Musk endeavours

[odysseus2000]

Hi Howard,

I think you are getting too focused on short term moving average and that you are in denial about the troubles that legacy auto is facing and how this helps Tesla.

One can argue that the whole auto sector is in a cyclcal decline as in this Seeking Alpha article and that this will hurt Tesla.

https://seekingalpha.com/article/425402 ... ycle?app=1

But the BEV market is not in decline and is instead receiving tail winds from politicians. if instead of looking at every blip in the curve you move to longer time scales there is clear growth in Tesla sales. Moreover, a new model in a new market often takes months to reach its peak, we are very early in the model 3 in Europe and China. Model 3 leasing as just started which should help the business buyer.

There is now relentless force to make folk go BEV. A neighbour who has a daughter in London, now finds that the area requiring clean vehicles is expanding beyond his daughters house and so he wants something that won’t give him unpleasant charges. There are no Tesla 3 in the UK, so he decided on a Korean BEV and was getting around to leasing it when he found there was a 12 month wait. Currently nothing in the market interests him but he is being forced to do something. This is bullish for all BEV, and bearish for all legacy ice.

Now if we look at BMW accounts we find:

https://annual-report2018.bmwgroup.com/ ... statements

Cash & equivalents balance sheet Euro 10.9b,

Declining profits from Euro 8.7(2017) to 7.2b (2018)

One of the other articles I linked states that to convert a car plant to electric costs about Euro 1.2b. 10.9b of cash won’t last long at that rate of consumption and while this is being done BMW loses sales and we are, if the seeking alpha article is correct, in a cyclical auto decline.

I believe that the dangers of the current market are not to Tesla, but to legacy and BMW looks to me to be in very serious trouble.

Regards,

[tjh290633]

All the anecdotal evidence that I see suggests that the Leaf was intended and designed to be a second car for short distance journeys locally. That job it does well, and combined with solar panels gives an economical solution.

All it has in common with Tesla vehicles is that it is a BEV.

TJH

[Howard]

dspp

Yes, Reuters and others are reporting that Tesla are now leasing the Model 3. As we have discussed in the past it will be interesting to see what the cost is. As Tesla will be financing this and the ultimate costs for them will ultimately only be known 3+ years on, it might be a good deal for consumers and should increase sales.

Apparently customers won't be able to buy the car at the end of the rental. The analysts are going to have fun predicting the ultimate costs to Tesla!

regards

Howard

[ReformedCharacter]

Nice video here of the first commercial launch of the Falcon Heavy, including the landing of all 3 main booster stages:

https://spaceflightnow.com/2019/04/10/l ... wednesday/

Skip to 19:55 for the launch.

RC

[dspp]

Uber trying to get $100bn valuation without ever becoming profitable .... basically based on FSD + other features. Meanwhile "2018 revenues of $11.27bn for 2018 and a loss of $1.85bn.". Ouch.

https://www.theguardian.com/technology/ ... ing-public

- dspp

[BobbyD]

Tesla has begun leasing its Model 3 sedan in the U.S., in a financing option that would increase the EV maker's base. However, customers will not have the option to buy their cars at the end of the lease as Tesla intends to use the vehicles for its long planned Tesla Network ride sharing program.

That would be the same Tesla Network Tesla recently removed all mention of from their website, and which relies on L4/5 AD for which Tesla have not one testing license?

Watched a great video recently (CNBC panel I think) in which Tesla bull guy decried the idea that Tesla was going to meet serious competition for the first time on the grounds that that competition hadn't arrived so it doesn't exist before Tesla bull gal explained that her fund's position in Tesla was based on a valuation 80% of which was derived from the value of full autonomy... Schrodinger's future.

Leasing fits perfectly with the Tesla roadmap. It's another area in which they have no experience and established competition down which to pour resources they don't have... If they want a fleet of cars in 3-5 years time being a car manufacturer they could just build them, assuming of course that they could sell the cars that they build in the meantime and that the leasing isn't just designed to get the Model 3 lake off their hands in return for some % of its nominal value.

Tesla has also halted online sales of its $35,000 Model 3, meaning the lowest-priced version available on the net for order is now the $39,500 Standard Plus (which includes Autopilot). The lowest-priced model can still be ordered by phone or in stores.

