Thoughts on TESLA

[oneill225]

That situation, the (general) failure to pay for road maintenance, the tax subsidies... it all adds up. Warranted or not, EV drivers should not be surprised if resentment grows.

I have no doubt that the tax man will find a way to extract money from EV users and both Tesla and Chevy will see their tax incentives go away soon. This period of taxes favoring the EV over ICE will be short-lived. Enjoy it while you can by buying a Tesla, now. Worrying about the morons who will resent your good decisions is a waste of time.

 

[Ready]

That situation, the (general) failure to pay for road maintenance, the tax subsidies... it all adds up. Warranted or not, EV drivers should not be surprised if resentment grows.

I resent people who drive gas guzzlers all by themselves and pollute the air I need to breathe. I resent motorcycles who use their noisemakers to make everyone’s lives miserable. I still don’t key their cars or tip over their motorcycles because I’m not a jerk.

 

[Mr. Tightwad]

That situation, the (general) failure to pay for road maintenance, the tax subsidies... it all adds up. Warranted or not, EV drivers should not be surprised if resentment grows.

Tax subsidies: anyone who wants 11k in credits/rebates can buy a Kona, a Ioniq, or a Leaf.

I decided to cash in twice.

 

[bobandsherry]

Tesla reported sales, they came up short of last quarter, but also short of expectations, even though estimates were revised downward a couple of times. Is this a sign of growth company? Will be interesting to see what stock opens at.

 

[eroscott]

Prediction on sales in China for the 1st Quarter of 2020
Last image below is 1st quarters product and sales for the past several years.

[update]
Link: Tesla will start installing Model 3 production equipment in Gigafactory 3 this May: report
[/update]

Highlights: Photos taken on April 2 show the ongoing construction work of Tesla’s China factory in East China’s Shanghai. The first phrase construction of the factory is nearly finished, and the whole project is expected to finish in July or August [2019], a worker said. (Photos: Yang Hui/GT)

Via: Tesla's China factory under construction - Global Times

 

[Mr. Tightwad]

Deliveries up 110%, despite the federal credit being cut in half vs last year.

 

[Chuckanut]

Good question. I've never had a problem with a gas engine vehicle starting that I couldn't easily solve. I once even had a car I could start with a screwdriver shorting the starter if I crawled under and shorted it. Had cars I could neutral drop into starting...drop the clutch and vroom vroom car starts on a roll down the hill. Can a TSLA do that?

I would like to have introduced you to my 1985 Pontiac. This is the car that made me swear off GM products for life. Start with a sealed carb that cannot be adjusted or rebuilt by the home mechanic. Add in power steering rack failures, alternator failures, radiator leaks, water pump failure and much more. All starting at 40,000 miles and ending at 110,000 miles when I had it towed away.

Unless your screwdriver is Dr. Who’s sonic model, you will be making your mechanic’s boat payments for a long, long time.

 

[bobandsherry]

Deliveries up 110%, despite the federal credit being cut in half vs last year.

Yeah, "good news"... but as an investor it's really bad news....

The market was expecting sales to be up even more (Tesla's own guidance) as the Model 3 began ramping up sales and overseas was now rolling in. And at same time the Model S and X sales down by 50%, ouch.

When the market is expecting 76K and it's only 63K, well the stock get's spanked. Pre-market down 10%.

 

[kgtest]

Deliveries down 31% from prior quarter.

'Tesla saw its first quarter new-vehicle deliveries drop 31% from the previous one, due to difficulties it encountered in delivering its Model 3 car to European and Chinese markets. The electric car maker said it delivered 63,000 vehicles, versus the 73,5000 predicted by analysts'

 

[Running_Man]

Deliveries up 110%, despite the federal credit being cut in half vs last year.

When the car was announced there were 455,000 orders for the Model 3, Elon Musk stated that demand for the model 3 is infinite, the only inhibitor of sales was the ability to produce the car. That statement is now demonstrably false as sales fell despite a price decline.

