Moderators' Choice: Posts of Particular Merit

[PeterJA]

Some folks in the options thread have speculated that TSLA will plateau or drop hard from here. Reasons include: all-time high, pullback after runup, happened many times this year.

I don't think so. Tesla is changing fast, and so is market sentiment. For the first time in history...

• Tesla just raised prices on ALL their cars (nonperformance versions) because backlogs are out of control.
• Plaid shocked the industry, and is still getting press and ecstatic word-of-mouth.
• Production capacity is on track to DOUBLE very soon.
• Battery supply is on track to 10X soon.
• Tesla recently increased sales by double digits while ALL automajors lost sales by double digits.
• FSD Beta, despite today's temporary setback, is expanding to thousands of testers.
• S&P's rating upgrade reportedly expands the number of institutions that can buy TSLA.
• Market manipulators recently lost control, including paying on the GIGANTIC call wall at $900 last Friday.
• Analyst upgrades are pouring in.
• Even the two-faced mercenary Jonas upgraded bigly, maybe because his employer and their clients "who matter" are positioned for more runup.

Years ago I posted that a long decline in TSLA turned around when Jonas switched overnight from hilariously negative to positive on Tesla. That's when I jumped into buying again, and was not disappointed.

I'm not selling any covered calls now, not even those judged "safe" by folks looking at TSLA's past behavior. Things have changed. History is being made.

You may have heard the aphorism: "Past performance does not guarantee it will continue." The same is true of past underperformance.

 

[CLK350]

Great explanation of what went on the past few days in the SP bump past 1000 and what to expect going into Friday

Updating his Bloomberg article : How a 2,360% Jump in Call Options Fired Up Tesla’s Share Surge

" .. In the simplest form, when someone buys calls, a dealer must buy Tesla’s stock to hedge the delta exposure generated by those options trades. If the stock keeps rising, it forces dealers to buy more shares, a process know as gamma hedging.

According to Kochuba’s analysis, Monday started with traders selling calls, which led to a slight negative delta reading. As the stock started to lift off around 10 a.m. in New York, these call sellers were forced to cover their positions. That coincided with Tesla’s share advance toward $980.

Around noon, traders began flooding in to purchase calls, sparking a surge in delta hedging that accompanied Tesla’s ascent toward $1,000. Then two hours later, another wave of call buying hit the market. The stock peaked near $1,045, right before the estimated delta hedging started to taper off.

Note: Tesla’s stock price and option delta on Oct. 25. Source: SpotGamma

Notably, half of the calls traded were maturing Friday. The Tesla $1,050 call expiring exactly that day -- the second most active contract on Monday -- surged to $18.19 from 71 cents, a 25-fold increase.

“This was an incredible push by short duration traders to push into calls,” said Kochuba. That “ likely forced market makers to aggressively hedge long.”

The fact that all the trading was concentrated in short-dated options can be viewed as a tactic by some traders trying to take advantage of a phenomenon known as a “gamma squeeze” -- betting that as the value of Tesla shares gets closer to an option’s strike price, dealers will have to buy more and more of the underlying stock.

“This is the definition of ‘weaponized gamma,’” said Nomura strategist Charlie McElligott.
.... "

 

[The Accountant]

It Really Is Different This Time
I am often too focused on quarterly results that I fail to see what the annual numbers reveal.
When we hit all-time highs in January, Tesla had just delivered its first fiscal annual profit.
GAAP earnings came in at $721m for 2020. An annual profit was a huge achievement for Tesla.
The company was turning the corner but still had more to prove.

But this time . . . . oh this time . . .the numbers have gone Plaid.
The $5.2B in earnings that I expect for 2021, dwarf the 2020 number. Not many companies suddenly grow earnings that quickly.
As we hit all-time highs again, the financial results now have many new investors realizing that Tesla is for real with potential to run much higher.
Performance will continue to amaze. In 2022 I expect GAAP earnings of at least $12B.

 

[Tronguy]

I mostly agree, but I would compress your timeline considerably.

I know I'm mainly a lurker on these forums, but I'm with Prunesquallor on this one.

There's a paradigm shift in operation. Things are seriously out of balance and there's exponential changes occurring in the shift to EV's: Batteries, factories, and it's not just Tesla.

Fundamentally, BEVs are cheaper to build, operate, and maintain than ICEs and those that don't switch over are scared silly that they'll go under and stay under.

Thing is, Adam Smith's invisible hand is forcing the change, led by the breakthrough that Tesla has shown is possible. For a long time, I've been stating that Musk is running something that almost looks like a con: He's threatening the entire established ICE manufacturing base that, "Either you build these BEVs or I will, and, if I do it, I will Bury You." And it's not just my fairy tale stories here: Musk himself has said that, even if Tesla goes under, if the market for transportation has switched to BEVs, his actions will result in a success. Telsa has been doubling, or near doubling production every year and has products that threaten Every Single One of the established manufacturers. Even CEOs know that story about a chessboard and, starting with a single grain of wheat on square one, doubling on each succeeding square results in a total amount of wheat equal to Europe's net output for a year.

Thing is, this is happening, by design, in many nations at once at a velocity that outstrips the ability of legislators to pass laws against Tesla. Think that putting a Tesla factory in Texas, an oil rich state, was an accident? Putting a Tesla factory in Shanghai, comfortably out of reach of legislators elsewhere, was a mistake? Putting one in Germany, using a reasonable slight of hand to provide jobs to an underserved electorate was just tweaking noses of the German auto manufacturers? Dream on. This is a dogged push to get the world to go electric and it's scaring the bejeesus out of the established manufacturers. Adapt or die, and they know it. And no amount of fiddling with elected (or otherwise) representatives is going to help, when the world as a whole isn't going to work in a coordinated fashion to stop Tesla. Partly because each government typically looks to its own interests and advantage and partly because this whole business of removing CO2 from the air is, truly, a life-and-death situation.
(Wonder why Telsa's talking about building a factory in Russia, that <sarcasm> home of freedom and light? </sarcasm>. It's because the place is truly out of the reach of the UN, the EU, and China, and if none of them want to build BEVs because of wanting to protect the legacy ICE types, then Russia will be happy to. All the profits might go to the ogliarchs and Putin - but we'll have clearer skies if that's the case.)

Yes, every auto manufacturer and their ten nearest buddies are announcing not-built-yet BEVs. The Light Has Dawned and everybody is rushing to build battery plants, that being, apparently, the limiting factor, but all we got right now are artists imaginings. But the pot, if not boiling, is simmering: None of the new stuff is going to appear in zero time. But it's not like chemists aren't a dime-a-dozen and, once one has a bunch of minds, not just those at Tesla, concentrating on the task at hand.. things will happen, in a hurry. Because it's adapt or die time.

I'm thinking 10 years, tops, before ICEs for personal transport become hard to find.

Last comment. Civilization arose, first, in the Golden Triangle when, because of newly discovered agriculture, there was enough food around to support civilization: bureaucracies, trade, manufacturing, and the non-productive (in terms of food) leadership, and people weren't forced by starvation to hunt and gather just to stay ahead. Improvements in agriculture has allowed more and more people to exist; and, of the non-productive types that aren't actively involved in the production of food (arts, sciences, and the like being the froth of this wave) the more that are there doing that research and education thing and the faster things have changed. When I was a kid, there were 4.5 billion souls on the planet; now, there's 7 billion and change. Yes, more mouths to feed - but more people that have gone to college, more papers written, more research done, and these people feed on each other in terms of aggrandizing information for useful purposes. And it's not just the sheer amount of useful information out there: The speed with which it can be applied has bumped up quite a few steps as well. When I first started designing circuit boards, time from start to first sale was measured in a year and a half; that's down to six months, if not less, in the industry. It still takes 9 months to make a baby; but for everything else, stuff happens faster. Period.

