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

[UncaNed]

This is a good question and, to be clear, I’m not very confident in the timeline for Tesla to get into medium-duty work trucks. It’s quite possible it might take until 15 years from now or something like that. The clean commercial vehicle subsidies in the US, with their 2032 expiration date, make for a strong financial incentive to get started in the 2020s, but maybe despite this it will make sense to focus on other segments and postpone these models. Nevertheless, I have higher confidence that Tesla will at some point in the future make a fuller lineup of work trucks in between today’s Cybertruck and the Semi.

The Master Plan includes all major modes of terrestrial transportation, because the goal is a complete transformation to sustainability. Tesla is explicitly planning to become the largest automotive manufacturer the world has ever seen, and it would be surprising to me if Tesla permanently left any major vehicle classes totally untouched. Also, to my knowledge they’ve never said the 20M/year target will be a steady-state end point. It was set just as an approximate milestone intended for 2030. Elon said on Investor Day that around ten vehicle models will be in play for the 2030 plan. With S3XY, Semi and CT we have six we know about. (Roadster will have negligible volume and it’s probably not counted in the estimate of ten models.) A van, smaller hatchback, and dedicated robotaxi all seem very likely, taking the count to nine. That leaves some room for another model or two, which might include a medium-duty work truck.

Timing aside, I anticipate at least some of the following coming in the long run:

• Class 3 dually Cybertruck
• Smaller Cybertruck (last we heard, this is already in the plans)
• Class 6 or 7 day cab box truck for local deliveries
• Class 4 customizable flatbed truck

The Semi isn’t needed to reach 20M vehicles per year, yet Tesla has already started to sell it, so evidently they’re not targeting solely the highest-volume segments. Some of the reasons Tesla gave for this decision are that diesel semi trucks consume a lot of fuel per vehicle and contribute significantly to human health and environmental problems. Diesel engines tend to be worse than gas engines in terms of noise and hazardous pollutants likes particulates, nitrous oxides, and aromatic hydrocarbons. The same problems apply, albeit slightly less, to mid-market trucks. So, the same logic for Tesla entering this segment might apply as well. Work trucks can be even worse for breathing hazards despite being smaller than semis, because they are commonly parked on job sites with their engines left running, spewing toxic fumes around all the nearby workers.

Tesla’s vehicle engineering advantages make a bigger difference for trucks than for passenger vehicles, mainly because of the intense power demand for trucks and because of the buyers caring more about factors such as cost, reliability and longevity. Competitive work trucks generally will require:

• Batteries with high energy density
• High-power, low-cost charging
• Powertrain efficiency
• Structure that can bear high loads for hauling, towing, and off-road driving

The energy density requirement is why Cybertruck and Semi will be using Tesla’s 4680s with nickel cathodes instead of cheaper nickel-manganese or iron-phosphate cathodes. Nobody except Tesla currently has a viable technical path for going full-nickel with zero cobalt. Also, the technology from Battery Day should lead to Tesla’s nickel batteries lasting longer than comparable batteries from competitors. In particular, better thermal control and dry electrode deposition should help a lot with longevity. Tesla’s V4 chargers and battery-to-wheel powertrain efficiency are industry-leading. For structural strength, the gigacastings, structural battery pack, and Cybertruck exoskeleton design deliver best-in-class performance by a wide margin. This translates to more strength with the same mass or an opportunity to reduce mass and save money while increasing energy efficiency. These same advantages would extend to mid-market work trucks and enable Tesla to have a big lead on total cost of ownership and other characteristics professional truck buyers care about.

This is why I’m thinking Tesla will produce these trucks in the long run.

I'd have been very happy if they'd offered a "delete rear seat" version of Model X, and doing the same with Cybertruck creates simple camping/cargo friendly versions at no design cost to Tesla, they just leave lots of parts out.

 

[wtlloyd]

Maybe I didn't understand it correctly, but am in the "it's no big deal" camp. How is they camp dangerous? What are you promoting? Sky is falling and we should all bank run tomorrow? Maybe it's more correct, but certainly more dangerous to our institutions.

Pretty sure I've never given you a downvote before. Are you being disingenuous? Even I can understand what unk45 is saying, and I'm a guy who wore the t-shirt "What do you mean there's no money, I still have some checks left" all through the '90s!

