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

[dhanson865]

Tesla's BTC holdings are still going up as it heads towards the previous ATH of 65k. Some actual sane people like Cathie think that a 500k BTC is possible in the next 3-5 years. While hard to wrap my head around, that would leave Tesla with well over 20 billion in BTC profits.

Crazy to think when I first looked at buying a model 3 with BTC it was something like 2 or 3 bitcoins for a car. Now it's approaching 2 or 3 cars for a bitcoin.

Today's pricing is about

LR AWD Model 3 is at ~0.79 BTC
SR+ Model 3 is at ~0.63 BTC

if a $35k model 3 still existed it would be ~0.55 BTC

 

[ammulder]

Good question. I can't wrap my head around these Treasury Operations . . . when to take on debt and when not to.
For example, I thought I just read that Tesla was getting a favorable loan from a German locality.
I guess if the interest rate terms are low enough, it does not hurt so much to take on debt even with a stack of cash on hand.

I guess there could also be an advantage to keeping a closed loop of in-country accounting? If they build the German factory with German loans and then pay off those loans with German profits, perhaps that's better in some way than using US cash to build the factory and then later repatriating German profits to the US to even it out? (I feel like I did read that they paid off the Chinese loans with profits from the Shanghai factory, though it wasn't clear whether that was literal or just noting that Giga Shanghai has been profitable enough to cover it.)

 

[lafrisbee]

eyeballing the daily chart makes ya think this is real.

aaaaand then I have to open my big mouth.

 

[SN_8]

Why did you sell now? 8000% would be better.

He did not sell, he exercised

Correct. These are trading with no time value left, e.g. at 668 when the stock is at 868. And I knew I wanted the shares and had the cash to exercise, so no time like the present.

 

[FastCompany]

According to @JayInShanghai, Tesla China October deliveries could be significantly better than expected due to resolution of the Sept wheel shortage problem.

My guess is the missing 19 inch wheels will also move those production numbers from Sept to Oct, and, by "orders" he probably meant fulfillment of those MY orders. Hopefully he can provide some volume numbers later on.

https://twitter.com/x/status/1450501891025219592

Would it not be a good idea for Tesla to use Gigapress machines to make their own wheels ?

 

[Curt Renz]

Maybe this is why stock took a turn south? Nikola suit back on the table.

Nikola allowed to proceed with $2 billion patent lawsuit against Tesla

A federal judge begrudgingly set some new deadlines.

www.theverge.com

Probably, but it's essentially meaningless. I'd expect Nikola to lose the patent suit regarding similarities in the designs of semi cabs. The judge is already upset with the way Nikola has been proceeding.

Nikola was probably hoping for a settlement for allowing Tesla to proceed with its design, but Tesla says take it to court. Nikola may not want to absorb the legal expenses of a lost lawsuit. It may not even be worth it for a winning suit.

In the unlikely event that Nikola wins, it would not be difficult for Tesla to slightly alter the design of a vehicle that is still far from entering regular production.

 

[RobDickinson]

Maybe this is why stock took a turn south? Nikola suit back on the table.

Nikola allowed to proceed with $2 billion patent lawsuit against Tesla

A federal judge begrudgingly set some new deadlines.

www.theverge.com

“Nikola’s ostensible reasons for not responding to the Court’s orders are not particularly compelling,” the judge said in Tuesday’s order. “The case will not be dismissed at this time for failure to prosecute, but that may change if Nikola does not move this case forward to resolution in an efficient and timely manner.”


Yeah the sounds really compelling for nikola...

 

[Beltsbear]

Maybe this is why stock took a turn south? Nikola suit back on the table.

Nikola allowed to proceed with $2 billion patent lawsuit against Tesla

A federal judge begrudgingly set some new deadlines.

www.theverge.com

The headline is deceptive as usual. The case is still administratively closed. But there is chance for Nikola to convince them to re-open it again. The case is not dismissed.

It is going to be hard to argue 2 billion dollars in damages for a product that does not exist.

 

[mltv]

Cybertruck will come with side mirrors but you can remove them.

https://twitter.com/x/status/1450517602573422605

Could save this if I can remove the side mirror. The cost of a broken side mirror for M3

 

[CLK350]

I guess there could also be an advantage to keeping a closed loop of in-country accounting? If they build the German factory with German loans and then pay off those loans with German profits, perhaps that's better in some way than using US cash to build the factory and then later repatriating German profits to the US to even it out? (I feel like I did read that they paid off the Chinese loans with profits from the Shanghai factory, though it wasn't clear whether that was literal or just noting that Giga Shanghai has been profitable enough to cover it.)

IIRC there was a clause in the Tesla Shanghai agreement that all profits had to be kept in China; the simple way around it was to spend the C Yuan for Chinese batteries that are exported to the US.

 

[Ogre]

Would it not be a good idea for Tesla to use Gigapress machines to make their own wheels ?

The Gigapress is quite big for very big parts. They could certainly use a smaller die casting machine for wheels, but right now there are reliable and affordable sources for wheels.

Seems like it makes most sense for them to focus the specialized equipment on building parts which aren’t widely available elsewhere.

 

[jerry33]

Would it not be a good idea for Tesla to use Gigapress machines to make their own wheels ?

Given the number of wheels a Gigapress could turn out at once, it would probably cost more to reconfigure than to purchase. Also I don't think wheels are something that can be improved through production (through new materials, yes, but as they are only one piece (usually) I don't see much room for process improvement).

