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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Jack0Life on November 30, 2020, 11:46:52 AM

Title: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Jack0Life on November 30, 2020, 11:46:52 AM
I'm no expert on the subject so I want all the gurus to chime in as this will greatly affect most people who's investments are all on Indexes.
This is the gist of what I'm thinking. I might be totally off base here.
Speculators are driving up Tesla in anticipation of Tesla being added to the SP500 knowing that by Dec 18th, all these portfolios will have to add Tesla to their funds. We are talking about ~$100 billions here.
So after Dec 21st when Tesla are added to all the Index funds, it it going to plunge because speculators will sell off ??
Is it wise for us to move all our Index funds to the sideline by the 18th and let the Index settle down ??
A good comparison would be Yahoo in 1999 when it's share jumped up 64% before being added to the SP500 and then afterward the SP500 funds suffered. I know I know it's Yahoo but they didn't decline till years later.
What do you guys think ??
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: joleran on November 30, 2020, 11:53:32 AM
Well, now I know that you know that speculators know that they know they will sell off because they know a big spike will happen on joining the index, but other people know that I know that you know.

Tongue in cheek, but the market is full of stories starting with "look at this clear and predicable pattern, I'm sure to win!" and ending in "I guess it was already priced in".

In short, fighting potential volatility potentially produced from speculation with meta-speculation doesn't seem like the best approach.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: v8rx7guy on November 30, 2020, 11:57:26 AM
I'm no expert on the subject so I want all the gurus to chime in as this will greatly affect most people who's investments are all on Indexes.
This is the gist of what I'm thinking. I might be totally off base here.
Speculators are driving up Tesla in anticipation of Tesla being added to the SP500 knowing that by Dec 18th, all these portfolios will have to add Tesla to their funds. We are talking about ~$100 billions here.
So after Dec 21st when Tesla are added to all the Index funds, it it going to plunge because speculators will sell off ??
Is it wise for us to move all our Index funds to the sideline by the 18th and let the Index settle down ??
A good comparison would be Yahoo in 1999 when it's share jumped up 64% before being added to the SP500 and then afterward the SP500 funds suffered. I know I know it's Yahoo but they didn't decline till years later.
What do you guys think ??

I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly.   Just a random thing that has been on my mind a lot lately regarding this subject.  As to your question, I think that the addition to the S&P500 and the risk of people dumping once it's added has already been priced in to the current price of TSLA... I think it's too late to be trying to strategize.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Jack0Life on November 30, 2020, 02:56:37 PM
I mean this is no ordinary inclusion to the SP500. Tesla will be the 6th largest company when it joins and that's going to be a huge problem for all the Index funds out there.
Last time this big of a company joined the SP500 was Yahoo. After that both Yahoo and the SP500 tanked. This was end of Nov 1999. Sure the Dotcom bust contributed to that.






Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: joleran on November 30, 2020, 03:50:57 PM
I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly.   Just a random thing that has been on my mind a lot lately regarding this subject.  As to your question, I think that the addition to the S&P500 and the risk of people dumping once it's added has already been priced in to the current price of TSLA... I think it's too late to be trying to strategize.

The last 10 years of returns say "that's nice" as VOO outperformed VTI (not a ton, but a bit) over the last 1,2,5,10 years.  The large cap outperformance erases the aggregate small cap underperformance recently, and TSLA doesn't seem to have made a difference overall.

I mean this is no ordinary inclusion to the SP500. Tesla will be the 6th largest company when it joins and that's going to be a huge problem for all the Index funds out there.
Last time this big of a company joined the SP500 was Yahoo. After that both Yahoo and the SP500 tanked. This was end of Nov 1999. Sure the Dotcom bust contributed to that.

And everyone knows that and is factoring it in!  Or maybe not and it will be far worse than that!
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: dandarc on November 30, 2020, 04:10:22 PM
Market cap of Tesla ~$500 billion. Market cap of S&P 500 today ~30 trillion.

Even if all the speculators dive out to the point TSLA goes to zero immediately, that's less than a 2% drop in the S&P 500. Then anything so obvious as this gets hedged out to a large degree. The largest funds, I'm sure, are already invested in various derivatives to minimize the impact of them "being forced to add TSLA to their portfolios".
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on November 30, 2020, 04:23:20 PM
who's getting kicked out??


asking for a friend. :)
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: v8rx7guy on December 01, 2020, 11:47:09 AM
OP are you also on Reddit?  I just got a notification about this exact subject on Reddit, using the same chart, etc.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: MustacheAndaHalf on December 01, 2020, 01:04:00 PM
The S&P 500 committee are going to add Tesla at full market cap weight?!
They pushed Tesla stock up +5% in Friday's trading, according to this article.
https://www.wsj.com/articles/tesla-to-enter-s-p-500-at-full-weight-in-december-11606780897

Earlier in 2020, the S&P 500 committee delayed an update that would have dropped many recently fallen stocks.  Which made sense - it reduces disruption and volatility... so who is making the decisions now, and trying to cause disruption and volatility?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: kenmoremmm on December 01, 2020, 02:24:50 PM
I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly. 

is this true? at what point in time did VTSAX add TSLA to the fund? i'd assume TSLA already made a significant gain in it's share price and # of shares before it even sniffed VTSAX, thus mitigating a large % of the gains. right?

i have a good amount of VTSAX, so i'm generally curious. it looks like it's the 14th largest holding:
https://investor.vanguard.com/mutual-funds/profile/portfolio/VTSAX/portfolio-holdings
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: v8rx7guy on December 01, 2020, 02:31:22 PM
I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly. 

is this true? at what point in time did VTSAX add TSLA to the fund? i'd assume TSLA already made a significant gain in it's share price and # of shares before it even sniffed VTSAX, thus mitigating a large % of the gains. right?

i have a good amount of VTSAX, so i'm generally curious. it looks like it's the 14th largest holding:
https://investor.vanguard.com/mutual-funds/profile/portfolio/VTSAX/portfolio-holdings

I know it was for sure in there last year because I remember it was on the 2nd or 3rd page of that same VTSAX holdings list... now it's in the top 15!  I don't see why it wouldn't have been included since TSLA went public... it's the total stock market index fund afterall?  Someone can correct me if I'm wrong.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: bacchi on December 01, 2020, 03:32:24 PM
I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly. 

is this true? at what point in time did VTSAX add TSLA to the fund? i'd assume TSLA already made a significant gain in it's share price and # of shares before it even sniffed VTSAX, thus mitigating a large % of the gains. right?

i have a good amount of VTSAX, so i'm generally curious. it looks like it's the 14th largest holding:
https://investor.vanguard.com/mutual-funds/profile/portfolio/VTSAX/portfolio-holdings

I know it was for sure in there last year because I remember it was on the 2nd or 3rd page of that same VTSAX holdings list... now it's in the top 15!  I don't see why it wouldn't have been included since TSLA went public... it's the total stock market index fund afterall?  Someone can correct me if I'm wrong.

Correct or nearly so. VTSAX contains almost all of the listed domestic stocks in the CRSP database. See https://etfdb.com/index/crsp-us-total-market-index/.


Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: PDXTabs on December 01, 2020, 04:52:30 PM
Yup, I own FSKAX, VTSMX, and VT. All of them hold it. In fact I would estimate that at this point ~0.5% of my net worth is Tesla stock even though I don't directly own a single share.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: v8rx7guy on December 01, 2020, 05:02:39 PM
Yup, I own FSKAX, VTSMX, and VT. All of them hold it. In fact I would estimate that at this point ~0.5% of my net worth is Tesla stock even though I don't directly own a single share.

Same.  My FOMO was somewhat relieved when I found this out.  Wish it was more, but glad I didn't completely miss the rocket ship that has been TSLA stock.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: v8rx7guy on December 01, 2020, 05:05:39 PM
I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly.   Just a random thing that has been on my mind a lot lately regarding this subject.  As to your question, I think that the addition to the S&P500 and the risk of people dumping once it's added has already been priced in to the current price of TSLA... I think it's too late to be trying to strategize.

The last 10 years of returns say "that's nice" as VOO outperformed VTI (not a ton, but a bit) over the last 1,2,5,10 years.  The large cap outperformance erases the aggregate small cap underperformance recently, and TSLA doesn't seem to have made a difference overall.

Then maybe you're overthinking this??
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: joleran on December 01, 2020, 08:39:03 PM
I'm just glad I chose the total stock market index fund (VTSAX) rather than the S&P500 index way back when.  I've been riding the Tesla wave all the way up rather than having to buy in high like S&P500 index holders are going to have to do shortly.   Just a random thing that has been on my mind a lot lately regarding this subject.  As to your question, I think that the addition to the S&P500 and the risk of people dumping once it's added has already been priced in to the current price of TSLA... I think it's too late to be trying to strategize.

The last 10 years of returns say "that's nice" as VOO outperformed VTI (not a ton, but a bit) over the last 1,2,5,10 years.  The large cap outperformance erases the aggregate small cap underperformance recently, and TSLA doesn't seem to have made a difference overall.

Then maybe you're overthinking this??

I'm just saying you did not win by buying VTSAX over the time period, TSLA or no TSLA, so it doesn't make sense to be glad you chose a more or less comparable but slightly less performing asset in retrospect.  I entirely agree it was a good idea to hold VTSAX over the S&P500, but it didn't pan out.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 03, 2020, 09:43:02 AM
Telsa has ran up about 45% since the announcement.  It was already way overvalued before announcement.  I do not like the thought of buying a stock at such a premium.  I also don't like the downward pressure it will create on all the other SP500 stocks that have to be sold so they can buy Tesla.

I've personally moved my sp500 exposure to VO (mid cap), VB (small cap), and VEU (world - US).  I will probably add sp500 back in January or Feb after it settles down and all the Tesla speculator have cashed out. Had I been thinking, I would have bought call options on Tesla right after the announcement with expiration in Jan.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Scandium on December 03, 2020, 10:47:43 AM
Vanguard has a process for adding stock to the index over time, they don't just buy billions of TSLA the day it's added (Months I believe, but you'll have to google for details as I don't remember). So any effect of S&P "pump & dumb" will be diluted. And even if they did, then everyone would sell out of the index just before people dumb TSLA, but then the stock holders would sell earlier..etc etc.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: v8rx7guy on December 03, 2020, 11:23:21 AM
Vanguard has a process for adding stock to the index over time, they don't just buy billions of TSLA the day it's added (Months I believe, but you'll have to google for details as I don't remember). So any effect of S&P "pump & dumb" will be diluted. And even if they did, then everyone would sell out of the index just before people dumb TSLA, but then the stock holders would sell earlier..etc etc.

Does that mean that there could be a deviation between a S&P500 tracker such as .inx and VOO?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 03, 2020, 01:44:59 PM
Vanguard has a process for adding stock to the index over time, they don't just buy billions of TSLA the day it's added (Months I believe, but you'll have to google for details as I don't remember). So any effect of S&P "pump & dumb" will be diluted. And even if they did, then everyone would sell out of the index just before people dumb TSLA, but then the stock holders would sell earlier..etc etc.

Does that mean that there could be a deviation between a S&P500 tracker such as .inx and VOO?
Source for this?  From what I've read most are following SP500 instructions to do it all in one go instead of tranches which will be on end of day Dec 18 (friday) and start of Dec 21(Monday).  That would be nice if Vanguard did that, but like he says it would certainly create a deviation between sp500 trackers.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 09, 2020, 11:54:46 AM
I do see the Tesla discussion thread, I'm just surprised no one is concerned about this vastly overpriced stock going into their sp500. As the market cap keeps inflating it will represent an ever larger percent of the sp500 portfolio.  I feel like all the robinhood speculators are going to profit off the retirement fund groups by forcing them to buy their inflated garbage.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: WhiteTrashCash on December 09, 2020, 11:58:05 AM
I think the difference between Tesla and Yahoo is that Tesla actually produces a product and not just any product, but a product in extremely high demand using technology that their competitors havenít come close to matching yet. Everything will be fine.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Travis on December 09, 2020, 06:00:57 PM
I do see the Tesla discussion thread, I'm just surprised no one is concerned about this vastly overpriced stock going into their sp500. As the market cap keeps inflating it will represent an ever larger percent of the sp500 portfolio.  I feel like all the robinhood speculators are going to profit off the retirement fund groups by forcing them to buy their inflated garbage.

Anybody who has a total market fund has had Tesla since the beginning.  This means it'll show up in two more of my funds, but it's not like they're hitting the market for the first time ever.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ChpBstrd on December 09, 2020, 07:38:18 PM
It's a good case for moving from a market-cap weighted ETF to an equal-weighted ETF. Unicorn avoidance is also a good case for moving one's S&P500 ETFs into broader market ETFs or diversifying into Ex-US ETFs. Some of us remember the late 1990's when the rationale was that the dot-com companies would keep raising money infinitely so therefore they couldn't go down.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 10, 2020, 06:42:23 AM
I think the difference between Tesla and Yahoo is that Tesla actually produces a product and not just any product, but a product in extremely high demand using technology that their competitors havenít come close to matching yet. Everything will be fine.
Berkshire Hathaway has over 10 times the revenue and profits yet Tesla just passed them.

Even under the most astronomical optimistic growth for 15 to 20 years Tesla can't reach a point to justify that market cap.  Tesla competitors are within just a few years of catching up. Tesla also still isn't profitable without selling ever dwindling credits.  I'm not saying bad company, but not worth a tenth of this price even if they dominated car market.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: PDXTabs on December 10, 2020, 12:05:15 PM
Yes, it's the Musk fanboy put. But I'm waiting until Starlink goes public to hop on that train.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 05:24:48 PM
I think the difference between Tesla and Yahoo is that Tesla actually produces a product and not just any product, but a product in extremely high demand using technology that their competitors havenít come close to matching yet. Everything will be fine.
Berkshire Hathaway has over 10 times the revenue and profits yet Tesla just passed them.

