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

[StealthP3D]

There comes a point where you have to start digging into things on your own, and forming your own actionable views. 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.

I treat the back of the napkin profit numbers we have seen lately with a contempt reserved for all wild claims without supporting hard data. And that is about where our agreement ends. It appears to me like you are treating the energy storage business like a highly competitive market in terms of pricing. From where I sit, Tesla cannot produce enough to fill all the demand so, rather than extend their current backlog more years into the future, they simply assign a high price on their products and field services instead of having a lottery to see who gets a product that is in such short supply, relative to demand, that they cannot hope to saturate the market. And neither can any other battery storage provider. If and when Tesla's backlog diminishes, they will lower prices to keep their order books full, as necessary.

I've seen you mention time and time again how much competition there is in grid scale battery storage and yet, the fact remains, the operators cannot get their hands on enough installed battery capacity, soon enough. It's like claiming Tesla prices their EV's too high for mass adoption when they are actually scaling as quickly as feasible and selling every one they can make. They adjust prices to match demand. The fact that Tesla has higher prices than the rest is likely due to a better experience, perhaps a faster install, maybe customers find the product more reliable, I don't know and I'm not claiming to know. I'm simply saying that the higher price indicates strength, not weakness. Claiming that Tesla's high published prices indicates weakness flies in the face of basic economics unless you assume the high price is as low as Tesla can get it and still make a profit. And you have no data indicating that is the case.

No offense intended, but you don't need 30 years of grid energy experience to understand simple concepts. As an investor, I have to discount everything you've said that doesn't make sense given that grid battery storage is supply limited. And, as an investor again, I'm going to continue to watch the quarterly reports and management discussion for clues as to whether this is ready to take off yet or not. Analysts and the rest of the investment community will be slow to assign value to the energy business, if and when it grows into interesting volumes. It's currently being valued at zero, so no great loss if it doesn't take off.

 

[StealthP3D]

Absent retail FOMO (and that has evaporated across the board), all we are left with is equity funds and they do listen to analysts, at least partially. So it is good to hear what they say. At the very least, a cautious investor wouldn’t buy options outside analyst price targets.

I‘m not saying you should take their word as gospel (you’ll note that the quoted analysts don’t agree with each other), obviously their base cases don’t take into account a bunch of expected tailwinds (as the quoted analysts state above). But it is nonetheless data, use some or none of it as you please.

I'm saying it's a waste of time to try to extract useful information from a bunch of brokerage analysists. You do you, and here's a tip: using their opinions in a contrarian manner will give you slightly better results. Still not worth the time to try to divine anything from them.

 

[Singuy]

After trying for years to get a few PowerWalls, I purchased FranklinWH battery system. From my research, and I sell solar. the FranklinWH beats Tesla in every metric except name recognition. So far I am quite pleased with the system. I got an aGate (transfer switch and two xPowers (a PowerWall equivalent) here is a good video

You know without VPP, I don't even know why people get battery back ups unless you lose power constantly which I seriously doubt most people are. However with VPP and autobidder, you can get paid for having a powerwall which offset the cost over years. How are the competitors doing in this aspect?

 

[mongo]

I haven't found verification of this anywhere else-and article seems pretty circumstantial, in spite of the headline.

Q3 earnings call at around 58 minutes in youtube auto transcript.
"really excited about that which is a part of the plan that we discussed on battery day yeah um but then you know we're also building lithium Refinery and Corpus Christi um uh so we're we're making you know um putting our money where our mats"

 

[ByeByeJohnny]

Caution: Electrek

But this is cool!

Tesla fan files trademark for the company to make electric motors for airplanes & boats [Updated]

Tesla is hinting at making electric motors for airplanes, boats, and more in a new trademark filing that went unnoticed.

electrek.co

Haha. You gotta love how Fred fell for that.

Remember how a couple of months ago he was chastising everyone from bloggers to newspapers to the whole universe about checking the sources/details before printing your stories. Don't even remember what that one was about but he was so smug about not making the same mistake as everyone else for a specific story.

Guess he's as gullible as everybody else.

 

[30seconds]

I'm saying it's a waste of time to try to extract useful information from a bunch of brokerage analysists. You do you, and here's a tip: using their opinions in a contrarian manner will give you slightly better results. Still not worth the time to try to divine anything from them.

ok, if demand was not and is not a current issue why did Tesla need to have large incentives in December and why is the delivery miss vs guidance an outlier? If Tesla was expecting y/y 40% delivery growth they would have had many many many chances to guide the analysts down in calls (like every other public company knows how to do).

 

[30seconds]

You know without VPP, I don't even know why people get battery back ups unless you lose power constantly which I seriously doubt most people are. However with VPP and autobidder, you can get paid for having a powerwall which offset the cost over years. How are the competitors doing in this aspect?

If you have solar and are not grid independent it is pretty useful for time shifting.