So you can't buy a $35,000 without talking to a salesman? Reminds me of trying to cancel a mobile phone contract... It also creates an interesting paradox for their sales channels. The company which was supposed to be massively online in contrast to its out of date competitors doesn't seem to think its website upsells enough at the bottom end of the market, and the hoops they are jumping through to prevent people ordering a $35,000 M3 would make a cynical person think they might not be able to build and deliver it for $35,000.

Although here is a slightly different take on it:

On Thursday night, Tesla announced some changes to its Model 3 range. The lineup has been simplified, the prices have been altered, and in the US it will now be possible to lease the car.

First, Autopilot is now a mandatory option, although the company is only raising prices by $2,000 on each configuration instead of the $3,000 that customers have paid until this evening.

Next, the Standard Range Model 3—the one with cloth seats that Elon Musk told us about as recently as February—is now gone. Instead, the cheapest Model 3 will be a software-locked version of the Standard Range Plus, which now costs $39,500. Its range drops from 240 miles (386km) to 216 miles (348km), and features like music streaming, navigation with live traffic, and heated seats will be disabled. Additionally, if you want one you have to call the company or visit one of the stores—there is no option to order it online.

Tesla says that customers can pay to unlock the features of the Standard Range Plus at any time, or choose to downgrade to the Standard Range and receive a refund for the difference in price. Since the Standard Range is not listed on the site, we can't confirm if the entry-level car now starts at $37,000 before any incentives at the time of writing. Assuming it is, the cost to unlock the extra 24 miles and those seat heaters should be $2,500.

...

Finally, it will now be possible to lease a Model 3 instead of buying one—in the US, at least. All leases are for 36 months, with the option for 10,000, 12,000, or 15,000 miles a year (16,093km, 19,312km, 24,140km). The minimum lease deposit is $3,000 for all three Model 3s, although the amount due at signing varies depending on both spec and mileage; this ranges from $4,199-$4,584. Monthly leasing payments decrease if a customer chooses to make a larger down-payment, but if not these range from $535 for the cheapest Standard Range Plus car to $889 for the Model 3 Performance.

- https://arstechnica.com/cars/2019/04/te ... re-locked/


...and of course the logical question raised by a Tesla Network which exists and turns such good money that the company is stockpiling its own used car futures would be 'Why bother with the customer at all'? Hire some minimum wage bod to plug it in, remove the fast food wrappers and crack the windows to give it some air and send it straight back out. But if your endgame is the Waymo/Aptiv model why would you give the competition, eg. your customers, access to your network?

Uber trying to get $100bn valuation without ever becoming profitable .... basically based on FSD + other features. Meanwhile "2018 revenues of $11.27bn for 2018 and a loss of $1.85bn.". Ouch.

https://www.theguardian.com/technology/ ... ing-public

- dspp

Yeah, but when they crack AD they'll be rolling in it!

Sure I've heard that somewhere before...

[Howard]

Hi Howard,

I think you are getting too focused on short term moving average and that you are in denial about the troubles that legacy auto is facing and how this helps Tesla.

One can argue that the whole auto sector is in a cyclcal decline as in this Seeking Alpha article and that this will hurt Tesla.

https://seekingalpha.com/article/425402 ... ycle?app=1

But the BEV market is not in decline and is instead receiving tail winds from politicians. if instead of looking at every blip in the curve you move to longer time scales there is clear growth in Tesla sales. Moreover, a new model in a new market often takes months to reach its peak, we are very early in the model 3 in Europe and China. Model 3 leasing as just started which should help the business buyer.

There is now relentless force to make folk go BEV. A neighbour who has a daughter in London, now finds that the area requiring clean vehicles is expanding beyond his daughters house and so he wants something that won’t give him unpleasant charges. There are no Tesla 3 in the UK, so he decided on a Korean BEV and was getting around to leasing it when he found there was a 12 month wait. Currently nothing in the market interests him but he is being forced to do something. This is bullish for all BEV, and bearish for all legacy ice.

