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

[CyberDutchie]

How is an investor supposed to estimate the FSD timeline, especially considering that we are not on the team developing it and probably don't have experience with AI being used on anything remotely close to FSD in terms of breadth, scale and diversity?

I've been a long-time bull on Full Self Driving and have defended the technology often in the face of naysayers who claim it's not viable (ever) or will take decades to be safe enough to use. But as an investor, I would caution against thinking the latest beta release has moved the timetable for governmental approvals forward or that the market will suddenly "get it". In terms of the market, it will be a gradual and inconsistent factor in TSLA valuation with many fits and starts.

To have a better idea of what the timeline might be, I look to people who are much closer to the effort than I. Like Elon. From parsing his statements about FSD I gather the point at which it will mostly be able to drive itself is going to come quickly, much more quickly than most people suspect (and indeed, the latest demonstrations support this), but Elon has been hesitant to make predictions about government approvals and has been warning about the uncertainty of the "march of 9's" for years now. At some point the challenge of approval moves from a purely technical one to a political one.

My personal belief is that it would be criminal NOT to approve it as soon as it can be shown to be statistically significantly safer than humans even though a skilled and attentive human driver is capable of being better than a machine for perhaps a decade or more. Some of the very qualities that make the average human such a terrible driver overall are the same things that will allow an attentive driver with good eyesight and plenty of experience to outperform the best machines for years to come. Humans can be good drivers, they just don't pay enough attention because they become conditioned to believe they don't have to be hyper-attentive. The fact that a hyper-attentive and skilled human will still be better than a machine is not a reason to not approve FSD. The fact that humans are, statistically speaking, absolutely horrific drivers makes FSD approval a very low hurdle indeed.

First principles thinking says the acid test for FSD approval should be: Does it cause the death/accident rate to go up or down from where it would have been without FSD approval? And Tesla is in an enviable position in terms of the amount of data they will have at their disposal with which to make their case to the regulators. Regardless of when first principles thinking says it SHOULD be approved, Elon knows this is not a given. And while his actions and statements can and will AFFECT exactly when it is approved, ultimately, it's beyond his direct control because regulators don't necessarily use first principles thinking. Humans are not always logical and have many built-in biases. Hence his hedging on the timeline of FSD approval. Even though the market will recognize FSD value in fits and spurts in advance of approval, the valuation will also reflect that the bulk of the value is not unlocked until it's actually approved.

Even Elon doesn't know when regulators will actually approve it and it could drag on longer than one might think is reasonable. If it does drag on, previously recognized value of FSD (in the share price) will fluctuate. All of the above might seem obvious to some but it outlines a number of strong reasons why the best strategy is still "buy and hold".

I don't think we are seeing many challenging situations in any FSD videos yet. Here is a video of a Cruise presentation last year at Google Next that show clips of a few of these challenging situations in San Francisco--one of the more challenging urban environments you can find. Scroll to 3:40 in the video.

Pretty good that Cruise can handle situations with multiple cars blocking the lane, double- or triple-parked cars. Cruise received a permit from the California DMV just last week to remove the human backup drivers from their cars. This allows them to test level 4 autonomy (full self-driving under certain conditions, geo-fenced) on the streets of San Francisco.

Tesla of course has the advantage of much faster learning due to cars on the road, and has a good chance to be first in solving general full autonomy (vs. geo-fenced or other boundary conditions).

Btw. Reason for posting this here is that while to many of us it's clear Tesla is in the lead, the industry does not agree with that. The industry puts Cruise and Waymo in the lead with Tesla a challenger. See the 2019 Navigant Research autonomy leaderboard:

As for Tesla's data/real-world miles advantage: the counter argument from Cruise, NVIDIA, and others is that simulation can make up for a lot of real-world miles. This, plus the fact that Tesla FSD is still at level 3 (limited self-driving: vehicle will inform the driver when he or she must take over), is probably the main reason that you don't see analyst upgrades yet from this FSD beta release. I expect as soon as Tesla moves to level 4, the analysts are going to pay attention.

 

[jerry33]

OT
Even Renewables Are Bigger In Texas

Interesting read (Forbes) about renewables progress in Texas. Even in the land where hydrocarbons are king, economics win out in a deregulated market.

