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

[BigPeePee]

Apple's design giving their M1 chip a wider pipeline allowed extremely good industry leading single core performance. I will give them that. 2.5 stacking memory very close to the gpu also enabled them enough bandwidth with pretty decent graphical performance as well. These are all design choices but the 5nm node really enabled some of this to happen. They can make a bigger chip while stuffing more things inside and staying cooler.

The industry is going 3d stacking in 5nm anyways which will lead to some very profound extraordinary performance gains on the x86 side so it's too early to write them off as being disrupted.

While you are correct that those are "design choices", anyone building it on the 5nm process would have done the same or mostly the same (An example would be PS5 using RDNA 1 and developing their own architecture to mimic some RDNA 2 features while XSX uses off-the-shelf AMD RDNA 2 features. Both came up with extremely similar answers and both have extremely similar performance minus the potential infinity cache-like design in the PS5 CPU and GPU cache scrubbers). The design part isn't hard (It's mostly about maximizing what you can and making sure there are no bottlenecks). What's hard is getting access to the 5nm process nodes to allow you to make those kinds of design choices. Right now, TSMC gave Apple first dibs on 5nm. If you have 2 different companies with the same goals in mind, they will produce 2 extremely similar, if not the same, designs if they have to design it on the same process node.

Anyway, Apple is receiving too much praise for things they didn't do.

 

[jkirkwood001]

Apple doesn't need to do a paradigm shift. They need to hold back improvements to create buying cycles every year.

Our household changes 4 iPhones every year with the Apple upgrade program. They also get us on watches, apps, iCloud subscriptions, iPads.

5G cycle though is substantial enough to have a strong runway through 2021.

Will return less than TSLA but AAPL is the highest yielding "bond" ever.

I think TSLA will pass AAPL sooner than (if) it passes GOOG (there, kind Mod, I hope this passes the test?)

You're right, of course, @MXWing, and Apple is happy to have so many who'll pay such a premium for specialized products. Personally I'll pick the Google world in which, for "free", I can

• log on securely to half the websites in the world without a custom password (using two-factor authentication)
• save documents to Drive and instantaneously and securely access them anywhere in the world, on virtually any device
• take photos and videos and, moments later, after they're automatically uploaded, share them with anyone in the world simply and easily - without filling their Inbox with huge attachments
• collaborate on documents with almost anyone easily and productively - I do this daily with my private-, public- and nonprofit sector clients, and have enabled two Boards I serve on to do the same
• edit Word and Excel files that I receive better than Microsoft 365 can do online
• videoconference with anyone with access to a browser - try that with Facetime
• log onto any friend's computer or kiosk in the world running Chrome (most) and securely access my profile of favorites, passwords, add-ins

I use each of these features on a regular basis to make me more productive and share joy with my friends and family. And it doesn't cost me expensive Apple products to do it.

I was travelling in India in 2014. I lost my phone with all my photos, contacts, emails on. I went to a hole-in-the-wall electronics store in the upper Himalayas, bought a cheap Android phone, and within half an hour, I had EVERYTHING BACK, just as I'd left it on my lost phone.

Image (C) 2020 - do not use without my permission

 

[Bet TSLA]

Apple has a huge advantage by regularly dropping old tech and somehow forcing everyone into the new tech. A 2020 Windows computer can be cajoled into running DOS Wordperfect. That sounds great for compatibility but it has a pricetag in CPU die space and throughput. Code for Windows looks like crap. Code for the new M1 is cleaner. So even if there was no process advantage, Apple would be ahead with the near clean sheet M1. With two generations of process advantage, the M1 is a killer. It brings in the profit that Intel or AMD would normally make in house.

Tesla mirrors some of the kinds of advantages Apple has above. No huge legacy of thousands of different ICE cars to support. No legacy factories and contracts to support. And most importantly no costly dealers to support.

Note the parallel with Tesla FUD. You have it exactly backwards because you believe the lies you read rather than having any first hand knowledge. Apple equipment is regularly used for far longer than Android phones or Windows computers because it stays compatible and functional. iPhones get regular software updates (sound familiar?). As do their computers and iPads.

