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

[Artful Dodger]

Good grief. To the people rating this “funny” or “disagree”, I just gotta know what part of that post triggered that, especially the disagrees:

• I know it’s only a one-time thing (stretched over about a year)
• but, given it’s well-known that the making of concrete is a huge contributor to greenhouse gases,
• I’m curious how much CO2 etc is being generated in order to build GigaBerlin.
• Has Tesla said anything?

Quick source on well-known carbon emissions problem with concrete:
Environmental impact of concrete - Wikipedia

It's been studied to death for 22 years. Start reading here to find the stale scientific facts which are ignored by the current Adminstration because they're 'inconvenient':

https://www.ipcc.ch/site/assets/uploads/sites/2/2019/02/SR15_Chapter2_Low_Res.pdf

Meanwhile, Tesla is tackling the TWO LARGEST source for CO2 emissions: vehicles and electrical generation. As you can see in the pie chart below, cement accounts for just 7% of CO2 emissions:

 

[FrankSG]

For an all in risk play... Ya, the risk reward ratio is not good enough. But at the same time, going all in should only be a viable strategy when your net worth is below a certain point. I am conservative, so going all in should only be done at below 200k. There are ppl who manages to still go all in and win at million+ net worth, I am not that person. The variable is that my definition of going all in is when you risk the value going to 0. And for a chance that you lose it all, a 3x reward is not worth it as it can be easily achieved by starting a business.

Perhaps potential long term (10 year) upside is lower now than it was in Jun'19, but I actually think that downside risk for TSLA @ $800 today is less than it was a year ago @ $180 thanks to:

1. The fantastic cost reductions and margin increases in Q3'19.
2. Model Y and Shanghai are way ahead of where anyone expected them to be a year ago, and have also proven Tesla can rapidly ramp up the production capacity of new products and factories.
3. There is less chance that something catastrophic happening to one of Tesla's production facilities will ruin the entire company, because Tesla now has two vehicle factories, soon to be even more.

At a SP of $800 Tesla is valued at ~$160B. Most large tech companies are valued at at least 20x EBIT (APPL 20x, GOOGL 25x, MSFT 35x, AMZN 85x). For Tesla to deserve its current SP of $800 at a 20x EBIT valuation, it'd require a yearly EBIT of $160B / 20 = $8B, which is a quarterly run rate of $2B in EBIT per quarter.

Tesla currently has an operating margin of 5%, but with the leverage of Shanghai, and soon also Berlin, this should go up to 10% at least, possibly as high as 15%. But let's stick with the 10% for the purpose of this calculation.

At an operating margin of 10%, Tesla would require $20B revenue per quarter to achieve a quarterly EBIT of $2B. The ASP of Tesla's EVs may be around $50k, but including credits sales, automotive leasing, and non-automotive revenue, I expect Tesla to achieve this when it delivers a little over 300k vehicles per quarter.

Today, Tesla already has production capacity of 172.5k per quarter:

• 22.5k S+X
• 100k Fremont 3+Y
• 50k Shanghai 3

By the end of this year, Tesla will have installed production capacity of 210k per quarter:

• 22.5k S+X
• 125k Fremont 3+Y
• 62.5k Shanghai 3

Around this time next year when Shanghai will have ramped production of the Model Y, Tesla will be able to produce at least 272.5k per quarter:

• 22.5k S+X
• 125k Fremont 3+Y
• 125k Shanghai 3+Y

Although I suspect that Shanghai may end up producing more than 5k MY per week. However, either way it won't take Tesla much more (Berlin should easily do it) to reach production capacity of a little over 300k per quarter, and deserve its $160B valuation and $800 SP at an EBIT multiple valuation of 20x.

Of course in reality Tesla would be valued at much more than 20x EBIT, perhaps as much as 3x or 4x that.

P.S. Not trying to argue that people should go all-in TSLA, but disagreeing that risk is higher than it was a year ago.

 

[mblakele]

Good grief. To the people rating this “funny” or “disagree”, I just gotta know what part of that post triggered that, especially the disagrees:

• I know it’s only a one-time thing (stretched over about a year)
• but, given it’s well-known that the making of concrete is a huge contributor to greenhouse gases,
• I’m curious how much CO2 etc is being generated in order to build GigaBerlin.
• Has Tesla said anything?

