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

[gabeincal]

Fremont Factory Flyover Mar 21, 2021

• Kato seems to have been somewhat finished. The structure on top of the building that was being constructed looks like a storage unit of some sort with ducts going up there from both sides. Perhaps it's the storage facility that we've seen in the videos?
• Very few Model S' in the roro lot but there are at least a few. Only regular steering wheels spotted, no yoking around.
• One of the Gigapresses was working at the time of the flight, the other had panels off.
• All around a more grown up environment and VERY busy (presumably for EOQ rush)

Enjoy

 

[ZsoZso]

CNBC - hour ago:

Jimmy says its the stimmies that push TSLA today, if he is right, we ain't gonna break 700, because $1400 can by 2 stocks at that price but only 1 above it, so buying interest will drop sharply there...

 

[goinfraftw]

Might be helpful:

Price Earnings Ratios

 

[StarFoxisDown!]

To me it looks like in interior supply chain issue. Did we see any picture of a complete dash?

There have been a couple refreshed S's sightings with a complete (White) dashboard. You'd have to expect that almost every sighting you're going to see in the wild right now are test mules and it seems like its consistent in the test mules to have the dashboard incomplete...so odds are they were testing something. Likely they were swapping the steering wheels out and thus need the dashboard accessible.

Considering the rest of the test mules look complete, I would highly doubt that Tesla had supply parts issues for just the dashboard and nothing else. There's nothing special about the dashboard.

 

[PeterJA]

I've been wondering why I'm the only one calling out this care bear for meticulously detailing and linking to literally every single piece of FUD each morning. Quite overt.

I told @Norwalk79 about TMC when I saw him/her battling FUDsters and haters on Seeking Alpha. I would not have done that if I thought he was one of them. I saw him as a Tesla enthusiast who could benefit from a more knowledgable and honest community of such enthusiasts.

Indeed, if you look at his first posts here, you will see great enthusiasm and eagerness to contribute. I think he jumped into posting without knowing the unwritten rules, and posted about FUD because he thought tracking it might be useful, not because he endorsed it. Or maybe he was venting his outrage about it and hoping for empathy. Or both.

One of the pleasures of any community is the joy of scorning outsiders -- a human trait apparently rooted in evolution. We feel comforted hanging out with our tribe (which of course is better than other tribes), because it helped our ancestors survive. But the trouble with scorning and sneering and name-calling and blocking dissenters is it cuts you off from possibly useful info. TSLAQ demonstrated this, to the financial ruin of some of them.

I value the info contributed by @Knightshade and @RobStark, for example, even though I have disagreed with some of their opinions. I suspect @Norwalk79 could also contribute useful info, if you tell him the rules and give him a chance.

 

[Krugerrand]

I said that. There has been a video from December showing 4 wrapped bodies outside the factory. To my knowledge, they have stayed there and not been used yet. Now it looks like an additional 4 arrived:

Thank goodness for context, otherwise —

 

[lafrisbee]

"Gigafactory" used to be only in the Tesla-sphere. It seemed like a mislabeling by sloppy journalists at one time, But now the term carries little "Teslaness" with it.
In the last week I kept hearing it mentioned in reference to both car and battery manufacturing by "others."

Volkswagen Group to open six European gigafactories by 2030 | Autocar

Firm will massively upscale its battery production strategy, and introduce new single-cell format to make EVs cheaper

www.autocar.co.uk

This is just more verification of Tesla becoming a major entity in the world.

 

[goinfraftw]

I made this spreadsheet in 9/2017 and I lol'd for various reasons at the time and now:

 

[TheTalkingMule]

FWIW I sold mine just shy of the top of this mornings pop top for about 2.5x what I paid for em Friday- I expected a pop from the Ark report, but with the button being delayed to at least April I was happy to take the profit there as I wasn't expecting anything else that'd be helpful before end of this week and expiration.

If we do get some further surprise pop later this week I've got plenty of longer-expiration stuff that'll benefit, and if not I can be happy I did decently well on lotto tickets I normally avoid.

