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

[Knightshade]

Who knows about the price cuts other than Tesla enthusiasts and Wall Street analysts? How would they know? I still have people I run into thinking EVs are $100K autos. How many people this weekend that go out and look for a possible new car will know that Tesla just cut the prices of the Model 3 and Model Y by $2000. How many more in a week? In a month?

And in the threads on slickdeals where the cuts ARE being discussed it's filled with folks who still think it takes an hour to charge on a road trip and you'll need to replace a $20,000 battery every 5 years too.

Doubtless a few are trolls, but some clearly just have never been educated otherwise on this stuff- in ways that many here who live/breath this stuff just don't seem to accept others can be unaware of.

Think of it like when your elderly mom is confused by her computer and you can't understand how she can possibly not know what right-click is or whatever.

That's what I think of every time I see someone dismiss the idea there's a huge % of the population that remains ignorant of the many benefits of EVs.

 

[juanmedina]

China/Europe have the new 2024 model. The US is still selling the old model. I'm not buying the old 3/Y without a discount.

Seriously, why didn't they retooled all factories for the highland launch at the same time? Did they had too much inventory of part for the older Model 3 in the USA? The Y Chinese update is also really mild but the Model 3 makes sense. I am surprised that the stock is not down more than the 2.5% so far.

 

[thx1139]

China/Europe have the new 2024 model. The US is still selling the old model. I'm not buying the old 3/Y without a discount.

Yeah there is that problem as well that Tesla isnt managing the transition to newer versions well. Not to mention CyberTruck didnt hit Elon end Q3 launch and what did Tesla Daily say couple days ago? Thanksgiving.

 

[MikeC]

Seriously, why didn't they retooled all factories for the highland launch at the same time? Did they had too much inventory of part for the older Model 3 in the USA? The Y Chinese update is also really mild but the Model 3 makes sense. I am surprised that the stock is not down more than the 2.5% so far.

I think they want to perfect the line and then copy paste it to other factories. Tom Zhu can only be in one place at a time.

 

[BornToFly]

Seriously, why didn't they retooled all factories for the highland launch at the same time? Did they had too much inventory of part for the older Model 3 in the USA? The Y Chinese update is also really mild but the Model 3 makes sense. I am surprised that the stock is not down more than the 2.5% so far.

Especially when you consider that Giga Texas was just shut down for upgrades. They should have reopened with the new model.

 

[elasalle]

If all you have is a hammer, all you see is nails ...

Does Tesla have only one hammer (price cuts) ... or can they try other things like Advertising?

Price cuts do however help to achieve the 1.8M goal for the year while sacrificing on the margins...

 

[2daMoon]

These two comments hit the nail on the head - these price cuts are both very bad for legacy auto, but also continue to cut into Tesla's margins in the short term. This entire year people have rationalized that "COGs are declining!" will more than cover the price cuts - but that simply has not been true. Yes COGs have gone down, but not as much as average selling prices. There is no reason to think this is magically going to change over the next few quarters.

So margins are down. These drops are smoothed over the last 4 quarters, the most recent quarters are actually lower. I think a base case would be that with increased volume in Q4, total gross profit in Q4 might be similar to Q3. Which probably is a bit below Q2 (or same? Not sure).

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With interest rates seemingly staying higher for longer, this signals slower earnings growth for longer.



I've stated my motivations for signing up for this forum - 1 year ago there was massive red warning signs (Tesla used car prices & backlog began tanking) that were almost totally ignored by this thread. My intention was to contribute to information I thought was being ignored by the overly optimistic.

I know some of you understand my position of being long term very bullish, but lukewarm if not slightly bearish in the shorter term, just based on the data I see. I provide data to back up those points. What's the problem with that?

Is it really that offputting that I said I think share price might dip to $200? TSLA PE ratio at $200 would be 58, but after Q3 EPS likely come in lower than 2022 Q3 ($0.95), the updated TTM PE ratio would still be over 60.

Is it that unreasonable a thought to think (in the short term) a company with flat earnings could have a PE ratio of 60?

Is it unreasonable a thought to consider how margin and earnings might not be the factor defining these price cuts?

What if the goal is to keep moving as many vehicles as possible during a down-turn in the market due to economic forces.

Since one year ago, what has changed with the flow of vehicles into customer's hands? Has it gone up or gone down?

Used car prices may be immaterial to the strategy and "backlog tanking" may also be seen as "deliveries being tuned to match increased production to demand as closely as possible."

What if everyone trying to judge Tesla based upon traditional concepts of increasing the margin, earnings, and similar benchmarks are completely missing how "these are not the Droids you are looking for." Those who do not realize how a company that is rock-solid financially to the point that they could operate for years with no profit at all may not place these as high on the pecking order of "important things" simply because they aren't.

This isn't a sign of weakness. It is a sign of consistent growth through making other than traditional measures the yardstick they use to spread their product far and wide at a rate not seen in over a century in the auto industry.

Perhaps the people consistently making this mistake in evaluating Tesla should consider possibilities beyond the narrow scope of traditional benchmarks.

 

[M|S|M MYP]

But i thought....

 

[Artful Dodger]

Especially when you consider that Giga Texas was just shut down for upgrades. They should have reopened with the new model.

Are you aware that Giga Texas doesn't make any Model 3 cars?

 

[Usain]

They have already gone one better than what you describe.

I posted some time ago about how Tesla had placed a selection of actual products at a (gigantic) Buc-ee's convenience store with Superchargers and let potential customers arrange a test drive using their phone, while on site. No Tesla employee present. Just point the phone's camera at the signboard and it sets up the demo ride.

