TSLA - Tesla Motors

[walt373]

ASP has fallen significantly over the past couple quarters due to price cuts and mix shift. The price of a high end Model 3 or S/X from a couple quarters ago was maybe twice or more of the price of a SR+ today, which now make up a large % of sales. So unit growth is not an apples-to-apples comparison. As some have mentioned, profits are going to suffer, but even revenues would make more sense to focus on. Here's a nice post that goes into more detail: https://rapercapital.com/2019/07/03/teslas-unit-growth-and-the-art-of-spurious-comparisons/

[Dalal.Holdings]

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."

 

You’re right but also wrong: it’s the financial journalists and bears doing most of the horse race and anchoring biases. The bears fixated on deliveries in Q1 2019 vs Q4 2018. The bears anchor to Elon’s crazy projections and deadlines which are inherently unrealistic. Then when he misses, he’s a fraud and it’s all just like Enron...Elon is not a normal person-his wild optimism is what allows him to achieve great feats, but he often misses his own wildly optimistic deadlines.

 

If SpaceX were public and landed a man on Mars but did it 3 years later than Musk estimated, there’d be many ready to mock him and call him a fraud. Now that’s horse race fallacy.

 

95K deliveries is 4-5% over the previous record and a 133% year over year gain in deliveries...not something to scoff at. Lots of demand exists for this car and most people don’t seem to get why.

[SHDL]

Some of you guys are bigger, global thinkers than I might have thought.  When I was writing “infrastructure” I was literally thinking about the company that manages my parking garage and their reluctance to install EV chargers onsite (which is what made me decide not to buy a Model 3).  ;)

 

Anyway, yes, a lot of developing countries have a long way to go before they become major Tesla buyers, probably decades.  Tesla’s solvency, on the other hand, hinges more on what happens during the next year or two.  I find it really unfortunate that they’ve gotten themselves into such a position, but it is what it is.

[Liberty]

Anyway, yes, a lot of developing countries have a long way to go before they become major Tesla buyers, probably decades.  Tesla’s solvency, on the other hand, hinges more on what happens during the next year or two.  I find it really unfortunate that they’ve gotten themselves into such a position, but it is what it is.

 

To be clear: When talking about developing countries and EVs, I wasn't thinking particularly about Tesla but about EVs in general.

 

It certainly won't be premium EVs that pop up there first. But if in 10-20 years the price per kWh of batteries is $50 or $25, there'll be plenty of affordable options.

[Investmentacct]

Some of you guys are bigger, global thinkers than I might have thought.  When I was writing “infrastructure” I was literally thinking about the company that manages my parking garage and their reluctance to install EV chargers onsite (which is what made me decide not to buy a Model 3).  ;)

 

Anyway, yes, a lot of developing countries have a long way to go before they become major Tesla buyers, probably decades.  Tesla’s solvency, on the other hand, hinges more on what happens during the next year or two.  I find it really unfortunate that they’ve gotten themselves into such a position, but it is what it is.

 

There are parking lots across California which lets you charge free and do not charge 1 penny. So ultimately, you are driving free. May able to compare EV sales to where gas prices are higher than 4$ where ; people started figuring out what are the best options going forward. Charging infrastructure is way overblown issue. When it comes to personal pockets, driving free of cost or lower cost appeal majority of people. There are many apps in this area where information is written. Plug Share is one of them.

 

 

[gary17]

Some of you guys are bigger, global thinkers than I might have thought.  When I was writing “infrastructure” I was literally thinking about the company that manages my parking garage and their reluctance to install EV chargers onsite (which is what made me decide not to buy a Model 3).  ;)

 

Anyway, yes, a lot of developing countries have a long way to go before they become major Tesla buyers, probably decades.  Tesla’s solvency, on the other hand, hinges more on what happens during the next year or two.  I find it really unfortunate that they’ve gotten themselves into such a position, but it is what it is.

