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

[insaneoctane]

Anyone want to share insight to what creating a vehicle capable of 500K low maintenance miles does for the resale value of said vehicle? Why do most vehicles heavily depreciate so quickly?

 

[Green Pete]

Anyone want to share insight to what creating a vehicle capable of 500K low maintenance miles does for the resale value of said vehicle? Why do most vehicles heavily depreciate so quickly?

I think most vehicles depreciate so quickly because you are padding the pockets of the middleman dealership and the commission paid salesperson who works there. Most cars lose some crazy amount of value the moment you sign the paperwork. ICE cars are just overpriced. If ICE cars were fairly priced they'd be cheaper in the first place.

 

[ItsNotAboutTheMoney]

Anyone want to share insight to what creating a vehicle capable of 500K low maintenance miles does for the resale value of said vehicle? Why do most vehicles heavily depreciate so quickly?

I think the large depreciation on premium vehicles is because:
- the people buying them new have more money than sense,
- there are a lot of lease deals to move the rest of them

 

[LN1_Casey]

Starlink having the capability of serving fast moving objects all around the world makes the revenue potential almost infinite.

They better offer it to Tesla owners.

It's not about the speed or movement of the object, it's the size and placement. Atop a semi-truck, a pizza box sized object is barely a blip. Further, it could be "embedded" into that upper, fiberglass wind deflector they have, to make it virtually flush without damaging the integrity of the cabin, or obstruction the view of the windows.

Atop a car? Jeep Cherokee, no. It's bad enough with the lidar applications that the Google cars have, let alone something much larger for an extremely limited use. Cars just, frankly, don't travel as much as Semi's do, and are rarely outside of signal of a cell phone tower that can provide adequate signal.

 

[30seconds]

Anyone want to share insight to what creating a vehicle capable of 500K low maintenance miles does for the resale value of said vehicle? Why do most vehicles heavily depreciate so quickly?

I think the biggest impact will be little drop in value of the cyber truck for many years. There won’t be much of an incentive to get a new one once you have one, so the resale market will be very small and there won’t be much of a rationale to drop to price to sell one as it will be basically new for years. Especially since Tesla is engineering the entire truck to be 1m+ miles (suspension / heating / cooling / transmission / stainless steel body)

Maybe similar with 3 & Y but exterior wear and tear will be more evident and it’s not clear how long other components will last

 

[⚡️ELECTROMAN⚡️]

Especially since Tesla is engineering the entire truck to be 1m+ miles (suspension / heating / cooling / transmission / stainless steel body)

Where did you hear that?

 

[TheTalkingMule]

As the story points out, there's a LOT of old peakers out there- they're dirty, they're expensive, and there simply isn't enough large scale batteries to get rid of them... hence building new, 30 times cleaner (in this specific case) as well as cheaper NG plants still makes sense for now.

Nonsense. There is no "peak" to be serviced moving forward, especially in high renewables plans like the one for NY State.

Batteries situated alongside large scale renewables ruins the economics of gas peakers. Battery systems ability to regulate the grid without effort is the other nail in the peakers coffin.

From here on out it's just a matter of supply. If Tesla(or whomever) can build packs, people will buy them instead of peaker capacity.

 

[Beltsbear]

It's not about the speed or movement of the object, it's the size and placement. Atop a semi-truck, a pizza box sized object is barely a blip. Further, it could be "embedded" into that upper, fiberglass wind deflector they have, to make it virtually flush without damaging the integrity of the cabin, or obstruction the view of the windows.

Atop a car? Jeep Cherokee, no. It's bad enough with the lidar applications that the Google cars have, let alone something much larger for an extremely limited use. Cars just, frankly, don't travel as much as Semi's do, and are rarely outside of signal of a cell phone tower that can provide adequate signal.

It could be placed in the frunk with a radio invisible plastic section. But that’s probably a subject for another thread.

 

[MC3OZ]

Anyone want to share insight to what creating a vehicle capable of 500K low maintenance miles does for the resale value of said vehicle? Why do most vehicles heavily depreciate so quickly?

We need to consider if FSD works in time for the car to have a useful 2nd life as a Robo-taxi, the original owner can still upgrade regardless of who uses the vehicle as a Robo-taxi it has an amount of income earning potential

The motors, battery and a lot of the electronics may still be viable after the body has rusted out.

With an old ICE fear of large maintenance bills can be a reason to sell. Sooner or later cars are worth little as there are more sellers of old ICE cars than buyers... In contrast the EV fleet size is smaller and newer, EVs are going to be supply constrained for sometime, increased longevity further adds to good resale prospects.

 

[JusRelax]

It looks like tesla could be setting up a new battery factory in Indonesia:

Tesla closer to building battery factory in Indonesia: Report - Drive Tesla Canada

Gokil! Tesla Elon Musk Bakal Bangun Pabrik di Batang Jateng

https://twitter.com/FirstSquawk/status/1318025371158253570

 

[Criscmt]

That row in that table shouldn't be interpreted as a SP prediction per se. A stock rarely goes up in linear fashion like that, as we've seen with TSLA over the last decade.

