TSLA - Tesla Motors

[Jurgis]

I think you just take your old car to Carmax lol.

 

The issue with the rapid technical advance with electric cars is rapid loss in value and that means high cost of ownership. This hasn’t been considered much, but given the number of customers screwed by Tesla’s price cuts, I think it will be in the mind of potential customers. Leading might be a better option, if the offers are good.

 

That's much more of a problem for ICE cars (or really any mechanically complex machine.)  The more "electric" the car is, the more it's essentially a software update issue that doesn't require a new car purchase.  I expect electric cars to have a MUCH longer ownership timeline than ICE vehicles historically have had.

 

It’s not just software that changes, it’s the battery, engine, sensor etc that’s evolving faster for electric cars than for ICE‘s, hence I expect a faster loss in value. The buyers of Tesla cars seeing their used car values plummet already. It won’t happen with the Subaru I own.

 

It's literally the opposite.  Websites track this.  The Model S depreciates far less quickly than sedans in the same class (and as an owner of the Mercedes E350 who is looking to buy a Model S, this is very real.)  The Model 3 recently won a "best in class" depreciation award. 

 

https://www.autolist.com/news-and-analysis/tesla-model-x-model-s-depreciation

 

Model S resale values have been stable since the previous Autolist study in August 2016 despite greater inventory.

 

Maybe this was true mid last year. It's not true anymore.

I looked at used Model S prices on Tesla.com

Last year there were zero Model S'es below $65K. Now there's tons at $40K.

Maybe they were stable. But now they definitely collapsed.

They may stay stabilize at new $40K value assuming Model 3 prices don't drop even more.

[A Dhandho Investor]

I think you just take your old car to Carmax lol.

 

The issue with the rapid technical advance with electric cars is rapid loss in value and that means high cost of ownership. This hasn’t been considered much, but given the number of customers screwed by Tesla’s price cuts, I think it will be in the mind of potential customers. Leading might be a better option, if the offers are good.

 

That's much more of a problem for ICE cars (or really any mechanically complex machine.)  The more "electric" the car is, the more it's essentially a software update issue that doesn't require a new car purchase.  I expect electric cars to have a MUCH longer ownership timeline than ICE vehicles historically have had.

 

It’s not just software that changes, it’s the battery, engine, sensor etc that’s evolving faster for electric cars than for ICE‘s, hence I expect a faster loss in value. The buyers of Tesla cars seeing their used car values plummet already. It won’t happen with the Subaru I own.

 

It's literally the opposite.  Websites track this.  The Model S depreciates far less quickly than sedans in the same class (and as an owner of the Mercedes E350 who is looking to buy a Model S, this is very real.)  The Model 3 recently won a "best in class" depreciation award. 

 

https://www.autolist.com/news-and-analysis/tesla-model-x-model-s-depreciation

 

Imo depreciations for current owners are becoming quite substantial when owners already start to protest about them: https://electrek.co/2019/03/04/tesla-owners-protest-price-cuts/

 

About the Model 3: it has been out in volume for less than one year, so definitely too soon to tell. The same seems to apply as for the S, btws: https://twitter.com/i/likes?lang=nl

[JSArbitrage]

I think you just take your old car to Carmax lol.

 

The issue with the rapid technical advance with electric cars is rapid loss in value and that means high cost of ownership. This hasn’t been considered much, but given the number of customers screwed by Tesla’s price cuts, I think it will be in the mind of potential customers. Leading might be a better option, if the offers are good.

 

That's much more of a problem for ICE cars (or really any mechanically complex machine.)  The more "electric" the car is, the more it's essentially a software update issue that doesn't require a new car purchase.  I expect electric cars to have a MUCH longer ownership timeline than ICE vehicles historically have had.

 

It’s not just software that changes, it’s the battery, engine, sensor etc that’s evolving faster for electric cars than for ICE‘s, hence I expect a faster loss in value. The buyers of Tesla cars seeing their used car values plummet already. It won’t happen with the Subaru I own.

 

It's literally the opposite.  Websites track this.  The Model S depreciates far less quickly than sedans in the same class (and as an owner of the Mercedes E350 who is looking to buy a Model S, this is very real.)  The Model 3 recently won a "best in class" depreciation award. 

 

https://www.autolist.com/news-and-analysis/tesla-model-x-model-s-depreciation

 

Imo depreciations for current owners are becoming quite substantial when owners already start to protest about them: https://electrek.co/2019/03/04/tesla-owners-protest-price-cuts/

 

About the Model 3: it has been out in volume for less than one year, so definitely too soon to tell. The same seems to apply as for the S, btws: https://twitter.com/i/likes?lang=nl

 

The price strategy of new car sales for Tesla is a COMPLETELY DIFFERENT ARGUMENT than depreciation of electric vs ICE cars (which was the issue raised.) 

