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

[Ipcress]

Same here. I then discovered, to my considerable regret, that Estes' recommendation for firing four C6-5 motors simultaneously (a paperclip "buss bar" for the igniters) was somewhat speculative.

(OT)I lost a couple engines on the maiden voyage. Nice parabolic path right into the ground. I was thrilled, of course!

 

[Paul_SF]

Not-No. I get it... but that's what people said about the automotive industry not so long ago. I think my time horizon is longer than yours.
When she scales up, what's a Billion (B for a Lab?) in exchange for more secure, controlled AI silicon jewels for example?
Keeping it 1st Principle, FABs likely cost too much period. Should-cost on everything is in question for me now, even more so in the future. Controlled tech might get important soon as well.

View attachment 765299

Yeah, I used to think (after some here made some good arguments) that Tesla is in no need to have their own FAB.

Not so sure anymore. Especially after the last Earnings Call.

It seems they might NEED one. Sweet!


Edit: Elon liked this earlier:

https://twitter.com/x/status/1489949644209762316

 

[Prunesquallor]

I had the Estes Saturn 1B. Heady stuff!

That Launch Escape Tower was a b$&!h.

Edit: I mean the “old school” one, where you had to cut every strut out of wooden dowels and glue them together on a piece of wax paper.

 

[-=buzz=-]

Not-No. I get it... but that's what people said about the automotive industry not so long ago. I think my time horizon is longer than yours.
When she scales up, what's a Billion (B for a Lab?) in exchange for more secure, controlled AI silicon jewels for example?
Keeping it 1st Principle, FABs likely cost too much period. Should-cost on everything is in question for me now, even more so in the future. Controlled tech might get important soon as well.

View attachment 765299

It's more like $1B+ of R&D per quarter just to stay in the process game (hard-core material science) and a (big) FAB runs at $10B+ and needs to be upgraded every few years.
A smaller plant will be cheaper, but unless they want to reinvent industries like isolation foundation construction, clean rooms, online purification of gases/liquids, chemical handling+reprocessing, wafer production (?), um/nm precision positioning, optics, laser sources, substrate production and chip testing methods it won't be significantly cheaper..

Might just as well use this money to buy themselves to the front of the line at whoever is the current leader on the target process.

But besides that, the current shortage seems to be legacy car controllers built on 'ancient' process technology for which no new production equipment will be built. And they aren't redesigned for current processes because it's extremely low margin and there are high costs for redesign, validation & certification. So Tesla would have to finance those costs for every chip they want to insource.

 

[MC3OZ]

I have talked before about how FSD can be very unpredictable and how it can add value to the stock extremely quickly and at any time. Today, I believe that most assume that the take rate is low and that it will slowly increase over time. However if demand is strong and FSD take rate starts to increase, Tesla could well impose FSD on ALL cars, just as they did with Autopilot back in 2019. This also goes with Elon's saying that it makes more sense to buy FSD than to pay each month.
If Tesla went this route, it would pretty much double the operating margins instantly.

There will be a bump from recognizing FSD revenue from historical sales.

What I expect is that Tesla will keep increasing the cost of FSD, and eventually customers will not be able to buy it, only pay-by-month, perhaps with a minimum 1 year contract.

The steady stream of income from pay-by-month is also an advantage.

For financial and for reasons of the mission, either of us might be right.

But Tesla will not need to force customers to buy FSD, customers will be queuing up to do that, in most cases becuase they want to run a network of Robotaxis. That will happen as soon a regulatory approval is granted.

However it plays out, regulatory approval of FSD is an inflection point.

 

[MC3OZ]

Global demand for crude oil peaked in 2019.
Demand within the #1 market for crude oil (U!.....S!......A!) peaked in 2018.

On a global scale, crude has been dramatically and permanently oversupplied since 2015. US fracking had increased supply 30+% and showed clear ability to keep building supplies all the way through a peak demand that back then was assumed to come around 2027. In this environment, the Saudis realized they'd lost their role as "swing producer" and would need more players to keep prices high from here on out. They hunkered down with some hedge fund managers and now the only price rises prior to the pandemic were manufactured by a combination of OPEC+Russia+Wall Street.

Now we have a "reopening trade" from Wall Street that's driven WTI to $92 at the same time global logistics are a mess. Once those logistics are sorted out and market players start delivering more crude in a rush to take advantage of these prices, the bottom falls out.

