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

[Gigapress]

Not long ago everybody was predicting declining government subsidies. When I started buying TSLA in 2018 the most popular belief was that Tesla was in deep trouble as the $7.5k US tax credit phased out for them in 2019. Once the credit did get cut in half in Q1 2019, sales took a short-term hit and the stock price got crushed. Tesla’s market cap fell to $40 billion.

The irony is that now, Tesla is profitable beyond what even bulls were hoping for back then and Tesla is now looking likely to receive a bit more than $40 billion worth of extra profit due to US federal government subsidies in the first three years of this law. Now the EU and California have banned ICEV sales past 2035 too. Did the TSLA bears get anything right?

 

[Artful Dodger]

. . and what's funny is the the truth is the other way around. Tesla is a risk to legacy auto.

Indeed. 'Watch ye, for you know not when the Master of the house cometh.'

Chairs!

 

[NicoV]

Europeans don't have to deal with PG&E who got paid to modernize their power lines and just gave all that money to shareholders. Then when they got sued for not maintaining power lines, they kept giving money to shareholders and shafted the customers.

This is the peril of government sanctioned monopoly.

I don’t know if this is the same in all European countries (I expect so because the European grid is one big integrated grid), but in Belgium the power line infrastructure is owned and maintained by state-owned companies, and the power generation is done by different companies.
My pre-war yearly electricity bill is about 4K euro, of which less than 1K is actual electricity, less than 1K is VAT and other taxes, and the rest goes to those state owned companies as a compensation for the use of the grid. That part is so high because it is also a government sanctioned monopoly (there is only 1 such company operating in the same region) with all its inefficiencies.
The war has changed the picture completely. The electricity part of the bill has gone up significantly, while the other parts have remained the same. I still have a contract with the same fixed price (per kWh) for the next 14 months, but due to the price increases no electricity company offers fixed price contracts anymore, and the only currently offered contracts have a variable price that gets adapted to the market price every 1 or 3 months.
In august that would have meant a yearly price of 8K+ for me, currently it means a 13K+ price.
I’m lucky I don’t have any natural gas usage anymore. Gas users now have monthly bills as high as their yearly bills pre-war!
In this European energy crisis, Diesel and Gasoline has only increased moderately (compared to gas and electricity). For cars, ICE drivers now have similar or cheaper km costs than EV drivers. CNG drivers stopped using their cars because way too expensive.
Not only is the price/km cost incentive gone for EV drivers, because so much of the family budget has gone to paying energy bills, there is a lot less budget available for new cars. This will no doubt have an impact on both ICE and EV car sales.

 

[SmokyPeat]

I don’t know if this is the same in all European countries (I expect so because the European grid is one big integrated grid), but in Belgium the power line infrastructure is owned and maintained by state-owned companies, and the power generation is done by different companies.
My pre-war yearly electricity bill is about 4K euro, of which less than 1K is actual electricity, less than 1K is VAT and other taxes, and the rest goes to those state owned companies as a compensation for the use of the grid. That part is so high because it is also a government sanctioned monopoly (there is only 1 such company operating in the same region) with all its inefficiencies.
The war has changed the picture completely. The electricity part of the bill has gone up significantly, while the other parts have remained the same. I still have a contract with the same fixed price (per kWh) for the next 14 months, but due to the price increases no electricity company offers fixed price contracts anymore, and the only currently offered contracts have a variable price that gets adapted to the market price every 1 or 3 months.
In august that would have meant a yearly price of 8K+ for me, currently it means a 13K+ price.
I’m lucky I don’t have any natural gas usage anymore. Gas users now have monthly bills as high as their yearly bills pre-war!
In this European energy crisis, Diesel and Gasoline has only increased moderately (compared to gas and electricity). For cars, ICE drivers now have similar or cheaper km costs than EV drivers. CNG drivers stopped using their cars because way too expensive.
Not only is the price/km cost incentive gone for EV drivers, because so much of the family budget has gone to paying energy bills, there is a lot less budget available for new cars. This will no doubt have an impact on both ICE and EV car sales.