Probably the smart move, I am world renowned for my stupid timing and illogical greed. I have a sell order in for about 4x, with any luck I'll grow smarter this afternoon and settle for 3x.

We closed at $718 three weeks ago, and were at $740 not long before that. Literally nothing happened except a mild 10yr treasury spike, so I expect us to get most of that back this week and then begin a slow march up toward $900 by the 4th of July.

Zero rationale other than mega-liquidity and logic.

 

[lafrisbee]

I rarely cross-reference to Reddit, and wouldn't this time if I hadn't zoomed in on the ol' man's face to see his expression...
The Planet Fitness hat made me feel the need to share...

https://www.reddit.com/r/teslamotors/comments/ma79ze

 

[Zaxxon]

So I saw this article and while it is hard to read (as there is no chart or matrix of anykind) it is worth noting that not a single car company TO DATE has implemented OTA for FW (firmware). But if anyone knows differently that would be great to know.

Just to be crystal clear on this, to enable FW OTA is super hard. Also, there is really no way to know that you got a FW OTA update **UNLESS** one of the systems had very different behavior (which includes the infotainment system). This does NOT include new maps updates or even better performance of the infotainment system.

To describe this very different behavior would be very different like faster 0-60 times, materially better braking performance, better self driving characteristics, suspension features or behaviors, changes in how windows or doors operate, changes in pedal performance or regen feel...etc.

Had an interaction this week that is relevant to this discussion. We took a road trip last week of around 900 miles each way. On the way out, we had heavy rain for more than 300 miles straight. Eventually Autopilot disabled itself after throwing a bunch of camera blocked or blinded warnings. This isn't abnormal. What was not great is that it never came back once things cleared up. I opened a service request through the app.

A Tesla rep messaged me in the app to let me know that after reviewing my car's logs, the issue was a radar fault, and set up an appointment for this week to have the radar unit replaced. We went about our vacation expecting to have no AP on the trip home (the horror!). However, we received a software update while on the trip. After the update, AP was operating normally again, and stayed this way all the way home.

I messaged Tesla through the app again on Sunday relating what had happened. This morning I received a response telling me that they spoke to the AP team and learned that there was a radar firmware issue in the prior release that was resolved in this current one.

If this is all true, then this would seem to be pretty strong evidence that Tesla is applying component-level firmware updates regularly as part of the normal OTA process.

Certainly would have been better to have not experienced an issue in the first place, but this is another instance of solid service through the new paradigm, in my book. Have problem, spend 1-2 minutes submitting service request, problem disappears or is addressed by Tesla.

I was in awe looking at the yolk and that would be a main factor in my decision to pull the trigger and order.
will be waiting to see when they start shipping with it and see if I replace my Model 3 with a yolked S =)

For the record, a yolked steering wheel would be problematic on many levels--salmonella exposure, slippery grip, etc.

 

[JustMe]

CNBC - hour ago:

These knuckleheads should be ashamed of themselves. They say they have no idea how Cathie came up with $4000 TSLA price target. “It’s got to be more than just cars!” For the love of God -Ark published their model on GitHub for all the world to see. I can’t imagine being so unprepared before giving financial advice to a huge television audience.

 

[ninpb]

Fremont Factory Flyover Mar 21, 2021

• Kato seems to have been somewhat finished. The structure on top of the building that was being constructed looks like a storage unit of some sort with ducts going up there from both sides. Perhaps it's the storage facility that we've seen in the videos?
• Very few Model S' in the roro lot but there are at least a few. Only regular steering wheels spotted, no yoking around.
• One of the Gigapresses was working at the time of the flight, the other had panels off.
• All around a more grown up environment and VERY busy (presumably for EOQ rush)

Enjoy

The car carriers just makes me so excited thinking about when we'll see the Tesla Semi start to be used for them and all the implications it means.

 

[SN_8]

CNBC - hour ago:

I watched this. Even as they were saying that Cathie Wood is the only fund manager that can pull off such a price target without being dismissed, they are... wait for it... shaking their head and being dismissive of her price target.