US frackers are selling every oil futures contract they possibly can at profitable levels of $70+ and will be flooding the market with these deliveries from here til god knows when. As of now they're producing at about 11.5Mb/d, down from 13.5Mb/d pre-pandemic. What do we think happens when this logistics logjam eases in 3-5 weeks? US production goes back to 13+Mb/d and our imports go negative.

AND the Saudis are boosting OPEC production in February
AND the Russians will likely pump every barrel they can, even beyond their OPEC agreements
AND Iran will make headway on a renewed nuclear deal

Meanwhile.....demand hasn't even recovered to pre-pandemic levels and is unlikely to ever do so.


See all the notes above. TSLA investors need to be mindful that just before (or perhaps during or a bit after) this pandemic we will have crossed the tipping point on peak global oil demand. That's why oil traders, who very well know this, won't be buying 1yr or 2yr out oil contracts at $90 this June. Or perhaps ever again.

We're shifting from fossil-based scarcity to renewables(and storage)-based abundance. That's why we won't see a recession. Energy prices should absolutely collapse a couple months after the pandemic eases in March/April. Commodity prices will come down with it.

We have TONS of job openings with an unwilling workforce. All during a period of free money, record corporate cash, AND easily deployed renewable energy that's far cheaper than what's in place. That's all absurdly stimulative. Our concern should be inflation due to massive excess money supply, but fortunately there will be no scarcity to go with it so it should moderate itself. As we're already seeing.

You need scarcity for inflation and scarcity is literally over.

In terms of of EV adoption we all indications are we are about to enter the steep part of the adoption curve.

Tesla will be gowing at 50% per year compound, perhaps higher, others should match this rate. Raw materials issues are overstated and will be solved.

It isn't hard to determine where future demand for oil is headed. People underestimate how much previous boom and bust economic cycles were tied to oil. Boom lead to scarcity as additional supply was slow to ramp. Scarcity caused inflation and in response many governments increased interest rates. High interest rates caused a bust as overleveraged individuals couldn't service their debt.

Without scarcity it is hard for this pattern to occur.

 

[Knightshade]

However it plays out, regulatory approval of FSD is an inflection point.

Here's the seemingly weekly reminder-- FSD (or any L4 or L5 self driving system the operator believes is safe and can follow all laws) is already approved in half a dozen US states to operate. Today. At L4 or L5. Without any further external approvals needed.

The reason it's not isn't "waiting for approval" it's "waiting for the system to actually be safe at those levels"

Once it is, it can be launched that day in a bunch of states. Data showing it operating safely there would then highly encourage other states (and other countries) to likewise permit it.


The "it will be held up by regulators before it can be rolled out anywhere" thing continues to be a 100% red herring in the discussion.

 

[jerry33]

Here's the seemingly weekly reminder-- FSD (or any L4 or L5 self driving system the operator believes is safe and can follow all laws) is already approved in half a dozen US states to operate. Today. At L4 or L5. Without any further external approvals needed.

The reason it's not isn't "waiting for approval" it's "waiting for the system to actually be safe at those levels"

Once it is, it can be launched that day in a bunch of states. Data showing it operating safely there would then highly encourage other states (and other countries) to likewise permit it.


The "it will be held up by regulators before it can be rolled out anywhere" thing continues to be a 100% red herring in the discussion.

Except in the EU where they can't even change lanes automatically (unless this has changed since I last heard).

 

[TheTalkingMule]

In terms of of EV adoption we all indications are we are about to enter the steep part of the adoption curve.

Tesla will be gowing at 50% per year compound, perhaps higher, others should match this rate. Raw materials issues are overstated and will be solved.

It isn't hard to determine where future demand for oil is headed. People underestimate how much previous boom and bust economic cycles were tied to oil. Boom lead to scarcity as additional supply was slow to ramp. Scarcity caused inflation and in response many governments increased interest rates. High interest rates caused a bust as overleveraged individuals couldn't service their debt.

Without scarcity it is hard for this pattern to occur.

That's a far better articulation of what I was trying to say. Another HUGE underestimation is not only EV adoption, but ICE replacement with ICE is now all under the new mpg efficiency standards.

Even a nonEV is going to be twice as efficient as the ICE it's replacing. This has been and will continue to be a constant squeeze on crude demand.

 

[Knightshade]

Except in the EU where they can't even change lanes automatically (unless this has changed since I last heard).

Yeah but there was 0 chance it was gonna initially launch there anyway.

Most likely rollout would look something like:

Rolls out in the various US states it's legal already.

