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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Stretch2727
Engineer and Car Nut
Todays chart looks to me like someone selling on the market strength down to yesterdays closing price. (ok except for a short period during lunch. )
Maybe Elon selling what he can but not wanting to drive it to a new low? 144M shares traded is quite high.
Maybe Elon selling what he can but not wanting to drive it to a new low? 144M shares traded is quite high.
Interest rates can stay above five percent and the market can still explode upwards. What is important is that inflation has subsided and the FED has indicated that it is not dispatching search and destroy commando teams for 'overvalued' assets, but will be following inflation trends and reacting accordingly.
These five years the fed funds rate averaged well above five percent and hit 7% almost every year.
US ten year treasury bonds ran well over six percent at times. The way everyone speaks about interest rates now, you would think these numbers would have translated into a relentless multi year stock market massacre with arterial blood not only in the streets but flooding out and swamping coastal cities into the oceans. That's where all those fancy stock traders live anyway.
Instead we got this:
One of the most spectacular runs in the history of the stock market. Inexplicable to this day, but here is the takeaway:
If inflation drops to 3 percent and the recession either happens or goes away as an immediate possibility, there is absolutely no reason interest rates at this level will matter to a fast growing company turning big profits with no debt and huge cash on their balance sheet. The Fed Funds rate can stay at 5 percent forever, but if Tesla executes they WILL be awarded a minimum of a 40 P/E as long as they back it up with earnings growth. This can happen fast. We have seen it happen in both directions.
This is Tesla. There is no slow. When the runway is set look for this stock to explode upward until it once again goes to stratospheric heights .... and probably comes down 30 to 40% in a year at some point because this is the way the market works.
If you don't think TSLA is a good buy here, then you do not believe in growth stocks of any kind. I suggest you stop wasting your time on this board and invest in financial instruments that mirror your risk tolerance. Bonds, index funds and precious metals come to mind.
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StealthP3D
Well-Known Member
Yeah I'm pretty sure the biggest reasons for people not wanting Teslas now are:
1) Lack of real awareness of the product or EV ownership experience in general2) The upfront price still being high3) Service centers and charging infrastructure still not being filled out as much as people would like4) Residual bad perceptions of the quality or reliability from FUD campaigns and the relatively poor build quality of early Model S, X and 3 compared to today's output
Awareness
Awareness is most likely increasing as publicity surrounding Elon Musk is increasing. However, the main factor here is and probably always will be simply the current size of the Tesla fleet, because word of mouth and test rides remain the primary way people really learn about the cars. The more Teslas Tesla sells, the more Teslas Tesla sells. And pretty soon, the more Vegas Loop expands around the Strip, the more butts it puts in seats every day and thus the more Teslas Tesla sells.
It's hard to overstate just how little awareness there actually is of even basic facts. In my travels across most of the US this year, including even people living in the Seattle area where Tesla adoption is higher than almost anywhere on the planet, I've seen very little evidence of widespread understanding. For example:
- Friend's dad in Cincinnati was concerned that we'd get stranded driving our Model S rental while driving around Kentucky, Tennessee and West Virginia. He had no idea there were chargers all along the route. Both of the guys I went on that trip with now want to buy Teslas when they have enough money to afford it.
- Campground manager in Kentucky checking us in had never seen an EV before. When she asked what the make of the car was and I responded "Tesla" she asked "How do you spell that?" and then when she found out I was trying to charge the car (after wasps in the electrical box stung me and I asked her for help killing them) also later told me the regional manager had prohibited EV charging for blowing the fuses. I asked her the amp limit and she said 30 amps, told her the Tesla could be limited to less than that, and was met with a confused stare. I gave up and didn't charge.
- Family friend we stayed with in Nashville was amazed that the car didn't take any gas and we could just run an extension cord from the garage to charge it. He was very drunk but couldn't stop saying how cool it was for about 10 minutes straight, and he didn't even go for a ride.
- Random person in parking lot at Cumberland Falls was walking around our car staring at it, not realizing we were sitting inside because of the tinted windows. After we opened up and talked to him we explained that the handles are like that for aerodynamics and showed how they pop out automatically. He was impressed.
- In Oregon, a guy in campsite next to me was curious and asked about the frunk and where the motor is. Asked about whether the wheels spinning can recharge the battery and I explained regen braking and one-pedal driving. Was impressed with Camp Mode. etc.
- My brother and his roommate I stayed with in Texas started joking about wanting to split the cost of a Plaid after spending a week with my 3. He is also no longer considering an ID.4 for his next purchase and instead will wait for TSLA to recover and then hopefully buy a 3 next year with the gainz.
