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

[SmokyPeat]

So did NVDA.

The entire nasdaq did. Something happened.

 

[Stormy24]

Yep yet another buying opportunity. Lol

 

[M|S|M MYP]

TSLA just took a nosedive - any news?

Interns got relieved?

 

[Iain]

It took MSNBC about 15 minutes to notice the drop

 

[Artful Dodger]

Day 08: Eight Maids A-Milking | Model 2 World Car​

Part of 12 Days of Christmas - Tesla Edition a series (c) by the Artful Dodger, Dec 2023

Over this Yuletide season, I will post a daily installment focusing on Tesla products, past, present, and future (please note that I will express major themes as short-hand bullet points, so I can Yule just in tide ). Here's the series so far:

Day 01: A Partridge in a Pear Tree | Roadster Proof of Concept
Day 02: 2 Turtle Doves | S/X Fraternal Twins go Mainstream
Day 03: 3 French Hens | Model 3 Bets the Company
Day 04: 4 Calling Birds | Model Y Built at Four Factories
Day 05: Five Golden Rings | Semi Breaks Physiks
Day 06: Six geese a-laying | Megapack To Excel
Day 07: Seven Swans a-Swimming | Cybertourdeforce

Intro to Part 8: Eight Maids A-Milking | Model 2 World Car​

At Tesla's 2018 AGM, the 1st question from the audience was 'when would Tesla build a compact car?' Elon agreed it was a good idea, and said possibly in about 4 years. Well, a world-wide pandemic later, subsequent supply chain disruptions (chips, sealift, ports), Model Y breakout success, and CT deliveries here we are on the cusp of the "Model 2" era.

Please allow me this one conceit: I believe I was the first to adopt the moniker "Model 2" in a discussion here with @fact-checking circa 2018. He advocated calling the compact car the "Model 4" since it would be Tesla's 4th car (Model Y not had not yet been announced). I liked "Model 2" because the compact car targeted the $20K price point (the "Corolla" market), while Model 3" aspired to the $30K level (the "Camry" Market) - a price level which it has now achieved.

Elon Musk says Tesla's next-gen Model 4 will be affordable for everyone | computerworld.com (Apr 27, 2016)​

"With something like the Model 3, it's designed such that roughly half the people can afford the car," he continued. "With fourth generation and smaller cars and what not, we'll ultimately be in the position where almost everyone will be able to afford the car." While Musk did not offer a time frame for when a follow-on vehicle to the Model 3 would be available, he said the fourth generation (Model 4) vehicle would be even less expensive.

Of course, I'm well aware that Elon has said specifically that the compact car won't be called the "Model 2", which promptly set off a new round of naming speculation: Model Zei, Model Tau, Model Juan (just for the MiMx Robotaxi). For the purposes of this discussion, I'll simply continue to use this placeholder name for what will be 1st in a series of Gen 3 products: "Model 2"

1. Combining Lessons Learned ​

• Model 2 will be the culmination of everything Tesla has learned so far about designing cars and the factories that make them. I expect the following features in the Model 2:
• $1,000 drive train: featuring PM motors w/o rare earth magnets
• LFP tech for bty cathode: long-life and approaching $50/KWh when fully scaled
• steer+brake-by-wire allows for optional driver controls, easy switch btwn LHD/RHD
• paintless process: unclear how they'll do this but Tesla could save $8B in CapEx w/o paintshops
• this is based on a production tgt of 16M units for the entire Gen3 range of vehicles
• FSD hdw in all new Tesla cars; safety first, convenience next

Lesson 1: Learn from the Past, Price Matters

2. Where to Build? ​

• The Model 2 program will begin at the home of Tesla engineering, Giga Texas
• I expect a pilot line there by Q1 2025 +/- 1 qtr
• this pilot line will use learnings from the CT ramp, and emply many of the same techniques
• Tesla may need 8 more Gigafactories by 2030 just to produce Model 2 and siblings (2M ea)
  • Texas phase 2
  • Mexico phases 1 + 2
  • Shanghai phases 3 + 4
  • Berlin (EU) phase 2
  • India phase 1
  • Osaka phase 1

Lesson 2: Build a World Car; localize the Supply Chain

3. The Third Wave​

• What will the world look like with Gen 3? Well, gas cars sales will shrivel up and die for the most part when a better car is available at a lower purchase price, and has half the operating cost
• Many Nations are in the process of adopting strict deadlines for new cars sales to be all electric, many chosing 2035 (which is just over 10 model years away)
• Other automakers will either adapt or die, we see already the tremendous contraction in production of their non-competitive models. It will be a race for survival, not for 2nd place

