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

[2daMoon]

And not only have I never talked to anyone who actually read their report, the people behind this are just a couple of management consultants. It's not like it's a team of AI researchers who did these rankings. Any monkey in a suit with powerpoint could have done the same.

Have you considered how this statement may be painting monkeys in a poor light?

A monkey would have done better.

 

[Usain]

But, that is NOT true. If you had said, 'Tesla isthe only one that immediately posts publicly all price changes' that would have been true.
In fact, virtually all OEM's practice, other than Tesla, is to have some public and some secret discounts from normal prices that are called incentives and most such, in the US, are published in the dealer and OEM industry paper, Automotive News, with comprehensive list in the back pages that include both dealer and consumer incentives. Even there some common ones are not always shown, including inventory subsidies (i.e. Floor Plan), F&I subsidies (aka Spiffs) and others. None, repeat none change the MSRP because MSRP is, by definition meaningless (the S is Suggested). So, dealers sell above MSRP if they can, pad the quotation with largely useless dealer additions etc.

Tesla, by contrast is WYSIWYG, and acronym for full clear disclosure.

There is a notable side effect of WYSIWYG that is using some consternation mostly among the less experienced new vehicle buyers. Almost always a vehicle titled immediately loses at least 25% in initial purchase price, reflecting dealer margin of 10-15% or more, taxes, delivery fees and so on, explicitly including poorly or non-disclosed finance margins. That last generally makes more money for dealers than does the original transaction.

Tesla does none of those things. Oddly, people who notice huge cost of depreciation usually concentrate on Tesla because MASRP IS transaction price. The same people experience the same actual impact from dealer-sold vehicles, but seem not to notice so much as they do with Tesla. In large part that si the result systematic obfuscation by dealers and collaboration by OEM's own self-interest.

Many of us were spoiled for the early years when demand vastly exceeded supply and used cars sometimes were more expensive than new ones. That once happened with even early Honda Accords (I bought one after a year-long waiting list and sold it at a profit on delivery, I never actually drove it. Then BMW 3 series in late 1970's, much the same. Quite a few other examples happened, many during the COVID-19 pandemic. They are vanishingly rare now, when prices are dropping.
I'm not thrilled that my 2021 Model S Plaid is worth 40% of my purchase price, but, to be honest, I really expected it. After all they were soon to become plentiful.

Really it is painful for so many people to misunderstand the nature of auto purchase.
Last critical point: Dealers understand how psychology works so the routinely inflate trade-in value while adding the variance between wholesale retail value and that trade-in to F&I margins with dealer adds, extended warranty etc. BTW, typical dealer add for extended warranty is >100& in the US. It is always a rip-off.

So, please stop with portraying Tesla as somehow deficient in treatment. They simply do not engage in those deceptions.
Thank direct distribution for lower cost and open disclosure. We should be grateful not disdainful!

I think you misunderstood my post as it had nothing to do with dealer pricing and those dynamics. Your above post about that was spot on.

I fail to see how I was being disdainful and I certainly wasn't portraying Tesla as deficient. Quite the opposite.

Our discussion was about only about how competition affects Tesla's pricing. Gigapress was making a case that Tesla's competition is partially responsible for Tesla's price cuts. I argued that the competition probably has little to do with it because Tesla still doesn't have much real competition (which is a seperate discussion I won't go into here).

I believe that Gigapress and I both acknowledge that Tesla (and maybe BYD) are the only ones pricing its EVs based solely on the market. As Gigapress said, legacy autos are supporting their money-losing EVs with ICE cars. Startups are supporting their money-losing EVs with startup capital. So they are both playing a tricky game of trying to gain EV market share while not losing too much money. That's a big factor in their pricing strategy and it's a game Tesla doesn't need to play.

 

[Mike Smith]

You mean Cruise FSD? By itself, nah. It's just the normal noise.

However regarding the Honda/GM breakup on EVs - that's interesting because Honda is an investor in Cruise. Lost trust perhaps. They were shooting for <$30K vehicle so there's also that BS as well.

"Honda is also an investor in Cruise, the driverless car operator that is a wholly owned subsidiary of GM. And GM and Honda co-designed the Cruise Origin, a purpose-built autonomous shuttle that is set to make its debut in the US next year — and Japan in 2026."

Edit: It seems the Cruise Origin (RoboTaxi with no steering) between GM and Honda are still the plan in 2024, but details are scarce.

In 2018 Honda paid $750M to buy 5.7% of Cruise. For the same money they could have bought 2% of Tesla..

 

[Usain]

This is yet another misunderstanding. Trucks are higher margin in the US because they have much less actual manufacturing cost than do their cars. The large SUV (e.g. Suburban, Navigator, Escalade) and Pickup (Sierra Denali Ultimate, F-150 Limited, RAM Limited, etc.) all have gigantic margins precisely beaus they are cheap trucks at the core, with all sorts of gimmicky additions to appear luxurious. Those SUV and Pickup models are the same underneath. In fact they're made in the same factories on the same lines. BTW that is why the UAW struck Ford Kentucky Truck Plant (F-150, Navigator, Expedition) the produces nearly all Ford US profits. 'Higher utility' is a matter of market positioning, were utility to the selling basis they'd not have so much cheap 'luxury' fitments.

