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

[ReflexFunds]

At $1 per mile my guess is 30 cents per mile profit with 70 cents going towards, electricity, maintenance and insurance... Telsa owns a Supercharging network and will have it's own insurance company... For private cars the owner gets 20 cents and Tesla 10 cents..
Tesla can use cheap "off lease" cars for some portion of the fleet....
My estimate is 30 cents per mile by 90 miles per day x 365 = $9,800 profit per year - road use charges..
The software cost of building and running the network is diluted if the fleet is sufficiently large..

Are the Uber drivers happy to make 30 cents per mile for 90 miles per day or $27 per day?

The Robo-taxi never complains ...

The initial price will be $2-2.5 per mile. There is no reason to price below the competition when the competition are already at breakeven pricing.
Of course this price will come down eventually, but only when all Ubers and Taxis are bankrupt and Tesla competes it’s own prices lower.

All in costs, including depreciation, will be <$0.3 per mile.

For example, a single Tesla Robotaxi in the US with the same pricing and utilisation rates as Uber/Lyft ($2.5 per mile, 70% passenger miles) should be able to drive around 88k miles per year (15 hours per day, average 16 miles per hour), making $150k revenue and $138k gross profit in a single year. How much of this gross profit goes to Tesla vs the owner is entirely up to Tesla. If Tesla takes a higher cut of revenue, then the value of the Robotaxi to an owner is lower. I would guess around 50% of gross profit could be a good balance, leaving around $70k gross profit for the car owner. On this structure a new Tesla owner likely has to pay well over $100k upfront price of the FSD option to Tesla upfront.

Uber & Lyft's overall average revenue per mile are lower than the US due to Asia/Latam country and scooter mix, but overall in 2018 Uber and Lyft together made 30 billion miles of customer journeys making $50bn in gross bookings and with 5 million active drivers in the final quarter. This 30 billion miles and 5 million drivers could be replaced by about 500k Tesla Robotaxis - and on the Robotaxi cost base these journeys would make a total $43bn gross profit (compared to the approximately $0 gross profit made by Uber & Lyft).

Of course, if Tesla released 500k Robotaxis the cars wouldn't make quite this much money - the increased number of taxis on the roads would reduce utilisation from the current c.70%. While Robotaxis are still competing with Uber/Lyft (US breakeven at $2.5-3 per mile) and taxis (US breakeven at $3-3.5 per mile), there is no reason for Tesla to price its Robotaxi journeys much less than $2.5 per mile in the US.
Looking globally, beyond Uber & Lyft's markets, I think it would take 2 to 4 million Robotaxis to put all ride hailing, taxi and car rentals out of business, at which point Robotaxis start competing with themselves and then there is an incentive to lower pricing to increase ride hailing adoption rates. But until there are 2-4 million Robotaxis on the road globally, each Robotaxi is still likely to charge around $2 per mile and make over $100k gross profit per year.

As we go from around 4 million Robotaxis globally to around 200-300 million, the price per mile is likely to be slowly driven down towards the cost of personal car ownership of around $0.6-0.7 per mile (as more and more people make the decision to rely fully on Robotaxis). Past this point, as more Robotaxis are built, price should be driven closer to the EV AV operating cost of c.$0.2 per mile, with Robotaxis now driving a significant increase in annual miles travelled as people switch from public transport, travel more due to the lower cost and potentially move further into the suburbs now transport is more easy. But this is a long time away. I think Robotaxis should still make over 50% margins until more than 200 million are on the roads.

 

[Remus]

I’m well aware of the solid facts and science behind Elon’s “fool cell” take on fuel cell technology.

That said, my brother forwarded the article below to me this morning, and I do not have the chemistry background to determine if this is a different enough approach to sourcing hydrogen to have any potential of being more than a gimmick.

If some here with the background to determine if first principles says this process has potential or not could take a look and share their assessment, it would be greatly appreciated.

Quick note, at first I was ready to dismiss it as I thought they were describing a process to create electricity to then create hydrogen, but, they seem to be saying hydrogen and electricity are both products of this process.


Powerhouse Energy is turning plastic into fuel for hydrogen cars - CNN

Don't you still have to bear the cost of compression, leaking, erosion ... Of hydrogen?