 

[AudubonB]

Cybertruck will come with side mirrors but you can remove them.

https://twitter.com/x/status/1450517602573422605

Can a passing grizzly swipe ‘em off? Just asking for a tundra friend.

 

[Gigapress]

With Free Cash Flow, Tesla is then:
- free to pay down debt
- free to buyback shares
- free to pay dividends
- free to purchase another company
- free to buy Bitcoin
- or free to add to their cash account


My annual projections for FCF are:
$ 4b - 2021
$ 9b - 2022
$15b - 2023
$24b - 2024

There is only so much debt to be paid down; Tesla will be sitting on a pile of cash.

Considering the tsunami of FCF headed our way, do you understand Elon's statement at the shareholder meeting that they don't expect to pay dividends any time soon?

This seems to contradict:
1) He's repeatedly said that the limiting growth factors are talent and supply chain and that if Tesla could find more ways to spend money reasonably they would
2) Tesla's CapEx efficiency has been improving at a stupendous rate. E.g. Giga Shanghai's up front investment costs paid for themselves in less than a year. So if anything, with rising ROIC we'd expect it to be even harder to reinvest all FCF into growth (a good problem to have).

So with your projection of $48 billion in FCF for 2022-24, what can they do?
- pay down debt

• Tesla's total debt is only around $10 billion last time I looked

- buy back shares

• This is effectively a dividend with different tax implications, so I think we can rule this out

- pay dividends

• Elon just said this isn't coming any time soon

- purchase another company

• Maybe, but large-scale mergers and acquisitions are slow, difficult and prone to failure, so it'd be hard to spend all the FCF

- buy Bitcoin

• Meh, still too much FCF for this. They have quite enough BTC in my opinion and I wish they owned zero. Seems unlikely that they'd pile all their excess profits into BTC before paying a dividend.

- add to their cash account

• They already seem to have enough cash at $24 billion last quarter IIRC, and at a certain point they have more than enough dry powder to weather out any conceivable headwinds

All I can think of is that Elon is intimating that a massive, monumental increase in CapEx is coming soon, beyond that which we already know about that fed into your $48 B estimate. I can only think of one way to profitably spend that much in '22-'24 and beyond: Directing most automotive production away from consumer sales & leasing in favor of building the Tesla Network robotaxi fleet. At a unit production cost of let's say $24,000 each, that would fund production of about 2 million robotaxis while keeping cash and debt roughly constant.

Thoughts?

 

[AudubonB]

@Gigapress probably doesn’t even like the phrase “Solar System domination”.

 

[CHGolferJim]

Ah, truth be told I'm selling my lowest buy prices first for max cap gains in my IRA.

It's just a theory, but because it's in an IRA, I don't want some new law to come along and start taxing that somehow, maybe after some threshold. This does mess with my head on paper because now I'm sitting on chairs that don't have large gains, and this year's gains are actually from last year's great buys as I cycle through them. But the math all comes out the same in the end as this is treated as normal income when withdrawn... so far.

Check into Roth Conversions…….advise.

 

[jbcarioca]

He says moats are dumb, not that they don't exist. Moats don't provide lasting protection because it doesn't take long for competition to devise a way cross the moat.

True enough, verbally. The implication, however, is that 'are dumb' means they really do not work.
Historically moats admittedly did exist, even though warfare improved enough to make them useless.
In the context used here, the notions that a 'moat' provides long term protection from competition.
Think of, only in the last few decades: Xerox, Kodak, DEC, and so on. Even with patent protection Aspirin, Kleenex and so many more examples.
So, I admit that the precise wording was 'are dumb', which in turn means that the nation does not provide protection form innovation, thus does not exist.

With Tesla, partly because of SpaceX, there are:
-BMS incorporating a proprietary inconel use for precise temperature control;
-Octovalve;
-proprietary aluminum and more enabling ...
-Gigapresses;
-Grüneheide paint shop;
-structural battery pack;
-4680's
-many sensor types including the infamous Model X door ones;
- wide array of motor, inverter and other powertrain elements;
-Dojo;

None of those provide permanent protection, so are not 'moats' though some describe them as such.
The only sustainable advantage is continuous innovation driven by an endless quest for improvement.

I rather suspect we all agree on that, despite quibbling over vocabulary.

 

[Gigapress]

True enough, verbally. The implication, however, is that 'are dumb' means they really do not work.
Historically moats admittedly did exist, even though warfare improved enough to make them useless.
In the context used here, the notions that a 'moat' provides long term protection from competition.
Think of, only in the last few decades: Xerox, Kodak, DEC, and so on. Even with patent protection Aspirin, Kleenex and so many more examples.
So, I admit that the precise wording was 'are dumb', which in turn means that the nation does not provide protection form innovation, thus does not exist.

With Tesla, partly because of SpaceX, there are:
-BMS incorporating a proprietary inconel use for precise temperature control;
-Octovalve;
-proprietary aluminum and more enabling ...
-Gigapresses;
-Grüneheide paint shop;
-structural battery pack;
-4680's
-many sensor types including the infamous Model X door ones;
- wide array of motor, inverter and other powertrain elements;
-Dojo;

None of those provide permanent protection, so are not 'moats' though some describe them as such.
The only sustainable advantage is continuous innovation driven by an endless quest for improvement.

I rather suspect we all agree on that, despite quibbling over vocabulary.

I concur

 

[ZachF]

boo!

 

[ZachF]

OT:

The rocket-chopsticks are being lifted on to the tower in Texas