Apple is not "regularly dropping old tech and somehow forcing everyone into the new tech". They encourage new tech by no longer selling the old tech, but they continue to support it for years. For example, Intel based Macs will be around for many years. Intel-based software will continue to run for the foreseeable future through translation, and it will be faster than on Intel-based Macs.

And lastly, yes Apple has huge numbers of legacy machines and software to support, of many different types (although not as many as some other companies), they have a huge supply chain and also manufacturing partners (as they aren't as vertically integrated as Tesla and don't do their own manufacturing), and they have a dealer network all over the world.

So pretty much everything you wrote is wrong, except about Apple using a more advanced process than Intel. Really, really wrong. So now, tell us how Apple hardware catches fire....

 

[BigPeePee]

I don't think you can compare AAPL and TSLA's strategies aside from having a large dedicated fanbase to fuel sales.

AAPL's strength has always been volume. They get first dips on the best technology their suppliers develop due to high volume.
TSLA's strength is in manufacturing (Actually developing the technology).

2 different methods. Not comparable at all.

 

[jkirkwood001]

Note the parallel with Tesla FUD. You have it exactly backwards because you believe the lies you read rather than having any first hand knowledge. Apple equipment is regularly used for far longer than Android phones or Windows computers because it stays compatible and functional. iPhones get regular software updates (sound familiar?). As do their computers and iPads.
...

You're kidding, right, @Bet TSLA ? Please cite a reference for this claim. I'm a technology consultant and I see tons of people and orgs keeping their old Windows computers way longer. In fact, @MXWing bragged about his / her family replacing their four iPhones every year.

I don't know why I'm debating about which technology is kept old longer! I just don't buy into most arguments about Apple being better since, oh about Windows XP / Android KitKat / Google Pixel. Apple's interface advantage is long gone IMO, and the hardware manufacturers' finally developed simpler and more elegant products that emulate Apple's long-standing, intuitive, and gorgeous designs. I believe the world is moving away from expensive, proprietary devices, and to a world of connected, Cloud-based apps. I'm afraid Apple is behind the curve on this.

Tesla is ahead of the curve in many of the innovative and connected ways Apple is no longer IMO. Tesla is continuously re-inventing the transportation industry (and manufacturing, and energy generation and storage, and autonomous driving). IMO, Apple is running out of ideas / boldness in re-inventing personal communication devices and functionality. Their lead is shrinking. Tesla's is growing.

 

[MC3OZ]

I don't think you can compare AAPL and TSLA's strategies aside from having a large dedicated fanbase to fuel sales.

AAPL's strength has always been volume. They get first dips on the best technology their suppliers develop due to high volume.
TSLA's strength is in manufacturing (Actually developing the technology).

2 different methods. Not comparable at all.

IMO the overlap is on product design, paying a lot of attention to all aspects of design / performance, to give the customer the best possible experience.

Lot of the fanbase stems directly from the quality of the product and the experience, with the product being clearly superior to the alternatives. A lot of loyalty stems from the initial positive experience with the product.

One difference I think is Apple is constrained by form factors, a lot of the products are improvements in existing products with established form factors, Desktop, Laptop, Tablet, Smartphone, IPod, Watch. Sure there are different form factors but all products are essentially (mobile) computing platforms with communication and the ability to capture/replay media.

Apple expanding into health is an excellent idea.

Tesla is different in that products are larger than Apple's, more varied and some are mobile, Cars can be (mobile) communications platforms with communication and the ability to capture/replay media.

So I see Apple as playing in a slightly smaller sandbox, they are bossing that sandbox. Their in house expertise is more tightly focused.

Tesla has had to be a "Jack of all Trades", as a result in house expertise is very diversified, in turn the potential to expand into new areas is greater and the scope to improve existing products is greater.

What we learn from comparing Tesla and Apple is a better understanding of Tesla. Both the similarities and differences are revealing.

 

[Fred42]

Is there any word on if we will be able to get news live regarding the S&P decision for Tesla?

? It will be posted here in seconds.

 

[BigPeePee]

IMO the overlap is on product design, paying a lot of attention to all aspects of design / performance, to give the customer the best possible experience.

Lot of the fanbase stems directly from the quality of the product and the experience, with the product being clearly superior to the alternatives. A lot of loyalty stems from the initial positive experience with the product.

