Posts

The VIN Gap - a Hypothesis

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[Updated 2/6/2019 with fresh legal data. See below]
If you're a Tesla bear and haven't read Bad Blood, well stop reading this and go get yourself a copy. It's a great read, but I suspect in a year or two when "Disorder of Magnitude- The Elon Musk Story" (h/t @ElonBachman) comes out it'll make Theranos seem like Sesame Street.

In the wake of the SEC & 35K announcement many bears think the end is nigh. I'm skeptical of that, but it's a good time to clarify my thoughts and put down my guesses as to what's really going on at Tesla. Hopefully in a year or two, we can look back and see how accurate or wildly inaccurate my inferences were.  I should add that my track record here on what's going with Tesla is not great, but you only hit the pitches you swing at.

In this, the first of two posts, I'll explain the "VIN Gap", what it means, and why I think Tesla has acted as it has.

The VIN Gap
A group of bears has been tracking US Mode…

Modelling Q4 Model 3 Deliveries

***** NOTE: 12/25 *****
One more mistake to correct. I estimated 507 Dec deliveries in TMC, based on the number of undelivered configurations.  However, it appears I drastically underestimated how many of those were "ghost" entries that were abandoned before delivery.  It now appears that Dec deliveries in TMC will come in around 330 at most.  That makes total TMC deliveries 934.  NY sample rate was 2.38%, but assuming that's 20% higher than average, we get 1.9% sample rate.  That implies ~50K deliveries in Q4.
So my first estimate was high on Dec deliveries, but low on sample rate.  The final result is about 2K higher.


***** NOTE: 12/16 1PM PST*****
After publishing this,  I did some more analysis that makes me question my conclusions here.
1) It's become more clear that 20% of Sept VINS are simply missing from NMVTIS. This has implications both for the NMVTIS-based predictions and for the NY registrations (if we assume 20% of NY regs are simply missing as well)
2)…

Why Tesla's FSD Approach is Flawed

The only folks more prone to rants than myself are Tesla fans talking about neural nets. So I thought, why not combine the power of the rants? I'll rant about Tesla fans ranting about the power of neural nets! To get myself good and wound up, I listened to a recent Tesla Daily Podcast about Full Self Driving (FSD) and Neural Nets. Go ahead, listen to it.  I'll wait. It's actually not that bad. "Jimmy D" is the guest and he talks with some authority about neural nets. He doesn't get anything terribly wrong on the basic tech. Everything he says about how Tesla plans to exploit it seemed reasonable to me. If you are a Tesla skeptic, it's a good way to understand Tesla bull thinking.
Of course, like everyone else who's familiar with the AV space, I think Jimmy is 100% wrong about Tesla's prospects. He's a typical Tesla fan- smart, technically savvy, and without any detailed domain knowledge. He's drawn in by the surface logic of Tesla's a…

What Smart Tesla fans Get Wrong about FSD

The only folks more prone to rants than myself are Tesla fans talking about neural nets. So I thought, why not combine the power of the rants? I'll rant about Tesla fans ranting about the power of neural nets! To get myself good and wound up, I listened to a recent Tesla Daily Podcast about Full Self Driving (FSD) and Neural Nets. Go ahead, listen to it.  I'll wait. It's actually not that bad. "Jimmy D" is the guest and he talks with some authority about neural nets. He doesn't get anything terribly wrong on the basic tech. Everything he says about how Tesla plans to exploit it seemed reasonable to me. If you are a Tesla skeptic, it's a good way to understand Tesla bull thinking.
Of course, like everyone else who's familiar with the AV space and not named Elon, I think Jimmy is 100% wrong about Tesla's prospects. He's a typical Elon fan boy- smart, technically savvy, and without any important domain knowledge. He's drawn in by Elon's …

The Hydraulic Theory of the Euro

Jean-Baptiste Queru recently posted what I call the "Hydraulic Theory" of currency union.  Other than an overall theme of "Blame Germany", it's somewhat discombobulated, but I think the basic point is:
The core mechanism that allows multiple states to share the same currency is pretty simple: since the weaker states can't devalue their currency to compensate for their trade deficit with the stronger ones, money has to flow from the stronger economies to the weaker ones in order to maintain the balance. Which is pointing out that balance of payments in an identity: your surplus + my deficit = 0
This identity doesn't cause the balance of payments, rather it merely identifies that if someone owes money, someone else must be OWED that money.  Consider if I told you that last year I racked up $20k in debt (credit card).  You could correctly infer that I spent $20K more than I made last year.  It would be ABSURD to say that the debt caused the spending! Rather…

Kevin Drumm's Crazy Uncle Ivan theory of Finance and Trade

In covering the Greek tragedy that is the Greek tragedy, Kevin Drumm espouses what I like to call the "Crazy Uncle Ivan" theory of finance and trade.  It's a popular mix of Mercantilism and Keynesianism which explains how rather than being the villain of this tragedy, Greece is actually the tragic hero.

Kevin quotes the German view of the situation:
"In Germany especially, the fear is that providing new loans to Greece without extracting more spending cuts represents a fateful step toward a so-called transfer union, with wealthier nations providing handouts to Greece and other weaker countries." The facts on the ground are quite clear.  Greece does in fact want German money, and there is really no way for Kevin and the liberal intelligentsia to deny this.  But perhaps if we step back, we can still blame Germany:
But so far Europe has done next to nothing for Greece. They've made lots of loans, but mainly so that Greece could pay back its debt to shaky Euro…

Medicaid vs Transit in LA.

In his budget, Obama proposed increased spending on transportation funded largely by tax increases. This naturally raised the ire of Conservatives, who though generally in favor of infrastructure, oppose tax increases.  This also raised the Conservative talking point that welfare spending is consuming the entire budget, leaving very little left over for traditional government spending (also known as "discretionary spending").
The amounts proposed for transportation are relatively small.  As a small-government advocate, I find it mystifying that Obama's administration could not identify even small cuts to welfare spending to pay for this increased spending.  If they had proposed such an exchange, it would have been an easy sell in Congress- a welcomed bipartisan compromise.  So why didn't they propose such a deal?
It's possible that the Administration recognized that a compromise would be welfare-enhancing, but felt that political considerations made it undesirab…