Lesson 3: Survival of the Fittest applies to the auto industry

Conclusion:​

Model 2 will be the lead ship in what will become a global fleet of Tesla mass market vehicles. Gen3 will span all major use cases: RoboTaxi, Workman Van, Camper, Mini-bus, perhaps even a small truck (Truckla?) The overarching theme of Gen 3 will be commonality of parts, esp. drivetrain, bty, and electronics. A consistent UI via Tesla software, Apps, and Infotainment will add significant recurring revenue while keeping COGS low on a per unit basis. Then, there's the dawn of AGI...

Next up: Tesla's Supercomputer Project - AI neural nets go mainstream

Tomorrow's Topic:

Day 09: Nine Ladies Dancing | Dojo as a Service​

 

[madodel]

Just imagine how high Tesla's demand will be when all this nonsense FUD actually completely stops working. We are definitely near the point where everyone knows someone who has driven a Tesla. Its hard to maintain the FUD in the Prescence of people you know who actually own one.
At some point, news outlets will realize that the destruction of their credibility is not worth the trivial amount of goodwill they earn from ICE advertisers by bashing Tesla. It will probably coincide with the first huge bankruptcies of the ICE laggards who can suddenly no longer sell their new cars.

That's what happened with AAPL. People got tired of hearing Steve Jobs was dying and Apple was being driven out of business by Microsoft. Hopefully it comes before Barra drives GM bankrupt, but in either case it should be sooner than later.

 

[unk45]

Probably accurate eventually just to sell to the Central and South American markets. Probably doesn't impact the US market -- especially since it won't be up and running producing anything at all until at least mid 2025.

At least one North American market would be included, Mexico.

 

[15Peter20]

VIX spiked 10% at the same time. Did WWIV start?

 

[unk45]

This is a fantastic idea for lowering the cost of auto loans to Tesla customers. Sounds like Tesla will originate the loan and then that loan will be purchased by this credit union. That way, customers can get credit union rates without belonging to a credit union.

Brilliant.

Tesla partners with Origence for credit union-based financing program

Tesla car buyers will now have access to credit union rates through a new partnership with Origence.

www.teslarati.com

It may be once have been brilliant, but this process has been going on for many decades. Many credit unions have been buying dealer paper and a few have even done floor planning. That's just in the US, but everywhere mutually owned financial institutions are there si usually some form of auto dealer originated financing too.
As for rates, they do vary greatly with credit unions too. Indirect financing does not always confer the advantages one associates with direct financing.

Despite the PR Origence is NOT a credit union, but a credit union specialized entity that originates and documents loans for resale to Credit Unions and Banks (in the vernacular these are called Credit Union Service Organizations.). Such companies exist mostly to sell paper to small and unsophisticated Credit Unions and sometimes local banks, which often have little expertise themselves. They are subject to regulatory limitations themselves. if anybody wants to know more just search for CUSO or the full name.
They do have some tax benefits when compared with less specifically-dedicated loan generators.

This may be a good deal for Tesla by placing paper more cheaply than they could do, perhaps, with securitizations. At best it serves to diversify the funding flow. How much volume this might represent is hard to estimate, not least because of the lack of technical expertise of the funding source credit unions.

 

[Usain]

It may be once have been brilliant, but this process has been going on for many decades. Many credit unions have been buying dealer paper and a few have even done floor planning. That's just in the US, but everywhere mutually owned financial institutions are there si usually some form of auto dealer originated financing too.
As for rates, they do vary greatly with credit unions too. Indirect financing does not always confer the advantages one associates with direct financing.

Despite the PR Origence is NOT a credit union, but a credit union specialized entity that originates and documents loans for resale to Credit Unions and Banks (in the vernacular these are called Credit Union Service Organizations.). Such companies exist mostly to sell paper to small and unsophisticated Credit Unions and sometimes local banks, which often have little expertise themselves. They are subject to regulatory limitations themselves. if anybody wants to know more just search for CUSO or the full name.
They do have some tax benefits when compared with less specifically-dedicated loan generators.

This may be a good deal for Tesla by placing paper more cheaply than they could do, perhaps, with securitizations. At best it serves to diversify the funding flow. How much volume this might represent is hard to estimate, not least because of the lack of technical expertise of the funding source credit unions.

Thanks for the analysis @unk45.

