Musk endeavours

[odysseus2000]

An alternative would be some cash injection from SpaceX into Tesla

Surely that's not likely? They were reporting a loss in Nov, and looking to raise $750m debt. I can't see SpaceX having spare cash lying around.

Tesla currently have about $2b in cash, so there is no immediate need, but I was thinking of what might happen if there was an emergency and Tesla needed cash urgently.

There is potential for SpaceX to raise cash by selling equity, not something Musk would probably like, but in an emergency...Additionally as SpaceX is private the state of its balance sheet etc is not public knowledge so I don't know what cash they may or may not have and the cash could come via SpaceX taking an equity stake in Tesla after SpaceX raised cash, or indeed the take Tesla private playbook might again emerge if Musk has the necessary contacts. If the Tesla share price continues to fall at some point it potentially becomes interesting to other folk such as Apple as an acquisition.

All of these options are undesirable for both business but provide some potential "Get out of Jail cards" if things get bad.

Personally I am not convinced Tesla need to raise cash now, but if car sales continue to fall it may happen and many bears are certain it will.

As I see things now the certainty that many bears have that Tesla will quickly go bust does NOT look logical to me no matter how many bears continue to endlessly tweet about it.

I have again spent some time reading Tesla bear cases. There are several folk on Twitter who have made their hate for Tesla a part of their lives and they incessantly tweet anything they feel is bad for Tesla. Most of it imho seems like bandwagon jumping by folk who have very little understanding. But the lack of sales is a concern which I expect to get dealt with, but if not Tesla have imho several ways of raising cash. But although this seems sensible to me I would not touch the debt here for several reasons, the most important being that I don't have much experience of debt trading making me vulnerable to being murdered by someone who does.

Regards,

[odysseus2000]

UK model 3 orders open next week:

https://twitter.com/elonmusk/status/1121469940815425536

Scrol down after top add about how BMW are lame without electric.

Regards,

[Howard]

Just listened to the latest Tesla conference call which was a steady as she goes affair from Tesla executives.

The decline in sales were put down to their inability to ship product, with much of the delivery taking place in the last 10 days of the quarter.

One new piece of info was that Tesla are to launch an insurance for Tesla owners. This again is following the Apple service model of expanding their product line to include services. Apple were slated by many analysts for going so heavily into services but where ever I go I see Apple-Pay and their web service although low cost compared to buying an iPhone is nonetheless a nice money spinner. Insurance has not hurt Warren Buffett and I suspect it will not hurt Tesla.

Regards,

Ody,

The suggestion that Tesla can launch an insurance operation is laughable! Whether Tesla survives as a car manufacturer is a valid discussion. But you cannot surely believe that that a company which is cash-strapped and junk-rated would be approved by the insurance regulators in the USA.

Worth doing a bit of research on the characteristics of insurance companies before suggesting this.

And to compare Elon Musk with Warren Buffett is stretching your credibility! Good joke!

Yours, highly amused,

Howard

[BobbyD]

An alternative would be some cash injection from SpaceX into Tesla

Surely that's not likely? They were reporting a loss in Nov, and looking to raise $750m debt. I can't see SpaceX having spare cash lying around.

Pawning Space X to bail out Tesla which he pawned to save solar city...

Tesla currently have about $2b in cash, so there is no immediate need

...and that will get them through to where given the current rate of burn?

The suggestion that Tesla can launch an insurance operation is laughable! Whether Tesla survives as a car manufacturer is a valid discussion. But you cannot surely believe that that a company which is cash-strapped and junk-rated would be approved by the insurance regulators in the USA.

In a major surprise Musk has claimed

“It will be much more compelling than anything else out there,”

- https://techcrunch.com/2019/04/24/tesla ... t-a-month/

I'm sure it's announcement on results day was a coincidence just like the proximity of FSD day and delivery numbers...

Squirrel =======>>>>>

[odysseus2000]

Just listened to the latest Tesla conference call which was a steady as she goes affair from Tesla executives.

The decline in sales were put down to their inability to ship product, with much of the delivery taking place in the last 10 days of the quarter.

One new piece of info was that Tesla are to launch an insurance for Tesla owners. This again is following the Apple service model of expanding their product line to include services. Apple were slated by many analysts for going so heavily into services but where ever I go I see Apple-Pay and their web service although low cost compared to buying an iPhone is nonetheless a nice money spinner. Insurance has not hurt Warren Buffett and I suspect it will not hurt Tesla.