Now if we look at BMW accounts we find:

https://annual-report2018.bmwgroup.com/ ... statements

Cash & equivalents balance sheet Euro 10.9b,

Declining profits from Euro 8.7(2017) to 7.2b (2018)

One of the other articles I linked states that to convert a car plant to electric costs about Euro 1.2b. 10.9b of cash won’t last long at that rate of consumption and while this is being done BMW loses sales and we are, if the seeking alpha article is correct, in a cyclical auto decline.

I believe that the dangers of the current market are not to Tesla, but to legacy and BMW looks to me to be in very serious trouble.

Regards,

Ironically Tesla may help legacy companies benefit from their battery technology.

Because their sales have slipped so far below their forecasts Panasonic are said to be looking for customers for batteries from the Mega factory.

Reports from Japan suggest that the agreement between Tesla and Panasonic may allow Panasonic to sell excess production to Tesla's competitors. It is rumoured that Toyota may be the first company to be interested in incorporating these batteries into their EVs.

We didn't see that one coming! But if this is a fact it destroys much of Tesla's lead in battery technology. We'll have to see if it proves true.

Ody - you are so gloomy about BMW's prospects that, who knows, they might follow Toyota and buy batteries that Tesla fail to use!!

regards

Howard

[PeterGray]

The Leaf is a pretty crude BEV. It certainly isn't Tesla-comparable as a long distance vehicle. The battery pack/system technology just hammers the battery longevity in the Leaf. I have seen quite a lot of evidence (which I don't have to hand) of Leaf owners doing the Tesla-stretch when replacing their Leaf. Owners of Leafs who I speak with in the UK think the same way.

Interesting that you've heard that, dspp, and a bit of a surprise to me. Clearly the Leaf is pretty crude, early generation which would explain why sales may be dropping off. I have no disagreement with that. What would surprise me is if a lot of Leaf owners sell to buy Tesla. Apart from both being EVs they seem aimed at fundamentally different markets - the Leaf is smaller and cheaper and not aimed at performance enthusiasts. My view is that the biggest market is for an updated Leaf, with modern tech and better range. I don't see Tesla targeting that anytime soon, but I can see "big auto" - or at least parts of it, doing so.

[BobbyD]

My view is that the biggest market is for an updated Leaf, with modern tech and better range. I don't see Tesla targeting that anytime soon, but I can see "big auto" - or at least parts of it, doing so.

2019 Nissan LEAF e-Plus First Drive: Capable, Competent 226-Mile EV

...Official pricing for the LEAF Plus is not yet available, but Wandell said that the LEAF Plus would be “very competitive from a pricing standpoint.” That probably means the LEAF Plus base S trim will start around $36,000 with the upper SV and SL versions topping out in the mid-$40,000s.

So quite like a model 3 except you'll probably be able to purchase the bottom of the range model within 3 years of launch and built by a proper car company...

Still significantly more expensive than the ID3 though, and in America VW still have most of their tax credits left.

[dspp]

The Leaf is a pretty crude BEV. It certainly isn't Tesla-comparable as a long distance vehicle. The battery pack/system technology just hammers the battery longevity in the Leaf. I have seen quite a lot of evidence (which I don't have to hand) of Leaf owners doing the Tesla-stretch when replacing their Leaf. Owners of Leafs who I speak with in the UK think the same way.

Interesting that you've heard that, dspp, and a bit of a surprise to me. Clearly the Leaf is pretty crude, early generation which would explain why sales may be dropping off. I have no disagreement with that. What would surprise me is if a lot of Leaf owners sell to buy Tesla. Apart from both being EVs they seem aimed at fundamentally different markets - the Leaf is smaller and cheaper and not aimed at performance enthusiasts. My view is that the biggest market is for an updated Leaf, with modern tech and better range. I don't see Tesla targeting that anytime soon, but I can see "big auto" - or at least parts of it, doing so.

The stats data for this, came from analysis of what Tesla owners sold out of when buying their Tesla. An awful lot have come over from Leafs, Volts, Prius, etc. Plus of course folk coming 'up' from Civics and the like. In the particular case of the Leaf the explanation I have seen most often is that a) it was the best EV available when families bought it; b) they most often bought it as the family's secondary car; and c) when the Tesla became available they then bought a Tesla as the family's primary car having derisked the technology in their own minds. However some were just 1-car Leaf to 1-car Tesla so clearly there is more to it than that. The Tesla stretch definitely used to exist, though it may be tapering as the 3 becomes more widespread.

