Tesla Q1 Earnings Call

Well that was absolutely hilarious. Haven't seen a CEO dodge questions and come unglued like that since the "asshole" moment from Skilling. Stock's down about 5% after-hours thanks to fraud-boy shitting the bed yet again. I hope some of you are short the stock or long swaps on this POS.

 

I don’t understand the whole YouTube kid thing... Musk basically used him as a puppet to show people the open-ended strategy oriented quesitons he prefers versus what you typically hear from the analyst community. Thats cool and all but sorry its not like this rando 25 year old is Warren Buffet stepping in to ask questions... Should the entire earnings Q&A process change now because some kid came in and asked “non finance related” questions that were more “interesting”? I mean come on dude its an earnings call its not supposed to be entertaining... I find it so odd that a man as smart as Musk cannot fundamentally understand what responsibilities come along with a public company. Quarterly performance matters, meeting expectations matters, burning cash flow without explaining to your shareholders matters... Dont go public if you cant handle that. Separately any real stakeholder or analyst covering Tesla is perfectly capable of asking the same open-ended questions as that kid, but that is not the objective during an earnings release. Its an earnings call not a management presentation... As expected the internet is having a field day with this and commending the kid for asking thoughtful questions and how he put the Analyst community to shame by being so much more knowledgeable bla bla bla. Im just waiting for the “Not My Analyst” hashtag to start trending on twitter and thats when I will accept the liberals have fully taken over

 

let's talk more about this. I seriously wonder how this ends. Tesla is an incredibly interesting case study (as is Amazon, but that thread's already been done to death). here's my bias: I'm not a fan of Elon, I would love to see him crash and burn. and if you think this is jealousy? hah! if I'm jealous of anyone, it's people like howard marks, mark kiesel, seth klarman, david shaw, and jim simons.

that being said, I'm curious to see if I'm missing something, because I know that most of the world worships the ground Elon walks on. OK, so Elon led the series A back in 2004, became chairman at that time but was absent, then became CEO in 2008, a position he's held ever since. now, I've been in a model S, it's cool af, and not having to deal with car dealers is a great idea, but the model 3 is what everyone's hoping will help.

I can't really keep track of all of his production goals, but basically he's never met them with the model 3. promises 5,000 model 3s a week, actually puts out around 133 (from last quarter). good job dude. I'm all about setting lofty goals, but this seems like a broken record to me. over promise, under deliver.

and then there's the solarcity deal. while this is unknowable, the facts are that was a heavily indebted company owned by a family member and the speculation is that basically it was a sweetheart deal to bail out a relative. now he's being sued for this (he was the biggest shareholder in both and is being called out for breach of duty to shareholders).

someone help me understand. why the Tesla hype? because Musk builds rockets too? because electric cars are "cool?" because he's not a traditional CEO? because for the life of me, when I look at the financial statements and the history of broken promises, I simply cannot fathom why this company is so attractive to people.

/rant

wanted to tag some others

Layne Staley @TNA" DickFuld Sil takenotes08 TippyTop11 @iBankedUp" Esuric LeveragedTiger the_gekko @real_Skankhunt42" AndyLouis Kassad Secyh62 APAE Frieds GoodBread Going Concern

 

I've been following this for awhile, and understand the Tesla hype so I'll add my synopsis here. It's interesting to see the finance bro's perspective on the whole thing, and I agree that this is ludicrous from your standpoint. They do have shit financials as far as I can tell, and they are gambling really hard and betting on slim odds. If you're buying Tesla for anything other than the two reasons of 1. Wanting to see Musk's (multi)world vision come true or 2. you see it as a growth stock that will pay out in 5-10 years at minimum, you're in it for the wrong reasons.

They are not some stable company that is going to pay out dividends and be a reliable source of income. They do not fit the model that started sometime in the last 50 years that says a company's sole purpose is to make money for its shareholders. It's an experiment, and he's trying to see how far he can get. Musk has said this himself many times, and has fully expected its failure multiple times. He just doesn't care if he fails, because he sees any progress made as beneficial for mankind.

Whether it's the right or wrong way to go, you finance/wall street guys just aren't his target audience, and that is why his earnings call reflected that.

 

If he isn't trying to be a "normal" company or care about Wall St, he wouldn't offer ludicrous targets and objectives with deadlines attached that even he in the back of his mind has to know he will end up falling short of. They have bonds due soon. They DO have to answer to their investors. He should have started a non-profit if he wanted to make an experiment; if that's the case, he shouldn't have had a public offering to investors and then bitch and moan when they scrutinize you for failing to return them money after you promised time and time again that you would.

