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

[StealthP3D]

Another video by Connecting the Dots, this one on why the best hydraulic braking system is no hydraulic braking system and the best hydraulic steer system is no hydraulic steering system.

warning for those with a CyberTruck on order, your waiting time will be more agonizing.
warning for those with no CyberTruck on order, you will want to order one (Elon, 4 seater mini version for a Europe please).
final warning: this video is more speculative; the other one concerned features determined by physics

Cybertruck will be the most disruptive vehicle to impact the auto industry since the Model T. I'm not exaggerating. Demand will be so high it's going to make analysts claiming it's too "ugly" to gain acceptance in any volume, that truck buyers are more "traditional" and want that traditional pickup truck appearance, look like the complete idiots we already know them to be. Because products that disrupt an automotive segment to this degree change the way people think about that segment for ever. Current truck buyers don't know what they really want until it is shown to them.

Cybertruck will end up being cheaper, faster, stronger, lighter, more efficient and more capable than anyone thought a pickup truck could be. There's going to be a lot of crow-eating going on!

Hey, Billy-Bob, whatcha doing in that Musk-mobile? I thought you said you wouldn't be caught dead in one of them sissy Cybertruck's if the Cybergods dropped one on your driveway!

Aww, shucks Travis, I know... Aw, man, get your ass over here, I gotta show you this. It's not what you think...I mean, yeah, it's different...but it's *good* different. You gotta see this...

 

[StarFoxisDown!]

This is a record high for #Tesla Shanghai.
Sep wholesale with previous record highs:
Jun '22 - 75,988
Aug '22 - 76,965
Sep '22 - 83,135

These are wholesale sales; Sep production (reported later this month) will be a record high as well.

I know there were some vehicles that were at the docks and on the lot at the factory but these numbers are not good at all considering Shanghai went into Sept with 11k in inventory. I could say maybe only 10k vehicles were produced but not counted in deliveries/exports.

It tells me that not only were local China sales weak but production wasn’t that great either.

I’d love to be wrong but this is probably going to be viewed negatively until we get the production numbers to provide some clarity

 

[thx1139]

I know there were some vehicles that were at the docks and on the lot at the factory but these numbers are not good at all considering Shanghai went into Sept with 11k in inventory. I could say maybe only 10k vehicles were produced but not counted in deliveries/exports.

It tells me that not only were local China sales weak but production wasn’t that great either.

I’d love to be wrong but this is probably going to be viewed negatively until we get the production numbers to provide some clarity

Huh we dont know how many were local deliveries and how many export. I dont know how we can really judge anything until we know production and export. Once we know that we can kind of figure out how many produced and not delivered in US and Europe.

 

[Nocturnal]

I see the Florida bunch are now using the words “imploding and exploding” with regards to EV batteries after the hurricane. Not sure how a battery would implode.

Anyway. Any real numbers on how many fires there has actually been?

No because it's BS. Some random official briefly mentioned EV fires, Fox News ran an article with an unsourced pic of a Model S being sprayed with hoses and a headline saying that EVs are exploding because of the water.

And of course that particular propaganda network did not mention how ICE vehicles are much more likely to be destroyed by flooding.

 

[StealthP3D]

When looking so far out as 2030, we also don't have particularly strong evidence of Tesla producing 20m vehicles at a 30% gross margin (what is my estimate of the TMC average base case assumption while noting the variance in TMC member opinions). Clearly that is the stated goal, Tesla is taking the right steps to achieve that target and we have a strong track record of growth rates and innovation to this point in time that provide comfort.

However, to get to 20m vehicles/yr we are relying on products that haven't been announced being as compelling an offering as when there has essentially been no decent competition, Tesla's nascent cell production scaling dramatically (including the supporting supply chain) and equalling or bettering the performance of other cell manufacturers, and the market not becoming saturated before this point which would likely compress margins (as ICE have done for the last 50 years). We also need Tesla to continue to innovate to ensure their manufacturing cost remains as low or lower than the best offered by government backed Chinese companies can offer.

The sensitivity analysis that @petit_bateau is running sounds well within the range of potential outcomes over the next 8 years. That is not to say that it is the probable outcome, only that it would be a plausible outcome should China accelerate a compelling EV supply chain. For example, should Tesla only achieve 10% market share in China they would need c.33% market share in US/EU to reach the 20m annual figure - which sounds quite a bit more difficult than the 25% target.

I think we will have a better idea over the next couple of years on how the Chinese EV industry will shake out. The reddit post that kicked off this discussion notes that the more compelling EVs have only really been released in the last 3-12months which isn't enough time to get a good handle on how volumes, margins and steady state demand will look like for their offerings.

My personal opinion is that by 2030 at least one of the non-dumb EV products will have taken off (FSD, energy, optimii) leading Tesla to be valued far higher than it is currently even if China EV does provide stronger than expected competition. Historically, there has been limited value for these items included in people's forecasts.