 

[StealthP3D]

The part about heating the plastic to 1800F means you'll probably consume more energy than the syngas would produce. This would be great for breaking down and recycling plastic waste, but terrible as a source of H2 or electricity. It's like getting ethanol from corn - net negative as an energy production method.

While I'm against subsidizing ethanol from corn, it is only net negative in terms of energy production if it's not done efficiently or (more often than not) the numbers used are artificially stacked against ethanol production. This kind of biased net energy comparison is done by many of the same interests that are against Tesla because it will eat into oil demand. In the US alone, ethanol reduces gasoline demand by about 8%. That's more than enough reduction in demand to drastically lower the value of refined gasoline in the US because it removes demand from existing oil refineries. Gasoline supplemented with ethanol reduces the cost of gasoline in other ways also. By naturally raising the octane of gasoline without the more expensive components used in lieu of alcohol, more gasoline can be made from a barrel of crude (before it is diluted with ethanol). It takes more oil to achieve the right mix of octanes the market demands (if ethanol is not used)

On the other hand, now that the world is on the cusp of the BEV revolution, maybe more expensive gasoline is a GOOD thing to accelerate the transition.

 

[StealthP3D]

That said, using a narrow focus. Q1 is seasonally low for all auto sales in terms of demand, and there are some tax headwinds for Q1 20, and Tesla will stop exporting low spec 3's to china from Fremont. If Tesla were ready for manufacturing the Y there may be some cells they could reallocate to a "founders edition" Y or just the fully optioned Y limited to the west coast USA only - with mass manufacturing only coming online when new cell production scales.

The benefit would be high cashflow vehicles being sold to bolster a traditionally weak quarter. If there was too much demand for the fully optioned Y, tesla could change the product mix of the 3 to reduce demand for the lower margin variants (e.g. turning autopilot into a mandatory purchase with a new vehicle, or just increasing the price of the lower end vehicles) until their production capacity caught up.

That's a good point. By releasing the more expensive versions of Model Y in advance, they will naturally raise their revenues and profit margins even as the Model Y cuts into their Model 3 sales.

 

[Tenable]

How so? How about this:

"Overachievers are the norm, not the exception, in downtown San Francisco. These people will stop at nothing to get a master's or a doctorate, a higher paying job or a better deal on a nice townhouse."

I think "these people" simply refers to the previously stated group of people. Not condescending at all.

WHAT DO YOU MEAN NORM!!??!

 

[StealthP3D]

Hmmm........so could there be any possible connections between this graph and JP Morgan's Ryan Brinkman having a whopping $200 price target for TSLA and an 'underweight' rating.....?

I just wanted to point out that your alias image puts a nice exclamation point on that comment of yours.



And this isn't the first time I've noticed that!

 

[hobbes]

A few Model Y at seen at Fremont:
Tesla Owners Online on Twitter

 

[PeterJA]

I’m well aware of the solid facts and science behind Elon’s “fool cell” take on fuel cell technology.

That said, my brother forwarded the article below to me this morning, and I do not have the chemistry background to determine if this is a different enough approach to sourcing hydrogen...

The solid facts and science make hydrogen a bad idea for cars regardless of the source.

1) Low energy density.

2) Low energy of ignition (any leaks ignite easily).

3) You can't see a burning leak because the flame is invisible.

4) It won't stay in containers because of the tiny atomic size.

5) It embrittles metal containers and fittings, which causes spectacular failures.

6) Any leaks pool on the ceiling where they are easily ignited by light fixtures. (Don't park the car indoors.)

7) It blows things up, even things that don't move. Following hydrogen facility explosion, fuel-cell vehicle owners left stranded

8) Cars can move and crash.

I will never drive a hydrogen car, even if the fuel is free (which some automakers had to do to sell the cars). Hydrogen is a specialty fuel for niche applications, not consumer products.

 

[ZeApelido]

Reveal to prototypes on streets to production times have gotten shorter with each new vehicle. Model Y will follow suit.

 

[Artful Dodger]

Remember, Model 3 prototypes were starting to be seen 3 - 4 months before official production started.

Yes, likely the case that these are alpha prototypes build for testing / validation before the new lines are ready. Notice that all the trim brightwork is in chrome color? The Model Y production cars will have blacked-out trim a.k.a. "chrome delete" treatment.

