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

[Maarten]

"So: one cell fails -> a whole new batterypack will be needed.
One more reason why the cells will have to be very durable."

For sure - matches up with Elon stressing in ER that battery yield, quality and longevity is really important.

But - are we all that sure that just one or a couple cells failing is a big problem?

I recall various videos from Jack Richard from EVTV where he praised both individual cells and the battery pack as a whole after taking them apart and testing them rigorously.
As I recall Tesla has the least amount of variance between individual batteries he ever tested. Also, the batteries were grouped and various monitoring and error handling was added, both in software and hardware on both the modular and pack level, enabling very good pack performance and longevity despite minor battery variation and/or a few failing batteries, out of the ~3000 cells in the 2017 pack.

(I do think that the 4x modules per pack design was a conservative hedge by Tesla: They could replace one of the 4 subsections instead of a whole pack.)

The structural pack and 4680 is a whole new deal of which we know very little. But, it would make sense if Tesla employed some of the same methods they have developed over the years. It could perhaps be possible to fabricate a top layer (to glue to the cells) of both conducting material and perhaps also with embedded measuring hardware, enabling one level of error handling, as well as serving as a structural member - a kind of very large and rigid circuit board.

Another possibility is that they made the conscious decision to skip one or two layers of 'error handling or mitigation' techniques in order to drive down the cost of structural batteries.

If so they would likely only do this if the error rate on the pack level is tested to be really low.
How to determine this reliably? Here they have the long-standing cooperation with Jeff Dahn from Dalhousie to draw lessons from: One of his great contributions is to measure batteries very precisely, enabling continuous testing to yield useful result with a high degree of reliability in time frames of a few quarters to a year, instead of 5-10 years.
Tesla likely has testing rigs for the new 4680 packs where they can elicit useful quality assessments quickly.

To speculate further, Tesla might very well have a wide range of variants of 4680 batteries and structural pack assembly method. They could then test both the battery yield and longevity and structural stress of the pack of all these variants.
Even though the testing methodologies developed by Dahn et al yield results quickly, the measurements still gain in reliability over time. So it all comes down to how much risk you are willing to take, how well you can pivot and recover from mistakes and sunk cost from earlier decisions that turned out to be not right enough vs the opportunity cost of not acting fast, based on incomplete information.

Luckily, Team Elon has a lot of experience in navigating fluid and complex problems like that.

Edit: Chenkers beat me to it.

What you and @Chenkers are saying makes a lot of sense.
My thinking comes from articles from Gruber that one cell could degrade the performance of the whole pack. But maybe that was about the old roadster.
Apart from making the 4680 cells very durable, I think you are right that we can expect Tesla to handle the problem of cell variance too in tight fabrication tolerances, software and electronics.

The new structural batterypack has a lot of consequences.
But, as we agree on, Tesla team has a lot of very clever engineers to handle those challenges.
And I am sure they will keep on innovating, that really is something in the core of Tesla.

 

[Krugerrand]

The genius part was to get people to pay full price for it and help Tesla train it because YOU want it better since you paid full price for it. But when you no longer have skin in the game, once the novelty wears off you'll stop subscribing.

FSD is a novelty feature until it has some real utility such as able to make you money via robotaxis or saves you time by fully freeing you from the burden of driving. Supervised FSD on city streets doesn't seem very relaxing unlike NOA on hwys.

Spoken like someone who doesn’t have it, never used it, and just basically has no idea what they’re talking about but is intent on letting everyone know their uninformed opinion.

 

[Paracelsus]

TSLA pre-market approaching the 1-year support trend line just before the weekend. The extra two days helps today’s closing price get solidly pinned on the longer charts. And now that we are once again trading at the bottom of the converging 3 month and 1 year trend lines that are still a few weeks away from convergence at the 700-level, we are also once again trading at levels that could represent an advantageous price for IRA to Roth rollovers with TSLA shares should TSLA continue to trade upwards and thus break out of the wedge (not an advice)

 

[Singuy]

Spoken like someone who doesn’t have it, never used it, and just basically has no idea what they’re talking about but is intent on letting everyone know their uninformed opinion.

Valid criticism. My problem is not FSD. My problem is the subscription pricing model. It's not going to be a 30 dollar a month subscription in which one can just forget about it regardless of usefulness. It's going to be in the hundreds which is meaningful to a families budget which constantly requires evaluation.