It's difficult to see the future through anything other than the way we already know the present. But I let my analysis go wherever the known facts take it, to the place I see as being the most likely outcome. I don't give any extra credit to GM or Ford or Toyota or Nissan for their past greatness and I don't assume it's in their DNA. I look at what they are doing right now and project from there. I think the auto industry is being massively disrupted in ways that are hard to imagine for any analyst who tries to see the future by looking in the rearview mirror.

Everything is changing rapidly in ways that are largely unexpected by the thought patterns of the majority. Five short years ago, in 2017, how many industry experts thought the media would be announcing that EV's had hit 10% of global auto sales by the middle of 2022? The future surprises people with how little it changes during stable periods and it really surprises people by how much it changes during periods of disruption. I think most of legacy auto will follow in the footsteps of Kodak, a dominant and very profitable company that went bankrupt even though they invested the first handheld digital camera and had a long-standing plan to transition to digital. They didn't think it would happen as quickly as it did and its profit margins in traditional photography were much stronger than on the digital side of the business. They wanted to extend their profits from tradition photography right up until the day it collapsed.

In my observations over the years there are two kinds of people when it comes to projecting the future: Those who view change as very measured and who give a lot of credit to a company based on history and size, and those who view change like a light switch. The difference between these two types of people is mostly how they view time. A year is a long time to the first group and these are the same people who are looking at monthly sales results to see how they think the business will do in the future. The second group sees a decade as a short period of time and they tend to look at bigger trends vs. monthly sales data to determine where various companies will be in a decade. The first group misses the forest for the trees.

While I agree the future is unknowable, I have seen nothing to indicate the momentum that has been building within Tesla is slowing down or that others are able to innovate and iterate as quickly. The biggest fallacy I see presented here is that a bunch of companies, with a bunch of low-volume models (or higher volume China only models) will erode Tesla sales simply because the manufacturer chose to price it at breakeven to get a foot in the door. The real question is can they profitably ramp to huge volumes while exporting cars out of China. Because the volumes needed to stop Tesla from hitting their 20M goal in 7 years are mind-boggling. Chinese makers might cause Tesla to lower their prices sooner, and therefore their profit margins, but that is hardly a problem if your volume is growing more quickly than your margins are falling.

 

[Gigapress]

$80k Subsidy for Tesla Semi in USA???

I'm starting to think the Tesla Semi is likely to sell exclusively (or almost so) in the United States for the foreseeable future. I underestimated the benefits of the Inflation Reduction Act with respect to the Semi on my first readthrough. It's looking like the cumulative impact could be roughly on par with Volkswagen's entire market cap.

I am not a lawyer or tax expert and this is not investment advice. Please let me know if you think I'm misinterpreting this.

From what I'm seeing, there's three credits at play here:

• $45/kWh for battery manufacturing
• 10% of value of critical minerals going into the batteries
• 30% clean commercial vehicle credit, up to $40k max

The 30% credit I had missed earlier when presenting this table a few weeks ago in this post. $180k was the 500-mile Tesla Semi list price from back when the order page used to show a price, so we would max out at the $40k limit which is 22% of the price. That's still amazing.

https://www.congress.gov/bill/117th-congress/house-bill/5376/text

Is the Semi a "qualified commercial clean vehicle"? It looks like it to me.

Section 30D(d)(1)(C) requires for eligibility that the vehicle shall be produced by a "qualified manufacturer" which is defined just based on reporting requirements with which I'm pretty sure Tesla is compliant:

Section 30D(d)(1)(D) requires that the vehicle "is treated as a motor vehicle for purposes of title II of the Clean Air Act".

26 U.S. Code § 30D - Clean vehicle credit

www.law.cornell.edu

This credit lasts through 2032 if the law stays in place.

One question here is whether the "incremental cost" limit will apply instead. I have no insight regarding how the IRS will interpret and enforce this rule or exactly what diesel semi truck would be considered the "comparable vehicle". Some of them cost the same as the Tesla Semi, but most cost like $100-140k from what I can find online. So there's a reasonable chance the IRS might be restrictive and the Tesla won't get most of this credit, but I think that's pretty unlikely since the Tesla isn't a specialty truck or a sleeper cab or anything like that, and it looks like those are the trucks that cost like $180k.

However, this subsidy goes to the customer buying the truck instead of directly to Tesla, but that doesn't really matter because the impact on the supply and demand equilibrium is the same either way (one of the first things I was taught in economics school). Thus, I expect much of the benefit to flow through to Tesla via pricing much higher than $180k. Since Tesla has more power in this relationship due to having the best truck on the market by a pretty big margin, I guess that probably around $30k of the subsidy will come to Tesla via higher pricing. That's fine anyway, because $180k is a freaking steal because of the savings on fuel, maintenance, inspection, insurance and longer vehicle longevity. Tesla could easily charge $250k+ and customers would still want it.

