I doubt it because of the potential clean-up costs involved with taking out the tanks and liability costs if they were found to be leaking. Better to start with fresh ground methinks.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Due to home charging, I think the majority of gas stations are going to be dead real estate. The cost of digging up the tanks/remediation is going to be bad. I cant believe the sheer number of gas stations that line the streets of suburbia. Future dunsels.
edit: ninja‘ed by @wipster
bkp_duke
Well-Known Member
Take a chill pill. The tension on this thread is so thick you would have problems cutting it with a scapel.
It's joke, don't like it, don't read it.
I
I would be very surprised if it did have a structural battery. The way a semi is structured, all of the strength, the part that pulls 80klbs is the eight wheels under the front of the trailer. The motors are all down in there. The batteries might make a platform for the cab, which is not different for all of the Tesla cars, but it is not supporting the weight of the load, or acting as a major structural element like they do in the new Y. Most probably there will be a traditional frame in the Semi and the battery will sit on that, and the cab will sit on the battery.
StealthP3D
Well-Known Member
It's a successful investor's job to be selfish when it comes to returns. That simply means you want to find the best returns and there is nothing wrong with that. Logically, the "best" returns have the best risk/reward ratio, which is something that requires an educated guess. I'm not expecting 30% margins on autos come 2025 and that's not required for me to justify TSLA's valuation now and for me to project it will be worth many multiples of that in 2030. What makes TSLA a compelling investment is the way they put innovation front and center. I don't see the Chinese companies doing that because they are risk adverse. They just want to copy the best cars in the world and make them as cheaply as they can. That means they will always be copying the product the leader invented 5 years ago. And the "product" is the factory. I expect copy cat companies to fill the demand at lower price points and at lower profit margins. They will be very successful at this and it will help speed the mission. But, no, they are not a threat to my investment thesis because they are chasing a moving target.
One example: I'm projecting the Cybertruck will be wildly successful in N. America and that, once it's proven and the major wrinkles are ironed out, Tesla will make them at GigaShanghai or a subsequent China factory on a generation II Cybertruck production line for the Chinese market and other geographically convenient markets. I think the economy, durability and versatility of the Cybertruck (and perhaps a follow-up Cybervan) is going to greatly expand the market for pick-ups and vans in China and elsewhere. This is just one example of many of where I think Tesla is headed and my question to you is, "How do these Chinese automakers compete with a company that is always using manufacturing technology to continually make things better and cheaper and willing to take risks rather than copy what is already successful?". So, it's not just innovation, it's vision.
My investment thesis does not depend upon specific examples because the future is hard to see and the Cybertruck is just one example of one idea that could keep Tesla three steps ahead of the competition. Normally, I would never invest in an automaker and, to be honest, I am not so much investing in automaking, per say, but rather a person with a proven ability to create massive value. That value could be in AI, robotics, energy, etc. I really don't care about cars, I care about doing things that make sense in a capital efficient manner. It's no secret that Elon/Tesla let others copy their work and there's a reason for that. Elon thinks moats are lame. He's not happy raking in ever larger piles of money and protecting that money, he wants to do big things that put humanity in a better position, things that make sense, and the measure of how much sense they make is whether they are profitable. Because otherwise you are running a charity and charities are very limited by how much capital you put in them while truly good ideas can do 100X or 1000X as much good. Elon has a proven ability to know the difference and to react to changing conditions.
I'm not going to second guess him on this point because he is intimately familiar with what the Chinese are doing in the EV realm and his answer is simply to push the pedal to the floor and push his employees to continually do things even better than they already are. This is not going to sneak up behind him and gobsmack him because he knows about manufacturing in China more intimately than you and I put together. I don't agree with those who are projecting 30-35% margins as far as the eye can see, and I don't need to in order to value TSLA at 3-4 times it's current value in just a few short years. That's a bull case that I only ascribe a 10% likelihood of.
In the context of how fast Chinese EV competition can scale production you mention estimates that indicate CATL, the largest battery manufacturer in the world, can produce enough batteries for 5M EV's annually by 2025. But guess what? CATL supplies batteries to Tesla also! And 5M vehicles is only 7% of global vehicle production (using 70M vehicles annually as a baseline). On top of this, batteries are not just for cars. Energy storage, semi-trucks, delivery trucks, landscaping equipment, mining and tunnelling, all of these applications (and much more) will be switching to electric. In light of all the untapped demand for batteries it's extremely bullish that Tesla is ramping battery production themselves and sharing their innovations with other battery makers. Elon has said himself that the demand for batteries will outstrip supply as far as the eye can see. This is why I say investors should keep their eyes on the ball and that ball is the batteries (and by extension, the raw materials that comprise batteries). Everyone who is paying attention can see that Elon understands that and is constantly taking action to best protect Tesla's interests.
