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

[j6Lpi429@3j]

As someone who writes 90% of his code, but occasionally uses middleware from 3rd parties, I can vouch for having stuff done in house to be MASSIVELY simpler, easier, quicker, more reliable, and in the long ruin, dramatically cheaper. Anybody with software engineering experience would agree, and I think a core reason tesla is the only car company that gets this is that they are the only one whose CEO can code in C++. The future of cars is software, not hardware, and no other car company CEOs have a clue what it even is.
May buy some more stock, even at this price...

 

[Fact Checking]

Tesla certainly doesn’t write all of their software themselfves. I remember that when they updated the Model S radar software to see beyond the the first car in front, they had to cooperate with Bosch to have Bosch change the radar firmware.
Over time Tesla has produced more an more components in-house, so they probably do write much more software themselves compared to other car manufacturers.

Certainly not 100%, but they are almost certainly above 90% vertically integrated in the software space.

I'm pretty sure Tesla has their own radar unit in the pipeline as well.

 

[KarenRei]

How long before market opens?

 

[SebastianR]

That's worse than I thought it was.

Let me extend my statement:

• Tesla's cars are 5 years ahead,
• Tesla's factories are 10 years ahead,
• Tesla's software is 15 years ahead.

I'm not joking.

Well funded, huge financial institutions like Deutsche Bank have failed with 10 year projects to get rid of heterogeneous software platforms. (A large part of Deutsche Bank's downfall was the lack of control over their software platforms, which forced them into a destructive spiral of compensating lack of internal efficiencies and lack of scale with riskier financial bets.)

The quirky physicist-economist software nerd with a mild Twitter addiction understands this very well. He is one of Tesla's most valuable assets going forward, as Tesla's business plan starts to branch out for real ...

Check this out: VW says a lot of interesting things. The software part is slide 14, problem is they don't seem to have the strength to do this themselves (look at the collaboration partners they show on slide 16):

https://www.volkswagenag.com/presen...19/12_december/2019-12-09_Evercore_RS_Ldn.pdf

There are reports that VW wants to go from currently 500 developers to 2000 developers at the end of this year and then on to 10.000. Of course this does not help if your assets, strategy and leadership is not aligned.

And the reports that they have thousands of ID 3 in a parking lot without working software (and even need to manually update them once the software is ready since not even the OTA functionality is there) doesn't help me become a believer. The problem? VW is probably one of the best of the legacy car makers...

 

[Fact Checking]

Yes they should be able to do this. From Tesla's perspective it is essentially the same as choosing to pay the convert holders in cash. Just different processes in the finance department behind the scenes and a different announcement to convert holders.

I suggested this because deep in the money call options are generally less liquid and more inefficient to sell.

IIRC the cash conversion process is a complicated 30-day VWAP-alike pricing process that establishes a final conversion price based on daily closing prices, for cash conversion?

If Tesla instead excercises those call options then they'll be protected from any price fluctuations in the pricing period.

But maybe all these methods were engineered to be roughly equivalent.

Btw., one other option Tesla has is to do a partial cash conversion: they can pay for example 50% in shares, 50% in cash.

If they did so then they could possibly cover a fair chunk of the cash cost from the sale of the 100% call options alone, and reduce dilution to half.

 

[CorneliusXX]

Indeed. Right now I see no force that could turn these ocean liners:

• If you have significant wealth invested in Toyota shares you "see the EV light", you don't start trying to pressure Toyota execs to embrace EVs. You sell your shares and buy TSLA instead.
• If you are a capable employee of one of the big OEMs and you "see the EV light" you don't have to fight the existing inertia and anti-EV corporate culture: you can apply at Tesla or another EV-friendly OEM like VW instead.

Freedom of capital and freedom to work elsewhere has, somewhat ironically, concentrated the anti-EV elements and reduced the ability of big OEMs to embrace EVs...

@avoigt has a better insight into German OEMs, but I think they already have trouble retaining good software developers - the result of outsourcing most of the automotive software to suppliers and allowing it to fracture into a heterogeneous mess.

Tesla's approach is superior: they vertically integrated software not just into their cars but into their factories as well ("Factory OS"), a largely unified software platform that not only allows much faster R&D and a better user experience, but is also fun to work with and attracts top software talent. Software is treated as a core competency by the Tesla CEO himself.

Tesla's cars might be 5 years ahead of the competition - but their factories are 10 years ahead ...

Toyota effectively can't go broke. No matter how poorly they perform they will get funding from Japanese banks and bailouts from the Japanese government. Even if restructuring and favorable subsidies are required.

That doesn't mean they will become a competitor to Tesla any time soon, it just means they won't disappear.

 

[CorneliusXX]

Btw., were do debt funds make money in this scheme? The convertible notes are only paying 1-2%, which is lower than money market rates.

Do they simply use the cash proceeds from the short sale and reinvest them, thus basically gaining Tesla's rate plus money market rates?

If it's the latter then indeed they'd lose 3 months worth of "double interest rate" time value, right?

