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

[Johan]

According to their own Q4 and full year 2020 update their automotive gross margin varied between 22,5% to 27,7% percent during 2020, with Q4 coming in at 24,1%.

Also, thanks for the great comparison @petit_bateau. I agree that a "small" difference in gross margin is what makes or breaks both Tesla and VAG (and any other estabilished auto maker hoping to survive and eventually thrive in the new paradigm).

 

[Todd Burch]

Look at the replies to this Tweet from Pierre:

https://twitter.com/x/status/1369789507059474435

Gordon has replied about 20 times. What real financial analyst would do that? Gordo’s trying too hard.
Maybe Chanos pays him by the Tweet? Lol.

 

[j6Lpi429@3j]

I think tesla can be a lot more cavalier about their gross margin anyway, because the investors in tesla tend to be more long term, focused on growth, not looking for short term profits so we can get dividends. VW investors are likely to be...less forward thinking by definition. Thus, if Tesla were so inclined it could probably squash its GM down to push VW out of business entirely, just the way amazon does.

Not that I think they would, or that they need to. I thinks VWs long term implosion is guaranteed anyway. They are way too slow to autonomy and charging networks, even if they caught up with the car tech (they wont) and even if they could source enough batteries (they cant).

 

[Johan]

I think tesla can be a lot more cavalier about their gross margin anyway, because the investors in tesla tend to be more long term, focused on growth, not looking for short term profits so we can get dividends. VW investors are likely to be...less forward thinking by definition. Thus, if Tesla were so inclined it could probably squash its GM down to push VW out of business entirely, just the way amazon does.

Not that I think they would, or that they need to. I thinks VWs long term implosion is guaranteed anyway. They are way too slow to autonomy and charging networks, even if they caught up with the car tech (they wont) and even if they could source enough batteries (they cant).

The counter argument to this is that people will need and want ars and Tesla can't grow fast enough to supply all the world's hunger for new cars even if they grow 50% year after year. And in that reality VAG and many other auto makers will survive the transition.

 

[Right_Said_Fred]

More from the UBS id3 strip report, UBS disassembles & analyzes ID.3 - electrive.com

"UBS analysts have disassembled a VW ID.3 and come to the conclusion that the MEB platform is “fully competitive” with Tesla in terms of cost. VW achieves “first-class energy density, efficiency and scalability”. That being said, when it comes to the battery and its costs, Tesla remains ahead.

According to the UBS experts, VW has a cost disadvantage of 1,300 US dollars per car (currently 1,078 euros) compared to Tesla when it comes to batteries and it is “unlikely” that this gap can be closed in view of Tesla’s vertical integration and innovative strength. For the disassembly of the ID.3 and the subsequent analysis, the major Swiss bank worked with the electric car experts of the P3 Group.

In terms of the costs for the production of the vehicles and the important margin in sales, VW could reach parity by 2025, according to the analysis. In other words from then on, VW would earn as much on the sale of an ID.3 as on a Golf.

VW’s software platform and ecosystem are top-notch compared to most classic OEMs, but are “years behind Tesla”. The LG battery cells used in the VW ID.3 cost around $100 per kilowatt-hour (€83/kWh), putting them in the top 3 worldwide, along with CATL and Tesla.

Although an ID.3 was disassembled for the analysis, UBS says it expects to be able to transfer the results to other vehicles based on the MEB. Since a Model 3 was already disassembled two years ago, UBS considers its figures on the price difference for the batteries to be reliable. Based on this experience, the experts dare to predict that the advantage in battery costs with the structural battery packs in the Model Y with the 4680 cells could bring Tesla’s cost advantage back up to 2,000 dollars (1,659 euros) per vehicle."

Using the TSLA Q4 2020 numbers average price per vehicle is $59k and average cost per vehicle is $48k (I am throwing all energy sales & revenue in the pot for simplicity) for GM of $11k and a 19% GM%. An average model 3 will be lower than that as the Y, S, X costs and prices will raise the fleet average. So lets take a SWAG and say that an average 3 maintains the same GM% of 19% but a price of $42k and a cost of $34k for a GM of $8k.

I am unclear from what is written if the id3 is equal cost with the 3, or would be equal cost except for the $1300 / $2000 battery cost penalty. The "fully competitive" bit is somewhat misleading 1! Let's assume that VAG is not actually "fully competitive" but is instead "nearly fully competitive" and this would give an equivalent VAG product the same price of $42k, a cost (now) of $35.3k and a GM of $6.7k for a GM% of 16%.

