And sell more solar panels/roofs, and Power packs.....anyone know the contribution/drag from solar?
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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And sell more solar panels/roofs, and Power packs.....anyone know the contribution/drag from solar?
OK, so Tesla has eliminated as much as possible of the car lease accounting; the recent changes to lease accounting get rid of most of it, and the fact that they avoid direct leases gets rid of most of the rest.
As for the solar systems, their accounting is super bogus (but mandated by GAAP, sigh). There's a bifurcation of opinion: some people think that old solar panels are "worthless" and the depreciation schedules are too long, which I consider to be total nonsense -- I think on the whole the depreciation schedules are too short.
I said more specifically that they were getting rid of the zero-money-down leasing model, which was subject to bank runs and so unmanageable. They needed the installer teams and they used them. They wanted the Buffalo Factory (which is a sweetheart deal). IMO, they bought the company for under the value of the old lease income streams, which they promptly sold for cash, with the Buffalo Factory as an extra, so it was a good deal.
It might not be a terrible strategy to get out of solar panel retrofits altogether and only offer the premium solar roof product while partnering with every other solar panel installer to sell PowerWalls.
They reduced the price drastically by about 30%. But honestly there shouldn't be a drag. I don't know what's stopping Tesla from bundling solar with the cars.
Carl Raymond
Active Member
Not sure what you mean, but that looks like an "I'm sceptical" comment.
Think like Elon - in terms of exponential growth curves. If you haven't watched any Tony Seba presentations, maybe watch a few to get into the habit of visualising S curves.
Then look at what's happening already. Solar and wind are the cheapest energy - half the cost of anything that uses fuel and a third of the cost of nuclear. Renewables only downside is susceptibility to weather fluctuations, so the cheapest energy is best buddies with the cheapest storage.
Enter the gigafactories. Already Tesla is a growth engine for Nevada, Fremont, Shanghai and is contributing to growth in other places like Lathrop, Buffalo. Every time they construct a supercharger station the local economy gets a little bump. Every time somebody buys a Tesla, that person's weekly disposable income goes up by the amount they previously spent on fuel. Don't forget all the suppliers scattered across the globe, all seeing their orders from Tesla ratchet up, 50 to 100% per year. When electric Semis hit the scene, the cost of every product will fall by a few percent. Currently, 6% of the cost of everything is transport - expect that to halve. All that extra cash for consumers is economic adrenaline.
Now double the Tesla effect. Double it again. Keep doubling till you get to a terawatt hour of cells and related products per year.
Can you see the industrial revolution now? The fossil fuel era is as dead as the steam era. Divest sooner rather than later.
As someone mentioned as a reply to one of my posts, it's likely Tesla will eventually exit the PV retrofit business. Its quarterly deployment numbers have only been straight down since the acquisition. And yesterday's number showed just about half of the the previous quarter's record low, and almost just 10% of 2016 numbers.....even with 2 months since undercutting bigger competitors on price.
In reviewing today's FUD there seems to be a lot of "It's bad but look at that boatload of cash" spin control.
I suspect we have not seen the bottom for TSLA this week. I think this dip will be short-lived compared with other bear raids we have seen in recent years. Of course, I have no powers of prediction when it comes to TSLA.
All things considered, I thought yesterday's numbers and call were positive. I see increasing signs of stability in addition to continued exponential growth. It's all good.
Disclosures: The highest price I ever paid for TSLA was 370 (when I thought 420 was secured). My current adjusted cost per share is about 140. I have also bought shares of ARKK.
I suspect we have not seen the bottom for TSLA this week. I think this dip will be short-lived compared with other bear raids we have seen in recent years. Of course, I have no powers of prediction when it comes to TSLA.
All things considered, I thought yesterday's numbers and call were positive. I see increasing signs of stability in addition to continued exponential growth. It's all good.
Disclosures: The highest price I ever paid for TSLA was 370 (when I thought 420 was secured). My current adjusted cost per share is about 140. I have also bought shares of ARKK.
I doubt they'll fully exit that business. That said, I think they will *only* sell solar panels to people who are buying Powerwalls... and they'll prefer to sell them to people who are buying Powerpacks. The stated (though clearly incomplete) rationale for the SolarCity merger was to more easily offer utility scale solar farm + storage deals like the one in Kauai. They've done more of those deals since then, and also smaller commercial-scale Powerpack + solar-on-flat-roof deals. And I think that type of solar retrofit is going to continue to happen.
That $420 deal hurt me also. Average price went up to just shy of $300.
On the contrary, I've been sitting on an open proposal for retrofit solar onto my roof for a few weeks now. (Still not sure whether we'll move forward at present, as it's for a 2nd system to fill out our roof, so the production wouldn't be spectacular. Oh, and we bought an X while this process has been going. But that's neither here nor there.)
The reason I bring it up is that there's no Powerwall component yet Tesla very much wants me to move forward. They call, text, and email daily. All three. Daily. For weeks. It's the opposite of Tesla's car business communication.
Clearly their retrofit numbers are dropping, but at present they are definitely still working to close deals.
Carl Raymond
Active Member
Anybody care to comment on this item from the earnings report?
"Gigafactory Shanghai continues to take shape, and in Q2 we started to move machinery into the facility for the first phase of production there. This will be a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year – the second generation of the Model 3 production process."
It doesn't make sense. Fremont is already pushing 7000 model 3 per week. Why would a new line only aim for 3000 per week? I'm not seeing a relationship between simplified, more cost-effective, and slower. Hitherto, Musk has always advocated that faster equals more cost-effective. Recall comments deriding lines running at 'walking speed'.
