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

[Cobbler]

The Tesla was stationary. In fact it was at the charging station. But why let that spoil a good headline.

 

[hobbes]

Lots of quibbles about the $15k pricing. People are missing the point here. Ultimately, FSD is not going to be an ADAS system. It is a driver replacement system. Lots of people look at FSD and they think “I can drive myself for that much money”. The assumption here is that the car will be used in exactly the same way it was previously but with FSD in control. That’s not the goal of FSD.

The goal is to open up new ways to use your car.

• Always have a designated driver.
• My mother’s vision is terrible at night and she is not comfortable driving.
• Play games, watch movies, or work while driving. If you commute long distances this is big.
• Recline your seat back and sleep instead of taking a flight. (Requires waking up to charge once or twice)

As you you get a little closer along the way to Robotaxi, lots more opens up yet.

• (For the cyclists out there) Having a Sag vehicle that meets you every 5-10 miles along the way.
• Through hikers could have a support vehicle.
• Kayakers and cyclists could have a shuttle vehicle to drive to the top and meet them at the end of the route.
• Dropping off and picking up the kids from school.

I don’t recommend running out and buying FSD at $15k in the current state, but in the near future (3-5 years?), it’s going to transform transportation significantly and will seem like a bargain. Even before Robotaxi is fully online.

My big problem with paying for it now is I’m not even sure I’ll own this car by the time the feature matures.

I agree, but would frame this differently: I don´t think many people are "missing the point" here. There are two camps basically - happy to pay for the projected future value of FSD and only willing to pay when it actually is ready. Similar to share price, seems overvalued to some now, for others who believe in the mid/longterm trajectory going way up not so much.

Happy I got FSD for "free" when the price of the 3 was lowered by 5K Euros ahead of delivery and don´t have to decide now (yeah, price decreases once were a thing ).

 

[TheTalkingMule]

Good news on the "inflation" front, an EU deal with Iran appear imminent. That should crumble crude futures even further and cool off the Fed nicely.

 

[dm28997]

Didn't know Ford trucks had a weak roof. 1.7 billion $ verdict

Ford to appeal $1.7 billion verdict in Georgia truck crash

WOODSTOCK, Ga. (AP) — A Georgia jury has returned a $1. 7 billion verdict against Ford Motor Co.

wgxa.tv

 

[AudubonB]

Thanks for the heads up about Sichuan's location. Scratch the Shanghai weather forecast because the Sichuan region is farther east. Nonetheless, that region also gets the vast majority of its rain in the summer monsoon season. We'll either see relief within the next few weeks or they will have a much bigger problem on their hands.

That’s okay, as you can scratch the “Sichuan…farther east”, too.

 

[CorneliusXX]

The 100 million number wasn't mine. It was from the poster I quoted. I believe Tesla will out compete most private Tesla robotaxis long before that.

It's anything but straightforward that there's time to recoup before saturation. All it takes is that FSD isn't ready for fullblown robotaxi in a couple of years yet. Let's say it's ready in 2025. It could be faster but there is certainly no guarantee of that. It could also take longer. In 2025 Tesla will make something like 4 million cars. Let's say they decide to put half of those into their own robotaxi fleet. After all since it's so profitable why wouldn't they?

Three years later there would be 4+6+9=19 x 50% = almost 10 million Tesla owned robotaxis. You are no longer getting even 12 hours use out of yours. You are likely not getting eight hours either. If you are also using it for your own rush hour transport and only have it available other hours you are probably down to less than six hours already.

Also, you may have gotten a great price for FSD. But there will very likely be a fee percentage just for joining the Tesla robotaxisystem so you can get passengers. Tesla will likely set that fee just high enough that you get to make enough money to continue but not low enough to let you make these several tens of thousand a year many seem to think they can make indefinitely. Why would they?

So you can make some money having your private car you already need/own in the fleet. But so many seems to have a plan of owning several Teslas. Then you need financing. Good luck finding a bank that will let an average Joe borrow most of that money for a second or third car. So you would have to sell Tesla shares to finance.

Yes, if you paid 15k, or less, and you can start using it as robotaxis in say 12 months you will probably have a couple of years with great returns. But so would keeping that money in shares do. Without all the work and risk of delays. Unless it's a car you have paid for anyway the investment will be significant.