Even with roughly equivalent operational costs, EVs will continue to displace ICEVs in Europe. Yes, the transition may be slowed a bit if Europe is plunged into recession, but the environmental benefits of EVs haven't changed at all. In fact, this energy crisis really should speed up the greening of Europe's electrical grids. I guess that's the silver lining.

 

[Cosmacelf]

I don’t know if this is the same in all European countries (I expect so because the European grid is one big integrated grid), but in Belgium the power line infrastructure is owned and maintained by state-owned companies, and the power generation is done by different companies.
My pre-war yearly electricity bill is about 4K euro, of which less than 1K is actual electricity, less than 1K is VAT and other taxes, and the rest goes to those state owned companies as a compensation for the use of the grid. That part is so high because it is also a government sanctioned monopoly (there is only 1 such company operating in the same region) with all its inefficiencies.
The war has changed the picture completely. The electricity part of the bill has gone up significantly, while the other parts have remained the same. I still have a contract with the same fixed price (per kWh) for the next 14 months, but due to the price increases no electricity company offers fixed price contracts anymore, and the only currently offered contracts have a variable price that gets adapted to the market price every 1 or 3 months.
In august that would have meant a yearly price of 8K+ for me, currently it means a 13K+ price.
I’m lucky I don’t have any natural gas usage anymore. Gas users now have monthly bills as high as their yearly bills pre-war!
In this European energy crisis, Diesel and Gasoline has only increased moderately (compared to gas and electricity). For cars, ICE drivers now have similar or cheaper km costs than EV drivers. CNG drivers stopped using their cars because way too expensive.
Not only is the price/km cost incentive gone for EV drivers, because so much of the family budget has gone to paying energy bills, there is a lot less budget available for new cars. This will no doubt have an impact on both ICE and EV car sales.

Thanks for the info. This is the reason why Tesla stock price isn’t soaring. These electricity prices almost guarantee a severe drop in European sales.

 

[MC3OZ]

Thanks for the info. This is the reason why Tesla stock price isn’t soaring. These electricity prices almost guarantee a severe drop in European sales.

This might help:-

france24.com/en/france/20220902-france-to-restart-all-nuclear-reactors-by-winter-amid-energy-crunch

“There’s a schedule that provides that starting from October, each week, a new (nuclear) plant is operational again,” Pannier-Runacher said.

 

[Artful Dodger]

I also remember rumors from 2020 that Tesla was involved with Brookfield for an experimental residential real estate development project to make a suburban subdivision near Austin.

Not a rumor: Brookfield at Austin is real.

• Tesla Energy, Brookfield and Dacra Announce the Development of Large-Scale Sustainable Neighborhood in Austin, Texas – Brookfield Asset Management Inc
• Tesla Energy, Brookfield, & Dacra Are Developing A Large-Scale Sustainable Neighborhood In Austin, Texas | CleanTechnica
• Tesla partners with Brookfield, Dacra to establish first all-solar ... https://communityimpact.com › austin › 2021/07/09

Cheers!

 

[NicoV]

Thanks for the info. This is the reason why Tesla stock price isn’t soaring. These electricity prices almost guarantee a severe drop in European sales.

I doubt Tesla sales will drop. But the increase may be less than what it would have been without war. The reason I think this is that EV’s are still very much a company car thing. Companies are more likely to do a TCO analysis, which is still favorable to EV’s (and government incentives are favourable for EV’s, and unfavourable for ICE). It’s the poor people who are the most impacted by the high energy prices, because they live in old, badly insulated houses, they have old energy-hungry appliances, they don’t own a house so they can’t benefit from solar panels. These people don’t buy new Teslas.

 

[EVMeister]

As scheduled, FSD price in the US has risen to $15,000. And $19,500 CAD in Canada.

 

[NicoV]

It doesn’t seem like the EU electricity prices are impacted a lot by the NorthStream 1 indefinite closure. The spot baseload prices (for tomorrow) are less than 0.40 euro, and most hourly spot prices are also below 40 cents. Unlike the 1 euro per kWh panic at the end of august.

It seems that I spoke too early. Apparently gas is not traded during the weekend (electricity is traded every day), so no impact on electricity. This morning, the European gas prices jumped 25% during the opening hours of trading.

