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

[bkp_duke]

I like the video, but Sandy is being a bit disingenuous when he says FSD sales are pure profit. Yes, it has very little effect on gross margins the way that Munro calculates such. But it does affect net margins or company profits. All the Dojo engineering costs, GPU supercomputers, very expensive AI engineers cost money. To answer Sandy’s question, that’s where all Tesla cash from gross margins goes to. I’m just not sure Sandy has taken into account all the FSD development costs in his FSD margin estimation when he says it is pure profit.

I'm going to side with Sandy on this one, regarding FSD. The R&D costs, GPU supercomputer, and Dojo dev costs, are very small compared to the cost of equipping each car with the hardware, regardless of if the client ever buys FSD.

Does your argument have some truth - yes. Dojo and the GPU supercomputer are costs, but they are not billions, which is literally what it cost Tesla to deploy the FSD hardware en masse, even though it is not used by everyone.

Is Sandy being a bit hyperbolic that it's "pure profit", only a tad. If you've given aware the hardware and already accounted for that in the COGS for the car itself, the rest of it is a very very small cost.

 

[insaneoctane]

I don't care for them but to be fair they did include the Model 3 as a finalist. Y was not included though. They said nice things about it at least.

Edmunds Top Rated Electric Car 2024 | Edmunds

The BMW i5 wins our Edmunds Top Rated Electric Car award for 2024. Read on to see how the i5 beat out its rivals to take the trophy.

www.edmunds.com

Guessing crash worthiness was one of the many important measures NOT considered in this "subjective" comparison

 

[navguy12]

Real FRUNK story.

Sometime ago I was buying 2x24 packs. Put both in the frunk. A lady from nearby car opens her window and says WTF - why did you put this in your engine. I had to do lots of expanation and demos. It was a real shocker to people that watched.

You mansplained her? Such a brave soul.

 

[lafrisbee]

Sandy Rant: Tesla Margins and Sandy was Right! | Munro Live on Youtube (30 min ago)

Wheeewie... Sandy was so hot his head was a flame red.

 

[scaesare]

And right in the Family Joules, VW Group:

Tesla Heat Pump | More Range in Cold Weather | Tesla on Youtube (1 hr ago)

In case you don't know why this is funny, here's this week's news from VW Group:

• Audi stops including heat pumps in Q4 e-tron due to semiconductor supply shortages - Drive Tesla
• VW ID.4 Is Being Shipped Without A Heat Pump Due To Semiconductor Shortage - InsideEVs
• Worst is over for global chip shortage, ABB chairman says - CNBC (2023-01-17)

The Universe maximizes irony! (but apparently not silicony)

This video raises a question I've had for a while... posted in a more approriate thread.

 

[mongo]

I like the video, but Sandy is being a bit disingenuous when he says FSD sales are pure profit. Yes, it has very little effect on gross margins the way that Munro calculates such. But it does affect net margins or company profits. All the Dojo engineering costs, GPU supercomputers, very expensive AI engineers cost money. To answer Sandy’s question, that’s where all Tesla cash from gross margins goes to. I’m just not sure Sandy has taken into account all the FSD development costs in his FSD margin estimation when he says it is pure profit.

Self contradiction, but FSD as a whole isn't 100% while sales of it are. The development costs are all included in R&D as incurred and are non variable. So FSD sales do pass through to net profit (when recognized). Further, FSD also handles the required safety features, so stopping FSD wouldn't remove all the dev costs.

 

[Nocturnal]

Guessing crash worthiness was one of the many important measures NOT considered in this "subjective" comparison

Ahem

 

[Sofie]

Does anyone think we will retest that 125$-126$ low again next week?

 

[TSLA Siempre]

Self contradiction, but FSD as a whole isn't 100% while sales of it are. The development costs are all included in R&D as incurred and are non variable. So FSD sales do pass through to net profit (when recognized). Further, FSD also handles the required safety features, so stopping FSD wouldn't remove all the dev costs.

In other words, marginal cost is close to zero, like for most software.

Probably a little more than zero, since there may be some additional insurance expense and other things we don't realize.

 

[hobbes]

Bitcoin Is Steady Despite Genesis Bankruptcy. Two Signs Traders Are Bullish.

Crypto traders remain optimistic that digital assets have fared the worst of a brutal bear market. Not even another bankruptcy has significantly shaken that.

www.barrons.com

Someting got mixed up, wanted to link another article on Barrons regarding Tesla in China:

Tesla Price Cuts a 'Huge Success.' Market Share Grows in China.