 
Controversial

Lol sounds like you bought and are pissy it might not work out, or are just used to execs pandering to the traders.

He used the infrastructure/system already in place in the financial sector to further his means. He does have to answer to investors, but he's been saying it's risky all along and that he's not pandering to them. Musk: "We have no interest in satisfying the desires of day traders. I couldn't care less. Please sell our stock and don't buy it." and "I'm not here to convince you to buy our stock."

His ludicrous targets and objectives are more for himself- if he was trying to be a normal company, don't you think he or others in the company would make their goals more attainable, since they know they don't currently meet them? They just aren't super worried about it.

 
Best Response

urmaaam Please don't buy into that counter-culture, disruption, "going against big auto" bullshit that Musk peddles to you guys. Leave all of that whimsical "we're going to change the world" shit at the door because, although it is cool and fun to think about, it doesn't matter one single bit in the discussion of Tesla. We're looking at an auto company (call it a tech company if you really don't understand business or finance) with a -16% profit margin, -38% ROE, -1.44B levered FCF, and a cash burn on track to touch -$3bn this fiscal year. Don't get me started on the black-hole that is their R&D, what fucking research and dev is happening when the cars are rolling out of the factories and not starting in sub-20 degrees temps? Why are parts being glued on and falling off or out of place after delivery is taken? I could go on for hours about that. Let's not forget the ridiculous production woes that the company has seen (not hitting numbers EVER, takt time being 3x-4x what their competitors are at, etc). Not only did they outright lie about how and how many vehicles were being produced, they continue to lie about it straight to investors faces and you guys are eating it out of the palm of their hand because all-might Lord Elon said to.

If you aren't a finance guy that's fine but let me break something down for you. Tesla burns so much cash each quarter that they have to constantly tap the capital markets for funding (be it debt or equity). Their credit rating is currently B2 from Moody's (that's a Junk bond - highly speculative rating) and falling thanks to them not paying attention to capital requirements and trying to financially engineer their way to making $1 of net income. They very well might not be able to tap the debt markets any more so that only leaves the equity markets. Once their obligations come due starting in 4Q2018 and these lawsuits start making headway, I doubt many banks will want to touch their stock so retail will be propping it up (not very strong these days). That'll be the end of the company because without tapping the capital markets, they have nothing because all they do is set money on fire and lie.

You might think you've found "the next big thing" and that normally "financial metrics are a good judge of a company's character and health but this time it's different", let me tell you honestly that you're wrong. Also, why the fuck would you want your CEO saying "please sell our stock and don't buy it" and that he "doesn't care if [the company] fails"? I'm longer than the fucking Nile River on 2yr-CDS on this shitter. Love the vision but hate the company and can't wait to see Elon go to court.

 

People root for Elon to succeed because they love the underdog mentality. As his supporters might say, American car manufacturers and dealers rigged the system to innovate as little as possible and run their businesses with no risk taking. That's not a bad investment thesis in a closed system by itself, but it's not sexy.

Elon is riding the popular wave of disruption along with Uber (taxis rigged the system with medallions and were horrible), AirBNB (hotels suck and are expensive but you need a license; why can't I just rent my place out?), Netflix (cable companies rigged the system, too expensive, too many ads, can't watch what I want), and so on... this is very "in" at the moment among investors desperate for growth, media desperate for a sexy story, and consumers fed up with the status quo.

100% agree with your financial assessment but the above should help to explain the irrational exuberance.

Be excellent to each other, and party on, dudes.
 

(Most) people will not listen to me when I point this out--the autonomous vehicle is going to change everything. From what is being reported, Tesla plans on launching its taxi service sometime around 2023. If you look at the numbers, the autonomous vehicle has the potential to be breathtakingly profitable in a ride-sharing ("taxi") service. Tesla is building its brand right now and getting its manufacturing infrastructure in place, as well as designing its own AV software.

If--IF--Tesla can survive long enough, Tesla will be the envy of Waymo, which will be sharing a great deal of its profits with other car companies because Waymo won't have the infrastructure to build its own cars. Tesla will be raking in tens of billions (maybe a couple of $100 billion) in profits by 2030 on its AV service, and not splitting the profits with anyone.

Tesla is a long-term play. If Musk can keep the company afloat for another 5-10 years, the company will be worth a trillion dollars.

Array
 
real_Skankhunt42:
(Most) people will not listen to me when I point this out--the autonomous vehicle is going to change everything. From what is being reported, Tesla plans on launching its taxi service sometime around 2023. If you look at the numbers, the autonomous vehicle has the potential to be breathtakingly profitable in a ride-sharing ("taxi") service. Tesla is building its brand right now and getting its manufacturing infrastructure in place, as well as designing its own AV software.