Even under the most astronomical optimistic growth for 15 to 20 years Tesla can't reach a point to justify that market cap.  Tesla competitors are within just a few years of catching up. Tesla also still isn't profitable without selling ever dwindling credits.  I'm not saying bad company, but not worth a tenth of this price even if they dominated car market.

Few points here. Plenty of companies derive part of their profit margin from subsidies. Everything from sugar to oil is heavily subsidized. Seems odd to single Tesla out in this regard, especially considering ZEV credits are not a taxpayer funded subsidy. The ZEV credits are earned through or as a direct result of Teslaís core business (EVs). They are not a simple transfer of wealth from taxpayers like other industries receive. Teslaís so called competitors are forced to pay Tesla for these credits exactly because they are failing to create compelling EVs of their own in any significant quantity. Secondly, if you take away the ZEV credits, then itís only fair to also take out Muskís stock compensation from last quarter. Remove both, and Tesla is profitable even without ZEV credits last quarter. If you are going to discard EV credits because they are transient, then only fair to also discard Muskís one-off compensation payment as well. Lastly, the Tesla detractors always want to ignore that Tesla has only recently become profitable because they have and continue to plug billions back into the business to fuel their rapid, capital intensive growth. If Teals stopped building out superchargers, new factories and funding research and development they would be very profitable every quarter going forward. As a Tesla stock holder Iím glad Tesla is plugging profits back into the company to fuel future growth and capture market share.

Which brings me to the next point, you say the competition is coming in ďa few yearsĒ, but there is no evidence to support this. No ICE manufacturer is currently building multiple plants to manufacture EV batteries and vehicles at mass scale like Tesla. No ICE manufacturer is building out supercharger networks across North America, Europe and China like Tesla. No ICE company has even released specs for a vehicle that competes with current Tesla vehicles on range, price, performance, AND charging speeds. All of which ignores the fact that while these ICE companies try to catch up with todayís Tesla vehicles, Tesla continues to innovate and provide a moving target. The "Tesla Killers" have been promised for a decade or more now, and if anything, Teslaís moat has widened. 

The ICE majors have an impossible task. They need to simultaneously plug billions into developing and producing new EVs at scale, while competing against their own existing ICE product lines and satisfying current share holders demand for quarterly profits. No wonder no major has produced anything more than compliance vehicles at minimal scale (10s of thousands) with the possible exception of Nissan (LEAF).  How can they? For them to make the necessary investments to retool their manufacturing line, design new EVs from the ground up, build out charging infrastructure, procure battery supply, etc., they would have to sell their boards and share holders on several consecutive unprofitable quarters and suspension of dividend payments. Good luck! You canít serve two masters. Half the current ICE manufacturers will not survive this transition to electric.

Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 10, 2020, 05:47:25 PM
Large major auto companies are already beating Tesla in China and Europe, competition is there already and winning. USA has lower demand for EVs because of lower gas prices and lower EV subsidies, if these things change then so will demand here. Hybrids make enormously more sense in the USA anyway. People can argue Tesla all day long but there is no reason to think that Tesla is capable of things that no other company is also capable of. Short of an exclusive patent or government mandated monopoly no company is likely to dominate long term.
 
Tesla is my canary in the coal mine. When it's bubble pops young folks (and old too) will realize that stocks can go down and they will panic sell like always happens. Just wish it will happen sooner than later.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 07:05:59 PM
Large major auto companies are already beating Tesla in China and Europe, competition is there already and winning. USA has lower demand for EVs because of lower gas prices and lower EV subsidies, if these things change then so will demand here. Hybrids make enormously more sense in the USA anyway. People can argue Tesla all day long but there is no reason to think that Tesla is capable of things that no other company is also capable of. Short of an exclusive patent or government mandated monopoly no company is likely to dominate long term.
 
Tesla is my canary in the coal mine. When it's bubble pops young folks (and old too) will realize that stocks can go down and they will panic sell like always happens. Just wish it will happen sooner than later.

Would love to hear the evidence that major auto companies are beating Tesla in China and Europe? Tesla sells every vehicle they make as fast as they can ramp production. So, EV consumers may be left with the decision to buy a ďcompetitorísĒ product tor wait for a Tesla. Tesla does not need 100 or even 50 percent of the addressable market to be wildly successful.  When Tesla makes a car they canít sell then you can tell us how the other car companies are ďwinningĒ.  Its a fact that Teslaís vehicle far and away offer the best combo of price, performance, range, and recharge rate (plus  a charging network). Tesla is doing things that no other car company has yet to do despite a decade to catch up.  But Iíll keep waiting for the Tesla killer...
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 10, 2020, 07:29:39 PM
Would love to hear the evidence that major auto companies are beating Tesla in China and Europe? Tesla sells every vehicle they make as fast as they can ramp production. So, EV consumers may be left with the decision to buy a ďcompetitorísĒ product tor wait for a Tesla. Tesla does not need 100 or even 50 percent of the addressable market to be wildly successful.  When Tesla makes a car they canít sell then you can tell us how the other car companies are ďwinningĒ.  Its a fact that Teslaís vehicle far and away offer the best combo of price, performance, range, and recharge rate (plus  a charging network). Tesla is doing things that no other car company has yet to do despite a decade to catch up.  But Iíll keep waiting for the Tesla killer...
[/quote]
Sales and registration numbers are easily available if you look. Every car company sells every car they make. Wait times are very low for Teslas most places with prices being lowered continually. No company would lower prices if demand was sufficient, even Tesla with their "mission". Can't and won't are indistinguishable to outsiders to the company, as soon as margins for electric cars match ICE or governments compel companies to make them then all companies will make them. The majority of your argument is just recency bias, because Tesla is doing well now doesn't mean that is likely to continue or even to get much better which necessitates the high valuation.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 07:54:43 PM
Would love to hear the evidence that major auto companies are beating Tesla in China and Europe? Tesla sells every vehicle they make as fast as they can ramp production. So, EV consumers may be left with the decision to buy a ďcompetitorísĒ product tor wait for a Tesla. Tesla does not need 100 or even 50 percent of the addressable market to be wildly successful.  When Tesla makes a car they canít sell then you can tell us how the other car companies are ďwinningĒ.  Its a fact that Teslaís vehicle far and away offer the best combo of price, performance, range, and recharge rate (plus  a charging network). Tesla is doing things that no other car company has yet to do despite a decade to catch up.  But Iíll keep waiting for the Tesla killer...
Sales and registration numbers are easily available if you look. Every car company sells every car they make. Wait times are very low for Teslas most places with prices being lowered continually. No company would lower prices if demand was sufficient, even Tesla with their "mission". Can't and won't are indistinguishable to outsiders to the company, as soon as margins for electric cars match ICE or governments compel companies to make them then all companies will make them. The majority of your argument is just recency bias, because Tesla is doing well now doesn't mean that is likely to continue or even to get much better which necessitates the high valuation.
[/quote]

Every car company "eventually" sells every car they make, but not every car company has produced as many cars as they possible could produce for the length of their existence like Tesla to date. ICE manufactures have shuttered lines and entire factories at various points in their history and have parking lots full of inventory they sometimes sell at a loss just too unload. Again, Tesla does not engage in any of this and has not spent a penny on paid advertising or marketing.  Tesla sells every EV the make as fast as they make them despite the expiry of the US Federal tax credit that still benefits all the ďcompetitionĒ.

And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%). Tesla doesnít offer rebates or hold Labor Day sales. They donít rely on a service department to be profitable on vehicles they sell on slim margins like the big boys. 

Iíve heard your last sentence repeated for the last 10 years in various forms. Iíve made a lot of money betting on Tesla do to just that since I invested in 2013. 
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 10, 2020, 08:20:25 PM
Every car company "eventually" sells every car they make, but not every car company has produced as many cars as they possible could produce for the length of their existence like Tesla to date. ICE manufactures have shuttered lines and entire factories at various points in their history and have parking lots full of inventory they sometimes sell at a loss just too unload. Again, Tesla does not engage in any of this and has not spent a penny on paid advertising or marketing.  Tesla sells every EV the make as fast as they make them despite the expiry of the US Federal tax credit that still benefits all the ďcompetitionĒ.

And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%). Tesla doesnít offer rebates or hold Labor Day sales. They donít rely on a service department to be profitable on vehicles they sell on slim margins like the big boys. 

Iíve heard your last sentence repeated for the last 10 years in various forms. Iíve made a lot of money betting on Tesla do to just that since I invested in 2013.
[/quote]
If Tesla has very profitable margins why aren't they profitable?
Tesla shuttered the Roadster.
Tesla does huge fleet sales end of every quarter, probably also at a loss.
When Tesla needs to start advertising costs will go up.
Don't need to run a sale when you continually lower prices.
What service department? When they add it again costs will increase.
Low margins and profitable with low valuation is preferred any day to unprofitable and high valuation. 5 quarters does not make a trend.
I'd like to know what Tesla is capable of besides cashing in subsidies and issuing shares that any other auto company is incapable of?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 10, 2020, 08:26:58 PM
Iíve heard your last sentence repeated for the last 10 years in various forms. Iíve made a lot of money betting on Tesla do to just that since I invested in 2013.
[/quote]
Stock price bro! is not a logical argument. People made tons on; RCA, Enron, cisco, Yahoo, Nicola, Nio, pets.com, ........
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 08:36:27 PM
Every car company "eventually" sells every car they make, but not every car company has produced as many cars as they possible could produce for the length of their existence like Tesla to date. ICE manufactures have shuttered lines and entire factories at various points in their history and have parking lots full of inventory they sometimes sell at a loss just too unload. Again, Tesla does not engage in any of this and has not spent a penny on paid advertising or marketing.  Tesla sells every EV the make as fast as they make them despite the expiry of the US Federal tax credit that still benefits all the ďcompetitionĒ.

And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%). Tesla doesnít offer rebates or hold Labor Day sales. They donít rely on a service department to be profitable on vehicles they sell on slim margins like the big boys. 

Iíve heard your last sentence repeated for the last 10 years in various forms. Iíve made a lot of money betting on Tesla do to just that since I invested in 2013.
If Tesla has very profitable margins why aren't they profitable?
Tesla shuttered the Roadster.
Tesla does huge fleet sales end of every quarter, probably also at a loss.
When Tesla needs to start advertising costs will go up.
Don't need to run a sale when you continually lower prices.
What service department? When they add it again costs will increase.
Low margins and profitable with low valuation is preferred any day to unprofitable and high valuation. 5 quarters does not make a trend.
I'd like to know what Tesla is capable of besides cashing in subsidies and issuing shares that any other auto company is incapable of?
[/quote]

As I already noted above, Tesla only recently became profitable because the plow profits back into growing the company (building factories, RND, supercharging network, etc.). They always made money on each vehicle they sell. You can keep harping on the lowering of prices, but that was always Teslaís stated goal. The fact that Tesla can lower prices AND still make 23.7% auto gross margins just demonstrates why they are and will continue to crush the ďcompetition". This before we even consider the total cost of ownership advantage.  Five quarters does not make a trend? Thatís funny. Iíd argue has showed a trend of steady rapid growth for the past decade all while folks like yourself speak of the impending doom. I already addressed the subsidy argument above in my reply to WhiteTrashCash. Thatís a complete canard. So, if you're just going to keep throwing out debunked bear talking points Iíll move on.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: bacchi on December 10, 2020, 08:37:23 PM
And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%).

That's gross profit margin, which only uses revenue and COGS.

Toyota has a Q3 16.95% gross profit margin but, more importantly, the Q3 net profit margin is 6.95%. Tesla's net profit margin is 3.77%.*

GM's GPM and NPM are 17.06% and 11.40%, respectively.

11.40% (GM) > 6.95% (TM) > 3.77% (TSLA)



* https://ycharts.com/companies/TSLA/gross_profit_margin
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 10, 2020, 08:41:45 PM
ColoradoTribe
All I want is one thing that Tesla does that other companies are incapable of? The only thing I can think of is they have guys like you arguing for them on sites across the internet.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 08:44:33 PM
Iíve heard your last sentence repeated for the last 10 years in various forms. Iíve made a lot of money betting on Tesla do to just that since I invested in 2013.
Stock price bro! is not a logical argument. People made tons on; RCA, Enron, cisco, Yahoo, Nicola, Nio, pets.com, ........
[/quote]

Oh, Iím sorry, I thought the goal was to make money, not ďlogicalĒ arguments. Though, I think Iíve brought far more facts to this debate than you. I bought a Nissan Leaf in 2013 and realized EVs were the future. I did my research on Tesla and for the first time in my life placed a large bet on an individual company. I made my bet on a simple investment thesis:

1) EVs and battery storage are the future
2) Tesla is the leader in EV and battery storage

I will maintain my investment in Tesla as long as both of these hold true. You donít like Tesla or think its garbage thatís fine. Place your bets accordingly. Best of Luck!
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 10, 2020, 08:50:49 PM
1) EVs and battery storage are the future
2) Tesla is the leader in EV and battery storage

I will maintain my investment in Tesla as long as both of these hold true. You donít like Tesla or think its garbage thatís fine. Place your bets accordingly. Best of Luck!
[/quote]
Many companies start out as the leader, but if there is nothing that keeps them there they don't last. I've never heard a logical response to "what makes Tesla special" so will stay far away if not short. Be careful Chairperson has been selling a ton of shares lately.
All the best bud.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 09:14:48 PM
And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%).

That's gross profit margin, which only uses revenue and COGS.

Toyota has a Q3 16.95% gross profit margin but, more importantly, the Q3 net profit margin is 6.95%. Tesla's net profit margin is 3.77%.*

GM's GPM and NPM are 17.06% and 11.40%, respectively.

