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

[capster]

Last I heard that $7500 is only affecting US pricing and Tesla sells the Model Y world wide.

But hey I need to buy a Tesla or two in the next few years so I don't mind focusing on the US picture for a second.

I'm saying ~4x the production and lower costs leaves room to adjust the price downward even in the US. They will reduce the cost of manufacturing over time and will have room to adjust as needed.

but my introspection doesn't last forever, they'll be selling Model Y in dozens of other countries. Tell me you don't expect European Model Y prices to drop after the GF in Germany starts spitting out volume. I expect pricing to drop worldwide (maybe less in countries with good EV incentives) but I can't take my mind off of ~4x the volume coming on line driving prices lower.

Sure, I can see the world easily absorbing 4x the volume with little necessary effect on the ASP of the 3 and the Y.

People may think I‘m just kidding with my comments about fashion or about the potential for women to also indirectly affect the, gasp!, pickup truck market. I am not.

There is a sea change underway and Teslas are becoming the car to have. The short version is: Any economic dive and rebound will drive a fashion change; decision making wrt car buying assuredly has a fashion component; floods in China & Germany together with fires in the Western US, amongst other climate change driven extreme weather events, will push vehicle fashion in Tesla’s direction faster than might otherwise have been the case.

Though Elon speaks of first principles, he appears, from Tesla’s actions, to be quite aware second order effects, including fashion. I tend to think in terms of tidal forces and, at times, fashion can be a tidal force.

Yes, I’m aware that such analyses are hard to plug into a valuation spreadsheet (ask me if I care) yet to my way of thinking are far more valuable. That is why I consider the current stock price and any models of future valuations to be but secondary sources of guidance. When the modelers converge on a legitimate midterm story and the forecasts of reputable modelers agree, Tesla will have exited the disruptive phase. Which, IMHO, is still a ways out.

YMMV (Your Modeling May Vary ). Not advice exactly.

 

[MC3OZ]

I base this hunch on a statement Elon made some time ago where he expects to sell more Model Y's than Toyota sells Corolla annually a few years from now. Yet there is a huge price difference between them both today. Thus, I feel like Tesla will actively lower the prices on their cars over time to sell more of them per year.

Realize that once Austin and Berlin fully ramp up the production per year on Y/3 is going to be MUCH higher than we have today. It's very possible they will outpace demand at current prices, which are rather high compared to the likes of a Corolla. Due to economies of scale Tesla should be able to lower prices AND margins on Y/3 while still keeping profits per quarter well into the black enough to keep growing at 50% per year.

I'm not saying this will definitely happen, just that I feel there is a high chance based on things Elon has said coupled with Tesla's mission, which is not to make as much profit as possible. I think as long as Tesla stays profitable and healthy Elon will put the mission ahead of the shareholders. Just my hunch!


EDIT: Elon might have said Camry, not Corolla, I'm not sure which one it was but I think it was Corolla!

Model Y doesn;t need to take all of its sales from Camry/Corolla, and it only need to be price competitive om a TCO basis including costs like fuel and maintenance.

FSD also help lower the base price of the car, as the FSD take rate increases Tesla has more scope to lower prices.

The cost of cell is also a factor, and 4680 LFP cells will also help.

Profits are important, and the mission is important.

Essentially I agree with you,, they want profits and margins sufficient to fund 50% growth per year, and they want demand growth to keep up with 50% growth per year, price is one part of demand growth.

 

[Wicket]

View attachment 688162
I think the main issue is we are battery constrained. As 4680 scales and is used for y, s, x, semi, cyber, and roadster this will free up 18650 and 21700 cells to be used in other models and products and increase production.

I attached the above slide from teslas battery day presentation because I think it shows Tesla's focus on battery makeup rather than form factor.

Yeah as was debated here for *years* and still ongoing to some extent, the model S retained the 18650 for far longer than expected after 2170. Presumably it simply isn't that cheap to bring everything up to the same standard while also having the axis of completely new model development competing for some of the same resources.

Potentially Tesla might skate to a lineup that has 25k$ base for the 2 (or even the 1) and every 5k$ base point on the way up satisfied in an alternating sedan vs S/CUV format.

