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

[Usain]

I personally doubt megapack production will ramp as fast as he suggests in 2023, given the recession and macro economics. I also expect margins to rise on megapacks but not quite so aggressively and quickly.

Tesla energy is certainly starting to turn the corner, and I think within the next few years we will see it become a very meaningful part of earnings. It might take a bit longer yet to climb that bottom part of the exponential curve though.

I agree that the timing is uncertain. But my uncertainty is only based on the uncertainty of battery supply.

IMO, there is no uncertainty in Tesla Energy that is due to macro. The IRA is making sure that it's advantageous to purchase megapacks ASAP. And besides, by the time Tesla Energy gets through their backlog, the recession will be over.

 

[Nocturnal]

We are witnessing the kinky inverse Santa rally… I’m so excited

Looks like all of auto is in the same boat today. I guess that makes me feel better.

 

[WattsHappening]

So you are predicting production ramp will be limited by demand?
You are aware Q3 2024 is the earliest date for new orders?
Each MP is 3.9MWh. Under IRA that's $175,000 in credits assuming local cells and modules. Almost 10% of list price @100 units.

Edit:

Two configurations, 2 hour and 4 hour peak output.

Not sure why you think a recession has any impact of Megapack demand. This is a commercial product which is used for core energy supply purposes. There could be a major recession and still be sold out for a year.

As for the ramp and margins, not sure why you doubt ramping a product like it. It’s exponentially easier to manufacture, there’s only on configuration, and Tesla has stated they have enough battery supply to ramp it. In the event of recession and Tesla’s demand for its cars softens to where there’s even more battery supply available, it only speeds up Megapack ramp

Also as @mongo just pointed out, the credits Tesla gets from the IRA practically guarantees margins double from where they’re at today without factoring in the actual dynamics of Rampling production which will results in 3%+ margins even without the IRA

Ya, I don't doubt volume. With an 18 month backlog, sales will be limited by production, not demand. And clearly Tesla is ramping production as quickly as possible. The comment they are no longer constrained by batteries as they switched over to CATL LFP batteries is very encouraging.

What I can't wrap my arms around are pricing, cost and IRA credits to get to gross margins. That's a huge increase in GM. Hopeful they achieve it or at least get close.

 

[StealthP3D]

The 4 european countries with real-time car registrations have now reached an all-time high quarterly sales of Tesla cars: Electric Vehicle registrations in Europe: 14 countries, 90+% of BEV market

Don't you read the news? Demand can't be at an all-time high.

Someone must have hacked the servers at the licensing departments at the four countries with real-time registration data. /s

 

[Gray Man]

Nobody's hurt if they didn't sell. Spectacular buying opportunity. Fundamentals are sound.

I wasn't make a case about share price, but about the fundamentals. From a brand perception standpoint, it's probably better to steer clear of the social noise and focus on results. Certainly not as important as the results themselves, but brand reputation can have an affect on sales.

 

[Dikkie Dik]

Don’t forget there’s some serious demand for battery storage in Europe. This year Europe installed more than 40 GW of solar:

New report reveals EU solar power soars by almost 50% in 2022 - SolarPower Europe

www.solarpowereurope.org

In the Netherlands we have had multiple days this spring where solar and wind were producing more than 100% of our energy need, creating grid congestion.

Tesla has only just begun building grid storage in Europe with one in the UK and one in Belgium.

 

[Discoducky]

Don't you read the news? Demand can't be at an all-time high.

Someone must have hacked the servers at the licensing departments at the four countries with real-time registration data. /s

That is totally what happened after they drove off with e-fool e-fuel.

Porsche begins production of 'e-fuel' that could provide gas alternative amid EV push

Porsche officials celebrated the beginning of e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site.

www.cnbc.com

Did it actually drive? Anyone know?

It just says they filled it:

"Porsche officials celebrated the beginning of the e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site.

 

[Cryptkeeper]

Looks like all of auto is in the same boat today. I guess that makes me feel better.

As they say, "Misery loves company."

