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

[The Accountant]

New info via private sources of teslamag.de on Giga Berlin:

• Two week shutdown starting next week for upgrades
• Upgrades include doubling production clock from 90 to 45 seconds
• Still only two shifts afterwards (there had been a rumor of 3 shifts/24hr operation)
• 6% higher wages for everyone but management from Aug

Exklusiv: Nächste Woche Umstellung deutscher Tesla-Fabrik, ab August 6% mehr Gehalt für alle

Ab nächstem Montag macht die deutsche Tesla-Fabrik zwei Wochen Pause für größere Umstellungen – und soll danach viel schneller sein.

teslamag-de.translate.goog

With upgrades in Shanghai and now Berlin, we can expect the deceptive FUD to continue into early August when China July production numbers are reported by the CPCA and the July European Registration get published.

This will be the Shorts last chance to hold back the approaching avalanche. They'll need to get to safety shortly thereafter as the Aug/Sep share split coupled with the production/delivery numbers for Aug/Sep will be too much for them to contain.

Stay strong . . .

 

[Usain]

When the single greatest constraint to renewables is storage (not FSD ) and the single greatest constraint to sustainable transport is batteries (not FSD) than what should be the greatest focus of management?

Both.

 

[ZachF]

With upgrades in Shanghai and now Berlin, we can expect the deceptive FUD to continue into early August when China July production numbers are reported by the CPCA and the July European Registration get published.

This will be the Shorts last chance to hold back the approaching avalanche. They'll need to get to safety shortly thereafter as the Aug/Sep share split coupled with the production/delivery numbers for Aug/Sep will be too much for them to contain.

Stay strong . . .

Q2 sales data is gonna be terribad for most automakers, especially in YoY terms. Europe is so weak that Ford and GM may retake the global third and fourth position in $/revenue terms from Daimler/MB and Stellantis. China has a large shutdown last quarter too. US+ Europe+China+Japan = ~70% of world market.

Q2 last year was when a lot of automakers hugely reduced inventories and shortages had only begun to show up. They were also in the sweet spot of the inflation curve where they could charge higher margins into higher consumer demand before their suppliers and employees could do the same. YoY comparisons for most is gonna look bad.

 

[H Mak]

The dangers of being dependent on ICE exports:

As Germany’s auto production has collapsed by half, its trade surplus (which a few years ago was the largest in the world IIRC) has completely disappeared.

Tesla Berlin to the rescue

 

[cliff harris]

Q2 sales data is gonna be terribad for most automakers, especially in YoY terms. Europe is so weak that Ford and GM may retake the global third and fourth position in $/revenue terms from Daimler/MB and Stellantis. China has a large shutdown last quarter too. US+ Europe+China+Japan = ~70% of world market.

Q2 last year was when a lot of automakers hugely reduced inventories and shortages had only begun to show up. They were also in the sweet spot of the inflation curve where they could charge higher margins into higher consumer demand before their suppliers and employees could do the same. YoY comparisons for most is gonna look bad.

I think we are heading for a double whammy blow to ICE vehicles very soon. There are two pressures on their sales:

• New EV models are coming out all the time, so there is now an EV for almost any budget and almost any use-case. The percentage of people for who an EV is viable is racing up. (Still not there yet. If you want an EV pickup truck and don't live in the US< you have to wait).
• People can see EVs becoming more mainstream, but that are pricier. A lot of people will be sweating the assets of their old ICE vehicle hoping to squeeze another year or two from it, while they wait for EVs to become more available or more affordable. These people do NOT want to be stuck with a new ICE vehicle purchase.

Obviously the corrupt-as-hell automotive and financial media will not report this. They will seize on any slight dip in tesla production, and refer to it as falling sales, combine it with recent layoffs, and try to spin that tesla is in trouble. It should make for some absolutely classic headlines we can laugh at the day after we get Q3 production or Q3 financials (or both!)

