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

[growler23]

Maybe...certainly not me.
Here is what I am upset about:

1.Highway deaths trend is not good, as this chart shows. Almost 48 thousand in 2021. If only someone was working on a solution/s

Historical Car Crash Deaths and Rates - Injury Facts

Between 1913 and 2021, the number of motor-vehicle deaths in the United States increased 1,018%, from 4,200 deaths in 1913 to 46,980 in 2021.

injuryfacts.nsc.org

2. Hundreds of thousands of pre-mature deaths due to particulate matter from ICE car's and trucks. If only someone was working on a solution/s

New study quantifies the global health impacts of vehicle exhaust - International Council on Clean Transportation

Study links ambient PM2.5 and ozone specifically caused by vehicle exhaust emissions to ~361,000 premature deaths worldwide in 2010 and ~385,000 in 2015 On-road diesel vehicles were responsible for nearly half of the health impacts of air pollution from vehicles worldwide in 2015, and two-thirds...

theicct.org

3. Wars and climate change due to extraction and burning of fossil fuels. If only someone was working on a solution/s

So I am upset about all the nonsense spewed when we should be ALL be pulling towards a better future.

"But, but... muh margins!!!"

Logic would dictate that one should cheer the mission first, then the margins second. If the mission fails, there will be no margins. Or money.

 

[TesslaBull]

You pay nothing with an eligible trade in. Either Att is subsidizing or Apple is...don't know who but most people in the US doesn't really pay for phones anymore. They just keep trading them in.

https://www.att.com/buy/phones/apple-iphone-14.html?offerID=22100052&source=EC1NvImlp0000000P&tfn=homesolutions&WT.srch=1&wtExtndSource=att+iphones&ds_eid=700000002596606&ds_cid=71700000099867174&ds_agid=58700008008606467&ds_kids=p72842732752&&&&&gclsrc=aw.ds&&gclid=CjwKCAjw__ihBhADEiwAXEazJk3QrA9rV_ddVhzU5hwFdkmtNew0-zQWhvNLjC-xFbebO1Xt_N6vFxoCJhsQAvD_BwE&gclsrc=aw.ds

You are partly correct. Many people aren't very smart with money, so they do trade their phones in every couple of years. They aren't smart enough to realize that they are paying an exorbitantly high price for their "free" phone in the form of ridiculously overpriced monthly cell phone plan. Another big reason is that so many people are living paycheck to paycheck due to all their monthly payments and can't actually afford to buy their phone outright and then pay a MUCH lower cost of ownership with a reasonably priced cell phone service. This is why people actually lease cars, or finance and trade-in every couple of years.

I paid $180 for a full year of cell phone service, or $15/month.(Actually only paid $30 after referral bonuses.) But that's because I'm smart enough to realize that Verizon, ATT etc aren't giving me a "free" phone with their $2-$300/month+ service plan.

To make an argument that people aren't paying anything for their new iphones every two years is either being disingenuous, or you've had the wool pulled over your eyes like most other consumers.

 

[LTC_RRR]

had this discussion with my wife. I already have a LR Y so the base AWD Y would be perfect for her. Still hesitant giving up her 3 row Telluride though for the space. Really wish the X was more affordable instead of getting 2 Y's. But the Value of the Y at this price point is very tempting.

I gave that some very serious thought but stopped cold when I realized I couldn't transfer my FSD from my (to be traded in) Model 3 to the (to be purchased) Model Y. Bummer. Folks who like to trade up every three to four years will not be happy campers.

 

[Artful Dodger]

A second post that would have gotten a "GOLD STAR." Two in one day? It couldn't have anything to do with this being an earnings report day??? (The real brainiacs dusting off their keyboards)

CAPEX TO 20 MILLION AUTO PRODUCTION:

This is when we really miss the contributions of members like @The Accountant (and others). While it's fine to ponder the current quarterly results, its the end game we really should be discussing here.

CapEx funding was a big issue for several notable TSLA Analysts and Institutional Investors in the past. I believe Cathie Wood (ARK Invest) said they expect Tesla would need to raise another ~$15B in the Capital Markets to fund future growth. Now, that need is in doubt as Tesla appears to be targeting self-funded growth from operations. This is inconceivable for Wall St.

Can Tesla reasonably get to 20 Million annual production rate by 2030?