It is a good car, there is a demand for the car just not 500K this year. Since the original forecast was supposed to be for 88,000 in sales for the quarter resulting in a slight loss (per TESLA), TESLA is 25,000 cars short of that, which is about 1.1 billion short of their sales target. 14,000 cars were added to inventory so that should increase inventory by 500-600 million dollars, I assume a 65% marginal loss on the difference and you have a 350 million dollar loss (about $2.00 a share and a 1.2 billion cash flow negative quarter on top of the 920 million bond payment which will lead cash to just around a billion dollars, or enough for one more quarter of this performance. So I would expect Tesla to do a capital raise of 2-4 billion or 10-20 million shares @200, which is Elon's defense of the stock point, diluting the shareholders, but giving ELON a year to implement something. This would be good for holders of the 2025 bond but bad for shareholders. If he keeps the company afloat. Which would mean that new shareholders will garner 25 percent of any future increase in value from all the shareholders that have made this company happen to this point.

Tesla has the lowest paid workers in the automotive industry and the highest CEO to average employee pay in the history of the stock market. https://www.bizjournals.com/sanjose/news/2019/04/02/tsla-median-pay-musk-compensation.html.

Whether these numbers are precise to me is irrelevant, directionally they must be correct and confirm the only investment in TESLA that would be worth anything is the 2025 bonds. Despite all denials of a capital raise expect one to be announced in the coming quarter.

 

[Ready]

Tesla is still producing as many cars as their production line allows. Their problem right now is on the delivery side, especially with international deliveries. Demand did drop after the tax credit was cut in half on January 1 but the price drops stimulated demand again. I expect there will be a rush of orders as we get closer to June 30 when the next tax credit phase out takes effect. We will have to see if Tesla does something after June 30 to try and stimulate demand again. Beginning next year the tax credit will be completely gone and then we will see what demand for the Model 3 will be with no subsidies in place.

We know that SUVs are far more popular than sedans in North America so the Model Y is going to be critical to Tesla’s long term growth.

 

[ERD50]

I hadn't dug below the headlines before I saw eroscott's post, but I knew the Tesla news was bad as he resorts to the usual 'deflect' with "but... China!" and "but... 2020!" and "but... New Factories!" . And then Ready with "but... Model Y!".

I'll skip the delivery disappointment for now, and focus on production. I think production is where the really bad news is. Hiccups in deliveries to new markets might be expected, but why were production numbers so low? Q1-2019, 77,100 vehicles produced, when Q4-2018 production was 86,555 vehicles? How do you call a 10% drop "growth"? How is this the "exponential growth" that has been talked about by the fans (OK, a negative exponent?)?

Before this gets blamed on the delays in shipping to new markets, let's think about that. Why not shift sales to the US when these delays are being seen?

Well, Occam says it is because US demand is just not there. There have been other signs, all deflected by fan exclamations of "EU!", "China!","new factories!".


Back to deliveries - I said that hiccups in deliveries to new markets might be expected. So what does this say about Tesla? They didn't anticipate these hiccups? Why the heck wouldn't you start out with small shipments to the new markets, work out any kinks, then ramp up as things get worked out? Again, Occam says it is because US demand is just not there. It also points to some incompetence of the Tesla leaders for making these Q1 delivery predictions without accounting for the risks in starting up a new market. What else have they failed to anticipate? Is this really what a company with a solid future looks like?

-ERD50

 

[ERD50]

....

We know that SUVs are far more popular than sedans in North America so the Model Y is going to be critical to Tesla’s long term growth.

That's what was said about the Model 3. A $35,000, 200+ range EV! A "game changer"! Now the 'next big thing' isn't expected in volume until 2021? That's gonna be a long and difficult (maybe not survivable?) 20 months....

That really, really does not sound good for Tesla.

-ERD50

 

[Running_Man]

Remember Elon's tweet, which he is going to court about today, where he said TESLA would make 500K cars in 2019, then corrected to say that will be run rate by end of the year. That would be 125,000 cars made in the fourth quarter a 100% increase from 1st quarter sales with about 40,000 cars presently in inventory. In order to get to the BOTTOM of Tesla's sales prediction you need to have a 70% increase in sales for the remainder of the year.

 

[Ready]

I’m not concerned about Tesla “surviving” because at some point if they can’t make it on their own a company like Apple would buy them at the right price. That wouldn’t be such a bad thing if it happened. It would add some needed leadership experience to their executive team.

 

[kgtest]

Tesla has the lowest paid workers in the automotive industry and the highest CEO to average employee pay in the history of the stock market. https://www.bizjournals.com/sanjose/news/2019/04/02/tsla-median-pay-musk-compensation.html.