 

[scaesare]

With regard to the Plaid MS and even more the Plaid X (and the new roadster) I am very curious as to how they solve(d) the enormous mechanical forces in bringing all that power to the wheels.
On our 2013 P85 we have now more than 300.000 km and while the car has proven very reliable (been driving all over Europe with it), it took more than a few drivetrains to receive one that can cope with the power of the P85, all on the rear wheels. But the car still drives like new, unbelievable.
I am sure Tesla learned a lesson or two with the drivetrains, but the mechanical challenge must be great.
As shareholder I would like to see as little messages of changed drivetrains as possible. Will give me all the more confidence for changing our cabrio for the new roadster!

So are you saying you had drivetrain reliability issues related to mechanical failure due to handling the torque?

I ask because cars of that vintage all had drivetrain issues/replacements (including my 2013 non-P) due to a problem with the shaft bearing causing a mechanical growl, but that was due to pitting induced by stray eddy currents induced in the rotor, not to torque-induced failure.

 

[Mo City]

What do you guys think about Tesla operating it's own semi fleet (potentially with FSD in the future) as opposed to selling semis to fleet operators?

https://twitter.com/x/status/1373878726807613448

If the mission remains to maximize how many ICE vehicles are replaced, this will not happen.

Also, the logistics business and dealing with drivers are two things Tesla has no interest in right now. There are more important things to do.

 

[dl003]

Thank goodness for context, otherwise —

I can't breathe.

 

[MTL_HABS1909]

CNBC - hour ago:

It infuriates me how they question Cathie, who has a proven track record of success, yet none of them EVER question any of their bear guests (ex: Gordo) after years of failed predictions.

 

[dl003]

It infuriates me how they question Cathie, who has a proven track record of success, yet none of them EVER question any of their bear guests (ex: Gordo) after years of failed predictions.

I mean, you only question people who seem to have some sort of rationale behind their claims. You don't question the insane ones.

 

[st_lopes]

I've had a chance to sift through the ARK model and wanted to share some of my reactions. Many of these things have been called out on Twitter, some of these comments here as well, so may not be groundbreaking new information for many here. That said, hoping that synthesizing these in to a single post may be of use to many in this community. For reference:

• ARK's Price Model: ARK’s Price Target for Tesla in 2025 is $3,000 Per Share
• ARK's GitHub Data Model (includes their old models as well): ARKInvest/ARK-Invest-Tesla-Valuation-Model

TL;DR: Tesla has immense optionality in its business and the permutations of outcomes that justify a $3,000+ valuation by 2025 are equally immense. It may never achieve autonomy nor launch a ride hail network, but it may still hit that price target if it delivers 5M+ units at strong margins and continues growing at 50% CAGR through 2030. Importantly, that growth trajectory will demand a higher enterprise multiple than what ARK has currently ascribed to Tesla in 2025. The ARK model ignores HUGE parts of the business which would just add more support levels for future valuations. TSLA is the next TSLA and this truly still is just the beginning. I look forward to seeing the Machine that Builds the Machine coming to scale and watching the markets realize the level of operating margin and operational execution that Tesla has actually achieved.

---

Below are my observations and comments on some specific assumptions or model details that I personally found interesting:

1. The model assumes MAX 25% market share in any individual segment, which seems entirely reasonable. The one aggressive assumption is the addition of M-2/A and a "Neighborhood EV" ("N-EV") which both have extremely large addressable markets (40M and 100M respectively). In other words, a lot of the extremely high price scenarios have Tesla getting a fair chunk of both of those markets.
   
   
2. Assumes M-3 ASP of $50k, M-Y ASP of $53k, and C-TRUCK of $55k. M-3 seems high, C-TRUCK seems low; modifying any of these doesn't materially change bullish outcomes given the potential distributions skewing to M-2/A or N-EV, but it does increasing some of the bearish outcomes given more of those models skew towards M-3, M-Y, and C-TRUCK.
   
