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

[unk45]

There is no homeschooling going on at 0329, so I’m here for a bit.

44 TeslaPoints to whoever first demonstrates the parallel between what we have just seen from Tesla and what Henry Ford did between 1908 and 1913…and on through 1924.

Nothing new under the sun. But it sure is shining brightly.

Elsewhere - pretty good news this week from LKAB, but we’ve little in the way of details as to just *what* melange of rare earth metals they’ve discovered. Many are neither rare nor exceptionally useful, particularly in batteries/automotive.

You might have mentioned for the very young and/or non-historically inclined that the Ford logic and support was precisely analogous to that of Tesla;
-manufacturing superiority,
-scale economies,
-vertical integration,
-major supplier cooperation (think Firestone and Edison),
-etc...

 

[bkp_duke]

Again you are not reading what people are writing. The majority of cars delivered in q3 2022 were paid for in 2021, when model Y was 53k. In fact model Y was 53k q1 2022 as well. All the "60k" price hike happened after q1 2022 but Tesla didn't sell any with those prices because they were working through year long back logs. People were grandfathered into the price when they put down a deposite a year back.

So basically Tesla is going from 53k asp in q3 2022 to an asp of like 50k q1 2023. Tesla is not going from an asp of 53k to asp of 40k. That doesn't even make sense looking at the mix of prices when the cheapest sr+ is still 43k.

If this is true, and I suspect it is at least in part, then the "actual" price drop is small enough that the battery credit from the IRA will make up for pretty much all of it.

4D chess move there.

 

[Prunesquallor]

Why would a company lower prices when it has a ton of market share (BEV market share, not overall, in most places) *AND* has feature/value dominance? Fear? Uncertainty? Doubt? (insert your bias here with many handwringing posts)

Tesla is following its stated mission and the equation is simple.

As more factories ramp + pre-pandemic market prices return + COGS goes down + Tesla relentlessly innovates = margins go up.

Tesla is again, drastically increasing output as two massive factories ramp, thus better economies of scale, thus higher margins. The mission is not for higher margins so they lower prices to manage the backlog.

Higher production output lowers the backlog faster, thus lowering prices to an appropriate backlog to compensate for the higher production output.

The mission dictates accelerating the transition, well folks, this is what it looks like.

I partially agree. There is no need to emasculate the EV competition in the US since there really is none.

We know Elon has been worried about the severity of a coming recession. Tesla does NOT want to throttle production at Fremont and Austin due to recession-induced order drop-off. I suspect this was the primary rationale for the price cuts.

The OEMs’ little trip to the vet is a happy by-product.

 

[MrMoo]

Again you are not reading what people are writing. The majority of cars delivered in q3 2022 were paid for in 2021, when model Y was 53k. In fact model Y was 53k q1 2022 as well. All the "60k" price hike happened after q1 2022 but Tesla didn't sell any with those prices because they were working through year long back logs. People were grandfathered into the price when they put down a deposite a year back.

So basically Tesla is going from 53k asp in q3 2022 to an asp of like 50k q1 2023. Tesla is not going from an asp of 53k to asp of 40k. That doesn't even make sense looking at the mix of prices when the cheapest sr+ is still 43k.

Maybe you are forgetting that on the Q2 call Zach said this:



They were still selling cars at the old price, and hadn't fully gotten in to the new higher prices.

And in Q1 2022:


So the Q1 and Q2 margins were still heavily based on old lower prices, and the margins were still excellent.

@singguy I disagree, Troy has a chart showing the backlog in the USA. Q3 and Q4 has pretty much removed the backlog. The majority of cars delivered in Q3 2022 were not paid for in 2021, they were 2022 pricing. Think about it, the lead times are very low and inventory is building up. They have realised the new prices. There isn't a batch of 100k orders lying around that haven't taken delivery yet that paid in 2022.

@MP3Mike
This is correct. But now we are just doing the he said she said game. Bulls will argue that 2021 prices + No headwinds had Tesla selling at 32% margins so with volume and everything going back to Q1 2022 we'll have 32%+ Margins again (Less the discount).

And naysayers will say, no Q3 2022 was a good indication of the current environment and with this price cut it'll lead to even worse numbers.

This is going to be a time will tell situation.

 

[traxila]

How much higher? Because asp q1 2022 vs q3 2022, 3/y only went up 1k. This why extrapolating using peak prices is incorrect especially when Tesla was working through a year long backlog..you know, how people paid 2021 prices taking deliveries q3 2022.....

We took delivery of LR MX in Q3 2022. Paid less than the lowered prices now.

Also traded in a 2020 MYP for more than a new one is now but that another story

 

[Singuy]

If this is true, and I suspect it is at least in part, then the "actual" price drop is small enough that the battery credit from the IRA will make up for pretty much all of it.

4D chess move there.

Yeah people are cheering or sounding the alarm due to a price drop that is all psychological. This is a "oh man I am getting such a deal because price just dropped 11k" but in fact to Tesla, the price they collect barely budged.

Q2 2022 Tesla prioritized high trim cars because everyone wanted a Tesla when gas prices was 5 dollars. Those who ordered Q4 2021 and Q1 of 2022 had to wait until all the P Ys and 3s are delivered. Then they had to work through a massive backlog Q3 and this is why ASP didn't really move Q1 vs Q3, but only Q2 spiked.

 

[Prunesquallor]

Job of Forensic Psychiatrist testing mental capacity instantly became so much easier. Only one question:
Would you buy any vehicle other than a Tesla?

Glad to see you back.

 

[ZsoZso]

Lol *sugar* so i guess -8% on stock tomorrow.

That prediction came pretty close!
Although you are not as nostradamic yet as chicken genius, but getting there...