 

[2daMoon]

When the single greatest constraint to renewables is storage (not FSD ) and the single greatest constraint to sustainable transport is batteries (not FSD) than what should be the greatest focus of management?

Pondering upon this further, also recognize how many lives that FSD will save. FSD also contributes significantly to the Optimus subPrime Cyberbot which will revolutionize labor and economics.

So, FSD and Batteries are both required to achieve the goal of nearly free energy, unveiling an economy where people only need to work at things they enjoy, and this will save lives, improve the human condition, save the planet, and completely remove the harness and reigns the energy sector has held upon the world.

I understand how many folks struggle with this concept, and I expect that most arguing against any aspect of what Tesla does simply cannot grasp the big picture well enough to understand the interconnection of these smaller pieces of the puzzle they do see clearly.

 

[Usain]

I think we are heading for a double whammy blow to ICE vehicles very soon. There are two pressures on their sales:

• New EV models are coming out all the time, so there is now an EV for almost any budget and almost any use-case. The percentage of people for who an EV is viable is racing up. (Still not there yet. If you want an EV pickup truck and don't live in the US< you have to wait).
• People can see EVs becoming more mainstream, but that are pricier. A lot of people will be sweating the assets of their old ICE vehicle hoping to squeeze another year or two from it, while they wait for EVs to become more available or more affordable. These people do NOT want to be stuck with a new ICE vehicle purchase.

Obviously the corrupt-as-hell automotive and financial media will not report this. They will seize on any slight dip in tesla production, and refer to it as falling sales, combine it with recent layoffs, and try to spin that tesla is in trouble. It should make for some absolutely classic headlines we can laugh at the day after we get Q3 production or Q3 financials (or both!)

The last valid use case for light duty ICE vehicles is long distance hauling. A normal road trip is not a problem for an EV. But hauling a trailer absolutely kills your range and we dont' have good solutions yet.

Other than that, ICE is dead.

 

[2daMoon]

The last valid use case for light duty ICE vehicles is long distance hauling. A normal road trip is not a problem for an EV. But hauling a trailer absolutely kills your range and we dont' have good solutions yet.

Other than that, ICE is dead.

There are solutions that have been designed. Trailers with batteries and motorized wheels are in the works and will extend the range of the tow vehicle.

The battery production rate is the limiting factor holding things back.

So, yeah, the ICE age is over and we're just marking time for the dinosaur juice drinkers to go completely extinct.

 

[AudubonB]

They were all vehicle sales.

It appears to me not ALL sales, because unless I’m blind, Ford doesn’t appear anywhere, nor MBenz. . I didn’t notice any other important names missing.

 

[Artful Dodger]

The last valid use case for light duty ICE vehicles is long distance hauling. A normal road trip is not a problem for an EV. But hauling a trailer absolutely kills your range and we dont' have good solutions yet.

Other than that, ICE is dead.

You neglect the most common use-case for light duty trucks: Posing.

How do you think youtube videos will portray Cybertuck in Dallas, 30 years on?

Cheers!

 

[dm28997]

Out for blood. The FUD machine is getting called out. Actual investors may benefit.

Tesla's "hardcore litigation department" is already taking shape

Elon Musk stated that Tesla is building a "hardcore litigation department" to initiate and execute lawsuits. The team is now being formed.

www.teslarati.com

 

[PeterJA]

Out for blood. The FUD machine is getting called out. Actual investors may benefit.

Tesla's "hardcore litigation department" is already taking shape

Elon Musk stated that Tesla is building a "hardcore litigation department" to initiate and execute lawsuits. The team is now being formed.

www.teslarati.com

Maybe this will cheer up the folks who want Tesla to do more public relations.

Rather than simply denying media lies, Tesla may be taking the liars to court. Seems to me like a first-principles solution.

 

[jw934]

It appears to me not ALL sales, because unless I’m blind, Ford doesn’t appear anywhere, nor MBenz. . I didn’t notice any other important names missing.

The Accountant posted this link to the sales earlier.
Automotive News

He may have been thinking about this on his reply.