View attachment 602210

I've been saying this for quite a while. Almost all the new stuff in Texas is solar and some wind.

 

[Christine69420]

A surprisingly positive article from Business Insider about Tesla and The Machine That Builds The Machine - some quotes:

Elon Musk's manufacturing obsession could make Tesla into an industry — and make him a 21st century Henry Ford

On a call with analysts and investors to discuss the Q3 results, CEO Elon Musk returned to a preoccupation with manufacturing, an area that he believes could be Tesla's greatest achievement.

Musk wants Tesla to do things very differently from the rest of the car business, in order to go beyond building cars to developing a new, vertically-integrated industry.

Imagine that the machine that makes the machine doesn't just make machines, but creates a level of vertical integration that's never been seen. Tesla would entirely own that machine-making machine and be able to leverage it to make many, many other things.

For that reason, some of Tesla's most outrageous bulls, the ones who think the company could be worth more than Apple or Amazon, might be right. And with Tesla's struggles evidently behind it, Musk is now free to feed their enthusiasm.

Source: Elon Musk's manufacturing obsession could make Tesla into an industry — and make him a 21st century Henry Ford

 

[StarFoxisDown!]

I don't think we are seeing many challenging situations in any FSD videos yet. Here is a video of a Cruise presentation last year at Google Next that show clips of a few of these challenging situations in San Francisco--one of the more challenging urban environments you can find. Scroll to 3:40 in the video.

Pretty good that Cruise can handle situations with multiple cars blocking the lane, double- or triple-parked cars. Cruise received a permit from the California DMV just last week to remove the human backup drivers from their cars. This allows them to test level 4 autonomy (full self-driving under certain conditions, geo-fenced) on the streets of San Francisco.

Tesla of course has the advantage of much faster learning due to cars on the road, and has a good chance to be first in solving general full autonomy (vs. geo-fenced or other boundary conditions).

Btw. Reason for posting this here is that while to many of us it's clear Tesla is in the lead, the industry does not agree with that. The industry puts Cruise and Waymo in the lead with Tesla a challenger. See the 2019 Navigant Research autonomy leaderboard:

View attachment 602212

As for Tesla's data/real-world miles advantage: the counter argument from Cruise, NVIDIA, and others is that simulation can make up for a lot of real-world miles. This, plus the fact that Tesla FSD is still at level 3 (limited self-driving: vehicle will inform the driver when he or she must take over), is probably the main reason that you don't see analyst upgrades yet from this FSD beta release. I expect as soon as Tesla moves to level 4, the analysts are going to pay attention.

Sorry but I couldn't decide where to rate funny or disagree on this post. That study by the "industry" is an even bigger joke than the industry saying "competition is coming 5 years ago" when it comes to EV's. I dont think I need to explain why. The "industry" is clueless and/or intionally trying to mislead. That study was practically a hit peice and it doesn't take much to put the pieces together to figure out the intent behind it.

Simulation miles do not equal real world miles and anyone that really believes that or thats its even close is someone that I can't take serious. Of course companies that have no choice but to use simulation will say its an acceptable substitute for real world miles. Its their only option. I dont really care about analyst upgrades based on the FSD beta build because analysts have been clueless on this company for years...in practically every aspect. I pretty much ASSUME they will continue to be clueless of the value of this until it slaps them in the face...the same way they got slapped with Tesla's dominance in EV's.

And really? That video by Cruise shows less than a handful of times it worked, all were short clips. They of course didn't bother to show the many times it failed. The fact that they couldn't show a clip longer than 20 seconds despite having ample time to try and do a clip of say 5 mins(or even 1 minute of driving with no intervention) of continuous driving should tell you everything you need to know about how well things are going for them.

 

[Joe F]

Too late to edit...but I wanted to add........Human's THINK they are good at driving in bad weather.
At least (the current version of AP) KNOWS it can't see and basically says "I give up..you want to keep driving go for it...but I aint helping"

Humans are not that honest and will keep trying when they really should pull over and stop.

Depends on what you mean by bad weather. If heavy snow, or dense fog, I agree. If you mean blinding rain, I disagree.

