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

[⚡️ELECTROMAN⚡️]

I get all your concerns but there is data that says Tesla has a backlog for almost 2 years for a product they plan to scale to 40 GWh / year. Do you think this is not the case? It seems, and Musk states that Energy growth will be 100% YoY. Don't you expect say 15 GWh of Energy products this year and say 30 GWh next year? What am I missing?

https://twitter.com/x/status/1610710673897684992

He’s also I trying to scare us with the idea of Elon taking Tesla private at some stupid low stock price, and screwing us out of millions. Is he just another carebear we should ignore?

 

[MC3OZ]

Is he just another carebear we should ignore?

IMO he is good contributor, and does have some valid points.

The "taking Tesla private" part has jumped the shark.

I also rated Tesla Economist Lee in the past, and it is a shame how that paned out. I hope people can resist kicking him while he is down.

All things considered 2022 was a very strange year, and there have been some very strange changed opinions..

 

[bkp_duke]

ok, this is nuts. Apparently the trademark about motors for boats, etc (non land vehicles) was not filed by Tesla, but rather by a Tesla fan w/o Tesla's knowledge.

https://twitter.com/x/status/1610782014747164677

My money is on @ZeApelido. Sounds exactly like something he would do.

 

[thx1139]

Hi thx1139. Canadian here so not up on how American tax incentives work for EV’s so bear with the stupid questions.

Does Tesla get any portion of this tax credit or is it just the buyer that gets a deduction on their tax return?

Thank you.

Buyer. Tesla gets credits for batteries and battery modules produced. Again Tesla will get more than any other manufacturer. Not just EV batteries either, Powerwalls and Megapacks also earn credits.

 

[Webeevdrivers]

Buyer. Tesla gets credits for batteries and battery modules produced. Again Tesla will get more than any other manufacturer. Not just EV batteries either, Powerwalls and Megapacks also earn credits.

Ok. That helps.

So tesla gets credits. Do they have moneyary value? Are they somehow factored in to taxes that tesla pays? Sorry. Not up on us corporate tax.

 

[thx1139]

Ok. That helps.

So tesla gets credits. Do they have moneyary value? Are they somehow factored in to taxes that tesla pays? Sorry. Not up on us corporate tax.

All scales and you cant start with a Model S pack of 100kwh gets $4500. Think powerwall is 10kwh so gets $450

 

[wipster]

So anybody know if the destination and sales fees are included in the MSRP? I just pseudo ordered a Blue YLR, with 20" induction wheels, white interior, EAP ($99 FSD subscription), tow hitch, and charging accessories, all priced at $79,990, not including destination or sales fees.

This would be what I would order if I was currently in the market. Qualifies for the $7,500 tax credit does it not? If the fees are included, I could subscribe to EAP as well for a $5k reduction.

Am I missing something here?

Design Your Model Y | Tesla

Design and order your Tesla Model Y, the car of the future.

www.tesla.com

Edit: forgot to include 7 seater. Thanks for the reminder @The Accountant

 

[Captkerosene]

Here's what various analysts are saying in the wake of the P&D report:

Consensus 2023 deliveries are 1.85mm. vs 1.31 in 2022, for an expected 41% YoY growth.

RBC: "Because of a greater focus on margins/profit, we are shifting entirely to earnings-based valuation metrics (avg. of EV/EBITDA and P/E, from avg. EV/Sales and EV/EBITDA). We now use 20x 2025 EBITDA and 30x 2025 P/E to get to our $186 PT [down from $225]." Note that RBC is projecting slightly lower than consensus deliveries for 2023, 2024, and 2025.

RBC: "IRA ... Model 3 Long-range subject to $55k cap but TSLA currently has no pricing on site, but we wouldn't be surprised to see it priced to qualify. However, IRS also appears to be leaning towards a rule that leased vehicles can get $7.5k credit and since these would be considered "commercial" then all TSLA vehicles may qualify if leased."

RBC: "Based primarily on updated deliveries, our 4Q22 revenue estimate goes to ~$23.7bn from ~$24.0bn. Visible Alpha consensus stands at $25.7bn, so a sizable revision should come. We model $250mm of credits. We model auto-gross margins ex-credits at 25.5% vs. Visible Alpha consensus at ~28.5%. Our diluted adjusted EPS decreases to $1.13 from $1.15 vs. consensus of $1.29. Our diluted GAAP EPS estimate is $1.02."

RBC maintains an outperform rating for TSLA. Upside scenario at $350/share, downside at $89/share.