I prefer the mandatory subscription model aka you pay it in the form of a loan payment over 5-6 years when you bought the car.

 

[ItsNotAboutTheMoney]

It is normal for automakers in North America to build their full size trucks and near luxury CUVs like Model Y in the United States. And their non-premium vehicles in Mexico. Ford choosing final Mach-e assembly in Mexico is unusual.

Mexicans buy about 1.2M new cars per year. Mexicans also buy about twice that of American 3-7 year old used cars that support American used car prices. Mexico should have some local production.

The whole point of NAFTA/USMCA is to level up Mexico so there are not millions of desperate Mexicans coming into the USA illegally every year. The efficiency gains by trading freely with Mexico for the US economy is negligible.

The rants of xenophobes should be ignored.

The point of NAFTA/USMCA is to provide a nearby base of cheap labor that can help the competitiveness of domestic companies.

The USA has Mexico, the EU has countries in Eastern Europe (see VW's cheaper Skoda rebadging).

Cheap for the (short-term) win!

 

[mongo]

TSLA pre-market approaching the 1-year support trend line just before the weekend. The extra two days helps today’s closing price get solidly pinned on the longer charts. And now that we are once again trading at the bottom of the converging 3 month and 1 year trend lines that are still a few weeks away from convergence at the 700-level, we are also once again trading at levels that could represent an advantageous price for IRA to Roth rollovers with TSLA shares should TSLA continue to trade upwards and thus break out of the wedge (not an advice)

One of mongo's broken records:

Watch your tax tables when considering this.

Low SP (account value) reduces the amount of external liquidity one needs to complete the IRA to Roth conversion to cover taxes. However, the long term financial merit is dependent on the effective tax rate of the lump sum roll over vs the multi-year withdrawls from an IRA. Secondary impact is the lack of future appreciation on the funds used to cover the taxes.

A lesser tax payment in dollars does not neccesarily mean more net income over time. Put another way: A smaller percentage of tax on the future value is a larger number than a higher percentage on the present value, however a higher percentage in tax now means less total funds.

Made up numbers (multiyear IRA distributions also gets the deduction and low end of graduated tax rate every year (lower effective rate), Roth rollover starts at your current highest tax rate (higher effective rate))
Roth rollover:
100k minus 25% in tax = 75k * 4x appreciation = $300k net and $25k in taxes.
IRA:
100k *4x appreciation = $400k minus 20% in tax = $320k net and $80k in taxes.

 

[ByeByeJohnny]

Valid criticism. My problem is not FSD. My problem is the subscription pricing model. It's not going to be a 30 dollar a month subscription in which one can just forget about it regardless of usefulness. It's going to be in the hundreds which is meaningful to a families budget which constantly requires evaluation.

I prefer the mandatory subscription model aka you pay it in the form of a loan payment over 5-6 years when you bought the car.

No, it's not gonna be $30 but it's not gonna be several hundred either. At least not for long. Tesla will adapt to a price that get the maximum take rate vs total dollar amount. If there is any deviation from that it will be towards lower price, and thus slight lower total amount, because more users are always preferred.

Always been suggestions for $300 or so from folks here that seems to think that high price will get the most profit. They took Elons comment on price 'buying will be cheaper' as meaning that buying and owning FSD for even three years should be cheaper than subscribing for three years. Guess what? Elon has never said anything about how many years it would be for buying to be cheaper. Every one is just speculating. There has never been any real hint at what the cost will be. 'Cheaper to buy' is not that. They could just as well decide that buying and using for 10 years compares to a $100/month price. Or putting some mileage limit on a low price and just like that 'owning is cheapest for unlimited driving'.

There are so many ways to figure out the best price both for Tesla and adaption rate. Tesla right now might know what they want to start with but they don't really know what price they will end up with in a few years.

As always this is for non-commercial driving only.

 

[StealthP3D]

During the call, Zach made a comment regarding the transition from cash purchases of FSD to subscription.

Zach: One of the things we'll need to keep an eye on is a potential transition from cash purchases of FSD subscription over to -- or cash purchases of FSD who may move over to FSD subscription. And so there could be a period of time in which cash reduces in the near term and then as the portfolio of subscription customers builds up, then that becomes a pretty strong business for us over time

Has the concept of getting a refund on already completed cash purchases of FSD to go subscription been introduced before? First I've heard of it.

