TSLA - Tesla Motors

[Dalal.Holdings]

95k vehicles delivered. Looking forward to reading more bear drivel about demand cliffs and vaporware and how this is all just like Enron.

 

Oh wait, I can just read the comments that have already been posted on here for entertainment.

 

Most of the people who are stating demand cliff never took flights going to SFO, LAX or stepped on to one of those  California Cities. Majority of California streets are getting flooded as people realize cost to operate Tesla is 1/4 of Gas powered car or practically no driving cost to drive. Smart, IOT systems, Autopilot, Car Driven Games, Superchargers availability, Long road-trips  etc are top of icing. Value offered by  Tesla Model 3,X,S  is far more than stated otherwise in comparable price range gas cars. Majority of demand comes from places where gas prices are 4$ or above where majority of world stands today other than continental US.

 

Bro, why would they do some real world scuttlebutt research like that when they can just follow all their #TSLAQ friends on Twitter to satisfy their need for endless confirmation bias?

[Ahab]

Thank you for your money.

[alpha]

95k vehicles delivered. Looking forward to reading more bear drivel about demand cliffs and vaporware and how this is all just like Enron.

 

Oh wait, I can just read the comments in the past few pages on here for entertainment.

 

Incredible--usually crowd folly and lemming-like behavior happens to those who are long a stock, but in this case, it was shorts who caught the bug--even on this here "value investors' site".

 

How many cars did GM sell in 2009?

[Liberty]

95k vehicles delivered. Looking forward to reading more bear drivel about demand cliffs and vaporware and how this is all just like Enron.

 

Oh wait, I can just read the comments in the past few pages on here for entertainment.

 

Incredible--usually crowd folly and lemming-like behavior happens to those who are long a stock, but in this case, it was shorts who caught the bug--even on this here "value investors' site".

 

How many cars did GM sell in 2009?

 

How many did Tesla sell in 2009?

[SHDL]

Those were good delivery numbers; however the bears (the big, outspoken ones at least) don’t sound like they are going to change their negative views about the stock anytime soon.  They generally seem to share the view that the delivery numbers for the quarter were (a) driven by pent up demand in international markets and therefore unsustainable, and (b) juiced by ASP reductions that are likely to reduce margins.  I guess we’ll have to wait a bit to see if they are right or not.

[frommi]

95k vehicles delivered. Looking forward to reading more bear drivel about demand cliffs and vaporware and how this is all just like Enron.

 

Oh wait, I can just read the comments in the past few pages on here for entertainment.

 

Incredible--usually crowd folly and lemming-like behavior happens to those who are long a stock, but in this case, it was shorts who caught the bug--even on this here "value investors' site".

 

What if they still can`t make a profit on that many cars delivered?

 

A car delivered != a car paid for, because you can give back the car and the company can deliver it again (but only book revenue once). ASP`s this quarter where a lot lower than in Q3 and Q4 and will be even lower next quarter. I still stand by my call that Tesla is bankrupt in 12 months, but do your own DD and come to your own conclusion. I am just a stupid and stubborn little guy.

[Castanza]

Those were good delivery numbers; however the bears (the big, outspoken ones at least) don’t sound like they are going to change their negative views about the stock anytime soon.  They generally seem to share the view that the delivery numbers for the quarter were (a) driven by pent up demand in international markets and therefore unsustainable, and (b) juiced by ASP reductions that are likely to reduce margins.  I guess we’ll have to wait a bit to see if they are right or not.

 

The general market still sees Tesla as a luxury item. I think once we get by the demand from tech savvy people or people genuinely interested in EV's and "sustainability" we will see a large decline. I think it's difficult to get people to understand the fueling process of Tesla. I always hear the questions from average people discussing where or how to charge it. If Tesla installs a charging station at your house etc. I think it comes across as a hassle to the average person. Kind of like having the cable company come over to setup your box. Not to mention I bet there are a lot of people who don't want a charging station at their house simply for the look, space dedication, or lack of space for one.

 

All that being said, I think infrastructure will be the largest hindrance to demand.

[SHDL]

I think once we get by the demand from tech savvy people or people genuinely interested in EV's and "sustainability" we will see a large decline.

 

Yes, that's a big part of the bear case.  The Q1 numbers provided some evidence of this in the US, and I think it's reasonable to expect something similar to happen abroad over the next few quarters. 

 

The infrastructure problem I think will get better over time but the problem for Tesla is that they will likely face tougher competition over time as well.

[Liberty]

I think once we get by the demand from tech savvy people or people genuinely interested in EV's and "sustainability" we will see a large decline.