2/25k$
2Y/30k$
3/35k$
Y/40k$
5/45k$
5Y/50k$
7/55k$
7Y/60k$
S/65k$+
X/70k$+

Getting to a more elaborate product lineup with full market coverage might be prioritized over fewer models with more modern designs. A greedy algorithm basically just says 'what is the biggest addition to sales we can make here with each major revision/release?'. In addition to S/3/X/Y (4680 for S/X) then I might prioritize in order to be the 2, 7Y, 5, 2Y, 7, X, 3, 5Y, S, Y and then refreshes from there in similar order as age. Of course there are other products that have to fit in with orthogonal form factor as well which might lead to a refactor of this idea. 25k$ might be too aggressive right now as well for current tech. Just Sunday musings. Would you rather a 5 year old Y get refreshed to new Y or have a 5 year old Y and a brand new 7Y that is mid-sized between Y and X?

 

[MC3OZ]

Yeah as was debated here for *years* and still ongoing to some extent, the model S retained the 18650 for far longer than expected after 2170. Presumably it simply isn't that cheap to bring everything up to the same standard while also having the axis of completely new model development competing for some of the same resources.

Potentially Tesla might skate to a lineup that has 25k$ base for the 2 (or even the 1) and every 5k$ base point on the way up satisfied in an alternating sedan vs S/CUV format.

2/25k$
2Y/30k$
3/35k$
Y/40k$
5/45k$
5Y/50k$
7/55k$
7Y/60k$
S/65k$+
X/70k$+

Getting to a more elaborate product lineup with full market coverage might be prioritized over fewer models with more modern designs. A greedy algorithm basically just says 'what is the biggest addition to sales we can make here with each major revision/release?'. In addition to S/3/X/Y (4680 for S/X) then I might prioritize in order to be the 2, 7Y, 5, 2Y, 7, X, 3, 5Y, S, Y and then refreshes from there in similar order as age. Of course there are other products that have to fit in with orthogonal form factor as well which might lead to a refactor of this idea. 25k$ might be too aggressive right now as well for current tech. Just Sunday musings. Would you rather a 5 year old Y get refreshed to new Y or have a 5 year old Y and a brand new 7Y that is mid-sized between Y and X?

I find this 5/5Y and 7/7Y speculation interesting...

Essentially you are saying a mass produced budget model that is bigger than 3/Y and significantly cheaper than Model S/X.

I can see a lot of merit in this proposition, specifically for markets like the US, Canada and Australia, less so for Europe and Asia where a larger size car is sometimes a disadvantage.

Whether we have 5/5Y and 7/7Y, or simply 6/6Y would be the other question.

Why I think this is viable again, comes back to 4680 LFP cells, the lowest priced variant will trade off some performance, range and charging speed, but higher price variants with Nickel-Manganese cells would be very good cars, but not as good as Model S/X.

I also agree with proposition that for some markets Tesla might eventually make a car that is smaller and cheaper than a Model 2. I think the minimum requirement is 4 wheels. As 4680 cell production scales, and casting matures, there is always the opportunity to make smaller vehicles, simply because fewer cells and raw materials are needed. Lower price and smaller size works well for some regions of the world.

 

[TheTalkingMule]

Since the dawn of time right up til today, even on this board, people keep talking about automobiles as the primary source of Tesla revenue. Around 2025 we should be rounding the corner into the next infinitely bigger S-curve of the Energy business.

That's why TSLA has 10x'd with relative ease and not fallen back. Big money knows that Tesla's about to sit atop the global energy market. No one knows what that will look like, but the very early wagerers have a few coins on Tesla.

 

[MXWing]

Regarding Tesla wanting to maximize profit or not--In todays edition of "Why do people not believe what Elon said" we visit the Q2 2020 ER call

Comeon man, you been around. Remember when Elon tried to convince everyone the Model S (the 2017 version) was better than the Model 3? That the S/X would be the platform that gets all the advanced features before the 3?

I believe in the spirit of Elon's statement but the actual execution leaves a lot of interpretation for both effect and timeframe.

Like a 3 years maybe, 6 years definitely kind of aspirational statement

Musk: I think we should deploy "the button":
Karpathy and the VP of Risk Management: NO

Musk: I think we should just only make a "little profit":
Kirkhorn and every accountant, finance and economists known to man: NO

 

[InTheShadows]

Since the dawn of time right up til today, even on this board, people keep talking about automobiles as the primary source of Tesla revenue. Around 2025 we should be rounding the corner into the next infinitely bigger S-curve of the Energy business.

That's why TSLA has 10x'd with relative ease and not fallen back. Big money knows that Tesla's about to sit atop the UNIVERSE-AL energy market. No one knows what that will look like, but the very early wagerers have a few coins on Tesla.

