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

[elasalle]

Sounds like the conference calls were slightly different.

https://twitter.com/x/status/1581595614269145088

Yeah it also does say FSD in the next line

 

[Singuy]

Don't even know why Gary is trying to explain anything. We have a classic bear market crash which results in everything hitting 52wk low as the result despite whatever is reported. Tsla is pretty much the last man standing next to Appl. Consider that a badge of honor and a sign that we are near bottom because everything needs to be hit hard.

 

[Budding]

https://twitter.com/x/status/1581507385029709826

Can someone smarter than me refute this?

 

[TSLA Pilot]

*This* is the most important thing I would ask of this forum: “Replace “margin” with any other topic, and truly consider this as you are posting, consider the extremes, and post about where on the spectrum of possibilities you believe in. Rarely are the extremes the right answer (and even when the answer is an extreme all-or-nothing, that is even more rarely a well thought out and interesting answer). For example, for all the stock buyback discussions recently: Hopefully even the most ardent supporter would agree using *all* available funds + future FCF + borrowing to max out a stock buyback would be a poor choice, and hopefully even the most staunch opposer would agree spending a tiny amount to recover employee stock purchases / employee stock grants (other than the large exec ones) over the next year would not consequentially hurt the company (although also provide no consequential benefit to the TSLA share price), so everyone should be describing where between those extremes they feel would be the best balancing point, and why. (Arguably the lower extreme could even be another secondary offering to raise cash, the opposite of a stock buyback, if someone wanted to go there.) For the products (hopefully most of us here are Tesla vehicle / energy / merchandise owners, not just “TSLA investors”): Hopefully even the most fanboi among us can acknowledge areas of improvement to be made, and even the most disgruntled buyer (if they exist here) can acknowledge how far ahead of any other available alternative the products are. With Musk himself: Hopefully even his greatest supporters can see individual points where they disagree with him, and even his worst detractors will acknowledge the HUGE good he has done not just for Tesla / SpaceX / et al, but for humanity as a whole. (And, YES, every person on this forum should be able to see the same “some good and some bad” in other forum members as well as THEMSELVES!) Same with longer range options, Texas and Germany production ramp, 4680 production ramp, advertising, and every other topic…few things are “All or nothing” - one should understand the extremes and then discuss where between them they believe the best balancing point is.

The "Enter" key is your friend.

It creates paragraphs which help break apart long walls of text. Otherwise it just looks like someone threw up on the screen . . . .

 

[Todd Burch]

Is Tesla really going to be punished further if they barely miss 50% even with COVID shutdowns, for something completely out of their control? That would be a crappy thing to do. I’d think missing is already baked in (definitely at this price). At the Q2 call they said it would be much harder to hit 50% but they’re going to push hard for it.

This Wall St expectations game is stupid. Delivery growth might end up being 47% yoy despite a factory getting shut down and they’ll still paint it as a failure on Tesla’s part even though in reality they managed those hurdles spectacularly.

 

[Singuy]

https://twitter.com/x/status/1581507385029709826

Can someone smarter than me refute this?

Giga Berlin is expected to produce 30k in q4 is wrong. They hit 2k a week in q3. And we have seen with Tesla that 2k/w->5k a week usually happens within a quarter. Troy is not expecting this to happen. Also Texas is not that far behind.

So he can be 100k off just for not adjusting for both gigafactory production ramp as they hit the steepest slop of the S curve.

 

[mongo]

Yeah it also does say FSD in the next line

FSD was the next topic, this was part of Elon's Q4 2021 state of the machine address with modified spacing by me.
Tesla (TSLA) Q4 2021 Earnings Call Transcript | The Motley Fool

So -- in 2022, supply chain will continue to be the fundamental limiter of output across all factories. So the chip shortage, while better than last year, is still an issue. And, yeah, so that's -- there are multiple supply chain challenges. And last year was difficult to predict, and hopefully, this year will be smooth sailing, but, you know, I'm not sure what you do for an encore to 2021, 2020. Nonetheless, we do expect significant growth in 2022 over 2021, you know, comfortably above 50% growth in 2022.

Full self-driving. So, over time, we think full self-driving will become the most important source of profitability for Tesla. It's -- actually, if you run the numbers on robotaxis, it's kind of nutty -- it's nutty good from a financial standpoint. And I think we are completely confident at this point that it will be achieved. And my personal guess is that we'll achieve full self-driving this year, yeah, with data safety level significantly greater than the present.