I find it more interesting to speculate if these alphas were hand built (esp. welding), or at least partially built on the EXISTING Model 3 lines? If so, this could speak well for the possibility of having a new flexible line which can produces 3/Ys in series. Then a subsequent upgrade to the existing 2 Model 3 lines gives Fremont enormous flexibility for product mix optimizations, again esp. to deal with the inevitable surge in Model Y demand on first availability.

Overall, good times!

Cheers!

 

[Buckminster]

View attachment 466079 Tesla Owners Online on Twitter

Model Y spotted. Seems they are being shipped out. Showroom models? Whatever, getting close now.

Guidance is Q3 (call it August), "3 month first spotted M3 to production" rule suggests Feb. Split the difference, full production of MY starts May. There is going to be much less interest in MY compared to M3 at this stage on the internet. Osborning will be minimal based on 1 photo.

Shipping multiple prototypes at the same time suggests they aren't struggling to build. They ought to be able complete homologation in record time if they have plenty of prototypes built and the fact that 75% of parts are already qualified.

Are those wheels new?

 

[StarFoxisDown!]

Yes, likely the case that these are alpha prototypes build for testing / validation before the new lines are ready. Notice that all the trim brightwork is in chrome color? The Model Y production cars will have blacked-out trim a.k.a. "chrome delete" treatment.

I find it more interesting to speculate if these alphas were hand built (esp. welding), or at least partially built on the EXISTING Model 3 lines? If so, this could speak well for the possibility of having a new flexible line which can produces 3/Ys in series. Then a subsequent upgrade to the existing 2 Model 3 lines gives Fremont enormous flexibility for product mix optimizations, again esp. to deal with the inevitable surge in Model Y demand on first availability.

Overall, good times!

Cheers!

That actually looks like tape to over the blacked out trim. It cut off sharply into black trim in the back

 

[M3Rider]

Of course not, I hope the EV market grows and that a number of companies are able to produce state-of-the-art EV's. But if the reason someone is a Tesla fan is that they make the most technologically advanced EV's at a compelling price point, then it would be assinine to overlook the fact that other EV makers are selling inferior EV's at non-competitive prices just because you want them to succeed. In other words, it's not "dumping" on other EV's if you are keeping it factual.

Nobody gets a free pass just because they are making a BEV, regardless of how uncompetitive it is.

A lot of buyers of other EVs will be those affected by FUD. They will think EM is evil and does not deserve a purchase going his way and the only difference between EVs is a company logo and a few extra buttons lacking in Teslas...
They will learn the hard way.

If there was too much demand for the fully optioned Y, tesla could change the product mix of the 3 to reduce demand for the lower margin variants (e.g. turning autopilot into a mandatory purchase with a new vehicle, or just increasing the price of the lower end vehicles) until their production capacity caught up.

Hello, AP is mandatory. Unless Tesla still honors $35k car off the books. They should really limit these to reservation holders.

The initial price will be $2-2.5 per mile. There is no reason to price below the competition when the competition are already at breakeven pricing.

The reason is marketing. Those affected by FUD may try to avoid Tesla. Also, the fear of robots trying to kill you. But if they cost 2x less, it will be hard to do.


Btw, 6 days green in a row does start looking like short covering. Maybe the big ones know something and by ER we'll have 30M shares short left.

 

[T@oo]

That actually looks like tape to over the blacked out trim. It cut off sharply into black trim in the back

Agree. Also doorhandles and wheel housings are now color matched with the body. Not black like prototype or website. I like the new rims. I'd really like if Tesla could provide some more options. Could be even a SeC fit not factory to ease production.

 

[MC3OZ]

The initial price will be $2-2.5 per mile. There is no reason to price below the competition when the competition are already at breakeven pricing.
Of course this price will come down eventually, but only when all Ubers and Taxis are bankrupt and Tesla competes it’s own prices lower.

All in costs, including depreciation, will be <$0.3 per mile.

I wasn't clear, I consider my price the final end price in a fully saturated market, basically as low as it is likely to get...

And it is hard to define as we don't know customers expectations in terms of service, but my hunch is it is close to instantaneous, they want a Robo-Taxi at the scheduled time... and fairly soon after requesting one.

I also think cars have to be cleaned after every shift, but in bulk that is $20-$30 per car..... so perhaps there are some additional costs but nothing major..

