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

[StealthP3D]

I really cannot get my head around the idea that there are demand concerns. I've owned my new model Y performance (RHD) forabout 6 weeks now. I had to wait a YEAR to get this car. You still cannot just decide to buy a tesla here and get one the same day, not even close. And thats with just TWO available cars (S/X not here yet), and a choice of 5 colors in total, and 2 interiors, and zero advertising.
I would KILL to have a business that could so effortlessly shift £70,000 cars with a £30k profit and zero adveritising or marketing.

Anyone who thinks Tesla has a demand problem is just wrong. Its not a matter of emphasis, or a matter of being conservative or cautious, its just WRONG.
I'll believe they have a deman problem te day I'm sick of seeing TV ads and billboards everywhere trying to get new orders.

Ignore this idiocy.

To be fair, the big unknown for 2023 is how margins will fare. Not worried about demand, per say, because of Tesla's pricing power.

I actually look forward to margins getting squeezed if global economic conditions continue to deteriorate. I'm not predicting that, I pay very little attention to trying to forecast it since it's more important to position yourself to weather potential economic headwinds than it is to bail because you think the economy might get worse. But, should it happen, it will impact Tesla's competitors even more.

This is what many investors still don't get - they think that since EV's are "so expensive" they will take the brunt of the hit from any economic softness. The opposite will actually be true, at least for any EV manufacturer who has pricing power like Tesla does, because they will be able to sacrifice margins for sales while other manufacturers will sacrifice both margins and sales. That's a deadly combination depending upon how long it continues. And I know of no other EV manufacturer who has pricing power anywhere near Tesla's.

The IRA will probably help Tesla's margins from dropping too far, and the subsidies will function as a form of life support for legacy manufacturers in the US. This might simply delay what would have been inevitable, but perhaps not for long enough to prevent it. I really dislike the IRA because it looks to me like it will turn domestic auto into hybrid manufacturers (of a scale not envisioned before IRA). Some will say that's better than the status quo but I disagree, it would be better for them to go bankrupt so real renewal can begin sooner.

It remains to be seen how the economy will fare in 2023 and how the IRA will affect Tesla. I can see a range of possibilities with the most bullish ones looking pretty absurd and the most bearish ones looking more like a "time-out" than a catastrophe.

 

[petit_bateau]

That's the second time I've seen you refer to "smallbeer investors", the first time I thought it was a typo for "smaller investors". But now I'm wondering why you don't get yourself a bigger beer? After all, we are TSLA investors, not RIVN or LCID investors! /s

It was not a typo, not even the first time you noticed it.

In this context it is a humorous synonym for a position of relative weakness.

Very few of us private shareholders would be in a position to obtain restitution if we were to be financially disadvantaged from Tesla going private. I've watched Musk/Tesla very closely for many years before I personally was prepared to consider the risks had reduced to an acceptable level to invest (in 2018). Operational performance and associated risk for the vehicle segment has reduced over time, which is welcome. (And energy is going pretty much where I expected .... ). But I am very concerned re management and governance risk which in my opinion improved in 2018-20 but have been rising quite significantly in 2020-22. There are many strands to that discussion of which the going private proposition is only one strand. But in aggregate I am concerned re the totality of the management/governance risks.

To increase my beer strength in this context would require more firepower than I can amass. The responsible thing would be to reduce my exposure. I'm in profit so I could do that if I chose, unlike some others who are in less fortunate positions.

 

[FielderJones]

Model 3 and Y are not mainstream? First time I realized I am driving an odd ball car.

$60k cars are not mainstream, they are luxury vehicles. When I bought my Model 3 in 2019, I expect to pay somewhere in the $30ks, not the $45k that it ended up being. 3 and Y are popular and gaining momentum, but many people are locked out by the price.

 

[SN_8]

Maybe his "MISSION", actively supported by the state is to cobble up as many shares as possible?

What state is supporting this plan, exactly? His country of birth, citizenship, or residency?

