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

[ZachF]

We gonna get 6,000 pages before 2020?

 

[StarFoxisDown!]

Reading through the German Forum it sounds indeed as if the new regulation will be active early in Jan. Many people have been waiting with their orders as its partly a 50% increase of the incentive or €2k which is significant.

No reason comes to my mind with the authority would ask people to wait while they do the required regulation changes until Jan 2nd and then ask to wait longer which would not be in the interest of any party.

Sounds reasonable to me that we will have an incremental wave of orders that did wait for that moment in Q1 in Germany.

I think another factor to consider is the view/perception of Tesla across Germany now that they have announced the Berlin Gigafactory and will start construction/ground clearing in Jan. The national pride of only buying German-made auto's will diminish over time as the Berlin Gigafactory get's closer and closer to completion.

 

[Curt Renz]

Now You Know - today:

 

[dww12]

Exactly, that's my take too: the Trump administration just forced renewable energy providers into a highly lucrative, high margin energy pricing cartel, without much of an advantage to coal based generators.

Bad for emissions, totally good for green energy providers - unless we missed some additional shenanigans.

Maybe @brian45011 can offer some insight?

Yeah, sounds like they just gave wind/solar providers a free cushion of cash to use for lobbying officials with strippers and trips to the Bahamas so they choose more wind and solar vs the race to the bottom on $/kwh for the accountants. I guess coal got tired of all of the stories about how cheap wind and solar is and how there is free electricity in Texas at night.

 

[KarenRei]

I suggest combining those two bullet points into something like:
Customers awaiting cars in multiple markets: list

Tesla prioritizes deliveries to markets with looming subsidy or tax deadlines, Q4 was US & NL

Customers are awaiting delivery in deferred or new markets, most likely including:
Iceland
England
Ireland,
Norway
South Korea
China -> New GF3 orders not filled until Q2
... haven’t seen any estimates of the number of customers waiting but it is a tailwind nonetheless

I believe there are still countries where Tesla accepted reservations for Model 3 and customers are still waiting, including India, although not relevant to Q1 2020

Meh, who in Iceland woud buy a Tesla?

Seriously, though, there's been a ridiculous amount of demand pushed off into Q1, APAC markets (particularly South Korea) are still dealing with lots of initial backlog (plus new E. Europe markets opening), UK (and to a much lesser extent Germany) have new incentives (UK may turn into a Netherlands-style monster, potentially even bigger), and China is already backlogged to Q2. AND Tesla has the margins to reduce prices if needed, particularly with another 1-2 quarters of COGS reduction. Doubt they'll need to; they've been going in the opposite direction.

I have zero worries about Q1. None. It's simply a question of how much Tesla can produce.

 

[mongo]

Maybe, but solar installation is IMO hard to ramp, and winter is also not the best season to do it in most of the northern hemisphere. I'd like to be pleasantly surprised about solar, but it's been in hibernation for a long time.

Ah, but then there are the advantages of Tesla solar roof

#1 solar shingles do not rely on heat to melt the tar strip that bonds rows together, so the cold temperatures are not an issue (as long as the plastic is properly specified)

#2 the much maligned house tents allow installation regardless of weather. No need to delay or schedule around rain or snow.

#3 the home turf of California has lots of opportunities for installs to start with, even ignoring item 1 & 2

 

[gerebgraus]

I am of the same opinion. The Shorts will be screaming how it is a sign of a drop in demand and use it to try and push the SP down.

We almost need someone like Fact Checking to do the bullet list of push-down BS that should be looked out for 2020.

In Q1 battery cells and packs, will still be delivered to GF3 from the USA. So unless there is some major increase in GF1 cell production my wild assumption based on very incomplete information is that Tesla will not counter the seasonal lower demand with price drops because they want to send battery packs to GF3. In Q2 there will be Chinese battery production and Model Y so there will be more battery supply and much more demand as well.

 

[gerebgraus]

Having also worked in Public Accounting for one of the Big Accounting firms for 10 years, I can tell you that even though there are Generally Accepted Accounting Principles (GAAP) for cost accounting, companies often have slight variations in how they apply and interpret GAAP. So my comments below may not be consistent with what Tesla is doing but it should be very close.

I assume that GF3 is Tesla's fully owned Chinese subsidiary so they will use the Chinese version of GAAP. Is that different in any substantial way from the USA rules?

 

[StealthP3D]

Anyone noticed what didn’t happen?
We don’t have an EoQ push email leak yet.

That's gotta have TSLA short-sellers squirming in their seats!

Not that they weren't already.

 

[capster]

Maybe, but solar installation is IMO hard to ramp, and winter is also not the best season to do it in most of the northern hemisphere. I'd like to be pleasantly surprised about solar, but it's been in hibernation for a long time.

The California Solar Roof Mandate goes into effect in 2020. Every one of the ~80K new homes built per year in California will require solar. California’s rooftop solar mandate will normalize clean energy

Seems to me "Tesla Solarglass Roof included" would be as much of a selling point as premium appliances and finishes.

California, during the first quarter of the year in my experience, tends to be at worst chilly, not cold, with some rain, but little snow in its most populous places. Many might find the conditions are usually fairly pleasant for working outdoors.