One difference I think is Apple is constrained by form factors, a lot of the products are improvements in existing products with established form factors, Desktop, Laptop, Tablet, Smartphone, IPod, Watch. Sure there are different form factors but all products are essentially (mobile) computing platforms with communication and the ability to capture/replay media.

Apple expanding into health is an excellent idea.

Tesla is different in that products are larger than Apple's, more varied and some are mobile, Cars can be (mobile) communications platforms with communication and the ability to capture/replay media.

So I see Apple as playing in a slightly smaller sandbox, they are bossing that sandbox. Their in house expertise is more tightly focused.

Tesla has had to be a "Jack of all Trades", as a result in house expertise is very diversified, in turn the potential to expand into new areas is greater and the scope to improve existing products is greater.

What we learn from comparing Tesla and Apple is a better understanding of Tesla. Both the similarities and differences are revealing.

For Apple, the design / performance comes from Apple's volume. They squeeze the suppliers and/or buy out the manufacturing capacity for the best tech.
Tesla relies less on their suppliers to deliver, because they manufacture most of their parts

I'm not saying which approach is better, but Tesla's approach is definitely harder to execute. It is extremely difficult to be the best in every single thing. If you look at the semiconductor industry, for example, a couple of companies dominate the memory market, but the logic fab market is dominated by other companies. Some memory companies tried to enter the logic fab market and vice-versa, but there is not a single company that dominates both memory and logic.

 

[Zhelko Dimic]

With the next 2-3 weeks of S&P inclusion drama, I fully expect Elon to fuel the fire with something new that no one was thinking about. When the dust settles I predict $650B market cap and then shortly thereafter Tesla will announce a new CEO comp plan that lays out a roadmap to $2T market cap.

Don't be silly. $10T

 

[MC3OZ]

AAPL's strength has always been volume.

In EVs Tesla is a volume leader... that will become more apparent in the next 12-24 months,

Being a volume leader brings economies of scale, and the ability to negotiate good deals with suppliers.

There is a lot of internal savings form reusing the same software and parts in multiple products, more so when the standardize on 4680 cells.

Tesla is a volume leader in an industry where volume is hard, making good margins can be hard and industry competition is intense.

Another similarity is having the right number of models, my eyes glaze over every time a competitor announces 30 new models by 2040.

Every Model should have a reason for existing, it should do one thing very well that no other Model in the range does. IMO this is true for Tesla models and as far as I know mostly true for Apple products.

Too many products / models with blurry undefined boundaries means a lot of R&D is being unnecessarily duplicated.

 

[BigPeePee]

In EVs Tesla is a volume leader... that will become more apparent in the next 12-24 months,

Being a volume leader brings economies of scale, and the ability to negotiate good deals with suppliers.

There is a lot of internal savings form reusing the same software and parts in multiple products, more so when the standardize on 4680 cells.

Tesla is a volume leader in an industry where volume is hard, making good margins can be hard and industry competition is intense.

Another similarity is having the right number of models, my eyes glaze over every time a competitor announces 30 new models by 2040.

Every Model should have a reason for existing, it should do one thing very well that no other Model in the range does. IMO this is true for Tesla models and as far as I know mostly true for Apple products.

Too many products / models with blurry undefined boundaries means a lot of R&D is being unnecessarily duplicated.

Yes, this makes sense. If Tesla can deliver on the 40-50% annual growth, Tesla can become a monster if they also manufacture their own parts. They can produce the lowest cost parts at the highest quality, and no one would come close. We also have to remember that robotaxis will displace a large number of personally-owned vehicles, so that also provides a massive squeeze on the competitors. They may never be able to scale up and get their costs down to compete.

 

[MC3OZ]

For Apple, the design / performance comes from Apple's volume. They squeeze the suppliers and/or buy out the manufacturing capacity for the best tech.
Tesla relies less on their suppliers to deliver, because they manufacture most of their parts

While that is true, a lot of effort went into the functionality and aesthetics of the products, especially in the era when Jobs was leading.

Elon himself acknowledges that he learned a lot from Jobs.

I don't think a business model built on squeezing suppliers is sustainable, suppliers will not innovate and will be more than happy to deal with others. This is the model the legacy car industry is using to some extent.

