Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[thx1139]

When production out of Shanghai is below capacity, especially when much lower like it was Q2 and Q3, gross margin goes down even if ASP and cost of goods stay the same because of depreciation/amortization. Now in Q4, we have Shanghai not just at the production levels it was back in Q1 for the entire quarter, it's actually 30% higher.

Weird thing is I dont even see by bulls is had prices stayed flat margins should go up because of the extra production at Shanghai, Texas and Berlin. Those 3 plants will all be more efficient in Q4 producing more cars with similar labor, factory and parts costs per unit. Honestly shouldnt Shanghai additional savings because of efficiency eat into those price cuts?

 

[bkp_duke]

Why it is critical to not promise a semi in 2 years and not deliver or fsd or not to sell shares etc. eventually everything is discounted. The semi delivery did not move Tesla and that is a profound product.

Elon was crystal clear about why the Semi wasn't delivered earlier - there was not battery supply for it. It was either deliver 12 x Model Y . . . or one Semi, with the same number of cells (approximately).

We all wanted the semi earlier, but battery supply was a key factor, and will continue to be a constraint for years to come.

 

[bkp_duke]

Weird thing is I dont even see by bulls is had prices stayed flat margins should go up because of the extra production at Shanghai, Texas and Berlin. Those 3 plants will all be more efficient in Q4 producing more cars with similar labor, factory and parts costs per unit. Honestly shouldnt Shanghai additional savings because of efficiency eat into those price cuts?

Efficiency continues to improve, but it's not linear, it comes in spurts with "upgrades" in the factory. Last upgrades were completed over the early summer and those efficiencies are mostly realized.

Two factors that will push margins more favorable this Q to counteract the small price decreases will be:
1) USD weakening
2) commodity prices dropping

 

[wipster]

Why it is critical to not promise a semi in 2 years and not deliver or fsd or not to sell shares etc. eventually everything is discounted. The semi delivery did not move Tesla and that is a profound product.

Well the Semi delivery event may not have moved TSLA in a positive direction, but I can't wait until I see a Semi with a car hauler attached moving Teslas around the country! A Tesla hauling Teslas... that will be grand!

 

[AudubonB]

Economics , they are requiring big deposits, wait time is long. Charging stations require industrial locations with 3phase. Many small truck companies are located away from industrial zoning on purpose and few are going to Have access.

So too much upfront costs and they don’t have equipment yards to charge. It is going to be a terrible thing for many small companies as the truck fleet, knowledge and mechanical know how, and equipment yards are much of their wealth.

I think the semi is the most important thing Tesla can do right now but it is going to destroy some small trucking firms and bankrupt many. Semi is a complete game changer due to fuel costs and the fleets will move. Might take a long time, 5-10 , years to move the long distance fleet but most trucks run local routes in a 200 mile area.

Of course this requires 50k run rate. It also has a battery implication in that the packs are 2170 packs- 1 MW each. Does that equal most of the production capacity of Reno? If so it is evidence that maybe they have 4680 figured out. Each semi is what, 15 model3s? The new Panasonic plants are doing 4680 right? Think about it and let us know. I might be wrong

Thank you for bringing up the uncomfortable inequity regarding the independent trucker or the small-fleet operator vs the large fleet companies. There is a solution that, while an extra expense, is not prohibitive and is dual-purpose. I present this here because of the effect it would have on Tesla in increasing the sphere of its market.
A backup power system that consists of a Powerpack (or 2-4, depending on the fleet usage) and a generator is the answer. Megapacks needn’t be considered. Its secondary usage is that “dual”: it provides blackout power. Its primary usage is to charge the vehicles. The key is that all reasonably-sized gensets - ie, those bigger than around 10kW - can have affixed to the motor a powerhead - ie, a generator* , that is wired for three-phase.

I know all of this is eminently feasible, as it is exactly what Tesla Power and I worked out for Paxson. What I do not know is the extent to which any industrial / corporate / environmental / small business / etc. incentives exist in any specific location to address any asssitance in the cost of such set ups.

