't saying NASA would have had SpaceX tech in the 70s, but that the overall system (costs, and flight rate, and ...) wouldn't have been such a sugar-show if things hadn't been twisted to the AF's whims to such a degree.

As for DC-X/Y, it was doomed to NASA no longer being the NASA of the 60's or even the 70's. NASA from 80's onwards was too timid and constrained by politics and funding to take anything like that to completion, even if they hadn't had road bumps.

 

[Zhelko Dimic]

It's hard to reconcile dichotomy of 1. technical expertise I see in Tesla products vs. 2. massive screwup that this quarter is, and implications of incompetent execution. And lack of 'mea culpa'.

For the first time ever, I feel (likely irrational) fear Tesla won't succeed; as I don't know how much to trust Tesla management.

It's time for Elon to let someone else lead.

 

[Singer3000]

Even though things seem gloomy right now, I for one will sleep a lot better once the Maxwell deal is official.....that tech represents the path to major profits across future S/X, 3, Y, Semi, and Pickup. Everything else right now when it comes to margins/profits/etc... is noise.

Is it? It might be. But it might not be. Refer to Silevo vs Grohman. Sometimes these acquisitions work out well and sometimes they don't. You should see it as bad times if this on-off fairly small acquisition is the path to profits.

 

[kengchang]

Right, regarding the amount of batteries, they can sell 1 more SR. But, the profits from selling 2 LR is likely more than selling 3 SR. So, why purposely try to sell less LR?

Battery aside, Tesla is also making money on everything else in the car and AP/FSD (Software has huge margin)