So it's -- you know, the cars in the fleet essentially becoming self-driving by a software update, I think, might end up being the biggest increase in asset value of any asset class in history. We shall see.

Here's Q2 2022 from Tesla (TSLA) Q2 2022 Earnings Call Transcript | The Motley Fool

Zachary Kirkhorn -- Chief Financial Officer

Despite these challenges, we were still able to achieve one of our strongest operating margins of 14.6%. Our free cash flows were impacted by working capital related to the Shanghai factory shutdown. However, we expect this will show as a benefit in Q3 as our working capital-related cash flows restabilize. As we look ahead and as Elon mentioned, we are positioned for a record-breaking second half of the year.


We're quite excited about this. A couple of things to keep in mind as we progress. Austin and Berlin ramp inefficiencies will continue to weigh on our margins for the balance of the year. However, the impact should reduce as we increase ramp.


Second, as we've mentioned before, we expect to continue to see recognized global pricing to increase as our backlog flows through. However, macroeconomic-related cost increases will also continue to be part of our story. And finally, despite losing more builds in Q3 than expected, we're still pushing to reach 50% growth this year. This target has become more difficult but it remains possible with strong execution.


And as Elon mentioned, no more force majeure events for the balance of the year.

 

[Mengy]

Is Tesla really going to be punished further if they barely miss 50% even with COVID shutdowns, for something completely out of their control? That would be a crappy thing to do.

Yes, Tesla will probably be punished in Q4. Wall Street will look for any reason, any excuse at all, to keep TSLA down. We'll be posting record quarter after record quarter for the next year or so most likely, but it probably won't matter because the MM's will find a chink in the armor to perpetuate what THEY want the narrative to be.

Long term it doesn't matter, but in the short term, given the macro situation, TSLA will most likely be held down for some time yet. It wont' make sense, it will seem stupid, but I think it's probable.

 

[Todd Burch]

https://twitter.com/x/status/1581507385029709826

Can someone smarter than me refute this?

See, this is an example where Troy’s analysis can go off the rails and why I think his analytic potential is a bit overrated. When you’re production limited, the numbers don’t mean anything.

He assumes that the maximum export potential from Shanghai is going to continue to be 59K + 20k for Australia, Japan, etc. (-30k for Berlin) as that’s been the historical maximum. You can’t assume that when the factory was at maximum output and when every car produced was sold. Depends on the bias toward local vs export sales. Ignore “deliveries” (that’s logistics-based) and exports (that’s dependent on when Tesla shifts to local production each quarter). As long as Tesla is selling every car they make, their choice of when to switch purely limits that number.

Obviously Shanghai was upgraded significantly in Q3, so Q3 numbers include less exports than they could have had with a full quarter as the lines were down during a significant portion of the time Tesla typically exports during the quarter.

Because of the upgrades, Shanghai will produce many more cars in Q4, therefore their ability to export more is higher. Plus, add the cars that were in transit at the end of the quarter, which didn’t count as Q3 exports but have already applied as Q4 exports.

Easy stuff that I’m shocked someone who spends so much time doing analysis doesn’t understand.

Plus, the other obvious things: Tesla paid 3x overtime to keep Shanghai open during the Chinese holiday at the start of Q4, and *still* hasn’t lowered prices, despite having plenty of margin to do so.

If Tesla can’t sell everything they can produce, they will lower prices a bit until the demand curve hits the supply curve again. Tesla has best visibility into this, and will lower prices as needed to keep the lines running at 100%. The fact that they haven’t even lowered any prices yet gives me confidence they’ll sell evey car they can make in Q4.

 

[saniflash]

See, this is an example where Troy’s analysis can go off the rails and why I think his analytic potential is a bit overrated. When you’re production limited, the numbers don’t mean anything.

agreed. Linear extrapolation not a good idea since we're moving along an S-Curve.

 

[Todd Burch]

agreed. Linear extrapolation not a good idea since we're moving along an S-Curve.

Moreover, I believe Tesla has said Berlin is expected to exit Q4 with a run rate of 5k/wk.

There will be a nearly immediate step change up in production (a doubling) as they add an additional shift, which I believe is rumored to be happening this month. Adding a shift, assuming parts supply is sufficient, almost immediately doubles production since you’re still doing the same thing on the lines—running at the same rate—just for twice as long. If Tesla is around 1500/wk at Berlin now, they may exit October at 3k/wk due to that additional shift alone. This implies average production this quarter will be around 3.5k/wk. That’s about 42,000 cars from Berlin, already well over Troy’s 30k estimate.

