Depending on the time horizon, there are longer term factors that can impact of car margins:-
- 4680 cell production (50% of cell costs)
- Gen3 manufacturing processes (30% of GA or manufacturing costs)
- Optimus robots in car factories
- FSD
I've posted here on how I see Gen3 production processes applying in future to all cars Tesla makes:-
Place to record the production ramping performance for new vehicles starting with CT:
teslamotorsclub.com
Media outlets are increasingly starting to predict EV prices below prices for ICE vehicles. IMO at price parity only a total fool would buy an ICE car.
Being able to think more than 3 months ahead is why I don't buy the EV demand issues narrative...
Well said. The list of manufacturing innovations that reduce costs and improve quality seems to be growing. Based on reports elsewhere it seems there are numerous areas for which cell and pack costs are declining, including chemistry changes and materials cost reduction, including substitutions for lithium as well as rapid increase in lithium and other battery ingredients. Some reports suggest BYD Blade technology is much cheaper and robust, which is used in China production of Tesla too, and those are produced at pack level for Tesla, form what I read.
Then consider the impact of 48 v on future vehicles which vastly reduces copper use as well as contributes to lower vehicle weight. And so on... or in homage to Vonnegut "and so it goes", but this time it is all good!
For some reason many people are blissfully ignorant about the march of cost reduction with Tesla. In particular, few are even aware of the logistics costs reduced by unwinding "the wave" nor the cost reduction resulting from nearly automated delivery processes. The latter I noticed a couple fo weeks ago taking delivery of a new Model Y. The email and message updates, instructions and directions all enable reduced staffing in delivery. Then ceasing delivery from many stores and centralizing for major urban areas reduces costs too, not coincidently home delivery also does the same.
It also seems most people are simply not aware of the total logistics, production and operational savings that accrue from unwinding 'the wave'. Those who see only downside from pricing changes , periodic incentives from FSD transfer, Supercharging and 'spiffs' for customer referrals really do not understand how much operational savings all that brings.
Tesla has guided fro low growth this year. That does not mean collapse of earnings nor, especially, Free Cash Flow. There are enough moving pieces in all this that we cannot make accurate assessments today, IMHO. That said, I will be unsurprised if the quarter ends out quite well, despite the 'Volcano Group' attack on the Brandenburg grid, The Red Sea Houthi attacks and other challenges. With all the speculation about demand problems too it is also possible that the first quarter will suffer more than i expect. OTOH, Tesla has a history of thriving in adversity and there si also the effect of incentives for BEV and renewable adoption in several crucially important markets.
Finally, it does appear that Cybertruck might be ramping somewhat better than expected. At minimum that should reduce negative effects of the ramp. Further, a trifle of 'slow walking' Monterrey and initial production of 'Model 2' now planned for Austin should also somewhat reduce need for cash.
'Wild Cards' exist with FSD V1 impact, Optimus, AI progress including Dojo and much else. Until recently those have been major cash suers. What happens when one or more turn to cash producers rather than only consumers? Is that happening now? Perhaps.
Looking at all those factors I admit there are grounds for both pessimism and optimism. Not too long after quarter end we'll know. I remain optimistic that Cash Flow will remain strong but the P&L I will not even speculate.
. When enough people trade around it…..
