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

[nativewolf]

Giga what now?

It makes Gigawatt hours of cells. Or products containing or handling GW or GWh annually.
Lathrop makes 1,000s of Megapacks (which are Megawat hour scale), it may now be a Gigafactory.

(Technically, a kilo-factory would be 1,000x an old school factory. Mega 1,000,000x).

I think it is important to acknowledge that Lathrop is assembling not making cells. Reno and Austin and keto Make cells. As we watch battery sales it is important to keep your eyes on the cells.

 

[Gigapress]

Based on this trend, Q1 in Europe is going to end up below Q4 in deliveries. Not good.

Why would you linearly extrapolate the Q1 delivery trend when every single quarter has not had a linear delivery curve? The wave is being unwound which is gradually pushing it towards linearity but at least give better evidence like the count of ships headed to Europe before fear-mongering.

 

[NicoV]

Meanwhile, Tesla's average cost per car is trending down since Q3, management has repeatedly stated that prices of raw material inputs and shipping have been plummeting, and this year the proportion of Model Y in the mix is going to increase substantially. We're also going to be shipping cars far less distance on average and Berlin and Austin won't be dragging down average margins like in 2022.

As an example, 3 months ago the European natural gas price was 149 euro/MWh. Today it’s 42.2 euro. That must have an impact on Tesla’s production cost in Germany.

 

[mongo]

I think it is important to acknowledge that Lathrop is assembling not making cells. Reno and Austin and keto Make cells. As we watch battery sales it is important to keep your eyes on the cells.

Yah, I though I did ("Or products containing or handling GW or GWh annually"). I had to allow for Giga Buffalo where Tesla is making less than 1 GW of solar cells, but also produces Superchargers.

 

[InTheMiddle]

Am I the only one bothered* by what we refer to "Gigafactories"... technically, a mega factory should be 1,000x the output of what they used to call a factory back in the old days, and a so-called Gigafactory should be 1,000x the output of a Mega factory...

So at that rate, shouldn't Gigafactories refer to something that produces at least hundreds of millions if not many billions of cars (or whatever in makes) every year per factory?

*Bothered that we propagate innumeracy, which, IMHO, is not, shall I say, "satisfactory".

(See what I did there?)

I always assumed it refers to the GigaWatts of batteries output through the products, rather than the number of products?!

IIRC, the term Gigafactory first came into use when deciding where to place the battery factory; hence, Nevada was announced as Gigafactory 1. The “giga” is referring to the watts of batteries (someone please do the calculations for me in terms of giga-watt-hours of cells produced there annually), not count of cars (of which GF1 produces 0).

 

[WattsHappening]

Note out from ARK. Very succinct and good summary of Investor Day.

Added snark: I'm sure the Care Bears will completely ignore this as another case of hopium.


Tesla’s Investor Day Offered No Flash, All Substance
ARK Invest_Illustration_Tasha Keeney_Final_Circle 400 px By Tasha Keeney | @TashaARK
Director of Investment Analysis & Institutional Strategies
This piece was co-authored by Sam Korus, Director of Research, Autonomous Technology & Robotics.

Despite mixed reviews of Tesla’s Investor Day last week, ARK’s Tasha Keeney and Sam Korus found no shortage of important and exciting news. While many investors expected a flashy glimpse of its next generation vehicle, we believe Tesla shared news more profound than a product prototype: the roadmap for continuous cost declines associated with scaling production.

In our view, Tesla is likely to deliver on interdependent actions that should reduce vehicle costs by ~50% during the next five years. First, it will produce 100% of the controllers on its next generation vehicle. Second, it will switch to a 48-volt battery architecture that should reduce power losses by 16-fold. Third, it will use local ethernet-connected controllers to reduce the complexity of the wiring harness. These electrical architecture changes should cut costs and give Tesla more control over its supply chain at the component level. They also will enable Tesla to transition its manufacturing to a parallel assembly process, slashing its manufacturing footprint and wasted time by 40% and 30%, respectively.

By reducing its factory footprint, Tesla will be able to accelerate Gigafactory production, increasing the scaling velocity of both its fleet and its data engine. Tesla’s fleet currently drives more than 120 million miles per day in total and ~100 million in full self-driving (FSD) with its most advanced driver assistance. In contrast, Cruise and Waymo each has attained one million miles driven cumulatively with no one behind the wheel on public roads. While not a perfect comparison, relative to its autonomous driving competition, Tesla vehicles have traveled ~100X the cumulative miles and have collected ~50,000X the data. According to our research, data will be critical in the race to create and scale a fully autonomous taxi service.