Apple still does more early stage R&D than legacy car makers, and they build a lot of the software, so Apple is still driving innovation.

 

[JustMe]

Don't be silly. $10T

Good point. Elon likes round numbers

 

[Beltsbear]

Note the parallel with Tesla FUD. You have it exactly backwards because you believe the lies you read rather than having any first hand knowledge. Apple equipment is regularly used for far longer than Android phones or Windows computers because it stays compatible and functional. iPhones get regular software updates (sound familiar?). As do their computers and iPads.

Apple is not "regularly dropping old tech and somehow forcing everyone into the new tech". They encourage new tech by no longer selling the old tech, but they continue to support it for years. For example, Intel based Macs will be around for many years. Intel-based software will continue to run for the foreseeable future through translation, and it will be faster than on Intel-based Macs.

And lastly, yes Apple has huge numbers of legacy machines and software to support, of many different types (although not as many as some other companies), they have a huge supply chain and also manufacturing partners (as they aren't as vertically integrated as Tesla and don't do their own manufacturing), and they have a dealer network all over the world.

So pretty much everything you wrote is wrong, except about Apple using a more advanced process than Intel. Really, really wrong. So now, tell us how Apple hardware catches fire....

It’s as if you don’t understand one thing I wrote. Not getting into a more off topic discussion with you.

 

[UnknownSoldier]

Apple did not design the node. TSMC did.

I think Apple fanatics are giving way too much credit to Apple. The M1's power comes almost entirely from TSMC's 5nm process, not the "design" of the chip. Chip design doesn't really have much impact on computing performance barring any kind of bottleneck (See performance metrics of XSX and PS5 using 2 different types of 7nm CPU + GPU designs but both having very minimal differences. You can also see 14nm CPUs from Intel YoY having extremely similar performance despite different designs; small performance improvements came from slight 14nm improvements "Tock cycle" rather than the design of the chip). "Chip design" is a marketing gimmick to make consumers feel special. The process node is far more important and far more complicated than the chip design.

You can 'design' a chip to specialize in certain areas like having the SoC have a bigger neural engine, but that's like me going to dominos and asking them to put in double the amount of pepperonis on their pizza. Literally anyone can do that. The 'secret sauce' is the process node, not the "design" of the chip.

I mean, you're completely wrong in every possible way it is possible to be wrong about this.

The Apple Silicon designs are completely novel implementations of ARM architecture, that's why they are so superior to anything made by Qualcomm or anyone else using standard ARM cores. If process node were really all that mattered, then your generic Qualcomm Snapdragon, Mediatek, HiSilicon/Huawei, or whatever design would be just as good but none of them are in the same ballpark as the performance of Apple Silicon. Even the ARM Cortex-X1 and A78 cores, which are ARM's latest reference design, are probably 2-3 years behind Apple Silicon A14/M1 and these are literally the reference cores ARM designs themselves using their own architecture schematics.

Anandtech has a good overview of the Apple Silicon design in A14/M1.
Apple Announces The Apple Silicon M1: Ditching x86 - What to Expect, Based on A14

Chip design is probably one of the hardest yet most important drivers of semiconductor innovation. AMD basically went from hopeless also-ran to runaway leader in x86 because Jim Keller went to AMD and designed the Zen architecture for them. This is the same Jim Keller who worked with the team at P.A. Semi that Apple acquired to design the Apple A6, the "first" Apple ARM chip. It's also the same Jim Keller who designed Tesla's FSD processor core, just so you realize why the HW3 CPU's are so powerful and far ahead of competing self-driving computer designs from Nvidia and Intel/Mobileye.

 

[MXWing]

You're kidding, right, @Bet TSLA ? Please cite a reference for this claim. I'm a technology consultant and I see tons of people and orgs keeping their old Windows computers way longer. In fact, @MXWing bragged about his / her family replacing their four iPhones every year.

I don't know why I'm debating about which technology is kept old longer! I just don't buy into most arguments about Apple being better since, oh about Windows XP / Android KitKat / Google Pixel. Apple's interface advantage is long gone IMO, and the hardware manufacturers' finally developed simpler and more elegant products that emulate Apple's long-standing, intuitive, and gorgeous designs. I believe the world is moving away from expensive, proprietary devices, and to a world of connected, Cloud-based apps. I'm afraid Apple is behind the curve on this.

