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Tesla Q4 2018 Earnings Letter

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Re: Tesla Q4 2018 Earnings Letter

#91

Post by Pharmakon »

kgwgk wrote: post #84
Pharmakon wrote: post #59

Earlier quoted context omitted.

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...

Elon: "And we thought long and hard about who the right person is to take over from Deepak, and that's Zach. And Zach has been with Tesla now for nine years... [...] So Zach, you had management and technology at Wharton undergrad and then worked at Tesla and then spent a couple of years at Harvard Business School, which I actually don't think was necessary, by the way."

Jesus. It’s hard not to worry about this particular combination of events. Is there a benign explanation?

Re: Tesla Q4 2018 Earnings Letter

#92

Post by greglindahl »

ChuckMcM wrote: post #36
chollida1 wrote: post #2

Pre: - 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…

Nice summary! I was under the impression that the services loss was from the free electricity they gave out at superchargers to some owners. Their boosting of the prices there was a response to converting that line into a something at least revenue neutral. Also no details on how they proceed with their power swap arrangements. Personally I expect them to use the Google hack where they create a wholly owned subsidiar…

The amount of money lost in services is way too big to be free electricity.

Re: Tesla Q4 2018 Earnings Letter

#93

Post by marvin »

reitzensteinm wrote: post #79
kjksf wrote: post #76

Earlier quoted context omitted.

Let's say there are 2 grocery shops. All their costs and expenses are the same but one grocery shop sells twice as many products per square foot / unit of time. As someone interested in more profit, which store would you rather own? The argument you're responding to wasn't "Tesla's stores are dramatically more efficient". The argument is that Tesla stores sell Tesla's EV cars effectively (because that's the only thin…

In fact parent was making claims about the extra markup required for a traditional dealership to make a profit on EVs. This expense doesn't magically disappear on a Tesla, unless their dealerships are more efficient . Feel free to argue with my prisoner's dilemma point earlier in the thread if you want, which is in my view how this will play out. I've already agreed that what you're describing is an issue (and am at…

I've greatly enjoyed this thread, thanks to you and parents for taking the time to write it out. Just wanted to add, putting the "250 billion dollars of wealth destroyed" into perspective, that is more or less what Apple's loss of market cap during the last 6 months represents.

Granted, that's to a large degree a speculative reduction in wealth. A similar re-valuation of the global car industry's future prospects would cause more mayhem due to well-established investments in supporting industries. It's fascinating how 250 billion dollars in reduced marked cap means "meh, it was overvalued" in Apple's case, whereas it would be a nasty surprise of historic proportions if it happened to the car industry.

Re: Tesla Q4 2018 Earnings Letter

#94

Post by marvin »

Ntrails wrote: post #89
tomp wrote: post #67

Earlier quoted context omitted.

Yeah, I'm not opposed to a few buttons - like +- temperature, all blinkers, etc. But in most cars, the number of buttons is just overwhelming, so you probably need to take your eyes off the road just to find the button you're looking for!

I could type on my old Nokias etc without ever looking at the message. It was flawless. If one wanted to do it whilst driving (not that anyone ever would , of course) it could be done without ever looking away from the road. That's the power of actual physical feedback. I'm sure there's someone somewhere who can prove me wrong and touch-type flawlessly on their touch screen phone. But in most cases you're relying hea…

Siri works well enough for me that I can perfectly dictate a text message without taking my eyes off the road. That's just one data point and I know others have diverging experiences, but it seems likely that voice control with improve enough that this could soon be a feasible way of controlling a car's secondary systems too.

Re: Tesla Q4 2018 Earnings Letter

#95

Post by marvin »

Pharmakon wrote: post #91
kgwgk wrote: post #84

Earlier quoted context omitted.

Elon: "And we thought long and hard about who the right person is to take over from Deepak, and that's Zach. And Zach has been with Tesla now for nine years... [...] So Zach, you had management and technology at Wharton undergrad and then worked at Tesla and then spent a couple of years at Harvard Business School, which I actually don't think was necessary, by the way."