11.40% (GM) > 6.95% (TM) > 3.77% (TSLA)



* https://ycharts.com/companies/TSLA/gross_profit_margin

And I would argue its more appropriate to use gross margin to compare Tesla to the competition at this time because Tesla is still in its intensive growth phase and plowing money back into building factories etc. More established manufacturers are spending less on infrastructure, so their net profit will be higher than Tesla. It reinforces my point that if Tesla stopped reinvesting, they would be a wildly profitable mid size car manufacturer. Thatís not the goal. It does show that once Tesla reaches the same production scale as Toyota and slow its growth curve the EV margins will blow away the margins of the traditional ICE manufacturers.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: bacchi on December 10, 2020, 10:23:19 PM
And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%).

That's gross profit margin, which only uses revenue and COGS.

Toyota has a Q3 16.95% gross profit margin but, more importantly, the Q3 net profit margin is 6.95%. Tesla's net profit margin is 3.77%.*

GM's GPM and NPM are 17.06% and 11.40%, respectively.

11.40% (GM) > 6.95% (TM) > 3.77% (TSLA)



* https://ycharts.com/companies/TSLA/gross_profit_margin

And I would argue its more appropriate to use gross margin to compare Tesla to the competition at this time because Tesla is still in its intensive growth phase and plowing money back into building factories etc. More established manufacturers are spending less on infrastructure, so their net profit will be higher than Tesla. It reinforces my point that if Tesla stopped reinvesting, they would be a wildly profitable mid size car manufacturer. Thatís not the goal. It does show that once Tesla reaches the same production scale as Toyota and slow its growth curve the EV margins will blow away the margins of the traditional ICE manufacturers.

Capex is not a revenue expenditure. It doesn't affect net margin.

In 2019, Toyota spent over 10x more capex than Tesla did.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 10, 2020, 10:54:39 PM
And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%).

That's gross profit margin, which only uses revenue and COGS.

Toyota has a Q3 16.95% gross profit margin but, more importantly, the Q3 net profit margin is 6.95%. Tesla's net profit margin is 3.77%.*

GM's GPM and NPM are 17.06% and 11.40%, respectively.

11.40% (GM) > 6.95% (TM) > 3.77% (TSLA)



* https://ycharts.com/companies/TSLA/gross_profit_margin

And I would argue its more appropriate to use gross margin to compare Tesla to the competition at this time because Tesla is still in its intensive growth phase and plowing money back into building factories etc. More established manufacturers are spending less on infrastructure, so their net profit will be higher than Tesla. It reinforces my point that if Tesla stopped reinvesting, they would be a wildly profitable mid size car manufacturer. Thatís not the goal. It does show that once Tesla reaches the same production scale as Toyota and slow its growth curve the EV margins will blow away the margins of the traditional ICE manufacturers.

Capex is not a revenue expenditure. It doesn't affect net margin.

In 2019, Toyota spent over 10x more capex than Tesla did.

I appreciate the correction on Capex and revenue. Is it fair to say that since COGS does factor into net margin that Toyota has an advantage in that they have a more mature supply chain and benefit from greater economies of scale? Is it also fair to say Tesla will reap these same benefits and continue to improve their net margins as they continue to rapidly grow? For example, the battery pack is by far the most expensive component of an EV and battery costs have dropped dramatically in recent years and will continue to decrease as volume battery production ramps. I think it's fair to say Toyota is unlikely to see further or drastic decreases in their supply/component costs? If anything, Toyota will be writing off stranded assets related to their ICE business as they are forced to transition to EVs (or hydrogen fuel cells, if they decide to go that route). The Tesla bears (not saying you are one) always make it sound like the auto bigs will just flip a switch and their ICE production lines will start churning out EVs at volume overnight. Its going to take years and an entire culture shift, bringing in battery and software expertise, finding battery suppliers or building the infrastructure in house, building out a charging network, designing new EV platforms from the ground up, etc., all while maintaining and simultaneously competing with their core ICE business.  Not to mention they have legacy pension and union obligations and a dealer network that wants nothing to do with selling low maintenance EV that can easily last 500k miles. Would anyone honestly rather be GM or Ford right about now?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Paul der Krake on December 10, 2020, 11:45:15 PM
Vanguard has a process for adding stock to the index over time, they don't just buy billions of TSLA the day it's added (Months I believe, but you'll have to google for details as I don't remember). So any effect of S&P "pump & dumb" will be diluted. And even if they did, then everyone would sell out of the index just before people dumb TSLA, but then the stock holders would sell earlier..etc etc.

Does that mean that there could be a deviation between a S&P500 tracker such as .inx and VOO?
Source for this?  From what I've read most are following SP500 instructions to do it all in one go instead of tranches which will be on end of day Dec 18 (friday) and start of Dec 21(Monday).  That would be nice if Vanguard did that, but like he says it would certainly create a deviation between sp500 trackers.
"Frontrunning" is the keyword you're looking for.

Basically people try to anticipate stocks being added to the index. Index fund managers certainly don't want to get caught with their pants down, so they employ a bunch of clever financial engineering tricks (hint: options) to avoid being in the position of suddenly having to buy the underlying stock.

The fund's assets never fully track the index, because this constant tweaking requires to have cash on hand, whether it comes from expense ratios or elsewhere.


Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: bacchi on December 11, 2020, 08:59:53 AM
And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%).

That's gross profit margin, which only uses revenue and COGS.

Toyota has a Q3 16.95% gross profit margin but, more importantly, the Q3 net profit margin is 6.95%. Tesla's net profit margin is 3.77%.*

GM's GPM and NPM are 17.06% and 11.40%, respectively.

11.40% (GM) > 6.95% (TM) > 3.77% (TSLA)



* https://ycharts.com/companies/TSLA/gross_profit_margin

And I would argue its more appropriate to use gross margin to compare Tesla to the competition at this time because Tesla is still in its intensive growth phase and plowing money back into building factories etc. More established manufacturers are spending less on infrastructure, so their net profit will be higher than Tesla. It reinforces my point that if Tesla stopped reinvesting, they would be a wildly profitable mid size car manufacturer. Thatís not the goal. It does show that once Tesla reaches the same production scale as Toyota and slow its growth curve the EV margins will blow away the margins of the traditional ICE manufacturers.

Capex is not a revenue expenditure. It doesn't affect net margin.

In 2019, Toyota spent over 10x more capex than Tesla did.

I appreciate the correction on Capex and revenue. Is it fair to say that since COGS does factor into net margin that Toyota has an advantage in that they have a more mature supply chain and benefit from greater economies of scale? Is it also fair to say Tesla will reap these same benefits and continue to improve their net margins as they continue to rapidly grow? For example, the battery pack is by far the most expensive component of an EV and battery costs have dropped dramatically in recent years and will continue to decrease as volume battery production ramps. I think it's fair to say Toyota is unlikely to see further or drastic decreases in their supply/component costs? If anything, Toyota will be writing off stranded assets related to their ICE business as they are forced to transition to EVs (or hydrogen fuel cells, if they decide to go that route). The Tesla bears (not saying you are one) always make it sound like the auto bigs will just flip a switch and their ICE production lines will start churning out EVs at volume overnight. Its going to take years and an entire culture shift, bringing in battery and software expertise, finding battery suppliers or building the infrastructure in house, building out a charging network, designing new EV platforms from the ground up, etc., all while maintaining and simultaneously competing with their core ICE business.  Not to mention they have legacy pension and union obligations and a dealer network that wants nothing to do with selling low maintenance EV that can easily last 500k miles. Would anyone honestly rather be GM or Ford right about now?

Well, we know that GROSS profit margin is better for Tesla than the 3 legacy car manufacturers above, even with their advantages. That's fantastic and, actually, surprising considering the battery costs.

That can only be because the COGS for EVs is less expensive. As more Toyota production changes to EVs, its COGS will (?) also decrease proportionally.

I'm not sure why operating costs are higher at Tesla. It could be related to employee retention costs or interest on debt.

But to your point -- yes, Toyota/GM/VW will have to shift strategies and it's burdened with pensions and old factories and an outdated dealer network. They can't pivot as quickly as Tesla and their EVs simply don't have the same cachet as a Tesla EV.

What Toyota does have is $40B in profit this year, which trumps the $5B Tesla made in a stock issuance this week. That $40B covers a lot of fuckups and a lot of shifting.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ChpBstrd on December 11, 2020, 10:08:02 AM
They can't pivot as quickly as Tesla and their EVs simply don't have the same cachet as a Tesla EV.

When I was a kid, there were still old-timers around who talked about how Toyota's new Lexus brand would never be a Cadillac or a Lincoln.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 10:28:02 AM
They can't pivot as quickly as Tesla and their EVs simply don't have the same cachet as a Tesla EV.

When I was a kid, there were still old-timers around who talked about how Toyota's new Lexus brand would never be a Cadillac or a Lincoln.

A more apt comparison would be the old timers who talked about how Henry Fordís new fangled contraption would never replace the ever reliable horse and buggy.

Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 10:36:49 AM
And yet Tesla, even as they lower prices in keeping with their mission they produce auto profit margins (23.7 % in Q3) that the ICE manufacturers would kill for (GM ~10%).

That's gross profit margin, which only uses revenue and COGS.

Toyota has a Q3 16.95% gross profit margin but, more importantly, the Q3 net profit margin is 6.95%. Tesla's net profit margin is 3.77%.*

GM's GPM and NPM are 17.06% and 11.40%, respectively.

11.40% (GM) > 6.95% (TM) > 3.77% (TSLA)



* https://ycharts.com/companies/TSLA/gross_profit_margin

And I would argue its more appropriate to use gross margin to compare Tesla to the competition at this time because Tesla is still in its intensive growth phase and plowing money back into building factories etc. More established manufacturers are spending less on infrastructure, so their net profit will be higher than Tesla. It reinforces my point that if Tesla stopped reinvesting, they would be a wildly profitable mid size car manufacturer. Thatís not the goal. It does show that once Tesla reaches the same production scale as Toyota and slow its growth curve the EV margins will blow away the margins of the traditional ICE manufacturers.

Capex is not a revenue expenditure. It doesn't affect net margin.

In 2019, Toyota spent over 10x more capex than Tesla did.

I appreciate the correction on Capex and revenue. Is it fair to say that since COGS does factor into net margin that Toyota has an advantage in that they have a more mature supply chain and benefit from greater economies of scale? Is it also fair to say Tesla will reap these same benefits and continue to improve their net margins as they continue to rapidly grow? For example, the battery pack is by far the most expensive component of an EV and battery costs have dropped dramatically in recent years and will continue to decrease as volume battery production ramps. I think it's fair to say Toyota is unlikely to see further or drastic decreases in their supply/component costs? If anything, Toyota will be writing off stranded assets related to their ICE business as they are forced to transition to EVs (or hydrogen fuel cells, if they decide to go that route). The Tesla bears (not saying you are one) always make it sound like the auto bigs will just flip a switch and their ICE production lines will start churning out EVs at volume overnight. Its going to take years and an entire culture shift, bringing in battery and software expertise, finding battery suppliers or building the infrastructure in house, building out a charging network, designing new EV platforms from the ground up, etc., all while maintaining and simultaneously competing with their core ICE business.  Not to mention they have legacy pension and union obligations and a dealer network that wants nothing to do with selling low maintenance EV that can easily last 500k miles. Would anyone honestly rather be GM or Ford right about now?

Well, we know that GROSS profit margin is better for Tesla than the 3 legacy car manufacturers above, even with their advantages. That's fantastic and, actually, surprising considering the battery costs.

That can only be because the COGS for EVs is less expensive. As more Toyota production changes to EVs, its COGS will (?) also decrease proportionally.

I'm not sure why operating costs are higher at Tesla. It could be related to employee retention costs or interest on debt.

But to your point -- yes, Toyota/GM/VW will have to shift strategies and it's burdened with pensions and old factories and an outdated dealer network. They can't pivot as quickly as Tesla and their EVs simply don't have the same cachet as a Tesla EV.

What Toyota does have is $40B in profit this year, which trumps the $5B Tesla made in a stock issuance this week. That $40B covers a lot of fuckups and a lot of shifting.

Toyota is betting on hydrogen fuel cell vehicles last I checked. Theyíre going to need all that profit margin when they start writing off stranded ICE assets and spending billions on the needed EV infrastructure. I do believe Toyota survives and prospers if they abandon the fuel cell route and get serious about battery EVs ASAP. If they went all in tomorrow, I think it would take them 5 years minimum to get to where Tesla is today.  Itís odd that Toyota pioneered the hybrid and made it mainstream with the Prius, but hybrids will quickly be seen as odd anachronisms once EV adoption takes off. I see hybrid sales dropping off a cliff sometime in the next 5 years.

I actually see Apple as Tesla's biggest threat. Apple has the resources and the software engineering expertise. Apple is not saddled with an entrenched ICE culture and legacy infrastructure. Starting from scratch (with the money to bank roll it) is probably easier than the bigs trying to reinvent themselves.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: FIPurpose on December 11, 2020, 10:52:47 AM
In related news, Toyota is claiming that they have a "solid-state" battery that can do 500km (300 miles) on a single charge and can be charged in 10 minutes. They plan on rolling out in 2021. I really gotta dump my ICE vehicle soon before they become worthless lol
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: dandarc on December 11, 2020, 11:04:04 AM
In related news, Toyota is claiming that they have a "solid-state" battery that can do 500km (300 miles) on a single charge and can be charged in 10 minutes. They plan on rolling out in 2021. I really gotta dump my ICE vehicle soon before they become worthless lol
At least another 10 years for fleet to turnover, even if the technology's 100% ready today.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: PDXTabs on December 11, 2020, 11:04:10 AM
I really gotta dump my ICE vehicle soon before they become worthless lol

I think that I can get another nine years out of mine if I'm careful, and then just live car-free. Possibly with self driving taxis.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 11:04:18 AM
Legacy auto is very good at spinning up new production lines they do it all the time. I doubt building a car around a body and battery is much different than building a car around a body and engine. Judging from initial quality of model Y I could be wrong tho. 
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 11:23:44 AM
Legacy auto is very good at spinning up new production lines they do it all the time. I doubt building a car around a body and battery is much different than building a car around a body and engine. Judging from initial quality of model Y I could be wrong tho.