I'm hoping they are playing it down, with plans to match/exceed Fremont output in a next phase. Surely...
"Gigafactory Shanghai continues to take shape, and in Q2 we started to move machinery into the facility for the first phase of production there. This will be a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year – the second generation of the Model 3 production process."
It doesn't make sense. Fremont is already pushing 7000 model 3 per week. Why would a new line only aim for 3000 per week? I'm not seeing a relationship between simplified, more cost-effective, and slower. Hitherto, Musk has always advocated that faster equals more cost-effective. Recall comments deriding lines running at 'walking speed'.
I'm hoping they are playing it down, with plans to match/exceed Fremont output in a next phase. Surely...
Perhaps there is probably about 3k max demand a week (steady state after initial pent up demand wave) for model 3 SR in China....AT CURRENT PRICING.
Next production increase in shanghai after that might be for Model Y SR, and then as costs/prices come down further in future production could ramp up further on 3 & Y, or a new smaller/cheaper model introduced if needed.
no point building a production line for more than is needed at current demand level.
Elon said yesterday he sees global demand for model 3 at 750k annually (presumably with lower eventual pricing included). 150k SR units just for China seems a lot given that number.
Considering Tesla has demand, is improving production all the time, expansive charging network, expanding in areas they invested in and with a highly popular, much desired line up of cars and soon more like the Y and Semi and Pickup in the hopper, if you compare it to other manufacturers out there facing a multitude of battery, production line, even still design issues still while juggling current cars and some emissions fallout, I think Tesla is in a much better position than some out there. Nissan today announced 12,500 jobs to be cut, some factories shut down and their profit fell some 90+%, Tesla looks pretty good to me long term. I see the market’s reaction to Tesla yesterday and today typical until more analysis is done and a look at the bigger picture taken into account.
Makes sense to me build up one line, train the workers, get that line working before building more lines...
powertoold
Active Member
I don't think the stock is gonna move anywhere until Tesla achieves consistent profit. The other car companies are delivering way more cars, and none of Tesla's "non-car" businesses are generating much revenue. Given that, the market cap is reasonable. Many analysts are tired of Tesla's crazy ambitions and aren't sure what to believe: FSD by next year and TWh factories are pipedreams in their view.
Frankly, I'm exponentially exhausted listening to Elon talking about exponentials.
Frankly, I'm exponentially exhausted listening to Elon talking about exponentials.
dc_h
Active Member
Amazon went through the same thing. Microsoft went through a few years where deferred revenue reduced profits. They would defer revenue of MS-DOS revenue to account for patches. People who got distracted by deferred revenue missed out on millions. No guarantee that Tesla wins the race to EV scale or FSD, but I think the progress and focus on cash flow and growth is sound.
F those dummies who think a small loss is more important to then free cash flow and 75% growth. Wait two years when Tesla 75% growth really starts hitting topline sales of the ICE industry. Tesla will continue growing from a larger base and legacy will see forced consolidation and retrenchment. 500 million in FCF on average gets Tesla’s bank to 10 billion in 2.5 years and funds 50-75% growth. Once they suck the cash flow out of the competition margins will grow and they can either increase growth or start increasing profits.
I prefer 100 billion in revenue in 3-4 years and positive cash flow then 50 billion in revenue 1 billion in quarterly profit.
Carl Raymond
Active Member
The market did not react to the earnings. The shorts merely executed their plan to dump stock regardless of the report contents.
The media are playing along, pretending there has been poor reception.
If you read the past 20 pages of posts here, it’s clear real investors are happy with the report. Free cash flow, growth, terawatt-hour plans, all super bullish.
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A demand for hundreds of thousands of electric cars a year from zero, making it profitable at 35-40k, super chargers every where, battery production building that will produce more than the entire world's combined, and a no body that can scale up from making a few hundred cars a year to a few hundred thousand cars a year..all this in 10 years time....tired of Elon's crazy ambitions too. Wondering when all of those things will ever come true.
powertoold
Active Member
I know. It's been great, but also, it's been exhausting. I think it's great that Tesla is doing these things, and Elon should be proud of the team. What's exhausting is Elon throwing out seemingly moonshot ideas without much background information about how he'll achieve them.
Sure, we had an autonomy day, but we didn't really get a good idea of how Tesla plans to get to 99.999% FSD, given the limitations of ML. IMO, the autonomy day hasn't done anything except for having all of us constantly debate about FSD.
And now, Elon throws out TWh factories without any background on it, leaving us to go "WOW, COOL, but WTF?"
After a while, it's just exhausting, and we're not sure how much longer Elon can stress the company to its limits.
It won't hurt Tesla if Elon just doesn't tell us these things, focuses on releasing things as they're ready, and we'll go WOW COOL, LOOKS GREAT... rather than WOW COOL BUT HOW?!
This thought process completely ignores what Amazon showed is possible in terms of share price gains while being unprofitable and or wavering between profitable and unprofitable
When it became super obvious that Amazon was about to control most of the ecommerce space, that's when the share price took off. I think something similar will happen with Tesla. Once it becomes plainly obvious the Tesla is the only one with the means to control the majority of marketshare in EV and battery space, that's when it will climb consistently. Its already becoming obvious with the failure that was the competition in 2019, but if Tesla really does have a path toward terrewatt annual production, they will control the market in terms of both pricing power and supply.
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