If--IF--Tesla can survive long enough, Tesla will be the envy of Waymo, which will be sharing a great deal of its profits with other car companies because Waymo won't have the infrastructure to build its own cars. Tesla will be raking in tens of billions (maybe a couple of $100 billion) in profits by 2030 on its AV service, and not splitting the profits with anyone.

Tesla is a long-term play. If Musk can keep the company afloat for another 5-10 years, the company will be worth a trillion dollars.

In what way is having the cars the prohibitive aspect for Waymo? Clearly, the difficulty lies in creating the safest and most reliable autonomous vehicle software, which can be optimized for any type of car. Waymo is lightyears ahead in this respect. Why would Waymo have to build its own cars?

 

I agree with the guy before you, that earnings calls have a purpose and babbling about futurology isn't it. Why would you hope that Musk fails, though? I get that the guy is a jackass in some respects and I'm not some fan boy, I don't really know the story that well but I do know that he is making advancements in space travel, renewable energy, etc. Wouldn't you prefer to look up to someone who built space travel from the ground up? That's original though and that's what will benefit humanity in the long run. Moreso than being a money changer like we all are and like the men you look up to.

 

Has nothing to do with the technology he’s involved with, has everything to do with that I feel he’s a hypocrite, a liar, a jackass, and one could argue a crook (breach of duty to shareholders with solar city deal).

I think the technology will absolutely change things and I am all for innovation, and the fact he’s not a traditional ceo doesn’t bother me. The fact he repeatedly over promises and talks shit about the very people providing him capital doesn’t sit well.

Now, that being said, I don’t sit awake at night thinking about Elon musk, I’m just happy to call bullshit when I smell it.

Plenty of bullshitters out there: bill gross talking about stocks, mark yusko talking about anything, Bernie sanders guaranteeing jobs during a tight labor market, Tim hasselbeck, brandel chamblee, the list goes on.

I’m a little bit of a bullshitter too, I just amplify my tone online to generate some more discussion. If I was just like “musk is ight I don’t like the stock though and he’s kinda douchey” it wouldnt attract comments

 
thebrofessor:
let's talk more about this. I seriously wonder how this ends. Tesla is an incredibly interesting case study (as is Amazon, but that thread's already been done to death). here's my bias: I'm not a fan of Elon, I would love to see him crash and burn. and if you think this is jealousy? hah! if I'm jealous of anyone, it's people like howard marks, mark kiesel, seth klarman, david shaw, and jim simons.

that being said, I'm curious to see if I'm missing something, because I know that most of the world worships the ground Elon walks on. OK, so Elon led the series A back in 2004, became chairman at that time but was absent, then became CEO in 2008, a position he's held ever since. now, I've been in a model S, it's cool af, and not having to deal with car dealers is a great idea, but the model 3 is what everyone's hoping will help.

I can't really keep track of all of his production goals, but basically he's never met them with the model 3. promises 5,000 model 3s a week, actually puts out around 133 (from last quarter). good job dude. I'm all about setting lofty goals, but this seems like a broken record to me. over promise, under deliver.

and then there's the solarcity deal. while this is unknowable, the facts are that was a heavily indebted company owned by a family member and the speculation is that basically it was a sweetheart deal to bail out a relative. now he's being sued for this (he was the biggest shareholder in both and is being called out for breach of duty to shareholders).

someone help me understand. why the Tesla hype? because Musk builds rockets too? because electric cars are "cool?" because he's not a traditional CEO? because for the life of me, when I look at the financial statements and the history of broken promises, I simply cannot fathom why this company is so attractive to people.

/rant

wanted to tag some others

Layne Staley @TNA" DickFuld Sil takenotes08 TippyTop11 @iBankedUp" Esuric LeveragedTiger the_gekko @real_Skankhunt42" AndyLouis Kassad Secyh62 APAE Frieds GoodBread @Going Concern"

Well, the hype seems like it's the rockets and trips to mars and all that, but really, he did something that really was saw as impossible not too long ago. He really is a rebel.

Remember that documentary from 2006, Who Killed the Electric Car? The premise of that documentary is corporate greed and capitalism is wrought with fraud. Here comes Elon Musk doing what they say is impossible, which is magically going against the auto industry with a full scale electric car.

Something else you notice is that he's not just a business person, he's also a similar artist reminiscent of Steve Jobs with the "cool" factor being a major component to how he does operates the company.

Also, you have to give him credit for pioneering what is actually the highest performing car type out there. These things aren't just "environmentally friendly" and look great, they're also very fast, as well as becoming more efficient.

So, I think if you don't want to miss the train, the next frontier as Steve Jobs was to the cell phone, as an investor you have to hop on. As one of those forum nerds, you have to be very excited every time he speaks.

