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

[FreqFlyer]

I listened to the GM conference call.

Leading Mary stated that they updating the Bolt with Ultium technology. It could not be any more clear.

Because it will be a fast tracked development, my best guess is they will keep as much of the current car as they can and design a battery pack and drivetrain using Ultium components.

Most likely a shortened and narrower Equinox EV, The platform work and tooling are set, that alone saves a bunch of money and time. And when an automaker normally announces something R&D work has already begun. Would not surprised me if this was the plan two years ago.

 

[bkp_duke]

I think Ultium is short for Unobtanium. With a typo.

Munro's teardown of the Ultium they got their hands on was . . . less than flattering.

 

[mongo]

If this is indeed the same V4 that will come to the US it’s a bit disappointing to Cybertruck charging times

And we had some leaks in the past suggesting that it would be 350 kW only, so seems credible

Instead of the sub 20 minutes 10-80% we are looking at more likely 30+ minutes for the 500 miles version, I can plug all that in my calculations later for a more precise number

Won’t be bad bad, but far from leading both in range added per minute and % added per minute

For the towing folks around 20 minutes would be really nice, 200 miles fully loaded 10-80% and sub 20 min charge stops

But it will likely have a quite flat charging curve, likely to hold 350 kW up to 50% or even a bit more on the biggest battery version

https://twitter.com/x/status/1683844459237195777

We'll need to see what Tesla rolls out.
V3 cabinets are limited to 350kW each from the grid, but they crosslink to deliver over 900kW.
Megachargers gang pairs (Pepsi) or quads (Sparks) of cabinets together.
V4 pedestals max out at 1000V 615 Amps.

 

[winfield100]

Its still so profitable that (opinion) the problem with the Gamestop debacle to the industry wasn't the loss they took at the time - its that they got caught with their hand in the cookie jar, with a spotlight and cameras rolling. Sort of how profitable it would be if one could issue new USD at a dramatically faster pace than the US Government can do it.


EDIT to add: they key here is market maker status. The original observation about people doing what the industry describes as short selling - I have no problem with that. Regular short selling that you and I can do doesn't involve the manufacturing of any new shares. Rather we borrow the shares that we sell, so the net # of shares in the market remains unchanged.

@adiggs
as a side note, there were $812,143,217.50 of Fail to deliver in 3 days of GME.
a tiny bit of history. if only there were a way to further minimize those on TSLA tho it looks like FTD's are decreasing for TSLA
($ based on closing price of the day and split adjusted for the 4:1 in mid 2022)

 

[winfield100]

TSLA FTD for about the last year (since the 3:1 split, based on ~3.16 T shares)
(I may have posted this previously, apologies if so, but I _think_ % is decreasing)
(i included the FTD file if anyone wants it

 

[insaneoctane]

Read a Barron's article on my iPad news feed that is behind a paywall, so won't link...
Title : 5 Charts That Explain Where Tesla Is Relative to Ford and Toyota

Here's 3 of the 5 (other 2 were R&D and inventory). This is not news to most here, but it's nice to see truth....Tesla taking large warranty provision vs actual cost seems prudent and wonderfully conservative. Tesla's warranty costs are notably lower than Ford. More surprising than anything is that our latest margins are lower than Toyota's were a few quarters ago (Q3 2021) is stunning to me. I know that the market has changed, yada yada, but I thought Tesla had so much margin to spare that this observation wouldn't be possible, honestly.

Question for anyone, why do you think there's such a shift between Tesla's and Toyota's margins? Margins = f(Demand). Is it Tesla data is essentially real time, while Toyota's goes through the dealer network and is, thus, delayed?

 

[StarFoxisDown!]

Question for anyone, why do you think there's such a shift between Tesla's and Toyota's margins? Margins = f(Demand). Is it Tesla data is essentially real time, while Toyota's goes through the dealer network and is, thus, delayed?

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Not sure why you're comparing Tesla's current operating margin with Toyota's best quarter for operating margin. That's selectively picking data. Tesla's operating margin is still comfortably ahead of Toyota's.