I don’t think I’m being unrealistically optimistic here.

 

[unk45]

I watched a video about them:

I cannot help but think which workers could be replaced by an Optimus. How far are we from the day when Optimus can manufacture the homes and unpack them? Imo Tesla should seriously consider making the world awesome by fixing housing. Tesla have products for Solar roofs, powerwalls, tesla chargers, HVAC, starlink etc and will soon have Semis to transport the homes and Optimus to install them. Add their skill in manufacturing, capital to fund the scaling and brand name. I would buy a Tesla home...

-Some is good
-More is better
-Only too much is enough

 

[mongo]

See, this is an example where Troy’s analysis can go off the rails and why I think his analytic potential is a bit overrated. When you’re production limited, the numbers don’t mean anything.

He assumes that the maximum export potential from Shanghai is going to continue to be 59K + 20k for Australia, Japn, etc., as that’s been the historical maximum. You can’t assume that when the factory was at maximum output and when every car produced was sold. Depends on the bias toward local vs export sales.

Obviously Shanghai was upgraded significantly in Q3, so Q3 numbers include less exports than they could have had with a full quarter as the lines were down during a significant portion of the time Tesla typically exports during the quarter.

Because of the upgrades, Shanghai will produce many more cars in Q4, therefore their ability to export more is higher. Plus, add the cars that were in transit at the end of the quarter, which didn’t count as Q3 exports but have already applied as Q4 exports.

Easy stuff that I’m shocked someone who spends so much time doing analysis doesn’t understand.

Plus, the other obvious things: Tesla paid 3x overtime to keep Shanghai open during the Chinese holiday at the start of Q4, and *still* hasn’t lowered prices, despite having plenty of margin to do so.

If Tesla can’t sell everything they can produce, they will lower prices a bit until the demand curve hits the supply curve again. Tesla has best visibility into this, and will lower prices as needed to keep the lines running at 100%. The fact that they haven’t even lowered any prices yet gives me confidence they’ll sell evey car they can make in Q4.

Yeah... that's... something...

Many people overestimate Giga Shanghai's export potential. The highest sales in Europe were • 55K in Q4 2021 • 59K in Q1 2022 • 52K in Q3 2022 The highest sales in Australia, Japan etc. were 20K in Q3 Giga Berlin is expected to produce 30K and Giga Shanghai 260K in Q4.


12:45 AM · Oct 16, 2022·Twitter Web App
Therefore, Giga Shanghai's export potential is 59K+20K-30K= 49K in a regular quarter. Let's assume they will double that because they will clear all backlog. That's still only 98K and Giga Shanghai is expected to produce 260K, meaning they still need super high sales in China.

Shanghai can't export because Berlin took all the demand? But, wait, Shanghai somehow doubles exports anyway?

Going from reported capacity:
Q4 2021 China capacity >450k, All produced 306k
Q1 2022 China capacity >450k, All produced 305k
Shanghai post upgrade rate: 22k/wk = 1144k /yr capacity - 450k = 700k/yr China improvement

700k increase/ yr = 175k/quarter * 90% utilization = 160k more cars than Q1
Q1 Tesla production was 305k add 160k and you get 465k, just 30k shy of Troy's target number. Without any increases from the other 3 factories.

We know S/X from Fremont are expanding regions and they produced 5700 more of those in Q3 vs Q1. Just 24k extra production needed from Austin, Berlin, and Fremont 3/Y.

Going from actual production:
China Q1 wholesale was 182k, Q1 3/Y total production was 281k, so 99k non-China
China Q3 wholesale was 183k, Q3 3/Y total production was 346k, meaning non-China was 163k!!! >60% increase from Austin, Germany, and Fremont in two quarters. It also shows China did recover from upgrade related shutdowns via new capacity.
Q2 was 112k China, 130k AGF
So QoQ non-China increases were 31k and 33k .

1144k/yr/4*90%=257k China
163k Q3 non-China + 257k China = 420k 3/Y
Now add in X/S + 20k = 440k
Extrapolate AGF growth as +35k = 475k
And we are really close.

 

[Cosmacelf]

We remember when he did that early in the Model 3 ramp, and Elon admitted that it did more harm than good.

I agree with your sentiments, but what are you referring to above? Was it his order to automate everything? I don’t remember him pointing out specific mistakes, or saying that he did more harm than good.

 

[Knightshade]

I agree with your sentiments, but what are you referring to above? Was it his order to automate everything? I don’t remember him pointing out specific mistakes, or saying that he did more harm than good.