 

i tried 911 porsche , and model 3

and decided i had more fun with the 3 for 1/3 the cost lol

[gary17]

needing a charger is a myth

 

110V 15amp  receptacle would give you 7km/h...  if u come home at 7 and leave next morning at 7 that’s 84km or 53miles.  probably enough for most commutes?

lots of free public chargers here in B.C.  they give you 40km/h charge

[Investmentacct]

needing a charger is a myth

 

110V 15amp  receptacle would give you 7km/h...  if u come home at 7 and leave next morning at 7 that’s 84km or 53miles.  probably enough for most commutes?

lots of free public chargers here in B.C.  they give you 40km/h charge

 

You are correct. It is a myth. Once cost equation understood; you start looking for only chargers and as you said it is free. Show me a gas pump in the world; which is a quote and unquote "FREE".

[Investmentacct]

Some of you guys are bigger, global thinkers than I might have thought.  When I was writing “infrastructure” I was literally thinking about the company that manages my parking garage and their reluctance to install EV chargers onsite (which is what made me decide not to buy a Model 3).  ;)

 

Anyway, yes, a lot of developing countries have a long way to go before they become major Tesla buyers, probably decades.  Tesla’s solvency, on the other hand, hinges more on what happens during the next year or two.  I find it really unfortunate that they’ve gotten themselves into such a position, but it is what it is.

 

i tried 911 porsche , and model 3

and decided i had more fun with the 3 for 1/3 the cost lol

 

You are correct. Once you punch the pedal on 3; it becomes addictive 0-60.  At 31K with rebates; and 1/4 operating running cost; minimal maintenance cost ( tire replacement and windshield fluid replacements - 3 bucks) ; it's no-brainer purchase for lot of people. Not counting (all other software and IOT advantages) of 3.

 

 

[SHDL]

needing a charger is a myth

 

110V 15amp  receptacle would give you 7km/h...  if u come home at 7 and leave next morning at 7 that’s 84km or 53miles.  probably enough for most commutes?

lots of free public chargers here in B.C.  they give you 40km/h charge

 

That is if you have a regular electric outlet near your parking spot, right?  My garage doesn’t even have that.

 

There are parking lots across California which lets you charge free and do not charge 1 penny. So ultimately, you are driving free. May able to compare EV sales to where gas prices are higher than 4$ where ; people started figuring out what are the best options going forward. Charging infrastructure is way overblown issue. When it comes to personal pockets, driving free of cost or lower cost appeal majority of people. There are many apps in this area where information is written. Plug Share is one of them.

 

Yet another reason for me to move to California.  Maybe next year...

[gary17]

needing a charger is a myth

 

110V 15amp  receptacle would give you 7km/h...  if u come home at 7 and leave next morning at 7 that’s 84km or 53miles.  probably enough for most commutes?

lots of free public chargers here in B.C.  they give you 40km/h charge

 

That is if you have a regular electric outlet near your parking spot, right?  My garage doesn’t even have that.

 

 

 

This is an unfortunate situation for existing multi family buildings.  But many municipal bylaws now require new buildings to either have them or wired to have them. 

 

Even in existing buildings, it is not expensive to get an electrician to get a plug - can easily take it from the same circuit as the light in the garage.  they can run wires on the surface as long as it is protected cabling (in metal conduits)

 

the reality is with other manufacturers coming out with EV, more infrastructure will be there

[frommi]

You are correct. Once you punch the pedal on 3; it becomes addictive 0-60.  At 31K with rebates; and 1/4 operating running cost; minimal maintenance cost ( tire replacement and windshield fluid replacements - 3 bucks) ; it's no-brainer purchase for lot of people. Not counting (all other software and IOT advantages) of 3.

 

Can you imagine that California is the only state where that is the case and that that is not sustainable? (Look at what happened to solar panel producers after subsidies went away.)

You left out insurance, which is pretty expensive because Tesla is producing the worst quality cars in the world and the service has gone downhill since the introduction of the Model 3. Who wants a car where you have to wait 3 months for a repair and where you can`t even talk to someone on the phone with your problems?

Software/AP is were Tesla was ahead of the compeition, but that is catching up already. Now every new car has lane keep assistance and radar cruise control, which together is not that much different than AP, at least as long as it is not operating on level 4 or 5 autonomy. (which Tesla seems to be far away from.)

 

Here in germany the cost for electricity to run an electric car is the same as the cost to run an efficient ICE. For me it was a no-brainer to buy a hybrid car where you get the best of both worlds (silent operation of an EV, fast acceleration, easy energy refill, no investment into a wallbox necessary).