Regards,

Ody,

The suggestion that Tesla can launch an insurance operation is laughable! Whether Tesla survives as a car manufacturer is a valid discussion. But you cannot surely believe that that a company which is cash-strapped and junk-rated would be approved by the insurance regulators in the USA.

Worth doing a bit of research on the characteristics of insurance companies before suggesting this.

And to compare Elon Musk with Warren Buffett is stretching your credibility! Good joke!

Yours, highly amused,

Howard

Hi Howard,

The simplest way would be for Tesla to begin by partnering with an existing insurance provider & then develop from there. Most insurance under-writing is loss making, the profits coming from how the float is invested. Since Tesla know more about how anyone in one of their cars drives they can in principle tailor the premiums to the drivers style & perhaps move more towards an under writing profit. As of now Tesla are saying that auto pilot is 2x safer than manual driving. If this is true & was applied to the entire UK car fleet it would mean 5 fewer deaths & serious injuries every day, so about 1825 less accidents per year & corresponding less payouts for the insurers. Tesla getting a foot into this at a very early stage could lead to substantial gains further on.

Many are arguing that auto pilot will never work & that the insurance business is just another distraction. This may be true, but the endless progression in technology has been for things to improve. A car now is many times more comfortable & safe than one from 30 years ago & uses much less fuel. The rate of improvement has not remained static & to dismiss robitic driving has being impossible is fine if you can show why, but for now I have seen no fundamental reason that shows it can't be done.

Musk is swinginging hard at every ball that comes at him & this may lead to disaster, but if he hits some out of the park as he seems to have done with re-useable rockets the entire human race benefits & Musk trousers a lot of dosh.

Regards,

[Howard]

Ody

Yes, Tesla could partner with an insurer who underwrites the risk. But this isn't launching an insurer like Warren Buffett's Geico.

Any insurer who partners Tesla will make sure that there is a margin for themselves. They will underwrite to aim for a loss ratio which will ensure that they don't lose money after investment income is added. The problem in the insurance world is that competitors who don't have to provide profit margins for two companies will be able to undercut prices for safer Tesla drivers leaving the riskier drivers to Tesla and their insurance provider.

So ironically companies like Geico will pick off the safer drivers and make a profit. If Tesla guarantees that they will look after all Tesla owners, they will be left with the riskier unprofitable drivers.

We'll see what wonderful insurance product is launched by Elon Musk and who underwrites the risks. Don't hold your breath if you are expecting quick profits for Tesla from this type of partnership!

regards

Howard

[BobbyD]

Ody

Yes, Tesla could partner with an insurer who underwrites the risk. But this isn't launching an insurer like Warren Buffett's Geico.

Any insurer who partners Tesla will make sure that there is a margin for themselves. They will underwrite to aim for a loss ratio which will ensure that they don't lose money after investment income is added. The problem in the insurance world is that competitors who don't have to provide profit margins for two companies will be able to undercut prices for safer Tesla drivers leaving the riskier drivers to Tesla and their insurance provider.

So ironically companies like Geico will pick off the safer drivers and make a profit. If Tesla guarantees that they will look after all Tesla owners, they will be left with the riskier unprofitable drivers.

We'll see what wonderful insurance product is launched by Elon Musk and who underwrites the risks. Don't hold your breath if you are expecting quick profits for Tesla from this type of partnership!

regards

Howard

What it would do, just like having an accidental sale by slashing prices for a few weeks and announcing that you are just about to pump the price of auto-pilot astronomically would be to get people to hand them cash against some future promise. It's almost as though they think there might be a shortage in the very near to near term future...

[odysseus2000]

Ody

Yes, Tesla could partner with an insurer who underwrites the risk. But this isn't launching an insurer like Warren Buffett's Geico.

Any insurer who partners Tesla will make sure that there is a margin for themselves. They will underwrite to aim for a loss ratio which will ensure that they don't lose money after investment income is added. The problem in the insurance world is that competitors who don't have to provide profit margins for two companies will be able to undercut prices for safer Tesla drivers leaving the riskier drivers to Tesla and their insurance provider.

So ironically companies like Geico will pick off the safer drivers and make a profit. If Tesla guarantees that they will look after all Tesla owners, they will be left with the riskier unprofitable drivers.