*For most people, “generator” means that thing with a gas/diesel/propane motor with wires and switches coming out of it. In fact, that is two separate items: the power supplier (that motor) and the generator itself, which excludes the motor and is the set of coils etc. affixed to the motor by a shaft or belts. They’re quite separate, and usually built by different companies. In fact, one can take the entire assembly and switch out a single-phase generator for a three-phase one, wired at 207V, 240V, 480V and so forth. In practice….it’s just a bit more complex.

 

[Drax7]

OK don't do buyback, let the MMs ride the SP
... announce me a GF instead (spend the money ...)

Manage the business, not the stock.

Address media misinformation that hurts the brand,
ala China, put to use the newly assemble legal team.

Adopt an investor relation department that addresses FUD
and other issues (ie semi brakes anybody)

An inverted yield curve usually precedes a recession, bottom
line there is little appetite for risk. S curve investing during
a recession is probably put on hold.

 

[Krugerrand]

Are they? This is an honest question.

I don’t believe it’s an honest question, but for the sake of argument, I’ll go with it and ask this question in response:

Does anyone outside that room know the truth of it all to actually answer the question accurately?

I believe my question is rhetorical but in case there’s any kind of confusion the answer is unequivocally: No

What we know and see is only a fraction
of the information and it behooves people to remember that. Unless you’re sitting directly across from the other person/s, unless you’re walking in their shoes, you lack a significant piece of the puzzle that got them to that place, that created the situation you think you know about but don’t.

As an example: When you see that person weaving in and out of traffic, speeding, driving aggressively, your first assumption is that they’re a dick. But maybe they’re racing home or to the hospital because a loved one is seriously sick?

 

[Unpilot]

I don’t believe it’s an honest question, but for the sake of argument, I’ll go with it and ask this question in response:

Does anyone outside that room know the truth of it all to actually answer the question accurately?

I believe my question is rhetorical but in case there’s any kind of confusion the answer is unequivocally: No

What we know and see is only a fraction
of the information and it behooves people to remember that. Unless you’re sitting directly across from the other person/s, unless you’re walking in their shoes, you lack a significant piece of the puzzle that got them to that place, that created the situation you think you know about but don’t.

As an example: When you see that person weaving in and out of traffic, speeding, driving aggressively, your first assumption is that they’re a dick. But maybe they’re racing home or to the hospital because a loved one is seriously sick?

Your A little slow today cat.

 

[Gigapress]

Efficiency continues to improve, but it's not linear, it comes in spurts with "upgrades" in the factory. Last upgrades were completed over the early summer and those efficiencies are mostly realized.

That’s a big part of the improvements, but there’s also ongoing kaizen (continuous improvement) in any good manufacturing operation. Every day Tesla is learning how to do things better, whether via tweaking software, rearranging shelving, improving manual skill at various tasks from additional practice, implementing small design changes, inventing new assembly tricks or tools, etc.

Two factors that will push margins more favorable this Q to counteract the small price decreases will be:
1) USD weakening
2) commodity prices dropping

Overall ASP should actually be substantially higher for Q4. In all this noise it seems most have forgotten that:

1. We still had a massive wave of price increases from earlier this year still in the backlog that didn’t seem to materialize much in Q3 with delivery dates at the time of the price increases mostly pointing towards late Q3 and Q4
2. Model Y mix share is still increasing QoQ
3. One-time Forex impacts hurt our avg revenue per vehicle by like $0.7k in Q3 after sales revenue conversion to USD

Here’s avg auto rev per veh delivered excl ZEV credits.

Q4 2021	$ 50.7k
Q1 2022	$ 52.2k
Q2 2022	$ 56.0k
Q3 2022	$ 53.5k

It was only up $2.8k from Q4 ‘21 to last Q, despite M3 having declining mix share, despite huge price hikes in March and April, and despite previous huge price hikes late last year. I would be shocked if the Q4 number isn’t at least $55k. There are few places left on the planet where you can even buy a base M3 RWD for less than $47k. Some of this is due to higher percentage of global sales going to China and to M3 RWDs taking advantage of the growth in LFP cell supply, but clearly the bulk of the price hikes haven’t hit the income statement yet.

Here’s Tesla Daily’s table of US prices over time, showing roughly $10k+ average price increase since last October. So there’s still a lot of room to run on ASP in Q4 and Q1.