 

As all car manufacturers are ramping up their EV fleet i think the price of the battery will increase going forward, because there simply aren`t enough resources (Cobalt, Lithium) available. Thanks to the fracking boom, oil is abundant and will probably be cheap for a long time. And the crux is that if more EV cars are on the road and demand for oil goes down, the incentive to drive an pure electric car also goes down because electricity prices go up and oil prices down.

 

The price of an ICE car has gone down every year over the least decade, simply because parts and commodity prices have gone down and its a price competitive industry.

[Dynamic]

As all car manufacturers are ramping up their EV fleet i think the price of the battery will increase going forward, because there simply aren`t enough resources (Cobalt, Lithium) available. Thanks to the fracking boom, oil is abundant and will probably be cheap for a long time. And the crux is that if more EV cars are on the road and demand for oil goes down, the incentive to drive an pure electric car also goes down because electricity prices go up and oil prices down.

 

Do you have a good source for the resource limitations on Cobalt and Lithium that you mention?

 

I know there is limited lithium mining and refining at the moment, but could it only be that they have put in enough mining and refining capacity to satisfy the current/recent demand? I occasionally catch stories about new investments in lithium mining such as in the last couple of days reading about a Chinese investment into Sonora lithium mines, with a Bacanora mining company in the general vicinity of Hermosillo, Sonora, Mexico, so it seems that at least some capital is flowing into expansion of mining, and a test facility produced 99.5% grade and higher battery grade lithium in that case.

 

But that's somewhat anecdotal, and it would be interesting to see a more comprehensive picture of how such things are progressing. I'm always a little cautious in reading bullish or bearish articles on this aspect of things, though I do find it interesting to see the projections over the years of how the graphs of Li-ion production volumes and costs will develop in future years, having usually been far too conservative and always projecting a dramatic flattening of the improvement curve, and each year after the curve continued to improve dramatically contrary to their previous estimate, revising their forecast to start from that new base and project a dramatic flattening once again.

 

As for cobalt, I'm aware that most battery manufacturers are greatly reducing their reliance on cobalt as a percentage of their cell chemistry, but don't really have a good handle on either the picture of the trajectory of these reductions versus general increases in cell output or of the trajectory of development of new cobalt resources outside troubled areas like the Democratic Republic of the Congo where it's quite problematic.

 

It seems that there are major trends of demand (partly supported by legislation in regions like China and Europe) that would encourage companies to develop additional supply of the key minerals in lithium ion batteries, and there remains relatively plentiful cheap capital to fund such ventures, but I'm quite weak on knowledge of the actual geological constraints and cost of refining comparisons of different types of lithium-containing minerals and likewise for cobalt in terms of potential to meet the demand.

 

I think there's something of a rush to ramp up new electrified vehicle production especially with a lot of new European legislation starting 2020, and I understand the some new entrants such as Hyundai/Kia have been quite battery constrained, leading to long waiting lists for the similar Kona EV and eNiro respectively, despite using different battery manufacturers. I suspect they were a little surprised by the demand for these specific cars, which happen to be about as effficient as any out there (~4-5 miles per kWh), well cooled, and with support high rate CCS charging at a similar price for somewhat compromised cars like the Nissan Leaf (which only really wins on luggage space).

 

I understand that a temporary supply-demand imbalance has temporarily led to the likes of LG Chem being able to slow the rate of price decline as battery production ramps up and becomes less costly in the long run, but it doesn't seem to be bucking the trend of declining cost per kWh (partly through greater energy density) and the virtuous circle by which higher volume leads to lower cost, and lower cost drives volume higher still.

 

It seems to me that incremental improvements in battery chemistry, manufacturing techniques, yield and throughput are going to be enough to sustain the cost and energy density improvements that are enabling the increasing demand side of the virtuous circle, and they can delivery growth for quite a few year yet, even without needing a radical step change improvement (such as solid state cells) to reach production readiness and that people who have predicted the slowing of this continual improvement have been wrong over and over again, and don't seem to have a reason why it's different now.

