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

[growler23]

So do high gross margins matter anymore? Tesla has $29B in cash now. Should we be looking at this from a different angle now, just like with other Tesla items? Sure, let's not go negative on the margins, but does it always have to be an ATH?

IF $29B is plenty to expand on the things for the future, then lower the margins and flood the market with more EVs.

I had the same thought. But a couple things come to mind. I believe they said in the call they want to spend $10B in CapEx next year. Ye gads, that's a lot to blow in one year. So suddenly that $29B cash on hand doesn't look so excessive. Or egregious. This sounds to me like the year of planting enough seeds for a MASSIVE harvest.
Second, the US still lags greatly on charging infrastructure. There are 2 aspects to this of course: road trip (DCFC/Superchargers), and L2/overnight chargers. We are so incredibly lacking on L2 charging here that flooding the market with a bunch of EVs that apartment dwellers can afford would create more problems, more actual bad experiences, and overcrowd those chargers that we DO have, making EVERYONEs experience worse. This slows adoption, which hurts the mission.
There is an ideal ratio between increasing car volumes and increasing charging locations. We don't know the ratio, but Tesla has enough data to make a good stab at it, and they likely have.
We have seen some actions from them, reported in this thread.
Tesla has made huge deals in L2 charging in things like hotel chains. They have made software/bookkeeping enhancements to allow big businesses like that to oversee large L2 charger banks. They can't go to every mom & pop apartment complex, but it is worth their time to talk to massive chains, and they have been.
On the DCFC end, they continue to increase the already exponential curve of installations (supercharge.info has a good graph of this), but throwing money at that only goes so far. The major delays seem to be "permitting" and connection to the local grid, which rely on outside-of-Tesla timelines.
TL;DR
Tesla must fight on all fronts at once and in Balance: slow charge, fast charge, vehicle volumes...or things get out of whack and the mission slows.

 

[mongo]

Seems so:

https://twitter.com/x/status/1748012290320794068

As Tesla previously said they are doing dry anode and cathode, probably the rate at which they can produce dry cathodes cannot keep up with the others processes yet (IMHO).

Given the Austin Cathode plant is still being built, it seems premature for the article to say Tesla hasn't solved the cathode dry coating process.
Use of China sourced cathodes would explain the Cybertruck missing from the Clean Vehicle Credit vehicle list. It also provides some potential reasoning behind the Foundation Series launch as the option package drives the AWD over the MSRP threshold.
2024:
Ramp Cybertruck
Ramp 4680
Ramp Austin Cathode
Ramp Lithium plant
2025:
Start volume deliveries of credit eligible AWD Cybertruck

 

[GOVA]

View attachment 1012476

Love those ribbon(?) charts. Can we get one for Rivian?

 

[unk45]

Chinese OEMs are the ones Elon talks of as the best competition
...

For some additional data:
statistic_id1197457_share-of-sales-of-chinese-vehicle-exports-2021-by-region.pdf
statistic_id305640_export-volume-of-chinese-automobiles-2001-2021.pdf

This data is only available at the moment ending in 2021. Remember also that by far the fastest growing Chinese production is actually in other countries, usually using significant Chinese components.
It's also relevant that there are several relevant auto and renewable markets in countries that have balance of payments surpluses with China (there are some!) of which there are seven. Each of those has oils or other commodities, except three: Japan, South Korea and Taiwan each of which supplied high tech items. The others: Russia and Saudi Arabia surprising /s sell petroleum while the final two, Australia and Brazil both supply commodities and agricultural products. All of those are partially influenced by politics. For example the US has been a huge supplier of Chinese chicken, pork and soy but has ceded some of that market to Brazil recently partly du to politics, partly due to agricultural disruption in the US.

The primary reason for listing those is that the global markets for all Tesla products and ingredients are subject to both political and supply issues. In the short run we might not think of these as major issues.
For Tesla, however, these are crucial ongoing logistics and management issues.

It is quite easy, for example to have Chinese components or finished goods going to the countries just listed above. Rather more fraught with, say, the US. Without a doubt it might well be advantageous to have some increased Tesla activity with, say, South Korea, Japan, Australia, Taiwan and Brazil. Those all are on the short list for some activities and every one has been mooted already for some sort of sales, factory and/or supply.

It is not my intent to advocate any specific action. It is my intention to point out that those very clever logisticians and engineers at TSLA are spending a great deal of time on these and, simultaneously trying every way to extract some more expense from the cost of good sold. Quite conveniently all of those countries are conveniently located as suppliers to the US and/or EU.

In the meantime the Great Chinese Expatriation Process (OK, politically convenient) is well under way and the efforts to optimize sourcing to minimize all costs, including transportation and 'friction', for manufacturing and distribution.

A major part of why the 2024 non-guidance is so cautious is because Tesla must deal with all of this quite urgently. That process is not being shouted loudly, but is critical, as is the Suez Canal, the US IRA as well as many other issues. All of this geopolitical conflict is forcing business adjustments for everyone.