Deutsche Bank: "4Q revenue forecast $23bn and gross margin at 26.3% (ex-credit), representing 50bps decline q/q leading to EPS of $1.00. Note that our 4Q estimates do not account for the expected one-time benefit from the company recognizing the rest of 40%+ in deferred revenue associated with FSD rollout in N. America. We estimate that including this benefit could boost 4Q gross profit by ~ $1bn and EPS by 24-26 cents."

Deutsche Bank: "Beyond the quarter, we expect challenging headlines around demand softening and associated price cuts to continue; recent reports already suggest Tesla may take an extended shutdown in Shanghai later this month around Chinese New Year."

Deutsche Bank: "Looking at the year ahead, we anticipate tailwinds from continued volume growth, diminishing ramp-up cost from Austin and Berlin eventually turning to COGS/vehicle tailwind, IRA benefits, lower raw materials costs, and ~100% FSD revenue recognition in N. America at ~90% gross margin. Main uncertainty comes from the macro environment and associated magnitude of price cuts required, as well as lithium prices. We now
model 9% reduction in global ASP as initial IRS guidance raises the risk the IRA consumer incentive of $7,500 may not benefit all variants of Model Y in the U.S., and we are tweaking down our 2023 deliveries estimate to 1.84m units (still +40% YoY), and revenue to $100.7bn." They are targeting 2023 EPS of $4.70,

Deutsche Bank: "All in, we lower our price target to $250 (from $270) based on the average of 40x our 2025 EPS and EV/sales multiple of 10x 2023 (both discounted back), reflecting slightly lower volume and reduced but still strong gross margin expectations. We continue to view Tesla as an EV leader in the autos sector thanks to its superior cost structure and agility in the midst of challenging macro conditions. In the near term, it is establishing more cost-efficient capacity to support meaningful growth. In midterm, the company is looking to launch its next-gen platform which should support multiple other vehicles and segments, and targeting $20k COGS/vehicle. Reiterate Buy."

Deutsche Bank: "Tesla is likely facing a mix of accelerated weak macro and some level of growing competition in China with compelling EVs that offer newer features. Relative to the U.S. and Europe, China is seeing more new credible products coming to market and ramping up in capacity. This year, competition has moved upward to the RMB 100-200k price segment (BYD, GAC Aion, Hozon Neta), away from low end mini car category (e.g., Wuling Hongguan, Great Wall ORA). In response to this, reports suggest Tesla is developing a revamped version of the Model 3 to reboot the appeal of the 5-year old electric sedan and lower costs meaningfully further. The redesigned model will move into production in third quarter of 2023 in Shanghai. Amid the accelerated weak macro and a more competitive EV market, pricing naturally becomes Tesla’s lever to pull, especially after several price hikes earlier last year."

Deutsche Bank: "We expect IRA to constitute a meaningful tailwind for the company, starting January 1. The battery manufacturing piece should amount to $45/kWh for the battery cells and packs made in-house (10 GWh capacity from pilot line in Fremont, and ramping up Austin capacity as fast as possible), and a piece of it to be shared with Panasonic for the batteries made by the JV in Nevada. The company has indicated in the Q3 earnings call that Austin’s battery output should be around 1,000 vehicle sets per week by the end of this year. We had previously estimated ... under the IRA, amounting to a ~$1,800/unit overall COGS reduction on a volume-weighted basis in the U.S, or ~$800/vehicle when averaged over global volumes."

Deutsche Bank: "Tesla indicated that it is extremely focused on its next-generation vehicle platform, which in our view should support several different top hats across multiple vehicle segments, as well as robotaxi. Development is well advanced, and SOP is targeted to be in 2024. The goal is for this platform to have a COGS of about $20k per vehicle (half of Tesla’s current one), and for Tesla manufacturing output of the vehicle to be twice as high as currently on similar footprint, with half the capex spent. Recall that the company had seemingly de-emphasized the development of the more affordable “Model 2” earlier on last year, to focus primarily on growing volumes of existing models at its current and new factories, and roll out its FSD software. This platform development would represent the re-acceleration of this effort for SoP in 2024, though the exact vehicle types are yet to be unveiled. We think this will be an important topic investors will look to understand better, given implications for volume trajectory in the years beyond 2023."

JP Morgan: 4Q EPS estimate at $1.16. "Our base case assumption is that y/y growth (while remaining impressive overall) is likely to decline each year from here on out (we forecast +26% growth in 2023, +24% in 2024, and +20% in 2025)."