 

[Krugerrand]

Expect some vandalism if you are an early owner.

Sure. Give it a go, peeps. Forget the sledge hammer, but highly suggest a steel ball the size of a man’s - well, something that fits nicely in the hand with some heft behind it.

I actually believe there will be little targeted vandalism. It’s called Tesla glass, stainless steel and sentry mode, but more importantly people will be too awed and intrigued. Cybertruck will stop all in their tracks beyond any level that Model S, X, 3 or Y ever stopped people to gawk.

 

[Singuy]

Pretty sure I've never given you a downvote before. Are you being disingenuous? Even I can understand what unk45 is saying, and I'm a guy who wore the t-shirt "What do you mean there's no money, I still have some checks left" all through the '90s!

It was initially light on details when I responded. He edited his post with way more details. Thats why I said I may have misunderstood it correctly initially.

 

[Ogre]

Cybertruck has to be a better value and clearly superior to ford, Chevy and dodge.

Every 2 bit analyst and armchair strategist on the planet is busy second guessing what the best strategy for the Cybertruck intro should be.

Meanwhile, the best strategy for Cybertruck is exactly what Tesla announced 3 years ago. Release a truck which is an irresistible value even to the many/ most ICE truck buyers. People keep second guessing what Tesla should do. Higher prices, etc... but Tesla had a rock solid Cybertruck plan from go.

The only question mark is where Tesla can price it and retain their margins.

 

[capster]

Sure. Give it a go, peeps. Forget the sledge hammer, but highly suggest a steel ball the size of a man’s - well, something that fits nicely in the hand with some heft behind it.

I actually believe there will be little targeted vandalism. It’s called Tesla glass, stainless steel and sentry mode, but more importantly people will be too awed and intrigued. Cybertruck will stop all in their tracks beyond any level that Model S, X, 3 or Y ever stopped people to gawk.

I expect there might be some vandalism of my Cybertruck—something to do with the “Diesel Exhaust Kills Kids” bumper sticker I will have made and my yet to be revealed vanity plate.

 

[Open Interest]

Not quite so fast. The imminent failure was obvious when long Treasury rates began to rise late in 2022, precisely because CVB was deeply concentrated in long Treasuries unhedged. Regular reporting made that clear and made large SVB losses inevitable.

That did not explicitly forecast demise but certainly major trouble. Traditionally FDIC hunts for a takeover plan before the failure so that happens often within hours. SVB was not very easy because:

SVB had almost no conventional retail deposits with risk assets predominately of startups unlikely to be attractive to bank takeover candidates. This one is hard because it is so unlike any other major bank.

As a longtime Relationship Manager for community banks, I don’t understand how SVB could make a high concentration of loans to start-ups. Banks typically require a solid track record of profitability supported by CPA reviewed or audited statements, and collateralized by assets with values established by audit or appraisal, before approving a loan or line of credit.

The old adage that banks only make loans to people who don’t need money is somewhat true. Young companies without proven results usually have to go outside conventional banks for funding. Every bank I’ve worked for has policies that scrupulously adhere to federal and state regulations otherwise consequences are severe. We typically have multiple audits per year from different agencies.

So it’s true that this is unlike other major banks. But this is a federally regulated bank with FDIC insurance, subject to Federal regs and presumably frequently audited. So where were the regulators?

 

[unk45]

As a longtime Relationship Manager for community banks, I don’t understand how SVB could make a high concentration of loans to start-ups. Banks typically require a solid track record of profitability supported by CPA reviewed or audited statements, and collateralized by assets with values established by audit or appraisal, before approving a loan or line of credit.

The old adage that banks only make loans to people who don’t need money is somewhat true. Young companies without proven results usually have to go outside conventional banks for funding. Every bank I’ve worked for has policies that scrupulously adhere to federal and state regulations otherwise consequences are severe. We typically have multiple audits per year from different agencies.

So it’s true that this is unlike other major banks. But this is a federally regulated bank with FDIC insurance, subject to Federal regs and presumably frequently audited. So where were the regulators?

This is the best question of all. No risk officer for most of 2022, giant unhedged long treasuries, startup loans, 90+ % jumbo deposits (most from startup funding?), highest average salaries in insured banks … the list goes on..,UK & India operations mimic?
The last time I recall a thing like this was BCCI.
On the surface this seems fraud free. Where were the CAMEL rating warnings?