Most debt funds make money through leverage. The notes they own may only pay 2% but they can likely borrow against the notes at a lower rate.

As a simple example. If they own $100m of notes paying 2% and borrow $80m against them at 1% in a year they would have net income of ($2m - $0.8m) =$1.2m over $20m exposure. An effective return of 6%.

 

[JohnnyEnglish]

Okay, since we're all doing this game:

S+X @ 75k (significant uncertainty, depends on what they introduce this year. Plaid will be pricey (~$125k before options), but it's supposed to get a new pack, and if so, I wouldn't be surprised in the least for the downmarket models to get a new pack as well. Sky's the limit then.)
M3 @ 350K (I expect cannibalization to largely be compensated for by expansion and overall global EV market growth)
MY @ 120K (agree with kcveins - few scattered deliveries in late Q2 and ramping up in 2H)
Fremont: 545K
China: M3 110K (should be readily eaten up by domestic markets, but if not, there's a number of export markets which have significantly better trade deals with China than with the US).

Total: 655K production. Deliveries somewhat lower due to inventory runup due to expansion (we're also abnormally low inventory relative to scale at this point).

Hope we get some projections on the call.

Broadly agree . I am a bit more optimistic on model Y ramp - wondering if GF3 may also be producing small number of Ys by the end of 2020 (similar position to 3 at end of 2019). I have also added 20k Semi in H2 2020. It is a guessimate - not sure what the figure will be but I think they will start production . Hoping for more info in the 2020 outlook part of the Q4 ER.

 

[Artful Dodger]

Just watched Friday's "3 Trades" video on CNBC | Youtube focused on TSLA shareholders:

TL;dw ...they recommend selling your shares.

Cheers!

P.S. If you watch to the end of the video (near 3:00), you'll see that the BULL is UNIMPRESSED by the music, and calmly walks away.

P.P.S. finally I understand the appreciation that @Curt Renz has for POLKA MUSIC!

 

[Hock1]

I don't know what is going on but there's some Tesla fever going on everywhere (Location is Central FL). Is it just me noticing this?

Yesterday, sitting in the lunch room at work and overheard a guy raving on and on about Tesla the company, autonomy, Kathie Wood's 4k price target, and every other bullish thing we know to 2 nurse practitioners.

Today, walked out of my car at Disney and some lady with a crowd was talking about Tesla and even said right when she walked by "you see there's a Tesla".

Also today, picked up my meal at the drive thru and the guy was like "I'm so jealous of your car right now".

Man there's some major exuberance in the air!

I recently moved from Naples to Ponte Vedra Beach. The Naples area has been slow to embrace Tesla, but in the last few months has picked up considerably. Different story in PVB: Tesla's are everywhere here. Many 3s and a considerable amount of Raven Ss and Xs. Many of these cars have temporary plates, indicating a surge of yearend buying. People I know, who pay a lot of attention to MSM, and heretofore gotten downright pissed whenever I would try to talk about Tesla are coming around. Many of them have accepted EVs but also were convinced that it was just a matter time before the big OEMs would eat Tesla's lunch. Not so anymore, now that they can compare what the "Tesla killers" actually have vs. Tesla. Yes. it appears that a major tipping point is upon us.

 

[Christine69420]

Gene Munster likes $900

SolarNola️ on Twitter

 

[Beltsbear]

I recently moved from Naples to Ponte Vedra Beach. The Naples area has been slow to embrace Tesla, but in the last few months has picked up considerably. Different story in PVB: Tesla's are everywhere here. Many 3s and a considerable amount of Raven Ss and Xs. Many of these cars have temporary plates, indicating a surge of yearend buying. People I know, who pay a lot of attention to MSM, and heretofore gotten downright pissed whenever I would try to talk about Tesla are coming around. Many of them have accepted EVs but also were convinced that it was just a matter time before the big OEMs would eat Tesla's lunch. Not so anymore, now that they can compare what the "Tesla killers" actually have vs. Tesla. Yes. it appears that a major tipping point is upon us.

I was just in Fort Lauderdale and was surprised how there were very few solar installs and Tesla's. We still have a long way to go.

 

[HG Wells]

I was just in Fort Lauderdale and was surprised how there were very few solar installs and Tesla's. We still have a long way to go.

AND so few destination chargers !

 

[Prunesquallor]

I don't know what is going on but there's some Tesla fever going on everywhere (Location is Central FL). Is it just me noticing this?

Yesterday, sitting in the lunch room at work and overheard a guy raving on and on about Tesla the company, autonomy, Kathie Wood's 4k price target, and every other bullish thing we know to 2 nurse practitioners.

Today, walked out of my car at Disney and some lady with a crowd was talking about Tesla and even said right when she walked by "you see there's a Tesla".

Also today, picked up my meal at the drive thru and the guy was like "I'm so jealous of your car right now".

Man there's some major exuberance in the air!