 

[MC3OZ]

From my point of view, it is often easier to make the best product cheaper, than it is to make the cheapest product better.

I expect Tesla to have the best products from a combined hardware and software point of view, where possible,

And from there, I expect Tesla to ramp production volumes,, and make the product cheaper.

Always being the cheapest product and capturing all of the market is impossible, others may be prepared to subsidise products, and sell them for a loss.

Another good aim is always making a profit on the product, except for the early stages of a production ramp.

So the key questions I want Yes answers to are:-

• Does Tesla have the best product in this category?
• Is the product improving?
• Are they ramping production volumes?
• Are they lowering costs?
• Does the product make money?
• Do they have sensible plans for additional products, including cheaper products?
• Do they have a pipeline of product innovations ready for adoption?

The only product I give a definite No at this stage is the Solar Roof, I'm hoping that will eventually come good.

If all of the answers are Yes above, I'm unconcerned about a cheaper product taking some market share, because the chances are Tesla still stands a good chance of gaining sufficient market share.

When the price gap is sufficiently narrow, most people want the best product, not the cheapest product.
So the best product doesn't need to be the cheapest.

 

[StealthP3D]

The are production and cell constrained on Powerwall.

Stating the obvious :- Powerwall needs a redesign, probably a move to LFP, lower costs, and higher volume production.

Higher volumes and lower build costs will enable lower prices.

Let's see what the next 12-24 months brings.

If Tesla energy goes nowhere in the next 24 months it is an easy call, you are 100% right.

I'm still betting they know what is required, and plans are in the works.

Agreed on everything but LFP for Powerwall. I think it was only a year ago or so that someone suggested the Powerwall would be going LFP since stationary storage was not weight sensitive application. But Elon didn't hesitate to say that it actually was weight sensitive to due to the weight a typical wall is built to handle, installation difficulties (larger install crew) and the need for sufficient kWh leans towards the higher energy density battery chemistries. It's a premium product and energy density does matter.

They could change their mind, but that is the latest info I've heard.

 

[MC3OZ]

Agreed on everything but LFP for Powerwall. I think it was only a year ago or so that someone suggested the Powerwall would be going LFP since stationary storage was not weight sensitive application. But Elon didn't hesitate to say that it actually was weight sensitive to due to the weight a typical wall is built to handle, installation difficulties (larger install crew) and the need for sufficient kWh leans towards the higher energy density battery chemistries. It's a premium product and energy density does matter.

They could change their mind, but that is the latest info I've heard.

There are other alternatives like LMFP.

The main issues with Powerwall are production volumes and price, fixing production volumes will help to fix price.

If these can both be fixed without moving to LFP, then no need to move.

If they do need to move to LFP, some level of redesign is required.

 

[dhanson865]

Afeela = Sony/Qualcomm tech in a Honda car, pure EV joint venture.

preorders in 2025, customer shipments in spring 2026. Are you AFEELAing it?

Over 40 sensors, including cameras, radar, ultrasonic, and lidar, will be embedded all over the exterior of vehicle.

Turn down the sound for the 2nd video, it has views of the cameras and the lidar hump.

 

[Singuy]

Afeela = Sony/Qualcomm tech in a Honda car, pure EV joint venture.

preorders in 2025, customer shipments in spring 2026. Are you AFEELAing it?

You know what CES really needs beside all of these wanna be Tesla cars? How about having some new and innovative ways for people to charge reliably? My friend arrived at the Tampa EA charging station today with 1 stall out of order, 2 stalls charging at 30kwh, and 1 at full speed. These were put in 1 month ago brand new.

 

[insaneoctane]

As we (likely) head into a recession, companies will be competing more and more for fewer dollars. Some companies don't have to compete, because they have legal monopolies (California energy). I just received a new rate schedule. For me, I've already got solar, but it was sized pre-EV and on a plan that was far more lucrative with the time of day I produced energy. Today I'm paying substantially more per kWh too. My point is these rates are reducing the fuel savings advantages of EVs away, headed towards zero. Less money for new EV purchase premium. This is happening everywhere. While I can't speak for other countries, I know, in California, these rates will never go back down, even if the increase was justified by temporary cost increases. These energy increases while oil prices decline is a thorn in EV adoption.

 

[SmokyPeat]

There are other alternatives like LMFP.

The main issues with Powerwall are production volumes and price, fixing production volumes will help to fix price.

If these can both be fixed without moving to LFP, then no need to move.

If they do need to move to LFP, some level of redesign is required.

Yes, the redesign could be something as simple as a cabinet or legs that shift weight from the wall directly to the floor.

 

[Thekiwi]

Texas legislature to vote on automakers selling direct to consumers.

I am wondering if the announcement of the next Tesla factory is being held back until the Texas vote has been made.

In other words, if Texas doesn’t follow through - then Tesla might build the Gen 3 vehicle factory elsewhere rather than massively expanding GigaAustin beyond the already announced product lines.