 

Yes, that's a big part of the bear case.  The Q1 numbers provided some evidence of this in the US, and I think it's reasonable to expect something similar to happen abroad over the next few quarters. 

 

The infrastructure problem I think will get better over time but the problem for Tesla is that they will likely face tougher competition over time as well.

 

The Prius, in its early years, is a car that attracted a niche audience because it felt compromised and weird, and people overlooked that because of other benefits.

 

Teslas aren't in that category. They are perceived to be premium and they perform better than gasoline vehicles. Not the same dynamic at all, IMO.

 

There are certainly a lot of problems with the company, but having products that only EV early adopters and environmentalists are interested in certainly isn't high on the list.

[NBL0303]

This isn't a criticism of Tesla or anything, but the news about Tesla achieving a "record number of deliveries" last quarter illustrates a phenomenon that I can't quite articulate. I may completely off-base about this, but I think there is something to it. This is sort of a narrative fallacy kind of thing that I think is increasing in force in the modern investing climate, possibly because of the way the internet and our modern minds amplify and magnify stories about stocks such as these. Anyway, all the news was that Tesla had "record deliveries" last quarter - I've seen this headline all over today. Good for them, but is it really that important if that had a few thousand more or a few thousand less deliveries than their previous record. The difference (the record) was small from the previous record, and it seems like nearly everyone knew they were likely to be in exactly the range they landed. Yet, the "record deliveries" line is being received so positively by many that it may actually affect the short-term pricing of the stock and short-term perceptions of the stock. In reality, whether Tesla delivered 98,000 or 94,000 units this quarter has literally almost zero to do with whether or not Tesla is going to succeed over the long-run, medium-run or really even short-run.

 

You see this sort of thing a lot, where a piece of information which may be interesting of itself (in this case the "record deliveries") has a significantly greater effect on perceptions in the near-term. I'm doing a poor job of articulating this - but does anyone else see this effect or am I mis-perceiving the misperceptions that I think I see?

[Jurgis]

it seems like nearly everyone knew they were likely to be in exactly the range they landed.

 

I can't comment about the rest of your post, but large piece of the bear narrative was that Tesla will deliver way below the range they landed. Although I am not a bear, I expected deliveries to be way lower too.

[Liberty]

This isn't a criticism of Tesla or anything, but the news about Tesla achieving a "record number of deliveries" last quarter illustrates a phenomenon that I can't quite articulate. I may completely off-base about this, but I think there is something to it. This is sort of a narrative fallacy kind of thing that I think is increasing in force in the modern investing climate, possibly because of the way the internet and our modern minds amplify and magnify stories about stocks such as these. Anyway, all the news was that Tesla had "record deliveries" last quarter - I've seen this headline all over today. Good for them, but is it really that important if that had a few thousand more or a few thousand less deliveries than their previous record. The difference (the record) was small from the previous record, and it seems like nearly everyone knew they were likely to be in exactly the range they landed. Yet, the "record deliveries" line is being received so positively by many that it may actually affect the short-term pricing of the stock and short-term perceptions of the stock. In reality, whether Tesla delivered 98,000 or 94,000 units this quarter has literally almost zero to do with whether or not Tesla is going to succeed over the long-run, medium-run or really even short-run.

 

You see this sort of thing a lot, where a piece of information which may be interesting of itself (in this case the "record deliveries") has a significantly greater effect on perceptions in the near-term. I'm doing a poor job of articulating this - but does anyone else see this effect or am I mis-perceiving the misperceptions that I think I see?

 

It's called the "horse race". The same happens in politics where it's all about who's polling how and how people looked at a certain moment, rather than anything substantive.

 

The media has to fill 24 hours in a day, so rather than talk about the few things that really matter, they fill time by talking about minutiae.

 

On the other hand, growth stocks with high valuations can move a lot on relatively small differences in growth rates and terminal value expectations. If you're used to low growth deep value stuff, this might seem weird, but it's actually rational for the market to care and adjust on these inputs.

[SHDL]

The Prius, in its early years, is a car that attracted a niche audience because it felt compromised and weird, and people overlooked that because of other benefits.

 

Teslas aren't in that category. They are perceived to be premium and they perform better than gasoline vehicles. Not the same dynamic at all, IMO.

 

There are certainly a lot of problems with the company, but having products that only EV early adopters and environmentalists are interested in certainly isn't high on the list.

 

I actually do agree that Tesla-like EVs have a very good shot at becoming mainstream.  However it will likely take some time for the world to get there (the infrastructure needs to develop, people need to change their minds/habits, ...), and that process may take longer than Tesla can remain solvent.