During yesterday's extended Fort Lauderdale airport layover, my wife and I we sitting next to two other couples in the United Club. It turned out we all owned Teslas (an X, a Ludicrous S and a Performance 3). You can guess how the conversation went for the next half hour.

 

[LJS22]

As someone who writes 90% of his code, but occasionally uses middleware from 3rd parties, I can vouch for having stuff done in house to be MASSIVELY simpler, easier, quicker, more reliable, and in the long ruin, dramatically cheaper. Anybody with software engineering experience would agree, and I think a core reason tesla is the only car company that gets this is that they are the only one whose CEO can code in C++. The future of cars is software, not hardware, and no other car company CEOs have a clue what it even is.
May buy some more stock, even at this price...

Cramer called it a tech stock at the opening bell yesterday, but the other geniuses on CNBC that have not driven the car said something along the lines of “idk how to value this company...is it auto, is it battery” no mention of tech or energy. Shows how out of touch they are with the direction the company is headed. They assume it’s 2012 and they are still Tesla motors. Hard to trust any analysis on the street about TSLA.. they have no idea what’s going on.

 

[Todd Burch]

Just watched Friday's "3 Trades" video on CNBC | Youtube focused on TSLA shareholders:

TL;dw ...they recommend selling your shares.

Cheers!

P.S. If you watch to the end of the video (near 3:00), you'll see that the BULL is UNIMPRESSED by the music, and calmly walks away.

P.P.S. finally I understand the appreciation that @Curt Renz has for POLKA MUSIC!

I’ll see your accordion and raise you a trombone. In this video, the farmer is Elon and we are the bulls (ok, cows).

Notice how we can actually see what’s going on from a much further distance, and we are actually intrigued by what’s going on (cuz we be smarter).

Not sure if Elon is a better trombonist.

In other news, I think Iran tensions and increasing oil prices should help with demand in Q1 (although I’m not sure Tesla needs any help there).

 

[winfield100]

Automotive Trade Journal Scuttlebutt

View attachment 496176

in the attachment, there is a tiny blip that at least to me is highly informative
“ overall, across the industry (demand? sales?) continue to fall........even as incentives reach new highs”
ICE (polluting) vehicles basically cannot sell, at a profit, or even a loss, while all EV’s, (which can run on manufactured electricity from sunlight)

Terawatt hours production (ie, why burn fossil fuels

Gigawatts installed capacity

 

[Dylan]

Cramer called it a tech stock at the opening bell yesterday, but the other geniuses on CNBC that have not driven the car said something along the lines of “idk how to value this company...is it auto, is it battery” no mention of tech or energy. Shows how out of touch they are with the direction the company is headed. They assume it’s 2012 and they are still Tesla motors. Hard to trust any analysis on the street about TSLA.. they have no idea what’s going on.

I'm kind of thankful most analysts haven't got a clue about TSLA. Can they value Netflix though? Is it a DVD rental company, a tech company or a movie production house?

At the same time also amazed they cannot see the true value of Tesla. I for one, am in absolute awe of what they're doing and why they are doing it. And the why (as cliche as it may sound) is what makes Tesla beat everyone else imo, and it does not really matter if it's in auto, energy, software, robotaxi, batteries or tech in general. They have a pure mission and they own a culture where they're driven by ambition to change the world and taken chances to achieve engineering wonders. As an engineer myself, I love that. That is also why I've purchased an S, X and now the 3. And why I'm long TSLA.

 

[Krugerrand]

Toyota effectively can't go broke. No matter how poorly they perform they will get funding from Japanese banks and bailouts from the Japanese government. Even if restructuring and favorable subsidies are required.

That doesn't mean they will become a competitor to Tesla any time soon, it just means they won't disappear.

This is not reasoning by first principles. Of course Toyota can go bankrupt. Of course the government can then prop them up. But then guess what? Toyota can go bankrupt again and again and again. At some point the government will no longer be able to prop them up either because the government runs out of resources or people demand they stop or some combination.

Toyota HAS to produce vehicles that people WANT to buy. That’s a fact. Toyota HAS to make a profit from those vehicles at some point. That’s a fact.

It’s more likely that we see layoffs and repeated downsizing of many of the larger OEMs until they downsize themselves out of existence or they downsize to a position of strength - meaning they become small enough to have unloaded all the bureaucracy and legacy weights and can start from scratch and rebuild themselves.

The smaller OEMs just going bu-bye, either completely abandoned or swallowed up by someone bigger, who will then - see above paragraph.

Final answer.

 

[Mike Smith]

Once-deemed ‘Tesla killer’ Mercedes EQC flops with 55 units sold in Germany to date

'Data from the Federal Motor Transport Authority (KBA) revealed that there were only 19 units of the SUV that were sold in November 2019. Since the vehicle was released in the country, registrations for the vehicle have only numbered 55.'

'Welt aptly puts it: “The car is not only widely advertised, but has also been delivered for a few months. And at the last major e-car premiere that Germany experienced this year, numerous Tesla Model 3s drove through the area after just a few weeks. So where are the electric models from Stuttgart?”'