In short, Tesla’s vertical integration seems to have given the company an edge that may take its less-integrated competitors years—if ever—to replicate. Don’t be fooled by tepid reviews.

 

[2daMoon]

Do you know how to present a persuasive argument without ad hominem insults and excessively negative tone? If so, why do you persistently choose to write in this manner? How does that help make the community better?

As shown in the charts linked by dhanson, Tesla's prices have simply returned to where they were before the pandemic on an inflation-adjusted basis (about 10% higher), except for Performance/Plaid variants which have gone from crazy-expensive to more reasonable. However, that actually might tend to increase overall average margin by convincing more customers to upgrade, because now the gap between base variants and P variants is smaller than ever. It's really not clear how many cars Tesla actually sold at the super-high prices they set in last March, because average revenue per vehicle only rose by a few thousand dollars over the rest of 2022.



Meanwhile, Tesla's average cost per car is trending down since Q3, management has repeatedly stated that prices of raw material inputs and shipping have been plummeting, and this year the proportion of Model Y in the mix is going to increase substantially. We're also going to be shipping cars far less distance on average and Berlin and Austin won't be dragging down average margins like in 2022.

Tesla also informed us on Investor Day that at the new prices the rate of orders still greatly exceeds the rate of production, and the most recent short-term trend is the prices creeping back up in response to this.

Expectations of imminent refresh and HW4 deployment also may have contributed to a short-term demand pocket. Beware of over-extrapolation based on short-term variation.

At no point has Elon said cars would be sold at negative margin to push more growth. On that Twitter Spaces discussion which I assume you are referring to, he said in the worst case Tesla would go to 0% margin this year, but I'm pretty sure the point he was making is that if there is a severe short-term recession Tesla will not slow down growth because the mission demands it and because that will leave them ready to push much more volume when good times return.

Long-term financial projections for this enterprise are inherently volatile. The error bars are huge, especially because we're dealing with ridiculous exponential growth and multiple simultaneous technology disruptions. I doubt even Tesla's own internal projections for 10 or 20 years into the future have much precision.

Here's what matters for the long-term:

​

1) Tesla has a huge lead in stationary storage with Megapack XLs and there are compelling reasons to believe that the gross margins will be 50%, if not more, at today's prices of $420/kWh and up. There's a huge amount of room to reduce price and make excellent profits as this business scales, and we need to grow volume by at least 25x relative to current production rates.​

​

2) Tesla makes cars that millions of people want and many millions more will want after they learn about the cars. The barrier presently is affordability, and the company presented a clear and credible plan for cutting the costs in half from $35-40k to $17-20k. Due to the extremely nonlinear relationship between vehicle price and quantity demanded and also due to the giant wave of consumer acceptance of EVs that's still just in the early adopter phase, it's safe to project that demand will be an order of magnitude larger than today's 2M/yr level *if* Tesla drops ASP to something like $30k. With an average cost somewhere around $20k, that would be ~$10k gross profit per car and ~33% gross margin, even better than 2022.​

How about, instead of vaguely telling everyone else how bad their modeling is, you present your own -- with specifics -- and provide the rationale?

Now if you'll excuse me, I'm late for the local Tesla cult meeting and I don't want to miss my chance to smoke the hopium pipe at the beginning of the ceremony.

Don't confuse them with the facts.

They have a story rattling around in their head that must get out, regardless of any actual detachment from reality.

 

[wipster]

At this time wrapping requires skilled installers. Until wrapping can be automated having it done at an SC would just cause headaches for Tesla.

Geez guys, didn't you read the tweet thread I posted yesterday? That's what being conjectured, automated wrapping on the different components of the vehicle (doors, fenders, etc) not wrapping as it's currently done after the car is assembled. The new method of assembly really lends itself to this possibility.

It's an idea (among many) that popped up after Tom Zhu made his comment about the cost of painting. And personally, I think it makes sense on a lot of levels, including color choice and color matching if the vehicle needs repair.

Tesla is all about innovation and this would certainly be one.

 

[Artful Dodger]

Don't confuse them with the facts.

They have a story rattling around in their head that must get out, regardless of any actual detachment from reality.