 

[Matias]

China NEV insurance registrations in 5th week of Dec: BYD 55,706, Tesla 4,338, NIO 3,975

For the five weeks in December, November 28 to January 1, Tesla vehicles had 48,154 insurance registrations in China.

cnevpost.com

China registration stats

 

[ThisStockGood]

We just need 21 consecutive days of 5 % gain to reach our beloved ATH fyi

 

[Budding]

Kicking ass in Europe.
All numbers are out now.

Wiki - Tesla Europe Registration Stats

This wiki belongs to the thread EU Market situation and outlook. Click HERE (CTRL-click to open in new tab) to add new data using a Google form. Any forum member can contribute. We encourage you to do so! Your entry will appear after the data is double-checked by other volunteers. If the data...

teslamotorsclub.com

https://twitter.com/x/status/1610686216252395522

Remember Berlin likely should have sold about 30k. With higher production and exports from China, would have expected that total EU number to be higher. This likely means there is quite some inventory in EU too or just in transit.

 

[insaneoctane]

Not sure what the leadership at Tesla is contemplating in response to the IRA. I'd love nothing more than for Tesla to lower prices to work within the $55K cap and blow demand up through the roof. The MY/M3 should not need an $80K cap. That's a result of a production limited market that Berlin and Austin Gigafactories are the remedy for. Then get your crack legal team and go after any unfair application of the law. Go to the mattresses!

 

[Nocturnal]

I think people at the IRS likely ran the numbers using all the different vehicle criteria options at their disposal, printed off reports, sat in a board room or Teams, and picked the option that would create the least burden on taxpayers while still generating incentive for manufacturers and mineral miners/refiners whose operations they want brought into our shores.

How many ID4s, Highlanders, and Camrys are produced using North American domestic or free trade materials?

Regardless of what happens, I don’t think they’re putting an $80k cap on this vehicle and allowing prices to remain high or potentially even increase further. Prices need to come down, it’s the Inflation Reduction Act. If these are the best selling EVs in America, it’s all the more important that their prices do not go up and create more headaches for consumers and the Fed.

That's not the job of the IRS. Their mandate is to collect taxes and enforce tax law, not sit around and decide what interpretation would reduce the deficit or hurt Tesla. Furthermore, it's asinine to support some tax accountant sitting around and picking winners or losers. May as well have a fully planned economy if we want to abandon the market that much.

Never trust the name of any piece of legislation. They name them whatever they want to make it sound good, but they rarely actually do what the title suggests. The IRA was never about inflation.

$60k cars are not mainstream, they are luxury vehicles. When I bought my Model 3 in 2019, I expect to pay somewhere in the $30ks, not the $45k that it ended up being. 3 and Y are popular and gaining momentum, but many people are locked out by the price.

Average new car price in the US was 48k in 2022. Factor in cost savings from fuel and maintenance and that 60k car is pretty close to average.

 

[M|S|M MYP]

Ranting to squirrels in your backyard doesn't count.

Nor @ family gatherings either

 

[M|S|M MYP]

Way to go Bill...way to go....

Microsoft to invest in autonomous trucking startup Gatik -sources

Microsoft Corp is in advanced talks to invest in Gatik, a California-based autonomous driving startup, as part of its cloud partnership with the company, two people familiar with the discussions told Reuters.

www.reuters.com

 

[PeterJA]

... To recap, in my opinion, TE has - as far as I can see - lost the game in domestic. For utility TE has a chance for a long term play but it will need to raise its game far far higher than is apparent at present if it is to be significant and material....

I have not seen any reply from you to someone's objection that Chinese batteries won't dominate grid storage outside China because of national security concerns. Do you have an opinion on that?

 

[ZeApelido]

And this from GM.

"GM plans to build on this momentum in North America in 2023, growing EV market share with nine EV models on sale, including the Chevrolet Bolt EV and Bolt EUV, which was the bestselling mainstream EV series in the third and fourth quarter."