Let's make a simple growth table, based on these 3 assumptions:

1. Given $2B in CapEx spend to start (this is where a 10-Q could be handy)
2. $7,000 in CapEx buys 1 unit of auto production (historical average)
3. 50% growth per annum in CapEx spend (that's +10.67%/Qtr, compounded)

So as we see above, if Tesla can maintain exponential investment, then reaching 20M/yr Auto production capacity is absolutely in play by 2030 (given that the CapEx would need to be spent by 2028 for that production to come online in 2030).

Let's check some assumptions on CapEx spend:

• $140B total CapEx spend required by 2028 to achieve the goal
• Half of that CapEx will be spent in the final 6 Quarters (~1.5 years)
• Final CapEx spend rate will reach $15B per Qtr by 2028
• So far:
  • Giga Shanghai is currently at 1.1M/yr capacity. At $7K/unit of production, that means if Tesla built the factory for $7.7B USD or less, then they got a good deal
  • Giga Texas is reported in permits to cost $10B for the entire project construction. Again, if annual capacity at that site is greater than 1.43M units, then that's very effective cost management
  • Giga Berlin is an unknown for me, anybody care to step forward with an opinion?
• Giga Mexico is said to be half the CapEx per unit of production.
  • Will "Unboxing" filter backward to existing plants, or
  • is it possible to accelerate the 2028 timetable while keeping CapEx as above? or
  • reduce CapEx and increasing net income while maintaining 50% growth rate? (my vote)

Elon once said "I try to take a set of actions that are most likely to improve the probability that the future will be good". I think the chances are pretty fair with this plan.

Cheers to the Longs!

#CAPEX

 

[TesslaBull]

I never said Tesla cars was an investment. I have over 300k invested in Tesla stock, I think I know my dollars and cents.

But over night my cars value got reduced by $10k (so did many used car dealerships). I don’t think that’s something anyone had budgeted. The people who clearly have a problem with it might actually be the ones who understand finance and who have skin in the game.

I didn't have to "budget" for my cars drop in value....I bought the car and am driving it, and will continue to drive it for many years. Nothing has changed.

 

[Ogre]

To suggest that Tesla should begin paying for advertising is to imply either 1) that these analysts and forecasters are collectively failing to get the right answers or 2) that they are presenting compelling business cases in favor of paid advertising that are being rejected by top leadership for some reason. I think neither of these are likely.

There seems to be a recurring theme to this.

Musk does something off-script like making electric cars, doing direct sales, building their own charging network, avoiding advertising, etc etc.

Analyst Community reaction: Musk is following some sort of Quixotesque windmill-tilting whim.

Reality: Musk understands the thing more than the analysts do and rarely does anything without a giant pile of math to back it up.

Also: Musk does a lot of things for idealogical reasons which eventually pay off even though there might be short term pain. The whole EV thing and going to space thing were fundamentally idealogical plans.

Musk isn't always right, but assuming he does things on a whim is 100% wrong. The man is extremely analytical. I highly doubt any major decision is made at Tesla without Musk seeing and seriously reviewing some kind of plan that has solid numbers behind it.

 

[Buckminster]

https://twitter.com/x/status/1648657836086374400

Tesla could really compete If they could just keep up technically with VW et al.

 

[bkp_duke]

Bought more shares this AM at 178.

WS will soon figure out that Energy is now on the S-curve, and auto margins are still > 20% with ramping volume.

 

[Singuy]

You are partly correct. Many people aren't very smart with money, so they do trade their phones in every couple of years. They aren't smart enough to realize that they are paying an exorbitantly high price for their "free" phone in the form of ridiculously overpriced monthly cell phone plan. Another big reason is that so many people are living paycheck to paycheck due to all their monthly payments and can't actually afford to buy their phone outright and then pay a MUCH lower cost of ownership with a reasonably priced cell phone service. This is why people actually lease cars, or finance and trade-in every couple of years.

I paid $180 for a full year of cell phone service, or $15/month.(Actually only paid $30 after referral bonuses.) But that's because I'm smart enough to realize that Verizon, ATT etc aren't giving me a "free" phone with their $2-$300/month+ service plan.

To make an argument that people aren't paying anything for their new iphones every two years is either being disingenuous, or you've had the wool pulled over your eyes like most other consumers.