 

[Robertj]

Interesting article on where Uber is headed , Berlin appears to be leading the trend
Traditional car companies looking desperate

'One app to rule them all is dead': How Uber and Lyft can get disrupted

 

[Singer3000]

Guidance is Q3 (call it August), "3 month first spotted M3 to production" rule suggests Feb. Split the difference, full production of MY starts May. There is going to be much less interest in MY compared to M3 at this stage on the internet. Osborning will be minimal based on 1 photo.

Shipping multiple prototypes at the same time suggests they aren't struggling to build. They ought to be able complete homologation in record time if they have plenty of prototypes built and the fact that 75% of parts are already qualified.

Are those wheels new?

Where are we with battery supply for the Y? Won’t this be the determining factor of the ramp schedule?

Hard to see how Y ramps before Shanghai has its own battery supply. Wasn’t the speculation that Giga3 will make batteries out of the Phase 2 part of the plant? Which is due to complete end of March if recent news is correct. Presumably this refers to the structure, not the tooling, which would I guess take several months to install and fine tune.

You can then switch 3k/week battery packs from Nevada back towards Fremont for the initial ramp of the Y, but surely not before.

To everyone bigging up a Q1-2 rapid launch of the Y, where are the batteries coming from?

 

[avoigt]

What we have seen yesterday was another impressive SP run driven by no obvious or breaking news in an overall weak market leaving important resistance levels behind despite a still huge short engagement.

Its a behavior change and decoupling from market I have been waiting for a while and despite consolidation that may happen the more important information is that the so far usual trading range was left behind which is important for technical traders but even more important we may have a different kind o buyers getting in which may change the rules of the game we have seen in the past.

This days are painful for short sellers and smart once may intend to protect their gains they did in 2019 even if it was to balance losses they did in previous years. If that happens and short interest is going down while large investor getting in we may see a step change how the stock is traded.

We all should have no doubt that the market will try to play after ER the SP down but the question is if those messages still stick. In the past the SP has been determined by short sellers with smart manipulation but they only could do that because most have been very long term investors, new buyers have been just a few and some of the bulls have been uncertain or believe in swing trading.

The SP determination never has been fair, balanced or even transparent and considering the real value of Tesla the $250 are a real joke. While some here may feel pain I feel perfect having stocks I know are drastically undervalued but that has obviously to do with the personal situation and if you need the capital short term. Thats why I always say never invest money you may need soon in Tesla.

We don't know what the ER will bring but we know the spin doctors will try to define the narrative. A clean ER and call would be appreciated and helpful and more traders may be attracted maybe institutions with a + $100/s opportunity and in a perfect world we would have a run in front of us until year end. The tide can change more quick than people assume if a few factors come together.

The negative scenario is a mix result or a positive result they are able to redefine, FUD is spread and investors decide to wait another quarter and everything is postponed with a SP pressed down in the range. To my surprise they managed that well in the last months keeping the uncertainty and manipulation but I also believe in big oil & gas money that is used to keep Tesla down.

In any case there is not alternative for the SP to go up be it a bid earlier or later. Even if we get back to previous high levels, IMO and with my investment strategy its still a bargain and buy.

 

[Christine69420]

I’m well aware of the solid facts and science behind Elon’s “fool cell” take on fuel cell technology.

That said, my brother forwarded the article below to me this morning, and I do not have the chemistry background to determine if this is a different enough approach to sourcing hydrogen to have any potential of being more than a gimmick.

If some here with the background to determine if first principles says this process has potential or not could take a look and share their assessment, it would be greatly appreciated.

Quick note, at first I was ready to dismiss it as I thought they were describing a process to create electricity to then create hydrogen, but, they seem to be saying hydrogen and electricity are both products of this process.


Powerhouse Energy is turning plastic into fuel for hydrogen cars - CNN

Bjørn Nyland made a video about HY cars. What was an eye opener for me is how slow and cumbersome the filling stations are.

While filling one car is fast enough - the station needs frequent breaks so that one station can only fill up like 4 cars per hour. And the filling stations are very expensive to build.

This is not a problem now with so few cars around it will become a real bottleneck soon when more than 4 cars pull up to tank up.

 

[Causalien]

Interesting article on where Uber is headed , Berlin appears to be leading the trend
Traditional car companies looking desperate

'One app to rule them all is dead': How Uber and Lyft can get disrupted

Chaos in Berlin is as it should be. But can't see it working in other cities though. Berlin is a special one.