Regardless of how original the idea is, it will likely result in lower interest rates for Tesla customers, correct?

 

[Artful Dodger]

VIX spiked 10% at the same time. Did WWIV start?

lol, Cramer...

 

[SmokyPeat]

Google is the lone stock on my watchlist that stayed green today.

 

[2daMoon]

Both Optimus and FSD are constrained by the amount of training compute that Tesla is willing and able to devote to each effort. For much of next year, it seems likely that FSD will be prioritized for these scarce resources.

That said, Tesla is spending a huge amount on new computing resources. It is showing up on Tesla's cash flow statements and is significant, although we don't know the precise amount going to this effort. It is what Musk and the former CEO were talking about when they mentioned that Tesla was managing operations such that the company remained free cash flow positive despite margins declining.

The presumption that compute resources are scarce is in no way supported. Abundant resources are just as likely.

Particularly in light of Tesla's statements such as those regarding the potential to sell time on Dojo at some point.

Optimus and FSD most significant constraints are more likely to be found in the wetware trying to determine how to accomplish the task most efficiently.

 

[hobbes]

Hey - it's 8am in Germany, I noticed quite some positive reactions to Vision Autopark in Germany as it's just pushed to non-USS cars - and I must say, Tesla suprised me with this one - it's honestly great and I can see them finally having all things together to get serious auto-park working, I mean not just the "picture-perfect" one but more of the "real aka weird" ones as well.

So in case you wanna practice your german:

Now there's still the autopilot only going to 140km/h which is way too low for Autobahn but let's see how that develops over time.

Getting speed limits right would be way higher on my list than >140km/h AP!

 

[SOULPEDL]

Bought 50 shares. Ya gotta love a good FUD story!

 

[Max Plaid]

Getting speed limits right would be way higher on my list than >140km/h AP!

I'm not sure I'd want to use AP on the autobahns anyway!

What does irritate me though is when I am on AP and need to accelerate away from something, then the 140km/h limit gets hit, AP disengages and gets disabled from the rest of the trip -> that makes zero sense to me

 

[CorneliusXX]

The presumption that compute resources are scarce is in no way supported. Abundant resources are just as likely.

Particularly in light of Tesla's statements such as those regarding the potential to sell time on Dojo at some point.

Optimus and FSD most significant constraints are more likely to be found in the wetware trying to determine how to accomplish the task most efficiently.

My understanding is that compute demand is essentially infinite at the moment. If you could push 100x the data through the machine you would.

 

[hobbes]

I mostly agree with what you said, but this is not like robotaxi at all. While I don't think mass production of Optimus is imminent, it will go from concept to reality much, much faster than robotaxi.

The reason is because Optimus has the potential to replace so many different human tasks without the safety concerns of robotaxi. So the threshold to achieve usefulness is orders of magnitude lower for Optimus.

Tesla just needs to perfect one or two economically valuable use cases to get started with mass production. The chances of that happening relatively soon is pretty high. Maybe not "mass production in 2024" high. But high nonetheless.

One other difference that should make Optimus be faster to market than FSD is that it operates in a much more controlled environment. FSD has to deal with crazy edge cases, Optimus could just be sold for a given customer environment. Also, if Optimus drops something or runs into a wall, much less consequential than a car accicent.

But I also agree with @cliff harris that it will take much longer than initially expected, just like FSD.

 

[SmokyPeat]

The entire nasdaq did. Something happened.

Better than expected jobs data made investors nervous about interest rates, apparently. Nervous Nellies are to blame.

 

[Thekiwi]

40 CTs per day. That's already more than double the US sales rate of all Lucid's models combined. And we are just getting started...

Tesla Cybertruck 40 per day rate:
40 per day * 365 = 14,600 per year

Extrapolated Lucid 2023 sales:
(Q1+Q2) * 2 = 3191 * 2 = 6,382 per year

Source: https://www.visualcapitalist.com/visualizing-u-s-ev-sales-in-h1-2023/

All Joe said is that he saw 40 cyber trucks during his flight.

We don’t know how many of those were made before today, and we also don't know how many have been loaded onto carriers and taken away today.

Todays production could be 0. Or it could be 100. There is no way to know without continued coverage or at least being able to identify individual units to see if there are units sitting there for longer than a day or not.

If I was a well resourced hedge fund I would have interns sitting on the side of the road 24/7 monitoring transporters leaving Tesla factories in Austin, Fremont, Berlin (and lathrop for good measure). Or at least invest in some solar powered webcams.