We'll see what wonderful insurance product is launched by Elon Musk and who underwrites the risks. Don't hold your breath if you are expecting quick profits for Tesla from this type of partnership!

regards

Howard

As I understand from the question raised by a non analyst from youtube concerned the difficulty and trouble that some Tesla owners have with obtaining insurance. The implication was that existing insurance companies don't like insuring Tesla.

Musk comment was that Tesla know from the feed back of how their cars are driven as to which drivers are using e.g. ludicrous mode and driving fast and those that are not. Hence, they could in principle target their insurance rates to each drivers style. Folk may argue this is 1984 like surveillance but that is what Tesla cars do to improve their fleet, just as Google continually improves its search by learning from what people search for and what answers they then click on etc. It is possible that a totalitarian state, e.g. Stalin's Soviet Union, would use this information to take out potential opponents but for now most Google users and most Tesla drivers don't care, if they did they would stop using the service or other competitors such as Facebook etc.

The sort of information that Tesla have on each driver would not be known to a competitor possibly allowing Tesla to operate more efficiently in terms of driver and policy premium to move towards less of an underwriting loss. If auto pilot works then this would also be another step towards reducing claims etc.

This type of stuff is becoming common across financial systems. A friend who has just taken a lease on an apartment, tells me that her suitability and her loan history were used by the leasing company to check her suitability and set her fees, deposits etc. It was not that good as the system identified her sister in law (who has the same first name) as her and gave her all her sister in laws credit history and other private data by mistake. There were also several physical checks done including that she had to present her self to the leasing company, verifying her id with passport etc before anything could proceed. The whole thing seemed very disagreeable to me, but it was either do this or not get the lease agreement. Maybe this kind of stuff is done with car leasing, but I have no idea since I have never leased anything.

Anyhow having a Tesla badged, if not Tesla run, insurance looks to me as though it may bring some extra dosh to Tesla and make it easier for someone to buy or lease a Tesla. Perhaps they could insist on Tesla insurance for a lease, but again I don't know what is done in these businesses.

Regards,

[odysseus2000]

Musk deal with SEC?

https://www.reuters.com/article/us-tesl ... SKCN1S22BV

Still needs Judge to approve.

Regards,

[BobbyD]

Musk deal with SEC?

https://www.reuters.com/article/us-tesl ... SKCN1S22BV

Still needs Judge to approve.

Regards,

I'm confused Ody.

Why would Musk do a deal to terminate a case which will be laughed out of court regarding breaches of the settlement he made to give up the Chair of Tesla and have his tweets overseen by a responsible adult in return for the SEC dropping a suit which the judge was about to laugh out of court?

“We have direct knowledge of the risk profile of customers, and based on the car, and then if they want to buy a Tesla insurance, they would have to agree to not drive the car in a crazy way. Or they can, but then their insurance rates are higher.”

https://www.bloomberg.com/news/articles ... w-insurers

- Musk's disregard for the laws of the road and other road users is stunning.

- It's not like other insurance companies can't utilise a black box to monitor driver behaviour

- Restricted access to and ownership of data is likely to be an increasingly shallow protection as legislation around the world gradually catches up the advent of the information age.

[Howard]

As I understand from the question raised by a non analyst from youtube concerned the difficulty and trouble that some Tesla owners have with obtaining insurance. The implication was that existing insurance companies don't like insuring Tesla.

Musk comment was that Tesla know from the feed back of how their cars are driven as to which drivers are using e.g. ludicrous mode and driving fast and those that are not. Hence, they could in principle target their insurance rates to each drivers style. Folk may argue this is 1984 like surveillance but that is what Tesla cars do to improve their fleet, just as Google continually improves its search by learning from what people search for and what answers they then click on etc. It is possible that a totalitarian state, e.g. Stalin's Soviet Union, would use this information to take out potential opponents but for now most Google users and most Tesla drivers don't care, if they did they would stop using the service or other competitors such as Facebook etc.

The sort of information that Tesla have on each driver would not be known to a competitor possibly allowing Tesla to operate more efficiently in terms of driver and policy premium to move towards less of an underwriting loss. If auto pilot works then this would also be another step towards reducing claims etc.

how having a Tesla badged, if not Tesla run, insurance looks to me as though it may bring some extra dosh to Tesla and make it easier for someone to buy or lease a Tesla. Perhaps they could insist on Tesla insurance for a lease, but again I don't know what is done in these businesses.

Regards,

Ody

For the last 15 years Insurance companies in the UK have been giving discounts to drivers who are prepared to have a telematics unit in their cars which give all the information on driving style you describe above. So this is nothing new.