   
3. The highlighted bull case scenario ($4k) assumes 5M units produced/sold in 2025 with an overall ASP of $38k. This begins to show the optionality at Tesla's disposal. Tesla may never need to produce an N-EV or M-2/A, but can keep pushing cost and price of M3/MY lower and achieve a similar margin mix and ultimately valuation.
   
   
4. Ignores Energy; Ignores Solar; Ignores Service; Ignores SaaS (incl. Dojo); Ignores Licensing; Ignores Credits; Ignores SEMI. In other words, this is a very simple model focused solely on Automotive in most of the model outcomes with Ride Hail / Robotaxi pushing the highest model outputs.
   
   
5. Assumes Tesla continues with debt/equity raises to fund factory buildouts. Arguably they may not need to given their operating leverage, the current war chest (enough cash to build another 10 GFs), and BTC. This would impact operating margin calculations, which would also boost valuations.
   
   
6. Assumes a 70% loss ratio on insurance. This is fairly high considering the argument that Tesla's would be orders of magnitude less likely to have accidents and Tesla would be much better equipped to repair their vehicles relative to a third party insurer (i.e., lower cost to settle claims). That said, this is not a material driver to valuation.
   
   
7. The outlier bull cases (e.g., 20k+ / share) have assumptions of 15M+ units sold in 2025; likelihood of achieving that is quite low based on what we know today (e.g., they have a $22k price target scenario where Tesla sells 66M units in 2025). So, take the outliers with grains of salt as they are in fact very extreme outcomes. They do however show Tesla's ultimate potential if world domination was on the roadmap, but these would be major deviations from the 5-10 year Automotive plan we have heard from Tesla today.
   
   
8. Combing through their simulation outputs and you can see that several very conservative outcomes can still reach or surpass their bear case assumptions (e.g., 0% ride hail or autonomous fleet, 40% margins, 6M units sold, $9k/unit capital efficiency, 13 enterprise multiple = $1,300/share) (e.g., 0% ride hail or autonomous, 48% margins, 5.7M units sold, $4k/unit capital efficiency, 13 enterprise multiple = 1,350).
   
   
9. Point made by Meet Kevin in one of his latest videos, but worth reiterating,
   
   ARK is assuming a very low terminal Enterprise Multiple. ARK is using a 13 multiple in all scenarios for Automotive and Robotaxi and 10 for insurance. This multiple is effectively lower than any average Enterprise Multiple as at 12/31/2020 for Large Cap US Companies (telcos and utilities are both ~14; source: EV/EBITDA (Enterprise Multiple) by Sector/Industry 1995 – 2021) and would be roughly the average across all large caps in 2017/2018/2019. Pushing these multiples to more reasonable growth company multiples (20+), which considering Tesla's growth should continue through 2030 - would be reasonable, and you could very quickly more than 2x all the share price outputs. This again confirms how much margin of error Tesla has to still achieve these valuations. For instance, it may never hit 40% margins (say it plateaus at 30%), but still reach the expected ($3k/share) valuations if it hits 6M units in 2025 and is still on track for 50% CAGR through 2030, thus demanding a higher multiple. All while ignoring Ride Hailing and Robotaxi entirely.
   
   
10. Ending with a tangent, I absolutely love the fact that ARK is willing to publish not only their research notes for free, but equally make available their underlying data model. This is completely against the grain in the investment world and truly shows how disruptive they are to their own industry sector. The model is not only simple (arguably oversimplified), but extremely flexible and allows you to play with whichever variables you believe are the most relevant.

Overall, ARK has put out a model that some will scream is unrealistic (because of the emphasis on Robotaxi at higher valuations), but what has actually spelled out a fairly reasonable and conservative view on the Tesla Automotive business. As many here know, Energy and Solar will be major tailwinds to the Tesla business. It comes across, to me anyways, as actually a very subtle way for them to call out that Tesla actually has the potential to 10x in 5 years if they execute across multiple facets of their business, whereas "simply" executing across a single facet (Automotive) will allow them to grow in to a 3-5x in 5 years.