Quick source on well-known carbon emissions problem with concrete:
Environmental impact of concrete - Wikipedia

Some of those "disagrees" might have been meant to suggest that your post was off-topic for this thread.

 

[StarFoxisDown!]

Perhaps potential long term (10 year) upside is lower now than it was in Jun'19, but I actually think that downside risk for TSLA @ $800 today is less than it was a year ago @ $180 thanks to:

1. The fantastic cost reductions and margin increases in Q3'19.
2. Model Y and Shanghai are way ahead of where anyone expected them to be a year ago, and have also proven Tesla can rapidly ramp up the production capacity of new products and factories.
3. There is less chance that something catastrophic happening to one of Tesla's production facilities will ruin the entire company, because Tesla now has two vehicle factories, soon to be even more.

At a SP of $800 Tesla is valued at ~$160B. Most large tech companies are valued at at least 20x EBIT (APPL 20x, GOOGL 25x, MSFT 35x, AMZN 85x). For Tesla to deserve its current SP of $800 at a 20x EBIT valuation, it'd require a yearly EBIT of $160B / 20 = $8B, which is a quarterly run rate of $2B in EBIT per quarter.

Tesla currently has an operating margin of 5%, but with the leverage of Shanghai, and soon also Berlin, this should go up to 10% at least, possibly as high as 15%. But let's stick with the 10% for the purpose of this calculation.

At an operating margin of 10%, Tesla would require $20B revenue per quarter to achieve a quarterly EBIT of $2B. The ASP of Tesla's EVs may be around $50k, but including credits sales, automotive leasing, and non-automotive revenue, I expect Tesla to achieve this when it delivers a little over 300k vehicles per quarter.

Today, Tesla already has production capacity of 172.5k per quarter:

• 22.5k S+X
• 100k Fremont 3+Y
• 50k Shanghai 3

By the end of this year, Tesla will have installed production capacity of 210k per quarter:

• 22.5k S+X
• 125k Fremont 3+Y
• 62.5k Shanghai 3

Around this time next year when Shanghai will have ramped production of the Model Y, Tesla will be able to produce at least 272.5k per quarter:

• 22.5k S+X
• 125k Fremont 3+Y
• 125k Shanghai 3+Y

Although I suspect that Shanghai may end up producing more than 5k MY per week. However, either way it won't take Tesla much more (Berlin should easily do it) to reach production capacity of a little over 300k per quarter, and deserve its $160B valuation and $800 SP at an EBIT multiple valuation of 20x.

Of course in reality Tesla would be valued at much more than 20x EBIT, perhaps as much as 3x or 4x that.

P.S. Not trying to argue that people should go all-in TSLA, but disagreeing that risk is higher than it was a year ago.

To add onto Franks excellent breakdown of how Tesla is (to me) easily a 3-4X potential investment from these levels, he's not even including Tesla Energy and Robotaxi. Both of which are still very speculative of if/when they will happen or ramp up in production........but if either of them do become a big part of Tesla's business, it moves that 3-4X into the territory of 5-8X from these levels. If FSD and Robotaxi actually happens, Tesla is easily an $8,000 stock.

 

[Chenkers]

Some concrete progress in GigaBerlin:

Judging by the extent of excavation and concrete squares it looks like Tesla could be going with some form of pad footing for the Giga4 structural design. Each of the large concrete pad footings appears to align with column spacing and could potentially provide enough support for the style of building. This would avoid or at least limit the extent of piled footings required and overcome any concerns about penetrating the water table. We'll see as the construction progresses if they end up using piling and/or pads or if the test piles confirmed a change of direction to what we see at Shanghai.

 

[MC3OZ]

To add onto Franks excellent breakdown of how Tesla is (to me) easily a 3-4X potential investment from these levels, he's not even including Tesla Energy and Robotaxi. Both of which are still very speculative of if/when they will happen or ramp up in production........but if either of them do become a big part of Tesla's business, it moves that 3-4X into the territory of 5-8X from these levels. If FSD and Robotaxi actually happens, Tesla is easily an $8,000 stock.

Yes, there is the long term trend, which is hard to deny, then there is timing the market.

if timing the market you need to consider the risks on both sides, while there are macro risks that could drop the price, there is a lot of good Tesla specific events that could happen at anytime:-

• Battery Day
• FSD progress
• S&P 500 inclusion
• Progress on factory building and production

I'm sure the list of bad things that might happen is as long as the list of good things that might happen, but there is a lot of uncertainty as to when and if these good/bad things will happen and how they will move the price...