I just don't know how they can say something like that. Model 3 and Y are not mainstream? First time I realized I am driving an odd ball car.

Mary Barra: "In 2023 GM will increase our EV modelshare lead to 60% by introducing 100 new models".

 

[jhm]

I wonder if Tesla has ever considered going to a demand-based pricing model for vehicles. For example, set a target order book of, say, 21 days of production. On days when orders rise to 25 days or more, increase base price by, say, 0.25%. On days when orders drop to 17 days or fewer, reduce the base price by 0.25%. Most days the price just stays the same.

The flip side to this is that Tesla can prioritize the production schedule to maximize gross profit given whatever operational constraints are at play.

Such a system would find a price to maximize what customers are willing to pay while optimizing the mix for maximum gross profit. Customers will benefit from knowing that if they place an order today, it will most likely be built in about 3 weeks. If any want to hold out for a lower price, they can wait and see if the price will come down due to a slow up in order rate or a speed up of production. Buyers holding out for a lower price create a buffer for Tesla against prices dropping too low.

Anyway, that's my weird thought for the day.

 

[AndrewZ]

That's not the job of the IRS. Their mandate is to collect taxes and enforce tax law, not sit around and decide what interpretation would reduce the deficit or hurt Tesla. Furthermore, it's asinine to support some tax accountant sitting around and picking winners or losers. May as well have a fully planned economy if we want to abandon the market that much.

Never trust the name of any piece of legislation. They name them whatever they want to make it sound good, but they rarely actually do what the title suggests. The IRA was never about inflation.


Average new car price in the US was 48k in 2022. Factor in cost savings from fuel and maintenance and that 60k car is pretty close to average.

Well not the IRS, I guess it would be the Treasury who decided the criteria and such. And you can be sure they're employing experts in this field and have received feedback similar to mine, they're receiving comments from both sides and not only those who want the Model Y to be held to $80k.

The winners will be those who bring their operations out of China and other foreign entities of concern, because wrenching the supply chain out of their hands is the real intent behind all this. A $3750 credit, and it will be $3750 in most cases rather than $7500, will not decide which company wins and loses and that's evident in knowing that Tesla has not had these incentives for a long time while competitors have.


Just wait until the end of the year, people are freaking out about the MSRP caps but I'd like to see an EV battery that has no Chinese components and that will qualify for any of the credit in 2024. MSRP will be a minor concern before we know it.

 

[Ogre]

I wonder if Tesla has ever considered going to a demand-based pricing model for vehicles. For example, set a target order book of, say, 21 days of production. On days when orders rise to 25 days or more, increase base price by, say, 0.25%. On days when orders drop to 17 days or fewer, reduce the base price by 0.25%. Most days the price just stays the same.

The flip side to this is that Tesla can prioritize the production schedule to maximize gross profit given whatever operational constraints are at play.

Such a system would find a price to maximize what customers are willing to pay while optimizing the mix for maximum gross profit. Customers will benefit from knowing that if they place an order today, it will most likely be built in about 3 weeks. If any want to hold out for a lower price, they can wait and see if the price will come down due to a slow up in order rate or a speed up of production. Buyers holding out for a lower price create a buffer for Tesla against prices dropping too low.

Anyway, that's my weird thought for the day.

I was thinking something similar. Like Autobidder for car prices. Just imagine the day after the Superbowl rises, Tesla prices jump $5,000 then drop a week later. LOL.

 

[Ogre]

And this from GM.

"GM plans to build on this momentum in North America in 2023, growing EV market share with nine EV models on sale, including the Chevrolet Bolt EV and Bolt EUV, which was the bestselling mainstream EV series in the third and fourth quarter."

I just don't know how they can say something like that. Model 3 and Y are not mainstream? First time I realized I am driving an odd ball car.

They have a “special definition” of mainstream based presumably on pricepoint

Apparently they have quietly walked back their “20 new EVs by 2023” claim. They managed to launch 8 new EVs if you generously assume the Bolt EUV is a new model.

