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

[avoigt]

If true, they're going to owe a fortune to the EU re: emissions this year.

There is a third source, an E mail send to a reservat

Wow, VW's ID.3 debacle seems to be getting worse:

VW Again ! Delayed The Long Waiting ID.3 to Spring 2021
​

Note: the report is based on a single email sent to a customer and is unconfirmed.

A 3rd source an UK mail confirms ID.3 delays until 2021 as well.

In the meantime rumors say that the Germany incentives that are to be increased from €4k to €6k are not yet applied for at the EU commission but still debated in the German Government.

The theory is now that VW may intend to delay the ID.3 launch purposely given the incentive delay.

Lots of speculation and conspiracy but not a lot facts.

 

[MC3OZ]

For Robo-Taxis the hard parts are:-
1. Getting the software to work...
2. Getting regulatory approval....

If they have 1. & 2. Tesla are far better placed than the competition to have a working business model....

That doesn't mean everyone riding Robo-Taxis all the time, my guess is around 50% of private cars will remain privately owned and not in the network....

The considerations IMO are:-
1. Robo-taxis need to be cleaned at the end of each shift. (/hire)
2. There will be long term hire like car hire that provides the option of leaving stuff in the car...
3. Tesla will have its own fleet of cars made up mainly of off lease cars..
4. Most customers will put their old car in the Robo-Taxi fleet when buying a new car....
5. Deciding to put a car in the fleet is an individual decision, some will, some will not, most objections evaporate around the time the car is 5 years old.
6. Given the points above, Tesla will have a large fleet, and eventually have it working in many locations worldwide.

In terms of getting a working FSD solution, Tesla and Waymo will persist for as long as it takes... So eventually, it will work and have regulatory approval, then it is down the the business plan , the cost base and the size of the fleet.

If it is harder than we expect, and takes longer, that makes it easier for Tesla to have a large fleet at a lower cost,,, The main issue is customers who have purchased FSD getting value for money,

 

[jbcarioca]

I totally understand that we're facing an exponential growth in renewable energy and energy storage in the next decade.

But I am in the dark about the reasons why Tesla should be in a special position to take advantage of this. In my reasoning PV-modules are dirt-cheap nowadays and will be getting cheaper still. And I think battery-storage is relatively low tech especially when there are no special demands (size, weight, safety) like when they are used in cars.

Would somebody care to enlighten me? Is it the battery-supply? What am I missing?

The biggest thing that you’re missing is that storage battery systems are definitely not low tech. Look up Hornsdale Power Reserve and the Tesla Energy forum here fir clues. Similarly commercial and residential solar systems are most definitely becoming cheaper but they are definitely not commodities when they include storage, especially. Frankly, you’ll need to do some homework yourself to understand this.

 

[sundaymorning]

Me watching deferred tax asset impact updates.

that would be me deciding whether to buy calls or puts going into earnings.

 

[defc0n]

Buying Feb $1,000 calls

wont those be super illiquid though? Disclaimer: I’m options noob

 

[AlexS]

Has anyone verified that the GAAP profitability announcement actually originated with the Tesla Truck Team? That it wasn't a fake?

Yes and he clarified that comment was about q3, so please everyone forget about 2019 full year GAAP profit nonsense. Focus on Q1 profitability for S&P inclusion.

 

[StealthP3D]

I'm sorry. I'm still not clear on if a bunch of you were hitting the sauce hard yesterday or if this accounting discover is as monumental as it is being made out to be? From the way everyone is talking they seem to expect a doubling of the stock by end of month

This stock has more explosive potential than most people give it credit for. While I won't feel let down if it doesn't hit the $700 range within a month or two, it wouldn't surprise me one bit. And that's not even the upper limit of what's possible.

Overly optimistic expectations are the enemy of successful investors. But under-estimating what is possible is just as bad, if not more harmful to returns (if it causes one to exit a position that outperforms many times your low expectations). This is one of the hidden beauties of a "buy and hold" investment strategy. If TSLA turns into a tiger, don't let her get away!

 

[HG Wells]

This stock has more explosive potential than most people give it credit for. While I won't feel let down if it doesn't hit the $700 range within a month or two, it wouldn't surprise me one bit. And that's not even the upper limit of what's possible.

Overly optimistic expectations are the enemy of successful investors. But under-estimating what is possible is just as bad, if not more harmful to returns (if it causes one to exit a position that outperforms many times your low expectations). This is one of the hidden beauties of a "buy and hold" investment strategy. If TSLA turns into a tiger, don't let her get away!