An updated Leaf would need a bigger battery than the current 24-30kWh one (vs Tesla at 75-100kWh typically) so as to give less deep cycling, longer ranges, better battery lifetimes, plus better battery pack management (liquid cooling versus the air cooling of the Leaf). By the time you've done that you have a Tesla model 3 cost in your NRE and your BoM.

You can argue that a Leaf is fine as what it is: a short range low cost - but compromised - shopping trolley. This is the vehicle design bifurcation I talk about that may be coming.

For some reason a friend's UK holiday cottage seems to get Leaf owners booking, perhaps because they approve of the solar PV that is evident in the photos. They typically arrive on their last gasp. That would not be the case in the Teslas. And from my personal discussions with the owners they are well aware of this and generally expecting a Tesla or similar to be their next EV. I have similar conversations with other informed users in other contexts. So there is a fairly good correspondence between the analysis & anecdote I read online, and that which I experience personally. That's why I 'buy' the commentary on this point.

regards, dspp

[odysseus2000]

Ironically Tesla may help legacy companies benefit from their battery technology.

Because their sales have slipped so far below their forecasts Panasonic are said to be looking for customers for batteries from the Mega factory.

Reports from Japan suggest that the agreement between Tesla and Panasonic may allow Panasonic to sell excess production to Tesla's competitors. It is rumoured that Toyota may be the first company to be interested in incorporating these batteries into their EVs.

We didn't see that one coming! But if this is a fact it destroys much of Tesla's lead in battery technology. We'll have to see if it proves true.

Ody - you are so gloomy about BMW's prospects that, who knows, they might follow Toyota and buy batteries that Tesla fail to use!!

regards

Howard

Hi Howard,

So let me get this right. Competitors have to buy Tesla batteries since their own are not as good and/or in short supply and this is a negative for Tesla?

Reads like a huge positive to me.

The problem with shorting Tesla is that it is a crowded trade, there are endless folk doing it, but less so for legacy auto which I think is the better trade, assuming you know how to short. The belief is that the auto market is in a cyclical down turn and yet you have all autos popping with Tata very strong. This to me looks more like a short than Tesla.

However, I should declare a personal interest having found yesterday that the front coil (drivers side) spring upper cup, on my 19 year old Mercedes was almost corroded through and I was using a needle scaler on it. If it had failed then, the chance of it seriously hurting me or killing me would have been very high. I loathe the over priced low quality stuff that comes out of German legacy auto. By comparison a neighbour has a 35 year old Volvo which sails through its MOT.

Regards,

[dspp]

Early German March 2019 vehicle sales stats, rapidly gaining on Porsche in their home market:

Porsche - 2,723
Tesla - 2,367
Land Rover – 2,222
Honda – 1,858
Jeep – 1,779
Jaguar – 987

https://teslamotorsclub.com/blog/2019/0 ... s-germany/

They can't all be being bought by the OEMs for tear-down purposes

- dspp

[BobbyD]

Early German March 2019 vehicle sales stats, rapidly gaining on Porsche in their home market:

Porsche - 2,723
Tesla - 2,367
Land Rover – 2,222
Honda – 1,858
Jeep – 1,779
Jaguar – 987

https://teslamotorsclub.com/blog/2019/0 ... s-germany/

They can't all be being bought by the OEMs for tear-down purposes

- dspp

That's a completely meaningless comparison, and you know it.

Your comparing model 3 sales at questionable profitability to a part of a company which specialises in quite expensive, low volume, massively profitable cars. If they are a legitimate mainstream producer they should be comfortably outselling Porsche like VW, Audi, SEAT, Skoda... in the same way that Porsche comfortably outsell Bugatti. If they are a legitimate competitor to Porsche then those sales would be S's and X's not 3's.

[dspp]

BD,

The X is fairly comparable with the Cayenne. The S is fairly comparable with the Panamera. I'll admit that Porsche don't really have an equivalent to the 3 as that is left for Audi, but in due course the Y would be comparable to the Macan.