New production lines all the time for new ICE vehicles, where 90% of the parts are unchanged from one model to the next. You donít just swap out a gas engine for a battery pack and call it good. New EV lines will require ground up designs and retooling of the manufacturing lines. Elon has said it dozens of times. Building the prototypes is easy. Far, far harder is building the machines that build the machines. Sourcing all the new components that go into the EVs alone will be a huge undertaking as the legacy autos arenít vertically integrated to the extent Tesla is. Thereís no radiator, transmission, spark plugs, engine, fuel tank, oil reservoir, fan, etc. The heating system is totally different (Teslaís have heat pumps). Again, you donít just take an existing ICE vehicle and swap out a few pieces and restart the line.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 11:32:26 AM
In related news, Toyota is claiming that they have a "solid-state" battery that can do 500km (300 miles) on a single charge and can be charged in 10 minutes. They plan on rolling out in 2021. I really gotta dump my ICE vehicle soon before they become worthless lol

https://electrek.co/2020/12/11/toyota-electric-car-solid-state-battery-10-min-fast-charging/

To clarify, they will be rolling out a prototype in 2021. I am happy to see that Toyota is moving away from fuel cells at least. That was a dead end. This is promising and I want all the legacy autos to move in this direction for the sake of the planet.

Legacy autos have rolled out lots of prototypes, compliance vehicles, and plans. Unfortunately, still waiting for any of them to start mass production of new EV lines designed and built from the ground up.

The advantage of solid state is the rapid charge time. Issue has always been the number of cycles the batteries can handle and how fast they degrade. Unclear if Toyota has cleared this hurdle from the article.

Lastly, keep in mind that Tesla announced battery cell improvements at their battery day this year that if fully realized will improve the efficiency and reduce the cost of their in house cells by roughly 56% by 2023. Again, Tesla is not a stationary target and none of the legacy autos have committed to fully competing in this space yet because they canít realistically maintain their ICE business profitably while simultaneously going all in on EVs. They risk cannibalizing their profit center and shareholders would scream bloody murder. No such dilemma for Tesla.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 11:36:59 AM
New production lines all the time for new ICE vehicles, where 90% of the parts are unchanged from one model to the next. You donít just swap out a gas engine for a battery pack and call it good. New EV lines will require ground up designs and retooling of the manufacturing lines. Elon has said it dozens of times. Building the prototypes is easy. Far, far harder is building the machines that build the machines. Sourcing all the new components that go into the EVs alone will be a huge undertaking as the legacy autos arenít vertically integrated to the extent Tesla is. Thereís no radiator, transmission, spark plugs, engine, fuel tank, oil reservoir, fan, etc. The heating system is totally different (Teslaís have heat pumps). Again, you donít just take an existing ICE vehicle and swap out a few pieces and restart the line.
[/quote]
Can't be that difficult. Dozen or more companies have already done it and dozens of more models available 2021.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 11:57:50 AM
In related news, Toyota is claiming that they have a "solid-state" battery that can do 500km (300 miles) on a single charge and can be charged in 10 minutes. They plan on rolling out in 2021. I really gotta dump my ICE vehicle soon before they become worthless lol
At least another 10 years for fleet to turnover, even if the technology's 100% ready today.

While true that it would take 10 years to physically replace the entire fleet (at a minimum assuming adequate EV supply), I think the point FIPurpose is making is that ICE resale values will collapse longe before all ICE cars are replaced. Once EVs approach near universal acceptance as the vehicle of the future, ICE resale values will collapse, especially at the high end price points. This could happen with as little as 5% market share for EVs. People will hold onto and stretch their current ICE vehicle until they can justify or afford an EV purchase.

As the benefits of EVs become more universally known, for examples the batteries and drive trains can easily last 500k miles and the low cost of ownership (cheap fueling and maintenance costs), EV resale values will increase and ICE resale values will plummet. The Model 3 already has the highest resale value at one year of ownership of any car.

https://thedriven.io/2020/02/10/tesla-model-3-top-list-of-cars-that-hold-their-value/

The legacy autos are already seeing declining sales in all segments where Tesla currently competes. The Model Y ramp and coming CyberTruck roll out from Austin Texas in 2022 will accelerate overall declining sales and in their most profitable market segments.

Itís not that no one will be driving ICE vehicles. There will be ICE vehicles on the road for decade to come in steadily declining numbers. It's just that new sales will dry up and resale values will drop precipitously such that ICE ownership will be a class distinction. I see a situation where lower income classes will buy up top end used ICE vehicles at basement prices and lower end used ICE vehicles will make their way south across the border for their second act.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: FIPurpose on December 11, 2020, 12:40:02 PM
In related news, Toyota is claiming that they have a "solid-state" battery that can do 500km (300 miles) on a single charge and can be charged in 10 minutes. They plan on rolling out in 2021. I really gotta dump my ICE vehicle soon before they become worthless lol
At least another 10 years for fleet to turnover, even if the technology's 100% ready today.

While true that it would take 10 years to physically replace the entire fleet (at a minimum assuming adequate EV supply), I think the point FIPurpose is making is that ICE resale values will collapse longe before all ICE cars are replaced. Once EVs approach near universal acceptance as the vehicle of the future, ICE resale values will collapse, especially at the high end price points. This could happen with as little as 5% market share for EVs. People will hold onto and stretch their current ICE vehicle until they can justify or afford an EV purchase.

As the benefits of EVs become more universally known, for examples the batteries and drive trains can easily last 500k miles and the low cost of ownership (cheap fueling and maintenance costs), EV resale values will increase and ICE resale values will plummet. The Model 3 already has the highest resale value at one year of ownership of any car.

https://thedriven.io/2020/02/10/tesla-model-3-top-list-of-cars-that-hold-their-value/

The legacy autos are already seeing declining sales in all segments where Tesla currently competes. The Model Y ramp and coming CyberTruck roll out from Austin Texas in 2022 will accelerate overall declining sales and in their most profitable market segments.

Itís not that no one will be driving ICE vehicles. There will be ICE vehicles on the road for decade to come in steadily declining numbers. It's just that new sales will dry up and resale values will drop precipitously such that ICE ownership will be a class distinction. I see a situation where lower income classes will buy up top end used ICE vehicles at basement prices and lower end used ICE vehicles will make their way south across the border for their second act.

Yep. This exactly. I've already determined that our current car is our last ICE. Still thinking about a potential move to Europe in a couple years where we would likely go car free, but if we stay in the States for the foreseeable future, I think we will likely move to Hybrid within the next year or 2.

It doesn't help that my 50k miles ICE vehicle broke down recently, power train broke and has been in the shop for almost 4 weeks now. I asked the tow truck driver how many electric/hybrid vehicles he does. He said he's never done an EV due to mechanical failure, he said he never started seeing prius' unless they were over 200k miles. Honestly, that right then and there has sold me that people will very quickly consider EV's superior to ICE once they get charging to under 20 mins (only necessary for away from home charging), 350 miles single charge, less than $30k. That combination will be the death of the ICE vehicle.

Also I don't think car companies are afraid to eat their own profits. The problem has been that consumer vehicles are already close to not profitable. Drive past any car dealership and what's it full of? Giant trucks. The current fleets of these car companies are all subsidized by people willing to over pay for gigantic trucks. No one is willing to pay 40k for an ICE sedan anymore, so the auto companies are already abandoning that part of the market. But they have to sell consumer vehicles in order to meet fleet mpg requirements. So they sell sedans basically at cost in order to have more trucks to sell which is where they make their money.

The problem that they'll have in a few years is California and likely more states saying that they won't be allowed to sell ICE trucks anymore in a few years. That is the bigger burden that these companies face.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on December 11, 2020, 12:56:54 PM
Legacy auto is very good at spinning up new production lines they do it all the time. I doubt building a car around a body and battery is much different than building a car around a body and engine. Judging from initial quality of model Y I could be wrong tho.

New production lines all the time for new ICE vehicles, where 90% of the parts are unchanged from one model to the next. You donít just swap out a gas engine for a battery pack and call it good. New EV lines will require ground up designs and retooling of the manufacturing lines. Elon has said it dozens of times. Building the prototypes is easy. Far, far harder is building the machines that build the machines. Sourcing all the new components that go into the EVs alone will be a huge undertaking as the legacy autos arenít vertically integrated to the extent Tesla is. Thereís no radiator, transmission, spark plugs, engine, fuel tank, oil reservoir, fan, etc. The heating system is totally different (Teslaís have heat pumps). Again, you donít just take an existing ICE vehicle and swap out a few pieces and restart the line.

since you seem to know, I have a question/s!

I took my vehicle in for service this week, about $600 - mostly just regular maintenance but this is the first time it's been pricy. Car is 8 yo.

What is the regular maintenance schedule like on teslas? and how much does it cost?

And I suppose we don't know the older tesla costs as yet? 8-10-12-15 yo cars.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 01:07:18 PM
Companies shift to where the profits are. American companies build trucks and SUVs because they have the best margins and the leave cars for imports because they don't have as high of tariffs like the "chicken tax". Tesla doesn't compete with legacy because they don't make the same types of vehicles.
Cost is everything including for EV's. I agree that widespread adoption is going to require lower costs, quick charging time, and high range. I don't understand the point of BEV when hybrid already does all of this. Most people drive less than 50 miles a day with occasionally much larger trips. This new Toyota technology is the first I would consider buying depending on cost. However, I'm in a rural area. Trips on my ICE motorcycle with a 250 mile range get dicey and gas is available in every little town around, I couldn't imagine driving a BEV around here.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 01:10:10 PM
since you seem to know, I have a question/s!

I took my vehicle in for service this week, about $600 - mostly just regular maintenance but this is the first time it's been pricy. Car is 8 yo.

What is the regular maintenance schedule like on teslas? and how much does it cost?

And I suppose we don't know the older tesla costs as yet? 8-10-12-15 yo cars.
[/quote]
FYI just read up on Tesla service barely existent at this point. People waiting weeks and costs billed to "goodwill" instead of warranty costs to help pad their numbers.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 01:21:43 PM
Legacy auto is very good at spinning up new production lines they do it all the time. I doubt building a car around a body and battery is much different than building a car around a body and engine. Judging from initial quality of model Y I could be wrong tho.

New production lines all the time for new ICE vehicles, where 90% of the parts are unchanged from one model to the next. You donít just swap out a gas engine for a battery pack and call it good. New EV lines will require ground up designs and retooling of the manufacturing lines. Elon has said it dozens of times. Building the prototypes is easy. Far, far harder is building the machines that build the machines. Sourcing all the new components that go into the EVs alone will be a huge undertaking as the legacy autos arenít vertically integrated to the extent Tesla is. Thereís no radiator, transmission, spark plugs, engine, fuel tank, oil reservoir, fan, etc. The heating system is totally different (Teslaís have heat pumps). Again, you donít just take an existing ICE vehicle and swap out a few pieces and restart the line.

since you seem to know, I have a question/s!

I took my vehicle in for service this week, about $600 - mostly just regular maintenance but this is the first time it's been pricy. Car is 8 yo.

What is the regular maintenance schedule like on teslas? and how much does it cost?

And I suppose we don't know the older tesla costs as yet? 8-10-12-15 yo cars.

I do not own a Tesla (someday). I need one of current vehicles to die.

I did purchase a new Nissan LEAF in 2013. In the past seven years I have:

Replaced tires once.
Replaced the in cabin air filter once.
Replaced with windshield wipers once.
Topped off the windshield wiper fluid.

Thatís literally it. Total vehicle upkeep cost is roughly $400/7 = $57/yr

Iíve had zero mechanical issues. Not surprising with so few moving parts and no heat or friction issues that come with ICE.

My only complaint would be the rate of battery degradation. Iím at 65-70% of new. From everything I read there are early Teslas with 500K miles on them and still have 90% battery capacity. Tesla has thermoregulation of their battery packs and LEAF cut corners and did not do this.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 01:50:41 PM
New production lines all the time for new ICE vehicles, where 90% of the parts are unchanged from one model to the next. You donít just swap out a gas engine for a battery pack and call it good. New EV lines will require ground up designs and retooling of the manufacturing lines. Elon has said it dozens of times. Building the prototypes is easy. Far, far harder is building the machines that build the machines. Sourcing all the new components that go into the EVs alone will be a huge undertaking as the legacy autos arenít vertically integrated to the extent Tesla is. Thereís no radiator, transmission, spark plugs, engine, fuel tank, oil reservoir, fan, etc. The heating system is totally different (Teslaís have heat pumps). Again, you donít just take an existing ICE vehicle and swap out a few pieces and restart the line.
Can't be that difficult. Dozen or more companies have already done it and dozens of more models available 2021.
[/quote]

Letís be clear. No legacy auto has mass produced a ground-up EV that competes head-to-head with Teslaís current offerings. What they have produced for the most part is concept cars and compliance cars. The compliance cars are intended to balance their fleetís CAFE numbers and are produced in the thousands to tens of thousands per year. Tesla will likely sell 500k vehicles this year and one million vehicles in 2021.

After Tesla, the EV with the most cumulative sales has been the Nissan LEAF, but the LEAF does not compete with Teslaís current offerings. The LEAF is an honest attempt and not merely a compliance vehicle, but Nissan took the Versa ICE platform and shoehorned an EV powertrain and battery pack into it. I own one and appreciate it that it gave me an economical EV entry point back in 2013, but there is no way I would buy a Nissan Leaf over a Model 3 today even though the LEAF still qualifies for the Federal tax credit and the Model 3 would run $10k-$15k more. Tesla value proposition crushes the LEAF on performance, range, charging network, charging speed, over-the-air software updates, self-driving capabilities, actively thermoregulated battery back, build quality, driver interface, etc. Once Tesla rolls outfits cheaper Model 2 no one will choose to purchase a LEAF or a Bolt over the Tesla Model 2.