 

I'm in the same boat as you.

Fundamentally, I think there are two questions with Tesla: 1) are current and long-term trends in favour of Tesla and is Tesla well positioned to take advantage of these trends, and 2) does Tesla have the financial resources to capitalize on the opportunity in front of them.

In terms of Question 1, I think it's universally agreed that electric cars are the future, and we will only see more of them on the road in the future, along with the associated infrastructure investments necessary to support them. In this regard, Tesla has a first mover advantage. They essentially invented the electric car segment by producing a car (the Model S) that was cool, and for the most part, had enough consumer value to cause people to buy them over comparable luxury cars. Because of this, Tesla now has a bit of a cult following on the product side, just like Apple had in the 90s and 00s before they went mainstream. There is a lot of value to this, as people will buy the product non-rationally and Tesla doesn't need to be as concerned about how the product stacks up on an apples-to-apples basis as its competitors do. The risk here is that the whole auto industry knows that electric is the future, so Tesla now has to deal with 9+ deep pocketed competitors (GM, Ford, FCA, VAG, BMW, Daimler, Nissan/Renault, Honda, and Toyota) that are now universally focused on bringing quality EV products to the market, and have massive advantages in terms of production capacity/expertise, quality control, and selling/servicing infrastructures. Yes, Tesla will continue to sell to a rabid fanbase segment, but is that enough to be a sustainable business when the average person is choosing between a Model 3 and a Honda EV, and the Honda EV comes with product rebates, great financing options, etc.?

2) All of what's discussed in regards to Question 1 is meaningless if Tesla can't finance its vision. Everything that came out of the latest quarterly call is the market realizing that the business reality of cash flow is now more important than the disruptive vision than Musk is selling. Going off the top of my head, Tesla has ~$2B in cash, burnt through $1B in the last quarter, and more or less will continue on that rate in the near future. Doing dumb math puts the company in bankruptcy in a year at a burn rate of $500MM per quarter. So really, there are now two options, raise debt or equity - I find it impossible (except under incredibly optimistic assumptions) to believe that Tesla will become cash flow positive anytime in the near future. Debt is frankly out of the question given current credit metrics, so a dilutive equity raise is the only option (or they can get creative with convertible bonds, pref shares, etc. but those will in all likelihood poof into equity at some point so it's kind of moot how you structure it). In the situation that Musk is bone-headed and doesn't raise outside capital, we'll see one of the most interesting Chapter 11 cases of all time. I can guarantee that every major automaker will cream their pants at the opportunity to buy the auto division out of Chapter 11, and some utility co will buy the SolarCity portion. Ultimately, a well-capitalized automaker with the operational knowledge necessary to roll-out major product launches is the best partner to get Tesla to survive and capitalize on the future EV world vision. Tesla needed Elon's vision to get to where they are today, but they need a more mature brain(s) to take them to the next level.

"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
 

I feel like the idea behind Tesla is so revolutionary that people have stopped caring about the underlying financial results and whether the company would be able to generate enough cash to survive, which is not only dangerous but downright stupid in my opinion. Investors probably think that "Elon is smart, he's a cool CEO, investing in Tesla is like investing in him, etc.", and while that is one way to think about this investment thesis, completely ignoring the financial results/inability to generate cash flow will end in tears. On top of that their bonds are due relatively soon, so they will most likely have to tap the capital markets just to meet their obligations unless they can ramp up production which seems borderline impossible in light of their recent performance. Personally, I would probably start shorting them or at least start accumulating some deep OTM puts.

 

Guys,

This is simple. Musk is a creative genius, but has no business running a publicly traded company. He should be Chairman or Chief Design Officer or something of that nature to oversee long-term vision on a part time basis. That would allow him to focus on his other interests as well.

The Model S is an awesome car. At one point I considered buying one and I'm still a fan, but they value of the company isn't the model S,, its the 3 and then beyond. Musk has proven that he isn't the leader to execute on this.

Most of his ideas fall short (even shipping a flamethrower) and ALL of his operational aspirations fall WAY short.

I have some twitter troll on my case now because I'm anti-Musk and "short". I'm not anti- Musk or anti-Tesla, but this doesnt wor,

twitter: @CorpFin_Guy
 
accountingbyday:
Guys,

This is simple. Musk is a creative genius, but has no business running a publicly traded company. He should be Chairman or Chief Design Officer or something of that nature to oversee long-term vision on a part time basis. That would allow him to focus on his other interests as well.

The Model S is an awesome car. At one point I considered buying one and I'm still a fan, but they value of the company isn't the model S,, its the 3 and then beyond. Musk has proven that he isn't the leader to execute on this.