 

There is little evidence (to date) that electric depreciates faster than ICE but lots of evidence that they depreciate slower than ICE.  In fact, one of the primary selling points of electric is just that - a car becomes a software platform largely independent of physical upgrades.  Batteries are easily swapped and electric motors have been largely the same for the last 20 years.  Fewer moving parts means less wear and tear.  The only real innovation that could require significant hardware updates is self-driving (and particularly Tesla's refusal to use LIDAR, which is probably a mistake in the long run.)

 

In short - if the bear thesis on Tesla is that electric will depreciate faster than ICE, then investors haven't done an even surface amount of research. 

 

The better bear thesis on Tesla is that it's basically a pump-and-dilute stock run by a madman.  But if you are betting against the technology itself, you're going to get smoked IMO.

[SHDL]

The idea that EVs depreciate slower (physically, as opposed to in terms of resale value) than ICE cars sounds plausible, and if true I would consider that a big positive when I go shopping for my next car.

 

But I guess it’s less clear whether that’s a good thing for Tesla’s business prospects, because although it gives them a nice selling point (“our cars last longer”) and possibly some pricing power, it could also mean less lifetime/annualized revenue per customer because people end up holding on to their cars for much longer.  It’s a lot like one of the “problems” that Apple is currently facing.  Maybe they’ll find a way around this issue by figuring out a way to make good money off of things like supercharging, service, and software updates, but overall I think this is something that makes their business harder, not easier.

[A Dhandho Investor]

The price strategy of new car sales for Tesla is a COMPLETELY DIFFERENT ARGUMENT than depreciation of electric vs ICE cars (which was the issue raised.) 

 

There is little evidence (to date) that electric depreciates faster than ICE but lots of evidence that they depreciate slower than ICE.  In fact, one of the primary selling points of electric is just that - a car becomes a software platform largely independent of physical upgrades.  Batteries are easily swapped and electric motors have been largely the same for the last 20 years.  Fewer moving parts means less wear and tear.  The only real innovation that could require significant hardware updates is self-driving (and particularly Tesla's refusal to use LIDAR, which is probably a mistake in the long run.)

 

In short - if the bear thesis on Tesla is that electric will depreciate faster than ICE, then investors haven't done an even surface amount of research. 

 

The better bear thesis on Tesla is that it's basically a pump-and-dilute stock run by a madman.  But if you are betting against the technology itself, you're going to get smoked IMO.

 

Agreed with your points that electric vehicles depreciate slower than ICE. That is definitely not a reason why I am bearish on the stock. I just wanted to indicate that Tesla is messing with its existing customers, lease partners, etc by repeatedly lowering prices for its cars.

 

Also agree that Tesla is a pump-and-dilute stock run by a madman. I am looking forward to the day Musk will be behind bars for what he has done (the 420 tweet, probable accounting fraud, all the false guidance he gave, the link with Electrek / Teslarati that served as pumping vehicles, etc). I am still flabbergasted by the fact that PWC gave them a 100% clean slate in the most recent 10K btw.

 

I recently saw a video from someone on Youtube that showed that the odometer of his Tesla indicated a lower mileage after a software update. Another guy now says on Twitter that Tesla has designed its odometers since 2012 so that they can be easily rolled back and that Tesla uses this feature to more easily move cars at the end of the quarter https://twitter.com/danforhan/status/1102694816499027968

 

 

[rb]

The price strategy of new car sales for Tesla is a COMPLETELY DIFFERENT ARGUMENT than depreciation of electric vs ICE cars (which was the issue raised.) 

 

There is little evidence (to date) that electric depreciates faster than ICE but lots of evidence that they depreciate slower than ICE.  In fact, one of the primary selling points of electric is just that - a car becomes a software platform largely independent of physical upgrades.  Batteries are easily swapped and electric motors have been largely the same for the last 20 years.  Fewer moving parts means less wear and tear.  The only real innovation that could require significant hardware updates is self-driving (and particularly Tesla's refusal to use LIDAR, which is probably a mistake in the long run.)

 

In short - if the bear thesis on Tesla is that electric will depreciate faster than ICE, then investors haven't done an even surface amount of research. 

 

The better bear thesis on Tesla is that it's basically a pump-and-dilute stock run by a madman.  But if you are betting against the technology itself, you're going to get smoked IMO.

 

How is pricing a different argument? Isn't the idea with the electric cars that as they start to become mass produced the prices will drop? If the price for the new vehicles drops how is the price for the used not going to drop?