FTFY

 

[Knightshade]

Comeon man, you been around. Remember when Elon tried to convince everyone the Model S (the 2017 version) was better than the Model 3? That the S/X would be the platform that gets all the advanced features before the 3?

The 3 still has less top range, no adjustable suspension, no second (or now third) screen, no ludicrous (now plaid) mode, no ventilated seats, is now on an older UI than new Ses, and has no stalkless driving or yoke to name but a few features the S offers and the 3 never has.

Where's the lie?

 

[OrthoSurg]

Very timely POWER MOVE in Bitcoin. This is great support for TSLA going into earnings.

Hope action sustains. This will be of great help when impairment is discussed in both the letter, conference calls and analysts report.

... eh yeah we hit impairment when BTC was 31K. It's 38K right now so weird accounting rule.

View attachment 688181

The timing couldn’t be more perfect.

 

[Wicket]

I find this 5/5Y and 7/7Y speculation interesting...

Essentially you are saying a mass produced budget model that is bigger than 3/Y and significantly cheaper than Model S/X.

I can see a lot of merit in this proposition, specifically for markets like the US, Canada and Australia, less so for Europe and Asia where a larger size car is sometimes a disadvantage.

Whether we have 5/5Y and 7/7Y, or simply 6/6Y would be the other question.

Why I think this is viable again, comes back to 4680 LFP cells, the lowest priced variant will trade off some performance, range and charging speed, but higher price variants with Nickel-Manganese cells would be very good cars, but not as good as Model S/X.

I also agree with proposition that for some markets Tesla might eventually make a car that is smaller and cheaper than a Model 2. I think the minimum requirement is 4 wheels. As 4680 cell production scales, and casting matures, there is always the opportunity to make smaller vehicles, simply because fewer cells and raw materials are needed. Lower price and smaller size works well for some regions of the world.

I went with both 5 and 7 size midpoints between 3 and S because I figure they can release a 7 that is midpoint current S and 3 pricing and then later release a 5 which is midpoint 3 and 7. So as the timeline moves forward you are basically trying to find models that are maximally disjoint and add the most to the addressable market given where you happen to be at the moment.

I think on the bottom side there's more complexity. I'm skeptical they can hit a 25k$ price point and hold 25+% margins right now. I took a lot of guff with Tesla fans when I laid out the case on 3 launch that the 35k$ price was too low for the cost structure (but Elon said 35k$ so I was clearly wrong, right? Can be tough to talk with fans). Given the shape of the demand curve and how much of the market is under 40k$ it might make sense to aim for a 30k$ model first and 25k$ a little further down the line (thus I sometimes think the 2 is more like 30k and 1 is more like 25k, but again that's not what Elon said so..)

I suspect that the S/X end up refreshed at a lower price point as Tesla cedes the very top end of the market to either niche players or OEMs that use Tesla's drivetrains. As the story transitions to robotaxi this just isn't a very high priority space. And the CT, and the smaller CT, and the vans, and the semi, and the roadsters (wish they had a 40k roadster) added in but who knows.

100% agree about geographical complexities. A VW golf model in Europe and prolly China is more necessary than in the US but the US is and may remain 50% of their sales volume for quite a long time especially with incredibly generous 10k$ subsidy so the bigger than 3/Y models might be US-centric and ship tactically. Anyway that's a lot of speculation.

The real takeaway I'm exploring is the pace of new models vs. refreshes and the dynamics but in particular in regard to 4680 timing on the 3 which is where all these narrative tracks find a good litmus test.

 

[MC3OZ]

I think on the bottom side there's more complexity. I'm skeptical they can hit a 25k$ price point and hold 25+% margins right now.

From the following video raw materials prices for batteries cells are something like this;- LFP $8 kWh, Nickel $25 kWh

He also predicts pack prices of less than $50 per kWh will not happen before 2025.

Say after 2025 an LFP pack page with a roadrunner 4680 line only costs $50 kWh, and an ultra-compact model only needs a 25 kWh battery.
The pack cost is now, $1,250, at these price points the cost of the pack is probably the same as the cost of a compact ICE drivetrain or less.

So EVs should eventually be able to hit any low end price point ICE can hit. but that doesn't mean Tesla can.

Once we get to this end of the market, there is a question of standards, and preserving brand image, I can't see Tesla ever compromising on safety.
So the ultra-compact car also needs to be safe, and probably be able to support FSD.
The cost of the battery pack is no longer a big issue, but there are plenty of other considerations.

