Model Y. So Tesla will have four models: S 3 X Y
I dont think this is an accident.
Tesla Q4 2018 Earnings Letter
51–60 of 99 posts
Re: Tesla Q4 2018 Earnings Letter
#52Earlier quoted context omitted.
Yes. Musk abstained from voting. Musk made his opinion known, but otherwise "fairly" let the shareholders vote on the issue. At least technically fair. It was 85% in favor of merging. I say "technically", because Musk also went around trying to convince people that they should allow SCTY to be acquired by TSLA. But hey, shareholders trust Musk and were willing to follow his opinion on the matter. So I guess its fair…
> A stupid move, but fair. Are you're saying this from a short-term financial perspective? I personally think it's too early to tell if it was a stupid move. Elon Musk had a plan, and his plans do seem to work out for the most part given some time. It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.
> Are you're saying this from a short-term financial perspective?
Absolutely. Tesla's risk isn't long-term at all. Its all about the short-term risk.
Just think about Tesla's debt schedue.
* CUSIP 83416TAA8 -- $188,058,000 of Solar City Debt on November 2018.
* CUSIP 88160RAB7 -- $920,000,000 of Tesla Debt on March 2019. (Not part of SolarCity, but it has to be part of the calculus).
* CUSIP 83416TAC4 -- $566,000,000 of Solar City Debt, on November 2019.
Imagine how much easier 2019 would have been if Tesla didn't have to worry about $740 Million of Solar City debt coming due.
As a result, Tesla's CapEx spending (ie: building factories, buying factory equipment money) has dropped dramatically.
That doesn't even get into the stock-dillution issue either. Millions of shares were issued, reducing Tesla shareholder voting power, and your representation of the company. Solar City investors joined with Tesla investors as a freebie, part of the deal.
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So now that we've talked about the costs of merging the companies. What exactly has SolarCity done for Tesla? Absolutely nothing. Tesla has been given hundreds-of-millions of dollars in debt, and millions of shares worth of dillution... with nearly nothing in return.
SolarCity employees and contractors were fired or laid off for the most part. SolarCity's deal with HomeDepot has evaporated. And finally the Gigafactory 2 is barely operational. The Solar Roof is years late and sales / revenue of SolarCity are completely ignorable.
Oh, and future Solar City debt will come due. There's also a 2020 bond due (I can't figure out how much it costs though). Its not like Tesla is close to paying off all that old debt yet.
We're looking at a ton of downsides with almost no visible upsides. Even after a year of waiting, all the touted "potential upsides" (Solar Roof, etc. etc.) are basically dead.
Re: Tesla Q4 2018 Earnings Letter
#53Earlier quoted context omitted.
For me the next couple of years are going to make or break Tesla. You have pretty much every car manufacturer releasing flagship electric cars in 2019/2020. And most of them are either cheaper than Tesla or offer far more value i.e. premium branding and better interiors. And whilst they have their Supercharger network I suspect that pretty soon we will governments intervening to regulate standards and build out infra…
> offer far more value i.e. premium branding and better interiors This can't happen soon enough. Ever since driving a Tesla, I'm completely disappointed by the interior/control panels of most (all?) other cars. Buttons, seriously? A 9-inch screen?!
Seriously? Tesla interiors have a high tech feel, but they are pretty spartan and lack luxury I expect in a $100k car. You can get into a 3 series BMW and it's got a higher quality interior than any Tesla.
Re: Tesla Q4 2018 Earnings Letter
#54Earlier quoted context omitted.
As I most recently pointed out in https://news.ycombinator.com/item?id=18712442 , there is good reason to believe that all the other car manufacturers are going to learn the hard way that their interests do not align with their dealers. Which means that consumers will learn that they shouldn't go to existing car companies to buy electric cars. Which does not bode well for the future of existing car companies. (This i…
This is a bizarre argument to me, and I remember thinking that the last time you "pointed it out". You're essentially saying that tens of thousands of dealers and hundreds of billions of dollars worth of car companies are going to go out of business because they can't find a mutually beneficial incentive structure. It's not going to be all roses, but Tesla shunning dealers hasn't exactly been either, from a service q…
You're essentially saying that tens of thousands of dealers and hundreds of billions of dollars worth of car companies are going to go out of business because they can't find a mutually beneficial incentive structure.
It would be far from the first time. One of the biggest problems is for a company whose internal incentives and business model are based around one set of market assumptions to rethink it all and do something else instead.
Both The Innovator's Dilemma and The Innovator's Solution touch on this. The latter one in particular walks through how internal structures and incentives have caused company after company to fail to figure out how to sell products that they know consumers are buying.