 

The other stuff about longevity of the car is a somewhat better argument but still stretched imo. So what if an EV is a computer on wheels? The average age of ICE vehicles in the US is about 11 years. How many 11 year old computing devices do you have? Then you have the normal car cycle dynamics. So it's not a straight line. New models come out that are better looking with cooler stuff. The newer models are then become more desirable. The model S is the same as 7 years ago. Wait and see what happens to prices when a new model S comes.

 

The reason why luxury cars depreciate faster than ordinary cars is because their owners have plenty of money and want nice stuff. So they keep buying new cars. However next cohort behind them that is to buy the used vehicles are much further behind in what they can afford. So the price drops.

 

Right now you have a problem determining how these cars will depreciate because the sample is so small. I have a feeling that as the sample grows the dynamics will become more standard luxury car.

[Spekulatius]

Used car prices are anchored by new car prices and as prices drop for electric cars ( which I think is inevitable), so will used car prices. It doesn really matter much how long the car will last, also the jury on this one is still out.

I am willing to bet that my Subaru will exceed 10 years if service life. I am not sure the Tesla’s will last that long. I agree that a battery swap is technically easy, but it will be expensive. Also name we one example where a substantially new software ran on old hardware.

[Jurgis]

The idea that EVs depreciate slower (physically, as opposed to in terms of resale value) than ICE cars sounds plausible, and if true I would consider that a big positive when I go shopping for my next car.

 

But I guess it’s less clear whether that’s a good thing for Tesla’s business prospects, because although it gives them a nice selling point (“our cars last longer”) and possibly some pricing power, it could also mean less lifetime/annualized revenue per customer because people end up holding on to their cars for much longer.  It’s a lot like one of the “problems” that Apple is currently facing.  Maybe they’ll find a way around this issue by figuring out a way to make good money off of things like supercharging, service, and software updates, but overall I think this is something that makes their business harder, not easier.

 

I'm still driving 15 year old ICE. I doubt EVs will last way longer than that. Some will. But some people drive 20-25 year old ICEs too.

 

Edit: also what rb and Spekulatius said.

[Ballinvarosig Investors]

How Much Cash Does Tesla Have?

 

https://ftalphaville.ft.com/2019/03/05/1551787633000/How-much-does-Tesla-have-in-the-bank-/

[Investmentacct]

Used car prices are anchored by new car prices and as prices drop for electric cars ( which I think is inevitable), so will used car prices. It doesn really matter much how long the car will last, also the jury on this one is still out.

I am willing to bet that my Subaru will exceed 10 years if service life. I am not sure the Tesla’s will last that long. I agree that a battery swap is technically easy, but it will be expensive. Also name we one example where a substantially new software ran on old hardware.

 

From Utility standpoint, we have two Teslas (Tesla Model X and Tesla Model 3). In 18 months of ownership, we drove 45K miles combined, majority through road trips due to autopilot availability (no stress to driver for long trips). From cost standpoint you are roughly looking at 1/3 cost per mile to drive compared to gas (if paid by owner). So, that propels somewhat miles driven.  In our situation, we charge at solar public parking facility (complete free — 80% of mileage); home(solar-10% of mileage), and tesla free supercharging (model x); low cost supercharging(model 3- 10% of mileage). At , 45 K, with either cars, there is no degradation in batteries of either car (that shows how Tesla batteries are built). With recent software upgrade, Tesla Model 3 battery will provide more range than it was purchased for (310 miles was paid for - upgraded to 325 miles - free upgrade to consumer). And, also, performance upgrade on 0-60 speed. 

[Castanza]

https://drivetribe.com/p/tesla-owners-make-up-majority-of-Ya7TnGQnSUS5BPiCLTDE7g?iid=UbgRnmTfQh2HAxnHmyErMg

 

A bit vague, but still insightful. Shows that "Tesla brand loyalty" everyone preaches isn't as strong as first thought.

[A Dhandho Investor]

A new whistleblower case linked to the Martin Tripp case: =https://www.bloomberg.com/news/features/2019-03-13/when-elon-musk-tried-to-destroy-tesla-whistleblower-martin-tripp

 

Gouthro says at one point he saw a colleague reading the text messages and emails that Tripp was sending during breaks in the questioning. He says that somehow Tesla was able to access Tripp’s communications in real time.

 

Edit: link to the article that was based on information from Tripp https://www.businessinsider.nl/tesla-model-3-scrap-waste-high-gigafactory-2018-5/?international=true&r=UK

 

 

[ander]

I'm biased bearish but not currently involved. One key question for me is that there is a question re: the company's cash position. Given the $50 billion market cap, is it not reasonable to assume the company could raise even $3 or $4 billion in an equity offering?