As for why they're even remotely close...there's the dynamic you pointed out. Legacy auto sells to dealership and thus can keep pricing power consistently until well, all dealership lots fill up and the dealerships stop ordering. All of legacy auto has benefited over the past two years from dealerships replenishing their lot inventory from covid where lot inventory was bone dry. Eventually, likely not too far away based on dealership inventory levels of new and used cars, legacy auto will lose pricing power and gross and operating margins will plummet.

But besides that dynamic, since you're comparing operating margin, Tesla is ramping two new factories and 3 new products (Megapack, Cybertruck, Semi) with a likely fourth product about to ramp (Highland Model 3). Toyota is launching/ramping diddly squat. They are just operating their existing manfacturing lines. That lends themselves to operating an efficient level which translate directly to operating margin. The flip side though obviously is that Toyota SHOULD be launching new production, ramping new production lines for new productions. And since they're not, they're going to be left behind with stranded assets in their current factories and manufacturing lines.

 

[Drumheller]

If this is indeed the same V4 that will come to the US it’s a bit disappointing to Cybertruck charging times

And we had some leaks in the past suggesting that it would be 350 kW only, so seems credible

Instead of the sub 20 minutes 10-80% we are looking at more likely 30+ minutes for the 500 miles version, I can plug all that in my calculations later for a more precise number

Won’t be bad bad, but far from leading both in range added per minute and % added per minute

For the towing folks around 20 minutes would be really nice, 200 miles fully loaded 10-80% and sub 20 min charge stops

But it will likely have a quite flat charging curve, likely to hold 350 kW up to 50% or even a bit more on the biggest battery version

https://twitter.com/x/status/1683844459237195777

350kW capable is not stating an upper limit. I don't want to spread hope that it is more. Instead I'm pointing out the logic in the phrasing used.

 

[bkp_duke]

Question for anyone, why do you think there's such a shift between Tesla's and Toyota's margins?

Because Tesla is building 2 GFs right now and about to start a 3rd. Growth phase.

Back out costs of expansions like that, and margins would be absolutely bonkers.

EDIT - what @StarFoxisDown! said

 

[Mengy]

Not sure why you're comparing Tesla's current operating margin with Toyota's best quarter for operating margin. That's selectively picking data. Tesla's operating margin is still comfortably ahead of Toyota's.

As for why they're even remotely close...there's the dynamic you pointed out. Legacy auto sells to dealership and thus can keep pricing power consistently until well, all dealership lots fill up and they dealerships stop ordering. All of legacy auto has benefited over the past two years from dealerships replenishing their lot inventory from covid where lot inventory was bone dry. Eventually, likely not too far away based on dealership inventory levels of new and used cars, legacy auto will lose pricing power and gross and operating margins will plummet.

But besides that dynamic, since you're comparing operating margin, Tesla is ramping two new factories and 3 new products (Megapack, Cybertruck, Semi) with a likely fourth product about to ramp (Highland Model 3). Toyota is launching/ramping diddly squat. They are just operating their existing manfacturing lines. That lends themselves to operating an efficient level which translate directly to operating margin. The flip side though obviously is that Toyota SHOULD be launching new production, ramping new production lines for new productions. And since they're not, they're going to be left behind with stranded assets in their current factories and manufacturing lines.

Yep. The next few years are going to be bonkers in the auto industry, we are going to see quite a dramatic shift. The writing is on the wall already if you look deep into the data.

 

[bkp_duke]

Munro's "Final Predictions" for the Cybertruck:

 

[StarFoxisDown!]

Yep. The next few years are going to be bonkers in the auto industry, we are going to see quite a dramatic shift. The writing is on the wall already if you look deep into the data.

Covid and the repercussions from it essentially gave legacy auto a 2-3 year delay in the inevitable because it drained dealership lot inventory that was going to take a couple of years to fully refill. Once the lot inventories reach capacity, which we are seeing now, pricing power is going to plummet for them and with it, profits/positive cash flow/etc...

Covid was a lifeline given to legacy auto and most of them refused to take their heads out of the sand. Zero sympathy from me about what's going to happen to them going forward.