The reason insurance companies are reluctant to insure some Tesla drivers is pretty obvious from the videos they post on YouTube. Unfortunately Tesla has attracted many "ludicrous" fans and one doesn't have to be an underwriter to realise that they are high-risk from an insurance viewpoint.

Whilst Tesla may have some interesting information on individual's driving styles, I really doubt if they will share their information on individual drivers with an insurer. And, of course, they will need to get agreement from every driver for their personal information to be shared.

Like a lot of Tesla statements, this announcement doesn't really hold any water until Tesla announces which insurer will partner them and what the agreement is. Frankly, Tesla doesn't sell enough cars in any one market to be that attractive to a significant insurer. It will be marginal business at best, even in the USA which is their biggest market.

This is another example of Elon Musk trying to keep lots of spinning plates on poles. Obviously he has a problem that many of his customers are seen as poor insurance risks because of the ethos surrounding Tesla, so instead of dealing with the problem by toning down the irresponsible side of his company's promotion he is over-confidently trying to revolutionise yet another business area where he doesn't have any expertise.

Sadly it would be better marketing to begin to emphasise the responsible (and boring) characteristics of Tesla cars. In this way he will attract more responsible drivers and begin to make progress in a larger market segment. Then insurers will lower their premiums. And perhaps then the share price will go up rather than down.

This is the sort of short-term action required to ensure Tesla survives over the next two or three years. Hopefully it will then be able to deliver some of the longer-term dreams.

regards

Howard

[odysseus2000]

Hi Howard,

I was dissapoinred by what a telematics device does:

https://www.confused.com/car-insurance/ ... atics-faqs

There are no images, just kinetic & position data is returned with maximum discounts of 20%, more usually 10% on insurance premiums. The telematics device has to be engineer installed & engineer uninstalled when the car is sold.

If you compare to all the data returned from a Tesla including optical data the telematics device looks to be extremely primative. The Tesla system is factory installed & does not need to be removed for sale of the car. Moreover, the optical data would often be useable to determine what lead to an accident & it also has the ability to provide images of anyone breaking into the car and/or causing damage to it.

One can argue that the basic ideas of the Tesla & Telematic systems are similar, but in terms of information available the Tesla system is a great evolutionary leap upwards.

Regarding making a car that is safe & suited to a family life style, the Tesla is far superior in terms of protecting the occupants & reducing the mental effort required from the driver, perhaps shortly if cars work as described in taking the human out of the entire driving experience.

For anyone with the necessary income to support ownership of a Tesla it seems that there is currently no competing package that offers the same levels of safety. This is in addition to the reduced running costs & the emission free driving.

Anyone buying a currently available competing vehicle is being more reckless than someone who buys a Tesla.

Regards,

[Howard]

Hi Howard,

I was dissapoinred by what a telematics device does:

https://www.confused.com/car-insurance/ ... atics-faqs

There are no images, just kinetic & position data is returned with maximum discounts of 20%, more usually 10% on insurance premiums. The telematics device has to be engineer installed & engineer uninstalled when the car is sold.

If you compare to all the data returned from a Tesla including optical data the telematics device looks to be extremely primative. The Tesla system is factory installed & does not need to be removed for sale of the car. Moreover, the optical data would often be useable to determine what lead to an accident & it also has the ability to provide images of anyone breaking into the car and/or causing damage to it.

One can argue that the basic ideas of the Tesla & Telematic systems are similar, but in terms of information available the Tesla system is a great evolutionary leap upwards.

Regarding making a car that is safe & suited to a family life style, the Tesla is far superior in terms of protecting the occupants & reducing the mental effort required from the driver, perhaps shortly if cars work as described in taking the human out of the entire driving experience.

For anyone with the necessary income to support ownership of a Tesla it seems that there is currently no competing package that offers the same levels of safety. This is in addition to the reduced running costs & the emission free driving.

Anyone buying a currently available competing vehicle is being more reckless than someone who buys a Tesla.

Regards,

Ody

I do think you are looking at Tesla from an engineering and product-led viewpoint rather than from a potential customer's view. Nothing wrong with that so long as you take into account the strong and weak points of a Tesla.

There are very sophisticated Telematics systems available with multiple cameras which are not that expensive to fit. This type of system is used more and more by logistics operations for their lorry fleets and, for example, in-cab cameras will catch out drivers using mobile phones while driving as well as linking front and rear views of the surroundings.