So the 'now' position is a VAG GM% of 16% and a TSLA GM% of 19%.

Fast forward a year and UBS and TSLA both expect that TSLA will be adopting the 4680 cells and decreasing costs by a further $700. I would hazard a guess that TSLA costs will go down a lot more than that due to the front & rear castings, and due to increased localisation (no shipping to EU, no import duties - gotta be worth 10-15% GM alone in EU, or say 5% on the global blend). But let's be somewhat conservative and just make that $1000 reduction. TSLA's past form is to lower price as costs reduce so TSLA would then be at:

cost = $33k; price = $41k; GM = 8k; GM% = 19%

VAG would need to follow and their situation would become:

cost = $35.3k; price = $41k; GM = 5.7k; GM% = 14%

It is worth bearing in mind that VAG is in the best position of all the legacy car manufacturers.

I wonder if the VAG margin on the ID3 includes the advertising costs. Here in Europe it's impossible to turn on the tv without being confronted by a commercial of an EV by VAG (ID3, ID4, E-Tron). The same goes for the other OEMs. They are pushing the cars as much as they can to avoid EU fines, but must be burning through thousands of euros in advertising costs per car to do so (the fines are even higher, so it does make sense).

 

[NooB_cat]

Look at the replies to this Tweet from Pierre:

https://twitter.com/x/status/1369789507059474435

Gordon has replied about 20 times. What real financial analyst would do that? Gordo’s trying too hard.
Maybe Chanos pays him by the Tweet? Lol.

Every time Gordo posts some more BS I'm going to reply to him with this

 

[lascavarian]

And in that reality VAG and many other auto makers will survive the transition.

The world divides among different preferred styles. I think Y will work in the EU in a durable fashion. VAG can work their vehicle styles effectively against the Y. Not so well in the US IMO.

Cybertruck and similar SUV stands to rule the US. Film over SS or naked will compete well against paint. Durable, affordable, practical and brawny conveyance will match our dystopian imaginations.

Asia may need the Y and a new model. Tesla will be a competent competitor.

 

[OrthoSurg]

Every time Gordo posts some more BS I'm going to reply to him with this

View attachment 643519

It is a liability for main stream media to give so much air time to Gordo the worse 1 percentile of analyst to bash Tesla on air.and that he doesn’t have to disclose the underlying contracts he is getting paid to do so is out is dishonest

 

[Tslynk67]

its not just about the car. VAG is tainted by dieselgate, and has no supercharger network. When an ID3 costs what a model 3 costs, who the hell buys an ID3?
Also, does the ID3 have best in class autonomy?

It may come as a shock, but I get the impression that a lot of people either don't care, or have forgotten about VW's poisoning of themselves and their loved ones. Which I frankly find disturbing, negligent even

Two interesting things for me so far today:

• Had to take the wife's Ford C-Max for its annual service - always an experience to drive an ICE and it simply reinforces one's conviction on BEVs
• Then, walking back from the garage, I popped into a VW dealer as they had the ID4 in the showroom. This is a nice looking car - yes it's a bit dowdy compared to a Model 3, but it will appeal to Europeans very much. I found the interior spacious and pleasing, not too cluttered on the button-front, but the dashboard was a bit plasticky looking -> I hope they can iron-out the software glitches and sell loads

Remember, it's all about The Mission, and Tesla cannot succeed alone (although we'll give it a damn good try), we need good EV's from other manufacturers

 

[elasalle]

Price increase of $500 on Model 3 SR+/LR, $1,000 on Model Y LR...........and Plaid + S got a price increase of $10,000

Interest rate/ inflation/ stronger dollar?

 

[Drezil]

• Then, walking back from the garage, I popped into a VW dealer as they had the ID4 in the showroom. This is a nice looking car - yes it's a bit dowdy compared to a Model 3, but it will appeal to Europeans very much. I found the interior spacious and pleasing, not too cluttered on the button-front, but the dashboard was a bit plasticky looking -> I hope they can iron-out the software glitches and sell loads

They will sell loads.
There is more demand then everyone together can produce. The "good" models from all manufacturers here in germany are sold out since months.
Like
- Smart (from Mercedes/Daimler) is sold out until 2022. You can't even order one.
- Renault Zoe is nearly sold out
- Kia (3 different models) are also hard to get

Because some federal bonus in germany runs out at the end of 2021 nextmove regularly had a segmel with a red list of cars you may not get in time for all federal incentives.