I would like to encourage people to post in this thread: - COVID-19 Recession

IMO the detailed debate on what might happen post COVID-19 is far from simple, just capturing all the factors which might influence the outcome requires a lot of thought and discussion.

The general march of human progress doesn't slow down, a lot of things that will happen were going to happen anyway... and Tesla is on the right side of the significant and long lasting changes.

 

[Chenkers]

I know it’s only a one-time thing (stretched over about a year) but, given it’s well-known that the making of concrete is a huge contributor to greenhouse gases, I’m curious how much CO2 etc is being generated in order to build GigaBerlin. Has Tesla said anything?

I don't think it's an unreasonable question to ask. It's a common practice in Green Building to account for the embodied emissions of construction, usually expressed as a life cycle impact over say a 50 year lifetime. However, the embodied emissions are typically a fraction of the life cycle emissions with operational energy requirements dominating. Tesla should easily be able to account for the full life cycle emissions of Giga4 through the installation of Solar PV on the roof and local renewable energy power purchase agreements.

This would be especially important in Germany, which is a world leader in Green Building practice and technology and has a high awareness of environmental impacts. At some point this becomes a reputational issue for Tesla within Europe to be seen to be doing the best it can. Tesla tend to measure their environmental impact based on the societal benefits of their overall production without detailing the impact of their own operations as many corporations typically do. (Link to Teslas Impact Report here: https://www.tesla.com/ns_videos/tesla-impact-report-2019.pdf).

 

[heltok]

Another nice gigaberljn video;

 

[StealthP3D]

All great points ... but i am still waiting for TSLA to go on sale before adding to my long position... time will tell if this is a smart move...

no one on this board has convinced me otherwise ...

Well you can't lose money on TSLA by waiting - just like I've never lost a penny on AMZN or NFLX because I've been waiting for a "good deal"

Of course, I've never made 100x or even 10X on either of them either...

 

[Jack6591]

Interesting that this has been kept quiet for 2.5 years.

Is this where Tesla designs "the machines that make the machines that make the machines"?

If so, it all starts here.

Here's the Linked-in description of the guy who runs the operation for Tesla, as he did before it was bought by Tesla in 2017: https://www.linkedin.com/in/brian-greviskes-b01842b

I suppose that if the unit were in Silicon Valley, it would've been hard to hide. Instead it's tucked away in a relatively secluded spot in a far western Chicago suburb. Apparently the engineers employed there have been pretty good at not bragging about their work.

Below is a 2020 overhead view from Google Maps, which describes Compass Automation as being "closed".

View attachment 548124

From time to time, I have reflected upon the price that Elon has paid for fame and fortune — every public utterance — parsed to the smallest syllable. A world of prying eyes and ears; peering, listening, and critiquing, every action, every decision.

My career has routinely brought me into the homes, and into the presence, of the world’s most rich and famous. Their reactions to common people, like myself, revealing; speaking volumes about how fame has adulterated their sense of the world. In some, fame is an incredible addiction. In others a daunting burden.

I can only imagine, how difficult it must be, for the famous to balance their need for privacy and their desire for recognition. Some possess emotional intelligence beyond my understanding.

I appreciate that Elon lends his voice to significant matters, but more and more I appreciate what he doesn’t say — his ability to keep a secret — his sense of timing.




I wear chocolate shoes, it tastes better when I put my foot in my mouth.

Tom Hanks

 

[Jack6591]

Wasn’t sure if this had been posted.

Tesla Working On 12 Person Vans For The Boring Company | CleanTechnica

 

[StealthP3D]

Meanwhile, Tesla is tackling the TWO LARGEST source for CO2 emissions: vehicles and electrical generation. As you can see in the pie chart below, cement accounts for just 7% of CO2 emissions:

Most cement is used on highways, skyscrapers, irrigation channels, breakwaters, dams, foundations, while cement for auto/solar/battery factories account for just .001%

I just made that up and it felt good!

 

[Causalien]

To add onto Franks excellent breakdown of how Tesla is (to me) easily a 3-4X potential investment from these levels, he's not even including Tesla Energy and Robotaxi. Both of which are still very speculative of if/when they will happen or ramp up in production........but if either of them do become a big part of Tesla's business, it moves that 3-4X into the territory of 5-8X from these levels. If FSD and Robotaxi actually happens, Tesla is easily an $8,000 stock.