 

[Nocturnal]

Am I the only one that feels this way?

 

[Singuy]

No, it's not gonna be $30 but it's not gonna be several hundred either. At least not for long. Tesla will adapt to a price that get the maximum take rate vs total dollar amount. If there is any deviation from that it will be towards lower price, and thus slight lower total amount, because more users are always preferred.

Always been suggestions for $300 or so from folks here that seems to think that high price will get the most profit. They took Elons comment on price 'buying will be cheaper' as meaning that buying and owning FSD for even three years should be cheaper than subscribing for three years. Guess what? Elon has never said anything about how many years it would be for buying to be cheaper. Every one is just speculating. There has never been any real hint at what the cost will be. 'Cheaper to buy' is not that. They could just as well decide that buying and using for 10 years compares to a $100/month price. Or putting some mileage limit on a low price and just like that 'owning is cheapest for unlimited driving'.

There are so many ways to figure out the best price both for Tesla and adaption rate. Tesla right now might know what they want to start with but they don't really know what price they will end up with in a few years.

As always this is for non-commercial driving only.

Just for reference, a 60 months loan of 10k is 180/month @3% interest. 5 years is also the average rate at which an American family switch out their car.

Based on elons comment I expect it to be higher than this per month.

 

[Cape Coddess]

Am I the only one that feels this way?
View attachment 658351

Not me. I sell my current buys once they go up 50. So that particular Roth account stays pretty level.

 

[SOULPEDL]

$666 premarket not ominous at all

Ha, good morning... this was my first indication today of my latest purchase. "The devil made me do it." (Flip Wilson).
I use numerology so I can remember the trade. It worked! Sadly... what are we doing down here?

 

[Unpilot]

TBH I am getting sort of pissed off.
The way forward is clear. The need is urgent. Consequences of inaction grow more dire every day.

Yet every opportunity to slow/impede Tesla is used.

My kids NEED action yesterday...not in 2030 or whatever date is far enough in the future to keep the rest of the industry from doing anything today.

But sure let's "plan" to start thinking about maybe taking action at some point.


edit to say this relates to SP .....in other words it SHOULD be way up instead of trending down/ rant over

 

[-=buzz=-]

Wonder how much Ford paid for this tweet:

View attachment 658063

Imagine their profit margin, if they didn't have to BUY EV credits...

 

[TheTalkingMule]

We're moving from a centralized world based on fossil energy production to decentralized renewable sustainability. It's not in the interest of traditional govt/bank/media to speed this transition, so I would expect some resistance along the way!

We're at the biggest tipping point, a new level of attack is to be expected. I don't even think it's started yet.

 

[Paracelsus]

One of mongo's broken records:

Watch your tax tables when considering this.

Low SP (account value) reduces the amount of external liquidity one needs to complete the IRA to Roth conversion to cover taxes. However, the long term financial merit is dependent on the effective tax rate of the lump sum roll over vs the multi-year withdrawls from an IRA. Secondary impact is the lack of future appreciation on the funds used to cover the taxes.

A lesser tax payment in dollars does not neccesarily mean more net income over time. Put another way: A smaller percentage of tax on the future value is a larger number than a higher percentage on the present value, however a higher percentage in tax now means less total funds.

Made up numbers (multiyear IRA distributions also gets the deduction and low end of graduated tax rate every year (lower effective rate), Roth rollover starts at your current highest tax rate (higher effective rate))
Roth rollover:
100k minus 25% in tax = 75k * 4x appreciation = $300k net and $25k in taxes.
IRA:
100k *4x appreciation = $400k minus 20% in tax = $320k net and $80k in taxes.

Thanks @mongo - And I should have clarified that this situation is most applicable to long-term ‘buy-the-dip and HODL’ Longs that now have the first world problems of excessively heavy 401k’s that will get taxed at higher rates - and are facing the increasing probability that those rates will also be increasing. Thus, if TSLA share price rise is aligned with Cathy Wood’s expectations of 5x-10x before taking distributions, they will get hammered with the current (and possibly even higher) tax rates.