[Gregmal]

The thing everyone keeps missing is that it isn't hard to give away something at less than cost. Especially something nice. They've got a long, long way to go to start actually making money(not fudging their figures with credits, deferring vendor payments and phantom gains), and then an even longer way to go from there to justify their value as an auto company...Not really the smartest bet.

[Castanza]

I think once we get by the demand from tech savvy people or people genuinely interested in EV's and "sustainability" we will see a large decline.

 

Yes, that's a big part of the bear case.  The Q1 numbers provided some evidence of this in the US, and I think it's reasonable to expect something similar to happen abroad over the next few quarters. 

 

The infrastructure problem I think will get better over time but the problem for Tesla is that they will likely face tougher competition over time as well.

 

The Prius, in its early years, is a car that attracted a niche audience because it felt compromised and weird, and people overlooked that because of other benefits.

 

Teslas aren't in that category. They are perceived to be premium and they perform better than gasoline vehicles. Not the same dynamic at all, IMO.

 

There are certainly a lot of problems with the company, but having products that only EV early adopters and environmentalists are interested in certainly isn't high on the list.

 

When the Prius came out it was definitely considered a premium item. Every rich person who owned a Hummer went out and bought a Prius. Not to mention every tech CEO chose to drive one. It certainly was a status item. I'm not saying Tesla is exactly like a Prius, but it certainly has similarities. That's exactly why they launched the Model 3. I bet the percentage of people who are buying them simply out of "coolness factor" is a lot less than the people who "care about the environment." And to be fair, this could shift. I'm not saying it wont.

 

On the contrary, you see the younger generation preach about protecting the environment. Yet I'd be willing to bet my life on it that Jeep Wranglers are near the top when it comes to millennial sales. For every 10,000 young girls between the ages of 17-28 wearing Lululemon, drinking Starbucks, and driving a fully modded off-road Jeep Wrangler (to go shopping) I could show you maybe 1 girl who drives a Tesla. Jeeps aren't exactly environmentally friendly. Same goes for all those Subaru Crosstrek girls.

 

I think people care about looking like they care about the environment. For some reason the younger generation has it backwards when it comes to vehicles. They think a vehicle that is outdoor oriented means outdoor friendly or something.

[Castanza]

The Prius, in its early years, is a car that attracted a niche audience because it felt compromised and weird, and people overlooked that because of other benefits.

 

Teslas aren't in that category. They are perceived to be premium and they perform better than gasoline vehicles. Not the same dynamic at all, IMO.

 

There are certainly a lot of problems with the company, but having products that only EV early adopters and environmentalists are interested in certainly isn't high on the list.

 

I actually do agree that Tesla-like EVs have a very good shot at becoming mainstream.  However it will likely take some time for the world to get there (the infrastructure needs to develop, people need to change their minds/habits, ...), and that process may take longer than Tesla can remain solvent.

 

Have you ever been to Africa? South East Asia? South America? Middle East (not that one)? I have, and these people hardly have access to clean water and electricity. I find it hard to believe that they will have a fully integrated EV charging network (solar or not) let alone the ability to afford these vehicles in the next decade or 2 for that matter. I will say the benefit is they don't even have basic utilities to begin with. So at least the engineers (whoever they might be  :P) have a blank canvas to work with.

 

If modern societies move away from oil and gas what happens to the prices in these already desolate countries? If production drops and governments get involved pushing against oil and gas then you can only imagine the A.) subsidies to help these countries or B.) The insane cost of fuel for these poor people. I don't see any plans for nuclear power in Africa.

[Liberty]

The thing everyone keeps missing is that it isn't hard to give away something at less than cost. Especially something nice.

 

That's true, but is that what they're doing? Don't confuse unit economics with company-wide economics. Could they be profitable if they weren't building many gigantic factories around the world at the same time as developing multiple new models at the same time as having thousands of engineers build self-driving software at the same time as building a worldwide network of 200kW+ charger at the same time as building giant commercial grid-scale battery storage at the same time as investing in fancy solar roofs and home batteries, semi trucks, exotic supercars, expanding internationally, etc?

 

What if they had ramped up Model 3 over 2 more years than they're current plan before introducing the Y and such? What if they had milked the S for longer before even introducing the 3? What if they had stuck to just the US a while longer and had been content to be a premium niche manufacturer?

 

They are sacrificing profitability for growth. I'd say they're probably doing it recklessly, but that's very different from saying that they're selling dollars for 70 cents or whatever.

 

They're acting like their goal is to have the transition to EVs happen as fast as possible, which is Musk's stated mission. Doesn't mean he'll succeed, but he's giving it the ol' college try, that's for sure. I just wish he had a competent CFO and COO to reign in the business and operations side...