No matter how you look at it. When robotaxis becomes a thing Tesla shares is likely to make a much better return than selling $100k of shares today for a couple of years of unknown returns. And you would have to put zero effort into the shares. Except the time spent here.

I guess we'll have to see how it plays out particularly with how uncertain timing is on approvals, but using the top google result for each segment there are 18m taxis, 25m+ rideshare vehicles and 7m hire cars globally. So even if there are 10m Tesla robotaxis out on the road by 2025 they probably won't be squeezing the market much at all by then. The base uber price is £1.25/mile + 15p/minute in London so if a RT could take 25p (<20%) (conservative) of that as profit it would only take a little under 30k miles to pay off the £6,800 FSD price I paid. That could easily be done in 6 months based on 200mi/day and a few days off each month for my own usage - so you could likely 2x the investment each year even if it's not financed which would leverage returns further.

 

[hacer]

I'm an accountant where debits equal credits. So I have trouble following this.

If I buy something at $20 and then sell it at $100 . . . yes, I can now put $100 into the economy.
But didn't the person who purchased my share take $100 out of the economy?
Isn't it more about inflows and outflows of the market?
I'm not saying your post is incorrect, but I can't get my head around it.

I think it's related to those who borrow against stocks. They get newly created cash (through fractional reserve lending) because their (unsold) stock values have risen.

 

[Nocturnal]

Really want FSD on the Y (2nd car), but 12k worth of TSLA will appreciate far more than FSD pricing can. That applies even if it hits 40k so it's tough for me to pull the trigger.

Didn't know Ford trucks had a weak roof. 1.7 billion $ verdict

Ford to appeal $1.7 billion verdict in Georgia truck crash

WOODSTOCK, Ga. (AP) — A Georgia jury has returned a $1. 7 billion verdict against Ford Motor Co.

wgxa.tv

I hope that soon a company will sell a truck where the roof is integrated into the body/frame instead of the body just bolting on.

 

[hobbes]

Thanks for the heads up about Sichuan's location. Scratch the Shanghai weather forecast because the Sichuan region is farther east. Nonetheless, that region also gets the vast majority of its rain in the summer monsoon season. We'll either see relief within the next few weeks or they will have a much bigger problem on their hands.

Looks like the Sichuan region should get a lot of rain also during the next week (according to 14-Tage-Wetter Sichuan - WetterOnline):

 

[BornToFly]

The disconnect between how well Tesla is ramping on 3 continents, and FSD progress, and TSLA SP is unbelievable.

 

[Artful Dodger]

Good news on the "inflation" front, an EU deal with Iran appear imminent. That should crumble crude futures even further and cool off the Fed nicely.

Yup, "CL1" crude futures down -3.55% now to $87.55/bbl. They were at over $91 earlier today.

CL1 Commodity Quote - Generic 1st 'CL' Future - Bloomberg Markets

 

[StealthP3D]

I think the development team is getting a little colored by Silicon Valley wages. Outside of SV $15k is a huge chunk of change… outside of the US at these exchange rates it’s honestly a small fortune. $15k is equal to an entire half year of median compensation in Korea or Italy!

I think you are missing a couple of key points here:

1) FSD is a software product that doesn't have to be purchased at the same time the hardware (car) is purchased. The car is ready for FSD anytime the owner wants to add it at the current prices.

2) If Tesla sells a car and FSD package, then that car can never be sold another FSD package at a higher price when FSD is mature. They would be giving up all the potential FSD revenue on that car beyond the current FSD price.

This means the current price of FSD is not based upon how much it is worth right now. It's based upon how much it *might* be worth in the near future. If you think FSD is going to take another 6-8 years to deploy commercially, then it's worth a whole lot less then if you think the full value of FSD will be available next year.

It's obvious that Tesla's plan is to have as many millions of cars as possible that are ready to pay a hefty FSD upgrade fee when FSD is autonomous. They don't care if it's currently too expensive for a typically car buyer to pay $15,000 for now because they want to sell that same car FSD for a whole lot more in the near future. Tesla's FSD pricing is set in a very pragmatic way. Specifically, if they feel they would rather have a higher FSD take rate at this point in time they will set a lower price and if they want a lower FSD take rate at this point in time they will set a higher price. They don't need the money now, so they are under no pressure to achieve a higher FSD take rate at this point in time.

Raising the price of FSD now lowers the current FSD take rate which results in lower profits now and favors potentially much higher profits down the road.