I cannot confirm nor deny that we fall in that category since our first efforts of buying the dips in 2013 and HODLing. But I will confirm that the last time TSLA bounced off the longer 1-year trend line around 600 we rolled shares into our Roth, and at the same time we rolled an equal number of shares into a 501c3 we recently created.

While this of course gave us a tax deduction for our charitable contribution to our 501c3, the larger reason for doing so was to create a conduit for charitable contributions to projects and opportunities to advance community and environmental sustainability without any ‘management fees’ or other disgusting skimming of anyone’s philanthropical efforts.

We have already given a scholarship towards a degree in Environmental Science and monies to the local Senior Dining/Meals on Wheels program. We are now laying the foundation to help grow school curriculum opportunities to further advance an Environmental Science focus, which may soon include partnering for a solar project. This was all captured in our Mission Statement, and the 501c3 is additionally environmentally friendly by holding 100% of our funding and any outside contributions in TSLA shares. Thus, we have been able to turn our first-world 401k problems into a TSLA-funded path to advance environmental sustainability at the local levels while helping others find a path for effective and efficient charitable giving that will be held in TSLA shares to maximize fund growth opportunities

 

[Big Time]

TBH I am getting sort of pissed off.
The way forward is clear. The need is urgent. Consequences of inaction grow more dire every day.

Yet every opportunity to slow/impede Tesla is used.

My kids NEED action yesterday...not in 2030 or whatever date is far enough in the future to keep the rest of the industry from doing anything today.

But sure let's "plan" to start thinking about maybe taking action at some point.


edit to say this relates to SP .....in other words it SHOULD be way up instead of trending down/ rant over

I’m with ya buddy. I posted my feelings yesterday and got an amazing number of disagrees which made me feel.... a little bitter. Some here said the right thing = Tesla IS and needs to focus on EXECUTING, than after the smoke clears it will be obvious who the champion of the decade will be. Until then we gotta suppress the tears and dreams of islands. Just feels like we’re getting blindsided from all angles(yes ALL).

The only thing that I currently cling onto for hope in terms of SP is the fact that Microsoft is also down.

 

[Mengy]

Valid criticism. My problem is not FSD. My problem is the subscription pricing model. It's not going to be a 30 dollar a month subscription in which one can just forget about it regardless of usefulness. It's going to be in the hundreds which is meaningful to a families budget which constantly requires evaluation.

I prefer the mandatory subscription model aka you pay it in the form of a loan payment over 5-6 years when you bought the car.

From a valuation and investor point of view I far prefer the subscription model for FSD. For several reasons:

1. Smaller monthly purchases are far more affordable than huge one time lump payments.

2. Persistent high margin revenue streams over time are far better for Tesla's books.

3. The subscription model fixes the issue of FSD not migrating when buying a new Tesla. This frees up current Tesla owners with FSD to trade up and buy new again.

4. The subscription model allows people to only buy FSD when they need it on a month to month basis. This is good because it will equate to a much higher overall take rate over a time period. Going on a road trip? Buy FSD for the month. Do you commute one hour every day? Pay for FSD full time and work while you commute.


FSD going subscription along with V9 being released will be a turning point for Tesla. 2021 is the year we'll really see Tesla Vision take off, and it starts very soon. I'm super bullish on the whole subscription angle.

 

[Tslynk67]

Valid criticism. My problem is not FSD. My problem is the subscription pricing model. It's not going to be a 30 dollar a month subscription in which one can just forget about it regardless of usefulness. It's going to be in the hundreds which is meaningful to a families budget which constantly requires evaluation.

I prefer the mandatory subscription model aka you pay it in the form of a loan payment over 5-6 years when you bought the car.

I agree with this - I can't imagine paying $200 per months for it, unless I was using my car as a robo-taxi, then it's OK

A pay-per-mile would be much more interesting, especially for casual users

 

[ByeByeJohnny]

Just for reference, a 60 months loan of 10k is 180/month @3% interest. 5 years is also the average rate at which an American family switch out their car.

Based on elons comment I expect it to be higher than this per month.

I expect them to stop selling FSD and only go with subscriptions at the latest a year or so after starting subscriptions. Possibly at the same time.

Previous or current buying price will have an impact for the monthly price only at introduction. Even a few months after, Tesla can and will start to adjust the price to find the best result. With no regard to previous buying price.