Future shock, anyone?

 

[Sancho]

We’ve discussed at length here the future value to Tesla of the machine that builds the machine. That’s huge. But there’s something even more valuable happening, and that’s the innovation that enables the innovation.

A lot of companies through skill or luck generate a few major innovations, but generating many innovations is itself a skill: an extraordinarily challenging skill to develop. At first you’re going to make more mistakes than successes, and even with your successes you will have all sorts of challenges integrating them. But like any skill, if you practice really hard, efficiently and strategically, you get better at it.

Musk is doing something with innovation that is unprecedented at a scale that leads to unprecedented innovative competency.

First, he considers what big things need improvement (climate change, space exploration, traffic gridlock, etc). Then at the highest level he considers what engineering change will most likely solve the challenge quickly (electric cars, reusable rockets, tunnels). So far, that’s very good first principles thinking, but that and a dollar won’t get you a cup of coffee at Starbucks.

It’s what Musk does next that creates the wealth: he puts at risk his capital, energy and reputation to make it happen entirely through innovation. He takes nothing as a given and allows everything to be reinvented in search of the best solution to each challenge.

At first, this approach took enormous cajones, and may have been foolhardy risky. The number of mistakes should have been ruinous. But now he’s got all the capital needed to make this enormously successful.

But the capital is now the least of his advantage when it comes to innovation. Because he’s now created an innovative competency that no company has ever had before. Innovations will now come faster, and more efficiently. They will be better integrated from the start. There are a million examples of this. Here’s one: when Tesla designs a new part for a car, a major design consideration is how easy it will be for that part to be handled by the kind of robot others at Tesla are designing.

I just watched the new video created by Tesla Canada to recruit employees. It’s not that interesting, but there’s a short clip of this young engineer talking about how he’s discovered that there is always a way to overcome a technological hurdle. Think about that for a second: here’s a company where thousands of engineers are empowered to think outside the box every day, and their best innovations are instantly actualized into product creation.

The innovation that has enabled the innovation is that every technological problem has a solution, and we’re going to build a company that not only puts no restraints on re-engineering, but rewards hyper-innovation by actually deploying it, as fast as possible.

Bell Labs was the innovation leader when I was growing up, but Tesla, SpaceX, etc are in another league now because they are deploying, not just designing. It’s the act of deploying that builds the competency of how to innovate more productively, more valuably.

It’s the innovation that enables the innovation.

And the applications of all these innovations are so numerous and wide scale they blow the mind. Cars and rockets are just the tip of the iceberg.

 

[Gigapress]

A market cap of 1 Quadrillion? That's 10x the entire global GDP.

That's nuts. It would make many of us here multi-billionaires. Sure would be nice, but I choose to live in reality.

If he really believes that, then how much of what else he says is just as ludicrous and nonsensical?

It seems that the responses are reactions based on 1000 being a relatively large number and the implications that Tesla would be a large, if not majority, chunk of the world economy.

First of all, GDP is not the proper basis of comparison for stock market valuation. This is essentially comparing income (capital creation per unit time) with wealth (accumulated capital).

Secondly, in the Tesla hyperbull scenarios, Tesla will have been responsible for profoundly altering the human economy. The projections include massive increases in production relative to today's GDP.

For Mr. Justice's projection in particular, the TSLA 1000x scenario was dependent on Tesla "succeeding as much as they want to" which specifically included domination of:
> Autonomous vehicles, including eventually heavy machinery
> Energy
> Cryptocurrency (Bitcoin and Doge)
> Benefits from the success of SpaceX and Neuralink
> Teslabot

I do not personally agree with all the rationale he presented but I think 100x is actually pretty likely. So does Warren Redlich and some other hyperbulls. One aspect I did not fully understand was why Joe included SpaceX and Neuralink in this valuation. Also I still think cryptocurrency is a bad idea in general and projecting it to be the dominant medium of exchange in the future is questionable in my opinion.

Furthermore, essentially everyone I've ever met, including myself, has at times adopted nonsensical, ludricrous beliefs. I think it would be a mistake to assume that one silly opinion invalidates everything else that individual has to say. Having started to listen to his Agile handbook on audio, I've been blown away by how well-designed and rational the recommendations are. I can't say that about any other consultants I've ever encountered. I could do without the name-dropping and puffery but that seems to be necessary to establish credibility to average people, unfortunately.

Tesla automated robotics could easily lead to a $100T+ market cap IF they are successful on a level no one else manages to challenge. Roughly speaking, an autonomous robotaxi is worth around $100k in value add in the long run, or even more if combined with a large-scale Boring company tunnel network because they'll spend less time sitting in traffic and wasting energy starting and stopping. Every 10 million of them in annual production is $1T in annual profit potential.

The Teslabot scenario takes this concept to the extreme. IF it works and everyone else fails to make a competitive product on the same level, then where does that take us? Presumably its smaller, simpler body and tiny battery will enable it to be mass-produced for approximately $10k. Like the cars, these too are probably worth at least $100k in the value they can provide, but the overall market for them is massive compared to transport alone. What could 100 million of these per year be worth? $10T in annual income. This alone would be sufficient for 100X from today's share price.

There's also a reasonably likely scenario in which the $100/kg Starship launches from Earth combined with Teslabots and other machinery could realize the asteroid mining dream. Many elements are worth far more than $100/kg.

For those who believe this is all inconceivable, consider the comments from the Tesla Technoking as of 2 months ago:

"The Teslabot will be real...Basically, if you think about what we're doing right now with the cars, Tesla is arguably the world's biggest robotics company because our cars are like semi-sentient robots on wheels, and with the full self-driving computer essentially the inference engine on the car, which will keep evolving obviously, and Dojo, and all the neural nets recognizing the world, understanding how to navigate through the world, it kind of makes sense to put that onto a humanoid form. We're also quite good at sensors and batteries and actuators...[goes over specs of the bot]...This I think will be quite quite profound because if you think, like, what is the economy? It is at the foundation, it is labor. So what happens when there is, you know, no shortage of labor? That's why I think long term there will need to be a universal basic income...I think in the future, physical work will be a choice...I think it obviously has profound implications for the economy because...capital equipment is just distilled labor. Then, is there any actual limit to the economy? Maybe not."

In conclusion, Tesla's official company guidance is that they intend to so radically revolutionize life as we know it that a UBI will become necessary and that physical labor will become optional. Whether they will actually achieve this ambition remains to be seen. The physics of the robot and its potential are already established. So the primary unvalidated assumptions are 1) That the control software eventually will work usefully, and 2) That the competition will not catch up, and 3) That humanity will allow one organization to amass this much power without a Luddite rebellion.

If anyone wants to disagree with this I welcome the criticism but I hope further responses will be more thoughtful.

(Mods, if you want to move this to the hyperbull thread I will not be offended.)

 

[StealthP3D]

Tesla automated robotics could easily lead to a $100T+ market cap IF they are successful on a level no one else manages to challenge. Roughly speaking, an autonomous robotaxi is worth around $100k in value add in the long run, or even more if combined with a large-scale Boring company tunnel network because they'll spend less time sitting in traffic and wasting energy starting and stopping. Every 10 million of them in annual production is $1T in annual profit potential.