Positive data from there pushes other US states to pass laws allowing it.
Positive data from there pushes Canada to do so (and based on beta rollout that's the most likely country for Tesla to believe it's safe for next anyway)

After that is harder to say but Asia getting it before EU regulators allow it wouldn't shock me given how foot dragging they've been on this stuff.

 

[Artful Dodger]

More goodwill for Elon & Co. (this matters)

SpaceX sending engineering team to Fiji to setup Starlink ground station for Tonga

SpaceX is sending a team of engineers to Fiji to operate a temporary ground station for their Starlink internet services for Tonga.

driveteslacanada.ca

Makes me proud of the accomplishments of the team, and especially impressed by the forethought it takes to create such an organization with such amazing capabilities.

Kudos, Team SpaceX!

Cheers!

 

[TN Mtn Man]

This is a bigger factor than people take into account - well, those people who are thinking about these things, anyway.
You might like to look at a hard number like "BEV sales move up to 3% of total vehicle sales NA last year" and think slow but steady, we can project future years growth. But you won't ever see a figure that accounts for the people who are thinking, "should I really spend 30, 40, 50 thousand on an ICE car that's really just the same 'ole same 'ole, when there is this new technology coming on?"
People use tech now, they've seen it evolve and change in a short time, and radically so. Nobody's thinking "This guy's trying to sell me on the idea that there's a better horse coming if I just wait". They are thinking, "I remember how happy I was when I switched from my flip phone to an iPhone".
They have experienced for themselves how evolving technology improves their lives.
The minute you put a BEV in their hands, they'll want to keep it.

I'm a Tesla and BEV supporter, so don't take this as a negative. I agree with everything you say, except I think you're missing a point. ICE vehicles haven't changed much in the last decade or so, as far as basic capabilities. Similar range, adequate performance, overall size, plenty of infrastructure. As such, there are no major negatives in purchasing a 5 year old ICE, if that fits your budget (granted, in these odd economic times, even a 5 YO vehicle is high priced). BEVs are changing and improving rapidly, particularly range and charging rate. As desirable as BEVs are, I think some might delay purchasing a new one until things get a little bit better, with fewer compromises (such as MY with 4680s depending on what they bring, and 350KV charging). This particularly impacts older, used ones. I've considered a '14-16 S, I see them sometimes for a price I'd consider. But the more limited range and slower charging don't appeal to me.

We're kinda at the point ICE was a little over a century ago in some ways. New technology, rapidly scaling, more competitors and products coming out, all good for consumers. And a somewhat preliminary infrastructure that requires some planning, especially on long, cross country trips or in rural areas. All of which were resolved in ICE as infrastructure built out and as the best, strongest manufacturers in the auto industry developed the products and manufacturing processes-and as the weak ones were weeded out, just as will happen here. Kinda got sidetracked, my point was, as newer ICE cars came out, with self starters and electric lights, the Model T fell by the wayside. Flip side, it was introduced in 1908, sales continued to grow through 1923, so that was a heck of a run.

Point being, some potential BEV buyers, particularly more financially constrained ones that hold on to a vehicle for a long time, may hold off until capabilities expand just a bit more to avoid much of a lifestyle change from ICE. Which really won't impact the market, there are still plenty of buyers for everything that can be built now. Where I'm really going is I wonder what the impact will be on used, earlier BEVs as new generations come out. More extreme case, but what was a Blackberry or flip-phone worth once the iPhone became established?

 

[mongo]

So you believe production in China and CA will decline by a couple hundred thousand cars if Berlin/Austin build a couple hundred thousand this year?


Because that's the only way your zero sum claim adds up.

We do know that Tesla is now deeply preferred as a customer by the vast majority of suppliers. We also know Tesla is far more adept in part substitution than are other OEM.

Hence we really cannot say there is a ‘zero sum game‘,

Can we agree that Tesla stated on the Q4 call that S&F were running below capacity due to shortages?

This is the zero sum, not that total production is fixed, but that it is limited to MIN(total_production_capacity, supply_of_least_available_part) where part availability is the current constraint.

If critical part supply is improved in 2022, it will likely be the case than S&F build more cars than in 2021 and B&A also build cars. However, until the part supply saturates S&F production capacity, any of the critical parts sent to B&A will reduce the number of cars that would have been built at S&F.

If Tesla's supply base can only supply 1.2 million brake modules (pick any part as the constraint) this year, that is all the cars Tesla can build, regardless of which factory (BASorF) they are built at.
If they can get 1.4 million modules, they could build up to 1.4 million cars. Total BASF production will align with the least available part.