JP Morgan: "...with significant capacity coming online in full year 2023 vs. 2022 (annual run-rate installed capacity as per the 3Q22 shareholder letter of >1.9 mn as Austin and Berlin ramp vs. 2022 deliveries of 1.3 mn), supply is unlikely to be the limiting factor for Tesla deliveries in 2023 that it has been in prior years, such that a material deliveries miss vs. expectation could be particularly injurious to long-term investor expectations. We are not materially lowering our estimates today (2023 goes to $4.60 from $4.84, 2024 to $5.15 from $5.35, and 2025 to $5.55 from $5.65) although we are reducing our December 2023 price target to $125 from $150 on expected multiple compression as growth expectations moderate."

JP Morgan has a underweight rating for TSLA. "Although both technology and execution risk seem substantially less than was once feared, expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition. Meanwhile, valuation appears to be pricing in upside related to expansion into mass-market segments well beyond our volume forecasts for the Model 3 and Model Y."

Citigroup: "Although the soft Q4 outcome isn’t entirely shocking given recent China COVID developments, the delivery miss (vs. reduced estimates & post recent price actions) will likely escalate concerns over NT macro/competitive demand pressures at a time when Tesla is adding significant capacity on existing products. At ~30x consensus ’22 EPS and with sentiment already quite negative, an argument can be made that much of the bad news is already priced in. But until gross margin visibility improves (Q4 results on Jan 25th), the stock might struggle to regain meaningful ground, and it doesn’t help that U.S. IRA guidelines appear to limit the $80k price cap to just the three-row Model Y variants."

Citigroup maintains a $176 price target.

We've lost control of the narrative. Instead of being priced on 2030 earnings in the A.I. industry we're being priced on 2023 earnings in the auto industry.

Elon says clear path to a 10X from here in the next five years. No more than 20% of that is from products we currently sell. Dojo, FSD (not not FSD), Bot is what is going to get us there. Pace of innovation needs to return as our defining metric. Multiple of sales not earnings. Feels like with Elon at TWTR innovation has slowed (no evidence to support that).

Where is the progress report on Bot? I thought they were going to give regular updates?

 

[Gigapress]

During the last year or so the Tesla Powerwall went from being a competitive product for the domestic segment to one where it is over twice the price, not available, not loved by its manufacturer, and no longer really competitive. But you wouldn't know that from listening to any Tesla quarterly investor presentation or reading any information that Tesla gives its shareholders. The utility-scale Tesla Megapack is by no means in that category as a product today, but then again three (or even two) years ago no-one would have thought that Tesla could so mis-manage the Powerpack's ramp as to complete give away the leader position.

Can you provide evidence that that Powerwall ramp was mismanaged?

The CEO gave a pretty clear explanation of what happened on the Q2 '21 earnings call:

We have a massive backlog in Powerwall demand that demand to Powerwall versus production is an insane mismatch. Now part of that problem is also the semiconductor issue. So we use a lot of the same chips in the Powerwall as you do in a car, so it's like which one do you want to make? Cars or Powerwalls? So we need to make cars, so therefore Powerwall production has been reduced. But as the semiconductor shortage is alleviated, then we can massively ramp up Powerwall production.

Maybe I’m misunderstanding what he meant but it kinda sounds like curtailing the Powerwall ramp was a deliberate choice, not a failure. I seem to recall a bunch of other comments in recent years about allocating scarce chips to cars at the expense of Powerwalls and Megapacks.

 

[scaesare]

I think he's anti-subsidy across the board... I suspect he's not in favor of eliminating subsidies for individual players, and then arbitrarily allowing them for questionable vehicles (like lame 3KWh hybrids).

As such, I suspect he may consider strategies to allow the best-selling BEV to participate....

(replying to myself here, lol)

I had forgotten to include in my response to @insaneoctane who said:

I strongly suspect that since Elon is clearly on-record as mostly anti-subsidy, he won't go for the clever gimmicky solutions floating around this thread. I think he'll support only solutions that take the high road like reduced MSRP, or only selling 7-seaters in US, etc. Just my subjective read on Elon.

One of the reasons I suspect Elon may go for a solution (gimmicky or not) to allow the Y to try and qualify is that, a decade ago, the then-existing $7,500 tax credit for EV's was limited to 200K vehicles per manufacturer. The credit phased out the quarter after the 200,000th vehicle was delivered.

Tesla deliberately stockpiled as many cars as they could, delaying deliveries for the quarter where they'd likely hit that, so they could deliver the 200,000th vehicle on the first day of the following quarter, giving a full 3 months for delivering as many extra vehicles as they could.