Most of his ideas fall short (even shipping a flamethrower) and ALL of his operational aspirations fall WAY short.

I have some twitter troll on my case now because I'm anti-Musk and "short". I'm not anti- Musk or anti-Tesla, but this doesnt wor,

Tell me why the model s is such an awesome car. I don't get it. I have a neighbor who owned since new - the plastic interior is worse than that of a KIA, and the fitting/finish is just so bad it's like a 1980's ford pinto. it takes a lot more than being a good "manufacturer" to be a good auto manufacturer.

ill put it this way: people thought AT&T/verizon would go away after cell phone was invented. guess what? large companies will adapt, R&D, and CRUSH it. just look at what the other big autos are doing... tesla is a sinking ship, been saying since IPO

 

this was one of the weakest arguments I've heard, including the comments in this thread the fact that this is one of their largest shareholders makes me even more firm in my beliefs. when one of your reasons for liking the company is that it's born out of silicon valley, the fact it doesn't bother you that the CEO spends less time there than he does at spacex, you don't mention earning power, you don't mention any concerns about production, and so on tells me 1 of 2 things is going on here:

  1. they're stupid
  2. they hate the stock now but they have so much in capital gains they can't stomach selling

either way, wow.

OK, now that I've sufficiently painted myself as a TSLA bear and someone who's unabashedly rooting against musk, let me say this. while I think they'll have trouble getting capital and I think that the solarcity deal was stupid and that commercial space travel is stupid, I do believe that autonomous cars has legs. what I don't believe is that TSLA can execute. I believe 1 of 2 things will happen:

  1. TSLA gets bought or partners with someone to fix their manufacturing woes
  2. TSLA burns through all its cash, nearly goes belly up and its IP gets capitalized on by volvo, Ford, Google, Apple, or Amazon

disclaimer - I am not short TSLA, elon never fucked my wife or anything, I just am a natural contrarian so when I look at something super popular, I tend to find more bad news than the masses and there is something very satisfying about disagreeing with popular opinion and having evidence to back it up. included in this is uber, wework, amazon (as a stock, not as a company, they have a fabulous business), facebook, snapchat, etc.

WallStreetOasis.com Patrick, let's do more threads like this. I love the banter here. get one of your bloggers to dream up a nice idea

 

Full disclosure, I haven't read the whole thread like I normally do, but thebrofessor if you @ me, I'll always reply.

@Synergy_or_Syzygy" and @real_Skankhunt42" (the old VTforever?) have written the things that most match my perspective. That's as far as I got reading.

Bears here underestimate two things: (a) the TAM of the opportunity set Tesla is working on / (b) the symmetry of Elon's total package as a leader with the requirements to win within that opportunity set.

Opportunity set: Some commenters accurately pointed out how massive the markets are. Let's look at them.

-- (a) Electric cars

Electric cars are the future. This is incontrovertible. Regardless of your politics on climate science, everyone acknowledges that fossil fuels are a limited energy source. The cost of electric vehicle (EV) technology is plummeting. Developments in this field follow Moore's Law, directionally if not perfectly.

I can attest to this firsthand. I love cars. I am a car guy through and through. I own and abuse several beautiful and expensive machines. The days of fire-breathing beasts is effectively dead. The writing is more than on the wall. To continue squeezing performance improvements out, every supercar manufacturer is turning to electric technology either in tandem or in replacement of combustion engine technology. It doesn't matter how you feel about it, whether you love the space-age 'whooosh' of the Tesla P100D or get erect for the throaty roar of an Italian mid-engine, the performance numbers don't lie.

A simple Google for "electric vehicle market size" gives me a report from the IEA and a datapack from Statista. IEA is obviously fairly credible (OECD affiliated); who knows about the other one. I'm in a rush so I only skimmed the report, but I'll pull some statistics from it.

In 2012 the global EV market was apparently $83.5b. It says there's a 19% CAGR, so $272b by 2019.

Not only is Tesla going to try to capture as much of this as possible as a retailer of cars, but they may also start a wholesale battery supply line as well. This is a toss-up. Do they keep Tesla batteries solely for Tesla cars, or do they unlock another revenue stream by selling batteries to other manufacturers who want to effectively white-label the technology and simply sell their own designs (car models). That would be similar to how AMG is the engine technology for Pagani, for instance. The market here is huge: a report I have says that the EV battery market alone will be $93b by 2026. It's behind a paywall, so here's a press release snippet.

-- (b) Electric charging

This has three legs.

The first is EV charging infrastructure. According to the IEA report (page 44), the market for generation, transmission and distribution capacity will reach $180b by 2030.