 

[Nocturnal]

I don’t believe it’s an honest question, but for the sake of argument, I’ll go with it and ask this question in response:

Does anyone outside that room know the truth of it all to actually answer the question accurately?

I believe my question is rhetorical but in case there’s any kind of confusion the answer is unequivocally: No

What we know and see is only a fraction
of the information and it behooves people to remember that. Unless you’re sitting directly across from the other person/s, unless you’re walking in their shoes, you lack a significant piece of the puzzle that got them to that place, that created the situation you think you know about but don’t.

As an example: When you see that person weaving in and out of traffic, speeding, driving aggressively, your first assumption is that they’re a dick. But maybe they’re racing home or to the hospital because a loved one is seriously sick?

That's why it's a question.

 

[wipster]

Thank you for bringing up the uncomfortable inequity regarding the independent trucker or the small-fleet operator vs the large fleet companies. There is a solution that, while an extra expense, is not prohibitive and is dual-purpose. I present this here because of the effect it would have on Tesla in increasing the sphere of its market.
A backup power system that consists of a Powerpack (or 2-4, depending on the fleet usage) and a generator is the answer. Megapacks needn’t be considered. Its secondary usage is that “dual”: it provides blackout power. Its primary usage is to charge the vehicles. The key is that all reasonably-sized gensets - ie, those bigger than around 10kW - can have affixed to the motor a powerhead - ie, a generator* , that is wired for three-phase.

I know all of this is eminently feasible, as it is exactly what Tesla Power and I worked out for Paxson. What I do not know is the extent to which any industrial / corporate / environmental / small business / etc. incentives exist in any specific location to address any asssitance in the cost of such set ups.

*For most people, “generator” means that thing with a gas/diesel/propane motor with wires and switches coming out of it. In fact, that is two separate items: the power supplier (that motor) and the generator itself, which excludes the motor and is the set of coils etc. affixed to the motor by a shaft or belts. They’re quite separate, and usually built by different companies. In fact, one can take the entire assembly and switch out a single-phase generator for a three-phase one, wired at 207V, 240V, 480V and so forth. In practice….it’s just a bit more complex.

Informative post, but you missed an important item: the "fuel" or power to fill the Power pack or Megapack. That needs to be included in equation as well, whether it's renewable or purchased.

Just sayin'...

 

[Gigapress]

I don't think people are forgetting. The people on this board are well informed. If they worry about demand, it's because they explicitly or implicitly have doubts about management's credibility.

StarFox to whom I was replying was arguing in favor of the board or management combatting daily/weekly demand FUD with more statements about demand strength. To the extent that the market doesn’t believe them, then such frequent reassurances would be even more pointless.

 

[thx1139]

Efficiency continues to improve, but it's not linear, it comes in spurts with "upgrades" in the factory. Last upgrades were completed over the early summer and those efficiencies are mostly realized.

Two factors that will push margins more favorable this Q to counteract the small price decreases will be:
1) USD weakening
2) commodity prices dropping

Not entirely. I believe it isnt just upgrades to the factories that lowers the costs. Shanghai making what 65K more cars, Berlin making 30K more cars and Texas making 25K more cars with about the same staffing levels, utility costs, etc. spreads those costs over more cars lowering the costs.

 

[Ogre]

I don't think people are forgetting. The people on this board are well informed. If they worry about demand, it's because they explicitly or implicitly have doubts about management's credibility.

I know it’s crass to say “Then you should sell your shares”… but quite genuinely if you have no faith in the credibility of management—you absolutely should be selling your shares. That is a massive red flag for investors.

Anyone who stays invested in a company but doesn’t think management is credible is a fool in the biggest way.

Enron shareholders for example…

 

[Zero CO2]

StarFox to whom I was replying was arguing in favor of the board or management combatting daily/weekly demand FUD with more statements about demand strength. To the extent that the market doesn’t believe them, then such frequent reassurances would be even more pointless.

responding to FUD just creates more FUD... let quarterly P&D do the talking ...Tesla should not be concerned with individuals options bets

 

[SmokyPeat]

Thank you for bringing up the uncomfortable inequity regarding the independent trucker or the small-fleet operator vs the large fleet companies. There is a solution that, while an extra expense, is not prohibitive and is dual-purpose. I present this here because of the effect it would have on Tesla in increasing the sphere of its market.
A backup power system that consists of a Powerpack (or 2-4, depending on the fleet usage) and a generator is the answer. Megapacks needn’t be considered. Its secondary usage is that “dual”: it provides blackout power. Its primary usage is to charge the vehicles. The key is that all reasonably-sized gensets - ie, those bigger than around 10kW - can have affixed to the motor a powerhead - ie, a generator* , that is wired for three-phase.