You speak of new Chinese EV's coming to market and priced 20%-30% cheaper than a current Tesla and mention that Chinese manufacturers don't need a 30% profit margin to make it worthwhile. All true. But manufacturers price vehicles based on what they can sell them for, not how much it costs to make them plus their desired profit margin. They price them as high as they can and still sell everyone they can make. The fact that they are 20-30% cheaper than a Tesla is because that's all they think they can get for them. There is a reason for why Tesla's command a premium and much of that reason would still be valid even if the Chinese EV's were equal to Teslas (and we know they are not). There are two things going on here: Tesla can charge more just because it says "Tesla," and they can charge more because a copy is never as good as the real McCoy. I don't see any indication that will not be the case, at least for the next several years. There is plenty of room for both for many years to come. Yes, the Chinese will reduce the cost to produce as volumes increase and so will Tesla. Tesla will not stop innovating less costly ways to produce either, any Chinese copying of those design/production improvements will be at least 2-3 years behind Tesla, maybe more depending upon the nature of the innovation. But the real answer here is the market for EV's is huge and growing at an astounding rate.
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StealthP3D
Well-Known Member
Cybertruck and Semi are two different vehicles.
JRP3
Hyperactive Member
You made the same mistake as I. He was talking about the Cybertruck not the Semi.
A large share Buyback now is a ridiculous use of cash considering the large capital requirements coming up, the expansion of working capital needed as vehicles in transit continues to grow significantly, and the ever looming threat of recession making a cushion of cash a good idea. The argument of doing it now because there is a relatively tiny 1% tax going on buybacks next year is nonsensical.
Plus any buyback would only reduce shares outstanding if it was an ongoing one that exceeded the quarterly dilution from employee grants. A one off buyback before year end would be almost inconsequential, and would be viewed by many as merely a stock pumping exercise.
Also it would be all the reason necessary for the debt rating agencies to downgrade/not upgrade tesla investment grade status for a long time.
Remember the last time everyone here got excited about a financial engineering maneuver from Tesla? It was the recent share split, which didn’t amount to diddly squat. Let’s avoid a repeat of that.
Plus any buyback would only reduce shares outstanding if it was an ongoing one that exceeded the quarterly dilution from employee grants. A one off buyback before year end would be almost inconsequential, and would be viewed by many as merely a stock pumping exercise.
Also it would be all the reason necessary for the debt rating agencies to downgrade/not upgrade tesla investment grade status for a long time.
Remember the last time everyone here got excited about a financial engineering maneuver from Tesla? It was the recent share split, which didn’t amount to diddly squat. Let’s avoid a repeat of that.
I used to offer scrolling lessons....but class size was cumbersome.
StealthP3D
Well-Known Member
When the 500-mile range was disclosed at the reveal, it was clearly stated that was at maximum US legal load and a cruising speed of 60 mph. There will be a considerable difference in the size of the battery needed to achieve 500 miles at 60 mph vs. 75 mph. And in my experience in the American West, in most states, trucks do not cruise at 75 mph for legal reasons and, in the remaining states, many do not cruise at 75 mph for economic reasons. It adds a considerable amount of fuel burn and wears expensive tires, engines and transmissions proportionally faster. The sweet spot, taking into account the drivers wages, is around 60-65 mph. That's for economic reasons. A lot less work is needed to cruise at 60-65 mph.
Gigapress
Trying to be less wrong
How would a share buyback help accelerate the transition to sustainable energy?
That is literally the sole criterion Tesla cares about. Buying back shares means either having less cash or having more debt, which limits Tesla's options and raises the risk of mission failure, so unless there's a compensating justification then it's not going to happen.
Tesla developing a robotaxi fleet would. Tesla becoming an electric utility would. It turns out that both of these ideas are already in the plans and either one could swallow up Tesla's entire current cash balance and all upcoming cash flows. You, investors, don't have to believe that a robotaxi fleet scaleup is imminent, but what matters is that Tesla's leadership team does believe that and have repeatedly stated that is the plan, and the plan is going to determine Tesla's near-term cash allocation decisions.
I did the math back in May about how much capital might be required if Tesla solved autonomy and announced they're no longer going to accept new orders for private vehicles due to the fact that vehicles on the Tesla Network are 5x-10x more valuable towards the mission. #341,377 . Hint: It's a lot, even with each Robotaxi paying for its own production cost quickly.
How about solar and batteries? If Tesla stops selling those and instead eats the upfront investment cost and then sells the grid services, that can suck up a lot of capital too, and because it would have a slower payback period than robotaxis, the cumulative capital requirement could be in the hundreds of billions. Roughly, if Tesla deployed 1 TWh of Megapacks with an optimistic all-in cost of $100/kWh, that's $100B right there. Now add in solar generation capacity investments which is on the order of another $100B.