The second is home energy use. This was obviously the basis for the SolarCity acquisition. Another press release snippet says that reports indicate the market here was $65b in 2015 and will be $140b in 2023.

The third is consumer appliance use. Don't think it doesn't make sense to move into the market for phones, tablets, and any and all other consumer electronics. Once they've developed production capability at scale, they'll miniaturize and become a supplier to all the consumer OEM names.

I don't have the time to go size that one. Anyone can take the same elementary steps to get some 'envelope math' numbers.

So, a recap of this charging section:

A cynical viewer looks at the SolarCity deal as cronyism. An optimist argues that the fact pattern supports the logic that Elon realizes how absolutely integral the ability to provide clean power (battery tech and related infrastructure) for each of these three legs is to his long-term business model. At scale, it would be a steady, recurring, predictable, and growing revenue stream.

-- (c) Autonomous vehicles

We all know what this is. This will fundamentally revolutionize society. It won't happen overnight, but eventually we'll see some kind of "I, Robot"-like world. The question isn't if, it's simply how evenly distributed will it be. Is there penetration in the deep suburban (e.g. the dual-income family 90 minutes from a tier-two city like Cleveland or Detroit, not the stay-at-home-wife in Westchester 60 minutes from New York) market, and if so, how quickly?

Another press release snippet states that this market will reach $126.8b by 2027.

A second leg here is the trucking market. Read the McKinsey report (page 55 in particular) for some insight on this.

I haven't found calculations for dollar scale in the autonomous component here, but it's self-evident that it would be massive on an absolute basis.

-- (d) Ridesharing

Car-as-a-service will become a thing. The shocking statistic is that the average consumer car sits idly unused over 90% of the time. Think about it. Out of 168 hours each week, the average car is being driven less than 17 hours. Easy to see how it checks out.

One of the hardest things to solve in any 'marketplace' business is the classic chicken-vs.-egg scenario of solving supply or demand first. eBay, Fiverr, Uber, Airbnb, Instacart, and all the other prominent successes all struggled with this.

Some founders are able to bridge this through pure fundraising ability: keeping the business funded long enough for supply and demand to even out. Others are really smart and find inventive, hacky ways to stretch a dollar and be very cost-effective in dragging supply and demand on board the platform relatively in tandem.

(For the record, this is why Uber continually raises so much money and happily operates at a loss. They are using dollars to acquire supply, banking on the idea that demand will follow as long as supply is steady enough and cost is attractive enough. The statistics vary, but Uber currently subsidizes something between 20-40% of each ride. Yes, it sucks and creatives a massive cash burn, but it's been a land grab approach: get biggest first, then outlast all the others.)

Pairing the autonomous technology from the prior point (c) with the massive latent supply of Tesla owners gives a really unfair advantage. All of a sudden you don't have the chicken-vs.-egg problem.

Tesla has sold over 250,000 cars globally, 200,000 in the United States.

Simply turning on an app that allows owners to press a few buttons to allow their car to generate revenue in its idle time is going to unlock tens of thousands of cars on the Tesla-Uber platform. Sure, a bunch of owners will drop out once their car comes back smelly, stained, smoked in, or otherwise beat up a bit the way ridesharing vehicles do, but a lot of people are going to love the fact that they effectively get their car for free (or get paid to own their car) and keep farming it out.

///

This is starting to get so long it's unwieldy, so I will wrap it up without touching on all the adjacent business opportunities.

///

Elon as a package:

The man is immensely intelligent, hard-working, charismatic, articulate, inventive, risk-tolerant, visionary, and motivating. He is also demanding, manipulative, selfish, forceful, and proud.

Roll all this into one human and everything that both his critics and his champions say about him because blindingly self-evident.

He is able to attract talent like no other founder. The scale of the problems he commits himself to is breathtaking and laudable, and it's a commonly known trope that engineers often care less about the pay for their work than the content of their work. At the same time, he is able to extract so much from a person that it feels unfair. Even further, he is able to abuse someone too weak or unwilling to exert their own boundaries.

He is able to assimilate information quickly, build a depth of domain mastery, and synthesize disparate information to form a coherent strategy that reflects a more multi-faceted input set than the overwhelming majority of even the type-A, hard-charging, very smart tech founders and investors that pull in or deploy nine-figure funding rounds for a living can.

He is able to create a work environment that is stimulating like no other. At the same time, that environment is exhausting, consuming, and challenging.

He is able to identify manipulable elements that make his life easier. Sure, the company is effectively a "tax credit business masquerading as a _____ company" as @TNA" says. There probably isn't a single one of us on this forum ideologically pure enough to not accept or pursue billions of dollars in subsidies if they were available for a business we worked on.