[Liberty]

Have you ever been to Africa? South East Asia? South America? Middle East (not that one)? I have, and these people hardly have access to clean water and electricity. I find it hard to believe that they will have a fully integrated EV charging network (solar or not) let alone the ability to afford these vehicles in the next decade or 2 for that matter. I will say the benefit is they don't even have basic utilities to begin with. So at least the engineers (whoever they might be  :P) have a blank canvas to work with.

 

If modern societies move away from oil and gas what happens to the prices in these already desolate countries? If production drops and governments get involved pushing against oil and gas then you can only imagine the A.) subsidies to help these countries or B.) The insane cost of fuel for these poor people. I don't see any plans for nuclear power in Africa.

 

That's not how the world works.

 

EVs are on a trajectory to become cheaper than ICE vehicles. If EVs take over in the richer countries, it'll make oil cheaper for poorer countries. It's easier to build an electricity distribution network (because you need it anyway for residential, commercial, and industrial purposes) than to build a gasoline distribution network. Poor countries tend to leapfrog richer countries because they are starting from zero and can go directly to the new thing, they don't have huge sunk costs in the old technology (see mobile phones, micro-payments, etc).

[NBL0303]

it seems like nearly everyone knew they were likely to be in exactly the range they landed.

 

I can't comment about the rest of your post, but large piece of the bear narrative was that Tesla will deliver way below the range they landed. Although I am not a bear, I expected deliveries to be way lower too.

 

This is is part of m point - "I expected deliveries to be way lower too."  Way lower (or way higher) than an investor expects clearly matters to the investor, potentially quite a lot. But the total number falling just slightly on this side of a semi-arbitrary line (previous delivery record) versus slightly on the other side of that line - is not particularly relevant to Tesla's long-term value, but in this case probably has a mildly significant effect on it in the short-term. But way lower - or way more - I'm not suggesting that production numbers that are way lower or way higher than what an investor expects is not an important piece of information.

[NBL0303]

This isn't a criticism of Tesla or anything, but the news about Tesla achieving a "record number of deliveries" last quarter illustrates a phenomenon that I can't quite articulate. I may completely off-base about this, but I think there is something to it. This is sort of a narrative fallacy kind of thing that I think is increasing in force in the modern investing climate, possibly because of the way the internet and our modern minds amplify and magnify stories about stocks such as these. Anyway, all the news was that Tesla had "record deliveries" last quarter - I've seen this headline all over today. Good for them, but is it really that important if that had a few thousand more or a few thousand less deliveries than their previous record. The difference (the record) was small from the previous record, and it seems like nearly everyone knew they were likely to be in exactly the range they landed. Yet, the "record deliveries" line is being received so positively by many that it may actually affect the short-term pricing of the stock and short-term perceptions of the stock. In reality, whether Tesla delivered 98,000 or 94,000 units this quarter has literally almost zero to do with whether or not Tesla is going to succeed over the long-run, medium-run or really even short-run.

 

You see this sort of thing a lot, where a piece of information which may be interesting of itself (in this case the "record deliveries") has a significantly greater effect on perceptions in the near-term. I'm doing a poor job of articulating this - but does anyone else see this effect or am I mis-perceiving the misperceptions that I think I see?

 

It's called the "horse race". The same happens in politics where it's all about who's polling how and how people looked at a certain moment, rather than anything substantive.

 

The media has to fill 24 hours in a day, so rather than talk about the few things that really matter, they fill time by talking about minutiae.

 

On the other hand, growth stocks with high valuations can move a lot on relatively small differences in growth rates and terminal value expectations. If you're used to low growth deep value stuff, this might seem weird, but it's actually rational for the market to care and adjust on these inputs.

 

I agree with you. I really didn't articulate my point well.

 

My point is not that the delivery total doesn't matter. What I was trying to get at it, is that the delivery total is clearly really important to the substantive value of the company and hence to investors. Yet, let's say the previous delivery record was 92,000. If this quarter was 93,000 - and "Record Deliveries" were reported - that would have lets say an effect of an 88 on a scale of 1 to 100. Whereas, the move from 93,000 to 94,000 - if it wasn't a record - would be regarded as a 23 or something on a scale of 1 to 100. The headline of "Record Deliveries" seems to generate a huge proportion of the effect on many market participants. Versus a move from 93,000 to 97,000 may be very meaningful - but may not be regarded as such if it did not carry with it the salient headline of "Record Deliveries."

[Liberty]

I agree with you. I really didn't articulate my point well.