 

This seems to be the result of capitalism and supply and demand economics at work, putting financial and intellectual capital to work on making the improvements to increase supply to meet demand and to drive further demand.

[frommi]

 

Do you have a good source for the resource limitations on Cobalt and Lithium that you mention?

 

 

No sorry, i think it was 1 or 2 years ago when i read articles about that "problem" and it was mainly about Cobalt at that time. Just looked at cobalt prices and it looks like it was just a price spike at that time. While Lithium prices have gone up a lot, price per kwh has gone down as you wrote.

So maybe it is not a problem at all.

[A Dhandho Investor]

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."

 

You’re right but also wrong: it’s the financial journalists and bears doing most of the horse race and anchoring biases. The bears fixated on deliveries in Q1 2019 vs Q4 2018. The bears anchor to Elon’s crazy projections and deadlines which are inherently unrealistic. Then when he misses, he’s a fraud and it’s all just like Enron...Elon is not a normal person-his wild optimism is what allows him to achieve great feats, but he often misses his own wildly optimistic deadlines.

 

If SpaceX were public and landed a man on Mars but did it 3 years later than Musk estimated, there’d be many ready to mock him and call him a fraud. Now that’s horse race fallacy.

 

95K deliveries is 4-5% over the previous record and a 133% year over year gain in deliveries...not something to scoff at. Lots of demand exists for this car and most people don’t seem to get why.

 

As a bear, I have to admit that 95k deliveries was unexpected 3 months ago, but there is no rocket science in identifying where the demand in Q2 came from:

- EU: spillovers from Q1 and introduction of RWD & SR+

- US: introduction of SR, leasing option & FIT credit phase out

- Canada: new 5k incentive

- overall S&X sales: lot's of inventory was moved due to price cuts

 

The ability to pull certain demand levers does not take away the question whether sustainable demand exists at profitable price levels and whether Tesla can continue growing revenues compared to deliveries, as it is trading at a growth multiple after all..

 

 

 

 

[NBL0303]

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."

 

You’re right but also wrong: it’s the financial journalists and bears doing most of the horse race and anchoring biases. The bears fixated on deliveries in Q1 2019 vs Q4 2018. The bears anchor to Elon’s crazy projections and deadlines which are inherently unrealistic. Then when he misses, he’s a fraud and it’s all just like Enron...Elon is not a normal person-his wild optimism is what allows him to achieve great feats, but he often misses his own wildly optimistic deadlines.

 

If SpaceX were public and landed a man on Mars but did it 3 years later than Musk estimated, there’d be many ready to mock him and call him a fraud. Now that’s horse race fallacy.

 

95K deliveries is 4-5% over the previous record and a 133% year over year gain in deliveries...not something to scoff at. Lots of demand exists for this car and most people don’t seem to get why.

 

My point isn't about bulls or bears, in fact you've seen this exact what I'm calling a sort-of "phenomenon" before - where they kind of overweigh the headline quality of the story rather than the importance of the actual facts. I was just sharing this recent example that happened to probably be over-weighed with the

 

Again, it is not scoffing at the specific fact of 95k deliveries - but I do not think that is all together different than 91k deliveries - given the big macro questions that are going to determine the outcome of Tesla for investors:

-Can they make money over the long-run at the price they're able to sell Teslas at these volumes at?

-How much does scale improve their economics over the long-run?

-What is the market for Teslas at whatever ultimate price/margin function they end up selling cars at for the long-run - is say 2 m in the U.S. at their long-term price/value lineup or is it 16 m?

-Same question for markets around the world - what is the ultimate market at their long-term price/value equation.

 

 

Anyway, it seems to me evident to most of the investors involved Tesla, probably both bulls and bears, that these are the determinants of the bull-bear Tesla cases and ultimate outcomes. To the extent that the delivery totals shed light on these types of questions, its obviously critical information. But sometimes narratives driven by just sort of headline-worthy sub-points of the important data have a disproportionate impact that drives attention away from these big macro questions that will determine Tesla's long-term fate.

[gary17]

i don’t think tesla is a car company.

 

i think it’s a software company

[Gregmal]

The difference between a software company and an auto company is capex. Tesla most certainly falls on the auto side there.

[Liberty]

i don’t think tesla is a car company.