I am always amazed at how we can be talking about the same outcome but get it interpreted differently.

Breaking down my original post. The reward = 3x current valuation with stock price potentially at $3000.The potential loss is the stock getting halved to 50% so about $420~588 ish. All good number wise and conforms with the numerical analysis.

The risk/reward the post was about was in taking an all in position. A type of trading style used for an all or nothing trade. Focused at maximizing profit while you have very little capital built up at an earlier stage of life. In this situation, you have to assume that every trade you do gets more than 10x (for me, this type of trade has to be at lest 20x) return or it goes to 0 for it to be worth it. Even though in reality, the risk is only getting it reduced by 50%. Why? Because if that scenario does happen, you are back at 0 and you have to make it sink into your mind and understand that you can stomach it when it does come. And the 10x return forces you to see if it will be worth it. Of course, check out reddit's wsb to see how you can turn any stock with a risk reward of 50% to 3x into risk reward of 100% to 10x.

Of course, it turned out that I misinterpreted the OP's meaning when he says all-in. Since op's all-in was just all the cash which stands at 20% of op's net worth. In which case, the whole discussion is moot.

 

[PeterJA]

I appreciate that Elon lends his voice to significant matters, but more and more I appreciate what he doesn’t say — his ability to keep a secret — his sense of timing.

I agree. Some folks here may not realize that Elon keeps a lot of secrets, which is why waiting for a lower entry to TSLA is a risky game. Elon has surprised the market many times with announcements of new products and innovations and ambitious plans. He will do it again. It's only a question of when.

Remember, his companies are attracting the cream of the global crop of engineering talent, and their company culture requires and nurtures innovation. We have only begun to see what marvels these creative minds can cook up, and the growing talent will likely innovate at a growing rate.

For example, two surprises were posted here in the last few hours: the secret acquisition of Compass Automation 2.5 years ago (just reported by Electrek), and the secret development of tunnel vans (just reported by CleanTechnica). Few investors are aware of these reports yet. No investors have yet modeled the earnings from new automation and thousands of vans.

Every new surprise from Tesla makes it more obvious that many more surprises are coming, and that investors who want to ride the rocket must get aboard before everyone else sees it is headed for the moon.

 

[MikeAtkinson]

Giga Britain looks to be a possibility Elon Musk jets to UK amid Somerset Tesla factory plans - reports

This is the location Google Maps

It ticks most of the boxes for a location of a gigafactory, but there are in my opinion two potential deal breakers

• The owners of the Gravity site want a long term lease, which is probably more expensive in the long term and probably limits what Tesla can do to the site.
• It is a brown-field site being a former armaments factory, ground works and environmental amelioration before construction starts could easily take over a year.

 

[c041v]

Another nice gigaberljn video;

For anybody wondering:

These are spread footings atop “mud slabs” (low strength, unreinforced concrete used to produce a level, dry and firm surface for the actual footing) The footings appear to have significant starter column reinforcement in the center, which means either a really tall column or something really heavy is going on top. The blue and grey parts on the trucks appear to be formwork for the footings.

There’s some sort of Geosynthetic going down (white stuff) that is getting buried again, which is probably being used to improve the subgrade strength. I would suspect a raft slab type foundation will be used for the portions of the factory that don’t need the shear resistance that the footings are being used for. Pretty common solution for this type of building.

Not seeing any evidence of pipe or H pile on site, I doubt there will be any for this factory as it would be well underway by now with everything cleared and graded. I also don’t see any piling rigs sitting around.

The major difference between here and Shanghai is the number of concurrent operations. Local aggregate supply seems to be an issue (it is being trained in) and I assume the local concrete plant also trains in their aggregate as there are concrete trucks driving to the site and no localized batch plant.

Articulated haulers on the sand and highway haulers on the gravel roads. It actually looks like all of the gravel is being used exclusively for haul roads. Normal for operations on sand, no fun getting highway trucks stuck.

This buildout is probably more comparable to GF1 and will likely take shape in a very similar fashion. If I recall, GF1 excavated their footings, which is handy as you don’t need to form them if the soil is competent enough not to slough, but it looks like a lot of sand here, so no such luck.

Credentials: I have all these toys on my site, but we’re building a different widget.