This is the last one i coud find from dec 2020. Red = don't even try to order, yellow: you can order but be quick & if there is a hiccup then you may end up getting them only in 2022, geen = still available. Could be close but should work out (if nothing happens .. like .. a chip-shortage in 2021 ... )
Not on list = If you order in 2020 you will get them in 2021.

As you see all of those are the "mass market"-cars with a sale-price of <25k (incl. taxes, incentives & everything!).

If manufacturers can give enough rebate on their vehicles they will sell everything they can build. This applies for all manufacturers.. Just a matter of price.

One comparison: M3 SR+ minimal setup runs for 34.970€ (after all incentives, incl. taxes etc. - so comparable to the list above). So that is no segment Tesla is currently competing with.
Could be interesting if Berlin starts producing a Model2 for ~25k (would be "28k" sticker-price, 3k manufacturer-rebate, 6k governmental incentive.. yielding to a total after taxes of about 19k). That would REALLY shake up that lower end of the market.

 

[Artful Dodger]

Roblox Up 12% Premarket As Cathie Wood’s Fund Buys Over 50,000 Shares By Investing.com

Roblox Up 12% Premarket As Cathie Wood’s Fund Buys Over 50,000 Shares

www.investing.com

10 min ago (Mar 11, 2021 07:14AM ET)

 

[JohnnyEnglish]

We are talking cars .... but if you follow through my methodology (which I explained clearly in my first post) I took the total Q4 20 results for simplicity and calculated out a blended avge 3 from that based on the GM% of 19%. I then offset a id3 for comparison, Then I rolled forwards one year to do the compare & contrast.

If you want to pick out the auto-only numbers then yes indeed it will give a higher GM% for autos, but you must also carry out the corresponding offset calculation to inspect the id3. If you do that you will arrive at the same place in comparing the relative GM% numbers.

Bottom line is that what one needs to be concentrating on is that the ~3% -delta GM of VAG vs TSLA in 2020 widens to become a ~5% delta GM% in 2021. It is the widening gap in those GM% that is the key thing here, and one needs to do an apples-to-apples comparison with a consistent methodology to achieve that. As price falls, and competition means that price will fall, then unless something changes in the competitive landscape that works against Tesla, then that GM% gap will further widen in a way that works against competitors such as VAG. I think that they may be running at a NM% loss in BEV in VAG, and I rather suspect the same holds true for almost all OECD legacy manufacturers entering the BEV space. That is exactly why they don't publish their BEV GM% and NM% data - they'd be screaming from the rooftops if a) it was higher than their ICE numbers and/or b) positive !

I happen to agree with your other points by the way. I'm not seeking to be pernickety either, but is so seldom that we get any insight into GM and GM% of any other BEV manufacturer that we ought to slice and dice the numbers to reveal as much knowledge as we can.

Great analysis - thanks.

I think UBS are underestimating the cost savings associated with the front/rear castings and structural battery in their future projection.

Also agree with the comments that VAG, for all the problems seen, seem to be chasing hard with the ID.4 and OTA soon to be introduced.

 

[EVMeister]

Also agree with the comments that VAG, for all the problems seen, seem to be chasing hard with the ID.4 and OTA soon to be introduced.

Chasing something moving faster than themselves.

 

[JohnnyEnglish]

Chasing something moving faster than themselves.

Yes, but most of the other manufacturers don't appear to be really chasing at all

They don't need to outrun Tesla, just the other manufacturers

 

[Norwalk79]

Good morning Tesla comrades. As I look at Nasdaq future at +200pts +1.6% and Tesla at $694 +$26 + 3.9% at 7:18 AM ET, the chance that Tesla leads 2021 Nasdaq bull run is going to happen today.

Let’s review the latest Tesla news, PT and advantages: 1) Tesla has huge advantage on EV battery till 2030 2) Started first the FSD subscription and robotaxis with EVmo Inc ‘s fleet acquisition of Tesla Inc. vehicles 3) Had an outstanding Feb month in China even with the new Lunar year festival 4) Three (3) Price Target updates of $880 by Adam Jonas of JP Morgan, $900 by New Street analyst Pierre Ferragu + Buy rating and $950 by Wedbush Dan Ives.