You don't? Was pretty widely discussed at the time...

https://twitter.com/x/status/984882630947753984

He also admitted (several times) to mistakes about service center number and location-- though his specific promises about fixing them and covering "all regions of NA (not just big cities) within 3 to 6 months." haven't actually happened 4 years later.

https://twitter.com/x/status/1052356093534302208

Giga Berlin is expected to produce 30k in q4 is wrong. They hit 2k a week in q3. And we have seen with Tesla that 2k/w->5k a week usually happens within a quarter. Troy is not expecting this to happen. Also Texas is not that far behind.

So he can be 100k off just for not adjusting for both gigafactory production ramp as they hit the steepest slop of the S curve.

That would make things worse based on his assumptions. He's capping demand and saying unless china sales go way up there'd be no buyers for the extra cars.... that's why he "doubled" non-china deliveries seemingly thinking that'd knock out 100% of backlog and there's no more demand beyond that.

There is, of course, SOME limit to demand for vehicles in this price class- but the idea previous #s plus existing backlog (which is a # he's also kinda guessing at) is exactly it is... a guess at best.

 

[mongo]

You don't? Was pretty widely discussed at the time...

https://twitter.com/x/status/984882630947753984

He also admitted (several times) to mistakes about service center number and location-- though his specific promises about fixing them and covering "all regions of NA (not just big cities) within 3 to 6 months." haven't actually happened 4 years later.

https://twitter.com/x/status/1052356093534302208

Elon making a high level decision regarding automation and also taking the blame for Tesla shortcomings is normal good management, not examples of micromanaging which was the original claim.

There is such a thing as OVER managing (i.e. micromanaging). We remember when he did that early in the Model 3 ramp, and Elon admitted that it did more harm than good. It appears he has learned his lesson on that.

If anything, fluffer bot and the 3 pack assembly issues show he likely was not involved in the super low level details until there were problems.

 

[Cosmacelf]

I like fart button Elon, I like flamethrower Elon. I hate that he’s turned into “I’m gonna buy Twitter so I can unban white supremacists and the reason my daughter doesn’t like me is because public schools preach communism” Elon.

If you unblinded yourself from your prejudices you’d realize that Elon isn’t likely to turn Twitter into more of a sewer. More radical views will be expressed on Twitter, but you’ll have tools to block them from your view. Of course, people who hate Elon will parade those tweets that organically only 40 people saw and deliver them to millions to see, buts that’s on the idiots who are going to be looking for trouble.

Elon knows that you don’t combat misinformation by suppression, you do it by debate. And if you don’t believe that, just look at vaccination take rates for let’s say the flu vaccine (which are really low this season). All this suppression of anti Covid vaccine talk has simply resulted in more people believing the anti vax narrative. The debate was never fully fleshed out, anti vaxxers found other forums to talk among themselves with pro vaxxers not taking part. The end result was much worse than if suppression hadn’t taken place.

 

[Skryll]

Margin isn't an option for me, as my accounts are IRA's, and the timing for going in big into options (even leaps) is too scary to me. I have, however, started converting TSLA to TSLL and plan to continue doing so slowly. Every big down day like we've been seeing lately, I'll convert another percent or two.

That seems... unwise.

 

[Runarbt]

https://twitter.com/x/status/1581507385029709826

Can someone smarter than me refute this?

If they even out the wave either exports all quarter, why the focus on China sales?

Troy focus on production capacity, nothing to do with demand.

 

[Runarbt]

You don't? Was pretty widely discussed at the time...

https://twitter.com/x/status/984882630947753984

He also admitted (several times) to mistakes about service center number and location-- though his specific promises about fixing them and covering "all regions of NA (not just big cities) within 3 to 6 months." haven't actually happened 4 years later.

https://twitter.com/x/status/1052356093534302208

That would make things worse based on his assumptions. He's capping demand and saying unless china sales go way up there'd be no buyers for the extra cars.... that's why he "doubled" non-china deliveries seemingly thinking that'd knock out 100% of backlog and there's no more demand beyond that.

There is, of course, SOME limit to demand for vehicles in this price class- but the idea previous #s plus existing backlog (which is a # he's also kinda guessing at) is exactly it is... a guess at best.

I don’t understand why the constant belief there are a demand issue.

Sure.. eventually, we are not there yet.

You can’t throw the demand card alas an answer to all questions about production/deliveries. Not sure why Gary, Troy and everyone else keeps doing this