I don't have details on Tesla's material costs for high-nickel 4680s going into the Semi, but I guess it's around $50/kWh or so, meaning that the 10% government rebate is worth $5/kWh in addition to the $45/kWh for $50/kWh total. If someone knows of a good way to estimate I'd like to know. I didn't try hard on this because it's a minor impact of a couple bucks per kWh either way. Tesla hasn't said the battery size but it's rated for 500 miles and "<2 kWh/mile" so that is around 1 MWh. $50/kWh = $50k/MWh = $50k/Semi

$30k + $50k = $80k total subsidy benefit estimate.

If we hoped Tesla would start close to maybe 15% gross margin on the Semi in the next couple years with the $180k price (or maybe $200k with inflation adjustment since 2017 when price estimates originally published, then it's now going to be about 60% gross margin after adding in the subsidies.

$80k total subsidy.
60% gross margin.
$80 BILLION cumulative subsidy if Tesla can sell 1 million Semis in USA by 2032

Tesla's entire market cap was a bit less than $80 billion this time in 2019. Only about 150 companies in the world have market caps greater than this. This is the financial equivalent of Tesla acquiring Siemens for free. $80B obviously isn't a precise estimate but it's gigantic by any measure so I don't care much about the accuracy. This equates to about $20 of direct Semi subsidy impact per share of TSLA.

The subsidy will be approximately $20k less for the 300-mile range semi due to the smaller battery, but the manufacturing cost is lower in the first place and Tesla can make about 69% more of them with a finite battery supply (500/300= 1.67 plus a bit for better efficiency due to reduced weight). Any way I look at this, I like the numbers a lot.

Is it a coincidence that Tesla has announced preliminary deliveries to PepsiCo starting in December? I'm starting to think it isn't, because the credits come into effect on January 1st.

 

[PeterJA]

...Everything [in the auto industry] is changing rapidly in ways that are largely unexpected by the thought patterns of the majority....

And we ain't seen nothin' yet compared to when Tesla completes FSD.

 

[AudubonB]

Why it is that posters here gush so slobbily over the Cybertruck and its capabilities is beyond me. Not one of you ever has seen it perform as a truck - ever - nor has any idea in the least of how well it stands up. "But Tesla" is beyond weak as a reason, not least because of the flaw the Model X has (and the Model S? I cannot remember) with the altered stresses on joints when raised to the two "High" positions. "Just keep it in "Regular' and you'll be fine", being Service's final recommendation to me, remains a massive failure for Tesla in my eyes.

As for me, I am leery for the simple reason that there now is such a phenomenally long time between it first having been unveiled - and that in itself was after a long development period - and now....and it still isn't ready to be "properly" shown? This is absolutely separate from bringing it into production; I am quite complacent with it needing to be behind the Models 3 & Y and their increased output.

I had the wonderful and completely unexpected opportunity to host two engineers from Rivian this summer. Both admitted what was well beyond their expectations was the difficultiy of bringing the concept to the reality. My most focused questioning to them regarded the suspension - see above -...."not my bailiwick" was, frustrating to me, their response. And that likewise is what I have been most interested in regarding the Cybertruck, too...Tesla similarly has been tightlipped there, also.

 

[mongo]

Why it is that posters here gush so slobbily over the Cybertruck and its capabilities is beyond me.

It doesn't have paint

-mike drop

 

[AudubonB]

Bromine pentafluoride slobber eats stainless

 

[Gigapress]

By the way, that analysis on the ~$80B of US tax benefits for the Semi is arguably very conservative because it considers only the Semi, but not any future derivatives Tesla may make. The 30%/$40k/incremental cost credit applies to any qualified commercial clean vehicles with gross vehicle weight rating (GVWR) of at least 14k pounds. The Tesla Semi's GVWR is 82k lbs. I guess it's perhaps 10k lbs at most for the Cybertruck tri-motor based on Tesla saying the Cybertruck weighs about the same as an F-150, which is 7k lbs GVWR. So there is a solid market in between Cybertruck and Semi that Tesla could go for between now and 2032.

American vehicle classifications define Class 4 as starting at 14k lbs GVWR. Tesla Semi is meant for the Class 8 heavy segment, but Tesla currently has not revealed any products for Class 4 through 7, which Statista says has about the same total sales volume in the US as Class 8.

(link)

Classes 4 and 5 could basically be covered by a supersized heavy-duty Cybertruck. The Ram 4500 is an example of a Class 4 truck.

Any vehicle with a high proportion of the cost structure in battery costs will benefit disproportionately from the ~$50/kWh battery subsidies as well, and this would go for that middle commercial trucking segment. A Model Y with an 80 kWh battery at $100/kWh is $8k battery cost out of total maybe $36k cost, so maybe about 20% of the cost structure is battery. At the other extreme, at 1 MWh the Semi battery would cost $100k. I don't know what the rest of the Semi costs, but it's probably far less than this. Commercial trucks in general have more to gain than consumer passenger vehicles do from the Advanced Manufacturing Tax Credit.