To repeat, no legacy auto has sold a new ground up EV design to the public in significant numbers. The reason being they lack the battery and manufacturing capacity to do so and that is the difficult part and the reason Tesla will face no real competition for years to come. To offer a true Tesla competitor they would lose thousands of dollars on every vehicle they produced until they ramped up production into the 100ís of thousands. Iíve already explained why they havenít put the resources into that endeavor.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 02:26:08 PM


Letís be clear. No legacy auto has mass produced a ground-up EV that competes head-to-head with Teslaís current offerings. What they have produced for the most part is concept cars and compliance cars. The compliance cars are intended to balance their fleetís CAFE numbers and are produced in the thousands to tens of thousands per year. Tesla will likely sell 500k vehicles this year and one million vehicles in 2021.

After Tesla, the EV with the most cumulative sales has been the Nissan LEAF, but the LEAF does not compete with Teslaís current offerings. The LEAF is an honest attempt and not merely a compliance vehicle, but Nissan took the Versa ICE platform and shoehorned an EV powertrain and battery pack into it. I own one and appreciate it that it gave me an economical EV entry point back in 2013, but there is no way I would buy a Nissan Leaf over a Model 3 today even though the LEAF still qualifies for the Federal tax credit and the Model 3 would run $10k-$15k more. Tesla value proposition crushes the LEAF on performance, range, charging network, charging speed, over-the-air software updates, self-driving capabilities, actively thermoregulated battery back, build quality, driver interface, etc. Once Tesla rolls outfits cheaper Model 2 no one will choose to purchase a LEAF or a Bolt over the Tesla Model 2.

To repeat, no legacy auto has sold a new ground up EV design to the public in significant numbers. The reason being they lack the battery and manufacturing capacity to do so and that is the difficult part and the reason Tesla will face no real competition for years to come. To offer a true Tesla competitor they would lose thousands of dollars on every vehicle they produced until they ramped up production into the 100ís of thousands. Iíve already explained why they havenít put the resources into that endeavor.
[/quote]
GM partners selling more BEV cars in China, 5 brands likely to sell more BEV cars in Europe this quarter. Only a matter of time for Tesla to lose dominance in North America too.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ChpBstrd on December 11, 2020, 02:50:29 PM
I do not own a Tesla (someday). I need one of current vehicles to die.

I did purchase a new Nissan LEAF in 2013. In the past seven years I have:

Replaced tires once.
Replaced the in cabin air filter once.
Replaced with windshield wipers once.
Topped off the windshield wiper fluid.

Thatís literally it. Total vehicle upkeep cost is roughly $400/7 = $57/yr

Iíve had zero mechanical issues. Not surprising with so few moving parts and no heat or friction issues that come with ICE.

My only complaint would be the rate of battery degradation. Iím at 65-70% of new. From everything I read there are early Teslas with 500K miles on them and still have 90% battery capacity. Tesla has thermoregulation of their battery packs and LEAF cut corners and did not do this.

For the price difference compared to a Tesla, or replacement with any vehicle, you could replace the Leaf battery a few times.

https://hackaday.com/2020/10/23/battery-swap-gives-nissan-leaf-new-lease-on-life/ (https://hackaday.com/2020/10/23/battery-swap-gives-nissan-leaf-new-lease-on-life/)
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: dandarc on December 11, 2020, 02:57:51 PM
Thinking about that, because why wouldn't I be thinking today about what I'm going to do with the 2014 Leaf I bought a year ago in 5 to 15 years when the battery has degraded to where it doesn't serve our needs any more. $5K for a new battery vs. just getting a whole different car is an interesting analysis. Maybe one of those fast-charging solid state batteries will be available to swap in then.

I think somewhere in the 2013 model was when the 'lizard battery' was released, so I'm expecting better degredation than Colorado described - has gone from 11 down to 10 bars since we purchased it, but I have no way to know how long it took to go from 12 to 11 since I bought it used - losing a bar every 3 years or so would probably put us at about a decade before we're looking to replace either the car or the battery.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 04:30:13 PM
I do not own a Tesla (someday). I need one of current vehicles to die.

I did purchase a new Nissan LEAF in 2013. In the past seven years I have:

Replaced tires once.
Replaced the in cabin air filter once.
Replaced with windshield wipers once.
Topped off the windshield wiper fluid.

That’s literally it. Total vehicle upkeep cost is roughly $400/7 = $57/yr

I’ve had zero mechanical issues. Not surprising with so few moving parts and no heat or friction issues that come with ICE.

My only complaint would be the rate of battery degradation. I’m at 65-70% of new. From everything I read there are early Teslas with 500K miles on them and still have 90% battery capacity. Tesla has thermoregulation of their battery packs and LEAF cut corners and did not do this.

For the price difference compared to a Tesla, or replacement with any vehicle, you could replace the Leaf battery a few times.

https://hackaday.com/2020/10/23/battery-swap-gives-nissan-leaf-new-lease-on-life/ (https://hackaday.com/2020/10/23/battery-swap-gives-nissan-leaf-new-lease-on-life/)

I’m at 65%-70% of battery capacity at 50K miles in the LEAF. That is considered battery replacement time, though it still meets my range needs. That means for me to get to 500k miles with my LEAF I would need 9 battery replacements at $6,000 per battery pack, or $54,000. Or, I could pay $15,000 more for the Model 3 upfront and go $500k on the original pack. Not to mention the Tesla comes with a bare minimum 300 mile range, faster recharge, FSD capabilities, over-the-air vehicle updates, a national network or chargers, best resale value, one of the safest cars on the road, etc. The Tesla is worth every penny of the $15k premium and then some IMO.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 04:34:10 PM
since you seem to know, I have a question/s!

I took my vehicle in for service this week, about $600 - mostly just regular maintenance but this is the first time it's been pricy. Car is 8 yo.

What is the regular maintenance schedule like on teslas? and how much does it cost?

And I suppose we don't know the older tesla costs as yet? 8-10-12-15 yo cars.
FYI just read up on Tesla service barely existent at this point. People waiting weeks and costs billed to "goodwill" instead of warranty costs to help pad their numbers.
[/quote]

Gasp! I just read Tesla has the highest buyer satisfaction rating of any brand. Actually, I known this for years and is part of the reason I continue to invest. How could that be? Maybe best not to extrapolate from anecdotal evidence.

https://www.thestreet.com/tesla/news/tesla-tops-consumer-reports-owner-satisfaction-survey
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 04:39:24 PM
Thinking about that, because why wouldn't I be thinking today about what I'm going to do with the 2014 Leaf I bought a year ago in 5 to 15 years when the battery has degraded to where it doesn't serve our needs any more. $5K for a new battery vs. just getting a whole different car is an interesting analysis. Maybe one of those fast-charging solid state batteries will be available to swap in then.

I think somewhere in the 2013 model was when the 'lizard battery' was released, so I'm expecting better degredation than Colorado described - has gone from 11 down to 10 bars since we purchased it, but I have no way to know how long it took to go from 12 to 11 since I bought it used - losing a bar every 3 years or so would probably put us at about a decade before we're looking to replace either the car or the battery.

Your point about the old lizard pack is a fair one and I believe Nissan has somewhat improved their battery degradation issue in subsequent iterations. I was originally considering doing a battery swap for my LEAF. However, buying a new pack doesnít address the lack of a thermoregulation system in the LEAF. I say better to buy a used Model 3 in a few years for all the reasons I posted above.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 05:03:37 PM


Letís be clear. No legacy auto has mass produced a ground-up EV that competes head-to-head with Teslaís current offerings. What they have produced for the most part is concept cars and compliance cars. The compliance cars are intended to balance their fleetís CAFE numbers and are produced in the thousands to tens of thousands per year. Tesla will likely sell 500k vehicles this year and one million vehicles in 2021.

After Tesla, the EV with the most cumulative sales has been the Nissan LEAF, but the LEAF does not compete with Teslaís current offerings. The LEAF is an honest attempt and not merely a compliance vehicle, but Nissan took the Versa ICE platform and shoehorned an EV powertrain and battery pack into it. I own one and appreciate it that it gave me an economical EV entry point back in 2013, but there is no way I would buy a Nissan Leaf over a Model 3 today even though the LEAF still qualifies for the Federal tax credit and the Model 3 would run $10k-$15k more. Tesla value proposition crushes the LEAF on performance, range, charging network, charging speed, over-the-air software updates, self-driving capabilities, actively thermoregulated battery back, build quality, driver interface, etc. Once Tesla rolls outfits cheaper Model 2 no one will choose to purchase a LEAF or a Bolt over the Tesla Model 2.

To repeat, no legacy auto has sold a new ground up EV design to the public in significant numbers. The reason being they lack the battery and manufacturing capacity to do so and that is the difficult part and the reason Tesla will face no real competition for years to come. To offer a true Tesla competitor they would lose thousands of dollars on every vehicle they produced until they ramped up production into the 100ís of thousands. Iíve already explained why they havenít put the resources into that endeavor.
GM partners selling more BEV cars in China, 5 brands likely to sell more BEV cars in Europe this quarter. Only a matter of time for Tesla to lose dominance in North America too.
[/quote]

Good lord, Tesla is not ďlosing dominanceĒ in Europe or anywhere else. They sell every car they make, as soon as they make them, as fast as they can make, at a profit (23% gross margin), and are roughly doubling production year-over-year. The fact that other manufacturers are helping to speed the transition to EV is great news and part of Elonís long-stated goals. Tesla doesn't need every EV sold to be a Tesla to be wildly successful. Tesla will sell 500K vehicles this year. No other major is coming anywhere close to that total.

And you think the fact that the GM partnership in China sold slightly more micro cars than Tesla sold Model 3 is a sign that GM is competing with Tesla? The micro car sells for $4,200 (sounds like a glorified golf cart).  Let me know when GM actually builds an EV to compete with Tesla's existing models. Again, great that they are serving a market segment that Tesla is not currently addressing, but this canít be called competition. No one is deciding between a Model 3 and the GM-backed golf cart that no one outside of China has ever seen or heard of.

https://www.reuters.com/article/gm-electric-china/gm-ventures-mini-car-becomes-chinas-most-sold-ev-surpassing-teslas-model-3-idUSKBN25Z1E6

 
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 05:19:34 PM

Good lord, Tesla is not ďlosing dominanceĒ in Europe or anywhere else. They sell every car they make, as soon as they make them, as fast as they can make, at a profit (23% gross margin), and are roughly doubling production year-over-year. The fact that other manufacturers are helping to speed the transition to EV is great news and part of Elonís long-stated goals. Tesla doesn't need every EV sold to be a Tesla to be wildly successful. Tesla will sell 500K vehicles this year. No other major is coming anywhere close to that total.

And you think the fact that the GM partnership in China sold slightly more micro cars than Tesla sold Model 3 is a sign that GM is competing with Tesla? The micro car sells for $4,200 (sounds like a glorified golf cart).  Let me know when GM actually builds an EV to compete with Tesla's existing models. Again, great that they are serving a market segment that Tesla is not currently addressing, but this canít be called competition. No one is deciding between a Model 3 and the GM-backed golf cart that no one outside of China has ever seen or heard of.

https://www.reuters.com/article/gm-electric-china/gm-ventures-mini-car-becomes-chinas-most-sold-ev-surpassing-teslas-model-3-idUSKBN25Z1E6
[/quote]
How can you say they aren't losing dominance when their market share is dropping considerably? 5 brands are outselling Tesla in Europe, can you dominant while being 5th place?
As for China GM sells a product that China consumers are more willing to buy than the Tesla. Is it a bad idea to sell people what they want? GM is only one of many car makers in China rapidly ramping up.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on December 11, 2020, 05:38:30 PM
Legacy auto is very good at spinning up new production lines they do it all the time. I doubt building a car around a body and battery is much different than building a car around a body and engine. Judging from initial quality of model Y I could be wrong tho.

New production lines all the time for new ICE vehicles, where 90% of the parts are unchanged from one model to the next. You donít just swap out a gas engine for a battery pack and call it good. New EV lines will require ground up designs and retooling of the manufacturing lines. Elon has said it dozens of times. Building the prototypes is easy. Far, far harder is building the machines that build the machines. Sourcing all the new components that go into the EVs alone will be a huge undertaking as the legacy autos arenít vertically integrated to the extent Tesla is. Thereís no radiator, transmission, spark plugs, engine, fuel tank, oil reservoir, fan, etc. The heating system is totally different (Teslaís have heat pumps). Again, you donít just take an existing ICE vehicle and swap out a few pieces and restart the line.

since you seem to know, I have a question/s!

I took my vehicle in for service this week, about $600 - mostly just regular maintenance but this is the first time it's been pricy. Car is 8 yo.

What is the regular maintenance schedule like on teslas? and how much does it cost?

And I suppose we don't know the older tesla costs as yet? 8-10-12-15 yo cars.

I do not own a Tesla (someday). I need one of current vehicles to die.

I did purchase a new Nissan LEAF in 2013. In the past seven years I have:

Replaced tires once.
Replaced the in cabin air filter once.
Replaced with windshield wipers once.
Topped off the windshield wiper fluid.

Thatís literally it. Total vehicle upkeep cost is roughly $400/7 = $57/yr

Iíve had zero mechanical issues. Not surprising with so few moving parts and no heat or friction issues that come with ICE.

My only complaint would be the rate of battery degradation. Iím at 65-70% of new. From everything I read there are early Teslas with 500K miles on them and still have 90% battery capacity. Tesla has thermoregulation of their battery packs and LEAF cut corners and did not do this.


wow - I did not know about that maintenance side of things, and that is certainly another draw for EVs. I would put my corolla at about 1-200/yr before this year when I guess it lost it's newish car glow.