Wedbush analyst Dan Ives conducted a survey of electric-vehicle buyers in China. Tesla investors will like what he found.

www.barrons.com

 

[steve3]

Insightful and refreshingly presented assessment of S Korean battery makers by S Korean industry insider. Thread liked by Jordan G.

https://twitter.com/x/status/1616256419287760898

A favorite selection from the Google translate:
“8. S. Korean battery makers' Li-ion Battery is quite competitive at this moment, so auto makers around the world are sending love calls to those makers,”

 

[Curt Renz]

CNBC - 11 am EST
GM to invest $918 million in new V-8 gas engines and EV components

Excerpts

...It’s a signal that the company will keep relying on gas-powered vehicles for the foreseeable future....

...A majority of the investment — $579 million — will go toward preparing GM’s Flint Engine Operations plant in Michigan for the automaker’s sixth-generation family of small-block V-8 gas engines...

 

[Ogre]

Does anyone think we will retest that 125$-126$ low again next week?

Does anyone think next week will be defined by anything other than the earnings call?

I suppose it is possibly a boring call with no surprises good or bad… But I think we’ll see something and don’t think we’ll be flirting with 125 either way.

 

[Mengy]

CNBC - 11 am EST
GM to invest $918 million in new V-8 gas engines and EV components

Excerpts

...It’s a signal that the company will keep relying on gas-powered vehicles for the foreseeable future....

...A majority of the investment — $579 million — will go toward preparing GM’s Flint Engine Operations plant in Michigan for the automaker’s sixth-generation family of small-block V-8 gas engines...

I also enjoy burning money in my fireplace!!!

 

[2daMoon]

GM investing in engines made of vegetable juice?

Well, I guess that would be green, wouldn't it?

Can't wait until Mary Barra pulls the ripcord on her golden parachute and Biden can say, "You fled Mary, and it matters."

 

[Rashomon]

More like contribute to one official 0-60 time....

The Corvette eRay battery pack is a KERS type pack. It almost certainly consists of LiFeP chemistry power cells, similar to A123 power cells. These are very very low impedance, limiting thermal issues somewhat. The control system programming almost certainly restricts the range of charge/discharge to something like 85 percent max/15-20 percent minimum. Given the chemistry, cell design, and charge/discharge restrictions, it should be good for thousands and thousands of cycles. Battery life isn't likely to be a huge issue, though you can imagine some duty cycles that will use it up faster than others.

 

[WattsHappening]

I'm surprised at the relatively low trading volume today. With quarterly options expirations, I was expecting a heavy trading day. Not sure what, if anything, that means.

 

[UncaNed]

I'm surprised at the relatively low trading volume today. With quarterly options expirations, I was expecting a heavy trading day. Not sure what, if anything, that means.

I think it means that relatively fewer shares of TSLA were traded today so far, but I could be wrong.

 

[madodel]

Tesla Causes Used Car Prices to Plunge

Tesla is disrupting/destroying the used car market.

 

[Gigapress]

Sandy Rant: Tesla Margins and Sandy was Right! | Munro Live on Youtube (30 min ago)

P.S. Our feisty friend turned 73 yesterday. Happy Birthday, Sandy! (and remember to take your b.p. pills)

The money shot:

Emphasized that these numbers are “uber-conservative”:

• For example, not accounting for Tesla getting aluminum cheaper than base market price due to long-term purchase commitments
• Revenue is just base vehicle price; Does not include software revenue or hardware extras
• Does not account for $45/kWh battery credit (the 2022 numbers are from Giga Texas 4680 Y) which is about $3k off of the effective net cost
• This was most likely including ultra sonic system cost, which has now been deleted. We had varying estimates of a few hundred dollars total cost savings from that move.

The 2018 M3 numbers have not been adjusted for inflation to 2023 $$.

As Corey noted in interview with Farzad yesterday, a roughly $1k chunk of the cost increase since 2018 was due to adding the heat pump.

Sandy’s personal non-conservative estimate is 40% gross margin at current prices.

The team currently guesses that there’ll be upper 30% margins on Cybertruck, though obviously that’s not based on detailed hard data like the 3 and Y estimates and we don’t know what the actual prices will be.

40 second cycle time at the factory. Industry norm is 60 minimum.

For about the last year since I got into more detailed analysis, I’ve been estimating Tesla will get gross profits per car of substantially greater than $20k per car sometime in 2023 or 2024. It’s reassuring to see the Munro team getting similar numbers with much deeper cost estimation.