The question is if this will affect Tesla apart from losing a few thousand high paid buyers?

 

[Cosmacelf]

As a longtime Relationship Manager for community banks, I don’t understand how SVB could make a high concentration of loans to start-ups. Banks typically require a solid track record of profitability supported by CPA reviewed or audited statements, and collateralized by assets with values established by audit or appraisal, before approving a loan or line of credit.

The old adage that banks only make loans to people who don’t need money is somewhat true. Young companies without proven results usually have to go outside conventional banks for funding. Every bank I’ve worked for has policies that scrupulously adhere to federal and state regulations otherwise consequences are severe. We typically have multiple audits per year from different agencies.

So it’s true that this is unlike other major banks. But this is a federally regulated bank with FDIC insurance, subject to Federal regs and presumably frequently audited. So where were the regulators?

I don’t think it was SVBs loan portfolio that was the problem?

 

[skybluecgreen]

Futures open higher. Probably going to see a lot of volitilty though before the maket opens in the morning.

Dow futures jump 300 points as regulators announce backstop of SVB depositors: Live Updates

Investors were monitoring developments out of Washington for details on next steps in the Silicon Valley Bank crisis.

www.cnbc.com

Futures

Get the latest data from stocks futures of major world indexes. Find updated quotes on top stock market index futures.

www.bloomberg.com

 

[AndrewZ]

Hot off the presses, joint statement but I'm not 100% sure what it means aside from all depositors being made whole

Joint Statement by Treasury, Federal Reserve, and FDIC

Washington, DC -- The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Cha

www.federalreserve.gov

It sounds like banks will be on the hook for the uninsured portions via special assessments?

 

[2daMoon]

MS is right in that the North American full size pickup market is an incredibly hard nut to crack. Twenty years ago, Toyota sell a goal of competing in that market with the Tundra and pretty much failed.

Did you not see the table I later posted? Toyota Tundra was the one with 15% positive growth YoY. The one that stood out as not being negative growth. Seems a rather peculiar way of exemplifying "pretty much failing."
(Nissan's pickup, on the other hand...)

 

[mongo]

I don’t think it was SVBs loan portfolio that was the problem?

I think the issue is in finding buyers for the portfolio, not that the portfolio caused the inital problem.
(Had the same inital interpretation).

 

[unk45]

The Fed can literally announce a rate pause or drop and that will crash the 10y overnight, which automatically plugs a lot of holes these stressed banks are missing.

U.S. government to take 'material' action to avert fallout from SVB collapse -sources​

https://www.fidelity.com/news/article/company-news/202303121113RTRSNEWSCOMBINED_L1N35K0A9_1

What the just announces shows why you miss the point.

 

[unk45]

I don’t think it was SVBs loan portfolio that was the problem?

Correct. OTOH the loan portfolio is largely to startups itself so might nit be attractive to other banks. That is certainly one reason they’ve been forced to a novel approach to indemnify depositors, similar issue for Signature.

 

[petit_bateau]

It didn’t look big like the Fords and GMs. Also it wasn’t significantly better, so people just stuck with what they knew. Also, the first trucks were small so most people thought Japanese trucks eauals small, even after larger models were introduced.

So what you are saying is it was as good as the F150, but made the mistake of looking small, whereas the F150 made sure to look big.

(my colleagues designed the F150 : they were the best in the Ford team at the time)

So Toyota's scientific pursuit of first principles truth was defeated by Hollywood (looks matter)

And my ex-colleagues knew this about the way their F150 buyers thought, in a way that Toyota did not grok

Correct ?

 

[Krugerrand]

So where were the regulators?

Over at Sam’s party house with all those big name regulatory guys from every financial institution and governmental body this and that side of the Mississippi.

 

[dm28997]

This is what I love to see. More Tesla semis delivering Teslas

https://twitter.com/x/status/1635051990131822592

 

[cab]

What happened with SBNY (Signature Bank)? Looks like Fed has stepped in??

 

[unk45]

What happened with SBNY (Signature Bank)? Looks like Fed has stepped in??

Many different issues there; crypto issues, but has been cooking for quite a while. Much smaller