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

[uscbucsfan]

I on the other hand would perfectly fine with Tesla getting out of the power wall business. Same with solar

Solar, sure. They are basically one foot out the door with that anyway.

But why power walls? They have batteries, it's an easy thing for them to make and they are selling them. Until last year, they didn't sell them without Solar attached, but that's been changed.

edit: I want them to keep as many products as they can if they are profitable.

 

[Leftlane22]

I completely agree with you at present time. However, the market is forward looking. So I don't really care about what the company is earning now, I do care about what they are earning the next years and even decade.
Are you familiar with the idea of Wayne Gretzky? "Skate to where the puck is going, not where it has been"

Man I hate that quote - it is so cliche and gets used for everything. How about if you already have the puck, are in complete control of the puck, are a better stick handler than anyone else, have a clear path to the goal, and you already are so far ahead in the game - and then still somehow mess it up and score an own goal?

 

[Dikkie Dik]

No. These were "employee cars", not what we in the US think of as company cars. It's a fringe benefit/tax dodge. There was a big cliff on the tax dodge part at the end of 2019 and Tesla exploited it to the max.

Most companies over here have ‘green’ car policies. Benefits may have ended but most of these cars will be replaced by new EV’s and a lot of the 2019 M3 drivers are staying with Tesla.

They delivered them to third party leasing companies like LeasePlan. The cars made their way into end user hands over many months.

Some maybe, the reality was that Tesla delivered most directly to the drivers in the harbour of Amsterdam, straight from the boats. The dutch Tesla owners club stepped up and helped out.

Een enorme logistieke uitdaging: zo werkt Tesla aan een ‘afleverrecord’

Dat de Tesla Model 3 op dit moment de best verkochte auto van Nederland is mag goed nieuws zijn voor de Amerikaanse fabrikant, het levert de Amsterdamse haven een enorme logistieke uitdaging op. Bij hoge uitzondering zijn wij getuige van dat hele proces: hoe talloze Tesla’s in een paar uur tijd...

www.ad.nl

Epic logistical solution.

 

[alexxs88]

Waymo's problem is that there just is no clear path to profitability. Waymo's hardware costs are too high and more importantly, Waymo's operational costs are too high.

This is easily proven as false. Each Waymo car replaces a normal car plus its driver. The driver alone earns in a year more than Waymo's one-time cost for the sensor stack. Not to mention all the other savings they get.

 

[Todd Burch]

Wow...so if a company does not make a profit in trial phase why scale it? So Uber..which took years and years and years to make first profit should have shut down to start with. Google...same thing, should never have pushed forward. Intel..no...stupid idea. Tesla..terrible idea. FSD by Tesla which is a money losing pig right now...yeah shut that down. SpaceX...shut it down.

I agree with you that Waymo is going to focus on the USA at first. I disagree on the mapping, the maps are constantly updated as the vehicles drive and Tesla may very well find themselves using maps. I'd be very careful about making blanket statements such as that.

The only lunacy I see is to assume that Waymo won't have 50k robotaxis. Its clear that's what they plan to launch. It's clear that they go from a to b to c to d, etc etc. They solved FSD first, is it geofenced, yes. However, today you can get in a waymo in phoenix and drive across town. Same thing in San Fran. Austin, LA, and somewhere else coming soon. They plan to offer RT in the top Uber cities in the USA and then see where it goes. I'm bookmarking this post because I'd like to return to it in 2 years and we'll see where things sit. FYI, you sound like the TeslaQ people that said EVs don't work and nobody wanted them and tesla was a scam.

I did not see the original post so I'm not responding that I agree or disagree with it.

But the problem with this response is that there is a difference between a loss due to production at small scale, a loss due to R&D, and a loss due to a structural business plan or cost structure and I think those differences are trivialized in this response.

Rivian is likely in the first category. I think they still have some structural cost issues to deal with, but they should get quite a bit closer to profitability if they can effectively scale enough while continuing to drop production costs. Tesla was initially in this category too.