Tesla is ahead of the curve in many of the innovative and connected ways Apple is no longer IMO. Tesla is continuously re-inventing the transportation industry (and manufacturing, and energy generation and storage, and autonomous driving). IMO, Apple is running out of ideas / boldness in re-inventing personal communication devices and functionality. Their lead is shrinking. Tesla's is growing.

I'm in the Apple upgrade program. I pay ~60 per device per month for a two year term. After 12 payments, I'm eligible to exchange phones to next years model. Not upgrading makes no sense because I would be entering payment terms for the same amount the year after that if I hold off.

I'm probably unique that I am changing that many phones that often, but its because I want to/can afford it/can justify it. I don't HAVE to though.

Apple devices hold their value much longer than any Android equivalent. That is not debatable in the slightest.

Does Apple always make the best devices? Absolutely not. Could they? Absolutely. Do they? Absolutely not.

They need to sucker in the continuous upgrade cycle.

Apple used to get you on the phone only. Now its tablets, watches, data plans, app ecosystem.

And they have monopoly pricing power. Look at how bad Epic is hurting not being able to run Fortnite on Apple?

 

[dc_h]

Somehow I cannot resist pointing out the folly of conventional thinking. Just consider the following:

Parts of the 'Nifty 50'. Today
Xerox Amazon
Polaroid Tesla
Eastman Kodak Apple

I was active during the 'Nifty 50'. The three Nifty 50 for all practical purposes do not exist although all three have the names existing and somebody sells things with the brands. Investors in all three were wiped out through bankruptcy (Kodak 2012), takeovers and/or reorganizations. A quick review of the Wiki's and corporate histories reveals how lauded they were. Indeed, Xerox was hugely influential in GUI, mouse and other innovations, but complacency led to stagnation. All three of those had near-dominance in their fields and all three rested on their accomplishments, which were indeed dominant.

Today the three all share a paranoia that they could be left behind so they all three relentlessly innovate. All three know they exist and thrive in a kind of "infinite improbability drive" (Sorry, Douglas Adams , just not the upcoming SpaceX kind). In the heydays of the 1970's the heros of the day stagnated.

I gave no numbers intentionally. When assessing value in a very high growth environment the inevitable necessity of constant innovation and reinvention.

Xerox, for example, innovated very well, but they still stayed with the 914 long after the sell-by date. Kodak totally missed the digital photography evolution. Polaroid thought quick development would survive and thrive, making the same mistake Kodak did.

Now think of all three today again. Tesla Model S looks just like the 2012 version but is vastly more capable and becoming less expensive. Amazon knows their advantages are in logistics and information management so consistently reinvent merchandising. (whoever thought Italians would shop online?). Apple had near-death experience then kept redefining markets and inventing services.

None of the 'nifty 50' really thought they needed to reinvent themselves; they thought they could thrive with doing what somebody else invented.

I have been stupid as an investor quite a few times. I thought AMZN, AAPL and TSLA were different. So far they still are. If one day they show signs of complacency I hope I see it soon enough to sell. I really don't think any of them will have that happen anytime soon. From my view I think they'll survive the eventual absence of Bezos and Musk, just as Jobs demise led to greater successes.

As I was giving thanks these thoughts came to me.

Your point is correct, but some of your logic is flawed. Kodak invented digital photography and Xerox invented the PC. Polaroid was just over valued. The issue isn’t that these companies didn’t see the future, they often invented it, just like GM built the first modern viable electric car. The problem is inertia: these companies have armies with organizational momentum urging their legacy technologies forward. They have budgets that managers covet, and stockholders who have ties to the historical company. Kodak’s stockholders, many retired employees sued Kodak to stop their digital transformation. Xerox invented the tech that Apple sold. The end is the same, these companies rarely pivot to a new paradigm. Their organizational inertia forces them forward, spending on dead end technologies. GM spends 10 times Tesla in R&D, but Tesla spends nothing on transmissions or drive trains for dozens of cars. Everything Tesla spends benefits every Tesla product, while almost all of GM’s R&D goes to ICE vehicles.
I’m not disagreeing to disagree, but to point out how difficult it still is for legacy manufacturers to adapt, even after the future has become clear. Only the strongest leaders can lead their way to the future, eliminating 75% of their engineers, retraining the rest and hiring new, all while retaining some core culture and reinventing that culture at the same time.