All of this is of course contingent upon

• me having accurately understood the law as an amateur reading it
• how long the law actually stays on the books as-is
• how much truck production volume Tesla can actually push out in the next 10 years

 

[elasalle]

Can anyone please predict whether tomorrow will be UP or DOWN

 

[insaneoctane]

Can anyone please predict whether tomorrow will be UP or DOWN

Yes

 

[TheTalkingMule]

Can anyone please predict whether tomorrow will be UP or DOWN

Well rationally you'd think 3Q & 4Q earnings would have us counting the days to ATH. And then accelerate when news like this hits confirming the trend.

Tesla's China-made sales hit record following Shanghai factory upgrade

Tesla Inc delivered 83,135 China-made electric vehicles (EVs) in September, smashing its monthly record, according to a report released on Sunday by the China Passenger Car Association (CPCA).

www.reuters.com

But today.....fear and macro uncertainty are capping any real stock buying. If no one's buying.....hedgies/shorts/MM's run the show.

 

[Singuy]

I know there were some vehicles that were at the docks and on the lot at the factory but these numbers are not good at all considering Shanghai went into Sept with 11k in inventory. I could say maybe only 10k vehicles were produced but not counted in deliveries/exports.

It tells me that not only were local China sales weak but production wasn’t that great either.

I’d love to be wrong but this is probably going to be viewed negatively until we get the production numbers to provide some clarity

I think the most bullish case is that they delivered 20k less cars q3 2021 and decided to close all 7 days from Oct1-7 due to the holiday. This year Tesla decided to pay triple time just to remain open which is 20k more cars being made at lower margins so there's demand somewhere.

 

[elasalle]

I think the most bullish case is that they delivered 20k less cars q3 2021 and decided to close all 7 days from Oct1-7 due to the holiday. This year Tesla decided to pay triple time just to remain open which is 20k more cars being made at lower margins so there's demand somewhere.

Just a thought, but since Q2 was bad due to Covid shutdown, Tesla might have been better off not trying to undo the wave in Q3.
Ya Elon doesn't care about stock price and short term don't matter, but it would have done all investors lots of good if we did not have 2 quarters of perceived underperformance (regardless of what the reason was).

Also it's not just like analysts are wrong, Tesla has guided for 50% yearly growth -- I think it is out of the question now?

 

[StarFoxisDown!]

Just a thought, but since Q2 was bad due to Covid shutdown, Tesla might have been better off not trying to undo the wave in Q3.
Ya Elon doesn't care about stock price and short term don't matter, but it would have done all investors lots of good if we did not have 2 quarters of perceived underperformance (regardless of what the reason was).

Also it's not just like analysts are wrong, Tesla has guided for 50% yearly growth -- I think it is out of the question now?

50% is definitely not out of the question. I believe it would just require Tesla to delivery something like 475k for Q4.

 

[JoRoMo]

Just a thought, but since Q2 was bad due to Covid shutdown, Tesla might have been better off not trying to undo the wave in Q3.
Ya Elon doesn't care about stock price and short term don't matter, but it would have done all investors lots of good if we did not have 2 quarters of perceived underperformance (regardless of what the reason was).

Also it's not just like analysts are wrong, Tesla has guided for 50% yearly growth -- I think it is out of the question now?

«Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries»

 

[FSDtester#1]

«Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries»

And have done so for 6 years running.... ❤

 

[StarFoxisDown!]

I think the most bullish case is that they delivered 20k less cars q3 2021 and decided to close all 7 days from Oct1-7 due to the holiday. This year Tesla decided to pay triple time just to remain open which is 20k more cars being made at lower margins so there's demand somewhere.

The fact that they aren’t closing Shanghai for the first 7 days is bullish for Q4.

As you mentioned in one of earlier posts, based on what we know from China for Q3 and the total P/D for Q3 for all of Tesla, either Fremont, Berlin, or Austin did better than expected, which is also bullish for Q4.

But I expect neither to be recognized by Wall St for much of q4 until we get data for Oct and Nov from China and European registrations.

Q4 really comes down to put up or shut up for both the bull camp and the bear camp. If you’re a bull and don’t believe demand isn’t an issue, all the ingredients are there for Tesla to do 475-500k…..as long as there’s no further production interruptions.

If you’re a bear and think demand is a genuine concern, the Tesla won’t have enough demand to even deliver 400k.

I don’t think I’ve ever seen a quarter where the dynamics at play given the share price today have set up such a high stakes game of poker. The gap between the bull thesis and the bear thesis on a single quarter is wider than I’ve ever seen before.