 

[MP3Mike]

Mary did not say the new Bolt will have Ultium platform battery packs. She said it will have Ultium technology, like maybe an updated BMS. There is no way they are going to redesign the Bolt to use Ultium battery packs on an accelerated timeline. If they had Ultium packs to spare, they would put them in the Equinox EV.

I think it is going to be more than that. She also specifically mentioned Ultifi technology. My understanding is that is their new CarOS, that allows OTA updates and subscriptions. That would indicate that they are likely moving away from the Bolt essentially being an LG car. It is made from: LG drive unit, LG battery, LG BMS, LG infotainment system, etc.

In the end we will see, but my guess is they will use Ultium drive units/BMS/etc. Maybe even Ultium batteries. But given current Bolt production is probably still going to end in November, there is likely going to be a gap before the new Bolt is available for sale. It is possible they will have the Ultium battery pack automation problem solved before the new Bolt design is ready. Or it may even use a simpler design that can use the Ultium cells that may be piling up that they can't currently get made into packs quickly enough. (Since it sounds to me like pack production is the problem, not cell production.)

 

[bkp_duke]

Covid and the repercussions from it essentially gave legacy auto a 2-3 year delay in the inevitable because it drained dealership lot inventory that was going to take a couple of years to fully refill. Once the lot inventories reach capacity, which we are seeing now, pricing power is going to plummet for them and with it, profits/positive cash flow/etc...

Covid was a lifeline given to legacy auto and most of them refused to take their heads out of the sand. Zero sympathy from me about what's going to happen to them going forward.

I don't disagree with this, but one counterpoint - I think COVID added to legacy auto's complacency. In the end, as painful as COVID was, I think it actually benefited Tesla more than anyone.

 

[GhostSkater]

350kW capable is not stating an upper limit. I don't want to spread hope that it is more. Instead I'm pointing out the logic in the phrasing used.

Good observation

 

[cab]

MSFT and GOOGL both beat on EPS and Rev....MSFT down after hours (maybe cloud?) while GOOGL is up.

 

[StarFoxisDown!]

MSFT and GOOGL both beat on EPS and Rev....MSFT down after hours (maybe cloud?) while GOOGL is up.

Can pretty much be explained by the fact that MSFT's PE is 38, GOOGL's is 28. They both beat by similar amount % wise.

 

[insaneoctane]

Not sure why you're comparing Tesla's current operating margin with Toyota's best quarter for operating margin. That's selectively picking data. Tesla's operating margin is still comfortably ahead of Toyota's.

Because I would have thought that I could have legitimately said "Tesla's worst margins are still higher than Toyota's best margins"....but, alas, I can not!

 

[StarFoxisDown!]

I don't disagree with this, but one counterpoint - I think COVID added to legacy auto's complacency. In the end, as painful as COVID was, I think it actually benefited Tesla more than anyone.

It was a lifeline to anyone in legacy auto that would actually use the time period of strong demand to reinvest. We obviously know that most didn't take advantage.

 

[Stretch2727]

Mary did not say the new Bolt will have Ultium platform battery packs. She said it will have Ultium technology, like maybe an updated BMS. There is no way they are going to redesign the Bolt to use Ultium battery packs on an accelerated timeline. If they had Ultium packs to spare, they would put them in the Equinox EV.

She's trying to spin this disaster. It's what Mary does.

You are correct she said Ultium technology. This is all about cost. I agree there is nothing special about Ultium but it is also a big insourcing project as they realized if they don't do this they have no chance to be competitive.

They are likely completely upside down on cost with the current Bolt by buying everything from LG. Why else would you stop production of your highest volume EV? They are shipping each one with $$$ in the trunk as it likely costs more to make than the current selling price.

The only way they are going to have a chance to be cost competitive is stop buying from LG and use all their internal components, cells, pack, BMS, drivetrain etc. Ok, the cells are still a joint venture with LG but Ultium cells are also made in the US so they also will get the full $45 Kwh IRA credits for cell/battery manufacturing which the current Bolt does not get with manufacturing in South Korea. This is separate from the $7500 consumer credit which has different sets of rules. (Car made in NA, battery and material sourced from US or free trade country.)