 

[Artful Dodger]

Gary Black on Twitter: "@hiromichimizuno Everyone is giving Moody’s rating way too much importance. Quantitatively, $TSLA debt is already priced as if it’s investment grade. We always thought S&P would upgrade $TSLA first, and Moody’s would follow. So Moody’s made-up reason for being slow to upgrade isn’t very relevant." / Twitter

Tesla East Bay Club |Fremont| 🕊 on Twitter: "@garyblack00 @hiromichimizuno So… Kabuki Theatre Gary? https://t.co/nz4u7U8jUg" / Twitter​

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R I C O L A !​

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I love it when a meme comes together...

Chairs!

 

[MartinAustin]

RE: investment ratings firms... they are only inflicting harm on themselves. Because... Tesla the company does not need to borrow money. And has almost no debt so their interest payments are not brutal, no matter what the interest rate may be. Tesla literally does not care what their ratings are. But do you know who does care? Institutional investors - who use ratings as an assistant when choosing stocks. While retail investors are (IMO) less likely to use ratings to decide whether or not to buy TSLA (and thus, a lot of retail investors already own TSLA and have been riding it up over the years), all those fund managers who follow internal policies to avoid non-investment-grade stocks will look at the ascent of TSLA, see how much money they have lost as a result of observing those "junk" ratings, and decide that paying attention to ratings may not always be the gating signal it has been in the past. Consequently Moodys, Fitch et. al will in future find themselves "less religiously observed" by fund managers as a result of "the Tesla fiasco" - where Tesla was ignored for years and huge gains were missed - while retail investors won big.

There are definitely some institutions who own TSLA despite the ratings, and they have won big. But there may be more who are currently thinking about doing it. And there may be some whispers/leaks coming out of the ratings agencies... which trigger institutional buying... will be interesting to see if that happens immediately prior to the eventual ratings adjustment.

 

[MABMAB]

10.69.1! Happy Labor Day!

 

[RobStark]

 

[petit_bateau]

I don’t know if this is the same in all European countries (I expect so because the European grid is one big integrated grid), but in Belgium the power line infrastructure is owned and maintained by state-owned companies, and the power generation is done by different companies.
My pre-war yearly electricity bill is about 4K euro, of which less than 1K is actual electricity, less than 1K is VAT and other taxes, and the rest goes to those state owned companies as a compensation for the use of the grid. That part is so high because it is also a government sanctioned monopoly (there is only 1 such company operating in the same region) with all its inefficiencies.
The war has changed the picture completely. The electricity part of the bill has gone up significantly, while the other parts have remained the same. I still have a contract with the same fixed price (per kWh) for the next 14 months, but due to the price increases no electricity company offers fixed price contracts anymore, and the only currently offered contracts have a variable price that gets adapted to the market price every 1 or 3 months.
In august that would have meant a yearly price of 8K+ for me, currently it means a 13K+ price.
I’m lucky I don’t have any natural gas usage anymore. Gas users now have monthly bills as high as their yearly bills pre-war!
In this European energy crisis, Diesel and Gasoline has only increased moderately (compared to gas and electricity). For cars, ICE drivers now have similar or cheaper km costs than EV drivers. CNG drivers stopped using their cars because way too expensive.
Not only is the price/km cost incentive gone for EV drivers, because so much of the family budget has gone to paying energy bills, there is a lot less budget available for new cars. This will no doubt have an impact on both ICE and EV car sales.