 

i think it’s a software company

 

Clearly it's both, I don't even know why it's a debate among some people.

[patience_and_focus]

i don’t think tesla is a car company.

 

i think it’s a software company

 

Clearly it's both, I don't even know why it's a debate among some people.

 

I am not so sure. For example, Boeing uses a lot of software to support its products but I would not categorize it as a software company. To me software is a support function for its main product which is planes. Similarly today's Compugen https://en.wikipedia.org/wiki/Compugen_(Israeli_company) is a drug development company even though it probably uses software / computational biology heavily to guide the process. In the past Compugen was a software  company because it sold software/computational biology software tools to pharma / biotech but was not in the business of developing and selling drugs.

 

The economics and success / failure of these companies above only indirectly depends on software (e.g. Boeing Max 737 issues and its attempt to fix those using software updates). Just like it also depends on properly functioning sensors, even though Boeing is not a sensor / electronics manufacturer. They are primarily a car (tesla) / plane (boeing) / drug (compugen) company.

[Liberty]

i don’t think tesla is a car company.

 

i think it’s a software company

 

Clearly it's both, I don't even know why it's a debate among some people.

 

I am not so sure. For example, Boeing uses a lot of software to support its products but I would not categorize it as a software company. To me software is a support function for its main product which is planes. Similarly today's Compugen https://en.wikipedia.org/wiki/Compugen_(Israeli_company) is a drug development company even though it probably uses software / computational biology heavily to guide the process. In the past Compugen was a software  company because it sold software/computational biology software tools to pharma / biotech but was not in the business of developing and selling drugs.

 

The economics and success / failure of these companies above only indirectly depends on software (e.g. Boeing Max 737 issues and its attempt to fix those using software updates). Just like it also depends on properly functioning sensors, even though Boeing is not a sensor / electronics manufacturer. They are primarily a car (tesla) / plane (boeing) / drug (compugen) company.

 

Everybody uses software, many manufacturers write it too (or have suppliers who do). But I think Tesla does more than what most other automakers do, they put a large emphasis on it and don't just do it to support normal functioning of their products in the same ways that others do but rather to try to create primary differentiating features (ie. every automakers might write some software that does X, and all cars do X -- Tesla is writing stuff like Autopilot that was quite ahead of others and that no other vehicle on the road did at the time when they came out it with. Similarly for their app, the large touchscreen that does a bunch of stuff, etc). They also built in house their own computer for self-driving and have a lot of custom software for that, including a very large machine learning effort tied to the autopilot.

 

To me that's a huge enough part of the business to be worth saying that they are both.

 

But there's no objective metric out there, so it's a subjective call on my part.

[Dalal.Holdings]

My point isn't about bulls or bears, in fact you've seen this exact what I'm calling a sort-of "phenomenon" before - where they kind of overweigh the headline quality of the story rather than the importance of the actual facts. I was just sharing this recent example that happened to probably be over-weighed with the

 

Again, it is not scoffing at the specific fact of 95k deliveries - but I do not think that is all together different than 91k deliveries - given the big macro questions that are going to determine the outcome of Tesla for investors:

-Can they make money over the long-run at the price they're able to sell Teslas at these volumes at?

-How much does scale improve their economics over the long-run?

-What is the market for Teslas at whatever ultimate price/margin function they end up selling cars at for the long-run - is say 2 m in the U.S. at their long-term price/value lineup or is it 16 m?

-Same question for markets around the world - what is the ultimate market at their long-term price/value equation.

 

 

Anyway, it seems to me evident to most of the investors involved Tesla, probably both bulls and bears, that these are the determinants of the bull-bear Tesla cases and ultimate outcomes. To the extent that the delivery totals shed light on these types of questions, its obviously critical information. But sometimes narratives driven by just sort of headline-worthy sub-points of the important data have a disproportionate impact that drives attention away from these big macro questions that will determine Tesla's long-term fate.

 

Ok. I don't get your point. This happens ALL THE TIME in financial journalism. (Ie. headlines like "GE beats earnings" when the "beat" was only by 0.01 EPS). And it's not like most of the recent headlines about Tesla have been favorable--they've actually been the exact opposite, so printing that Tesla had a "record quarter" is not some sign of systemic, bullish bias in the media (in fact, the media has been trending in the opposite direction and boy do they love the clicks they get with Tesla headlines).