With the right (clean!) windshield, properly treated, I’ve never had any problem at highway speeds, ever. Shift position in the lane to ride the crown, and there’s little chance of hydroplaning. While everyone else is pulled over because they can’t see beyond the hood of their car, I’m in the left lane at legal speeds and can see far down the road, and can discern where any flooded spots are and avoid them. Have done so over decades with zero issues.

EDIT: Since I just read ggr’s post, I’ll add that, with a clean hydrophobic treated windshield, FSD should be able to handle driving in heavy rain without issues. The market will not understand this, but there are those who do. I wouldn’t be concerned.

 

[BornToFly]

I now don't think the SP will rise much with the release of FSD until Tesla starts making money from robo-taxis. Just like the SP stayed flat for years while we watched the business grow 50+% per year until they had a positive quarter. Sure, a few smart investors will accumulate a little, but the rest of the market will say "show me the money" first. This means we should have a buying opportunity for a while if you want more shares at the current price.

 

[Nolimits]

A surprisingly positive article from Business Insider about Tesla and The Machine That Builds The Machine - some quotes:

Elon Musk's manufacturing obsession could make Tesla into an industry — and make him a 21st century Henry Ford

On a call with analysts and investors to discuss the Q3 results, CEO Elon Musk returned to a preoccupation with manufacturing, an area that he believes could be Tesla's greatest achievement.

Musk wants Tesla to do things very differently from the rest of the car business, in order to go beyond building cars to developing a new, vertically-integrated industry.

Imagine that the machine that makes the machine doesn't just make machines, but creates a level of vertical integration that's never been seen. Tesla would entirely own that machine-making machine and be able to leverage it to make many, many other things.

For that reason, some of Tesla's most outrageous bulls, the ones who think the company could be worth more than Apple or Amazon, might be right. And with Tesla's struggles evidently behind it, Musk is now free to feed their enthusiasm.

Source: Elon Musk's manufacturing obsession could make Tesla into an industry — and make him a 21st century Henry Ford

"It wasn't the Model T that created Henry Ford's fortune — it was the moving assembly line that enabled workers to rapidly build the car," I noted. "It wasn't the Camry or Corolla that made Toyota the world's most valuable car company — it was the 'Toyota Production System' that replaced Ford's earlier innovation. For Tesla, it's the gigafactories that matter, more than the vehicles."

very thought provoking.

 

[Destination]

***legit think we’re missing something critical****

Tesla gonna make Y in Germany with some of the new battery architecture.

When is somebody who can get an answer going to ask what that means for the performance of that vehicle?

quite obviously if we’re changing the power train and chassis we’re changing the performance, yes?

If battery day and Elon’s Twitter elaborations are accurate, Berlin’s Y should have incremental performance over Fremonts Y, yes?

why is this not something we’re asking

what happens if Berlin’s product > fremonts product?

Is there a real chance Tesla imports to the US?

 

[phantasms]

I’m certain the Berlin Y will be better than Fremont. In, design, paint, and quality it will be superior. No sense to export them here as Austin will be hot on its heels.

 

[Beltsbear]

***legit think we’re missing something critical****

Tesla gonna make Y in Germany with some of the new battery architecture.

When is somebody who can get an answer going to ask what that means for the performance of that vehicle?

quite obviously if we’re changing the power train and chassis we’re changing the performance, yes?

If battery day and Elon’s Twitter elaborations are accurate, Berlin’s Y should have incremental performance over Fremonts Y, yes?

why is this not something we’re asking

what happens if Berlin’s product > fremonts product?

Is there a real chance Tesla imports to the US?

no. Upgrades will be done to the USA Y , maybe not right away but it will happen.

 

[wtlloyd]

OT
Even Renewables Are Bigger In Texas

Interesting read (Forbes) about renewables progress in Texas. Even in the land where hydrocarbons are king, economics win out in a deregulated market.

View attachment 602210

Most interesting take away for me is that ironically, renewables are better for tax revenue because they are reliable! FF energy market is a boom/bust market, municipalities can't rely on a known tax inflow. The irony of course is that the main push against renewables is they are unreliable, when the wind don't blow and the sun don't shine! Storage has changed everything.

