Author Topic: TSLA - Tesla Motors  (Read 885176 times)

NBL0303

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Re: TSLA - Tesla Motors
« Reply #2960 on: July 03, 2019, 08:20:41 AM »
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

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Re: TSLA - Tesla Motors
« Reply #2961 on: July 03, 2019, 08:33:37 AM »
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.
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Liberty

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Re: TSLA - Tesla Motors
« Reply #2962 on: July 03, 2019, 08:41:09 AM »
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.
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SHDL

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Re: TSLA - Tesla Motors
« Reply #2963 on: July 03, 2019, 09:21:02 AM »
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

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Re: TSLA - Tesla Motors
« Reply #2964 on: July 03, 2019, 09:49:20 AM »
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

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Re: TSLA - Tesla Motors
« Reply #2965 on: July 03, 2019, 10:05:24 AM »
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.
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Castanza

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Re: TSLA - Tesla Motors
« Reply #2966 on: July 03, 2019, 10:11:28 AM »
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.
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Liberty

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Re: TSLA - Tesla Motors
« Reply #2967 on: July 03, 2019, 10:29:01 AM »
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...
« Last Edit: July 03, 2019, 12:36:13 PM by Liberty »
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Liberty

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Re: TSLA - Tesla Motors
« Reply #2968 on: July 03, 2019, 10:34:56 AM »
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).
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NBL0303

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Re: TSLA - Tesla Motors
« Reply #2969 on: July 03, 2019, 10:44:48 AM »
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.
« Last Edit: July 03, 2019, 10:47:36 AM by NBL0303 »