He is able to integrate ideas that look unrelated to each other into a behemoth of a concept where each component complements the others well: electric vehicles, battery tech, home energy, autonomy, space exploration, 'rail' transportation, and underground infrastructure. And yes, this means he can look (or be) distracted and spread too thin.

In short, he is the prototypical founder you would want to back for business opportunities this large. You aren't going to find a mind of his caliber without the corresponding challenges he brings. The term 'troubled genius' exists for a reason, and looking at the 'troubles' that are part of his overall product, they're actually minor in relative terms.

He is a less-than-completely-involved father. Okay, that sucks (and he probably wishes it weren't the case), but (a) you could argue that a fraction of his time is more meaningful for his sons' development than most other fathers', and (b) he is making a personal sacrifice for what he deems the greater good.

He is a demanding manager. Okay, so are 80% of the bosses that this forum userbase has, and guess what ... they're all working on trivial stuff like pushing turns through slide decks for a deal that will never see the light of day.

He is an uncaring or unsympathetic husband or partner. Okay, so are at least half of all men in marriages or long-term relationships. And in his case it's because he is practicing high standards elsewhere in his life, so it's acts of omission on his part, not commission.

I read the situation with Justine as being long-simmering resentment. At some point she stopped being happy with never being the number one. She is an identifiably smart woman, and she put herself on the back burner in order to mother their six sons (one died from SIDS). She knew what he was (addicted to his own brain and what he could do with it), and ten years in she decided it wasn't worth it any more.

The situation with Mary Beth Brown, if true, is indefensible and a grave misjudgment. That one has conflicting data around it. The book says one thing, and he says another. Both are plausible. It's very plausible that he didn't take well to her request and chose to replace her. It's also very plausible that at some point he felt he needed a team of assistants rather than one, so his recent cover story that he gave her a year's severance and some stock may hold water. You'd think though that he'd simply have built around her rather than altogether without her though.

You can call him a charlatan. You can just as easily call him one of the greatest gifts to our species.

Investing in his businesses is a simple binary bet: do you think he is going to be able to keep the music going long enough that a single one of these logarithmic outcomes becomes real?

The poster who dismissed the idea that people should ignore fundamentals and treat this business like a startup is very short-minded. The unfortunate fact of the matter is that our capital markets more or less take a one-size-fits-all approach.

There are many businesses that will still be in the nascent stage of their life but merit an eleven-figure valuation. It is incredibly challenging to get those businesses funded in the private markets (where investors back them and provide freedom to breathe in a way that public market investors just about never can nor will). The concept of a 'decacorn' is very new.

So yes, the business constantly fails to meet its own targets. It faces an ugly cash burn. It's run by a potentially ego-maniacal guru figure who keeps finding new massive problems he wants to solve.

I get why an investor would hate it or him, I see the fact pattern from top to bottom. I also get why I want him to win.

He is one of the brave few who are audacious enough to push the world more in the direction he thinks is best, and he does it within the confines of legality and the capital markets. If he wins, it'll be splendid. We will have a cleaner earth, cheaper utilities, lower-friction travel, and in a term longer than most of us will live to experience, be multi-planetary. Godspeed.

I am permanently behind on PMs, it's not personal.
 

Lest anyone doubt that autonomous cars are the future, most major car companies are investing heavily into autonomous cars, and GM has basically staked its future on autonomous vehicles.

https://www.bloomberg.com/news/features/2018-05-07/who-s-winning-the-se…

In other words, you can't divorce your analysis of a car company without looking at it through the prism of AVs.

You know who should be scared shitless? Rolls Royce, Bentley, Ferrari, etc. Rolls Royce, for example, seems completely oblivious to the fact that they are massively behind in this technology, and nonchalant about how this technology will impact their customer base (how the chauffeur will become completely democratized). Also, by the early-2030s, I'd suspect that human-driven cars will begin to get banned from most roads, thus destroying a decent portion of the customer base of Ferrari and other super cars. You'll still have tracks, but I suspect a decent portion of people buy these supercars to show off on public roads (for example, if I had the money, I'd be a total dick about it and have a red Ferrari and act like a total ass with it on public roads--I suspect a great deal of Ferrari buyers are just like me--low character, lots of money).

Array
 
real_Skankhunt42:
You know who should be scared shitless? Rolls Royce, Bentley, Ferrari, etc. Rolls Royce, for example, seems completely oblivious to the fact that they are massively behind in this technology, and nonchalant about how this technology will impact their customer base (how the chauffeur will become completely democratized).