IIRC, Musk mentioned something about bureaucratic innovation in one of the calls. He was speaking specifically of speeding up the home solar permitting process through electronic communications and standardized/bulk permitting.

I've been assuming Tesla will have lined up deals with at least two or three major premium home real estate developers in California since the mandate passed. It's another situation where Tesla will sell as much as they can manufacture as quickly as they can do so.

 

[StealthP3D]

Doesn't blue mean Tesla is free to operate? Or are you saying that all the blue states can't have service centers either? (The map says only states in red, without an exception, can't have service centers.)

Washington has Service Center and Sales.

The map has Washington colored red (automakers cannot direct sell or service vehicles) but it has a blue logo which the map says means that automakers can direct sell. For the map to be accurate it would need to mean that automakers can direct sell and service.

Now that may be what the map intended to convey, but that's not what it actually says.

 

[MP3Mike]

Washington has Service Center and Sales.

The map has Washington colored red (automakers cannot direct sell or service vehicles) but it has a blue logo which the map says means that automakers can direct sell. For the map to be accurate it would need to mean that automakers can direct sell and service.

Now that may be what the map intended to convey, but that's not what it actually says.

But then you are saying that every blue State can't service either. You are just reading it wrong. The exception completely replaced the base color.

 

[gerebgraus]

In my opinion that's correct. The MiC gross margins will not have the Fremont Model 3 ramp up margin problems; however, they won't be optimized until GF3 gets to full capacity. So although the MiC gross margins won't be bad, they will get even better once they are producing 3k per week vs the 1k we see now.

Moreover, initially battery packs, power train and seats are imported from the USA with transportation, duty, and higher labor cost.

 

[The Accountant]

I assume that GF3 is Tesla's fully owned Chinese subsidiary so they will use the Chinese version of GAAP. Is that different in any substantial way from the USA rules?

Tesla will report using US GAAP for all of it's entities for the 10K (annual) and 10Qs (quarterly).

Sometimes a company may need 3 different financials in a country.
1. US GAAP financials (for the 10K)
2. Local Statutory Financials - sometimes there may be a local requirement for financials under IFRS - International Financial Reporting Standards (banks & local governments may ask for this).
3. Local Tax Financials - Tax authorities may have different depreciation rates, etc.

But for investors, we will see everything using US GAAP.

 

[StealthP3D]

This, unlike previous leaks, didn't include any specific figures and targets though.

So it's little more than a leaked EoQ motivational email, with very little market impact.

Previous leaks were far more substantial.

To me, this indicates the stealth short burn is intact. Under promise, over-deliver.

You know Musk has been planning this for over a year. I can talk about this openly because TSLA short-sellers are more stubborn than oxen and more stupid than Dumb and Dumber. They came out with a movie after Dumb and Dumber for this very reason. It was called Dumb, Dumber and Dumbest. Tesla short-sellers are so dumb they wear the title "Dumbest" as a badge of honor because it ends in "best".

 

[StealthP3D]

Moreover, initially battery packs, power train and seats are imported from the USA with transportation, duty, and higher labor cost.

How do you know MIC Model 3's will use seats made in Fremont?

 

[capster]

Hmmm. From PJM - About PJM


My take, likely to be widely off the mark, is that this is actually a positive for renewables. If you're an electricity supplier to PJM, and you can sell to them at a price comparable to that of Coal, Nuclear or Gas, but have to match those prices, if your cost to produce (ex-subsidy) is less than those others, you make more margin. Now if the subsidies excluded push your price over that of the competition, you'd lose sales, but I don't think those eastern states have much in the way of subsidies for solar, and anyway I think the cost of solar is competitive even without subsidies, so it just encourages them to build even more?

Of course it sounds bad (and is certainly bad for the environment) so maybe it will help the shorts to spin some more.

I hope you are correct that it is positive for renewables. I'll try to keep an open mind; the net effect may be as you say.

I'll admit to having developed, with good reasons, a jaundiced view of energy policy at the US Federal level. Too often has the Fossil Fuel industry benefited even when its not in the national interest much less in the interest of the environment.

 

[Beltsbear]

Moreover, initially battery packs, power train and seats are imported from the USA with transportation, duty, and higher labor cost.

They will want to make seats in China ASAP. They are expensive to move and can be cheaply in China.

 

[JustMe]

To me, this indicates the stealth short burn is intact. Under promise, over-deliver.

You know Musk has been planning this for over a year. I can talk about this openly because TSLA short-sellers are more stubborn than oxen and more stupid than Dumb and Dumber. They came out with a movie after Dumb and Dumber for this very reason. It was called Dumb, Dumber and Dumbest. Tesla short-sellers are so dumb they wear the title "Dumbest" as a badge of honor because it ends in "best".

There are definitely some startlingly stupid shorts, and the dumber they are, the nastier they are.

But I think a lot of them are not dumb at all, they are just plain crazy. Facts that don’t fit their Belief are proof of fraud.

Far side nature’s warning signs

 

[CalX]

Hmm, everyone has been buying Tesla now including my parents who are usually the last to get in. I'm getting my hair cut and my stylist is talking about how he has been trading TSLA options and I'm listening to his other client talk about her TSLA options trades. Tipranks show TSLA as the 11th most popular holding and the 6th most popular holding of top performers. I hate to jinx it but does this mean we are in a bubble now?