Pierre Ferragu asked on the Q1 call about how Tesla will spend $500B cash by 2030, and the response was:
That is literally the sole criterion Tesla cares about. Buying back shares means either having less cash or having more debt, which limits Tesla's options and raises the risk of mission failure, so unless there's a compensating justification then it's not going to happen.
Tesla developing a robotaxi fleet would. Tesla becoming an electric utility would. It turns out that both of these ideas are already in the plans and either one could swallow up Tesla's entire current cash balance and all upcoming cash flows. You, investors, don't have to believe that a robotaxi fleet scaleup is imminent, but what matters is that Tesla's leadership team does believe that and have repeatedly stated that is the plan, and the plan is going to determine Tesla's near-term cash allocation decisions.
I did the math back in May about how much capital might be required if Tesla solved autonomy and announced they're no longer going to accept new orders for private vehicles due to the fact that vehicles on the Tesla Network are 5x-10x more valuable towards the mission. #341,377 . Hint: It's a lot, even with each Robotaxi paying for its own production cost quickly.
How about solar and batteries? If Tesla stops selling those and instead eats the upfront investment cost and then sells the grid services, that can suck up a lot of capital too, and because it would have a slower payback period than robotaxis, the cumulative capital requirement could be in the hundreds of billions. Roughly, if Tesla deployed 1 TWh of Megapacks with an optimistic all-in cost of $100/kWh, that's $100B right there. Now add in solar generation capacity investments which is on the order of another $100B.
Pierre Ferragu asked on the Q1 call about how Tesla will spend $500B cash by 2030, and the response was:
Has that much really changed since April?
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bkp_duke
Well-Known Member
Someone smarter will correct me if I'm wrong, but I believe by reducing the float on TSLA shares it will make the stock price more stable, thereby allowing Tesla to:
1) repatriate revenue from off-shore and (legally) bypass paying taxes on it (this is what APPL, GOOG, MSFT, etc. use this for, at least in part).
2) allow Tesla to go to equity markets to fund capital expenditures without having to dig deep into cash on hand (i.e. smooth out cash flows)
Essentially, it's "playing the game" with the WS big boys to make them happy, but in doing so Tesla gets more of a "blue chip" status, tax benefits, and the ability to more easily tap capital markets.
I.e. I don't view buybacks with excess cash (that's key) as putting a limit on Tesla's future growth.
Gigapress
Trying to be less wrong
1) Taxes will still eventually be paid in the future on corporate income distributed to shareholders via dividend. A buyback just kicks the can down the road but doesn't delete the tax liability. If capital never gets returned to shareholders via dividend then what is providing the fundamental financial value of the company? The theoretical limit of a buybacks-only policy would be a single shareholder owning a single share and thus 100% equity of the company's cash and profits. In order to get any value from that, the single shareholder would need to move the cash from the company to themself, which is...a dividend. Otherwise the company is just a one-way black box where capital goes in and none ever comes back out, and people can only earn money by selling their ownership slice of the black box to some other sucker based on valuations that have no true financial basis, like the economic equivalent of a perpetual motion machine.
2) This idea would be like digging a hole so that you have somewhere to put all the dirt in the future. In other words, getting rid of cash so as to raise the stock price so as to be able to get the cash back someday. Why not just keep the cash in the first place and keep Wall Street out of their business?
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2daMoon
Mostly Harmless
What if they borrowed the money to do the buyback? That might explain participation of S&P in the game of late. I think this was alluded to in the SMR video I posted as explanation for the sudden comprehension of how well Tesla is performing by S&P.
Was thinking exactly the same. Those are brownfields.
Gigapress
Trying to be less wrong
Good question. The best justifications I've seen presented are based on the value of reducing the share price.
- Tesla's increases employee engagement and psychological ownership with the quarterly employee stock purchase program and reducing the share price makes it easier for entry-level employees to participate
- Tesla sees the value of small-time retail investors participating in this and many can't afford a $1000 share but can afford a $300 share, especially kids, who are the ones most affected by the degree to which Tesla succeeds at the mission
- Tesla and particularly Elon sees the bigger picture value of Tesla as a kind of democratic organization building the future of technology where the public can vote on what they want the company to do. As he pointed out at AI Day, it's very important that this isn't a dictatorship where he can do whatever he wants. Keeping the minimum buy-in price lower helps more people with less financial means buy in and gain voting power.
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JusRelax
Active Member
It's a good thing that Tesla could export all those MIC vehicles out in September since they were having demand problems in China. /s
On the trip I am on right now, trucks are driving the speed limit which is 70-75 mph. Perhaps in the East coast they go 60-65, but not here.
Rob should have the production numbers so look out for his YouTube video. 5k exports seems low so maybe the production number is much higher that wasn’t counted (at docks/on the factory lot)
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