 

[StealthP3D]

As an investor, I know I'd rather have a publicly politically neutral leader for a business, rather than one that invites potential downside.

Have you checked out GM and Ford? I think they meet your investment criteria to a "T" (without the "T"). I couldn't even tell you the political affiliations of Mary Barra and Jim Farley. Plus, look how big their N. American market share is - you can't go wrong. GM said they are coming out with 30 new electric models by 2025 and Ford plans to be building 2 million EV's in 2026 in the US and China.

Check 'em out, they pay awesome dividends too!

/s

 

[thesmokingman]

That is totally what happened after they drove off with e-fool e-fuel.

Porsche begins production of 'e-fuel' that could provide gas alternative amid EV push

Porsche officials celebrated the beginning of e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site.

www.cnbc.com

Did it actually drive? Anyone know?

It just says they filled it:

"Porsche officials celebrated the beginning of the e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site.

They really should not have positioned this fuel they bought off a start-up against EV, instead it would have had some promise as an ICE alternative for the fleet of cars still existing in the world after the ICE bans for ex.

 

[elasalle]

has the gap filled

 

[LYTRIDR]

This is another important line from that thread:

https://twitter.com/x/status/1605375575983476736

Did you get that? 38% margins for Tesla Energy next year.

Tesla Energy is the reason I got into the stock in the first place. Tesla Energy eventually will be bigger than automotive and it is a much simpler business with much higher margins. The way I see it, the automotive business has been funding Tesla Energy's R&D until they can sort out the battery supply issues. That day is coming soon.

I like his analysis in general and share some of the optimism surrounding the under-reported and under-appreciated Tesla Energy Story. With that said, his analysis contains a fairly significant assumption to get to the 38% margin number.

https://twitter.com/x/status/1605407372414951424

In particular, he assumes something like a linear gross margin improvement that scales directly with scale. His estimates were something like 1% Gross Margin/GWh of production. To support this, he is using a couple of competitors' projected gross margins. This analysis seems quite optimistic to me, though it is good for a back of the envelope/napkin math first approximation.

While, I'm exceptionally optimistic, especially in light of the IRA benefits, that Tesla Energy will become a profit center in the next year. And while I am grateful to the Zerosumgame33 for highlighting the ramping of the Megapack factory, I'd be cautious doing modeling using the 38% margin for the near term.

 

[Singuy]

I like his analysis in general and share some of the optimism surrounding the under-reported and under-appreciated Tesla Energy Story. With that said, his analysis contains a fairly significant assumption to get to the 38% margin number.

https://twitter.com/x/status/1605407372414951424

In particular, he assumes something like a linear gross margin improvement that scales directly with scale. His estimates were something like 1% Gross Margin/GWh of production. To support this, he is using a couple of competitors' projected gross margins. This analysis seems quite optimistic to me, though it is good for a back of the envelope/napkin math first approximation.

While, I'm exceptionally optimistic, especially in light of the IRA benefits, that Tesla Energy will become a profit center in the next year. And while I am grateful to the Zerosumgame33 for highlighting the ramping of the Megapack factory, I'd be cautious doing modeling using the 38% margin for the near term.

Still confused by the IRA
Who is getting the battery subsidies? The maker of batteries or the maker of megapacks? One is catl/Panasonic and other is Tesla right?

 

[Usain]

I like his analysis in general and share some of the optimism surrounding the under-reported and under-appreciated Tesla Energy Story. With that said, his analysis contains a fairly significant assumption to get to the 38% margin number.

https://twitter.com/x/status/1605407372414951424

In particular, he assumes something like a linear gross margin improvement that scales directly with scale. His estimates were something like 1% Gross Margin/GWh of production. To support this, he is using a couple of competitors' projected gross margins. This analysis seems quite optimistic to me, though it is good for a back of the envelope/napkin math first approximation.

While, I'm exceptionally optimistic, especially in light of the IRA benefits, that Tesla Energy will become a profit center in the next year. And while I am grateful to the Zerosumgame33 for highlighting the ramping of the Megapack factory, I'd be cautious doing modeling using the 38% margin for the near term.