The 50x EBIT multiple is simply something I've used, usually to look at options, because I think 50x EBIT is more than reasonable for TSLA as a high-growth, high-potential company (AMZN is closer to 100x EBIT). Of course the current low interest rate environment influences this, as do many other things, such as the fact that Tesla is likely to grow unit volume by nearly 100% YoY in 2021.

I wouldn't say shares are priced to perfection, but I can sort of see where you're coming from. Besides S&P Inclusion (and perhaps the market waking up to autonomy), I also think that Tesla beating earnings in the next few quarters probably won't make the stock price double/triple again like it did over the past few quarters. This run can't go on forever, and although it can and likely will continue to go up, it does have to slow down at some point, or else Tesla will be valued at $2T at this time next year, and $10T in 2022/2023.

Thanks @FrankSG!

> The 50x EBIT multiple is simply something I've used, usually to look at options
SP @50x EBIT is a/the key factor in evaluating if it's right time to buy options?

>Tesla beating earnings in the next few quarters probably won't make the stock price double/triple again like it did over the past few quarters.
Sure, I share the view. I am hoping all the bulls here and elsewhere also don't have such unreasonable expectation, for their own good.
@Everyone, I am not trying to be pessimistic here, I won't be surprised if the SP goes 600-700 within an year from now, macros permitting.

I might be going on a tangent here, but related to the topic of the expected SP trajectory (barring S&P factor), do you see IV (on LEAPS) coming down even further from here, considering the current IV is high historically speaking?

EDIT:
@Folks who disagreed with my first comment to @FrankSG post on this chain of messages, can you please share more information on the disagreement from your end. I view knowing the rationale behind disagreement as very valuable. Helps me minimize missing any perspective.

 

[MikeC]

It looks like tesla could be setting up a new battery factory in Indonesia:

Tesla closer to building battery factory in Indonesia: Report - Drive Tesla Canada

Gokil! Tesla Elon Musk Bakal Bangun Pabrik di Batang Jateng

https://twitter.com/FirstSquawk/status/1318025371158253570

Indonesia has 25% of the world’s nickel reserves and bans the export of nickel ore because it’s trying to set up in-country battery supply chains. Sounds very plausible.

Nickel mining in Indonesia - Wikipedia

 

[StarFoxisDown!]

Thanks @FrankSG!

> The 50x EBIT multiple is simply something I've used, usually to look at options
SP @50x EBIT is a/the key factor in evaluating if it's right time to buy options?

>Tesla beating earnings in the next few quarters probably won't make the stock price double/triple again like it did over the past few quarters.
Sure, I share the view. I am hoping all the bulls here and elsewhere also don't have such unreasonable expectation, for their own good.
@Everyone, I am not trying to be pessimistic here, I won't be surprised if the SP goes 600-700 within an year from now, macros permitting.

I might be going on a tangent here, but related to the topic of the expected SP trajectory (barring S&P factor), do you see IV (on LEAPS) coming down even further from here, considering the current IV is high historically speaking?

EDIT:
@Folks who disagreed my first comment to @FrankSG post on this chain of messages, can you please share more information on the disagreement from your end. I view knowing the rationale behind disagreement as very valuable. Helps me make sure I am not missing any perspective.

I didn't hit the disagree post on your original post but I do disagree with it. Tesla is not priced for perfection. Its priced where it is because Tesla is executing on its growth strategy and expanding a tech and software lead. The tech and software importance to value is debatable, but Tesla executing on their growth plan isn't.

Simply put, if you believe in Tesla’s production road map for the next 2 to 3 years, Tesla shares are not overvalued and could be easily argued that they're undervalued. Again, this only makes sense if you believe in Tesla's growth road map. Next year, I believe Tesla will make 1 million vehicles which will generate revenue, profits, and free cash flow that makes Tesla shares today pretty cheap. I'm confident in that growth.

I would imagine the people that did disagree with your original post might feel the same way. There's no need to caution about your view being pessimistic.....as long as your expectations of Tesla’s next 1 to 2 years accurately reflects that. If you are saying you think Tesla will deliver 1 million cars next year and that the share price will only be 600-700.....I would say somethings off with your calculations or that you're being pessimistic for no reason other than to be pessimistic. If you personally think Tesla will only deliver 750k vehicles or so in 2021, then your 600 to 700 share price would make a lot of sense.

 

[ZeApelido]

Lol

https://twitter.com/WholeMarsBlog/status/1318042663338135552?s=20

 

[Buckminster]

Presumably Starlink could be installed in the frunk fairly easily. Change the hood to glass fibre.

 

[Green Pete]

Presumably Starlink could be installed in the frunk fairly easily. Change the hood to glass fibre.

My understanding of starlink is that while it is not utilizing the parabolic dish shape of a traditional stallite dish it is still aiming itself for optimum reception. The user terminal innovation is that it possesses a number of motors that allow it to self correct it's positioning.

This would be viable in a wind shadow on a semi truck.