So no oil changes, huh?

I had been wanting to do a hybrid as my next car - but things were tight when I got the low level toyota. Now - the 100% EV has become much more prevalent and now tesla. I'd like to buy a tesla for my next car, hopefully, they come down some in price - aim for more affordable markets. Likely about 5 years away for my purchase. I do tend to like to support businesses that do things that I believe in, environment is top of that list. Will be great to end that ICE contribution to pollution.



Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 11, 2020, 05:54:28 PM
Hey mistymoney,
There are maintenance benefits to EVs for sure. However, the environmental benefits are more difficult to quantify. Mining the metals that go into these batteries produces horrible hellscapes that are deemed the worst places on Earth. USA is better at mining these materials as we have stringent pollution standards, however, it is very difficult to get new mines approved in the USA. CO2 emissions from buying a small ICE might be less than the typical BEV when the total CO2 cost of production is taken into account. New cars have much fewer maintenance intervals than older cars, often once a year or less. Look into Tesla wheels falling off brand new cars, they are horribly designed with low initial quality, check out the consumer reports puts Tesla second to last in reliability.
Sorry if I'm a bummer, curse of being an engineer.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on December 11, 2020, 05:57:34 PM
Hey mistymoney,
There are maintenance benefits to EVs for sure. However, the environmental benefits are more difficult to quantify. Mining the metals that go into these batteries produces horrible hellscapes that are deemed the worst places on Earth. USA is better at mining these materials as we have stringent pollution standards, however, it is very difficult to get new mines approved in the USA. CO2 emissions from buying a small ICE might be less than the typical BEV when the total CO2 cost of production is taken into account. New cars have much fewer maintenance intervals than older cars, often once a year or less. Look into Tesla wheels falling off brand new cars, they are horribly designed with low initial quality, check out the consumer reports puts Tesla second to last in reliability.
Sorry if I'm a bummer, curse of being an engineer.

Hopefully by the time I purchase, Tesla will be getting its materials from SpaceX with little impact to mother earth. :)
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 11, 2020, 06:25:21 PM

Good lord, Tesla is not “losing dominance” in Europe or anywhere else. They sell every car they make, as soon as they make them, as fast as they can make, at a profit (23% gross margin), and are roughly doubling production year-over-year. The fact that other manufacturers are helping to speed the transition to EV is great news and part of Elon’s long-stated goals. Tesla doesn't need every EV sold to be a Tesla to be wildly successful. Tesla will sell 500K vehicles this year. No other major is coming anywhere close to that total.

And you think the fact that the GM partnership in China sold slightly more micro cars than Tesla sold Model 3 is a sign that GM is competing with Tesla? The micro car sells for $4,200 (sounds like a glorified golf cart).  Let me know when GM actually builds an EV to compete with Tesla's existing models. Again, great that they are serving a market segment that Tesla is not currently addressing, but this can’t be called competition. No one is deciding between a Model 3 and the GM-backed golf cart that no one outside of China has ever seen or heard of.

https://www.reuters.com/article/gm-electric-china/gm-ventures-mini-car-becomes-chinas-most-sold-ev-surpassing-teslas-model-3-idUSKBN25Z1E6
How can you say they aren't losing dominance when their market share is dropping considerably? 5 brands are outselling Tesla in Europe, can you dominant while being 5th place?
As for China GM sells a product that China consumers are more willing to buy than the Tesla. Is it a bad idea to sell people what they want? GM is only one of many car makers in China rapidly ramping up.
[/quote]

This really shouldn’t be this hard to grasp. The total EV pie is growing. Tesla can both sell every car they make AND have shrinking market share. However, Tesla market is holding steady or growing slightly despite the total pie increasing. You seriously can’t believe consumers comparison are shopping a $4,200 golf cart and the Tesla Model 3 and choosing the golf cart, no more than people are deciding between a Ford Fiesta and F150. These are different animals. Great that those that can’t afford Tesla have an EV option. I’ll say it one more time in the hope it will penetrate:

Tesla sells every car they make, as soon as they make them, as fast as they can make them, at a profit (23% gross margin), and are roughly doubling production year-over-year.

You can carve out Europe, where some lower cost options out-sell Tesla because Tesla does not yet compete at the lower price points, but it's more informative to look at global sales. In global terms, Tesla is going to sell 500K vehicles and no other major is going to sell anywhere close to that total despite the fact Tesla is yet to offer an economy vehicle.

It’s becoming clear you have some an axe to grind with Tesla. If you can refrain from posting any more false or misleading information, I’d be happy to end this back and forth here as it’s clear you’re opinion is set, which is fine.


Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Telecaster on December 11, 2020, 06:34:36 PM
Sorry to yank this thread back on track, but a couple thoughts.

As mentioned up thread, TLSA will become only a small portion of the index.  So no really a big deal.  That's why we buy the index.  We're betting on all the horses.

If you are still concerned, as also mentioned up thread, you can simply start buying (or rebalance if you are retired) a nice mid-cap fund or ETF.  That why you are not betting so heavily on the big companies.

And finally, don't forget the simple "fire and forget" beauty of buying VTSAX and being done. 
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 12, 2020, 03:58:52 PM
Hey mistymoney,
There are maintenance benefits to EVs for sure. However, the environmental benefits are more difficult to quantify. Mining the metals that go into these batteries produces horrible hellscapes that are deemed the worst places on Earth. USA is better at mining these materials as we have stringent pollution standards, however, it is very difficult to get new mines approved in the USA. CO2 emissions from buying a small ICE might be less than the typical BEV when the total CO2 cost of production is taken into account. New cars have much fewer maintenance intervals than older cars, often once a year or less. Look into Tesla wheels falling off brand new cars, they are horribly designed with low initial quality, check out the consumer reports puts Tesla second to last in reliability.
Sorry if I'm a bummer, curse of being an engineer.

Hopefully by the time I purchase, Tesla will be getting its materials from SpaceX with little impact to mother earth. :)

Hey Misty, few thoughts and corrections to add here.

There is a significant domestic supply of lithium salt in the US and around the world. Lithium is plentiful and can be surface mined with minimal environmental impact. Nickel and Cobalt are rare and mining these is impactful. However, Tesla is reducing the amount of cobalt in its batteries and is now using a cobalt free  battery chemistry (LFP or lithium, iron, phosphate) in its Chinese made Model 3s.

Obviously, the biggest environmental threat to the world right now is climate change. On that front, EVs are far and away better for the planet. If weíre talking environmental hell scapes, check out the oil tar sands of Alberta. Anyway, the beauty of EVs is they are as green as the energy source used to produce the electrons. In my case, Iíve powered every EV mile Iíve driven with roof top solar. The lifetime greenhouse gas emissions of an EV using the dirtiest possible coal-fired electricity will still be better than a comparable ICE burning gasoline over its life time. As the percentage of renewable in the grid mix improves, so does the environmental advantage of the EV. An ICE car will never run on anything but 100% fossil fuels.

Another consideration, as the EV market matures, there will be a secondary market for the car batteries as electrical grid backup storage, and finally recycling of the spent batteries into new batteries. Most of the materials in the battery, including the rare earth materials are recyclable (80% of battery material is recyclable).  Further reducing the environmental impact of EVs compared to ICE vehicles.

https://www.cnbc.com/2020/06/01/joint-venture-to-specialize-in-recycling-electric-vehicle-batteries.html

Lastly, please do not accept the opinions of Teslaís performance or quality from detractors who have never driven or owned the vehicle. Teslaís have the highest customer satisfaction of any brand. Speak with owners, they will say Tesla is not always perfect. Service appointments can be slow, but issues are few and ultimately get resolved. Nearly all are satisfied and would buy again.

Best of Luck!

PS - I apologize for my part in derailing the intended topic, but there is a lot of misinformation out there when it comes to Tesla and I have a hard time not providing a balanced picture. As for the thread topic, Tesla SP may be overvalued currently with some degree of future performance baked into the stock price. However, Tesla has also been significantly de-risked and will continue to grow exponentially. So, unless you plan on cashing out of your index funds soon (<1 yr) itís very likely Tesla as part of the S&P 500 will be contributing to your account appreciation. Great way to get some exposure to a great American growth company and invest in a cleaner future for the planet.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 14, 2020, 11:07:38 AM
Colorado Tribe
Think I should clear up some misinformation from earlier.
Mining in general is horribly dirty for the environment. Saying one hellscape is worse than another misses the point. The point is that they are both bad. Strip mining oil is on the way out tho as fracking is considerably cheaper and cleaner while the amount of mining needed for batteries needs to exponentially increase. You well know that the LIFO battery is much lower quality and much heavier and will only be used in the low end models. CO2 emissions is a concern, however, if you buy a small efficient car the lifetime CO2 emissions are about equivalent to a heavy BEV. You said it yourself "comparable" most of the comparisons use large expensive ICE cars or SUVs to compare to model 3, not really comparable. Also the main factor in the CO2 calculation is efficiency, newer high end diesel engines are on a par with most coal fired plants as this tech trickles down to autos the benefits of BEV will diminish. You have the only setup which guarantees low operating emissions, good on ya. To say ICE will only run on fossil fuels is just false as they can and currently are running on many different hydrocarbons. Diesels were running on peanut oil from the beginning more than 100 years ago.
Don't believe any anecdotal evidence regarding quality, instead go to the people that take large sample surveys and samples, like consumer reports and the like that rank Tesla second to last in quality. Tesla fired their quality control group to save money last year in the push for S&P inclusion, so if you do buy a Tesla I would wait until those workers are hired back as Tesla is also trying to get rid of the 7 day return policy. Many states have lemon laws so I encourage people to check those out.

As for S&P inclusion. Tesla is valued equivalent to the entire auto industry combined. To say there is some future performance backed in is a huge understatement. In 3-4 years we will be talking about Tesla being the poster boy for the current market bubble or will be referring to Musk schemes where a company drives up share price and dumps that bag on index investors. To talk about Tesla as a greener alternative is nuts when their ESG score is at the bottom of all major car makers, better than only a few Chinese companies.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Travis on December 14, 2020, 06:54:54 PM
CO2 emissions is a concern, however, if you buy a small efficient car the lifetime CO2 emissions are about equivalent to a heavy BEV. You said it yourself "comparable" most of the comparisons use large expensive ICE cars or SUVs to compare to model 3, not really comparable.

I imagine these comparisons are made because that's what Americans are buying. Out of the top 10 purchased cars in the US, the top 6 are trucks and SUVs. Our favorite Honda and Toyota ICE fuel sippers are on the list, but on the bottom half.  Out of the top 20, 14 are trucks and SUVs. Ford and GM's sedans don't make the list at all.

https://www.edmunds.com/most-popular-cars/ (https://www.edmunds.com/most-popular-cars/)

https://www.forbes.com/wheels/news/top-20-selling-vehicles-first-six-months-2020/#:~:text=Fifteen%20of%20the%20top%2Dselling,Silverado%20and%20Ram%201500%20pickups. (https://www.forbes.com/wheels/news/top-20-selling-vehicles-first-six-months-2020/#:~:text=Fifteen%20of%20the%20top%2Dselling,Silverado%20and%20Ram%201500%20pickups.)
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 15, 2020, 10:45:56 AM
CO2 emissions is a concern, however, if you buy a small efficient car the lifetime CO2 emissions are about equivalent to a heavy BEV. You said it yourself "comparable" most of the comparisons use large expensive ICE cars or SUVs to compare to model 3, not really comparable.

I imagine these comparisons are made because that's what Americans are buying. Out of the top 10 purchased cars in the US, the top 6 are trucks and SUVs. Our favorite Honda and Toyota ICE fuel sippers are on the list, but on the bottom half.  Out of the top 20, 14 are trucks and SUVs. Ford and GM's sedans don't make the list at all.

https://www.edmunds.com/most-popular-cars/ (https://www.edmunds.com/most-popular-cars/)

https://www.forbes.com/wheels/news/top-20-selling-vehicles-first-six-months-2020/#:~:text=Fifteen%20of%20the%20top%2Dselling,Silverado%20and%20Ram%201500%20pickups. (https://www.forbes.com/wheels/news/top-20-selling-vehicles-first-six-months-2020/#:~:text=Fifteen%20of%20the%20top%2Dselling,Silverado%20and%20Ram%201500%20pickups.)
Good point. Also I suspect price point.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 15, 2020, 01:46:05 PM
Tesla sells every car they make, as soon as they make them, as fast as they can make them, at a profit (23% gross margin), and are roughly doubling production year-over-year.
Then why is Tesla shutting down production lines?  Stated reason is they made all they needed, but if demand truly is outpacing supply (even at such small numbers), they shouldn't be stopping production ever.
https://www.slashgear.com/tesla-stops-model-s-and-model-x-production-for-over-two-weeks-14651046/

Other companies are producing and selling EV models, enough so that most don't need Tesla's credits anymore either which will kills Tesla's current ability to stay out of the red.
https://seekingalpha.com/article/4394486-teslas-zev-credits-real-truth
Despite all the talk, Tesla still only represents about 1% of all US auto sales. 