Tesla does not and hopefully will never, engage in such absurd cheap tricks. The Cybertruck, just as Model S and X, have higher priced variants, but they offer clearly structured tangible benefits. Tesla does offer trim options, most superfluously wheels (that offer reduced longevity, exposure to road hazards, and sexy looks) and color options. Those do increase the price while providing no economic benefit, so Tesla is not exactly 100% innocent, but everyone who buys that, including me, knows what we've done. (Guilty of buying Ludicrous for my P85D).

Of course, the cheap basic F150, and other equivalents do provide scale and do provide huge utilitarian credibility and function. Those (just as in the EU Pocket Rocket) generate volume at minimal profit while the high trim levels cary huge profits because they are built on the cheap base. Those who've working of internal OEM cost accounting understand this well. Cheap version absorb fixed costs, high end versions generate profit at modest incremental cost, so carry the line.

We at TMC really need to understand these things to avoid falling into FUD traps.

Boy you really have it out for me today.

Trucks do have higher utility. You seem to agree with me on that (see bold above). So it does follow that higher utility will demand a premium. That's all I was saying.

Obviously, there are a lot of other factors that go into margin, which is something I pointed out later in my post.

 

[uscbucsfan]

I think you misunderstood my post as it had nothing to do with dealer pricing and those dynamics. Your above post about that was spot on.

I fail to see how I was being disdainful and I certainly wasn't portraying Tesla as deficient. Quite the opposite.

Our discussion was about only about how competition affects Tesla's pricing. Gigapress was making a case that Tesla's competition is partially responsible for Tesla's price cuts. I argued that the competition probably has little to do with it because Tesla still doesn't have much real competition (which is a seperate discussion I won't go into here).

I believe that Gigapress and I both acknowledge that Tesla (and maybe BYD) are the only ones pricing its EVs based solely on the market. As Gigapress said, legacy autos are supporting their money-losing EVs with ICE cars. Startups are supporting their money-losing EVs with startup capital. So they are both playing a tricky game of trying to gain EV market share while not losing too much money. That's a big factor in their pricing strategy and it's a game Tesla doesn't need to play.

The price reductions in the US have 0 to do with BYD. They are to generate demand and sell cars. EV sales have hit a wall in the US for everyone else and it's obviously impacting Tesla as well...but obviously not to the level of everyone else.

 

[jerry33]

I'm thinking the air compressor may already be a part of the adjustable suspension. If so, all that is needed in the bed is a quick-connect to the system.

Well, they could do that, but isn't the air suspension compressor a low volume compressor? If so, it would be really slow for most compressor uses.

 

[Usain]

The price reductions in the US have 0 to do with BYD. They are to generate demand and sell cars. EV sales have hit a wall in the US for everyone else and it's obviously impacting Tesla as well...but obviously not to the level of everyone else.

I don't think we were talking about "just the US". But yeah, I agree.

I think Elon is largely telling us the truth that market conditions alone have led to Tesla's lower prices. And if other EVs didn't exist, Tesla's prices would be about the same.

 

[uscbucsfan]

I don't think we were talking about "just the US". But yeah, I agree.

I think Elon is largely telling us the truth that market conditions alone have led to Tesla's lower prices. And if other EVs didn't exist, Tesla's prices would be about the same.

I disagree.

It's not just about selling against EVs, but ICE. Other EVs aren't really impacting Tesla *much* in the US, but ICE vehicle sales have been up and as I said before, EVs are hitting a wall where other manufacturers have lots full of them, if they are even making them at all.

Even if Tesla was the only option, to sell more vehicles and create more demand, they would have lowered prices.

A majority in the US are against EVs for a list of reasons, price is one of them. This is to win those over. The ones who are religiously against EVs won't willingly shift, ever.

 

[2daMoon]

Well, they could do that, but isn't the air suspension compressor a low volume compressor? If so, it would be really slow for most compressor uses.

I was thinking the on-board unit would be used for inflating mattresses when camping, or adjusting the tires for off-roading.

If they need a high-volume rig for tradesman work they can plug a pancake compressor into the 120vac outlet.

Edit: I now see there is a Launch is Imminent thread for this kinda talk.

 

[Usain]

I disagree.

It's not just about selling against EVs, but ICE. Other EVs aren't really impacting Tesla *much* in the US, but ICE vehicle sales have been up and as I said before, EVs are hitting a wall where other manufacturers have lots full of them, if they are even making them at all.

Even if Tesla was the only option, to sell more vehicles and create more demand, they would have lowered prices.

A majority in the US are against EVs for a list of reasons, price is one of them. This is to win those over. The ones who are religiously against EVs won't willingly shift, ever.

I don't understand what you disagreed with. Sounds like we both agree that Tesla's lower prices are based on market conditions rather than competition from other EVs.