 

[hobbes]

In my opinion ....

- Global domestic clients are voting with their wallets for generic Chinese LFP storage. Except for the sort of client for whom the sticker is important, they buy Tesla. Oh, and some Americans. It is already game over for scale-dominance in this segment and Tesla lost the game.

- Global utility clients are cannier. They will never allow anyone to become scale-dominant. The ones who are susceptible to FUD ("no-one got sacked for buying IBM") or who cannot bring themselves to buy Chinese, buy Tesla. The rest buy Chinese LFP with perhaps a side-order of non-Chinese shrinkwrap splattered with Western badges as camouflage. Tesla is - I think - quite rapidly moving from a wining position to a losing position.

I skim read a lot of other folk out there on the web. Most of them get hung up on trying to figure out a bit of the Tesla storage offer. Mostly they miss the storage competitors. And they don't understand industrial dynamics. And they have no idea re the wider energy game. Plus they don't understand well how this meshes with automotive. So they've zeroed in on one leaf on one tree in one wood inside one forest on one continent in a big planet. Plus other stuff. That chap(ess) you linked to is at leaf-level.

After 30-years in the energy game; from oil well to inverter; wind to solar; hydro to battery; 12V to 1.2 million volts; classroom to factory to field .... I try to put things in context.

But that chap(ess) is still saying things that are worth reading, not ignoring.

(And if Tesla think I'm wrong, and wish the market to understand that, then Tesla should publish regular, reliable facts about both their own business and the global market; and answer properly posed questions from knowledgeable people.)

If I understand correctly your main point is that Tesla missed their chance to become a major/dominating player in the utility storage market. Do you think that will prevent them from still significantly growing their energy business if the market as a whole is growing so much that the better positioned Chinese companies cannot supply all of that market? Similar to the EV market that is growing so much that Tesla (who is in the dominating position here) cannot do it all alone? Possibly yours and zerohedges views don´t really contradict as much as it seems, yours being more about global scope and his about relative growth potential for Tesla energy?

 

[MC3OZ]

That is a very interesting Megapack thread, with worthwhile threads nested in it. Thanks for pointing us to it @Todd Burch . And I fully agree that it would be extremely helpful if Tesla would break out profits and margin for Megapacks as a standalone from solar going forward- particularly with Lathrop up and on line now, because I do agree with a portion of @petit_bateau critcism of my TE post from the perspective of Tesla Solar - a wonderful product that is in a highly competitive and growing market, and that will not likely see margins and revenue contributing in a manner many of us once hoped had Tesla been able to ramp faster. But then sacrificing Tesla Solar by borrowing their resources to save the Model 3 ramp was brilliant and necessary in hindsight. Tesla Energy Storage on the other hand……

From my experience with power plant operations, grid projects, and with Pacific NW hydro projects there is mind-boggling opportunity for Tesla Megapacks as a product for the grid, and as a VPP opportunity as @Dikkie Dik emphasizes. It was sincerely the catalyst for my original investments in TSLA in 2013. And the number of opportunities for Megapacks on grids supplied by power sources that can run efficiently through the off-peak hours - such as hydro and wind, is only beginning to be realized as we transition into EV’s and adopt more efficient residential and commercial loads. Megapacks will exist up and down nearby interstate corridors and highways for charging vehicles during the day from those off-peak surplus sources. And Megapacks will be distributed throughout both rural and urban areas connected to a grid supplied in part from additional off peak surplus power such as from new residential and small commercial rooftop solar - thereby further crushing the arguments that the existing grid can’t handle EVs, and while further reducing the need for natural gas peaker plants for those loads.