They can talk and hope all they want, but they still way far to go to actually start proving anything.  They also have to start fixing their terrible Quality Control issues which is a symptom of their corner cutting/process skipping method.  Yeah, they can be quick and cheaper if they go by seat of their pants, but that costs in quality and reliability.  Not to mention their horrible treatment of self repair folks, they try to keep a monopoly on it threatening to remotely disable your vehicle if you fix it yourself.
https://www.forbes.com/sites/jamesmorris/2020/06/27/can-tesla-be-beaten-by-its-own-quality-control/?sh=903b8fd5da72
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: effigy98 on December 22, 2020, 10:48:10 PM
Story is 100% more important to the stock market now vs real earnings. The generation moving into the stock market probably doesn't even know what a PE ratio is and stocks can only go up. There is also a fed put in place. Not sure it matters much. Worst case scenario we probably just go sideways like the lost decade of the early 2000's. If worried, put on some hedges or get into a more conservative allocation like golden butterfly (with a tiny bit of bitcoin).
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 23, 2020, 12:01:45 AM
Story is 100% more important to the stock market now vs real earnings. The generation moving into the stock market probably doesn't even know what a PE ratio is and stocks can only go up. There is also a fed put in place. Not sure it matters much. Worst case scenario we probably just go sideways like the lost decade of the early 2000's. If worried, put on some hedges or get into a more conservative allocation like golden butterfly (with a tiny bit of bitcoin).
Which is terrifying.  Tesla could shut down, liquidate everything and they could still keep the stock price high by refusing to sell and having people willing to buy it.  What is investing if the physical company has no relation or link the actual stock value?  China has this all the time with fake companies putting out fake financials, people are happy to trade and buy the stock for years not knowing there is no actual company or business behind the stock.  I don't want to see that here.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 25, 2020, 01:05:55 PM
Story is 100% more important to the stock market now vs real earnings. The generation moving into the stock market probably doesn't even know what a PE ratio is and stocks can only go up. There is also a fed put in place. Not sure it matters much. Worst case scenario we probably just go sideways like the lost decade of the early 2000's. If worried, put on some hedges or get into a more conservative allocation like golden butterfly (with a tiny bit of bitcoin).
Which is terrifying.  Tesla could shut down, liquidate everything and they could still keep the stock price high by refusing to sell and having people willing to buy it.  What is investing if the physical company has no relation or link the actual stock value?  China has this all the time with fake companies putting out fake financials, people are happy to trade and buy the stock for years not knowing there is no actual company or business behind the stock.  I don't want to see that here.

Are you saying their isn't an actual company making products behind the Tesla name or are you saying IF Tesla didn't produce anything they wouldn't be worth anything? Confusing, since neither option reflects current reality.  In fact, Tesla does produce products for a profit. Their products are well made and in demand.

https://www.tesmanian.com/blogs/tesmanian-blog/tesla-model-3-and-tesla-model-s-are-the-best-american-cars-according-to-consumer-reports

I just don't get the disdain for this American manufacturing company. Don't like the cars, don't buy one. Don't like the company or think its worth its stock price, then don't buy the stock or short it. Do you go around the internets posting about every stock you don't own and/or you think is overvalued? If not, why the exception for Tesla?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: waltworks on December 26, 2020, 07:25:13 PM
It's funny, it seems like there are two camps on Tesla:
1: Tesla is going to change the world and no valuation for the stock is too high.
2: Tesla is a big fraud and no stock valuation is too low and they'll never sell 10k, or 100k, or 500k, or a million cars a year (increase number as needed as time goes by).

Is it not possible to think Tesla makes awesome stuff and could well dominate a couple different industries in a decade, and also believe that the valuation is actually still to high in that scenario?

-W
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Paul der Krake on December 26, 2020, 10:00:36 PM
It's funny, it seems like there are two camps on Tesla:
1: Tesla is going to change the world and no valuation for the stock is too high.
2: Tesla is a big fraud and no stock valuation is too low and they'll never sell 10k, or 100k, or 500k, or a million cars a year (increase number as needed as time goes by).

Is it not possible to think Tesla makes awesome stuff and could well dominate a couple different industries in a decade, and also believe that the valuation is actually still to high in that scenario?

-W
Goodness, no, that's not how we judge stocks on the internet.

You must also have a stance on the CEO. The choices are:
1) he is  the greatest mind of our generation
2) he is basically Hitler
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 27, 2020, 12:42:25 AM
Story is 100% more important to the stock market now vs real earnings. The generation moving into the stock market probably doesn't even know what a PE ratio is and stocks can only go up. There is also a fed put in place. Not sure it matters much. Worst case scenario we probably just go sideways like the lost decade of the early 2000's. If worried, put on some hedges or get into a more conservative allocation like golden butterfly (with a tiny bit of bitcoin).
Which is terrifying.  Tesla could shut down, liquidate everything and they could still keep the stock price high by refusing to sell and having people willing to buy it.  What is investing if the physical company has no relation or link the actual stock value?  China has this all the time with fake companies putting out fake financials, people are happy to trade and buy the stock for years not knowing there is no actual company or business behind the stock.  I don't want to see that here.

Are you saying their isn't an actual company making products behind the Tesla name or are you saying IF Tesla didn't produce anything they wouldn't be worth anything? Confusing, since neither option reflects current reality.  In fact, Tesla does produce products for a profit. Their products are well made and in demand.

https://www.tesmanian.com/blogs/tesmanian-blog/tesla-model-3-and-tesla-model-s-are-the-best-american-cars-according-to-consumer-reports
You missed that entirely.  He said "Story is 100% more important to the market vs real earnings".  I took that to mean the Story/Fable of Tesla is what matters to the stock value, not what an underlying company actually produces.

By his stated logic (which I'm terrified has some truth to it), the underlying business could cease to operate and the stock would stay sky high.  Case in point, Nikola stock was sky high just on a story without any substance and finally crashed down with more to follow.
Quote
I just don't get the disdain for this American manufacturing company. Don't like the cars, don't buy one. Don't like the company or think its worth its stock price, then don't buy the stock or short it.
Did you miss the original premise of this thread?  We don't get that choice anymore.  They forced it down our 401k throats as most company plans don't have good alternatives to SP500.
Quote
Do you go around the internets posting about every stock you don't own and/or you think is overvalued? If not, why the exception for Tesla?
You are really trying to normalize a stock that isn't normal.  I don't think there has ever been a stock this overinflated beyond it's actual value while also to this market cap.  I'm sure there are hundreds, if not thousands of random micro/small caps that mistakenly get priced at 1000 times their actual value, but there hasn't been anything like this since the likes of Yahoo circa 1999 and that is still dwarfed.  So yes, we are going to discuss and analyze the gigantic elephant dominating the room (which is an understatement sadly).
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 30, 2020, 02:38:33 PM
Story is 100% more important to the stock market now vs real earnings. The generation moving into the stock market probably doesn't even know what a PE ratio is and stocks can only go up. There is also a fed put in place. Not sure it matters much. Worst case scenario we probably just go sideways like the lost decade of the early 2000's. If worried, put on some hedges or get into a more conservative allocation like golden butterfly (with a tiny bit of bitcoin).
Which is terrifying.  Tesla could shut down, liquidate everything and they could still keep the stock price high by refusing to sell and having people willing to buy it.  What is investing if the physical company has no relation or link the actual stock value?  China has this all the time with fake companies putting out fake financials, people are happy to trade and buy the stock for years not knowing there is no actual company or business behind the stock.  I don't want to see that here.

Are you saying their isn't an actual company making products behind the Tesla name or are you saying IF Tesla didn't produce anything they wouldn't be worth anything? Confusing, since neither option reflects current reality.  In fact, Tesla does produce products for a profit. Their products are well made and in demand.

https://www.tesmanian.com/blogs/tesmanian-blog/tesla-model-3-and-tesla-model-s-are-the-best-american-cars-according-to-consumer-reports
You missed that entirely.  He said "Story is 100% more important to the market vs real earnings".  I took that to mean the Story/Fable of Tesla is what matters to the stock value, not what an underlying company actually produces.

By his stated logic (which I'm terrified has some truth to it), the underlying business could cease to operate and the stock would stay sky high.  Case in point, Nikola stock was sky high just on a story without any substance and finally crashed down with more to follow.
Quote
I just don't get the disdain for this American manufacturing company. Don't like the cars, don't buy one. Don't like the company or think its worth its stock price, then don't buy the stock or short it.
Did you miss the original premise of this thread?  We don't get that choice anymore.  They forced it down our 401k throats as most company plans don't have good alternatives to SP500.
Quote
Do you go around the internets posting about every stock you don't own and/or you think is overvalued? If not, why the exception for Tesla?
You are really trying to normalize a stock that isn't normal.  I don't think there has ever been a stock this overinflated beyond it's actual value while also to this market cap.  I'm sure there are hundreds, if not thousands of random micro/small caps that mistakenly get priced at 1000 times their actual value, but there hasn't been anything like this since the likes of Yahoo circa 1999 and that is still dwarfed.  So yes, we are going to discuss and analyze the gigantic elephant dominating the room (which is an understatement sadly).

So, youíre telling me that you donít own any TSLA shares individually and arenít short Tesla, but are spending all this time railing against the company and its valuation because Tesla makes up 1.5% of an S&P fund that makes up a subset of your 401K. So, assuming you even had half of your 401k in an S&P fund and Tesla went all the way to zero, your retirement account would go down less than 1%. And, itís not like all your concern and railing is going to get Tesla removed from the S&P, so again, not sure why all this disdain for an American manufacturing success story that provides high quality engineering, programming and manufacturing jobs to thousands of Americans, reducing our fossil fuel consumption, and nearly doubles production yoy. Sorry if Tesla doesnít fit the standard investment metrics. Then Tesla is not Yahoo or any other company to come about the past century. Whenís the last time you had a single company threatening three sectors simultaneously, like Tesla is disrupting transportation, energy/utilities, and oil and gas? Whenís the last time you had a company this large and still in rapid growth phase?

Youíre just the latest in a seemingly endless parade of folks, including paid financial advisors, who having been talking about Teslaís imminent fall or demise since I bought the stock in 2013. Buy and hold has me up 11X. Funny, the folks from 7 years ago are hard to find now. They talked about how nobody wanted an EV. Tesla would never scale. Demand would dry up. The cars catch fire. The legacy autos will crush Tesla any day now. The goal posts move and the narrative of doom shifts to the boogeyman du jour and all the while Tesla keeps executing and accelerating its pace of innovation.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Tinker on December 30, 2020, 03:10:48 PM
Tesla is very hot right now, but still seems an odd thing to be concerned about.
Facebook is in the S&P500, along with other IT services whose value proposition is questionable and business can be literally deleted with a few button presses.

Tesla at least produces something.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: Paul der Krake on December 30, 2020, 03:57:31 PM
Tesla is very hot right now, but still seems an odd thing to be concerned about.
Facebook is in the S&P500, along with other IT services whose value proposition is questionable and business can be literally deleted with a few button presses.

Tesla at least produces something.
Facebook sold 70 billion dollars worth of ad space in 2019.

Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: bacchi on December 30, 2020, 04:05:06 PM
Tesla is very hot right now, but still seems an odd thing to be concerned about.
Facebook is in the S&P500, along with other IT services whose value proposition is questionable and business can be literally deleted with a few button presses.

Tesla at least produces something.
Facebook sold 70 billion dollars worth of ad space in 2019.

And has a 31 PE ratio.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 30, 2020, 05:19:01 PM
Tesla is very hot right now, but still seems an odd thing to be concerned about.
Facebook is in the S&P500, along with other IT services whose value proposition is questionable and business can be literally deleted with a few button presses.

Tesla at least produces something.

Exactly, if the issue is Tesla hurting the S&P 500 then where are the posts railing against GE? Talk about a company bringing down the index.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on December 30, 2020, 05:28:50 PM
Tesla is very hot right now, but still seems an odd thing to be concerned about.
Facebook is in the S&P500, along with other IT services whose value proposition is questionable and business can be literally deleted with a few button presses.

Tesla at least produces something.
Facebook sold 70 billion dollars worth of ad space in 2019.

Iíd much rather be Tesla in 5 years than Facebook in 5 years. Different trajectories.

On a personal note, I wouldnít invest in any company doing as much harm to society and our democracy as Facebook. And since I donít like Facebook, I donít invest in it, nor do I troll the internet badmouthing the company and trying to convince others not to invest. Might try to convince you to deactivate your accounts though :)
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 31, 2020, 01:14:19 AM
So, youíre telling me that you donít own any TSLA shares individually and arenít short Tesla, but are spending all this time railing against the company and its valuation because Tesla makes up 1.5% of an S&P fund that makes up a subset of your 401K. So, assuming you even had half of your 401k in an S&P fund and Tesla went all the way to zero, your retirement account would go down less than 1%.
Sadly S&P500 is 100% of my 401k due to lack of alternatives.  If Tesla continues on its madness trajectory it could be more than 1.5%, (currently 1.6% to be precise).
 
not sure why all this disdain for an American manufacturing success story that provides high quality engineering, programming and manufacturing jobs to thousands of Americans, reducing our fossil fuel consumption, and nearly doubles production yoy. Sorry if Tesla doesnít fit the standard investment metrics. Then Tesla is not Yahoo or any other company to come about the past century. Whenís the last time you had a single company threatening three sectors simultaneously, like Tesla is disrupting transportation, energy/utilities, and oil and gas? Whenís the last time you had a company this large and still in rapid growth phase?

Youíre just the latest in a seemingly endless parade of folks, including paid financial advisors, who having been talking about Teslaís imminent fall or demise since I bought the stock in 2013. Buy and hold has me up 11X. Funny, the folks from 7 years ago are hard to find now. They talked about how nobody wanted an EV. Tesla would never scale. Demand would dry up. The cars catch fire. The legacy autos will crush Tesla any day now. The goal posts move and the narrative of doom shifts to the boogeyman du jour and all the while Tesla keeps executing and accelerating its pace of innovation.
Why are you so defensive over people discussing?  You act as if you are being personally attacked by people who disagree with Tesla's valuation and wish to discuss it, which is a weird thing to get so hurt over.  You remind me of Console Fanboys (there's a personal attack for you).

That's part of the issue.  You are making them out to be this giant success, when that has yet to be proven.  Their quality control is garbage (see roofs flying off brand new cars).  Their right to repair is non existent and terrible for a sustainable future.  They struggle to get 1% of the car market and seem unable to increase production.  Doubling production when your base production is tiny is nothing to brag about.  Their designs appear to be too difficult to scale up production easy while still cutting corners and failing at quality control and longevity (go watch Rich Repairs to see lots of wear point design issues).