 

[LN1_Casey]

This is the location Google Maps

It ticks most of the boxes for a location of a gigafactory, but there are in my opinion two potential deal breakers

• The owners of the Gravity site want a long term lease, which is probably more expensive in the long term and probably limits what Tesla can do to the site.
• It is a brown-field site being a former armaments factory, ground works and environmental amelioration before construction starts could easily take over a year.

I don't know if Tesla would want to get a property that they'd have to forever more lease, not for something like a GF.

Maybe if the owners did the expensive and time consuming prep work to remove the bombs they'd be more amendable? But if they've not done it yet, I doubt they'd be keen for it.

 

[Right_Said_Fred]

For anybody wondering:

These are spread footings atop “mud slabs” (low strength, unreinforced concrete used to produce a level, dry and firm surface for the actual footing) The footings appear to have significant starter column reinforcement in the center, which means either a really tall column or something really heavy is going on top. The blue and grey parts on the trucks appear to be formwork for the footings.

There’s some sort of Geosynthetic going down (white stuff) that is getting buried again, which is probably being used to improve the subgrade strength. I would suspect a raft slab type foundation will be used for the portions of the factory that don’t need the shear resistance that the footings are being used for. Pretty common solution for this type of building.

Not seeing any evidence of pipe or H pile on site, I doubt there will be any for this factory as it would be well underway by now with everything cleared and graded. I also don’t see any piling rigs sitting around.

The major difference between here and Shanghai is the number of concurrent operations. Local aggregate supply seems to be an issue (it is being trained in) and I assume the local concrete plant also trains in their aggregate as there are concrete trucks driving to the site and no localized batch plant.

Articulated haulers on the sand and highway haulers on the gravel roads. It actually looks like all of the gravel is being used exclusively for haul roads. Normal for operations on sand, no fun getting highway trucks stuck.

This buildout is probably more comparable to GF1 and will likely take shape in a very similar fashion. If I recall, GF1 excavated their footings, which is handy as you don’t need to form them if the soil is competent enough not to slough, but it looks like a lot of sand here, so no such luck.

Credentials: I have all these toys on my site, but we’re building a different widget.

In The Netherlands we build all our buildings on concrete piles, which get driven through 8-12 meters of soft peat soil (and sometimes even slide through it, the weight of the piles is enough to do that). The piles then reach a sand layer, which is strong enough to support the piles and the buildings on top of them. The GF3 site, close to the sea, seems to have a foundation built that way. At the GF4 site the sand layer is already at the surface (after removal of a few feet of forest soil). I think that removes the need for piling, except for maybe the heaviest structures. It would save Tesla time and money.

 

[j6Lpi429@3j]

I cant see anything in that UK article that shows actual evidence Elon even went to somerset. Its wishful thinking. His plane landed at Luton (basically London) which is a LONG way from somerset. I know... I live round the corner from somerset!

If you want to ship internationally from the UK, you probably want a factory near southampton. Somerset is great for cream teas and sightseeing, but its a tourist trap, not a major manufacturing location.

I'd love tesla to build a factory near me, but I';ll be shocked if it happened.

Also...I once stayed in a hotel (tiny...but interestingly had destination chargers) in the deep SW of the UK, where the manager said elon had been a few times, apparently to visit family of talulah, his second wife. If I heard Elon was in the SW I'd be way more likely to assume it was a family event of some sort than anything to do with factories.

 

[MC3OZ]

I cant see anything in that UK article that shows actual evidence Elon even went to somerset. Its wishful thinking. His plane landed at Luton (basically London) which is a LONG way from somerset. I know... I live round the corner from somerset!

If you want to ship internationally from the UK, you probably want a factory near southampton. Somerset is great for cream teas and sightseeing, but its a tourist trap, not a major manufacturing location.

I'd love tesla to build a factory near me, but I';ll be shocked if it happened.

Also...I once stayed in a hotel (tiny...but interestingly had destination chargers) in the deep SW of the UK, where the manager said elon had been a few times, apparently to visit family of talulah, his second wife. If I heard Elon was in the SW I'd be way more likely to assume it was a family event of some sort than anything to do with factories.

I think a UK factory probably makes sense one day to make cars and energy storage products for the UK market ... + any RHD countries close by. Cyprus, Ireland, South Africa

However a lot of this chain of speculation is rumours reporting other rumours and making further assumptions... it might end up being true, but it is far from confirmed.