FSD is obviously a loss (although actually at this point we don't really know if it's losing money anymore) because at it's heart it's an R&D project still in-progress that people pay to have access to while it's in development. In theory, Once Tesla hits (for example) 10x human safety they could immediately stop all development and the incremental cost of its development becomes nearly pure profit from that point on.

But there are some business structures that will lose no matter how much you scale. Uber, for example, requires a human driver to drive the vehicle. If that driver costs $20/hour in pay/benefits, but you can only make $17 an hour from rideshare customers, then you could have a million cars with a million drivers and you're still not going to make a profit.

The argument is really weather the business plan and technology roadmap leads to a cost structure that can lead to profits in the future. Waymo may figure out how to be profitable in various mapped geographies with a certain sensor suite, but if a competitor (FSD for example) gets to the point where it can drive in any city with a much less expensive sensor suite, then no amount of scaling will enable Waymo to survive unless they bring something unique to the table.

That's just an example, but the point is not whether something makes a profit initially--it's whether it shows promise to be profitable in the future.

 

[nativewolf]

Sure, it's fine to run a technology business like Waymo at a loss. It's even fine to do so for many years while the technology is allowed to mature into something profitable.

Waymo's problem is that there just is no clear path to profitability. Waymo's hardware costs are too high and more importantly, Waymo's operational costs are too high.

Scaling will help with the hardware costs to a point. But Waymo's technology has to massively improve before it will address operational costs. Otherwise, more scaling will just lead to more losses.

That's why Waymo won't have 50k robotaxis any time soon.

fair enough. We'll see in 2 years where they are and compare to Tesla. I suspect we'll see Waymo beginning to deploy the fleet and Tesla to start going through permitting in CA. We have no idea where Waymos cost will be at scale nor what the market will hold if Tesla and Waymo go to a price war in 3-4 years.

 

[nativewolf]

This is easily proven as false. Each Waymo car replaces a normal car plus its driver. The driver alone earns in a year more than Waymo's one-time cost for the sensor stack. Not to mention all the other savings they get.

well plus it's still all an experiment at this stage. Who knows what kind of costs they have, I do know Uber was a capital destroying pig for more than a decade but finally got to profitability after 13 years.

 

[cliff harris]

Wow...so if a company does not make a profit in trial phase why scale it?

Because there are virtually no economies of scale? Scaling a business model that is fundamentally broken is just dumb. What are the economies of scale in waymo/cruise? How can they possibly, ever, ever, in a billion years compete with a company that collects data from 5 million shipped cars, which have cost ZERO, because the customers actually pay to buy them and act as data collectors?
Waymo and cruise are both a joke. They exist purely to con gullible investors who dont understand tech.
I'm all for scaling em though, let google and GM throw more money in the dumpster.

 

[Todd Burch]

I don't think the margins will ever be what they were.

Suppose Tesla reaches 5x the safety of the top 1% of drivers. Or suppose you only have to intervene once a year on FSD. Tesla could decide that's good enough, immediately stop further development of FSD, freeze the NN in its current state, and just sell it as a software add-on.

What would be the take rate of FSD if it only required one intervention a year? Surely much, much higher than it is now.

Now consider that is almost 100% pure incremental profit at that point. No additional development cost to maintain it. That could instantly double or triple the profit of a single sold car, since it's all software.

It is not too hard to see margins not only going back up but potentially surpassing what they used to be once FSD gets to that point.

 

[nativewolf]

I did not see the original post so I'm not responding that I agree or disagree with it.

But the problem with this response is that there is a difference between a loss due to production at small scale, a loss due to R&D, and a loss due to a structural business plan or cost structure and I think those differences are trivialized in this response.

Rivian is likely in the first category. I think they still have some structural cost issues to deal with, but they should get quite a bit closer to profitability if they can effectively scale enough while continuing to drop production costs. Tesla was initially in this category too.