 

[Unpilot]

Depends on what you mean by bad weather. If heavy snow, or dense fog, I agree. If you mean blinding rain, I disagree.

With the right (clean!) windshield, properly treated, I’ve never had any problem at highway speeds, ever. Shift position in the lane to ride the crown, and there’s little chance of hydroplaning. While everyone else is pulled over because they can’t see beyond the hood of their car, I’m in the left lane at legal speeds and can see far down the road, and can discern where any flooded spots are and avoid them. Have done so over decades with zero issues.

Sure..but here is the thing..for every person who has the skill...and forethought to treat the windshield...100 other bumbling idiot's JUST HAVE TO GET THERE. If you were the only one on the road...I would agree...but your not and you have no idea of the skill of the other driver.

 

[StarFoxisDown!]

I now don't think the SP will rise much with the release of FSD until Tesla starts making money from robo-taxis. Just like the SP stayed flat for years while we watched the business grow 50+% per year until they had a positive quarter. Sure, a few smart investors will accumulate a little, but the rest of the market will say "show me the money" first. This means we should have a buying opportunity for a while if you want more shares at the current price.

Nah I don't think we'll have to wait until Robotaxi's are actually generating money for Tesla's marketcap to get a re-evaluation. Let's not forget that Tesla releasing FSD build to public(while still requiring driver's paying attention) will result in Tesla recognizing I think about 800 million in deferred revenue + they'll be able to recognize 100% of each FSD transaction on new vehicles. So Tesla's margins are going to explode higher. Then add in subscription model in Q1 2021 which will likely double the FSD adoption rate and you're getting another margin boost. This is all before Robotaxi's.

So I think you'll see a major reassessment of Tesla's value when FSD goes out to public/subscription model release and then another reassessment when Robotaxi's release comes near. Anyone thinking they'll be able to buy Tesla stock after Robotaxi's are out in the wild and somehow get in before the stock explodes higher from Robotaxi revenue will miss out on a lot of gains

 

[BigPeePee]

As far as I see it, Tesla's valuation currently is the case where they nearly monopolize the automotive industry (Which is likely considering how behind everyone else is) but they fail at FSD.
I can definitely see Tesla hitting $20+ trillion if they perfect FSD and have a large robotaxi fleet. Each FSD software can be sold for $100k, and this will have a 90+% profit margin. Tesla will also make $.50 per mile driven using the Tesla network.
My only warning to all of you is that Tesla is a very risky investment that can pay huge if Tesla wins the FSD race or go nowhere if they don't win.

 

[Mo City]

I now don't think the SP will rise much with the release of FSD until Tesla starts making money from robo-taxis. Just like the SP stayed flat for years while we watched the business grow 50+% per year until they had a positive quarter. Sure, a few smart investors will accumulate a little, but the rest of the market will say "show me the money" first. This means we should have a buying opportunity for a while if you want more shares at the current price.

I totally disagree. FSD is about much more than robotaxis. I don't understand why so many people (even some on this forum) want to make it an all-or-nothing propostion based on achieving that end result.

 

[CyberDutchie]

Sorry but I couldn't decide where to rate funny or disagree on this post. That study by the "industry" is an even bigger joke than the industry saying "competition is coming 5 years ago" when it comes to EV's. I dont think I need to explain why. The "industry" is clueless and/or intionally trying to mislead. That study was practically a hit peice and it doesn't take much to put the pieces together to figure out the intent behind it.

Simulation miles do not equal real world miles and anyone that really believes that or thats its even close is someone that I can't take serious. Of course companies that have no choice but to use simulation will say its an acceptable substitute for real world miles. Its their only option. I dont really care about analyst upgrades based on the FSD beta build because analysts have been clueless on this company for years...in practically every aspect. I pretty much ASSUME they will continue to be clueless of the value of this until it slaps them in the face...the same way they got slapped with Tesla's dominance in EV's.

And really? That video by Cruise shows less than a handful of times it worked, all were short clips. They of course didn't bother to show the many times it failed. The fact that they couldn't show a clip longer than 20 seconds despite having ample time to try and do a clip of say 5 mins(or even 1 minute of driving with no intervention) of continuous driving should tell you everything you need to know about how well things are going for them.