Is all this more likely to be the primary issue facing Tesla rather than simply demand? or even production capacity?

 

[kabin]

Megacap fwd P/E Ratio comparisons per CNBC this morning:

META 22x
NVDA 29x
MSFT 33x
AMZN 42x
TSLA 55x

 

[SOULPEDL]

Sure it is, have you done the math? If we take only last years actuals and exit run rates (N.B. Shanghai Dec '23 wholesale was 93.5K units, or 1.1M annualized) all we need to do is bring up Giga Texas Model Y Production to the existing level of Giga Berlin. Here's the numbers:

View attachment 1012352

Question is, will Tesla want to do it? Of course! They'be already invested 100% of the CapEx required to build this capacity, all they have to do is continue to run it at 2023's 'exit rate' and bring TX up to match Berlin...

and TX is getting 100GWh of 4680 cell capacity by mid-year, already at 25 GWh with just one production line (+2 test lines are extra, installing the 4th line as we speak). Plus, Drew told us YESTERDAY that they are weeks ahead on 4680 production vs needs for CT.

It's funny how many of us missed it, (congrats to those who correctly predicted "No guidance"). I can't seem to reveal who voted what, but thinking you (@Artful Dodger) were in the 2.5M camp (or did you change your mind?).

The controversy around this topic today shows me that many dislike stretch goals (even pie in the sky possibilities that help to open up possibilities among the myopic views). Their views are valid but also conservative in a non-conservative company... and not how Elon operates.

Sky is the limit with Tesla - this is a fact they have done the impossible already. In fact, 3M in '24 is actually possible (obviously with .001% probability). Maybe the hyperbolic comments are not so hyperbolic with Tesla, which is NOT Apple or Amazon.

Please consider this when making statements like "0% possibility" or "No way". These comments are even more unrealistic IMHO, borderline patronizing those folks with views that are actually possible.

So it might help in the future to clarify confidence levels. I'm more carefully choosing my own words to describe future states, just because people are so triggered, yes triggered by anything out of the ordinary. And yet Tesla is anything but.

So I'm still with 2.5M for the mission (with ~ 60% confidence), as unlikely as this sounds to most people here. Further, for the trigger people, I think RoboVehicle (not-a-Taxi) is also possible this year with ~5% confidence in a generalized launch, and 25% confidence for a location or use case specific launch. Maybe this type of clarification would help - instead of "Your wrong" etc...

 

[scaesare]

If you want temperature measurement per X number of cells, only the pack size (cell count) matters, not the arrangement.
BMS sections matches the series groups due to balancing requirements. Twice the voltage is twice the groups, even though each group has half the cells.



Estimating exponentials/ s-curves is difficult.
If 15M in 2030, a 33% increase would make 2031 20M. If 12M, two years of 29% increase makes 2032 20M.

Good point that BMS is per brick, so that chip count could go down, even if temp mgm't chips stays the same...

 

[EVNow]

Megacap fwd P/E Ratio comparisons per CNBC this morning:

META 22x
NVDA 29x
MSFT 33x
AMZN 42x
TSLA 55x

How about expected growth rates in next 3 years ?

 

[EVNow]

Sure it is, have you done the math? If we take only last years actuals and exit run rates (N.B. Shanghai Dec '23 wholesale was 93.5K units, or 1.1M annualized) all we need to do is bring up Giga Texas Model Y Production to the existing level of Giga Berlin. Here's the numbers:

It’s no longer a supply side issue - it’s about how many can you sell while increasing GM or at least while holding it steady.

Plus, Drew told us YESTERDAY that they are weeks ahead on 4680 production vs needs for CT.

Ofcourse for CT it is a supply issue this year. Where do people see CT production ramp this year by quarter ?

10k+15k+20k+30k = 75k ?

 

[uscbucsfan]

Joe T says current rate is 100 a day on one of his videos. He is somewhat plugged in so may be close.

Vin activation tracker is about 50 per day. That's reported VINs being activated. Some days are less and some are more. 56 was the highest when I looked Monday.

 

[Drumheller]

https://x.com/BestTrader01/status/1750721201087942812?s=20

Im guessing he was using margin and had a stop hidden below $180 or so.

This is why I only buy shares in Tesla never use options or leverage.

Perhaps he is not the Best Trader

 

[Artful Dodger]

Also, good luck running all factories at 100% utilization!

It's hardly 100% utilitation. The 560K from Fremont is the ACTUAL from 2023, and the 1.1M from Shanghai is their current run rate based on Dec 2023. Are you going to argue the their production will DECREASE? Hah!

Again, Texas only has to be brought up to Berlin and that over 2.5M capacity. As per demand, I'm not even going to dignify that tired old trope with a microeconomics lesson.

 

[Ellec]

Seems a likely outcome given the venom.

Yes, his name is Tesla Bull and now he's claiming Elon is a fraud over a 12% drop in the SP which, if you have been an investor more than 10 mins in Tesla is a common experience, especially after earnings.