[Liberty]

I'm biased bearish but not currently involved. One key question for me is that there is a question re: the company's cash position. Given the $50 billion market cap, is it not reasonable to assume the company could raise even $3 or $4 billion in an equity offering?

 

The short argument is that they can't raise equity because there are SEC investigations going on behind the scenes.

 

I don't know if it's the case.

 

As someone who doesn't care about it as an investment and just wants to see dynamism in the EV market, I also wish they would raise a bunch of money to make the company more robust to shocks and get them through their fast-growth phase. I don't know why they haven't done that. Maybe it's indeed an issue of access to the market, maybe it's hubris from Musk, maybe there's another reason... ¯\_(ツ)_/¯

[DTEJD1997]

I'm biased bearish but not currently involved. One key question for me is that there is a question re: the company's cash position. Given the $50 billion market cap, is it not reasonable to assume the company could raise even $3 or $4 billion in an equity offering?

 

I think it is perfectly reasonable that TSLA could raise a couple or few billion (or even more), probably very easily.

 

The question is how much of a hit the common would take.

 

Secondarily, I think it would also matter how the equity raise is spun.  If it is for new factory or tool & die for new model...probably better than just "we need it to pay the bills!".

 

 

 

[A Dhandho Investor]

Musk has mortgaged his 5 houses in the context of the December 2018 capital raise at SpaceX (if I remember well they only raised 250m instead of 750m).

The fact that that capital raise was a big disappointment seems an indication that Musk currently has difficulties in raising capital. In January 2019, the news

came that SpaceX was laying off personnel. Sounds familiar with the Tesla story?

 

Why would Tesla take the following measures instead of simply raising capital (either via debt or equity):

- Capital expenditures have dropped to a level that is barely enough to cover depreciation and amortisation in Q4

- there have been multiple rounds of layoffs since December

- Decision to close all stores and move to online only (which has been reversed in the mean time, after Tesla's ABL was increased by 500m)

 

In addition to that, I can guarantee that if Tesla raises 5 billion tomorrow, the common will take no hit:

- shares outstanding have nearly doubled since the IPO, shareholders never could have cared less

- there is quarterly stock based compensation of 200m, shareholders never could have cared less

- Tesla acquired Maxwell in a stock based deal, shareholders never could have cared less

- Tesla acquired assets from a trucking company in a stock based deal, shareholders never could have cared less

 

Btw, have you ever seen a 50 billion dollar company issue stock to buy a 250m company or to buy 15m worth of material (the trucking assets)? It more and more seems that the almost 4 billion cash at the end of Q4 was pure window dressing.

 

 

 

[Liberty]

December 2018 was pretty bad timing for a capital raise, though. I wonder if they'd do better now that that moment of generalized panic is over. I don't know the answer, just asking the question.

[Liberty]

No Toyota Motors thread, so I'll put this here. Interesting read about a flexible line that Toyota built, goes over a lot of the challenges with car manufacturing and increasing throughput:

 

http://www.thedrive.com/tech/26955/inside-toyotas-takaoka-2-line-the-most-flexible-line-in-the-world

[A Dhandho Investor]

New, extremely comprehensice, VIC write-up: https://www.dropbox.com/s/ycs1bzznlzapqly/TSLA%20writeup%20VIC%203%2017.pdf?dl=0

[fareastwarriors]

Placed order for a red LR AWD Model Y.

 

Hope Telsa is still in business by then.  :P

[Haasje]

With a deposit? :o

[fareastwarriors]

Yes, $2,500.

 

I guess it's not called a deposit anymore, but a "pre-order payment."

 

:o

 

https://electrek.co/2019/03/15/tesla-model-y-cash-grab/

[Guest cherzeca]

Yes, $2,500.

 

I guess it's not called a deposit anymore, but a "pre-order payment."

 

:o

 

https://electrek.co/2019/03/15/tesla-model-y-cash-grab/

 

well, I would rather be an unsecured creditor than a shareholder...

[fareastwarriors]

Yes, $2,500.

 

I guess it's not called a deposit anymore, but a "pre-order payment."

 

:o

 

https://electrek.co/2019/03/15/tesla-model-y-cash-grab/

 

well, I would rather be an unsecured creditor than a shareholder...

 

I'm both... :'(

[randomep]

Yes, $2,500.

 

I guess it's not called a deposit anymore, but a "pre-order payment."

 

:o

 

https://electrek.co/2019/03/15/tesla-model-y-cash-grab/

 

well, I would rather be an unsecured creditor than a shareholder...

 

I'm both... :'(

 

why the sad face? if you don't like it you why did you recently pay $2500 and why don't you sell your shares ?