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

[TradingInvest]

Large cities won't tolerate ICE vehicles for street pollution alone. There is zero reason to allow new ICE on city streets when high quality EVs are available. People will start to vote the mayors out if they don't fully support EVs.

I think at this point the investment world understand ICE business is not a sustainable business. They just don't know how to deal with it. ICE industry is still making 100 billion dollars profit a year.

On the other hand, they understand EV is the future, they know Tesla is leading, but they also don't know how to deal with Tesla. After all, "Tesla will run into demand cliff next year, and Tesla loses money on every car". /s

I think Tesla shares will be in high demand after two more quarters.

 

[Fact Checking]

Looks like production is starting by February.

What do you base this date on?

 

[wipster]

A company built a 6 MW solar power plant on my land. I recently went there to take a look, the scale is impressive. If they want, I will let them build another 50 MW. This is definitely better than burning coal and natural gas, both environmentally and economically.

For years we talked about EV is the future, we finally get to the tipping point. The future is solar+energy storage+EV. In the next few years Tesla car's all-in cost will reduce at least 30%, quality/features will continue to improve, margin will improve a lot because of software package. I consider myself fortunate that many Wall Street analysts don't understand what's happening.

Edit: Elon and Robyn both said they believe Tesla's EVs are appreciating assets. What does that mean? To me, that means they will be able to raise price in the future. When sales increase several fold, cost goes down by 30% per vehicle, retail price goes up, it will translate to high gross margin.

Just curious, how much land did it take for 6MW?

 

[LoveTSLA]

From Help Us Plant 20 Million Trees - Join #TeamTrees

Encouraged my mid schooler donated 50 trees using his allowance money he earned from cutting the grass in the summer. Elon effects.

 

[ZeApelido]

What do you base this date on?

Model 3 first release candidate seen end of March 2017 (tweeted out by Musk). Basically 4 months from production start.

Based on Model Y sightings so far, I feel like we are in early April 2017 for amount of sightings.

If we assume similar time to production, then yes that would be January / February.

Since Tesla is always improving, maybe it's even faster

Why would anyone think it is a slower ramp to production than the Model 3?

Yes, I am basing this on what is observed, not what Elon says.

Note Elon also B.S.ed the idea that the Model Y was going to be built at GF1. And downplayed Model Y at its own reveal. And has already sandbagged the timeline.

There is no evidence that production will start later than Q1

 

[ZeApelido]

Back in my day (err 3.5 years ago, lol), folks were going crazy to see the first release candidates of the Model 3.

Tesla Model 3: new blue release candidate spotted testing on the highway [Video] - Electrek

3 months before production started.

Meanwhile, in 2019, people do not seem that excited about Model Y RCs on the road, and are afraid to think that production is imminent.

Almost like you have all been traumatized by Model 3 production hell

 

[Skryll]

Passenger: So how do you like the car?

99.6% of Cabbies: It's a pleasure to drive

99% of cabbies: wtf is this doors, how do I get in and out ? 98%: Love it anyways, gliding ride, glass roof, clean dash, acceleration, vents, navigation voice, play anything via slacker/spotify, karaoke, ...

 

[Doggydogworld]

I agree this $375m includes both accrued liabilities and accounts payables related to capex. It is a balance sheet number though (despite being disclosed as a cash flow note) - it doesn't matter which year the asset was added to PP&E, it includes everything.

That's not how I read it. And I can't make sense of it dropping from 914m on 12/31/17 to 287m on 3/31/18 using your interpretation. They added 740m to PP&E in that quarter yet capex was only 656m.

It's possible GF3 has partially been moved to land & buildings, but I guess most GF3 spend is still in construction in progress. Hard to know really.

Yeah, they only added GF1 and GF2 land and buildings when they were "put into service" even though they had the "intended use" language then as well. Based on that I'd say GF3 was still all Construction in Progress on 9/30.

Either way, the accounting treatment (nothing new under build to suit lease), together with Tesla's repeated insistence they own the factory (and lack of disclosure to the the contrary) is increasingly suggesting to me that Tesla does own the whole factory and all the equipment and tooling. I suspect the nature of the deal from Shanghai was simply that Shanghai's construction company would offer Tesla a quote far below market value to complete the construction project.

I don't really care what name is on the title. What's that really mean, anyway, especially in China? It's not like Tesla could say "thanks for the Stamping Press, welding robots, paint shop and other free equipment, we've decided to relocate it to our new GF5 in Viet Nam".

I'm interested in how much GF3 cost and who paid for it, both upfront and over time. I say it cost ~1.5 billion. Tesla paid 141m upfront and will pay 500m upfront for tooling and incidentals. They'll borrow that 500m, but will repay it either next March or over time if they re-fi.

