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

[LJS22]

I don’t understand how transition from ICE to EV dominance would lower gas prices. By lowering demand? Sure a temporary fuel glut would lower prices temporarily, but production would be adjusted, and after that the lower production rate would seem more likely to raise rather than lower gas prices.

That’s true. Depends how rapid the transition is. There’s already too much oil being produced at the moment. For a brief moment there should be some wacky pricing. Regardless the oil companies won’t go quietly.
But I apologize for distracting discussion on the market. Seems we are in for a fun ride.

 

[KSilver2000]

I don’t understand how transition from ICE to EV dominance would lower gas prices. By lowering demand? Sure a temporary fuel glut would lower prices temporarily, but production would be adjusted, and after that the lower production rate would seem more likely to raise rather than lower gas prices.

In the same way, electricity prices are not going to become cheaper with increasing demand from higher EV adoption. My utility is always creating new rates and shifting hours with the numerous TOU rate options. Peak rates are already very very close to $.50/kWh here, which makes charging at home during the day (not that I do, but for comparison) cost equally to driving an ICE.

 

[EVNow]

No he didn't - but he heavily implied there were major cash burn issues and changes had to be made to address it.

You have to distinguish between internal memo to get employees to do certain things and actual cash position. Remember last time when they were apparently in a crash crunch, Musk didn't send such a memo.

See my cash flow model in the Finance thread. Even if they sell exactly the same number of cars as in Q1 (highly improbable) - they will still be $350M operating cash flow positive this quarter. Q1 cash burn was all about $800M in increased inventory. Not going to happen again until they decide to fill the pipeline with Y (may be a year or two after Y comes online). May be not even then since GF3 in China would be operational and you won't have so many cars in transit on ships.

Near-future quarterly financial projections

 

[MarcusMaximus]

OT :

Since several countries absolutely depend on oil income, unless the cartel agrees to cap production (and stick by the decision), the price will go down.

Oil != gas. Someone has to refine it. And as refineries close, supply will shrink.

 

[AlMc]

Bought another batch of 2024 convertibles at $89, with an effective yield of 4.5%.

Could you give CUSIP (again). TIA

Trying to find them on the TD platform with no luck. Anyone buy these on TD?

 

[sundaymorning]

You have to distinguish between internal memo to get employees to do certain things and actual cash position. Remember last time when they were apparently in a crash crunch, Musk didn't send such a memo.

See my cash flow model in the Finance thread. Even if they sell exactly the same number of cars as in Q1 (highly improbable) - they will still be $350M operating cash flow positive this quarter. Q1 cash burn was all about $800M in increased inventory. Not going to happen again until they decide to fill the pipeline with Y (may be a year or two after Y comes online). May be not even then since GF3 in CHina would be operational and you won't have so many cars in transit on ships.

Can you post your model in this thread, or provide a link?

 

[urarthur]

I think Standard Range Plus is basically conformed!

The page source listed a bunch of numbers as hints.

“460, 225, 5.6, 3, 2, 8, 0, 27800 and 56000”
View attachment 412805
T☰SLA Mania on Twitter

“27800 for Autopilot.
56000 for FSD
460 KM range
225 km/h high speed
5.6s 0-100km/h”

These are all the same configurations as SRP.

Now what about the rest of the numbers
“3, 2, 8, 0”

0 for 0 tax
8 for August production
2?
3?

the 3, 2, 8, 0 is supposedly the price. 328k RMB is what's floating around on twitter. Current prices are 377k RMB for the base model. So that's a hefty discount.

 

[EVNow]

OT :

Oil != gas. Someone has to refine it. And as refineries close, supply will shrink.

I think before refineries close we'll see gas stations closing. That is the signal for oil going bust. Anyway, we are far away from that point. The number of gas cars in the world is still increasing. We haven't even hit the Max ICE stage. I expect gas producing nations to start refining as well, if that is the problem.

Its going to be a while before you can make EVs for $5k to $10k that are getting added to the fleet in large numbers in China & India.

 

[VValleyEV]

OT :

Since several countries absolutely depend on oil income, unless the cartel agrees to cap production (and stick by the decision), the price will go down.

So a permanent oil glut holding down oil prices? Sure seems counter-intuitive. I recall the cartel capping production in the past, and if they don’t limit production either by agreement or voluntarily, the price should drop precipitously, but eventually they have to lower production or go bankrupt. Maybe they lower production just enough to keep prices just high enough to stay solvent, but if governments keep mandating EVs, the ability to boost demand by lowering prices will be increasingly limited.

Not debating, just thinking aloud that a permanent downward shift in oil demand seems unlikely to create permanently lower oil prices, but the transition indeed might not be smooth. A temporary big drop could throw a life preserver to some ICE manufacturers, especially in the US where energy policy is very friendly to oil. So maybe a temporary bounce of ICE sales based on gasoline price drops, in middle-America around 2022-2023?

 

[NicoV]

This may be to make way for Raven showroom cars - there have been a number of reports on the forum of Raven cars appearing in showrooms and test drives, so I think that Tesla may have been allocating early Raven production for this purpose to help with S/X sales. This would also explain some of the added delay in delivering any Ravens to customers.