The Teslabot scenario takes this concept to the extreme. IF it works and everyone else fails to make a competitive product on the same level, then where does that take us? Presumably its smaller, simpler body and tiny battery will enable it to be mass-produced for approximately $10k. Like the cars, these too are probably worth at least $100k in the value they can provide, but the overall market for them is massive compared to transport alone. What could 100 million of these per year be worth? $10T in annual income. This alone would be sufficient for 100X from today's share price.

There's also a reasonably likely scenario in which the $100/kg Starship launches from Earth combined with Teslabots and other machinery could realize the asteroid mining dream. Many elements are worth far more than $100/kg.

For those who believe this is all inconceivable, consider the comments from the Tesla Technoking as of 2 months ago:

"The Teslabot will be real...Basically, if you think about what we're doing right now with the cars, Tesla is arguably the world's biggest robotics company because our cars are like semi-sentient robots on wheels, and with the full self-driving computer essentially the inference engine on the car, which will keep evolving obviously, and Dojo, and all the neural nets recognizing the world, understanding how to navigate through the world, it kind of makes sense to put that onto a humanoid form. We're also quite good at sensors and batteries and actuators...[goes over specs of the bot]...This I think will be quite quite profound because if you think, like, what is the economy? It is at the foundation, it is labor. So what happens when there is, you know, no shortage of labor? That's why I think long term there will need to be a universal basic income...I think in the future, physical work will be a choice...I think it obviously has profound implications for the economy because...capital equipment is just distilled labor. Then, is there any actual limit to the economy? Maybe not."

In conclusion, Tesla's official company guidance is that they intend to so radically revolutionize life as we know it that a UBI will become necessary and that physical labor will become optional. Whether they will actually achieve this ambition remains to be seen. The physics of the robot and its potential are already established. So the primary unvalidated assumptions are 1) That the control software eventually will work usefully, and 2) That the competition will not catch up, and 3) That humanity will allow one organization to amass this much power without a Luddite rebellion.

If anyone wants to disagree with this I welcome the criticism but I hope further responses will be more thoughtful.

(Mods, if you want to move this to the hyperbull thread I will not be offended.)

I'm glad you presented this as it's something investors need to consider and I think it's far more important than many think. Sure, if you are looking to make a quick buck, this knowledge is not going to help you. But if you are trying to create a long-term portfolio that maximizes risk/reward and returns, this knowledge is worth considering rather heavily. Even though we don't have enough clarity on the timelines or economics of robotics to create valuations doesn't mean they don't add some current value to our investment. Tesla is a company that cannot be valued traditionally because it is not a traditional company and it doesn't have a traditional corporate culture. It should be understood that robotics will happen and they will add incredible value to society. It's not even necessary to be able to envision exactly how the value will be added at this point in time, it's enough to understand that AI robots in many forms, including humanoids, will eventually be very valuable to the economy and probably sooner than many realize. Certainly, this awareness will grow even sooner than the machines themselves.

Investors need to quantify the likelihood that the Tesla robotics team will be upstaged by another small upstart. But Musk has already pointed out why he believes Tesla will be the leader in robotics and I find his reasons sound. Because a robot is nothing without great software, specifically, powerful AI. Putting everything together, it seems obvious that the winner will be the company that has the leading edge in relevant technologies including:

1) Manufacturing and materials science (robots must be as low cost and durable as possible)
2) Ability to train (artificial intelligence)
3) Batteries (helps keep weight and cost down)
4) Electromagnetics (robots will run on electric motors and need to be as efficient as possible to maximize utility, minimize weight, etc.)

I would suggest that the ability to train is the most important and the the most difficult to develop from scratch. Dojo is an AI development effort that is much more than a machine, it's a massive development effort that will yield staggering knowledge. It's difficult to think another effort will pass it up in any reasonable timeframe. For these reasons I think the odds of Tesla being dominant in robotics is much higher than most analysts would guess at this point in time. Advantage goes to the individual investor who thinks about these things. Most analysts don't pull their weight now, and they have not for a very long time.

From a long-term investors standpoint, we cannot expect the market to value this more fully until there are reasonable timelines and visibility on initial deployments and what the economics will look like. But the market is forward looking and while it doesn't add too much value to current shares, as awareness of progress and the likely importance of robotics grows over time, this awareness will gradually increase the valuation of TSLA shares in a manner that will be impossible to quantify but that will result in TSLA being considered perpetually over-valued by conventional investors and analysts. So be it. That is how conventional investors/analysts miss out on the best investments. The value of robotics to TSLA will ensure that the people who garner most of the gains will be the people who didn't sell due to supposed over-valuation.

The above reasons are why a buy/hold investor is so much more profitable over time than one that buys/sells based on valuations. Because it's impossible to quantify the value of a company that is constantly innovating and those companies are the ones that end up with the lion's share of the gains.

 

[The Accountant]

Recent chart history suggests the opposite, namely that TSLA often only gives one buy point before never looking back. YMMV.

View attachment 734333

Agree! . . . and why is this? Each quarter that passes reaffirms that the dip was unwarranted.
I got tired of proclaiming "a new record" every time I published a new forecast.

Let's look at Non-GAAP Earnings as one metric:
Q1 2020 - 227m
Q2 2020 - 451m
Q3 2020 - 843m
Q4 2020 - 903m
Q1 2021 - 1.052m
Q2 2021 - 1,616m
Q3 2021 - 2,093m

And I project
Q4 2021 - 2,800m
Q1 2022 - 3,200m
Q2 2022 - 3,600m
Q3 2022 - 4,200m
Q4 2022 - 4,700m

The FUD and doubters run free in that time span that sits between quarterly earnings release dates but once the earnings get published, reality sets in again . . . .Tesla is unstoppable.

 

[Artful Dodger]

HIGHLY unlikely to be a distribution date on a Thursday (Dec 9, 2021).

The DD for the last split was Fri, Aug 28, 2020 after the Close.

So, let's continue exploring this rabbit warren. Way back during the August 2020 5:1 split, there was an interesting coincidence in timing between the Split Announcement and the NASDAQ Short Interest data release.

Specifically, SI data for July 31, 2020 was released just before Tesla announced their 5:1 split during the After-hrs session on Aug 11, 2020: (here was the TSLA SP reaction)

At that time, I used the SI volume to estimate the number of phantom shares created via naked short selling (assumed a 1:1 short/naked as a 1st approximation). This allowed me to use a simple supply and demand microeconomics model to predict a 90% increase in the SP due to the forced naked short covering. Turns out that was very close.

In the event, TSLA SP rose exactly 96% from $1374 to $2,700 pre-split (or $540 post-split) peaking in the Pre-market on Tue, Sep 01 just before Tesla's 7:00 a.m. SEC filing for their $5B Equity Offering: (here's the Pre-market reaction from Sep 01, 2020)

Recall that during this time, many Retail Brokers were *unable* to deliver the Dividend Shares to their Beneficial Owners (read: Retail customers of the Broker), and MANY excuses were offered as to why they had not received their shares from the Clearing House. Yeah, they were unable because they weren't ENTITLED to any more shares because they were NAKED SHORT. All this occurred as I predicted in advance, and posted here in this thread around Aug 14, 2020.

Let's also take note of this further coincidence: the $5B Equity Offering filed on Sep 01, 2020 was equal to the estimated value of shares that naked shorts would be forced to purchase as a minimum (also predicted by the Aug 11 SI data). IMO, Tesla gave an escape door for MM/hedge funds, who gladly coughed up $5B in about 24 hrs to escape their predicament (caught naked short).