 

[heltok]

I see cars jumping around, disappear/re-appear, flipping vehicles. I recall this with Tesla FSD many years ago so the confidence of what is drawn on the screen is much much higher with Tesla. This is what I'd expect from fusing Vision with LIDAR data as they compete with one another over the ground truth. Let's hope they all don't release this stuff too soon (like GM) and freak people out.

Such a parallel between FSD and AI in general - everyone so eager to monetize yesterday already which is both risky and it impedes progress because human trust is required!!! Consider this... if Otis had failed to stop that falling elevator stunt at the Worlds Fair, we'd all still be using stairs today.

The flickering is a sign that they are using images rather than video as input for training/running the neural network. What they show is likely Lidar detections scan by scan, that's why it's flickering. Lidars are great that they have a very high accuracy, you can easily go from nothing to something that works well in many situations. The problem is that they are expensive and messy(most are mechanical) so it's hard to get a diverse dataset with them to catch edge cases.

The hard part is not getting it to run and visualize a cute demo , the problem is eliminating the rare edge cases that break the system. Tesla learnt that the hard way.

 

[uscbucsfan]

I don't understand what you disagreed with. Sounds like we both agree that Tesla's lower prices are based on market conditions rather than competition from other EVs.

I must have misread when you said if other EVs didn't exist, Tesla's numbers would be about the same as they wouldn't have done a price drop.

I think Elon has overplayed "market conditions" a bit as he keeps harping on interest rates, but they really aren't "high", just higher than the all-time low. People are still buying houses and cars. It's something companies will need to deal with.

 

[Artful Dodger]

I’ve seen this chart now for years. Who made this? Can I short them? Or is it just some BS made by some magazine?

It was the Winmau Company Autonomous Board of Dartrectors:

 

[Skryll]

I must have misread when you said if other EVs didn't exist, Tesla's numbers would be about the same as they wouldn't have done a price drop.

I think Elon has overplayed "market conditions" a bit as he keeps harping on interest rates, but they really aren't "high", just higher than the all-time low. People are still buying houses and cars. It's something companies will need to deal with.

My guts read on all this is, that financials for Tesla are good now and forward looking, but that Elons exhibited anxiety was about scenarios in an uncertain future, i.e. his crystal balls are tres bleue thinking it through, macro fear

 

[hobbes]

Sneak peak inside V4 supercharger with many details:

https://twitter.com/x/status/1715723286695346605

 

[AndrewZ]

Tesla has real-time order flow data and has touted that advantage in the past + their ability to adjust pricing dynamically, so I don’t feel overly inclined to believe anyone knows better.

Ford raising prices on the 2024 Lightning lineup, need to hope this is an isolated thing and that the union strikes + factory shutdowns + labour costs dont create inflationary pressures that will increase pressure on the Fed.

 

[insaneoctane]

Interesting how Tesla’s superchargers (or energy business) can be the reason other stocks don’t do well, but it can’t be a positive for TSLA.

Sorry in advance, I believe this is paywalled….

EVgo Gets a Downgrade. Tesla's Chargers Are a Big Reason.

EVgo stock fell 7% in Wednesday trading after a TD Cowen analyst changed his rating on shares to Neutral from Buy.

www.barrons.com

 

[MountainRatMat]

Tesla has real-time order flow data and has touted that advantage in the past + their ability to adjust pricing dynamically, so I don’t feel overly inclined to believe anyone knows better.

Ford raising prices on the 2024 Lightning lineup, need to hope this is an isolated thing and that the union strikes + factory shutdowns + labour costs dont create inflationary pressures that will increase pressure on the Fed.

Ford can raise their prices as much as they want but if the demand isn't there then it won't have any effect on inflation. People need to buy the trucks at the higher prices in order to cause inflation.

Let's keep our fingers crossed the Cybertruck isn't too expensive. Keep the pressure on legacy auto to make a compelling affordable electric product.

 

[hobbes]

wow...interesting and impressive:

https://twitter.com/x/status/1717137131796406508

Impressive, looks quite similar to older FSD beta.

However, in the thread someone says the XPENG system is based on LIDAR+HD maps, so different approach from Tesla.

 

[AndrewZ]

Ford can raise their prices as much as they want but if the demand isn't there then it won't have any effect on inflation. People need to buy the trucks at the higher prices in order to cause inflation.

Let's keep our fingers crossed the Cybertruck isn't too expensive. Keep the pressure on legacy auto to make a compelling affordable electric product.

Definitely as long as this is an isolated thing and not the beginnings of something broader, companies trying to front-run labour cost increases, capitalizing on reduced inventory from the UAW work stoppages, etc. If new and used vehicle prices reverse their downward trend, this is part of Core PCE and among the items most at the Fed’s mercy, it could be not good for sales.

Knowing that the legacy business model is to sell cars at cost and their profit is actually made by selling parts and servicing to the existing fleet, I wouldn’t quickly discount how dangerous of a time this could be for Tesla