Doubt it. The showroom is full of Model 3s bumper to bumper.

 

[Wooloomooloo]

No, he said that the new cash infusion would be eaten up if such a burn continues. The new cash infusion as I understand it is for accelerated growth, not survival, that they already had sufficient cash reserves necessary for survival before this latest cash raise. So by “screwed” in your description it would mean “cannot accelerate growth”, not “go bankrupt”. Or am I mistaken?

The bolded part is misleading as a standalone point - you can't separate the cash burn from the growth. High cash burn is a characteristic of a rapidly growing company (I know I am not telling you anything you don;t know here) but should that growth stall, the burn has to stop or at least significantly decrease.

Now the interesting debate around Tesla, if people can pause for a second, is whether they're growing faster than the market can support - i.e., will Tesla have excess capacity in the near future? If they did, that would be very concerning - anything that looks like stunted growth would damaging to the stock.

I didn't post the original link to take a position that Tesla were in trouble BTW... I don't actually think that's true.

 

[Joe F]

Except Phil LeBeau. He has merit.

I used to believe he did as well, and at times he still comes across that way, however, at times his body language says otherwise, especially after a coworkers negative comment.

 

[EVNow]

the 3, 2, 8, 0 is supposedly the price. 328k RMB is what's floating around on twitter. Current prices are 377k RMB for the base model. So that's a hefty discount.

RMB 377k = $54k
RMB 328k = $47k

So, not exactly cheap compared to US prices.

May be I shouldn't assume the ASP will go down when GF3 comes online !

 

[wipster]

In the same way, electricity prices are not going to become cheaper with increasing demand from higher EV adoption. My utility is always creating new rates and shifting hours with the numerous TOU rate options. Peak rates are already very very close to $.50/kWh here, which makes charging at home during the day (not that I do, but for comparison) cost equally to driving an ICE.

Wow, glad I live in the PNW, my power rate is $.071/kWh here. Granted we benefit a lot from water power and our rates have gone up over time here (but far less than the rate of inflation), but with renewable energy prices coming down over time, I think power rates overall will decrease as well.

 

[KSilver2000]

the 3, 2, 8, 0 is supposedly the price. 328k RMB is what's floating around on twitter. Current prices are 377k RMB for the base model. So that's a hefty discount.

That would be a disappointment.
If demand is going to be through the roof, absolutely bo reason to be selling it cheap. Very first thing kids are taught about supply and demand. I’ve said it before....Tesla shouldn’t be running a charity for the EV movement. It just went through a cash concern.
The markets won’t like seeing high demand + low price.

 

[Fact Checking]

High cash burn is a characteristic of a rapidly growing company (I know I am not telling you anything you don;t know here) but should that growth stall, the burn has to stop or at least significantly decrease.

The TSLAQ cult is basically fitting a line on a single data point of a single "bad" quarter (Q1) and is declaring that Tesla growth has stopped, with a straight face - and you are uncritically repeating that lie.

It is well understood why Q1 was weaker, none of those factors are permanent, and I believe Q2 will demonstrate that Tesla is still growing nicely - while global EV growth is off the charts extraordinarily high with no credible Tesla competitor products in sight.

Doesn't stop them from lying about it though.

 

[Ratanpara]

OT :

Since several countries absolutely depend on oil income, unless the cartel agrees to cap production (and stick by the decision), the price will go down.

Total Oil market demand going down is still few years out, but what could happen is oil market growth will be taken out in next five years so Oil companies with high debt will get affected first, just like what happens to coal market, most coal using electric generation plant are still operational but on its way out, Oil price probably won’t collapse due to most of the middle east government budget is on 70-80/ barrels oil market, minutes demand goes down they will cut production, this will be good for EV adaptations, Ev price bound to fall at the same time oil prices steady.

 

[Wooloomooloo]

You have to distinguish between internal memo to get employees to do certain things and actual cash position. Remember last time when they were apparently in a crash crunch, Musk didn't send such a memo.

I do remember, most folks here were in complete denial about it. But I agree with your first point.

See my cash flow model in the Finance thread. Even if they sell exactly the same number of cars as in Q1 (highly improbable) - they will still be $350M operating cash flow positive this quarter. Q1 cash burn was all about $800M in increased inventory. Not going to happen again until they decide to fill the pipeline with Y (may be a year or two after Y comes online). May be not even then since GF3 in China would be operational and you won't have so many cars in transit on ships.

Near-future quarterly financial projections

Nice thesis, although I think you need to consider some lag in manufacturing to delivery in China in the second half of this year.

 

[Tifighter]

Yesterday, the wife and I were driving on a local freeway to go mountain biking. In about a 15 minute span, we counted seven car carriers full of Model 3's on their way to Seattle. Seeing this, my wife, who doesn't follow the market at all, asked if the stock was relatively cheap. I nodded. "Maybe we should think about buying some more," she replied.

I guess that's one form of advertising.

 

[Nocturnal]

And that's true, no one except fanboys are arguing about that, even Musk. It doesn't mean they're passing judgement on the likelihood of this occurring - it didn't pass judgment at all.

Not in the next few months IMO.