Here is a screen shot of all sales from News of which the bar chart only showed a small sample.

 

[The Accountant]

The Accountant posted this link to the sales here. He may have been thinking about this.
Automotive News

Here is a screen shot of all sales of which the bar chart only showed a small sample.

View attachment 824674

Yes - this is the data supporting @ avoigt 's slide. Auto News had no estimate for Ford.

 

[Gigapress]

The very optimistic view at this point would be they are battery constrained in 2023 only. A more moderate view is that they are constrained in 2024. Panasonic is not planning to deliver volume 4680 until 2024. A more pessimistic view is that they are constrained til 2025.

I believe that Tesla has a very small window left to grab a material slice of the energy business. The LFP capacity is arriving and already other companies are winning business because Tesla is unable to meet demand, the sector is not as hidebound and inflexible as the auto OEMs, the demand is there. It's great to see PG&E working with Tesla on a virtual power solution-why not 2 years ago? Tesla management took their eyes off the battery ball, hopefully they have refocused.

When the single greatest constraint to renewables is storage (not FSD ) and the single greatest constraint to sustainable transport is batteries (not FSD) than what should be the greatest focus of management?

Focus and prioritization are different. I don't know where this idea that Tesla isn't focusing on batteries is coming from. Where is the evidence?

Let's revisit what we heard about this on the last two earnings calls. Tesla has been explicitly telling us how they're approaching the 4680 ramp and the Powerwall/Megapack business.

Drew Baglino:
…[For 4680s] It’s really about rate and yield, which will come in time, as Elon said, over the course of this year and next.

Drew Baglino:
So that [sizeable cell inventory] gives us the ability to be pretty deliberate in the 4680 ramp where we can maximize learning step by step, take engineering downtime to upgrade key pieces of equipment and modify the structural pack designs to improve reliability all while achieving what you just said.

Drew Baglino:
So throughout 2021, we focused on growing cell supply alongside our in-house 4680 effort to provide us flexibility and insurance as we attempt to grow as fast as possible. As we sit today, sales from suppliers is actually -- it sort of exceeds our other factory-limiting constraints that you mentioned, Elon, in 2022, or to say differently, 4680 cells are not a constraint to our 2022 volume plans based on the information we have.

But we are making meaningful progress of the ramp curve in Kato. We're building 4680 structural packs every day, which are being assembled into vehicles in Texas. I was driving one yesterday and the day before. And we believe our first 4680 vehicles will be delivered this quarter.

Our focus on the cell, the pack, and the vehicles here is driving yield quality and cost to ensure we're ready for larger volumes this year as we ramp and next year. And the 4680 and pack tool installations here at Giga Austin are progressing well with some areas producing first parts. And the internet has also noticed that.”

Since chips and other supply constraints are the limiting factor this year, Tesla's 4680 team is focusing on optimizing the production line, modifying the design and equipment, and improving yield and cost rather than focusing on maximizing current 4680 production volume. In other words, Drew was saying that they're working on setting the pieces in place for a more effective mass production ramp later this year when the cells start to actually be needed. They're investing in line downtime now for higher future capacity. This is a logical plan considering the circumstances.

Energy storage projects have been severely limited by the chip shortages and Tesla decided to prioritize vehicles over Powerwalls and Megapacks, but throughout 2022 and especially 2023 they intend to grow explosively as the chip shortages subside and the Lathrop factory ramps up.

Elon Musk:
“… and I should say, like, we did short-change the energy business last year, and that vehicle took priority over the energy side. So --“

Drew Baglino:
“Not on cells, but on chip side.”

Elon Musk:
“Yeah, on chip side, exactly.”

Elon Musk:
“Yeah. We'll grow it this year [2022], for sure. It's just, you know, we -- if we're simply -- we're able to respond to demand, it might grow by like 200% or 300% or something, you know, as opposed to sort of 50% or something.”