 

[BigPeePee]

I mean, you're completely wrong in every possible way it is possible to be wrong about this.

The Apple Silicon designs are completely novel implementations of ARM architecture, that's why they are so superior to anything made by Qualcomm or anyone else using standard ARM cores. If process node were really all that mattered, then your generic Qualcomm Snapdragon, Mediatek, HiSilicon/Huawei, or whatever design would be just as good but none of them are in the same ballpark as the performance of Apple Silicon. Even the ARM Cortex-X1 and A78 cores, which are ARM's latest reference design, are probably 2-3 years behind Apple Silicon A14/M1 and these are literally the reference cores ARM designs themselves using their own architecture schematics.

Except for Kirin 9000, all the others are not using the 5nm process. Kirin 9000 is extremely close to the A14, just edging the latter by 11% in antutu. The differences in performance mainly comes from different goals. Apple wants wide cores while Android manufacturers want smaller cores to take advantage Android's multitasking capability. If Huawei wanted wider cores, they could've easily done so for better benchmarks but it would come at a cost of real-world performance.
Because of the way Android is programmed, Android doesn't do well with wide cores (See Samsung's mongoose cores - Better benchmarks but worse real-world performance).
Again, if 2 companies have the same goals in mind and are on the same fab, the performance will be the same or extremely similar. Chip design isn't as important as process node. It's hard to explain it to someone who hasn't seen the process before, but chip designing is mostly "obvious" in what you have to do.
The only time I saw a huge delta in performance in 2 designs on the same fab was with the PS4 and Xbox ONE, and that was only because SONY gambled on Samsung doubling GDDR5 memory density by 2013, so more space could be given to the GPU's CU. Microsoft didn't want to make that gamble and used the eSRAM and kept the CU count to 12.
Phone manufacturers are not making gambles on future technology like console manufacturers. The components that they use in their SoCs are already tried-and-tested, so you're not going to be seeing huge deltas in performance given identical goals of the companies that designed the chips.

Anandtech has a good overview of the Apple Silicon design in A14/M1.
Apple Announces The Apple Silicon M1: Ditching x86 - What to Expect, Based on A14

Chip design is probably one of the hardest yet most important drivers of semiconductor innovation. AMD basically went from hopeless also-ran to runaway leader in x86 because Jim Keller went to AMD and designed the Zen architecture for them. This is the same Jim Keller who worked with the team at P.A. Semi that Apple acquired to design the Apple A6, the "first" Apple ARM chip. It's also the same Jim Keller who designed Tesla's FSD processor core, just so you realize why the HW3 CPU's are so powerful and far ahead of competing self-driving computer designs from Nvidia and Intel/Mobileye.

The Zen architecture is on 7nm while Intel is still stuck on 14nm++++++++++... Notice how AMD started winning right when they had the process advantage. Weird, huh? Surely it's just coincidence...
The HW3 chip suits what TSLA needs in FSD. The chip design isn't important and can be replicated with ease. The fleet of vehicles and telemetry is far more important and harder to copy.

 

[Buckminster]

ATH and less than two pages to read overnight on this thread.

 

[Buckminster]

Tesla didn't start out to make an "okay" car that happened to be electric. They set out to make a car that was better than other cars and is electric. Elon understood that in order to get people to buy their cars they had to be better, faster, sexier. I think choosing a robotaxi should not be a sacrifice, but should provide greater benefit. If you need a car seat, call for a robo taxi with the car seat. If you need to take a lot of stuff with you, rent the robotaxi for as many hours as you need it. If you need a vehicle with more seating, set that as your robotaxi criteria.
While I believe the price will be substantially less expensive, price should not be the only advantage of a robottaxi.
These are just some of my thoughts.

This is what I was thinking. Don't make me setup a somewhat niche "Children's car seats in the robotaxis era" thread....