Exactly.
Thursday I logged on intending to sell some of my January 31 calls.
I ended up buying 20% more.

 

[ammulder]

So, an alternate prediction for the energy storage market:

US Energy Storage Market May Grow 12× By End Of 2024 (Interview) | CleanTechnica

This report suggests a $5.4B storage market in 2024 with just under 60% utility and the remainder household/business.

The Bloomberg forecast looks to be about 80 GW by 2024.

According to Wikipedia and Google, the Hornsdale Reserve was about $62M for 100 MW, or very roughly $600K/MW. If the PowerWall costs about $8000 for 13.5 kWh/5-7 kW, that comes out to about double, but we'll go with the utility number to be conservative. That would suggest 80 GW would run $49B, or nearly a factor of 10 difference between the two estimates.

I assume the models include batteries getting cheaper, but that's a mighty big difference. Maybe I got the math wrong somewhere?

Bloomberg does say that energy storage will take 7% of the battery supply and be "dwarfed" by EV battery usage, so I guess they don't agree with Elon either -- or else Elon thinks Tesla's market share will be very much larger in energy than EVs.

 

[FrankSG]

You believe Tesla Energy is a slightly smaller opportunity than automotive?

I see only three possible conclusions we can draw from that. Either:

1) you think you have better "numbers" or market data than Musk himself, or;
2) you think you are more visionary than Musk himself (can more accurately draw valid conclusions from the data), or;
3) or you think Musk a lying hypester/fraudster.

Did I miss anything?

4) Elon might the human I love & respect the most out of all 7 billion on this planet, but I don't take every single word he says literally. Just like I didn't take "FSD as safe as a human by mid 2020" literally when they were about to raise capital, I didn't take "Energy will be bigger than Automotive long term" literally. I took it as Elon wanting to convey that TE is being severely undervalued by the analysts and the market, and has way more potential than they were (and still are) giving it credit for at the time. I've been able to confirm this with data, logic, and reasoning, but I have thus far been unable to confirm the TE opportunity is bigger than Tesla's Automotive opportunity (excluding autonomy). I acknowledge I could be wrong, and will change my mind when presented with more evidence, although even then I don't think TE could ever come close to competing with Automotive + Autonomy + AMaaS in size of the respective opportunities.

 

[shootformoon]

Of course storage battery system is not low tech. But I think it is obvious it is not as complicated a system as an EV. So I expect major battery cell producers go into this market as well. Power Wall might have some pricing premium but utility scale products won't enjoy much brand halo since cost is king in the commercial market.

So I am in the camp that doubts TE would have more gross margin than tesla EV in the 10 year frame.

The biggest thing that you’re missing is that storage battery systems are definitely not low tech. Look up Hornsdale Power Reserve and the Tesla Energy forum here fir clues. Similarly commercial and residential solar systems are most definitely becoming cheaper but they are definitely not commodities when they include storage, especially. Frankly, you’ll need to do some homework yourself to understand this.

 

[FrankSG]

Your research was very helpful, thank-you, but I think there IS a path to profitability.

You showed that Amazon claimed about $350M of the VA assets as Income in the year they became profitable. Applying similar percentages to Tesla's current VA assets, we can estimate they could be able to claim about $420M as Income in 2019.

Given results for the first 3 qtrs of 2019, Tesla needs about $547M profits in 2019Q4 to become net profitable for the whole of FY2019.

That $547M is just $434M more profits than 2019Q3. We know Q3 was profitable with 15k fewer auto deliveries. Since all fixed costs and production labor were already covered at Q3 production levels, addtional deliveries in Q4 go straight to Profit, less the costs of materials for those cars.

Let's assume COGS (less labor) is 50% (similar to Sandy Monroe's est'd costs). For an ASP of $50K/unit, that's $25K addtional profit per unit. That sums to $375M addtional profit for the 15k additional units delivered in 2019Q4.

That leaves just about $60M in profits still needed to make Tesla net profitable for the whole of 2019. Can we find $60M?
December's $2K "Performance Boost" software upgrade for the existing fleet of all Model 3 AWDs could easily bring in $20M in profits (software == high margin)
Carbon credits are VARIABLE and DISCRETIONARY for Tesla. It seems certain they would claim these credits to push them across the line to profitability
So there you have it. A few wild-ass assumptions, and POOF! PROFITS! Cartman would be proud!