Lol, "short-for-brains".

Cheers!

 

[Drumheller]

A summary of the past 5 months of this thread:

 

[Electroman]

Hey, change in Twitter, preview coming automatically again in stead of just a link?
Very happy with that!

Hmm.. I thought that was always the case with most links like Twitter or Youtube.

 

[Nocturnal]

Geez guys, didn't you read the tweet thread I posted yesterday? That's what being conjectured, automated wrapping on the different components of the vehicle (doors, fenders, etc) not wrapping as it's currently done after the car is assembled. The new method of assembly really lends itself to this possibility.

It's an idea (among many) that popped up after Tom Zhu made his comment about the cost of painting. And personally, I think it makes sense on a lot of levels, including color choice and color matching if the vehicle needs repair.

Tesla is all about innovation and this would certainly be one.

I've been thinking about this as well. IIRC Elon had fielded a question about it in the past and the response was something like "we are thinking about it".

I'm not sure it would make sense though. It would tie that particular car to a particular buyer and make slotting orders more difficult. It would also mean needing to stock the various wrap colors at service centers (or somewhere). The real killer for me though is just thinking about all the customer complaints if the wrap isn't 100% perfect or if it get's scratched and they go ballistic. The vast majority of buyers have no idea what a vinyl wrap consists of and the pros and cons.

 

[AndrewZ]

As an example, 3 months ago the European natural gas price was 149 euro/MWh. Today it’s 42.2 euro. That must have an impact on Tesla’s production cost in Germany.

Just note that what most people discuss in terms of natural gas prices (and a lot of commodities) are futures contracts and there is uncertainty around how exactly prices hit consumption depending on how they were bought up. I think the tracked Dutch TTF contract right now is for delivery of the gas in April/Q2, and prices being realized today by consumers could be from futures purchased months ago.

Right now I think we’re seeing end-user prices for gas increase even though futures prices have come way down, exactly because of this dynamic.

 

[wipster]

I've been thinking about this as well. IIRC Elon had fielded a question about it in the past and the response was something like "we are thinking about it".

I'm not sure it would make sense though. It would tie that particular car to a particular buyer and make slotting orders more difficult. It would also mean needing to stock the various wrap colors at service centers (or somewhere). The real killer for me though is just thinking about all the customer complaints if the wrap isn't 100% perfect or if it get's scratched and they go ballistic. The vast majority of buyers have no idea what a vinyl wrap consists of and the pros and cons.

If Tesla implements it, I'm sure they will have it all figured out...

 

[Nocturnal]

If Tesla implements it, I'm sure they will have it all figured out...

Yes I feel that way across the board with Tesla. If they do something, I assume they will do it right. I just think it's unlikely in this case. (though as a customer I'd love it but I'm not the average customer IMO)

 

[2daMoon]

Demand problem supported by evidence on Teslarati...

Tesla sales jump nearly 90% in Germany during first 2 months of the year

Tesla sales in Germany have dramatically increased in the first two months of the year, motivated by strong demand for EVs generally.

www.teslarati.com

... that is, greater demand being a problem in that Tesla can't make them fast enough. ​

 

[GhostSkater]

On the Brazil topic, not something that is a problem but that there will have to be taken careful consideration, at least is quite a few places is Superchargers location

The model for the rest of the world that they are in a public space and open won't do well here, specially when some people figure out that Tesla owners that are plugged there are helpless to drive away without getting out of their cars first to unplug

For highway ones it's easy, we have quite a few big chains with awesome rest stops that work 24/7 with tons of food, gas and are safe even at night, but for inner city ones? Let's see what they do, having in parking lots would be nice, but most don't work 24/7

 

[ReddyLeaf]

So what just happened to cause the SP and market to dump?

 

[Stormy24]

So what just happened to cause the SP and market to dump?

NOTHING that’s what it does.

 

[lafrisbee]

Am I the only one bothered* by what we refer to "Gigafactories"... technically, a mega factory should be 1,000x the output of what they used to call a factory back in the old days, and a so-called Gigafactory should be 1,000x the output of a Mega factory...

So at that rate, shouldn't Gigafactories refer to something that produces at least hundreds of millions if not many billions of cars (or whatever in makes) every year per factory?

*Bothered that we propagate innumeracy, which, IMHO, is not, shall I say, "satisfactory".

(See what I did there?)

yes, yes you are.