BTW, that $5B paid for Giga Texas in full, with a tidy sum left over for future debt repayments (thanks shortie, wouldn't wanna be ya) Note also that this did not END the practice of naked shorting TSLA, it was just the MINIMUM number of shares required to cover by abusive naked short sellers (mainly MMs with the Options exemption, but TSLA has about 28 different MMs).

So now, fast-forwarding, let's take note of these Dates for Nov/Dec 2021, extracted from the NASDAQ Short Interest Publication Schedule:

November	Settlement Date	Due Date- 6 p.m.	Dissemination Date after 4 p.m., ET
	11/30/2021	12/2/2021	12/9/2021

OH GEEZ. There's that DATE again: 12/9

So this means that any naked shortz not covered as of Nov 30, 2021 WILL be vulnerable on Dec 09, 2021 if not covered via purchasing a real TSLA share (one which is registered with the National Clearing House, not just an entry in the MMs internal ledger).

But this time around, Elon is providing both an escape hatch (his share sales), and fair warning (all those twitter hints) to any MM/hedgies who DID NOT LEARN from the beating they took in Aug/Sep 2020: DUCK AND COVER, or SUFFER. We can attribute some of this week's SP runup to that "learning process" working on shortzes.

We saw in Jan 2021 with the Gamestop $GME trading disaster that highly exposed Retail Brokers are VULNERABLE to default/bankrupcy (mainly Robin Hood and Melvin Capital, but also Interactive Brokers to name a few).

When there are more legal obligations to purchase shares than the total number of shares that exist ($GME short interest was 134% of their total stock on about Jan 26, 2021), its a major problem for the Market. This event nearly caused the collapse of several large players, which desparately halted BUYING ONLY for GME, but retail suckers bagholders traders suckers were allowed to SELL as the SP collapsed. Also, Melvin Capital needed a $2.8B bailout from Citadel (which implies their own risk was even higher, if that was their best solution). It happened to $GME.

Now fast-forward to Dec 2021:

• Tesla does NOT need any Capital; so no rescue forthcoming via an Equity Offering
• S&P 500 Index and Benchmarked Funds combined hold ~$300B of TSLA shares
• large funds are direct holders of their shares, which can not be faked on a ledger
• on the split comes, big players will DEMAND all their rightfully owned dividend shares
• its possible a share dividend may trigger a recall by Funds which have loaned shares
• competition for the remaining float will be intense as legal shortzes scramble to cover

Any remaning naked shortzes will also have to compete for that shrinking float, as HODL'rs won't sell and MOMO traders jump in with both boots. And then it's the ...

SQUEEZE.

This is my prediction going forward:

• Thu, Dec 9, 2021 Tesla announces share dividend (split ratio TBD)
• December TSLA SP run-up continues in an epic "Santa Claus Rally"
• Thu, Dec 23, 2021 new shares Distribution Date (D-Day, Merry Xmas!)
• Mon, Dec 27, 2021 TSLA begins trading with these new Dividend shares
  • certain Retail Brokers are AGAIN unable to deliver those shares
  • excuses and cries of 'foul' flood the Media (who's Xmas is spoiled)
  • the short squeeze begins in earnest with exponential runup
  • Tesla DOES NOT offer an Equity rescue (humming Carols instead)
• Jan 2022:
  • some Financial instititutions collapse (looking at JPMorgan)
  • Congress gets involved (so nothing happens)
  • stalemate is not an option

So what does the end game look like? Well, SEC Regulation SHO, Rule 201 "the options market maker's exemption to the prohibition against naked shorting" a.k.a. the "Madoff Rule" has to be the target of this gambit. If Rule 201 is not fixed in a meaningful way, Tesla can repeat this forever going forward as Elon sells 10% year after year.

Untenable... Must fix... Rasputin... China syndrome... Manhatten Project.

Just one last point to make for any doubters who are still reading this: before Bernie Madoff died in prison for his multi-billion dollar fraud ponzi scheme, before Bernie drafted the "Madoff Rule" which is Regulation SHO, Rule 201, Bernie Madoff was the President of NASDAQ.

This can happen. Worse things have happened in the past. We just don't think much about it.

Word.

Mod: Original post. --ggr

 

[StealthP3D]

I guess I should have put the /s in my posts.

But the point is it is not "normal" behavior .

It is a heavily manipulated stock.

I think this kind of volatility is due to a lot of traders trading very few shares. As an increasing number of funds and individuals stake out a position in TSLA for the long-term, there are fewer and fewer shares that are actually trading hands, they are just doing it more rapidly, hence the volatility. Buy, buy, buy followed by sell, sell, sell. The number of TSLA traders is likely increasing with the increasing holders. Traders like a stock that makes big moves quickly so they can get in and get out. They also like a stock on the rise. Of course, Elon's shares coming into the market is increasing the number of shares available for trading somewhat but I think the overall trend is for people to realize Tesla is a great long-term opportunity and people that previously traded it on valuation are increasingly putting it aside and holding it for the long-term.

Volatility is natural in markets, sometimes its higher and sometimes it's lower, the market will decide which it is. Even if you are a long term buy and hold investor volatility is a good thing because it provides opportunity for better entry or exit points (depending upon whether you are building a position or selling one off). If you are just holding, then it matters not even a little bit. People put too much importance on the market price and especially the fluctuations. While one can claim the market price is important because it's the best and only true measure of what a stock or company is worth, that's only as true as it is. What I mean by that is, obviously, the value of a company doesn't wildly fluctuate through the days and weeks like the share price is doing, no, the share price is always trying to find the true value. But it is distorted by so many factors that have nothing to do with the true value of the company and the shares. So that is all noise of the market trying to find the "true" value and is best ignored by a long-term holder.

A great investor has conviction in their own estimation of future value and don't constantly look to the market for confirmation. Sure, it's always nice when the market appears to confirm your estimation but that's all it ever is (an appearance of confirmation). Since the market can be fickle, it can change its mind too. That's why it's always best to focus on the company, their current performance and your estimation of their future performance, not the share price. Because the share price will take care of itself and you have no control over it.

All that said, I think the current volatility, based on the factors in my first paragraph (more traders trading fewer shares more rapidly) will lead to some massive moves to the upside in the near future. Because I think there is HUGE demand for long-term shares that will be filled on any moves lower and so the volatility will cause shares to trend higher. Much higher if the volatility continues. This is really just noise but it will have the effect of valuing more of TSLA's future growth sooner. Tesla has been 'overvalued' by traditional metrics since they went public (and rightly so). The only exception, by my analysis, was in 2019. We have always suspected that as the market learns more about what makes Tesla tick, this effect will become more pronounced. Tesla is stock that will be wildly 'overvalued' by traditional metrics as far as the eye can see (and again, rightly so).

People want a piece of a company that has nearly unlimited growth potential and a very high likelihood of taking good advantage of that potential. And that is exactly what the market is starting to see. The volatility is a natural result of traders and the rest of the market trying to figure out just how much confidence the market has in Tesla's future growth. And it really is noise if you are a long-term investor. The share price doesn't matter unless you are the kind of investor that thinks Tesla will not have a bright future, that things are great right now but that innovation will dry up, competition will become fierce and profit margins will be squeezed by having to compete with superior manufacturers that can produce at a lower cost. If that is you, then you should take advantage of this volatility by selling during or shortly after one of these bull peaks. But I see a strong future for Tesla so I'm not about to exit under $2400 this year and my number will go up next year, and the year after that, as long as I think Tesla continues to have great long-term potential. The market price is almost meaningless unless it becomes what I would consider nearly fully valued looking out a handful of years. And that's probably not going to happen because it would mean the market is more bullish than I am.