 

Fact of the matter is, bears were saying that $7500 tax credit cut in half at end of 2018 would kill demand permanently (of course now that it'll get cut in half again, many are just repeating the same argument even though the reduction will be even less so in dollars). Many were projecting Tesla would only sell 70s-80s of thousands of vehicles just months ago. 95k is a substantial beat over those "estimates" and damages the notion that a $7500 credit was the only thing generating sales. Now of course, it's the argument that Tesla only beat because it started international deliveries, etc. The bear argument is always "evolving" one could say.

 

As for your other figures, you can go ahead and try to pin down "estimates" for what Tesla's TAM is. I'd warn you that it's a rapidly moving (and in actuality, growing) target and you are unlikely to get anything precise that is close to reality...

[Gregmal]

Are people surprised that dropping the Model 3, already unprofitable at $50K+ down to mid $30K range resulted in more sales? Let me know when they start making money...

 

This continues to be a great achievement for Musk, and poor investment from the short side; and.... a massive Ponzi scheme that requires Huodini to pull a rabbit(profits) out of his hat. Those profits continue to be non existent. And please, spare me the AAPL and AMZN rhetoric. Apple pretty much always had profits once they got going and AMZN did too once you got through the masking gimmicks Bezos employed to fuel growth and dodge taxes.

[NBL0303]

 

Ok. I don't get your point. This happens ALL THE TIME in financial journalism. (Ie. headlines like "GE beats earnings" when the "beat" was only by 0.01 EPS). And it's not like most of the recent headlines about Tesla have been favorable--they've actually been the exact opposite, so printing that Tesla had a "record quarter" is not some sign of systemic, bullish bias in the media (in fact, the media has been trending in the opposite direction and boy do they love the clicks they get with Tesla headlines).

 

Fact of the matter is, bears were saying that $7500 tax credit cut in half at end of 2018 would kill demand permanently (of course now that it'll get cut in half again, many are just repeating the same argument even though the reduction will be even less so in dollars). Many were projecting Tesla would only sell 70s-80s of thousands of vehicles just months ago. 95k is a substantial beat over those "estimates" and damages the notion that a $7500 credit was the only thing generating sales. Now of course, it's the argument that Tesla only beat because it started international deliveries, etc. The bear argument is always "evolving" one could say.

 

As for your other figures, you can go ahead and try to pin down "estimates" for what Tesla's TAM is. I'd warn you that it's a rapidly moving (and in actuality, growing) target and you are unlikely to get anything precise that is close to reality...

 

This point has actually nothing to do with estimates re: what Tesla's TAM is - it is about focusing on the big picture factors which will actually determine Tesla's value. The fact that it is rapidly moving is one of the reasons I would say that the difference between 90,500 deliveries and 95,000 deliveries or 99,500 deliveries in this one quarter are not as important as many people seem to think. I don't think the company is worth 20% more or less because of a 4,000 difference in deliveries in one quarter - when for Tesla to work out as its investors expect - it will be delivering hundreds of thousands vehicles per quarter in a few years or so - or if it works out as bears expect they will not be delivering any (or nearly any) because they aren't able to profit from deliveries at the current prices.

 

The fact that this sort of thinking happens all the time is exactly why I wrote the original post. I was trying to highlight a common investing fallacy, as I see it. Of course my description or analysis of this phenomenon may be inaccurate but the reason I feel it is important is because it happens all the time in financial journalism.

 

Because the company is rapidly moving, whether they delivered slightly more cars this quarter than their previous record deliveries or slightly less than the previous record is not particularly important to the value of Tesla. The more rapidly it is evolving and growing, as you say, the less important it is whether or not Tesla delivered slightly more or slightly less than their previous record in this one quarter.

[SHDL]

Clearly it's both, I don't even know why it's a debate among some people.

 

I think what those people are really debating when they get into this discussion is whether Tesla ultimately deserves a high earnings multiple like a software company or a much lower multiple like an auto company.  I happen to think it’s the latter (unless they change their business model in a big way), but apparently not everyone agrees.