 

My point is not that the delivery total doesn't matter. What I was trying to get at it, is that the delivery total is clearly really important to the substantive value of the company and hence to investors. Yet, let's say the previous delivery record was 92,000. If this quarter was 93,000 - and "Record Deliveries" were reported - that would have lets say an effect of an 88 on a scale of 1 to 100. Whereas, the move from 93,000 to 94,000 - if it wasn't a record - would be regarded as a 23 or something on a scale of 1 to 100. The headline of "Record Deliveries" seems to generate a huge proportion of the effect on many market participants. Versus a move from 93,000 to 97,000 may be very meaningful - but may not be regarded as such if it did not carry with it the salient headline of "Record Deliveries."

 

Ah, yes. There's a bunch of stupid, messy psychology involved for sure. Kind of like how it'll make a huge difference to many markat participants whether we're "10 years in a bull market" or whether the recent 20% correction reset things and we're now "in the early innings!". Whatever, it's all the same data, however you label it, but it'll make a difference to psychology because people use these labels as shortcuts to avoid having to think.

[Castanza]

Have you ever been to Africa? South East Asia? South America? Middle East (not that one)? I have, and these people hardly have access to clean water and electricity. I find it hard to believe that they will have a fully integrated EV charging network (solar or not) let alone the ability to afford these vehicles in the next decade or 2 for that matter. I will say the benefit is they don't even have basic utilities to begin with. So at least the engineers (whoever they might be  :P) have a blank canvas to work with.

 

If modern societies move away from oil and gas what happens to the prices in these already desolate countries? If production drops and governments get involved pushing against oil and gas then you can only imagine the A.) subsidies to help these countries or B.) The insane cost of fuel for these poor people. I don't see any plans for nuclear power in Africa.

 

That's not how the world works.

 

EVs are on a trajectory to become cheaper than ICE vehicles. If EVs take over in the richer countries, it'll make oil cheaper for poorer countries. It's easier to build an electricity distribution network (because you need it anyway for residential, commercial, and industrial purposes) than to build a gasoline distribution network. Poor countries tend to leapfrog richer countries because they are starting from zero and can go directly to the new thing, they don't have huge sunk costs in the old technology (see mobile phones, micro-payments, etc).

 

Why would the price of gas drop? If there is no demand in rich countries companies aren't going to produce it....Comparing cell phone adoption to cars is apples to oranges. A cell phone network is arguably far easier to implement. These countries are already reliant on Diesel fuel. How exactly do you go about making the transition when their labor intensive economies are highly dependent upon transportation? Where exactly do they get the money to make this transition and how will EV's be economical enough?

 

I just got back from visiting my family in Laos. Spent some time in Thailand as well. There is noway in hell these people will have EV's any time soon. The majority of them rely on 4x4s and dirt bikes. Not to mention a diesel vehicle is arguably easier to maintain in these living conditions. It's hard for me to picture EV mechanics in these locations.

[Gregmal]

LOL outside of the US most of the world still runs on manual transmission diesel vehicles. Its taken the US decades to even get together the half assed EV network we have now.

[CorpRaider]

Does anyone know what % of global auto profits are derived from North American Truck and SUV sales?  If so, thanks in advance for sharing. 

[Liberty]

Why would the price of gas drop? If there is no demand in rich countries companies aren't going to produce it....Comparing cell phone adoption to cars is apples to oranges. A cell phone network is arguably far easier to implement. These countries are already reliant on Diesel fuel. How exactly do you go about making the transition when their labor intensive economies are highly dependent upon transportation? Where exactly do they get the money to make this transition and how will EV's be economical enough?

 

I just got back from visiting my family in Laos. Spent some time in Thailand as well. There is noway in hell these people will have EV's any time soon. The majority of them rely on 4x4s and dirt bikes. Not to mention a diesel vehicle is arguably easier to maintain in these living conditions. It's hard for me to picture EV mechanics in these locations.

 

Totally missing the forest for the trees, as well as putting words in my mouth (did I say they'd have EVs soon in the poorest countries? No, just that the trend was for EVs to get cheaper over time, while ICEs aren't.. so it's fairly predictable what will happen). And yes, it's comparable to cell phones: Poor countries without existing infrastructure didn't replicate the tech tree of richer countries, they went straight to the newest thing. The same will happen with cars at some point in the future when EVs are no brainers vs ICEs (lower upfront cost as well as lower maintenance cost as well as lower "fuel" costs). I don't know if it's in 10 or 20 years, depends on many factors, but that's pretty short in the grand scheme of things.

 

And yes, if marginal demand for oil melts over time rather than go up over time as it has, prices will be pressured down. Over long periods, inflation-adjusted prices of most commodities have already been going down over time because of productivity improvements. There are exceptions like the China cycle of the 2000s, but the longer term trends are clear.