Given that this was a customer incentive, they went to that trouble and expense to maximize customer benefit. Of course, there's also the side-effect that it probably spurred more orders, but they already were production constrained and had a backlog, so not sure that the orders wouldn't have been there regardless...

Some might call that sort of deliberate delivery staging "gimmicky", but I think it's an indicator that Tesla is willing to try and maneuver things to help their customers (and the mission) to the extent realistically possible...

 

[The Accountant]

So anybody know if the destination and sales fees are included in the MSRP? I just pseudo ordered a Blue YLR, with 20" induction wheels, white interior, EAP ($99 FSD subscription), tow hitch, and charging accessories, all priced at $79,990, not including destination or sales fees.

This would be what I would order if I was currently in the market. Qualifies for the $7,500 tax credit does it not? If the fees are included, I could subscribe to EAP as well for a $5k reduction.

Am I missing something here?

Design Your Model Y | Tesla

Design and order your Tesla Model Y, the car of the future.

www.tesla.com

7 seater?

 

[wipster]

7 seater?

Yep, sorry should have included it.

 

[TN Mtn Man]

OK now, can someone explain something to me. Something I can't get my head around.

Last year (2021 production), Tesla's sales were up dramatically from the preceding year-if memory serves me, nearly 70% YoY. This year, they are up another 40%, to record levels. Stock price craters.

Last year, GMs sales were down dramatically-nearly 40% IIRC. This year, as supply chain issues are resolved, their sales are up from that low level a rather pathetic 2.5% (so still down somewhere just shy of 40% from 2 years ago). Stock price goes up.

I don't understand.

 

[jw934]

Cox Automotive Industry insights data forecast for full year 2022 US new vehicle sales places Tesla at 48.9% increase in sales and a 1.4% increase in market share. (Based on overstated forecast assuming they used analyst forecast, but should be fairly close to actual)

https://twitter.com/x/status/1610779513612378114

Source of data is from Dec 28. So, 8 days old - source

 

[Skipdd]

He’s also I trying to scare us with the idea of Elon taking Tesla private at some stupid low stock price, and screwing us out of millions. Is he just another carebear we should ignore?

I disagreed, because, like @MC3OZ , OP’s posts come with facts and lots of experience, both as an investor, as an owner/senior manager in the energy space, and are generally well reasoned. You don’t have to agree with him, but don’t slap a demeaning label on him because he is posting a contrarian view. I don’t share that view, but I still respect his opinion.

 

[Cosmacelf]

We've lost control of the narrative. Instead of being priced on 2030 earnings in the A.I. industry we're being priced on 2023 earnings in the auto industry.

Elon says clear path to a 10X from here in the next five years. No more than 20% of that is from products we currently sell. Dojo, FSD (not not FSD), Bot is what is going to get us there. Pace of innovation needs to return as our defining metric. Multiple of sales not earnings. Feels like with Elon at TWTR innovation has slowed (no evidence to support that).

Where is the progress report on Bot? I thought they were going to give regular updates?

Geez, impatient much? The last Teslabot update was only 3 months ago. I don’t expect a sellable product for another year at least.

I do agree that the analysts are only looking at what Tesla is selling now, extrapolating that out several years. They are missing much upside. But given that market sentiment is risk off right now, that’s the stock market pricing that investors are willing to buy right now. It’ll turn, just gotta wait for market sentiment to turn.

 

[mongo]

So anybody know if the destination and sales fees are included in the MSRP?

They are not.
Topic B — Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit | Internal Revenue Service

The MSRP for this purpose is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the vehicle at the time of delivery to the dealer. It does not include destination charges or optional items added by the dealer, or taxes and fees.

 

[tslagreen]

Anecdotal story: my daughter's friend's father decided to invest in Tsla after seeing the tragic Tesla cliff crash and how the passengers survived. Terrible story and I hope everyone survives physically and mentally, but shows the marvel of Tesla engineering and design.

 

[EVNow]

You could start with posing yourself the question of why buy a 10kWh domestic storage unit from Tesla at GBP 10k when you can buy basically the same thing from SolarEdge for GBP 6k, or from a Chinese clone for less.

That would be a tough sell - unless Tesla brand trumps SolarEdge and noname Chinese brands. Personally I'd be weary of noname brands because of safety concerns.

Are there comparable systems in the US I can research ?

 

[EVNow]

Again back to "dogma", but calling something that needs to burn gas for 95% of it's rated range an Electric vehicle is just a bit disingenuous, no?

I think we have discussed this PHEV thing a LOT over the years. BTW, we had Volt for couple years waiting for Model 3. Filled the gas tank only once because after a year (?) they want us to burn off the stored gas and fill in new