The two most common problems being that it is very hard to cut your own margins to match a low margin competitor, and it is even harder to convince a third party sales distributor to cut their margins.
Anyways this is something that I've been aware of for close to 20 years. In another 10 years you'll be able to decide whether I was wrong.
Re: Tesla Q4 2018 Earnings Letter
#55Earlier quoted context omitted.
For me the next couple of years are going to make or break Tesla. You have pretty much every car manufacturer releasing flagship electric cars in 2019/2020. And most of them are either cheaper than Tesla or offer far more value i.e. premium branding and better interiors. And whilst they have their Supercharger network I suspect that pretty soon we will governments intervening to regulate standards and build out infra…
> offer far more value i.e. premium branding and better interiors This can't happen soon enough. Ever since driving a Tesla, I'm completely disappointed by the interior/control panels of most (all?) other cars. Buttons, seriously? A 9-inch screen?!
> Buttons, seriously?
Buttons allow a driver to not take his/her eyes off the road while changing the radio station or adjusting the AC. Totally eliminating dashboard buttons is dumb, but fortunately some car-makers have started realizing this and have started to re-introduce some of those buttons.
Re: Tesla Q4 2018 Earnings Letter
#56Looks like everyone is worried about a few percentage points up and down in financial numbers. There are three keys points I took away: 1) We expect the capital spend per unit of capacity for this factory to be less than half of that of our Model 3 line in Fremont. 2) Since Model Y will be built on the Model 3 platform and is designed to share about 75% of its components with Model 3, the cost of the Model Y producti…
> Tesla is significantly ahead of the pack so far Not really. Audi e-tron, Jaguar iPace and BMW i3 are all well reviewed. And 2019/2020 will see a wave of car companies e.g. Hyundai, Mercedes entering the market including plenty of interesting startups coming out of China. So Tesla is going to need far more to differentiate themselves than just range.
The Model 3 outsold all of those by huge margins, and startups in China are not going to sell cars in the US — or any large market outside of China — any time soon due to safety standards.
IMO the biggest dealbreaker for non-Tesla EVs is the extremely anemic state of affairs for non-Supercharger charging stations: there are barely any of them, many are poorly maintained or broken (or reserved for customers/employees/building residents), and dear God they're slow. As a Tesla owner, I can't imagine having to depend on them... Half the time I come across one, which is rare enough as it is, whatever I find is literally unusable, and the rest of the time getting a decent charge takes hours. With a Supercharger I can reliably get 100+ miles in about 15 minutes, which is plenty for almost anything, and there's many, many more charging stations.
Re: Tesla Q4 2018 Earnings Letter
#57Earlier quoted context omitted.
Why would it be a liability? Shareholders voted and accepted the purchase of SolarCity. I agree its sketchy, but Musk doesn't technically control the company. He has a large share of the voting pool, but the shareholders in general were willing to bail out SolarCity. Its kinda "Democracy in action". I think it was a stupid move for the shareholders to do, but its fully within their rights to do so.
To nitpick, it's literally plutocracy, not democracy.
Fair enough. The Stock Market is a pay-to-play game for sure.
Re: Tesla Q4 2018 Earnings Letter
#58Pre: - Will they give guidance on Model 3, Geographic breakdown(most other peers do)? - how many sales are high end cars vs low end? - TSLA down 11% on year vs market up 5ish - convertable debt issue, we're now in the 20 day average window, option implied vols show market doesn't think they'll make it - Elon commented that they could pay bond w cash and didn't seem concerned, cash balance is up, though so are short t…
I am getting familiar with your summaries like this which I really appreciate. I am interested if you are writing these up or obtaining them through a script or other service? Thanks again!
He works for a hedge fund in Toronto (or used to?). Pretty sure these are all his own words. And you’re right they’re great. Whenever there’s earnings reports from the big tech companies - his are the first comments I look for.
Re: Tesla Q4 2018 Earnings Letter
#59Pre: - Will they give guidance on Model 3, Geographic breakdown(most other peers do)? - how many sales are high end cars vs low end? - TSLA down 11% on year vs market up 5ish - convertable debt issue, we're now in the 20 day average window, option implied vols show market doesn't think they'll make it - Elon commented that they could pay bond w cash and didn't seem concerned, cash balance is up, though so are short t…
Tesla also just lost another CFO. Deepak Ahuja announced he’s leaving. Again.
https://www.cnbc.com/2019/01/30/musk-says-tesla-cfo-deepak-a...
Re: Tesla Q4 2018 Earnings Letter
#60Is there another vehicle company that is close to Tesla in self-driving capabilities?
If Teslas drive themselves and other EVs don't, are they a comparable car?