- Friend's mom visiting from India loved the car in general and was cracking up with Fart Mode
These examples were not isolated incidents I've cherry-picked, and the people ranged in all kinds of ages, personalities, genders, political leanings, and US immigration status. The frequency is high enough that clearly a pattern is there even though the sample size isn't huge.
Lastly, on awareness I would like to point out that Tesla still isn't advertising and they could if really needed to reach mainstream buyers. The advertising could just be simple, non-manipulative education campaigns, as we've discussed ad nauseam on this forum.
Price
Price is, or will be, addressed with the declining manufacturing, raw material and shipping costs as well as major subsidies coming in the US and most other major markets. Price will also be addressed as Tesla's production grows and they slowly sacrifice margins to massively expand sales volume. Finally, we still have ample opportunity for lower-cost models without any radical technology advancements from what the 3 and Y base versions with LFP cells currently have. Merely increasing manufacturing scale and removing most the luxury features could eliminate at least 10% of the cost, I think, as discussed in this post from October:
Service Centers, Quality Concerns and Charging
Service centers and charging infrastructure are still rapidly being constructed, and the mobile service fleet is rapidly expanding too. This will be less of an issue for buyers with every passing year.
Also, the amount people care about this will also tend to decrease over time for a few reasons. First, as knowledge and awareness increase, more prospective customers will learn that the cars don't need regular service and maintenance in the first place and will learn about mobile service being more convenient anyway. For charging, people will learn that they can wake up every morning with a full charge, which still today most people don't know or even if they do know, they don't really grasp the convenience of it compared to going to fuel stations. Then, for service the need for it is reducing over time as Tesla's quality improves, and over time customers will share these positive experiences with people they know and Tesla's reputation for not needing service will grow.
The new factories have much better quality than Fremont so the perception of bad quality will gradually improve just as it did for the Japanese automakers 50 years ago.
What Customers Actually Want
The elephant in the room really should be gas prices, not Elon's politics and craziness. Here's why: People care about gas prices and what the car offers to their lifestyle, and it profoundly influences their vehicle purchasing decisions within a given market segment.
Here's the results of the 2022 annual global consumer survey conducted by Statista on what American adults rate as the most important factors in car shopping. It's only a survey, so it's of somewhat limited usefulness, but these are pretty basic survey questions that avoid much of the problems that often come with surveys. Notice how fuel efficiency is the most popular deciding factor. Not listed, but probably implied, is that the car has the body type and features the customer wants to make it even be under consideration in the first place. Tesla does not yet pass this implied gate for the majority of car-buyers yet simply due to only having 4 models.
View attachment 887570
Source
I can't find more recent data online, but ten years ago Consumer Reports published very similar survey results ranking fuel economy, safety, value for money, quality and performance as the top priorities, and in 2010 a similar survey had again yielded similar results.
Consumer Reports Survey: Americans Say Fuel Economy Most Important Car Buying Factor - CR Advocacy
Nearly three-quarters of drivers would consider an alternative fuel vehicle for their next car May 22, 2012 YONKERS, NY — With fuel prices at near…advocacy.consumerreports.org
Survey: Car buyers most influenced by quality and fuel economy
Car buyers don't switch brands easily. According to a new Consumer Reports survey, 73 percent said they were somewhat or very likely to purchase the same make they currently drive the next time they shop for a new car....www.consumerreports.org
The representativeness of the survey results is more credible when viewed in the context of what non-Tesla car companies choose to highlight in their advertisements. It's almost always some mix of these same factors listed here.
For instance, look at what Honda highlights in their web page for the CR-V:
View attachment 887597
- Base MSRP
- Most important features
- Horsepower
- Fuel economy
How about the Toyota Camry? Again it's base MSRP, fuel economy, and some key features.
View attachment 887600
Here's the first ad on Honda's Youtube channel that's about the Honda Pilot. Again, they're selling features, price, horsepower, and fuel economy, plus an example of the car bringing the family together around music and offroad adventures, making the parents happy with their purchase.
And the Honda Fit ad. Wow, this one is also about features that enable lifestyle choices, and safety!
Let's delve into gas prices in particular, which has been identified as the most important factor. I'm focusing on US here because that's the place with maximum interest in US politics, though of course our stuff does leak out internationally, and because that's Tesla's biggest and most profitable market.
The Google search trend data still shows a strong correlation between gas prices and interest in Tesla and EVs, especially in the first few weeks following a large change in gas prices. The all-time high search interest on Google for Tesla since 2020, when Elon's political activism increased, occurred in the 2nd week of March 2022. This spike was 50% higher than even the one following the viral Cybertruck reveal event in November 2019.