Cheers!

Not all of that $350M ended up on the P&L. Only $244M did.

In the fourth quarter we determined that $363 million of our deferred tax asset is realizable through future operations, and recorded a current tax benefit of $244 million to "Provision (benefit) for income taxes" in our results of operations, and a $106 million credit to "Stockholders' Equity" on our consolidated balance sheet as of December 31, 2004.

You're not accounting for the $85M "Other income, net" tailwind from Q3.

I don't think you can calculate $375M additional profit just like that. There probably was an increase in labor for the extra battery production capacity at Giga 1 among other factors.

In the near-future quarterly financial projections thread, people are estimating $200-300M in total GAAP Profits for Q4'19 (excluding potential VA tailwinds). I personally estimated $257M total.

So we'd require about $700M in other unforeseen tailwinds such as VA, margin increases, huge energy boost, further OPEX decreases, performance boost, etc.

I personally don't see Tesla selling any of the options it's holding just to achieve immediate S&P 500 inclusion, because to me it otherwise seems like a bad move to sell them this early. But the VA talk has increased the likelihood of 2019 GAAP Profitability in my eyes, because it seems possible that some amount will end up on the P&L, but I don't think it's going to be as much as $700M. And before all this talk, I thought the chance of 2019 GAAP Profitability was essentially 0%, so I personally feel like right now it's maybe 5-10% or so? Hard to accurately estimate though.

 

[MC3OZ]

Bloomberg does say that energy storage will take 7% of the battery supply and be "dwarfed" by EV battery usage, so I guess they don't agree with Elon either -- or else Elon thinks Tesla's market share will be very much larger in energy than EVs.

For Energy Storage the price of batteries is a key factor, for EVs the price is approximately right, for energy storage, most domestic, commercial and grid scale customers would prefer batteries to be cheaper....

As a rough guide energy storage will take off with the price of battery is around $100-$150 for kWh.... that starts to be competitive with pumped hydro, and combined with Solar it is very competitive..

I see TE as similar to the days of the Tesla Roadster, the products can improve as they mature, and Tesla will work on getting prices down, once price is in the right ballpark, demand is very high...

Every, there is no reason why every house, factory, fast charging station, substation, solar farm and wind farm would not have a battery, if the price was right... with Robo-Taxis we may get to the stage where not all houses have a car...

EDIT:: So there is a difference between turnover and margin... the Tesla solar tile roof is not an easy product to emulate so it will have higher margins.. both otherwise I agree TE could have lower margins than Automotive. But I always assumed Elon was talking turnover, and IMO that may eventually include generating and selling electricity...

 

[Unpilot]

Buying Feb $1,000 calls

Hmm they are kinda cheap....of course I am..... um about...50-50 on option's success.

 

[FrankSG]

特拉风T☰SLA mania on Twitter

@ReflexFunds

 

[Mader Levap]

What am I missing?

Your assumption that batteries are "low tech" is wrong.

 

[anthonyj]

wont those be super illiquid though? Disclaimer: I’m options noob

You’re right, going with March $1,000 calls. I’ll buy like 50 of em. Sold a few 30 baggers this month, so this is pocket change

 

[Green Pete]

I totally understand that we're facing an exponential growth in renewable energy and energy storage in the next decade.

But I am in the dark about the reasons why Tesla should be in a special position to take advantage of this. In my reasoning PV-modules are dirt-cheap nowadays and will be getting cheaper still. And I think battery-storage is relatively low tech especially when there are no special demands (size, weight, safety) like when they are used in cars.

Would somebody care to enlighten me? Is it the battery-supply? What am I missing?

Tesla's battery tech advantage is pretty huge even now, can't imagine how big their lead will be after battery/drivetrain day. The number of times a battery can be fully cycled, the rate it can be charged/discharged, thermal sensitivity amount other things are very very important. Every month theres some story about a kid at a science fair who built a battery that can be charged fully in minutes or something these days. Being able to check all the boxes is the difference. Tesla is absolutely killing it in the battery moat department,

 

[hacer]

... (There would actually need to be lobbying for removing a child seat requirement in California, apparently, though.)

And lots of other states including Ohio Child Passenger Safety.

 

[Cherry Wine]

wont those be super illiquid though? Disclaimer: I’m options noob

I’ve been building a 2/21 900c position over the last week just for the hell of it. They’re fairly liquid. Average price has been $0.50 per share so far.