I think it would be a highly unlikely solution on a passenger vehicle, without some significant aerodynamic sacrifice.

 

[smorgasbord]

You also appear to have read the exact opposite meaning into why I brought up the nonsensically high rate of car ownership in NYC.

That's just you distracting from your buckshot defense of nonsensical statements - from letting people eat in rental cars to taking a helicopter, to saving wear and tear on vehicles one doesn't own - hoping that something will stick. It hasn't.

 

[SOULPEDL]

Maybe they didn't talk about a million mile battery at battery day because they are working on 2M miles.

Jeff Dahn starts at 22:30

Agreed. Simple math on a 666 mi battery x 1,500 cycles = 1 Million Miles using OLD chemistry. The life is affected by range - it sounds obvious, but 1M is too easy really, we were almost there without Battery Day. I'll never outlive our Model 3 with 325 mi x 1,500 = ~1/2 Million Miles. So the Million Mile battery pitch seems to fit more for Trucking, or Powerwalls. Trip Range is worth more for the cars.

 

[heltok]

[URL="https://www.cnbcindonesia.com/news/20201019091456-4-195282/gokil-tesla-elon-musk-bakal-bangun-pabrik-di-batang-jateng"]Gokil! Tesla Elon Musk Bakal Bangun Pabrik di Batang Jateng
[/URL]
For those of you who don’t speak bahasa Indonesia:
Google Translate
https://www.tesmanian.com/blogs/tesmanian-blog/indonesia-1
Not an expert on the region but I once had to do a 16h taxi ride through Java to escape an erupting volcano closing down the airport and I was not sure about the location. Would have guessed Tesla would choose a location outside of Jakarta or Surabaya for more labour intensive factory. Maybe it more a mining/refining where they want to be close to the nickel and then just take it to a ship nearby. Anyway did some more digging, could be a part of this project:
Indonesia Welcomes $38b Factories Relocation From China to C. Java

Bolded some tesla-related industries from the text.

Last year, President Joko "Jokowi" Widodo saw 33 companies ignored Indonesia and moved their factories to the neighboring countries. Since then, he has vowed not to miss such an opportunity again.

"There are 119 companies likely to relocate, and I do not want we can't get even one of them. I don't want to see last year's [mistake] happens again," Jokowi said when visiting Kawasan Industri Terpadu Batang (KIT Batang) industrial estate on Tuesday.

"I have told the head of BKPM [the Investment Coordinating Board] to take care of the investors' needs from A to Z, so they feel being served," Jokowi said.

"Just tell us what you want us to provide, whether it's land, permit, electricity, gas, etc.. These kinds of service will improve our competitiveness and make the companies want to relocate their factories to Indonesia, "Jokowi said.

BKPM Head Bahlil Lahadalia said the companies don't need to buy the land in KIT Batang, sparing them from having to solve land acquisition problems that have been the bane of investing in Indonesia.

"In KIT Batang, investors do not need to buy land. If the process of developing the Batang industrial estate starts next year, this industrial estate will be more competitive compared to Vietnam," Bahlil said.

The Companies

Among the seven companies that were relocating their factories from China to Batang was South Korean electronic giant LG Electronics and CDS Asia, the subsidiary Alpan Lighting, a solar-powered garden lights manufacturer from the US.

Three Japanese firms were also moving their plant to Batang, including electronic component manufacturer Sagami Electric, automotive parts maker Denso, and electronics giant Panasonic.

Audio and video equipment maker Meiloon and tire maker Kenda Tire, both from Taiwan, are also joining the moves.

Industry Minister Agus Gumiwang Kartasasmita said among the 17 companies pledged relocation commitment was LG Chemicals with an investment plan worth $9.8 billion to build an integrated battery plant and nickel smelter in Batang.

Agus said the seven companies would provide 30,000 jobs to the locals while the LG Chemical project alone had the potential to open 14,000 new jobs.

The Industrial Area

KIT Batang is controlled and managed by a state-owned enterprise consortium led by Perkebunan Nusantara III. The company set to lease the complex long term to investors who find it difficult to purchase land anywhere else in Indonesia.

The industrial complex has 4,000 to 4,300 hectares of land ready for development. Today, KIT Batang has developed 450 hectares of the property.

Trans Java Toll Road connects KIT Batang with key container ports like Jakarta's Tanjung Priok and Patimban, which is currently under development. Indonesia railway operator Kereta Api Indonesia (KAI) would also connect the industrial with rail track and a dry port.

State utility firm Perusahaan Listrik Negara operates 2,000 megawatts Batang coal-fired power plant and a 50-megawatt solar power plant that are ready to supply the industrial complex. State energy company Pertamina provides the gas and fuel lines.

 

[SOULPEDL]

Futures are green. Seems like a stimulus bill before the election is still possible...

Pelosi gives White House 48 hours to reach coronavirus stimulus deal before election

Pelosi Shifts Deadline If Trump Wants Pre-Election Stimulus

...and it's Monday soon!
I've got another 100 Buy at $431, but no way unless MMD hits hard. But then it's smooth sailin' for the week.