 

[thesmokingman]

As we (likely) head into a recession, companies will be competing more and more for fewer dollars. Some companies don't have to compete, because they have legal monopolies (California energy). I just received a new rate schedule. For me, I've already got solar, but it was sized pre-EV and on a plan that was far more lucrative with the time of day I produced energy. Today I'm paying substantially more per kWh too. My point is these rates are reducing the fuel savings advantages of EVs away, headed towards zero. Less money for new EV purchase premium. This is happening everywhere. While I can't speak for other countries, I know, in California, these rates will never go back down, even if the increase was justified by temporary cost increases. These energy increases while oil prices decline is a thorn in EV adoption.View attachment 892481

Did you get the notice that SCE is raising rates, yet again?

 

[Ogre]

It’s a dynamic demand curve that changes over time. I think this is a fundamental misunderstanding people have had about demand for Teslas and EVs in general for about a decade now.

Microeconomic theory says that the demand curve for a good is a function of:

1. How much utility the good provides to consumers in the market
2. How many consumers are aware of the existence of the good
3. Of those consumers who are aware, how well they understand their own actual preferences and thus the utility the good provides

For Tesla and EVs, as with most new disruptive technologies, awareness and understanding remain low in the market at large while we remain in the early adopter phase. The reality is that most of the population still doesn’t really know about Tesla vehicles or most of the basic facts about them that most of us here have known about for many years. A lot of people literally are unaware that they don’t take gas, or still believe misconceptions spread by rumors and lies of the old guard who want to slow down the transition. Tesla’s lack of paid advertising has contributed to this lack of awareness and understanding.

The fleet itself generates new demand and the existing army of drivers is an education force teaching new converts. Because the rate of education is roughly proportional to the current number of owners, this is an exponential growth dynamic. Knowledge is spreading virally with the majority of the population still being uninfected, so to speak.

Marketing psychology also tells us that merely exposing people to a product repeatedly over time increases a sense of comfort and familiarity with it that increases likelihood of desire and ultimately purchase. This is one of the main reasons companies advertise in the first place: mere repetitive exposure. Teslas fleet performs a similar function simply by existing. The more people see Teslas in their environment, the more comfortable they feel about Teslas on a subconscious level. It goes from novel to normalized.

There’s also the “social proof” effect at play. Most people are uncomfortable taking a chance on something new, especially if they don’t have a lot of time to think about the options. Most prefer to outsource the thinking and risk to the more adventurous type of people who like trying new things. For most of human history, trying new things had a poor risk-to-reward ratio and meanwhile habits were fast and cognitively efficient, so this bias is built right into our brains. Many studies have shown people being more willing to do something, even illogical things, if they merely see other people doing it. They don’t even need to know or care about why other people are doing it. The underlying assumption is that there must be some reason so maybe it’s ok if I do it too. Nowadays, a lot of people are becoming more comfortable with the thought of buying a Tesla after seeing people in their neighborhood or people in their family or social circle getting them and enjoying the experience. This effect too intensifies as the fleet grows, creating a positive feedback loop of growing popular acceptance.

All of this is why we say “The more Teslas Tesla sells, the more Teslas Tesla sells”.

Year after year, skeptics have continually predicted demand growth for EVs and for Teslas tapering off, and they keep being surprised largely because they don’t understand this dynamic. Eventually the exponential growth will saturate the potential market segment and taper off, but I think we’re not anywhere close to that yet. Short term random factors like inflation, recessions, tweets, COVID waves, and gas price fluctuations can add noise to this trend, but the underlying trend is exponential demand growth.

While I wholeheartedly agree with this, there is another dynamic at play here.

A large percentage of the population simply can't afford a $60,000 vehicle. There are a lot of people who would love to buy a Tesla right now that simply cannot.

This is why I think the Gen 3 is so important. There are already huge numbers of people who lust after a Tesla and would buy one in a heartbeat if they were in reach. It opens up a massive wave of buyers.

 

[ZenRockGarden]

ok, if demand was not and is not a current issue why did Tesla need to have large incentives in December and why is the delivery miss vs guidance an outlier? If Tesla was expecting y/y 40% delivery growth they would have had many many many chances to guide the analysts down in calls (like every other public company knows how to do).

Because demand got all whacky in December due to the new tax rebates the public was expecting for Jan

 

[capster]

I predict we will see the articles in the main stream media about Elon and Tesla petering out a bit over the next several weeks.

 

[capster]

Presumably the Street buys calls as they back out of their short positions? They’ll be maneuvering to reap the dumb shorts while trying not to lose control of the share price and trigger a short squeeze I guess.

They have the ability to continue to short of course. There must be practical limits to the ability to naked short even if the SEC turns a blind eye. There likely may also be actual shares floating around earmarked to sell to cool things off if need be.

Or am I missing something in how this shell game works?