Their biggest success if their image and cult following (you are case in point).  It is how a certain president has done so well off just talk and image while actual results are poor.  However, this discussion isn't about the quality of their product, but the valulation of their stock and forced inclusion in retirement accounts via S&P500.
Tesla is very hot right now, but still seems an odd thing to be concerned about.
Facebook is in the S&P500, along with other IT services whose value proposition is questionable and business can be literally deleted with a few button presses.

Tesla at least produces something.
Facebook sold 70 billion dollars worth of ad space in 2019.
Well said.  Facebook sells a product and reliably earns money with lots of financials to justify their valuation.  No one is saying Tesla is worthless or a terrible company, we are saying it is just priced far FAR beyond where it should be.  It has a lot of potential, but many other companies can do what they do.  Their is hardly a product China hasn't managed to copy and undercut for instance.
Quote
Exactly, if the issue is Tesla hurting the S&P 500 then where are the posts railing against GE? Talk about a company bringing down the index.
GE is only .3% of SP500 market cap vs Tesla 1.6%.  GE isn't doing much to SP500 and hasn't seen even a fraction of the volatility of Tesla over last few years (. GE Beta is 1.1, Tesla is 2.2 which is pretty high with 1.0 being average.  GE has swung about 100% over last 2 years while Tesla has moved 1,800%.

The point is the stock price is completely detached from having any relation to what the company is currently doing or could even potentially do over the next 5-10 years.  Tesla could double US market share for the next 5 years to reach 32% (starting at current 1% and somehow going from 200k US cars a year to 5.5million) and that still wouldn't justify the current price where it exceeds all the other car companies combined.  By the current market cap Tesla (exceeding combined top 9 biggest auto companies) has to take 100% of the entire auto market and then somehow still sell more cars to justify it which will be a neat trick because Teslas are mostly sold as expensive luxury higher margin cars, but most auto sales are lower margin cheap cars for poorer people.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: lemonlyman on December 31, 2020, 09:26:02 AM
Sadly S&P500 is 100% of my 401k due to lack of alternatives.  If Tesla continues on its madness trajectory it could be more than 1.5%, (currently 1.6% to be precise).

It doesn't matter what the price is for the S&P 500. Tesla is one of the largest US companies and will do $50 billion in revenue next year, profitably. If it wasn't tracked by the major indexes, that would be a pretty poor representation of the US market. Spreading the risk for price anomalies is the point of the index. You seem pretty sure about Tesla's valuation and potential over the next 5-10 years. You should take your expertise in valuing companies and make a lot of money investing companies you are confident in.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on December 31, 2020, 09:43:44 AM
https://www.scmp.com/business/companies/article/3115897/teslas-reputation-burnished-jd-power-quality-survey-after-report



Quote
Tesla cars made at the companyís Shanghai Gigafactory were among the highest-quality models sold in China, second only to NIOís vehicles, according to the most recent quality survey by JD Power.
ďTesla Model 3 is well-received by Chinese consumers as its design and performance beat their expectations in many aspects,Ē said Jeff Cai, general manager of auto product practice at JD Power China. ďIn terms of driving experience and digital connectivity, conventional car brands now have a lot to learn from smart EV makers like Tesla.Ē
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: EricEng on December 31, 2020, 10:56:46 AM
https://www.scmp.com/business/companies/article/3115897/teslas-reputation-burnished-jd-power-quality-survey-after-report



Quote
Tesla cars made at the companyís Shanghai Gigafactory were among the highest-quality models sold in China, second only to NIOís vehicles, according to the most recent quality survey by JD Power.
ďTesla Model 3 is well-received by Chinese consumers as its design and performance beat their expectations in many aspects,Ē said Jeff Cai, general manager of auto product practice at JD Power China. ďIn terms of driving experience and digital connectivity, conventional car brands now have a lot to learn from smart EV makers like Tesla.Ē
https://www.cnbc.com/2020/11/19/tesla-model-s-no-longer-recommended-by-consumer-reports.html
Quote
Overall, Tesla ranked second to last in the reliability study.
I'm discussing US production and US standards, see Consumer Reports for instance.  China's domestic quality is usually pretty lacking to begin with, go watch some expat videos of folks who have lived their for couple decades (happy to recommend a few).  Some recent stand out cases in US are roof flying off and instrument panel completely crashing.
https://www.theverge.com/2020/10/5/21502379/tesla-modely-roof-flies-off-convertible-quality-issue
https://jalopnik.com/watch-a-bunch-of-tesla-stans-dogpile-someone-for-making-1845957260
If Tesla was 20-30% of the car market you'd expect some outliers on weird issues, but they are only 1%.  On top of that, it is beyond unreasonable that they don't have backup computers running for such critical functions.  In the defense and Space world I work, life critical functions have at least 1 if not more backup computers always running in case primary system crashes.  This is an example of Tesla cutting corners and rushing.  The difference between 99% and 99.999% reliability in life dependent scenarios is huge.  Even Apollo systems in the 1960s had backup computers.

Tesla's cars should have less issue by basic design.  An electric engine ran off batteries is very simple with a lot less points of failure than a gas engine.  Anyone who has ever played with RC battery and gas cars can attest to that.  So they are starting with an easier build case, yet still having issues mostly of their own fault due to rushing and cutting corners and no quality control process.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on December 31, 2020, 11:47:36 AM
Complexity is the enemy of reliability, and Teslas are unnecessarily complex. Give me manual everything with as few computerized controls as possible. Possibly getting locked inside a burning car is not my idea of fun. Now add unbreakable glass on the cyber truck, oofda.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on January 01, 2021, 07:50:31 PM
Complexity is the enemy of reliability, and Teslas are unnecessarily complex. Give me manual everything with as few computerized controls as possible. Possibly getting locked inside a burning car is not my idea of fun. Now add unbreakable glass on the cyber truck, oofda.

Once again you spread misinformation. ICE cars catch fire at a much higher rate than EVs, Teslas in particular. There is one incidence of a Tesla owner burning to death. One. How many have died in ICE vehicle fires. ICE cars can literally burst into flames upon impact. When a battery pack is punctured it takes several minutes before it overheats and ignites, giving the driver ample time to exit safely. Any driver can become trapped if the vehicle is mangled of course. Much safer to drive an EV if youíre worried about vehicle fires.

As for complexity, ICE drivetrains have over 200 moving parts compared to 17 moving parts in a Tesla drivetrain. Add in all the friction, heat and vibration and its no wonder Teslas can go 500k miles compared to an average 150k for an ICE vehicle. As for the software and electronics, Tesla have more for sure. But Tesla is also able to update, improve and even fix their vehicles with over-the-air software updates and upgrades. When was the last time an ICE manufacturer upgraded your vehicle (for free) after you bought it?

Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on January 04, 2021, 09:02:22 AM
Tesla (up ~5%) doing its best to prop up the S&P 500 (down over 1%). I expect those worried about TSLA's inclusion to be selling out of your index funds today and waiting to buy back once Tesla collapses?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: dandarc on January 04, 2021, 09:06:00 AM
Tesla (up ~5%) doing its best to prop up the S&P 500 (down over 1%). I expect those worried about TSLA's inclusion to be selling out of your index funds today and waiting to buy back once Tesla collapses?
The often advised "throw the baby out with the bathwater" trade.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: theoverlook on January 04, 2021, 09:48:14 AM
Give me manual everything with as few computerized controls as possible.
So I assume you have fun driving your 80s Toyota Corolla?

Manual everything and few computerized controls doesn't exist in 2021.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: waltworks on January 04, 2021, 09:56:45 AM
I think there would be a (small) market for something like an 80s Corolla, actually. But by the time you made it comply with safety and emissions requirements, I'm not sure how cheap it would end up.

And for a car company, why try to serve a market of cheapskates who are going to turn up their noses and keep driving their 20 year old beaters (guilty as charged...)?

Very basic cars exist in other markets, but in the US, there's really not enough demand for them for anyone to bother.

-W
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on January 04, 2021, 10:54:24 AM
Why does everyone get so emotional here, I thought this was an investing forum?
The fire thing is a fact all cars are capable of bursting into flames and I never said otherwise. Making car doors incapable of opening when said fire starts is what I was saying is a bad idea.
I have a Ram 1500 tradesman and a motorcycle. The Ram was cheapest smallest most simple pickup available at the time and probably still is. I said least amount of computerization not no computers. I'm an engineer I know it's impossible and unwise to rely on outdated tech when new is cheaper and more reliable. I also know it is equally unwise to use state of the art largely untested tech for systems where life and limb are on the line.

To get back to the S&P. My thesis is that by any measure the S&P is very overvalued, 2x or so. When Tesla inevitably falls back to something approaching normal it will either be part of a larger overall market correction or it will cause the correction. We have an entire generation that has yet to be invested during a major downturn (early 2020 doesn't really count). The fact that the S&P 500 committee wavered on adding Tesla may indicate that they are essentially acting as active managers, which should give passive investors some concern. What other active decisions are they making that we don't know about?
I'm sticking to bond funds as much as possible for the next few years with a very little VTSAX added. Give me my low but average reliable returns over huge swings any day. After all that is why people buy passive funds to begin with (and the low fees).
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on January 04, 2021, 11:43:36 AM
Tesla (up ~5%) doing its best to prop up the S&P 500 (down over 1%). I expect those worried about TSLA's inclusion to be selling out of your index funds today and waiting to buy back once Tesla collapses?

:P
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on January 04, 2021, 12:46:58 PM
Why does everyone get so emotional here, I thought this was an investing forum?
The fire thing is a fact all cars are capable of bursting into flames and I never said otherwise. Making car doors incapable of opening when said fire starts is what I was saying is a bad idea.
I have a Ram 1500 tradesman and a motorcycle. The Ram was cheapest smallest most simple pickup available at the time and probably still is. I said least amount of computerization not no computers. I'm an engineer I know it's impossible and unwise to rely on outdated tech when new is cheaper and more reliable. I also know it is equally unwise to use state of the art largely untested tech for systems where life and limb are on the line.

To get back to the S&P. My thesis is that by any measure the S&P is very overvalued, 2x or so. When Tesla inevitably falls back to something approaching normal it will either be part of a larger overall market correction or it will cause the correction. We have an entire generation that has yet to be invested during a major downturn (early 2020 doesn't really count). The fact that the S&P 500 committee wavered on adding Tesla may indicate that they are essentially acting as active managers, which should give passive investors some concern. What other active decisions are they making that we don't know about?
I'm sticking to bond funds as much as possible for the next few years with a very little VTSAX added. Give me my low but average reliable returns over huge swings any day. After all that is why people buy passive funds to begin with (and the low fees).

3Toe, what line of work are you in? Are you by any chance an engineer? : )

The S&P used their discretion to override their own inclusion criteria and did not include Tesla once they achieved 4 profitable qtrs. Thatís is their right, but their decision was a poor one and one that caused S&P fund investors to miss out on a chunk of Tesla gains. People have been telling me Tesla will ďinevitablyĒ fall since I bought my first shares at $165 in 2013. In pre-split dollars, those shares are now worth ~$3,700. No emotion from me, unless youíre counting happiness and gratitude. Sorry if my discussion tone is a bit defensive, but Iíve been debunking these same nonsense arguments for literally years. Seriously though, all the best in your investments. There is no one way to skin a cat. Before Tesla Iíd never bought more than a few shares of any individual company, and my work and personal interests aligned to provide an early and fuller understanding of Tesla's business and potential. One that Wall Street was slow to understand. Outside TSLA, Iím nearly 100% VTI, so Iím not a gambler or one of those millennials you suggest are naive.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: ColoradoTribe on January 04, 2021, 12:51:56 PM
Truthfully, S&P committee shouldíve used their discretion to add Tesla sooner, rather than later IMO. They could have justified based on market cap and profits being plugged back into growing the company. I understand their reluctance, but they chose poorly.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: FIPurpose on January 04, 2021, 12:58:15 PM
Truthfully, S&P committee shouldíve used their discretion to add Tesla sooner, rather than later IMO. They could have justified based on market cap and profits being plugged back into growing the company. I understand their reluctance, but they chose poorly.

We all should have known what we were getting into when investing in something called "Standard and Poor"
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: PDXTabs on January 04, 2021, 01:03:18 PM
The S&P used their discretion to override their own inclusion criteria and did not include Tesla once they achieved 4 profitable qtrs.

That's the problem: four profitable quarters shouldn't IMHO be a requirement. What if Amazon was still choosing to run unprofitable?
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: mistymoney on January 04, 2021, 01:05:38 PM
Very interesting insight for me! I had no idea that inclusion in sp500 could be denied/postponed if they didn't want you in there.

I thought it was just the 500 biggest. Didn't even know about the profit part...
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: dandarc on January 04, 2021, 01:33:07 PM
Very interesting insight for me! I had no idea that inclusion in sp500 could be denied/postponed if they didn't want you in there.

I thought it was just the 500 biggest. Didn't even know about the profit part...
They're not even super serious about the "500" part.
Title: Re: The effect of Tesla being added to the S&P 500. Our Index funds...
Post by: 3toesloth on January 04, 2021, 02:33:30 PM
Truthfully, S&P committee shouldíve used their discretion to add Tesla sooner, rather than later IMO. They could have justified based on market cap and profits being plugged back into growing the company. I understand their reluctance, but they chose poorly.
This is my problem with the S&P when they start choosing who and when to include a stock then the S&P funds are no longer passive. They should set their rules and follow them exactly anything less and there is too much room for shenanigans. Also since they are a benchmark they shouldn't be chasing returns anyway. It will lead to problems around adding high value companies like Yahoo, Amazon, Tesla..., but that is unavoidable. Whether their choice ends up being good or poor will be determined in time, but my main point is that they shouldn't be choosing at all.
Congrats on the gains.