 

[TheTalkingMule]

Where I'm really going is I wonder what the impact will be on used, earlier BEVs as new generations come out. More extreme case, but what was a Blackberry or flip-phone worth once the iPhone became established?

I think I know where you're going. Who exactly is the BB or flip in this instance?

 

[MartinAustin]

Weekend observation: I'm loving the fact that we are now seeing discussions about Ford and GM being overtaken by Tesla, and no-one is disputing those discussions as fantasy. It's already been happening of course, starting with BEV production rather obviously, but now the discussions span, to one degree or another, operating margin, revenues, profits, sales numbers, staffing levels, market share pretty much everything.

I wonder how long it will be before their financial situations get so bad that either Ford, or GM, or both, begin to be referred to as "embattled automaker Ford" "beleaguered car manufacturer GM" and so on. I suppose that gets answered by how much they are spending on advertising in those media. Once the advertising spends begin to shrink... perhaps the honesty will start flowing in the news reports.

 

[jbcarioca]

Can we agree that Tesla stated on the Q4 call that S&F were running below capacity due to shortages?

This is the zero sum, not that total production is fixed, but that it is limited to MIN(total_production_capacity, supply_of_least_available_part) where part availability is the current constraint.

If critical part supply is improved in 2022, it will likely be the case than S&F build more cars than in 2021 and B&A also build cars. However, until the part supply saturates S&F production capacity, any of the critical parts sent to B&A will reduce the number of cars that would have been built at S&F.

If Tesla's supply base can only supply 1.2 million brake modules (pick any part as the constraint) this year, that is all the cars Tesla can build, regardless of which factory (BASorF) they are built at.
If they can get 1.4 million modules, they could build up to 1.4 million cars. Total BASF production will align with the least available part.

Yes we agree. The only question is what resolutions may happen during 2022.

 

[mongo]

Yes we agree. The only question is what resolutions may happen during 2022.

Cars... so very very many cars...

Tesla has been building since 2019 for Berlin and 2020 for Austin with plans to launch production in late 2021. That means they've had their supply chain lined up to add capacity targeting now. Even with a reduction in supply due to C19-22, there should be a step change in part availability. Add on that the majority of 3rd party parts should be duplicates of current production meaning supplier execution risk should be low. Then, factor in reduced part demand due to other OEM's reduced production.
Tesla has increased production every quarter since Q2-2020. With a 68k/ 28% increase last quarter.

The cars will flow

(At least, that's what I tell myself)

 

[Knightshade]

Can we agree that Tesla stated on the Q4 call that S&F were running below capacity due to shortages?

For sure, yes.

They also still guided for significantly more than 50% growth above that in 2022.

So obviously they expect total # of chips available to also grow by a comparable amount in 2022.

Such that I expect Austin and Berlin to both spit out 6-figures of cars this year and Fremont and Shanghai production to also increase YoY.

Even with a reduction in supply due to C19-22, there should be a step change in part availability. Add on that the majority of 3rd party parts should be duplicates of current production meaning supplier execution risk should be low. Then, factor in reduced part demand due to other OEM's reduced production.
Tesla has increased production every quarter since Q2-2020. With a 68k/ 28% increase last quarter.

FWIW any time they ARE constrained on building a complete car it might be a great opportunity to fill up the service center supply chain a bit with other parts they're not constrained on getting- I'm surprised how often I still read threads here from owners with long parts waits.

 

[TN Mtn Man]

I think I know where you're going. Who exactly is the BB or flip in this instance?

I think that's going to evolve as the market does and products improve. For now, I'd say anything with less than a 300 mile range and anything slower than 250kva charging. Now-I (and I think everyone) has a habit of evaluating things based on their situation. I'm in a rural area, like to take long trips and have a very limited level 3 charging infrastructure nearby. And lets face it, "300 mile range" means something far different at 80mph with heat or AC on. Those issues that concern me might not bother someone in a dense urban area that doesn't travel long distances. I'd personally like to see a "true" 250 mile range on the highway-at 80-85 mph, at 80% charge (to stay on the fast charge portion of the curve) and with AC on. So what, 400-450 mile "claimed" range"? That would require very little in a "lifestyle change" even on a long trip, or for those that can only charge at "public" chargers. I suspect it's coming, matter of time. The ICE industry has had more than a century to get vehicles as capable as we have now, I'm sure BEV will improve even more rapidly.

 

[Knightshade]

Take with the appropriate someone-said-it-on-twitter grain of salt of course

https://twitter.com/x/status/1490101255850520578