However I am not that fussed with a model-model comparison, except to note that Tesla EVs have nothing to apologise about at product level. What interests me is that they are getting an interesting level of penetration, and that it ramps up very quickly as Tesla have a model to offer in each segment, and that this is happening in one of the - if the not THE - most competitive and exacting auto-markets in the world.

I noticed that Tesla was the #1 selling model in Switzerland, bar none. The second runner was the Skoda Octavia. Tesla is becoming very mainstream, and very competitive.

Watching how quarterly results come in during 2019 will be interesting. There are risks aplenty.

regards, dspp

++++++++++
Here are the mass market numbers in Germany https://www.marklines.com/en/statistics ... rmany_2019
German passenger car sales fall 0.5% in March
On April 3, the Germany Federal Motor Vehicle Office (KBA) announced that there were 345,523 new passenger car registrations in March, a 0.5% decrease from the same month last year.
Volkswagen brand sales of 62,627 units (18.1% market share) decreased 2.9% in March compared to the same month in 2018.
Audi sales of 29,751 units (8.6% share) increased 15.9% from last year.
Mercedes-Benz sales of 28,054 units (8.1% share) decreased 5.2% in March.
Ford sales of 25,613 units (7.4% share) decreased 4.7% from last year.
BMW sales of 25,458 units (7.4% share) decreased 3.1% from the same month last year.
Opel sales of 22,505 units (6.5% share) increased 6.4% in March.

[BobbyD]

The X is fairly comparable with the Cayenne. The S is fairly comparable with the Panamera. I'll admit that Porsche don't really have an equivalent to the 3 as that is left for Audi, but in due course the Y would be comparable to the Macan.

As I said you know you are comparing Apples with Antelopes. It's a comparison which adds absolutely nothing to the conversation. If all those Teslas were S's and X's it might have been interesting, but they weren't. You know it and I know it. This is just the heralding of a straw victory to keep fan boy morale up in the trenches during a string of bad news. It isn't useful or constructive.

[Howard]

Hi Howard,

So let me get this right. Competitors have to buy Tesla batteries since their own are not as good and/or in short supply and this is a negative for Tesla?

Reads like a huge positive to me.

The problem with shorting Tesla is that it is a crowded trade, there are endless folk doing it, but less so for legacy auto which I think is the better trade, assuming you know how to short. The belief is that the auto market is in a cyclical down turn and yet you have all autos popping with Tata very strong. This to me looks more like a short than Tesla.

However, I should declare a personal interest having found yesterday that the front coil (drivers side) spring upper cup, on my 19 year old Mercedes was almost corroded through and I was using a needle scaler on it. If it had failed then, the chance of it seriously hurting me or killing me would have been very high. I loathe the over priced low quality stuff that comes out of German legacy auto. By comparison a neighbour has a 35 year old Volvo which sails through its MOT.

Regards,

No, I don't think that's quite right. The issue is that Tesla aren't selling enough cars to fill the capacity of the Gigafactory. The demand for their cars appears to be falling quite fast at the moment.

So there is an excess of battery production capacity at the plant which Panasonic would like to sell as Tesla are letting them down at the moment. Hopefully Tesla are able to pay for the batteries they need! But Panasonic, who hopefully you will agree aren't a small player, are now reputedly looking for new customers for their battery technology. If they are able to sell to other manufacturers, this means that Tesla may lose their lead on battery technology.

From an investment viewpoint I know nothing about short selling but would suggest that the major ICE manufacturers shares are priced to fail, so may surprise on the upside. Tesla shares appear to be priced to be wildly successful at making huge sales and profits. They may surprise on the downside if the worldwide auto industry (including EVs) is in a cyclical downturn.

I'm not sure how relevant your suspension is to the above, but good luck in getting it repaired!

kind regards (and smooth motoring)

Howard

[PeterGray]

So let me get this right. Competitors have to buy Tesla batteries since their own are not as good and/or in short supply and this is a negative for Tesla?


Surely what's being talked about is them buying Panasonic batteries, just as Tesla do? The negative bit for Tesla is that there seem to be a lot of bits of news coming out about Tesla not using as many batteries as they, and Panasonic expected. That has obvious implications for how many cars Tesla are producing.