Those of you familiar with the biblical story of Esau selling his birthright for a bowl of stew may be able to draw some parallels here. For anyone who still doesn't understand this, Elon is more akin to the biblical character of Jacob than Esau.

 

[Nocturnal]

I'm an accountant where debits equal credits. So I have trouble following this.

If I buy something at $20 and then sell it at $100 . . . yes, I can now put $100 into the economy.
But didn't the person who purchased my share take $100 out of the economy?
Isn't it more about inflows and outflows of the market?
I'm not saying your post is incorrect, but I can't get my head around it.

On top of Singuy's comment, I'd add that there is a lot of psychology at play as well. Even if your cash on hand doesn't change, if your portfolio increases by 20% then you will feel more flush and willing to dip deeper into that cash to buy things.

 

[Olle]

Surprising that The Inflation Reduction act didn't boost TSLA more. Should be a pure $7500 profit per vehicle since prices will have to rise accordingly.

There are questions however:
Since the Act is primarily a handout to the Big 3 (Made in NA and full $7500 for hybrids are telltale signs), it's possible that government will keep tweaking the requirements to exclude TSLA. Also, will the made in NA requirement motivate China to exclude Tesla from upcoming EV subsidies in China? These could turn the Act in to a net negative for TSLA. What do you think?

 

[StealthP3D]

The disconnect between how well Tesla is ramping on 3 continents, and FSD progress, and TSLA SP is unbelievable.

The market doesn't often have this much profit opportunity that is so obvious. Just as the p/e can only compress so far, the market can only offer so much value that is so obvious. The current share price is starting to push that value to the limits which can only mean one thing:

The window to get in for a song will be closing up. No one can know the exact point at which that happens with any certainty beyond the general principle that the more out-of-whack the pricing is with reality, the higher the chance of that opportunity window closing up. My take is it's already closing up, it's just closing with less authority and less speed than we had hoped. It's taking its sweet time because people are slow to understand what is plainly obvious, that TSLA offers more value than any other megacap. Given the size of TSLA in the market, I suppose we should have known it was not likely to turn on a dime.

 

[Artful Dodger]

Surprising that The Inflation Reduction act didn't boost TSLA more. Should be a pure $7500 profit per vehicle since prices will have to rise accordingly.

We don't even know if any Tesla vehicles will be eligible yet. And we may not know until Dec 31st. Market giving no credit for the credit.

Tell it to Moody's.

 

[ZachF]

looks like the market woke up and chose violence…

 

[mongo]

2) If Tesla sells a car and FSD package, then that car can never be sold another FSD package at a higher price when FSD is mature. They would be giving up all the potential FSD revenue on that car beyond the current FSD price.

Unless traded in to Tesla.
Then Tesla can pocket FSD price on a used car - trade in value of FSD.
Offset by the possibility that used cars with FSD don't sell.

 

[MP3Mike]

Surprising that The Inflation Reduction act didn't boost TSLA more. Should be a pure $7500 profit per vehicle since prices will have to rise accordingly.

Why do prices "have to rise accordingly?" If you raise prices on the Model 3 you guarantee it won't qualify. The Model S&X already don't qualify. The whole point is to make vehicles more affordable to the end users, not to just give more profits to the automakers.

Elon has already said that their costs have started to drop, and they already make a good profit on the vehicles. So the only reason to raise prices is to try to control demand. (And with Giga Texas ramping, excess demand should be less of a problem for the one model that is likely to qualify for the credit.)

 

[ZachF]

My guess is that Shanghai has some built up supply of batteries after the Shanghai lockdowns so this should even out a bit. What worries me is how the European energy situation will look like in the winter and if some companies that use a lot of energy will be looking at losing money and go bankrupt later this winter. Maybe some suppliers to Tesla. It must suck to be a European metal producer and compete with countries with cheaper energy this winter...

Tesla must be really frustrated. They just want to ramp in peace. But then covid lockdowns, lack of shipping containers, queues in ports, chip supply, Shanghai lockdowns, war, energy crisis, droughts etc. It's been a rough last two years. Still Tesla has kept growing, this has probably cost competition much more than Tesla and Tesla has had to adapt and are now even better prepared to scale production in-house. Can this finally be over please! Elon was right:
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The 2020s, like the 1990s, are going to be a decade of US/North American economic outperformance. It’s there in the numbers if you look close enough.