$500 more or less per share is inconsequential unless you are building a position, liquidating a position or fancy yourself a trader. Because no one can accurately predict where the price will be tomorrow, next week or next month. It's up to the market.

 

[StealthP3D]

OTOH Charles Kettering alone helped make the Ford model obsolescent. Ford ddi become complacent and grew on and on by being cheaper but eventually technological innovation beat Ford. That is precisely what we hope never coms to Tesla. Manufacturing progress is magnificent, but not sufficient. Will Tesla; continue with product innovation when they have a huge market share?

That's right, only with product innovation will Tesla continue to lead. But if you have been listening to Elon he has let us know the products are not the cars, they are the factories. Most people still don't get this. The factories are becoming ever more efficient and that means no one can match the prices Tesla is able to offer. This will guarantee that they can sell every car they can make because they will have more pricing power as far as the eye can see. A car is second only a house as the largest purchase most people make and people want value.

The factories are being optimized by people who love to figure out new, better ways to do things and work under a management that lets them try new things. Sure, GM could become desperate and tell their engineers to try to develop new ways of doing things that will save them money but they don't have a culture of real innovation. It's a place where bureaucracy has ruled for decades. Turning that around takes a herculean effort and many years. It requires new blood and if you are one of the most innovative graduates in your engineering school, who do you want to work for, the mythical Elon Musk or someone like Mary Barra who speaks highly of the corrupt UAW and pays lower wages and no stock options and might go out of business any day? So, the question is, how does an organization like that not only transform themself into something as lean and efficient as Teslaa but also, how does a troubled organization attract top management talent to make it happen? Because it's obvious Mary Barra doesn't have what it takes to make the big changes necessary. I don't see anyone that does.

The theory that other, hungrier, companies could catch up to Tesla in any reasonable timeframe because Tesla was basking in their successes doesn't hold water. Tesla is attracting the most talented people who have a dream of helping to change the world for the better and none of them have been fooled that the job is not long and hard or that it will be done when EV's reach 50% of sales. The job at hand and the threat of climate catastrophe will continue to drive them to make their products faster and for less money so they can spread to increasingly poorer countries. These are not the kind of people that bask in early success and say "Mission Accomplished". The culture is to invent and innovate better ways of doing things and the processes they develop will live on. It's a virtuous cycle. No one can catch up. Tesla has smartly positioned themselves at the leading edge of the age of technology and they know they are in control of their destiny, not VW, not Toyota, not Ford, not GM, they are irrelevant. Tesla's business model doesn't rely on cheap labor, it relies on innovation.

And to be clear, the big advantage is in making the products for less money. That is where Tesla focuses most of their innovation. Anyone can design a very nice car but how much does it cost them to build a million of them? Can they build a million of them at a price they can sell them for? If there's no profit in it, they don't want to do it.

Tesla doesn't have any real competition now and they don't need any in the future to keep them innovating. Their entire corporate culture demands that and corporate culture is a very powerful thing amongst those who are embedded in that world. Ford had great innovation in the 1910's and 1920's and then it slowly died out. They eventually had real competition but they didn't have a mission beyond making money and it took decades for the competition to become real. Tesla's secret weapon is that they have a mission more important than money. If you want to argue that their lead might dissipate in 20 years, in 2041, fine, I can't project that far ahead anyway and it's not really relevant now from an investment standpoint. But I think it's extremely short-sighted to think they need competition in the 2020's or even in the 2030's in order to effectively carry out their mission. Sure, bring on the competition, it's not even relevant and I don't think it will be relevant for a very long time. Because no one has explained how the laggards are going to suddenly become high efficiency manufacturing power-houses without the best talent, without a clear mission beyond saving the corporation from bankruptcy and beyond getting a promotion. The best they can do is try to emulate what Tesla was already working on 3-6 years previously. The only way they could become relevant competition is to match Tesla's corporate efficiency and their manufacturing efficiency. And no one has even presented a viable plan for achieving that. Tesla's competition will slowly die out with ICE vehicles.

Remember, it's all about the batteries and the 'competition' has battery plans that are woefully inadequate. Tesla's partners in carrying out the mission are other battery manufacturers and mining interests that supply raw materials for batteries and motors, not other auto manufacturers who want to continue producing ICE cars to keep shareholders happy and justify their corporate overhead. Success might eventually breed laziness but we are only into the second inning and there is still 6 1/2 innings to go. Team Tesla wants to humiliate all the other teams. And I'm only talking vehicles here. Considering that we are only in the first inning of the transition from the industrial age to the age of technology, my, oh, my!

 

[avoigt]

All home charging is essentially trickle charging for a lithium-ion EV battery. Unless you have your own Supercharger (fast DC charger). No one does. The article made it clear the problem happens at "up to" 7.5 kW of charge power. So that would be 240V @ 32 amps or the maximum amount Porsche's US market mobile connector can deliver.

This was a mind-blowing revelation that Alex Voigt has delivered today. Not because I want to rub Porsche's nose in it but because the charges against Porsche rise to the level of consumer fraud. They are *very* serious charges. I just hope Alex hasn't been set up by the German auto industry (who would probably love for him to go away) to take a fall. If the charges are false and the 'whistle-blower' managed to convince Alex he was a real source when he was in fact a plant by someone covertly hired by someone in VW Group, it could cause quite a lawsuit. But Alex seems confident the whistle-blower is real. I just hope he's right.

With that out of the way, assuming the source is genuine and also knows what he's talking about, the revelation is really damaging for Porsche and it helps highlight what it means for Tesla to have a lead in batteries. For years Tesla naysayers have said Tesla has no lead in batteries and they always based this on the fact that Tesla did not manufacture their own cells. But, of course, they manufactured their own battery packs for over a decade and, perhaps more importantly, the software that runs the battery management systems. Now, of course, they make some of their own cells as well and that activity is set to explode in volume shortly. But this story highlights what happens when an ICE maker decides they have expertise in battery management because, how hard can it be? Red wire goes to "positive" and black wire goes to "negative", right?

@avoigt , good job on the major story! I would be interested to hear what kind of fall-out follows.

Thank you and I agree these are very serious allegations.

It took me many weeks and profound, intense, and critical validation, review, and verification with a small team including Teslarati, Christoph Krachten as well as one other major media to come to final conclusions to publish. After all information was brought together and validated it's been a clear decision to me that it's real and that I have the duty to publish it regardless if hard proof is found now, in years or never. Not publishing the story would have been irresponsible against all Taycan owners.

The scandal may be even bigger as the MEB platform from VW uses pouch cells too and we had 2 severe fires in Europe with an ID.3 and an ID.4 AC charging at low KW. It may or may not be related but its suspicious to me that the few fires that make it in the press are usually while the vehicle is charging in the early morning hours where you expect the battery to be filled and at low AC KW.

In addition to the article I have much more information I didn't get approval to publish from my source which is backing up the credibility but that's of course only helpful for people who know me as a credible Blogger, Author etc.

I consider publishing a YT video to give some more context and if more information is available I may write a follow-up story

 

[jbcarioca]

This morning I woke up to a full inbox. I therefore give up! I'm trying to reply individually to emails and PM's plus a few telephone calls. Probably I should have assumed that I'm not yet suffering from senility. Anyway, thanks for all the encouragement.
I'm having my new charger installed now and expanded solar panels etc so there is less time today exacerbated by Monday morning markets and other issues.