Yes, there are definitely cheaper ways to get cell service by going off brand. But paying 300/month for 10 people with unlimited service after our corporate discount is not bad.

 

[Chunky Jr.]

Plot twist : Sell the rumor, buy the news?

 

[Singuy]

No, people will just sit on the sideline for prices to go back down again. The market has been trained and the market controls what Tesla sells at, not the other way around.

LoL if it just takes a few price drops to train the market than I applaud the trainer...because as of right now 99% of the people still haven't learned their lessons playing with the stock and just end up losing money. Most makes the same mistake over and over, buy high and sell low.

 

[Buckminster]

Results will be published here in 4 hours:
Tesla Investor Relations
You can listen to the call 1.5 hrs later here:

or here:

https://twitter.com/x/status/1648355635980009472

 

[Cosmacelf]

upon review of all the price cut hand wringing here is my conclusion

people cannot handle price transparency ... they would rather be lied to and manipulated by a dealer network ... i guess
Telsa has been transparent

• input costs are higher we have to raise prices ... here is new higher price
• input costs are lower we can lower prices ...here is the new lower price

most people cant handle the truth

Just the trolls on this forum can’t. The buying public either isn’t aware, or is pleasantly surprised when they go to make a purchase decision. The hysterical anti-TSLA crap here the last day has been next level, making this forum almost useless. Tesla has been guiding towards a compression/reduction in gross margin while also guiding towards an increase in operating margin. Operating margin directly impacts EPS, which is what matters. Gross margin is just one component of operating margin, and thus is less relevant if the other parts of the company get more efficient.

People have been playing this game with TSLA for over ten years. Focusing on specific sub metrics that are trending down while ignoring the most important number, dollar profit, that is trending up. This latest brouhaha was started with a tweet forecasting lowering gross margin ex regulatory credits. Geez, can you can any more picky? Why would you ignore regulatory credits? That’s been a component of Tesla dollar profit for a looong time.

These people pretend that Tesla is just like all the other OEMs and thus use sub metrics to compare Tesla and them. But Tesla is very, very different. It has zero debt compared to gargantuan debt for the others. It has no dealer network, does in house sales and service, does no advertising and very little marketing, has very fast growing ancillary businesses (Supercharging, Tesla energy), competes in more vehicle segments that the OEMs (class 8 semi), still has geographic markets to grow into, and finally significant growth while the others are treading water at best. The point being that operating margin is exactly what you should be looking at since it takes into account all these other Tesla advantages that the OEMs don’t have.

 

[Artful Dodger]

Bonzai! Some say people won't buy a Tesla now, because prices will keep dropping, but they forget a couple of things:

Penzai! (@Singuy, not Sin-san)

 

[AudubonB]

CAPEX TO 20 MILLION AUTO PRODUCTION:

This is when we really miss the contributions of members like @The Accountant (and others). While it's fine to ponder the current quarterly results, its the end game we really should be discussing here.

CapEx funding was a big issue for several notable TSLA Analysts and Institutional Investors in the past. I believe Cathie Wood (ARK Invest) said they expect Tesla would need to raise another ~$15B in the Capital Markets to fund future growth. Now, that need is in doubt as Tesla appears to be targeting self-funded growth from operations. This is inconceivable for Wall St.

Can Tesla reasonably get to 20 Million annual production rate by 2030?

Let's make a simple growth table, based on these 3 assumptions:

1. Given $2B in CapEx spend to start (this is where a 10-Q could be handy)
2. $7,000 in CapEx buys 1 unit of auto production (historical average)
3. 50% growth per annum in CapEx spend (that's +10.67%/Qtr, compounded)

View attachment 929935

So as we see above, if Tesla can maintain exponential investment, then reaching 20M/yr Auto production capacity is absolutely in play by 2030 (given that the CapEx would need to be spent by 2028 for that production to come online in 2030).