FSD is obviously a loss (although actually at this point we don't really know if it's losing money anymore) because at it's heart it's an R&D project still in-progress that people pay to have access to while it's in development. In theory, Once Tesla hits (for example) 10x human safety they could immediately stop all development and the incremental cost of its development becomes nearly pure profit from that point on.

But there are some business structures that will lose no matter how much you scale. Uber, for example, requires a human driver to drive the vehicle. If that driver costs $20/hour in pay/benefits, but you can only make $17 an hour from rideshare customers, then you could have a million cars with a million drivers and you're still not going to make a profit.

The argument is really weather the business plan and technology roadmap leads to a cost structure that can lead to profits in the future. Waymo may figure out how to be profitable in various mapped geographies with a certain sensor suite, but if a competitor (FSD for example) gets to the point where it can drive in any city with a much less expensive sensor suite, then no amount of scaling while enable Waymo to survive unless they bring something unique to the table.

That's just an example, but the point is not whether something makes a profit initially--it's whether it shows promise to be profitable in the future.

Well I agree to a point however, Uber makes profit in big metro regions I think that's not going to change with any TaaS provider. So the ability to service anywhere is a bit of a red herring. I could offer all the rides I can in Cartersville VA but there just isn't much demand, if any. Secondly operating expenses of $.05/mile or $.06/mile really wont matter..I think. I believe sensor suite cost on a RT in a profitable region is just nothing. Waymo has virtually unlimited access to capital so I don't see it being a deal breaker.

 

[cliff harris]

It just staggers me that people can *with a straight face* not see the difference between a company that shoehorns 32 million different sensors on the top of a car they buy from someone else, then employ people to create maps of everywhere you might want to operate...
...and a company that sells people cars for a nice profit, then creates a universal map-free solution for driving everywhere on earth using the sensors that are already in the car that they sold at a profit.

I just don't get it. Its insane that the difference is not obvious. Scaling up a dumb idea is just being more dumb. Unless your livelihood depends on waymo and cruise 'scaling' it just cannot make sense to continue to support such a ridiculous dead end.

 

[UkNorthampton]

One of the TSLA retail community has got one of the best US law firms to represent her in the Delaware case.

I'm hoping that it's ok for me to at least post a link to Alexander Merz and others discussing this on youtube. To me, it sounds compelling, but I don't know.

"Amy Steffen's Brilliant Legal Move" Amy was a paralegal, before some other career moves (she's now an airline pilot).

According to my interpretation of the transcript, lawyers include Joseph Grundfest from Munger, Tolles & Olson (yes, Charlie Munger)

My Google-fu is failing me - apologies if wrong bloke

Munger, Tolles & Olson - Wikipedia

en.wikipedia.org

Joseph A. Grundfest | Stanford Law School

Senior Faculty, Arthur and Toni Rembe Rock Center for Corporate Governance Joseph A. Grundfest, JD ’78, is a nationally prominent expert on capital

law.stanford.edu

 

[nativewolf]

Because there are virtually no economies of scale? Scaling a business model that is fundamentally broken is just dumb. What are the economies of scale in waymo/cruise? How can they possibly, ever, ever, in a billion years compete with a company that collects data from 5 million shipped cars, which have cost ZERO, because the customers actually pay to buy them and act as data collectors?
Waymo and cruise are both a joke. They exist purely to con gullible investors who dont understand tech.
I'm all for scaling em though, let google and GM throw more money in the dumpster.

you realize that Tesla is spending billions analyzing the data, right? Again, you have no idea how broken, or not, Waymos business model may become. I can state that I have at least some understanding that TaaS doesn't scale, quickly, beyond what Uber has done. It's a market, it could make a bit of profit. It's nothing to write home about. The big cities are all the profit. Google can make money on ads in every Waymo ..something Tesla can't easily do.