Over the last three days I have heard of several bits of 'rumors' all of which have already had coverage here and elsewhere:

-significant casting news;
- stainless steel forming developments;
-4680 progress;
-production/shipping/sales developments.

All four seem to be somewhat related. All of them seem unexpectedly positive. None are exactly proven yet, so they all remain speculative. Despite that this time I personally believe them and have acted on the expectations.

In casting there seems to have been much broader applications of smaller castings that share some of the metallurgy and other cost benefits as the GigaPress ones, specifically less processing, better ductility and greater corrosion resistance. Net that seems to indicate that smaller, less notable pieces are also becoming cheaper and better. My source claims no direct knowledge but he has been employed in the automotive casting industry for a long time.

The SS forming issues are ones that have been reported but not actually seen. This one seems to have been almost completely related to the SpaceX Starship developments. My source for this one is a former client who is in the steel manufacturing business who describe his firm as 'screwed'. He's always been optimistic in the decades I. have known him.

The 4680 stories are from TMC and others known to delve into these issues. I have no better sources.

Production/Shipping/Sales have multiple conflicting points.
-Current shipping rates and availability from Shanghai seem very tight. TMS sources don't see that as improving soon.
- Tesla has been using new EU ports within the last few months including Koper and several less traditional ones further North.
- Major improvements in supplier quality and ability have been evident in both Shanghai and Fremont, plus the Brandenburg/Austin developments by suppliers seem to be moving quickly, perhaps not quite at 'Tesla speed'
- each new datum on actual sales and deliveries seems to be unusually positive for this time of year, especially.
- 4680's are at production ready status now, but volumes will have too slow a ramp to solve supply weakness in 2022. Related, CATL, Panasonic, LG and others are ramping as quickly as they can and Tesla is getting preference. Why so certain? Because Tesla is using it's liquidity to help them ramp. There is good corroboration on that but everyone involved is anxious to avoid being too specific.

Those of us who have access to MarkLines etc are convinced that Elon's recent 'reduce the quarter end rush' missive is an expression of very high confidence.
Later this week we will have more November reports and more status updates.

Energy products will not get help until 2023 except for a few high priority situations. Expect several chemistry changes to help accelerate the storage side.
I have asked everyone I know what is happening with chip fabs and when ti will improve. I have only a single contact in that industry who assures me Tesla is far better off then are most solar panel makers and automakers but she still expects at least another year of problems. Tesla arguably will be a huge beneficiary from Samsung's new fab investments coming on line. The solar panel issues include several other supply chain problems, and some near-single source raw materials.

This is entirely qualitative statements because I don't want to impede sensitive sources, and because most of this is not yet proven anyway.

 

[CLK350]

I found the report and downloaded it and I'll admit it was a struggle to read and understand even the sections that I decided to focus on - Executive Summary and Recommendations. The gist is that they have tried to analyze a subset of the financial institutions to assess the amount of carbon emissions they are financing. And then make recommendations on how to address the (obvious) large numbers they identified. I would be interested in seeing some of the very smart folks on this thread help tease out the significance of this analysis and how useful their recommendations are. I suspect that this type of discussion belongs in an Off Topic category - perhaps under Climate Change. The heading is of course dramatic and designed to grab one's attention and if true would of course be relevant to Tesla investors. Not sure where to draw the line between an analysis that belongs here and more detailed ones that belong elsewhere. In case, I'm not being clear - I need help to understand what to do with this besides just saying, "it's interesting."

Not at all OT IMHO, this report "The Global Emissions of the US Financial Sector" @Curt Renz mentioned is very relevant to Tesla, altho I recall postings of mine delving in that area being zapped by our zealous mods (maybe wisely so, can't recall how carefully I'd written these up).

This is:

1. Informational: this report details precisely who is opposing Tesla, ie the people and companies funding the anti Tesla FUD, directly or indirectly, call them the SUGB (Suicidal Unaware Greedy Bastards); the impending crisis, what should be done about it, something the US isn't doing and shouldn't be Tesla's responsibility.

2. Important for Tesla investors to understand. This may still be useful for the benefit of new TMC members here, saving them time to catch up. When I first joined a few years ago I had no idea. There is a cold war brewing between Tesla and the SUGB, and against all odds Tesla is winning it. Tesla can no longer be so easily destroyed (like Solar City was, via Wall Street, as so well explained by our own @Jesselivenomore ) - mostly because it now has ample cash reserves *and* at least one solid non-US base, the Shanghai Gigafactory, out of reach of the US based SUGB. Tesla is in line with the Chinese government interests as they want to reduce pollution and dependence on foreign oil, plus happy to increase their own technical prowess in the EV field.

So good luck trying to flex the Chinese, although some would say we are trying. Note, we don't encounter much opposition when imposing our rules to Mexico or other LA countries, altho some might not agree - see also this historical recap (Mods, if this pushes your buttons, feel free to delete this paragraph)

There are many ways this can develop - best case scenario, a majority of large funds decide to boycott these financial entities or force regulations along the lines put forth in that report, so going one step further than just stopping investments in fossil fuel industries like Harvard's $42B endowment fund recently did. Worst case scenario, something really really bad impacts Tesla, I have no clues, but black swans do exist.

Middling scenario, the FUD as we know it - POTUS and other politicians ignoring, mis-representing or bashing Tesla /EMSK, Wall Street heavies delaying TSLA's true valuation while grabbing money off mis-informed investors continues. Our government lying to help the oil & gas industry, while mouthing support for the burning environmental issue. Or plain wastefully, for special interests' gains, stopping their own government funded initiatives that would have modernized our power grid, reducing costs for consumers while making our power grid more stable. Abroad in Germany, same with difference being the local environmental color added.

Other related thoughts ..

With the SP again down significantly while we (well here at TMC) know full well this is complete manipulation - it is a reminder we really need to push for a rational/ modern upgrade of our stock markets. If our politicians/ leaders don't want to get to this (probably because they are personally profiting from our arcane/ obscure current system, forgetting why they were elected), it will be forced by some competing entity. TBH it might well be the Chinese again, as they did with the LME and soon SDR ; Gold is no longer freely manipulatable, and -unless drastic changes happen in our system, which is not likely - TSLA also won't be so easily manipulatable when that trend (e-Yuan etc) continues.

So, (very) long term, super bullish for Tesla - why try and gain exposure through Chinese indexed funds when TSLA does that just as well, nay, better because it isn't speculative like their housing industry. Germany also won't be able to block Berlin's progress forever... and eventually Tesla also will get some investments in Russia, insulating itself from all major/dangerous powers.

To think Elon figured all this out "on the job" while fighting deadlines and technical issues right and left under pressure, and so few people understand this - am so happy Elon did /does what he does. This may also explain his support for Doge and Bitcoin as less than an eccentric out of line excursion.

Timely: For once Time isn't FUD 'ing Elon - Why Elon Musk Will Go Down in History

Edit: grammar/ readability / link to Financial Sector Emissions report & illustration added for completeness

 

[StealthP3D]

... having a dedicated pr department to combat the FUD - all produced nothing good. Because the interests are different - if he paid the articles, like everybody else does, then the coverage would be positive - but also ineffective/just another useless GM style fluff piece.

And in fact by going his way, ignoring the media, the media attacks have become less and less effective, and lately in fact some of the Media realizes that good stories about Elon are good for them too - it differentiates them from the crowd in a good way - hence the Time etc person of the year.