View attachment 887621
Data sources: US EIA and Google
The outlier point in March is especially informative, as this was the week that the Russian invasion's effects suddenly spiked gas prices to the highest inflation-adjusted level Americans had faced since 2008, followed by another spike in Tesla interest in June as gas prices began to surpass even the March levels and set all-time records for prices at the pump. Furthermore, these interest spikes correspond precisely with the timing of Tesla's 2022 price hikes, as detailed in these posts I published in June.
The same kind of pattern occurred during the 1970s Oil Crisis. This was in a period in history when:
- A brutal war with Japan that ended with nuclear bombs being dropped on millions of civilians had ended only three decades prior, with many of the buyers at prime car-buying age having fought in that war or had friends and family who did
- Being openly racist towards non-whites and especially Japanese was socially acceptable in most of the US and there had recently been protests and violence simply over ending legally mandated racial segregation
- Japanese cars had a reputation for crappy quality and reliability, which was largely deserved given their historical track record in prior decades
- Americans had predominantly wanted big muscle cars with gas-guzzling V8 engines
None of this stopped the rapid market invasion of Toyota, Honda, Nissan, Datsun, and Subaru from approximately 1973 to 1983. The market share of Japanese imported cars in the US market roughly tripled to capture about a quarter of the car market in the US by the early 80s, while the domestic car companies saw major declines in sales.
As Tesla prepares to move into mass-market segments for the middle class, the operational cost savings of owning a Tesla vehicle relative to an ICEV will be a greater portion of the overall total cost of ownership, and these buyers are also more cost-sensitive than Tesla buyers have been up to now. Gas costs and maintenance costs are approximately the same for luxury cars as for economy cars of the same size, weight and horsepower.
Conclusion
Considering that Tesla still dominates at energy efficiency, safety, value for money, features and performance, I think that consumers will keep wanting to buy them in ever-increasing numbers. Government policies, infrastructure, improving EV awareness, and other macro factors will continue to drive EV demand in general, providing a tremendous tailwind.
The fact that Tesla is winning in every category that most people actually care about might have something to do with why the Model Y is the best-selling vehicle of any kind in all of the markets that are ahead of the curve on EV adoption (except China where a smaller percentage of the population can afford the price of a Y). This is occurring despite all the temporary roadblocks to EV adoption and despite Tesla having the ability to cut prices by $15k and still earn margins somewhat better than comparable crossover SUVs. I'm just saying...
Excellent analysis and real-world insights. I especially liked the parts you hid behind the spoiler!
People who think Tesla is developing a demand problem need to re-think their assumptions and step away from the edge of the cliff.
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KBF
Model X owner (formerly Cdn Signature Model S)
Yeah, I thought I was done, but sub 140 is quite the Boxing Week sale... I scraped together some dividends that were sitting in my portfolio and picked up a few TSLA shares, too. Not sure what poor souls are selling at this price - margin calls and covering shorts, I suppose... The fundamentals couldn't be stronger, especially with Energy coming online...
You just outed yourself as a poser.
A real mountain man makes his moonshine in a bathtub in his basement.
Krugerrand
Meow
He walking this year? Backwards?Here comes Santa.
I've brought up this point time and time again and this person won't acknowledge it so you're probably wasting your time.
There have been plenty of times where Fed fund rate was 4-5% and the markets and economy did just fine. The Feds are already telling us they're going to tap out around 5%...the idea that this going to lead a massive recession is simply speculation that doesn't have the facts to back it up.
Absolutely advantages companies that throw off cash/make a profit like Tesla relative to startups that either need to borrow or need to raise equity $. As long as interest rates are elevated, early stage companies are at a disadvantage. Tesla is able to grow without debt or more equity, so it is going to be fine.
Edit: In such elevated interest rate environments, Tesla is also advantaged relative to highly indebted mature companies like most of the legacy automotive sector.
Nope he’s not selling it’s the blackout period. Ends sometime in January
maybe its time for a reverse 2:1 stock split, citadel having to buy all those shares would be fun to watch
longer in Mexico? are you concerned about the environmental groups fighting for the anthills in Mexico the way they did in Germany?
JRP3
Hyperactive Member
Why do you think a statement made months ago that Tesla has plenty of batteries means the posters who said Tesla has plenty of batteries had their head in the sand?
Perfect information. Makes the number crunching much easier.
With your monicker, I thought you were the deliverer, not the pickerupper.
There are constraints in Mexico that you wouldn't run into in Germany and they have to do with archeological impacts; however I doubt they'll run into any difficulty in that portion of Mexico unlike the issues they're currently running into in Yucatan Peninsula where they're trying to build a modern railroad and each new dig reveal new discoveries about the Maya and even earlier civilizations. Great read about it in the WA Post yesterday, hopefully not paywalled:
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