Whether these numbers are precise to me is irrelevant, directionally they must be correct and confirm the only investment in TESLA that would be worth anything is the 2025 bonds. Despite all denials of a capital raise expect one to be announced in the coming quarter.

^^^ +1. Never was a fan of Elon or Tesla, but I do like the PowerBall concept of off-grid independent energy storage coupled with solar/wind/hydro whatever is renewable. If I have a storage ball and we suffer an outage, I could perhaps help store some food for my neighbors and myself while the boys climb the poles back up strengthening community quicker...which to me is a huge benefit of THAT independent energy storage model. Plus it will force consumers to rethink energy, and decrease overall reliance on Fossils. Add AI to the entire setup so peak power is generated and stored efficiently. YES PLEASE!

Besides, ELON and ENRON just sounds too damn similar for my tastes. Cadillac Super Cruise is something I can get behind.

 

[NW-Bound]

EVs really need to be cheaper to take over ICE cars.

Tesla may have a surge of sales initially when the Model 3 is introduced to Europe. I am willing to bet it will peter out, just like it has in the US when the pool of enthusiasts dries up.

Most European countries have a lower median income than the US. How are they going to afford expensive cars? On top of that, Europeans do not share the love of cars that Americans have. Most of them treat cars as transportation, not as a luxury toy or a possession to take pride in.

 

[NW-Bound]

^^^ +1. Never was a fan of Elon or Tesla, but I do like the PowerBall concept of off-grid independent energy storage coupled with solar/wind/hydro whatever is renewable. If I have a storage ball...

You meant Powerwall.

 

[ls99]

Is Tesla the new Edsel?

 

[aja8888]

Tesla reported car sales for the quarter today and units were 10K under forecasts. Stock dropped nearly 10%.


https://www.cnbc.com/2019/04/04/tes...s-were-substantially-worse-than-expected.html

Ford reports today and that will be an interesting one!

 

[Running_Man]

Is Tesla the new Edsel?

I think a more apt comparison is to Apple in 1985 when Jobs was ousted, Apple had more expensive products that were not differential enough for the price difference, this company may need the same thing and perhaps time away would do Elon and Tesla some good. But Apple almost went under before they came back with the products that were desired. But a capital raise will give TESLA time to sort this out. Perhaps they may go bigger than I think a 8-10 billion dollar raise would take away all concerns of bankruptcy. Eventually TESLA will be produced in the lowest wage country that can build them and they will become an import, that is inevitable.

 

[eroscott]

Another perspective on 2019 Q1:

 

[aja8888]

Above chart definitely shows the start of the downward sales trend (thanks for posting). A couple of quarters from now will tell the story, or when they run out of capital.

 

[Totoro]

Most European countries have a lower median income than the US. How are they going to afford expensive cars?

Fuel is much more expensive in the EU. 1.40 euro per liter vs. 0.64 in the USA, it adds up. One third of my car total cost is fuel. If you drive electric you can halve that cost easily.


We're pretty close to break-even in the better off countries for modest cars, including France, Germany, Italy, Netherlands, Norway, Ireland. Without factoring in subsidies.


If cost trends continue, electric cars will be de facto standard within 7 years, especially at the lower end for older cars that don't drive much: once depreciated, electrics have lower fixed costs and lower variable costs.

 

[oneill225]

I think a more apt comparison is to Apple in 1985 when Jobs was ousted, Apple had more expensive products that were not differential enough for the price difference, this company may need the same thing and perhaps time away would do Elon and Tesla some good. But Apple almost went under before they came back with the products that were desired. But a capital raise will give TESLA time to sort this out. Perhaps they may go bigger than I think a 8-10 billion dollar raise would take away all concerns of bankruptcy. Eventually TESLA will be produced in the lowest wage country that can build them and they will become an import, that is inevitable.

Goodness. Why don't you apply some of your genius to starting a major corporation that can pay these poor Tesla workers a higher wage? Otherwise, they will continue to suffer without options. How hard can it be?

For those reveling in Tesla's weak 1Q, it was anticipated. If the second quarter is a big letdown, I will join you in predicting their imminent collapse. Until then, take advantage of this over-reaction by picking up Tesla shares at a discount.

Tesla does not operate in a vacuum. They are currently producing quality EVs at a pace unmatched by any other manufacturer and will continue to have little competition while they complete a new factory in China. Everyone else is playing catch-up while falling further behind.