 

[SOULPEDL]

I'm being given a 3rd chance to buy an new Model Y. After declining in the txt msg this week, they are reminding me of the new sale price to make sure... I can't handle this high pressure sales! /s

So I thought that sale was only in China, didn't know USA as well. My problem is it was a Y 5-seater with no tax discounts. Here's a nice summary if anyone didn't see it yet on Tesla sales page.

Spoiler: Fed Tax Credit Summary for Tesla 3/Y

Here's something I can't figure out, the price vs mile range between the 4680 and regular. Something tells me there more than what meets the eye here. Why would anyone get the shorter range for same or nearly the same price? Unless Tesla is building inventory for an announcement and these have hidden gems to be revealed? I'm guessing, but something's doesn't add up.

 

[traxila]

Cowardly Citi, Wells Fargo and Guggenheim cutting their price targets and saying sell.

Pathetic, now you do this. Impress the hell out of me and foam out the mouth when it was at 400.

 

[Singuy]

@singguy I disagree, Troy has a chart showing the backlog in the USA. Q3 and Q4 has pretty much removed the backlog. The majority of cars delivered in Q3 2022 were not paid for in 2021, they were 2022 pricing. Think about it, the lead times are very low and inventory is building up. They have realised the new prices. There isn't a batch of 100k orders lying around that haven't taken delivery yet that paid in 2022.

@MP3Mike
This is correct. But now we are just doing the he said she said game. Bulls will argue that 2021 prices + No headwinds had Tesla selling at 32% margins so with volume and everything going back to Q1 2022 we'll have 32%+ Margins again (Less the discount).

And naysayers will say, no Q3 2022 was a good indication of the current environment and with this price cut it'll lead to even worse numbers.

This is going to be a time will tell situation.

"On Sep 30, the backlog at the Fremont Factory & Giga Texas was 190,000 units or 107 days of production." -Troy
This is AFTER delivering everything they can Q3, they still had a 190k backlog. This to me is saying they delivered everything ordered through Q1 2022, when the Model Y was still 53k.

 

[Prunesquallor]

… I have mixed feelings on Elons plans to open the supercharger network to other manufacturers. …

May have just become less of a concern.

 

[Unpilot]

Nice bounce happening...bet we end a certain color....think grass.

 

[FSDtester#1]

Nice bounce happening...bet we end a certain color....think grass.

Okay

 

[elasalle]

Under Pressure show

 

[scaesare]

(replying to myself here, lol)

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



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...

Aaaaaaand he did it again.

There's been a lot of debate here as to if this will have adverse financial impact to Tesla. And it may be so. But I take this as further evidence that The Mission remains Tesla's primary goal, customer benefit is a close second, and profit is 3rd.

Thanks Elon.

 

[Discoducky]

Why would a company lower prices when it has a ton of market share (BEV market share, not overall, in most places) *AND* has feature/value dominance? Fear? Uncertainty? Doubt? (insert your bias here with many handwringing posts)

Tesla is following its stated mission and the equation is simple.

As more factories ramp + pre-pandemic market prices return + COGS goes down + Tesla relentlessly innovates = margins go up.

Tesla is again, drastically increasing output as two massive factories ramp, thus better economies of scale, thus higher margins. The mission is not for higher margins so they lower prices to manage the backlog.

Higher production output lowers the backlog faster, thus lowering prices to an appropriate backlog to compensate for the higher production output.

The mission dictates accelerating the transition, well folks, this is what it looks like.

https://twitter.com/x/status/1613918013740154884

This is Tesla

 

[Gigapress]

I could go on, but you should really read @Gigapress's posts and @The Accountant on things like this. They have DEEP analyses that are historically pretty darned accurate. Not "cutting things by 2/3" like you did. LoL.

My projection for the elevated prices to more or less last through most of 2023 was dead wrong, unless this move just blows up backlogs again and Tesla is going to need to backtrack and tweak prices back up in the coming months. Lack of credit where lack of credit is due.

What was apparently accurate was the model showing that Tesla's Model Y, S & X margins must have been insanely good (circa 45%) with the $65k+ prices, and that these margins would enable deep price cuts in 2023 to meet volume growth goals if needed even while maintaining strong operating margins.

Also apparently accurate was discounting the noise and fear about Twitter shenanigans, alienated customers, competition, interest rates and recession. I argued that price would overwhelm all of that based on the strong price elasticity of demand typical of the car market. Now we are seeing the results. Customers stampeding Tesla showrooms, inventory evaporating and explosive growth in search interest far beyond anything we've ever seen before. Some of this is surely temporary and will cool off when the news isn't fresh and people aren't racing to get to the front of the order line, but it's still amazing.

Especially with respect to Elon's politics, I think this new market data can safely put to rest the hypothesized concerns that customers care more about that than they care about saving thousands of dollars.

As @ZeApelido shared, as of now Model Y worldwide search interest has immediately spiked by 8x and it's still trending up, absolutely crushing the previous all-time record for search interest set in March 2022 when fuel prices rocketed to record levels.

Using the last week baseline number, I made a modified version of the 12-month trend graph for a sense of scale. It literally is off the charts; I can't draw a line big enough in the allotted space.

 

[Artful Dodger]

I hope Tesla told whatever supplier they need for building the 7 seat vs 5 seat Y that they needed to increase their production by 10x.

I laughed way too hard because of this. I'm just picturing headlines "Tesla crashes US Government. Society in collapse. Elon Tweeting memes from his space bunker."

Lol, and we thought all the "Highlander" meant only one Megacasting. Who suspected it meant there can be only one Automaker (outside China)?

Cheers to the Longs!

 

[MrMoo]

That prediction came pretty close!
Although you are not as nostradamic yet as chicken genius, but getting there...

Lol I was reluctant to trade any positions around my guess so it was all just for fun.