 

[scaesare]

Seems so:

https://twitter.com/x/status/1748012290320794068

As Tesla previously said they are doing dry anode and cathode, probably the rate at which they can produce dry cathodes cannot keep up with the others processes yet (IMHO).

So, back to my original question, if they were originally using wet-slurry produced cathodes for the gen 1 cells (even though it appears they are using dry process now), and those cells were lower volumetric efficiency than the 2170s, then it would seem that cathode formation was not the culprit.. so what was?

 

[GSP]

Given the Austin Cathode plant is still being built, it seems premature for the article to say Tesla hasn't solved the cathode dry coating process.
Use of China sourced cathodes would explain the Cybertruck missing from the Clean Vehicle Credit vehicle list. It also provides some potential reasoning behind the Foundation Series launch as the option package drives the AWD over the MSRP threshold.
2024:
Ramp Cybertruck
Ramp 4680
Ramp Austin Cathode
Ramp Lithium plant
2025:
Start volume deliveries of credit eligible AWD Cybertruck

The post talks about Tesla buying ”cathode rolls.” I interpret that to be the aluminum current collector foil, coated with the cathode minute, and rolled up for shipment. Tesla would use these rolls with anode rolls they made with their dry process, plus the seperator, to make 4680 jelly rolls.

If Tesla could use their dry cathode process to coat the current collector, then they could have just bought the cathode mixture from a supplier until their own cathode plant is operational. However, it was reported that the top-tier battery suppliers refused to sell cathode rolls to Tesla. They only wanted to sell complete battery cells. Perhaps Tesla could not find a supplier of cathode material, and was forced to buy cathode rolls? Not sure, but maybe.

GSP

 

[EVNow]

https://x.com/BestTrader01/status/1750721201087942812?s=20

Im guessing he was using margin and had a stop hidden below $180 or so.

This is why I only buy shares in Tesla never use options or leverage.

Well, he says he will sell CC. So, I don’t think he lost everything…

 

[GSP]

So, back to my original question, if they were originally using wet-slurry produced cathodes for the gen 1 cells (even though it appears they are using dry process now), and those cells were lower volumetric efficiency than the 2170s, then it would seem that cathode formation was not the culprit.. so what was?

IIRC the main differences between gen 1 and gen 2 4680 are in the design of the can. Mass has been removed by using thinner steel, and less”dead space” above the jelly roll. The reduced mass is what increased the specific energy. If I am correct, then the gen 2 cell should have the same Wh of energy capacity, but higher Wh/kg.

GSP

 

[2daMoon]

I had the same thought. But a couple things come to mind. I believe they said in the call they want to spend $10B in CapEx next year. Ye gads, that's a lot to blow in one year. So suddenly that $29B cash on hand doesn't look so excessive. Or egregious. This sounds to me like the year of planting enough seeds for a MASSIVE harvest.

Reading this planted a seed to ponder.

Consider how Tesla staff will be quite busy with bringing everything they have in the pipeline to fruition, is there some way to take advantage of the expected lull that lowered expectations offer?

Elon, being of a competitive nature, has fostered events with prizes for Hackers, Tunnelers, Hyperloopers, and others across the Elonosphere.

Maybe it is time for a similar ongoing competition for Tesla educational / infomercial creators to give it their best shot. Winnings go to any whose work is adopted, bonus points for those designed to be ongoing.

Categories could span the range of:

Funny​

Instructive​

Promote Brand Awareness​

Accomplishments​

Thought Provoking​

Environmental​

Contributions to Society/Humanity​

The Freakin' Mission​

Why/How is Tesla Different​

How to Recognize FUD​

etc.​

With not much else being expected to attract the spotlight to Tesla in the coming year, this seems a prime opportunity that could result in a campaign building on public awareness of everything Tesla. And it might be less of a burden to administrate than pursuing the usual avenues toward such an end. Not to mention how a much wider range of creative talent could be involved than would be with an in-house team doing something similar.

The haters would go wild, bringing in folks to click, watch, and learn, then decide for themselves once they get past the initial FUD-generated outrage that draws them there.

You have to make hay while the sun shines, right?

 

[mongo]

Ofcourse for CT it is a supply issue this year. Where do people see CT production ramp this year by quarter ?

10k+15k+20k+30k = 75k ?

Waiting, waiting, waiting, driving...

As regards the ramp, Tesla could easily use imported cathodes for tri-motor and range extender, if needed, saving domestic production for AWD.
If I'm reading correctly, the manufacturing credit is not invalidated by use of Chinese components.

 

[CitizenKane]

Frankly, I don't think we can get anywhere if you can't understand what I wrote. I stop now.

Fair enough, I just don't want you or anybody else to believe in conspiracy theories about how the market works. I do not know Dan Ives personally but I do know other analysts, fund managers and investment banking employees and I have also worked during most of my life in the financial services sector. Even if people had no morals or ethics, which is not true, there would be no need to "manipulate" prices or people, you make good money anyway without the risk of sanctions and badwill. Sure, there are cases like Madoff and other criminals but they are exceptions, not the norm.