I agree that it's napkin math. But that's the best we've got for now.

Margins depend on scale. And scale depends on battery supply.

An interesting question that comes to mind is: How long will it be before it's more profitable to put an LFP cell into a Megapack rather than a car?

 

[LYTRIDR]

Still confused by the IRA
Who is getting the battery subsidies? The maker of batteries or the maker of megapacks? One is catl/Panasonic and other is Tesla right?

There are subsidies from every step along the way.

The Really Big Battery Deal In The IRA That People Are Missing - CleanTechnica

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News! When it comes to electric vehicles and the Inflation Reduction Act of 2022, almost all of the discussion has been around the consumer tax credit for buying an electric vehicle, including the interesting new...

cleantechnica.com

• 10% of the cost of battery electrode active materials
• $35/kWh of battery cell capacity
• $10/kW of battery module capacity (or, for a battery module that does not use battery cells, $45/kWh)
• 10% of the cost of producing a battery mineral.

Plus of course the 30% consumer credit that will increase Tesla's pricing power on new orders.

Which ones Tesla or CATL or LG Chem or Panasonic, etc. will receive are unknown to me, though some have claimed Tesla will get them all.

 

[Discoducky]

Still confused by the IRA
Who is getting the battery subsidies? The maker of batteries or the maker of megapacks? One is catl/Panasonic and other is Tesla right?

This video is good for starters:

Spoiler: Tesla gets them!

 

[Mengy]

Not sure why you think a recession has any impact of Megapack demand. This is a commercial product which is used for core energy supply purposes. There could be a major recession and still be sold out for a year.

As for the ramp and margins, not sure why you doubt ramping a product like it. It’s exponentially easier to manufacture, there’s only on configuration, and Tesla has stated they have enough battery supply to ramp it. In the event of recession and Tesla’s demand for its cars softens to where there’s even more battery supply available, it only speeds up Megapack ramp

Also as @mongo just pointed out, the credits Tesla gets from the IRA practically guarantees margins double from where they’re at today without factoring in the actual dynamics of Rampling production which will results in 3%+ margins even without the IRA

I don't think there will be a demand issue with megapacks ramping, but rather supply side issues due to the recession worsening for at least the first half of 2023, maybe longer.

I know what the ideal predictions are, I'm simply not expecting anything in 2023 to proceed "ideally".

 

[jerry33]

irate Ford customer called into Cramers show yesterday .. but now I see headline from him saying Tesla share of US EV market has peaked ... (Semi, CT, MQ ) .... hello ....

He's missed the point. There is no EV market, only the car market. Tesla is a very long way from peaking.

 

[Gray Man]

Have you checked out GM and Ford? I think they meet your investment criteria to a "T" (without the "T"). I couldn't even tell you the political affiliations of Mary Barra and Jim Farley. Plus, look how big their N. American market share is - you can't go wrong. GM said they are coming out with 30 new electric models by 2025 and Ford plans to be building 2 million EV's in 2026 in the US and China.

Check 'em out, they pay awesome dividends too!

/s

Look man, sometimes we can't find a company that meets ALL of our goals. Doesn't mean we can't have aspirations for some of our current investments. I think I'm going to pass on this one, Stealth. I wouldn't want my purchases to drive up the price of those great investment opportunities you've identified. Seems like it'd be discourteous of me to price you out of an opportunity that you yourself let me know about.

 

[30seconds]

@The Accountant are you following this account ?

https://twitter.com/zerosumgame33?s=21&t=SBOCQDK8HcdmVR4ft1lWlA

Good thread on mega pack ramp

https://twitter.com/x/status/1605375527099191296

A line from one of his tweets.
5/...By year-end 2023, TSLA will have deployed ~64 GwH of capacity, equivalent to an ~8x increase in GwH deployments over the TTM period ending 3Q’22, with upwards of $16B in gross profit contribution generated by TSLA existing and unconstrained 16K current MP backlog at Lathrop.

Would be awesome if Elon did the MasterPlan part 3 and laid out how Tesla is scaling