 

[Todd Burch]

Well I agree to a point however, Uber makes profit in big metro regions I think that's not going to change with any TaaS provider. So the ability to service anywhere is a bit of a red herring. I could offer all the rides I can in Cartersville VA but there just isn't much demand, if any. Secondly operating expenses of $.05/mile or $.06/mile really wont matter..I think. I believe sensor suite cost on a RT in a profitable region is just nothing. Waymo has virtually unlimited access to capital so I don't see it being a deal breaker.

Yeah that was just an example with numbers completely pulled from thin air. Was more focused on the concept, not the specific examples.

 

[uscbucsfan]

Suppose Tesla reaches 5x the safety of the top 1% of drivers. Or suppose you only have to intervene once a year on FSD. Tesla could decide that's good enough, immediately stop further development of FSD, freeze the NN in its current state, and just sell it as a software add-on.

What would be the take rate of FSD if it only required one intervention a year? Surely much, much higher than it is now.

Now consider that is almost 100% pure incremental profit at that point. No additional development cost to maintain it. That could instantly double or triple the profit of a single sold car, since it's all software.

It is not too hard to see margins not only going back up but potentially surpassing what they used to be once FSD gets to that point.

If a ridiculously high take rate is reported, sure. Just the advancements aren't shown in the stock price. I did say FSD in my original post, but it's sales/licensing not improvements that move the needle.

I think all the things I listed combined are why I'm still an investor.

 

[Hock1]

I sincerely hope most investors here don't believe shorting is what is holding down TSLA stock price.

1. % short interest in Tesla is like 3-4%, that's nothing. TSLA is not being shorted 30-40% like some stocks, or how it was in the past.

2. People keep pointing out the market is booming but TSLA is not, therefore TSLA is manipulated. Incorrect. Why is the market booming? Because of a handful of megacap stocks are booming. Why are they booming? Because they keeping make more and more insane amounts of money.

3. Tesla at ATH was valued as if not only the high margins were going to continue, but that they would continue with high volume growth. Basically TSLA at $400 was assuming 20% operating margins on 5 million vehicles was going to happen.

4. Tesla is making less amounts of money.

5. "Executing well" does not match with stock valuation. Just because the company is doing well does not mean it deserves whatever arbitrary value you think it should, just because it was valued that highly in the past. TSLA is still a $500 billion company, which is very very high given how much money it makes.

Short interest is a farce. I wouldn't be surprised if unreported shorts plus FTDs comprise hundreds of million "shares".

 

[nativewolf]

Man I hate that quote - it is so cliche and gets used for everything. How about if you already have the puck, are in complete control of the puck, are a better stick handler than anyone else, have a clear path to the goal, and you already are so far ahead in the game - and then still somehow mess it up and score an own goal?

than I was giving you lessons when you were a kid and for that...I apologize. But honestly your parents shouldn't have let me coach hockey when I can't skate.

 

[nativewolf]

Yeah that was just an example with numbers completely pulled from thin air. Was more focused on the concept, not the specific examples.

I understand your point, I don't think it's the point on which to focus, that's all. To me the big test is will RT drive an expansion of the TaaS market, I sincerely doubt it moves very much. For RT to actually matter to the stock price that's a huge question.

 

[ItsNotAboutTheMoney]

you realize that Tesla is spending billions analyzing the data, right? Again, you have no idea how broken, or not, Waymos business model may become. I can state that I have at least some understanding that TaaS doesn't scale, quickly, beyond what Uber has done. It's a market, it could make a bit of profit. It's nothing to write home about. The big cities are all the profit. Google can make money on ads in every Waymo ..something Tesla can't easily do.

You keep repeating that as if it's a fact, when you're talking about something that doesn't exist anywhere yet. That you even bring Uber into it to me shows how stuck your thinking is.

 

[nativewolf]

You keep repeating that as if it's a fact, when you're talking about something that doesn't exist anywhere yet. That you even bring Uber into it to me shows how stuck your thinking is.

TaaS -exist pretty much everywhere in the world. RT only change the price point. Uber is a USA proxy for TaaS. We can circle back in a couple of years and see if I'm right or not.