The difference between Gold medal and lower Silver and Bronze could be small but the fame, valuation and appreciation of Tesla at Gold medal position is HUGE. Tesla kills competition with large margin on Charging stations, Gigafactories, manufacturing technique, EV power train, FSD beta 9 coming (Everytime a special drive situation is encountered, there is button to send data right back to Tesla for its huge data base over-the-air OTA storage and update). The next competition VW is century behind in OTA

With all the above news and advantages, it is quite correct to re-iterate my Tesla summary:

Tesla will crush competition with its lowest price highest value $25K model 2 by the end this year 2021 together with Berlin Giga already has 8 Giga Press for model 3 and Y + ready to make new 4680 battery with $1B incentive, 2,500 Semi trucks in Texas, FSD and insurance started by 2nd Quarter of this year. The Solar Energy Storage of Tesla Power Walls and MegaWatts will advance along the way since Texas lost power 4 days in freezing temp, rolling shutdown in California and NorthEastern states losing power during heavy snow periods.

Have a winning day. Cheers

 

[Singuy]

Qqq blasting through resistance trend line of around 314-315 today off the bat. Closing above this line will be a huge deal and will signal the end of the tech correction!

On another note, today looks to be a very good day and I'll be beyond pissed if Tesla is pinned to max pain on a day like today.

 

[Norwalk79]

They will sell loads.
There is more demand then everyone together can produce. The "good" models from all manufacturers here in germany are sold out since months.
Like
- Smart (from Mercedes/Daimler) is sold out until 2022. You can't even order one.
- Renault Zoe is nearly sold out
- Kia (3 different models) are also hard to get

Because some federal bonus in germany runs out at the end of 2021 nextmove regularly had a segmel with a red list of cars you may not get in time for all federal incentives.
View attachment 643526

This is the last one i coud find from dec 2020. Red = don't even try to order, yellow: you can order but be quick & if there is a hiccup then you may end up getting them only in 2022, geen = still available. Could be close but should work out (if nothing happens .. like .. a chip-shortage in 2021 ... )
Not on list = If you order in 2020 you will get them in 2021.

As you see all of those are the "mass market"-cars with a sale-price of <25k (incl. taxes, incentives & everything!).

If manufacturers can give enough rebate on their vehicles they will sell everything they can build. This applies for all manufacturers.. Just a matter of price.

One comparison: M3 SR+ minimal setup runs for 34.970€ (after all incentives, incl. taxes etc. - so comparable to the list above). So that is no segment Tesla is currently competing with.
Could be interesting if Berlin starts producing a Model2 for ~25k (would be "28k" sticker-price, 3k manufacturer-rebate, 6k governmental incentive.. yielding to a total after taxes of about 19k). That would REALLY shake up that lower end of the market.

I like to add the latest price and performance of EVs in USA, 1st or 2nd largest EV market:

US Electric cars comparison: price, range and speed (0-60mph) in first table, save as .png and enlarge it to see.
The new $25K Tesla Model 2 is the BEST, with similar specs to Model 3.
Make sure you have enough brain power to understand the technicals

The cheapest is the Mini Cooper SE at $30K, range 110 mile too short, 6.9 sec too slow

Next is Nissan LEAF S at $31.6K, range 149 mile, 7.4 sec slowest

Best value is Tesla Model 3 standard plus $38K, 263 mile, 5.3 sec fastest, beats Mustang Mach-e $43K, 230 mile, 5.8 sec.

Compare Electric Cars: EV Range, Specs, Pricing & More

 

[Favguy]

its not just about the car. VAG is tainted by dieselgate, and has no supercharger network. When an ID3 costs what a model 3 costs, who the hell buys an ID3?
Also, does the ID3 have best in class autonomy?

The autonomy is the real competition killer here. Who on earth is going to want an old school car with no autonomy beyond adaptive cruise, lane keeping, and emergency collision avoidance when an equivalent Tesla can fully self drive and has a state of the art big screen entertainment package built in for similar money?

About the same number of people as those wanting a none smart phone!

 

[Artful Dodger]

The larger issue for VAG is whether they can achieve OTA updates before Tesla can achieve OTW localized production. There's a big 1st mover advantage at stake, and 500K Models Y in 2022 will be just the opening move for Giga Berlin. Euro Model 2 will be the end of the line for many old, stories carmakers in Europe.