Rolls is an imprint of BMW. Bentley is an imprint of VW. Both of those companies are fine on the autonomous front because their future models will be built on underpinning technology from the parent company.

real_Skankhunt42:
Also, by the early-2030s, I'd suspect that human-driven cars will begin to get banned from most roads, thus destroying a decent portion of the customer base of Ferrari and other super cars.
I've thought about this extensively and I think the 'regulation' is simply going to occur in the form of a soft tax: it will be prohibitively expensive to buy a car that is either combustion-engine or non-autonomous thanks to a 'disincentive' surcharge.

A run-of-the-mill Ford F-150 that costs $30k today is going to be $55k if you want it to run on diesel or gas. A Porsche 911 is going to cost $300k if you want to be able to drive it yourself. The Pagani that costs $2m today is going to cost $6m.

(Your low-character/high-income tool driving the Ferrari is going to love that even more. Simply buying the car will be even more of a statement than it was before.)

Couple that with more intense licensing requirements, and the government gets what it wants: lower volume of humans driving on roads, those humans who do drive having a higher average skill level, and the overwhelming bulk of vehicles running on clean and renewable fuel.

I am permanently behind on PMs, it's not personal.
 

My 2c as a car guy...

The electric car WILL win over the internal combustion engine (ICE). An electric motor has a handful of moving parts vs over 1000 for a basic ICE...also, all torque is available from 0 rpm which is why a Model S smokes about 99.9% of all ICE powered cars. You have to get to something pretty extreme in the gasoline powered world to out accelerate a Model S.

But here is the problem...the hard part of making an electric car is the "car" part, not the "electric" part. The Model S' high profile proponents are celebrities or Uber wealthy business types worth 10s or 100s of millions. If they pay $125k for the 'cool new thing' and the door won't close properly or the windshield pillar splits in half it's funny. If you make $400k and not worth 9 figures and you spend $100k on a car anything but perfect build quality is 100% unacceptable. I just bought a new Mercedes GLS 550 and I can tell you I went over paint, interior, everything for 90 minutes before finally signing and driving off the lot.

Hell, the domestic manufacturers can't even move $20k cars without offering 72 month financing, but somehow everyone is going to have $50k for the Model 3 which is basically a fast electric Corolla? Yeah...right...

The mainstream companies will figure out "electric" long before Tesla figures out the "car" part. The only issues now are battery capacity and charge times. Once those get within spitting distance of the usability of the ICE all of the major manufactures will pile in and destroy Tesla. But it gets worse -

You see, car companies make the vast majority of their profits on their high end models: GM makes WAY more money off of Escalades than Malibus; 1 optioned up Porsche makes more money for VW than probably 8 Golfs...well, Tesla is already selling only their premium product and still losing money hand over fist...they want to sell cars with way thinner margins to get to profitability? It makes no sense....

As soon as the economy has a shock and capital becomes harder to come by Tesla will be in big, big trouble

 

From a strictly objective aspect, even though I admire Elon because of the size of his testicles - I hate to say Musk is one what can label as a fucco or a fuccboi from a Wall Street angle.

When you go public, I'm sorry, but you have a god given mandate to make money for your shareholders. The commercial aspects of going public take precedence over everything.

It's like showing up at a strip club and wimping out of a lap dance because you're too prude. Why the F did you go to the strip club in the first place ?

America needs more Musks, but it certainly doesn't need financial megalomaniacs. Business at Musk's level is a high wire act . A good year looks like him making $100 million and his thousands of employees getting paid. A bad year looks like bankruptcy, jail time, employees being laid off.

He just doesn't fit the part of the Titan that the old school industrialists had - the Rockefellers and such. They literally counted every penny. Everything with Musk is like a rich kid's high school science experiment .

D.I.
 
oligarch:
When you go public, I'm sorry, but you have a god given mandate to make money for your shareholders.

Here's the thing though, when management/founders have a certain amount of control, they can get away with having an attitude of "fuck the shareholders". He bought the company public to tap the capital markets, not to give a shit about what anyone thinks. The analysts are clearly butthurt about it hahahaha. Zuckerberg is another one....while he will certainly show up to a Congressional inquiry, he doesn't give a fuck about the shareholders. On top of that...there's nothing that can be done about it. "Should" carries no weight in these cases.

https://www.thestreet.com/investing/stocks/how-elon-musk-controls-tesla…

Get busy living
 

Listen champ, the thing about "not giving a shit about what anyone thinks" is cute/edgy and all but as the CEO of a public company you have a legal fiduciary responsibility to act in the best interest of stakeholders and acting like a pompous child blowing through his bar mitzvah money is not the way to do that. But maybe you know more about how public companies should/do operate as you're a consultant and I only work in the capital markets, who knows.

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