 

[WolfHero]

By the way, Tesla has implemented new policies on Say for this upcoming Q2 2021 Earnings Q&A

Question authors should refrain from promoting their question(s) publicly, and all question authors will remain anonymous until one hour before the event.

Tesla Q2 2021 Earnings Q&A

Say Shareholder Q&A for the Q2 2021 Earnings held on Jul 26, 2021 GMT. Shareholders ask questions and company leadership answers them!

app.saytechnologies.com

 

[MP3Mike]

By the way, Tesla has implemented new policies on Say for this upcoming Q2 2021 Earnings Q&A

Question authors should refrain from promoting their question(s) publicly, and all question authors will remain anonymous until one hour before the event.

Tesla Q2 2021 Earnings Q&A

Say Shareholder Q&A for the Q2 2021 Earnings held on Jul 26, 2021 GMT. Shareholders ask questions and company leadership answers them!

app.saytechnologies.com

I guess they didn't like that Rob always had a couple of the top questions. I wouldn't be surprised if he still does, as his question are actually well thought out and good. While most of the questions are just pure garbage. (They seem to have gone down hill now that there are people with only a very small fraction of a share can post questions. Some of which sound like they could be from TSLAQ people.)

 

[StealthP3D]

Yep, his model and predictions are great and roughly match my own in many ways, EXCEPT if you look at his profit margins going forward he predicts they will actually increase over the next five years. That's where I feel people are being too optimistic, as I think Tesla will purposefully lower margins to bring prices lower and keep demand high as production ramps into overdrive.

If the Model Y stays priced as high as it is today it will never sell as numerously as the Toyota Corolla does today, I really think Tesla will lower prices and margins over time. It's just what I'm expecting to see, doesn't mean I'm right.

So you don't see how Tesla could lower prices while increasing margins over the next several years?

That is the primary premise of my investment.

 

[⚡️ELECTROMAN⚡️]

Is this it? :- Moderators' Choice: Posts of Particular Merit

Yes thank you. Looks like it was grand finale of the moderators choice thread.

 

[TheTalkingMule]

And so it begins. CNBC.com.....

 

[StealthP3D]

And so it begins. CNBC.com.....

View attachment 688228

That's some weak medicine considering that Tesla didn't exactly didn't guilt-shame their way into desirability, they said "Hey, check out this badass car!". And then made it practical and affordable.

 

[Prunesquallor]

And so it begins. CNBC.com.....

View attachment 688228

I would have thought that VW, GM, Ford, et. al. would be discouraging this type of FUD since they (presumably) want to promote their EVs. So now it’s big oil vs. legacy auto (and Tesla)?

 

[Tes La Ferrari]

I thought this was an interesting tidbit on the WallSteetBets front;

The "Top stocks" based on total real mentions, has Tesla moving up the list from #5 to #3. It is also interesting to note that 2 of the top 3 are EV stocks, and the 3rd contains TSLA in it.

Tomorrow's TSLA earnings and Lucid's merger / ticker change are some current catalysts, but will be interesting to see what this list looks like a month from now.

The source is: Real Time Meme Stocks Tracker | WallStreetBets Data | YoloStocks


GLTA

Top 15 Tickers: r/WallStreetBets (Past 24h)
Total Real Mentions*: 3,937 (+15% )
% of mentions from top 15 tickers: 55%

Rank	Ticker	Real Mentions*	Prev Rank
1	LCID	358 (9%)	2
2	SPY	324 (8%)	1
3	TSLA	248 (6%)	5
4	AMD	154 (4%)	13
5	AMC	152 (4%)	3
6	GME	146 (4%)	6
7	CRSR	140 (4%)	12
8	BABA	130 (3%)	14
9	AAPL	123 (3%)	23
10	CLOV	105 (3%)	7
11	SOFI	65 (2%)	21
12	EDU	63 (2%)	24
12	NIO	63 (2%)	9
14	TAL	58 (1%)	15
15	WISH	53 (1%)	11

 

[Jack6591]

And so it begins. CNBC.com.....

View attachment 688228

As an internal combustion engine ages, the piston rings, pistons, bearings, valves, valve guides, gaskets and seals wear. Over time it will pollute more and more. Hence the phrase, “Smokey Old Car.”



As an EV is charged from the grid, more and more renewable energy is added to the grid. Over time, an electric vehicle becomes cleaner and cleaner.