This is what the crowd that constantly wants Tesla to have a PR department and to buy advertising to "take charge of their public image" don't understand. People are not dumb, especially the people that will be your most valuable customers. They can see through the thinly veiled propaganda. The human mind is constantly categorizing everything it processes on a subconscious level and it's very effective at it as a result of natural selection. People who were best at making sense of numerous subtle clues subconsciously were most likely to survive. The people who survived were the ones who could figure out who to trust, who were your friends, who was dangerous and who was not. And it's not always obvious because people try to deceive for their own benefit, so this is a task best left to the subconscious.

If Tesla paid the media for advertising, then their coverage of Tesla would look much like their coverage of legacy auto - fluff pieces. It would make people subconsciously categorize Tesla with the rest. It would devalue the brand. Even if people's conscious minds were aware of important differences (more efficient, better software, Supercharger network, technological lead, etc.), they would still subconsciously lump Tesla with all the others that have the same general message. The reason it would devalue the brand is because the subconscious mind has a powerful effect on purchase decisions. People are willing to pay a lot more for something that pulls them to it, they are willing to stretch their budget to buy something that their subconscious mind tells them is somehow different from the rest, it can make it feel like the "right" choice. They may not be able to explain it to their spouse so they will justify it logical reasons. It's how humans work.

It's actually good for the brand when people do illogical attacks on Elon and Tesla. It sets Tesla and Elon apart from the rest. Being seen as being different from the rest would be a bad thing if the rest of the industry evoked feelings of trust, motherly love, joy, or were highly inspirational but, alas, there are no traditional auto companies out there that Tesla would want to be associated with on a subconscious level. Almost no one cares about Jim Farley or Mary Barra. Very few people could tell you who was the CEO of Ford, GM, Honda, Toyota, Nissan, et al. People have subconscious associations of these brands based upon their poor dealership experiences. Even though most people try to repress those negative feelings, they are still there in the subconscious. And people largely lump automakers together in the same basket. Tesla stands apart. This is good and advertising would take them one step closer to being thrown in with the rest. That devalues the brand. The fact that Tesla does not have fluff advertising sends a powerful message to the subconscious. and it attracts the best customers. Not every customer is created equal, and this is very important in the insurance industry.

Attacks by politicians are no different. People don't like or respect politicians and attacks from them are bad for them and good for Tesla. Why would Tesla want to be associated with that kind of fake rage?

I see people worry about the 10% of the market that say they would never buy a Tesla. My BIL is one of them. These people don't matter. Because you will never have 100% of the market anyway. Tesla currently has less than 2% of the market. If attacks on Elon damaged the brand, do you really think every other automaker out there would be scrambling to come out with cars that have cleaner interior aesthetics, large center screens and constantly crowing about how much money they are spending on going all electric? It's the other car makers that are trying to emulate Tesla, not the other way around. The worst thing Tesla could do is to try to be more like the others. Elon is smart, that's why he's our leader and has built the company that will soon be the most valuable company in the world. Everyone makes mistakes but Elon's mistakes are not what most people think they are.

 

[mrmage]

I’ve said it before, but will repeat.

I have not seen Elon deviate from the mission nor prioritize his personal wealth over others. His assets are just a means to accomplish his humanistic priorities. Yet he has been vilified by leaders who nip mercilessly at his heels, lying or distorting for their personal gain.

I have seen Elon react as someone wounded might when his best intentions and accomplishments were not merely ignored, but flung in his face, rejected, scorned or refuted. I know this hurts him, and cannot imagine the frustration that he’s had to endure.

This world must appear a thousand times more unworthy, mad, and illogical to Elon than I often feel it is. The vitriol directed at him resulting from their actions is ceaseless.

Like many here, I sometimes worry when the value of my portfolio drops. Having a brain, however, means that I can suppress this lizard-like emotion to realize there will be no long term impact. Elon has always said he supports his long term investors and works tirelessly to support what he believes in.

The benefits of his unending efforts accrue while I sit on my butt in front of the monitor, paddleboard in the ocean and eat at a nice restaurant. Therefore, I take a temporary haircut to the great wealth that he generates for me quietly, to show my solidarity and appreciation.

The non-lizard part of my brain says that anyone who believes in Tesla, Elon, and fundamentals will be fine. No long term investors he cares about will come out behind. Far from losing, I will be much further ahead due to this buying opportunity.

I’ll eat my words if I lose a substantial amount of my assets in the years ahead because of this. However, it’s far more likely that I’ll see my assets double or triple in value in a year, if not in just a few months.

/soapbox

 

[winfield100]

Note:
first graph
SP was ~$1,150 start of selling ~15 million shares, and acquisition of ~23 million shares
SP is ~$1,100, after 7 weeks, barely affected by ~7.5 weeks of sales (~ -4.5%)
folks had a quite tasty buying opportunity (buy what was ~$1,150 for $~900 momentarily)
(hopefully this is a prelude to the next 7 years when ~101 million shares are acquired and a portion sold for taxes and acquisition costs, with little disruption to the HODL'ers)
(link below to SEC form)

SEC FORM 4

(Elon seemed to _net_ gain between 6-8.5 million shares from a cursory first glance)
2nd graph
SP was under $600 6 months ago, linear regression line is nice and trending up, presently ~$1,100,
(this is quite delightful fun)

 

[petit_bateau]

There was some chit chat recently on how long it might take to transition fully from ICE to EV. Since I cleaned up my long term historical data series and future forecasts I thought I could look at that fairly easily, at least for some crude approximations so as to add data to what can otherwise be an unreal discussion.

There are issues around both stocks and flows, i.e. how many vehicles are in existence and how many get built and/or disposed of each year.

For the definition of a vehicle I used the IOICA ones (www.oica.net) which differentiate between light duty vehicles (aka 'passenger') and heavy duty (aka "commercial"). The "passenger" ones of course includes all those 'trucks' the yanks keep bleating about, whereas the heavy duty ones seem to be mostly the large buses and heavy goods vehicles.

For flows there are many series of tota production and with a bit of care one can identify light vs heavy. For lifespan one needs to be careful - most of the studies tend to give a vehicle lifespan in the mid-teens. However as any visitor to a poorer country will see the vehicles there are often well beyond mid teens, and so one needs to account for vehicles being exported out of rich nations to poor nations, and so skewing the data. This study (Lifespans of passenger cars in Europe: empirical modelling of fleet turnover dynamics - European Transport Research Review) looks at that and comes to 18-year lifespans for west Europe and 28-year lifespans for East Europe. As a result I selected a 20-year lifespan for global average forecasting purposes, though inevitably that will mask both national variation and the likelihood of some compression during the latter stages of adoption.

There is talk about how autonomous vehicles may result in fewer vehicles as each vehicle gets more fully utilised. I don't see any significant autonomy hitting the mass-market pre 2030, if only for regulatory reasons. Equally as (hopefully, perhaps) more humans around the planet are able to afford access to vehicles that will tend towards greater numbers of vehicles, though of course the continued penetration of rail solutions will have an effect, at least in some regions. During the transition some ICE-manufacturers will naturally push cheap vehicles into the market in an attempt to survive and that will drive volumes up, but then some of them will go bankrupt before the corresponding EV volumes are fully available, which will complicate matters. Therefore I imposed a long term (2040) production volume of 60 million vehicles/year to account for these various effects, and I sketched in a production profile over the next 20-years that attempts to reflect a bounce-back from Covid and these factors.