It seems China, Inc. paid the other ~850m upfront. I'm confident Tesla will not start paying on that ~850m for at least a few years, if ever. But there's no real way to know.

 

[M3Rider]

Large cities won't tolerate ICE vehicles for street pollution alone. There is zero reason to allow new ICE on city streets when high quality EVs are available. People will start to vote the mayors out if they don't fully support EVs.

I think at this point the investment world understand ICE business is not a sustainable business. They just don't know how to deal with it. ICE industry is still making 100 billion dollars profit a year.

On the other hand, they understand EV is the future, they know Tesla is leading, but they also don't know how to deal with Tesla. After all, "Tesla will run into demand cliff next year, and Tesla loses money on every car". /s

I think Tesla shares will be in high demand after two more quarters.

Yep, Bristol trying to ban diesel cars from 2021
New map shows where diesel ban and clean air zone would be

More of these need to happen, so people start thinking really hard if they want to have a car banned from the cities.

 

[TradingInvest]

Just curious, how much land did it take for 6MW?

Slightly more than 20 acres. As Elon said, a tiny portion of land covered by solar panels can supply the whole nation. The only reason why we can't move to sustainable energy faster is because of political reasons.

 

[Artful Dodger]

Why not? It is Tesla. Nothing is written in stone.
Besides, they can name the new building whatever really. Until something comes out of it we will not know for sure.

Because I can.

Because this would surprise everybody, shorts included.

Last, current Fremont alone will not be able to produce enough model Y to satisfy planned demand.

There's no Paint Shop at Lathrop. There's no huge multi-ton Stamping Press. It's a 33 mile trip to the seat factory. Model Y can not be built there without a huge increase in logistics.

Better to fantasize about Semi production there I think. Plastic aero body means no stamping and painting? Closer to Sparks/GF1 for motors, btys and electronics.

Cheers!

 

[M3Rider]

Slightly more than 20 acres. As Elon said, a tiny portion of land covered by solar panels can supply the whole nation. The only reason why we can't move to sustainable energy faster is because of political reasons.

Anybody remembers if long distance power transmission makes sense financially?
Like from TX to NY?
There are places with less sun or more seasonal or blackouts due to storm etc., when local solar production won't work...This will surely come up with people being afraid if they freeze to death during those periods if they depend on solar.

 

[adiggs]

Encouraged my mid schooler donated 50 trees using his allowance money he earned from cutting the grass in the summer. Elon effects.

That sounds like something worth tweeting back at Elon. I bet he'd like that.

 

[KarenRei]

Anybody remembers if long distance power transmission makes sense financially?
Like from TX to NY?

Yes. HVDC (and to a lesser extent, HVAC). China does this large-scale already.

Size comparison map:

Highly efficient, and cheap per unit distance per unit power. Also allows sharing power between disjoint AC networks.

 

[jerry33]

Anybody remembers if long distance power transmission makes sense financially?
Like from TX to NY?

TX to NY can't be done (without a lot of pain) because TX is on it's own incompatible system. To bridge there has to be a rather expensive connector built (there are two small connectors built IIRC from the presentation I attended).

 

[Fact Checking]

Based on this Jonas interview, I believe MS switched to long. I don't really care if they are long or short. I do want to know what all the players are doing.

Adam Jonas appears to still rate Tesla as a Hold as he has for most of the last two years. His price target is $230.

Jonas at TipRanks: https://www.tipranks.com/analysts/adam-jonas

He certainly sounded positive on Tesla during that interview. An upgrade would not be surprising.

Amazingly, I agreed with 90% of the points Adam Jonas made. In this interview he certainly was showing an increasing amount of respect towards Tesla, and even defended Tesla against the negative narrative of the Bloomberg reporter.

The contrast he drew between Toyota (most valuable auto company with zero EVs) and Tesla (most shorted auto company with only EVs) was downright genial. I almost came to the conclusion that he cares about the EV transition.

A few mistakes he made IMO:

• He hyped fleet EV sales - while missing the immense rate of simple ICE replacement sales that are ~15 million vehicles per year in the US alone. Those are the primary target of EV market share expansion. Yes, more difficult - but also highly lucrative and the viral marketing is very valuable for zero-advertising Tesla, more so than corporate fleet sales.
• He completely ignored the commercial EV truck business (Tesla Semi), which is both huge and high margin, and easier to disrupt because fleet sales are indeed the major expansion factor there, and it's the bottom line that matters in the trucking business, not perception and consumer fears. Regulatory limits against ICE trucks will also be imposed faster, once there are competitive EV trucks.
• He thinks Tesla's China margin improvements will be temporary: big mistake, China wants 100% EV sales by 2030-2035, and they just built a factory for Tesla in record time to accelerate that process, using their star state owned construction firm that they use for high profile construction projects. China: ~25 million vehicle sales per year, ~5 million of them in Tesla's price category ... addressable market: 10x of Tesla's current global production, and if China GDP grows 6-7% per year that expands car ASPs as well.