[BobbyD]

And what about the competition developing their own self-driving technologies? "To me, right now this seems like game, set and match. I don't want to be complacent or overconfident, but that is literally how it appears right now. I could be wrong, but it appears to be the case that Tesla is vastly ahead of everyone."

- https://www.cnet.com/roadshow/news/elon ... ving-tech/

Contrast that to the response given by Karl Iagnemma of nuTonomy who when asked about how he thought their car compared to Waymo's said the interviewer probably had a better idea than he did, since Waymo don't let him inside their cars...

[odysseus2000]

Hi Howard,

So let me get this right. Competitors have to buy Tesla batteries since their own are not as good and/or in short supply and this is a negative for Tesla?

Reads like a huge positive to me.

The problem with shorting Tesla is that it is a crowded trade, there are endless folk doing it, but less so for legacy auto which I think is the better trade, assuming you know how to short. The belief is that the auto market is in a cyclical down turn and yet you have all autos popping with Tata very strong. This to me looks more like a short than Tesla.

However, I should declare a personal interest having found yesterday that the front coil (drivers side) spring upper cup, on my 19 year old Mercedes was almost corroded through and I was using a needle scaler on it. If it had failed then, the chance of it seriously hurting me or killing me would have been very high. I loathe the over priced low quality stuff that comes out of German legacy auto. By comparison a neighbour has a 35 year old Volvo which sails through its MOT.

Regards,

No, I don't think that's quite right. The issue is that Tesla aren't selling enough cars to fill the capacity of the Gigafactory. The demand for their cars appears to be falling quite fast at the moment.

So there is an excess of battery production capacity at the plant which Panasonic would like to sell as Tesla are letting them down at the moment. Hopefully Tesla are able to pay for the batteries they need! But Panasonic, who hopefully you will agree aren't a small player, are now reputedly looking for new customers for their battery technology. If they are able to sell to other manufacturers, this means that Tesla may lose their lead on battery technology.

From an investment viewpoint I know nothing about short selling but would suggest that the major ICE manufacturers shares are priced to fail, so may surprise on the upside. Tesla shares appear to be priced to be wildly successful at making huge sales and profits. They may surprise on the downside if the worldwide auto industry (including EVs) is in a cyclical downturn.

I'm not sure how relevant your suspension is to the above, but good luck in getting it repaired!

kind regards (and smooth motoring)

Howard

I read this entirely differently.

Selling batteries is the analogue of Standard oil who would only give contracts to ship oil if the railroads agreed to pay Rockerfella a % of the shipping costs charged to competitors. Here we have anyone who buys batteries from Tesla/Panasonic putting cash flow into Tesla's & Panasonics profits, the margin having to be recouped by the battery buyer when they sell their car which is hence more expensive or lower margin than what Tesla can do. Moreover, we know Tesla are transitioning from 18650 cells to another geometry, so they are likely running production lines for cash that would otherwise be shut down.

Further all the FUD (fear uncertainty & doubt) about Tesla sales is likely just that. I have seen this kind of stuff endlessly, folk talking their own book or trying to send others the wrong way & almost always this kind of stuff is misleading or wrong. I would council to be very cautious about taking any position based on this kind of stuff. All the folk telling you they are short are in general no good at the game. Professional shorting is focused on price action, not rants.

If we think about autos we seem to have a cyclical slow down & at the same moment large secular spending on new tech & loss of market share to Tesla, Chinese & Koreans. A bad combinations that will hurt legacy auto & meanwhile they have all popped up, exactly the conditions to look for short opportunities.

The relevance of my car research is to indicate how Mercedes & the rest of German auto have been selling low quality stuff at high prices & now they face powerful new competitors who they have to buy batteries from. Not the conditions for growth.

Regards,

[PeterGray]

Here we have anyone who buys batteries from Tesla/Panasonic putting cash flow into Tesla's & Panasonics profits

Why do you think excess batteries Pana sell will boost Tesla's profits? There is perhaps some truth in that view, as I understand it Tesla have commitments to buy a certain number of batteries from Pano, which they have to pay for anyway. So perhaps if Pano can offload those Tesla aren't using elsewhere that may reduce Teslas losses?