Valid points about the Cruise clips, we don't know enough. But what I found impressive is that it did actually proceed. Would love to see if Tesla FSD beta will hand control back to the driver or makes the attempt in those same situations.

On the Navigant Research leaderboard, my argument is not that it is right or wrong, I just wanted to point out that the report is out there, and any analyst that tries to put a value on FSD has probably used it. Most analysts don't have the will or brain power to understand the ins and outs of the technology.

Also, this report is based on 2019, when FSD consisted of navigate-on-auto-pilot (level 3 autonomy) and summon (level 4 autonomy). Navigate-on-auto-pilot was already quite good, but summon was performing pretty poorly. I do expect, however, by next year, Tesla will be in the leader group (for 2020).

 

[BigPeePee]

I now don't think the SP will rise much with the release of FSD until Tesla starts making money from robo-taxis. Just like the SP stayed flat for years while we watched the business grow 50+% per year until they had a positive quarter. Sure, a few smart investors will accumulate a little, but the rest of the market will say "show me the money" first. This means we should have a buying opportunity for a while if you want more shares at the current price.

Why would you say that? Everyone knows that FSD is a goldmine, and whichever company gets there first will have a marketcap in the tens of trillions.

 

[StarFoxisDown!]

Valid points about the Cruise clips, we don't know enough. But what I found impressive is that it did actually proceed. Would love to see if Tesla FSD beta will hand control back to the driver or makes the attempt in those same situations.

On the Navigant Research leaderboard, my argument is not that it is right or wrong, I just wanted to point out that the report is out there, and any analyst that tries to put a value on FSD has probably used it. Most analysts don't have the will or brain power to understand the ins and outs of the technology.

Also, this report is based on 2019, when FSD consisted of navigate-on-auto-pilot (level 3 autonomy) and summon (level 4 autonomy). Navigate-on-auto-pilot was already quite good, but summon was performing pretty poorly. I do expect, however, by next year, Tesla will be in the leader group (for 2020).

Based on all of the videos I've seen, including a couple where it's working in "shopping plazas" which do to some extent offer a look into the same kind of scenario in the Cruise videos, it seems like even at this early stage, the NN thinks on it's own and proceeds around dynamic objects.....even when it technically has to break the "rules of the road" like crossing a solid yellow line. I too though am looking forward to someone taking their FSD beta car to a densely populated city and considering a number of CA owners have gotten it, I'm hopeful we'll get a few videos soon(in the next week or two)

As for your thoughts on analysts and them being able to recognize the position tesla is in the and the potential, yeah I definitely agree. But similar to how analysts were only raising their price targets to the upper 300's or lower 400's back in Jan of this year......I see big money pilling in well before any analyst gives a fair value for Tesla FSD (this excludes Ark of course but Wall st pretty much gave them the middle finger and called them crazy lol)

 

[Mo City]

As far as I see it, Tesla's valuation currently is the case where they nearly monopolize the automotive industry (Which is likely considering how behind everyone else is) but they fail at FSD.
I can definitely see Tesla hitting $20+ trillion if they perfect FSD and have a large robotaxi fleet. Each FSD software can be sold for $100k, and this will have a 90+% profit margin. Tesla will also make $.50 per mile driven using the Tesla network.
My only warning to all of you is that Tesla is a very risky investment that can pay huge if Tesla wins the FSD race or go nowhere if they don't win.

Sorry guy, but Tesla is gonna terraform the industry and TSLA will explode with or without FSD.

If Tesla "wins" FSD, everyone else is instantly vaporized by a single OTA. If someone else is first, their rollout will be at a snails pace.

 

[Unpilot]

My only warning to all of you is that Tesla is a very risky investment that can pay huge if Tesla wins the FSD race or go nowhere if they don't win.

The energy side of Tesla (Solar for production and batteries for storage) alone is worth multiples of its current value.

Insurance is another pile of cash waiting to be taken.

The car manufacturing machine is also a money printing machine.

Of course FSD is huge as well...but Tesla has many many irons in the fire.