Jesus. It’s hard not to worry about this particular combination of events. Is there a benign explanation?

Comparing it to the history of other companies, it might seem like a less likely explanation, but I'll give it a shot: Deepak Ahuja came out of retirement after the departure or Jason Wheeler, during a critical part of the company's history.

Cash flow was critical during this period, so it made sense to choose a CFO who both has a long history with the company and was able to take over on short notice. Now that Ahuja returns to retirement, Tesla figures it's better to hire an insider than get someone with external experience, given how many external executives they're losing after a short time.

In this scenario, the executive departures are taken at face value, namely that Tesla is such a chaotic and stressful environment that it's a bad match for many executives who thrive in other companies.

Re: Tesla Q4 2018 Earnings Letter

#96

Post by Pharmakon »

marvin wrote: post #95
Pharmakon wrote: post #91

Earlier quoted context omitted.

Jesus. It’s hard not to worry about this particular combination of events. Is there a benign explanation?

Comparing it to the history of other companies, it might seem like a less likely explanation, but I'll give it a shot: Deepak Ahuja came out of retirement after the departure or Jason Wheeler, during a critical part of the company's history. Cash flow was critical during this period, so it made sense to choose a CFO who both has a long history with the company and was able to take over on short notice. Now that Ahuja…

All good points. I would reply with, “Why Zach?” Are the current and future financials so exceptional that they can afford someone with no record of performance at this level as the CFO? On the other hand, if Mr. Ahuja signs the 10-K on the way out that would allay my fears that Zach is just the guy lining up on a future chopping block.

Re: Tesla Q4 2018 Earnings Letter

#97

Post by cmurphycode »

greglindahl wrote: post #92
ChuckMcM wrote: post #36

Earlier quoted context omitted.

Nice summary! I was under the impression that the services loss was from the free electricity they gave out at superchargers to some owners. Their boosting of the prices there was a response to converting that line into a something at least revenue neutral. Also no details on how they proceed with their power swap arrangements. Personally I expect them to use the Google hack where they create a wholly owned subsidiar…

The amount of money lost in services is way too big to be free electricity.

You could estimate this in a couple different approaches, here's one.

Tesla Model 3: 26 kwhr / 100 mi Model S: 33 kwhr / 100 mi Model X: 39 kwhr / 100 mi

Hard to say where the balance of supercharging comes from (more expensive models more likely to have it free, but maybe less likely to use?) so let's be generous and call it 30 kwhr/100mi

I pay 24 cents per kwhr but I hope their average price is more like 10 cents (not even counting the solar...)

So each 100 miles charged would cost $3.

So 100 million dollars spent giving out electricity would generate 3.3 billion miles charged.

Back in september there were 20 million telsa miles driven per day, but a year long projection would be hard given the fast growth of model 3. let's just say 20M per day. That's about half of the year's miles driven covered with 100M.

I can't imagine that even 1/2 of the total miles driven are charged by superchargers. So I am inclined to agree with you; the free-supercharging-electricity costs are probably a small piece of the total 500M.

Re: Tesla Q4 2018 Earnings Letter

#98

Post by Traster »

dragontamer wrote: post #6
Traster wrote: post #5

Earlier quoted context omitted.

You mention solar is a big nothing burger. I remember when the acquisition happened there was quite an outcry about Tesla basically bailing out Musk's other company. Do they have a liability here or is it just going to disappear into the ether?

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.

I mean a literal liability - they've currently got an asset on their balance sheet that at some point they're going to have to re-evaluate the business and at some point there'll be a write-down associated with it.

Re: Tesla Q4 2018 Earnings Letter

#99

Post by wpdev_63 »

threeseed wrote: post #15
chollida1 wrote: post #2

Pre: - 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…

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…

The tentative release for many of these new electric cars are in 2019/2010. There's probably going to be a good chance that they are delayed with the technical difficulty of manufacturing electric cars at scale.

Also I wouldn't count out Tesla's major advantage in sourcing the best batteries at wholesale prices.

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