Let's check some assumptions on CapEx spend:

• $140B total CapEx spend required by 2028 to achieve the goal
• Half of that CapEx will be spent in the final 6 Quarters (~1.5 years)
• Final CapEx spend rate will reach $15B per Qtr by 2028
• So far:
  • Giga Shanghai is currently at 1.1M/yr capacity. At $7K/unit of production, that means if Tesla built the factory for $7.7B USD or less, then they got a good deal
  • Giga Texas is reported in permits to cost $10B for the entire project construction. Again, if annual capacity at that site is greater than 1.43M units, then that's very effective cost management
  • Giga Berlin is an unknown for me, anybody care to step forward with an opinion?
• Giga Mexico is said to be half the CapEx per unit of production.
  • Will "Unboxing" filter backward to existing plants, or
  • is it possible to accelerate the 2028 timetable while keeping CapEx as above? or
  • reduce CapEx and increasing net income while maintaining 50% growth rate? (my vote)

Elon once said "I try to take a set of actions that are most likely to improve the probability that the future will be good". I think the chances are pretty fair with this plan.

Cheers to the Longs!

#CAPEX

A fine back-of-envelope set of data - well done. One set of questions and one Item To Ponder: How hard is your $7K/unit? If it encompasses all historical production Capex, to what extent does the Gigadeal Tesla received from snagging Fremont for pennies skew the data?

Ponder: at the production levels suggested by esp. those final quarters, upstream sourcing will have achieved rate-limiting importance. I am encouraged by the news on the raw materials front in recent times, but I wonder if Tesla is increasingly going to have to be more hands-on in the prompting of same. It should not have to be this way - but it might. And if so, I am pretty sure that will be the source of less-productive Capex than "basic" auto production yields.

Edited the final sentence to be less dogmatic.

 

[Artful Dodger]

most people cant handle the truth

FTFY.

Cheers!

 

[Krugerrand]

Seriously, here were quite a lot of limos and panel trucks that routinely used the place. The New York Times reported slab cracks and missing structural beams as long ago as 2003:

One Dead in Parking Garage Collapse in Lower Manhattan

A portion of the four-story Ann Street structure fell in, leaving cars stacked atop one another and rubble down to street level.

www.nytimes.com

I've shared the link.

Another joke that sailed over your head. You forgot to get in the ‘how to recognize sarcasm’ line when traits were being handed out in the womb.

All good. We’ll learn you.

 

[Artful Dodger]

CT will create its own market niche. It's kind of a goofy looking big car/SUV.

A quad-motor plaid Cybertruck is likely to be packing 1 MW of power. That's 1360 HP.

Let that sink in.



Cheers to the MudSlingers!

 

[generalenthu]

A theory with some credibility:

HW4 is incoming. Cybertruck is going to ship with it. This is the last batch of the lineup shipping with HW3. That way there won't be *any* complaining when there is a price hike as HW4 is introduced (/s).

 

[FreqFlyer]

Just the trolls on this forum can’t. The buying public either isn’t aware, or is pleasantly surprised when they go to make a purchase decision. The hysterical anti-TSLA crap here the last day has been next level, making this forum almost useless. Tesla has been guiding towards a compression/reduction in gross margin while also guiding towards an increase in operating margin. Operating margin directly impacts EPS, which is what matters. Gross margin is just one component of operating margin, and thus is less relevant if the other parts of the company get more efficient.

People have been playing this game with TSLA for over ten years. Focusing on specific sub metrics that are trending down while ignoring the most important number, dollar profit, that is trending up. This latest brouhaha was started with a tweet forecasting lowering gross margin ex regulatory credits. Geez, can you can any more picky? Why would you ignore regulatory credits? That’s been a component of Tesla dollar profit for a looong time.

These people pretend that Tesla is just like all the other OEMs and thus use sub metrics to compare Tesla and them. But Tesla is very, very different. It has zero debt compared to gargantuan debt for the others. It has no dealer network, does in house sales and service, does no advertising and very little marketing, has very fast growing ancillary businesses (Supercharging, Tesla energy), competes in more vehicle segments that the OEMs (class 8 semi), still has geographic markets to grow into, and finally significant growth while the others are treading water at best. The point being that operating margin is exactly what you should be looking at since it takes into account all these other Tesla advantages that the OEMs don’t have.

or.......Tesla is seeing metrics no one else sees and that is orders are starting to slow due to the economy. Its a plus as you have stated that Tesla is set up to not only survive but thrive in such an environment.

The hand wringing over price reductions is over the top ( unless one bought one during the COVID years). On the other side of the spectrum so is thinking Tesla can make 10K Model Ys a week and find buyers at $50K prices and above in this slowing economy.