Who needs point of sale ads running on the Supercharger when there is a sign at every entrance to the store offering all who are going in to take a test drive in a Tesla while they are there?

This is a brilliant way of targeting BEV-curious ICE vehicle owners who would never have seen the add on the Supercharger, thus, accelerating the transition by focusing on those who haven't bought an EV, rather than those who already have.

People at Tesla have consistently pointed out how the other EV manufacturers are considered part of the mission by Tesla, so targeting them to buy a Tesla would be a lower priority than would be getting an ICE driver into one.

That's a great idea, but I wonder if Buc-ee's wants its customers spending time on a test drive instead of shopping in the store.

Where was the sign board about the test drives? In my experience, the Superchargers at Buc-ee's are a long way from the gas pumps. So putting a sign at the Superchargers wouldn't attract ICE customers.

 

[MP3Mike]

Where was the sign board about the test drives? In my experience, the Superchargers at Buc-ee's are a long way from the gas pumps. So putting a sign at the Superchargers wouldn't attract ICE customers.

Did you read the post?

Who needs point of sale ads running on the Supercharger when there is a sign at every entrance to the store

 

[Zaddy Daddy]

Is it unreasonable a thought to consider how margin and earnings might not be the factor defining these price cuts?

What if the goal is to keep moving as many vehicles as possible during a down-turn in the market due to economic forces.

Since one year ago, what has changed with the flow of vehicles into customer's hands? Has it gone up or gone down?

Used car prices may be immaterial to the strategy and "backlog tanking" may also be seen as "deliveries being tuned to match increased production to demand as closely as possible."

What if everyone trying to judge Tesla based upon traditional concepts of increasing the margin, earnings, and similar benchmarks are completely missing how "these are not the Droids you are looking for." Those who do not realize how a company that is rock-solid financially to the point that they could operate for years with no profit at all may not place these as high on the pecking order of "important things" simply because they aren't.

This isn't a sign of weakness. It is a sign of consistent growth through making other than traditional measures the yardstick they use to spread their product far and wide at a rate not seen in over a century in the auto industry.

Right, you are taking my observations personally. I am not criticizing Tesla's approach. The price cuts are going to destroy other OEMs. Tesla is in a fine spot. They need to cut prices to keep moving volume, and they are fortunate they can do that.

It is a long term benefit.

But like it or not, valuation is significantly based on how much you will earn in the shorter term (12-24 months), and I'm just observing that this will hit those valuation marks.

Just because legacy auto's earnings might go and stay negative (and then go bankrupt), doesn't mean that lower earnings for Tesla will be a positive influence on share price.

 

[BornToFly]

Are you aware that Giga Texas doesn't make any Model 3 cars?

Yes, I was referring to the Y

 

[2daMoon]

That's a great idea, but I wonder if Buc-ee's wants its customers spending time on a test drive instead of shopping in the store.

Where was the sign board about the test drives? In my experience, the Superchargers at Buc-ee's are a long way from the gas pumps. So putting a sign at the Superchargers wouldn't attract ICE customers.

The sign was a folding style placed in front of each of the entrance doors to Buc-ee's. Some entering had to walk around it to get in.

The test drive cars were parked at a main driveway into the property, rather than at the Superchargers.

It was awesome to behold.

 

[unk45]

If all you have is a hammer, all you see is nails ...

Does Tesla have only one hammer (price cuts) ... or can they try other things like Advertising?

Price cuts do however help to achieve the 1.8M goal for the year while sacrificing on the margins...

Just like advertising? In the very short run there is margin loss. However, as most fo us know, with increasing volumes tesla benefits from economies of scale, not least of which is the enormous scale efficiencies that come with manufacturing innovations such as new new paint shops, gigapress etc. For some reason this thread is deeply influenced by 'short-term-itis' which assumes no scale economies, no ancillary revenues from Superchargers, subscription sales of premium connectivity and autopilot/FSD, not to mention Tesla insurance. your initial phrase is apt...when anything happens Advertise!

Even though all of us see every price change, almost none of us look at the US Automotive News back page lists of consumer and dealer incentives, NONE of which result in disclosure that MSRP is changing, because they leave that hypothetical price intact. Tesla specializes in WYSIWYG so many of us fail to perceive that we are often captive to ignorance about what constant price changes are happening with other OEM products, progressing most heavily just prior to and following model changes. We then accuse TSLA of '...all you see is nails". That is very sad and misguided thinking.

 

[Artful Dodger]

Yes, I was referring to the Y

There is no new Model Y. Are you referring to the ambient lighting (on the dash-only) of the Shanghai Model Y. There is no refreshed Model Y. Sorry, you sound out of the loop.

 

[M|S|M MYP]

There is no new Model Y. Are you referring to the ambient lighting (on the dash-only) of the Shanghai Model Y. There is no refreshed Model Y. Sorry, you sound out of the loop.

And do not forget the black wheels.

 

[SOULPEDL]

Due to excess Tesla Advertising, I picked up 50 chairs.

 

[Usain]

Did you read the post?

Ah, I missed where he said signs were at the store entrance. That means Buc-ee's is partnering with Tesla and possibly getting a commission for every test drive.

Long term, Buc-ee's would probably love for most of their customers to be EV drivers because charging takes longer than filling up with gas. So maybe they aren't asking for any commission at all.

 

[FreqFlyer]

Jeff Lutz on price cut & GM impact

https://twitter.com/x/status/1710223891287699705

Surprise many here do not talk about the effect the Point of Sale IRA will have on sales. For most normal Americans who do not itemize, this is much simpler and will supercharge sales.