Megapacks will quietly kill pumped storage everywhere as well - both existing and proposed - and that is good for the grid and good for the Planet IMO. The logistics and permitting and cost to create a 70% efficient pumped hydro project are staggering. And the hard reality nobody wants to talk about is that pumped hydro projects result in further increasing water temperatures of our water systems that dump into our oceans by unnecessarily adding to the water temperature increases that were already brought on by the existing hydro system from slowing the flow of water and creating more surface area. For anyone familiar with impacts of water temperature on habitat and on fish - such as salmon migration impacts due to elevated river water temps, consider the the impacts of a further large titration of warmer waters back into those systems from stored pumped hydro sources. And anyone that believes that it is bad to increase our oceans temperatures should question this practice. Thus IMO based on closely following river water temps in these systems that we have not even began to realize the full extent of Climate friendliness of Megapacks compared to existing and proposed power systems people still view as very Green.

Hornsdale showed the world that Powerpacks (and Megapacks by default) weren’t just more profitable than anything else, they could be deployed faster than anything else too.

I am still waiting for the local grid to approve our big residential solar project. But I feel they would like to have the Powerpacks in that project online asap. And that is a metaphor for the difference in Tesla Solar and Tesla ‘Storage’ under the TE umbrella. The grid and large investors will buy every Tesla energy storage project as fast as they can acquire them, but The Grid needs to tiptoe into a world full of solar on every roof if they are going to be able to retain ownership of the new Paradigm being built as we speak. And when Tesla unlocks the ability to use 60% of our EV vehicle storage for residential storage- Back The Truck Up on VPP!!! We are looking at an additional 120 kWh of storage on our home project from our two 100kWh Teslas at that point. Once VPP is eventually approved in our state and are Teslas are connected through our Powerwall Gateways…..$$$$

If you are listening Tesla - please break out Tesla Energy Storage from Tesla Solar. It IS the Paradigm Shift of the Grid. And I still fully believe that it will provide a substantial amount of forecast stability to a significant portion of Tesla’s revenue under even the most dynamic macro economic conditions going forward.

Small point of difference on pumped Hydro.

In Australia there is a University called ANU which produced a report by a team headed by Blakers into smaller off-river PHS sites. There are thousands of potential sites from a geographic point of view they can be smaller and more choce can limit the environmental impact.

However, what is being built in Australia at present are mostly on-river systems and extensions to on-river systems.

Pumped hydro here is mostly being built / funded by government. Private investment is building and funding batteries in increasing number and size. Both have a role but batteries have the ecomomic edge, lower risk, faster return on investment, easier projects to do.

Being manufactured products batteries benefit from Wrights Law, Hydro is always a construction project, every project has it own challenges .

We are heading for a grid with lots of batteries which will often be competing with each other. When the hardware has equal capability any edge software can provide may be a competitive advantage.

I also think that there is a big opportunity for Tesla Energy in the battery area. There has been a long runway, but hopefully we are about to see a smooth take-off.

For Solar, others are doing a good job of solar R&D, driving down costs and scaling up production and deployment. From a mission point of view, there isn't an urgent need for Tesla to do more. It is a more competitive market, especially in manufacturing.

For a product like the Solar Roof, Tesla keeps trying for years, perhaps decades, long after others would have given up. Perhaps in the end persistence will yield results, but it seems to need another decade of refinement.

 

[30seconds]

Average new car price in the US was 48k in 2022. Factor in cost savings from fuel and maintenance and that 60k car is pretty close to average.

At some point Tesla hits the demand / price curve for 60k EVs. Either b/c buyers don't qualify for a $60k vehicle purchase or decide that the time factor for the gas / maintenance savings don't outweigh the purchase price disparity.

Part of the issue is that Elon has gone on for years saying there is absolutely no demand issues, and has now pivoted to point out that the rise in interest rates and macro economic conditions are affecting demand. To me that says that the company's current pricing for the current vehicle offerings is right on that curve.

With Tesla aiming for continued 50% growth, it will either need new markets and/or new products. I don't see annual 3-4m S/3/X/Y without less expensive variants. Even CT may add 1m annually, but probably not 2-3m given its size. Hopefully the March investor day will cover the new products.