There are no problems fitting these to cars very cost-effectively. The problem is that car buyers generally don't want them and won't knowingly pay for them.

And from an insurer's viewpoint they can get a huge amount of useful data from fairly simple telematics systems which cost maybe one thousandth of the cost of Tesla's car technology. Insurers are interested in the lifestyle of their customers and it is much more significant to them whether a car is parked outside a Los Angeles nightclub at 1.00 am than how it manages lane-changes.

Your statement beginning "Regarding making a car that is safe & suited to a family life style ... " Shows just how wrong Tesla's current marketing is. As a Tesla fan you may see this aspect of their cars. I would suggest however that the average family buyer sees Tesla cars marketed as ridiculously fast, over complicated by technology which distracts drivers, suited to converted "Petrol Heads" and unreliable. And, even worse, representing something of the brash side of the US character.

And your statement that "Anyone buying a currently available competing vehicle is being more reckless than someone who buys a Tesla." is patently challenged by US insurers whose analysis suggests the complete opposite.

Insurers have taken a view of Tesla and their drivers, using risk-analysis technology which is far superior and more thorough than Tesla's. For every million dollars of analysis which Tesla has done, US insurers have invested billions of dollars over the years looking at the behaviour of drivers (and don't forget insurers are monitoring all autonomous driving as they are insuring the companies which have been exploring this across the world.)

So, in summary, can I respectfully suggest that in a strengths and weaknesses analysis of the Tesla offering, you are looking only at their strengths, believing all of Elon Musk's big talk and ignoring some of Tesla's obvious weaknesses.

Surely we'd all like a responsible environmentally-friendly vehicle manufacturer to prosper and thrive. But to earn our support Tesla has to modify its behaviour.

regards

Howard

[odysseus2000]

Hi Howard,

Very good rebuttal, thank you!

My views on Tesla are clearly different from yours, but it is super useful to have your side of the argument. As Munger as often said one should know the other guys arguments as well as your own and keep both in your mind simultaneously.

It is this kind of interaction that makes this board so interesting and useful.

Regards,

[BobbyD]

Yes, Tesla could partner with an insurer who underwrites the risk. But this isn't launching an insurer like Warren Buffett's Geico.

A partnership wouldn't really fulfil Musk's description of a product which would eclipse all others...

[TUK020]

converted "Petrol Heads"

Are these "Amp Heads"?

[odysseus2000]

converted "Petrol Heads"

Are these "Amp Heads"?

Maybe "Watt Heads"

As things now are I can't see how any petrol head can stick with petrol & retain peer group standing.

There of course may be a limit to how many Watt Heads there are, but I doubt we are anywhere near saturation.

Regards,

[odysseus2000]

Interesting article showing the potential knife pointed at Tesla's heart caused by Musk's borrowing against his Tesla equity:

https://seekingalpha.com/article/425776 ... soon?app=1

Musk's free spending ways are consistent with this putative $1b debt secured against his Tesla holding, but with only guesses as to at what point a margin trigger would be called.

A concerted social media campaign aimed at Tesla could be enough to bring him down and the folk who want this now have an excellent opportunity to run down Tesla cars with the slowing sales.

If I was in that kind of business I think I would now buy a bunch of puts and then recruit as many trolls to attack Tesla cars as i could afford.

Getting ones self into a position where others can hurt you is not the smartest of things and it may be this that kills Tesla rather than the competitors who by comparison look increasingly lame to me.

Regards,

[BobbyD]

Can this be true that the total CO2 emission for the life of an EV will be greater than some diesels!

http://brusselstimes.com/business/techn ... tudy-shows

John

For the same vehicle models with different powertrains, the carbon footprint of the battery-powered E variants is already better than those of the corresponding vehicles with internal combustion engines. In addition, the electric vehicles offer a higher CO2-saving potential in all phases of the product cycle. Furthermore, it is of crucial importance for CO2 emissions whether the propulsion energy is generated from fossil or regenerative sources. This is the result of a certified life cycle assessment (LCA) of the Volkswagen Golf, which compares the CO2 emissions of the different vehicle versions with either an electric or an internal combustion engine.

- https://www.volkswagenag.com/en/news/20 ... sions.html

[BobbyD]

Getting ones self into a position where others can hurt you is not the smartest of things and it may be this that kills Tesla rather than the competitors who by comparison look increasingly lame to me.

Being in the black is the new black.