Zach Kirkhorn:
“Yeah. I mean, I think it's exactly that. I mean, it's a question of does it double, triple, quadruple? I mean, either way, I think, you know, our plans are pretty ambitious for Megapack this year and storage in general.”

Elon Musk
“Yeah.”

Zach Kirkhorn:
“The exact amount of growth is hard to know. But ultimately -- I mean, to Elon's point about the growth of this business, I mean, we need to be growing it faster than the vehicle business.”

Elon Musk:
“And it will naturally grow faster than the vehicle business once we can less shipthe --“

Zach Kirkhorn:
“Yeah.”

Elon Musk:
“The damn chip constraint, frankly. So it will grow like kelp on steroids, basically, on their own.”

The Q4 '21 and Q1 '22 update reports also said that Megapack demand at the current prices they're charging remains far above production capacity, and the demand is growing. Construction and equipment installation at the Lathrop Megapack factory was only completed in Q1. Do you want Tesla to have made a bunch of Megapacks for which they didn't have chips nor a dedicated factory? Why not wait until the facility with 40 GWh annual production capacity is actually online and has the necessary supplies?

Does this chart from the Q3 report, when they had recently announced what the Lathrop facility was for, look like a lack of focus on batteries?

 

[Englishman]

You neglect the most common use-case for light duty trucks: Posing.



How do you think youtube videos will portray Cybertuck in Dallas, 30 years on?

Cheers!

Something like this! Although Tesla won't be paying for advertising... more like Tesla will be paid to take the Cybertruck or sports teams will buy them (get in the queue!) as part of their marketing!

 

[Stretch2727]

Yes - this is the data supporting @ avoigt 's slide. Auto News had no estimate for Ford.

Ford usually reports the 2nd business day after the end of the month/quarter which would be Tuesday. Mercedes is later not sure when.

They just put 0 rather than estimates until the actuals come in and it will get updated once they are available.

 

[Gigapress]

Building factories is about the slowest thing Tesla does, and they do that faster than anyone else. Like the Tesla Economist recently said, "Tesla is the machine that builds the machine that builds the machines"

And today the Tesla Economist calculated approximately a 1000% annual return on investment for Tesla's latest versions of the machine that builds the machine. Not a typo; 10x return per year on factory investments, or roughly 100x total return over a 15 year period after discounting for time-value of money.

I've done similar math with similar results. Mr. Economist is projecting $25k average gross profit per Y from Austin (40% margin) and $30k for the Cybertruck (also 40% margin), numbers which he thinks are actually a bit conservative, and I agree. The rest of the math is basically just inferring how much CapEx Tesla has spent on the factory and estimating around 1 million cars produced annually from these initial investments.

 

[Gigapress]

The Accountant posted this link to the sales earlier.
Automotive News

He may have been thinking about this on his reply.

Here is a screen shot of all sales from News of which the bar chart only showed a small sample.

View attachment 824674

Chrysler Grows Twice as Fast as Tesla in Q2; Bankruptcy Imminent, Analysts Say

 

[unk45]

It appears to me not ALL sales, because unless I’m blind, Ford doesn’t appear anywhere, nor MBenz. . I didn’t notice any other important names missing.

Yes, it is not all. In addition to the Tesla estimate the monthly reporting conventions in the US are not too rigorous. Specifically, for those whose monthly and quarterly numbers are really important to them, the numbers are easy to game, legally. All they need to do is ship extra vehicles to dealers and/or fleets (rental cars are in high demand right now). Some have been very clever in this respect.

Given that and the unusual issues rising from supply shortages, Covid-19 and shipping issues I really don't think these numbers are terribly meaningful anyway. Despite that none of us can resist them, including me!

Most of us probably know about fake VW id-3 self-sales in Germany, some may recall Buick Reatta sales doing well because Alamo took all of them on short GM recourse leases. Right now quite a few manufacturers are dusting off their old habits. After all GM needs to unload those 95,000 and not repeat the debacle of holding on to them.

We should just face the reality that as ICE flails, more shenanigans are pending.