As we know Tesla are pushing towards 20m/yr in 2030, and for the last few years Tesla have been approximately 22-23% of BEV-sales (see my previous studies and also EV-sales-blogspot). However Musk is on record as saying he thinks by the time Tesla get to 20m/yr the others will only reach 10m/yr. That does not seem likely to me as non-Tesla BEV production was already 2.5m in 2020, and non-Tesla growth rates have historically also been good. Nonetheless we can see that non-Tesla long-range integrated planning may be less than perfect and so I set up a progression for Tesla from the current 23% towards 50% in 2030. After that there is no good reason for Tesla to stop growing, indeed many reasons that they could and would do so. In this respect we can recall that Ford were once at 60% market share in the inter-War years. Therefore I assumed that Tesla continue to grow to ~30m and that the remainder of the industry match that rate.

For PHEV it seems to me that they are a failed technology and so once the current crop have come to market as a way of spreading the batteries around as thinly as possible, they will diminish to fairly rare use-cases. I suspect they will peak at 4.6m/yr in 2024 at 5% market share.

This gives the following production breakdowns.

or put differently it suggests ICE production would - naturally, and without requiring intervention - cease globally by 2035.

This assumes that Tesla perform on their stated plans, and that by-comparison other companies fail to individually match Tesla and can only (together) hold parity in volume terms with Tesla. If the ~25% market share of Tesla were to remain steady and the other companies somehow are able to match Tesla's growth rate then of course ICE-manufacture would end far earlier. Other combinations are of course possible.

In stock terms this creates the following global outcome, with ICE fully eliminated to all intents by 2050. From an energy perspective they would have become irrelevant earlier as the most mileages are driven by the newer vehicles.

Maybe one day I'll look at the energy and carbon implications of this.

EDIT: Left Hand Axis on most of these charts is of course "millions of vehicles". ICE = internal combusion engine, aka "dino-juice". BEV = battery electric vehicle. PHEV = plug-in-electric/hybrid vehicle. I've ignored fuel cells, hydrogen, etc as being irrelevant.

 

[StealthP3D]

Love the "it can't be done" crowd.

They along with the "it will take a much longer time" crowd have made me a lot of money.

An offshoot of the "it can't be done" crowd is the "if Tesla can do it, others can do it just as well" crowd. These people don't think Tesla has anything special, they are rooting for someone, anyone other than Tesla, to succeed. And I get that - it would be nice if all automakers could flip a switch and churn out EV's in large enough numbers to meet all the demand right now. But, these people should be careful for what they wish for. Because at the point there are enough EV's to satisfy demand, the emperor will not be able to hide behind low volumes while using ICE sales to cover up the problem. The problem is the cost to produce. It is impossible to offer good value when your company is inefficient at manufacturing.

Legacy auto could claim to be efficient at manufacturing ICE cars because there was no one to show them what was possible. There was no Tesla of the ICE world to illuminate just how archaic and inefficient automaking had become. It's easy to look good when you are surrounded by a field of equally incompetent manufacturers bringing poor value to consumers worldwide. Huge barriers to entry protected their incompetence.

The transition to EV provided the private investment capital for a new company to enter the race. Tesla knew they had to try harder and offer more to scale the barriers erected by the status quo and that caused them to reimagine what an auto could be and how it could be made at lower cost. Most of us here have profited handsomely by realizing that Tesla does have something special. And as time goes on, the difference between Tesla and the rest becomes more and more apparent, not less. Remember when people said the others will catch up to Tesla? Those people don't understand, it's not just about making a car with certain specs, it's about offering real value. They don't understand that not all manufacturers are equal.

The impressive P&D numbers released yesterday are not the really important thing, at least not directly. The reason the P&D numbers are important is what they reveal about Tesla. This is the best demonstration yet of Tesla's ability to make more with less and that is what drives down the cost for consumers. In four weeks, that will show up as enviable margins in the release of the 2021 financials. Those industry leading margins, even before Tesla has reached volumes measured in millions per year, are just the tip of the iceberg that has big, bloated legacy auto running scared. If Tesla can increase production and reduce cost per car that easily now, how can they compete on price when Tesla has economies of scale of millions of units per year and the EV market starts to become saturated? Because Tesla's cost to produce advantage will continue to increase with the application of new production technologies and increasing production volumes will multiply those effects. Legacy auto debt will grow as they struggle to modernize and keep up and huge debt works against the goal of low cost to produce. Anyone who thinks others will be able to keep up on that most important metric, cost to produce, must be smoking crack.

 

[Discoducky]

After this past week, I felt the need to write a bit about how I see Tesla and how this next earnings is a huge step in the transition to, what I would call a 'AI native companies', direction. Not my full thoughts, but as much time as I have today...

TL;DR - We are witnessing the increasingly fast transition to AI focused/native companies from **even** companies that are digital native.

The longer version...

Anyone remember this? DeepMind AI Reduces Google Data Centre Cooling Bill by 40%

6 years ago and that was just the first public iteration of infrastructure AI optimization. Imagine all the ways that Google is now implementing AI throughout the company. And you probably haven't even scratched the surface. DeepMind is pursuing AGI, but is solving many other issues along the way. Google is saving some serious money as they operate way more data centers than you think and owns, yes owns, soup to nuts, the entire supply chain of the internet, and continues to grow the percentage of cables and connective HW they own. They own most of the internet infrastructure. Yes, AWS has a bunch of data centers as well, but Google owns most everything in-between them.

This is just an example, but AWS, MS and FB (Meta) are all taking their respective pieces of the 'AI pie'. And I can talk to these, but it simply pales in comparison to what Tesla is solving.

Where does Tesla fit in? The AI pie is big and Tesla has made it bigger as no other big AI native company is going after labor. I didn't see that coming and I don't expect to see a prototype in the wild for at least 3 years, but when, not if, Tesla solves FSD, I'd bet the AI needed for the bot is close behind (1 to 2 years). Just owning FSD is enormous, but throw in AI for the grid and storage, energy generation, worldwide charging network...etc and it is bonkers. AI is at the core of how these systems will emerge, grow and flourish.

So wait, what happens to other traditional companies and other digital native companies? Well, their abilities to grow as fast as they used to is going to get much harder and they will feel the affects of 'sunk costs' and 'legacy thinking'. We'll continue to see these large AI native companies start swallowing up market share, increasing profits, economies of scale and all other non-AI native companies. This will happen stunningly fast (less than 10 years) IMHO. As the economy will require help over the next several years to recover from the pandemic, we'll see so many more companies go the way of the dodo.

Hold on, what? Yep, this is happening fast. AI is being integrated at the lowest levels of large tech companies that is enabling such immense economies of scale that it enables them to achieve profound ROIC relative to other tech companies. As we enter earnings season, this might be apparent to folks on this thread, we'll continue to see this story unfold, but it is AI that is at the heart of this. Don't be distracted with AR or VR (which is still 5 to 10 years away for TAM explosion; and will continue to be IMHO for at least another 5 years due to chip design but that is another discussion). AI makes so many formerly hard coding tasks, into a goldmine, **IF** you can acquire the talent to do it. Machine Learning Experts and Data Scientists on top of having the massive hardware to scale your models. These folks are all clamoring to work at Tesla for Elon. I get a lot of people interested in knowing about this from my network. But it is simple: Elon doesn't care about anything except one thing for Tesla and one thing for his other endeavors. Uh, it is such a breath of fresh air for an engineer to have that as a constraint and then go guns-a-blazing toward the finish line.