But nice interview overall, I can see the old Adam Jonas of 2015-2016 who was a Tesla super-bull, rising from the ashes again.

 

[Right_Said_Fred]

Note that for Tesla's ZEV revenue purposes what matters most is not the average pollution and how it relates to the industry average, but the "absolute excess emissions" of FCA-PSA-Opel combined firm - and this indeed would increase at least 3.6x-fold after the merger (!).

PSA has a number of ZEV vehicles, but they are already included in their 114g/km average, and they are a long way from 90g/km.

The fact that FCA's emissions got worse by +5 g/km is proof that reducing emissions in the ICE industry is hard: they'd have to cut some of their most profitable lines of business, and the rest would still be polluting.

A 3x increase in the pool size means that Tesla's potential revenue maximum from EU ZEV credits increases 2x-3x (not exactly 3.6x due to 'super-credits' which are somewhat diluted by the merger).

Since the pooling agreements are exclusive, i.e. Tesla is not allowed to pool with other ICE carmakers anymore and they require FCA's permission to expand the pool and FCA might not have allowed some other ICE manufacturer into the pool even if Tesla reduces the average emissions to below 90 g/km, an expansion of the pool is a Big Deal IMHO and big positive for Tesla.

If FCA ZEV pooling revenue of Tesla was estimated to be $1b/year in Europe, this proposed merger increases that to $2b-$3b/year (to the extent Tesla can ramp up in Europe) - as it's unlikely that FCA-PSA-Opel would be able to ramp up to Tesla's scale of ZEV vehicle production and sales anytime soon.

It’s a pity it takes another two years before GF4 starts producing Model 3 and Y in Europe. With the lower pricing (no import tax, lower transport costs) they could have sold a lot more and earned more credits from FCA (and PSA).

I wonder if Tesla could adopt the following interim strategy in 2020 and 2021: use the FCA credits to substantially lower the price of Model 3 and Y in Europe, in order to sell more and earn even more credits (and so on).

 

[S3XY]

Kind of surprised to see Buffalo News getting in on the FUD parade. I guess their owners aren't big fans of Cuomo and the GF2 tax incentives.

Column: Five reasons why Tesla's 'really cool' solar roof isn't a surefire hit

Saving you the click....

"It's a cult that can't even get to space."
"No one will buy this online."
"Too hard to install."
"Dow Chemical couldn't do it."
"It'll probably catch fire."

David Robinson's columns have always had a negative bent towards Tesla. Also, the Buffalo News is owned by Berkshire Hathaway. Hmm, why does that name sound familiar?

 

[Artful Dodger]

Anybody remembers if long distance power transmission makes sense financially?
Like from TX to NY?

HVDC could create a world-wide grid for renewables, such that the sun would never set on solar energy. Now the political borders aren't an issue that can be solved with technology.

 

[TradingInvest]

That's not how I read it. And I can't make sense of it dropping from 914m on 12/31/17 to 287m on 3/31/18 using your interpretation. They added 740m to PP&E in that quarter yet capex was only 656m.

Yeah, they only added GF1 and GF2 land and buildings when they were "put into service" even though they had the "intended use" language then as well. Based on that I'd say GF3 was still all Construction in Progress on 9/30.

I don't really care what name is on the title. What's that really mean, anyway, especially in China? It's not like Tesla could say "thanks for the Stamping Press, welding robots, paint shop and other free equipment, we've decided to relocate it to our new GF5 in Viet Nam".

I'm interested in how much GF3 cost and who paid for it, both upfront and over time. I say it cost ~1.5 billion. Tesla paid 141m upfront and will pay 500m upfront for tooling and incidentals. They'll borrow that 500m, but will repay it either next March or over time if they re-fi.

It seems China, Inc. paid the other ~850m upfront. I'm confident Tesla will not start paying on that ~850m for at least a few years, if ever. But there's no real way to know.

A while back (before GF3 construction) I saw news saying Tesla borrowed money from Chinese banks to build the factory. I assume Tesla wants to build and own their factory to make sure they have full control down the road. Maybe they negotiated ways to delay payments to the construction companies. This makes sense because construction companies are eager to find large projects. Once Tesla ramp to 3000 vehicles per week, they will have large cashflow to handle all the payments. On the machinery side they used to delay payment until real production starts.