Not quite correct. The EU energy sector got restructured largely the UK way (i.e. a la Thatcher) with some German and French twists. The generators got split off into one set of assets; the transmission into another set of assets; the distribution into a third set; and the consumers into a fourth set who were then placed into two pools, domestic and commercial. Plus some other minor players (metering, etc). Then the interfaces were neatly defined, then a market system applies to how pricing and costs flow through this network - both elec and gas. This was largely at the UK's insistence (back when UK was a EU member) but it took decades to come to fruition. The German and French twists were that not everything got privatised, so in some countries the state owns chunks of the above, whereas in other states the corresponding chunks are (or were) private, supposedly with Chinese walls and no state interference (yeah, really). There are supposedly limits to how much one chunk could then buy adjacent chunks, either horizontally or vertically, but in practice what one saw was that in the initial restructuring process the big continental players simply bought out the entire UK play ! Not quite what Thatcher had hoped for. Then RWE and EDF and EON (and, I think, GDF) went effectively bust over the last decade (the penultimate act in the coal/nuclear/renewables showdown) and got bailed out by their respective taxpayers. Then Covid followed by Ukraine has caused a further wave of bankruptcies which are going on in slowmo at present. In your case, because you are in Belgium, which is a small place, you don't have a multiplicity of players. In the larger countries there are (e.g) meant to be half a dozen DNOs, a couple of TSOs, half a dozen major generators, etc. In Belgium there wasn't really enough scale to do that. In any case quite a lot of the edifice has come crashing down as reality has intruded on Thatcher's fantasies (actually Keith Joseph's; but arguably behind it all is really US-think-tanks and a particular political & financial agenda).

If you are really interested, the UK went down the same pathway with water and sewage. Another natural monopoly that got overlaid with the pretence of a market system. Which also has gone horribly wrong.

 

[JusRelax]

RE: investment ratings firms... they are only inflicting harm on themselves. Because... Tesla the company does not need to borrow money. And has almost no debt so their interest payments are not brutal, no matter what the interest rate may be. Tesla literally does not care what their ratings are. But do you know who does care? Institutional investors - who use ratings as an assistant when choosing stocks. While retail investors are (IMO) less likely to use ratings to decide whether or not to buy TSLA (and thus, a lot of retail investors already own TSLA and have been riding it up over the years), all those fund managers who follow internal policies to avoid non-investment-grade stocks will look at the ascent of TSLA, see how much money they have lost as a result of observing those "junk" ratings, and decide that paying attention to ratings may not always be the gating signal it has been in the past. Consequently Moodys, Fitch et. al will in future find themselves "less religiously observed" by fund managers as a result of "the Tesla fiasco" - where Tesla was ignored for years and huge gains were missed - while retail investors won big.

There are definitely some institutions who own TSLA despite the ratings, and they have won big. But there may be more who are currently thinking about doing it. And there may be some whispers/leaks coming out of the ratings agencies... which trigger institutional buying... will be interesting to see if that happens immediately prior to the eventual ratings adjustment.

Rene Lipsch (the guy that responded to Alexandra Merz' email regarding Tesla's 'junk' status, stating that Moody's was looking for a 'broadening' product lineup, stated in an interview that he liked Ford's approach to target FEWER vehicle models in order to reduce complexity.

I can't help but laugh at this guy's duplicitous nature. This guy is a joke, lol!

https://twitter.com/x/status/1566643614314139648

 

[jw934]

And there may be some whispers/leaks coming out of the ratings agencies

And some of those whispers were to SEC in regards to corruption at Moody’s In the form of a 78 page submission from a retired employee.

MOODY'S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts

www.businessinsider.com

 

[jerry33]

Not a rumor: Brookfield at Austin is real.

• Tesla Energy, Brookfield and Dacra Announce the Development of Large-Scale Sustainable Neighborhood in Austin, Texas – Brookfield Asset Management Inc
• Tesla Energy, Brookfield, & Dacra Are Developing A Large-Scale Sustainable Neighborhood In Austin, Texas | CleanTechnica
• Tesla partners with Brookfield, Dacra to establish first all-solar ... https://communityimpact.com › austin › 2021/07/09

Cheers!

I wonder how long it will take the Texas Legislature to ban this. They have a habit of banning anything that individual cities do.

 

[jw934]

Tesla comes to Thailand​

“Looking at the types of jobs posted, one can assume Tesla will be opening a sales and service center in Bangkok. Tesla has also filed to sell not only its EVs but also solar and battery products.”

Source Business Blog

 

[Singuy]

And the rumours continue...

https://twitter.com/x/status/1566737138393104384

Someone took a screenshot of the new fsd pricing in CAD. Perhaps this was a tongue and cheek post.