I know all of this is eminently feasible, as it is exactly what Tesla Power and I worked out for Paxson. What I do not know is the extent to which any industrial / corporate / environmental / small business / etc. incentives exist in any specific location to address any asssitance in the cost of such set ups.

*For most people, “generator” means that thing with a gas/diesel/propane motor with wires and switches coming out of it. In fact, that is two separate items: the power supplier (that motor) and the generator itself, which excludes the motor and is the set of coils etc. affixed to the motor by a shaft or belts. They’re quite separate, and usually built by different companies. In fact, one can take the entire assembly and switch out a single-phase generator for a three-phase one, wired at 207V, 240V, 480V and so forth. In practice….it’s just a bit more complex.

Most all gensets sizable enough to be useful for charging a small fleet (or even one) of electric Semis will be 25+kVA, and have power heads that can be configured for either single phase or 3-phase simply by switching around a few wires.

 

[StarFoxisDown!]

Efficiency continues to improve, but it's not linear, it comes in spurts with "upgrades" in the factory. Last upgrades were completed over the early summer and those efficiencies are mostly realized.

Two factors that will push margins more favorable this Q to counteract the small price decreases will be:
1) USD weakening
2) commodity prices dropping

This is incorrect. The upgrades were finished in the summer but factory utilization of Shanghai was less than 50% in Q2 and less than 60% in Q3. So the efficiencies from the upgrades cannot be realized until production capacity reaches the new levels of production from those upgrades. It's impossible feor the upgrades to be realized until then.

This is what I keep talking when I say fixed costs such as depreciation and amortization hurt Shanghai's gross margins considerably in Q2 and Q3. And it's why we will probably at least see margins stay flat even with price cuts and incentives in Q4 and couple possibly see margins expand a bit in Shanghai.

 

[JupiterMan]

responding to FUD just creates more FUD... let quarterly P&D do the talking ...Tesla should not be concerned with individuals options bets

whilst a little PR to correct inaccuracies would be nice, I tend to agree.... and no doubt we would not even be having this conversation in a Bull market.

Us HODL's just need to relax, better days are ahead!

 

[wipster]

StarFox to whom I was replying was arguing in favor of the board or management combatting daily/weekly demand FUD with more statements about demand strength. To the extent that the market doesn’t believe them, then such frequent reassurances would be even more pointless.

One big difficulty in communication to the general public and wall street (to hopefully a lesser extent) is HEADLINES !!! that say one thing, usually horrible FUD as opposed to the articles themselves which are usually contain a modicum of truth. But even then the truth is buried at the end of the article (or post). Many if not most of the public never gets past the headline which is garbage and as we all know Garbage In Gospel Out, so they believe the demand crap and that Elon is flailing and a MAGA republican, etc. I would hope most analysts read the whole article, but who knows nowadays. Plus when articles, posts, etc are forwarded, the headline is the first Bolded, large font thing they see.

Don't know how to combat this practice, but headlines are what's driving most of the FUD.

 

[Crowded Mind]

This is incorrect. The upgrades were finished in the summer but factory utilization of Shanghai was less than 50% in Q2 and less than 60% in Q3. So the efficiencies from the upgrades cannot be realized until production capacity reaches the new levels of production from those upgrades. It's impossible feor the upgrades to be realized until then.

This is what I keep talking when I say fixed costs such as depreciation and amortization hurt Shanghai's gross margins considerably in Q2 and Q3. And it's why we will probably at least see margins stay flat even with price cuts and incentives in Q4 and couple possibly see margins expand a bit in Shanghai.

Shanghai produced 197k cars in Q3. Tesla's full capacity run rate from October would extrapolate to 260k for Q4. That puts Q3 at 76% utilization, not "less than 60%" as you keep repeating.