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

[Chenkers]

Thanks. Very interesting for those of us unfamiliar with production techniques. Need an option to play at 2x speed though

Go to settings in Youtube on the bottom right, under playback settings there are options for various playback speeds including 2x. I found 1.5xto be an OK pace for this video.

 

[Rashomon]

More insights about the MY casting structure that is IMO a game changer for costs, production speed, reliability, safety and other.

This is interesting, and the rear structure formed of castings is larger than I expected. But it is not from a single casting, nor am I sure this video gets the exact extents of the aluminum rear structure correct. The transverse and longitudinal beams are almost certainly separate castings that are likely bolted (perhaps with permanent, rivet-like “Huck bolts) or welded together. It is almost certainly a lot less expensive than the M3 structure, and lighter as well. You can see the pull directions of the molds (how the mold separates to release the part) from the webbed sections of the beams, and they are different for the transverse and longitudinal parts. If these are separate castings, they are also well within size and complexity constraints typical of high-pressure die castings.

Also, the front area high-lighted is stamped steel, not an aluminum casting.

 

[Dare]

@ReflexFunds

Great post! You’re a machine

Just a heads up, I did notice you’ve had ICE vehicle deaths from air pollution pegged at 4 million per year in the first post vs. 1+ million per year in the second post.

 

[kbM3]

FYI, even in China the bears are running out of FUD.

The only FUD they can run on MIC Model 3 is constantly predict the price will be reduced again.

Until I saw this today, it almost gave me heart attack.
View attachment 510110
The title says, “Tesla model 3 reduced price again, new price as low as 220k RMB”

Then in the article it actually said an “expert” “predicted” it’s “highly likely” the price “could be” reduced in the future.
View attachment 510112
I double checked Chinese model 3 order page, no the price didn’t change, it’s still 299k RMB.

This article appears in an investment news aggregation site, I could not find the source anywhere.

They turned to bluntly lie in the title, instead of just click baiting.

If this is the best they can come up with, I feel Model 3 is getting unstoppable there.

I’ll take a shot at providing a more misleading headline .

Did you know Tesla Investors are down big this year? Or that apparently shorts are Tesla Investors and TSLA shareholders apparently are not?
Tesla Investors Have Lost A Total Of $8.5 Billion Since January — Business Times

 

[viridi]

Model Y cannibalizing Model 3 is a bizarre statement. I have never heard companies whining about their customers switching from a budget item to a high-profit margin product.

Companies unwilling to cannibalize their own products are destined for failure when another company comes to market with the product that the original company feared bringing to market. There is much evidence of this fact (e.g., Big Auto right now).

 

[Silentk]

Go to settings in Youtube on the bottom right, under playback settings there are options for various playback speeds including 2x. I found 1.5xto be an OK pace for this video.

thx. Those options didn’t appear on my phone as they usually do.

 

[davepsilon]

@ReflexFunds thanks for the high level summary I’m in agreement on almost all points. But in your old post under ICE OEM handicaps you say “EVs only share 10%-20% of components and production process with ICEs”. That’s too low for a complete car. But it is challenging to communicate because Tesla is innovating in these areas despite the fact they are common elements to ice cars.

Body frame, body panels, paint, glass, interior, wiring, suspension, tires & wheels, friction brakes, steering wheel, infotainment system, autonomy & safety systems all common to cars no matter the power plant. EV changes drivetrain, drivetrain control system, and hvac. Adds regen brakes. Deletes alternator and potentially low voltage electrical system. So majority of components and production processes are shared though the optimization for components does shift to lightweight / aerodynamic ones due to current battery tech for energy density and cost.

 

[Silentk]

Spotted on Twitter:

from @thirdrowresla

 

[AlexS]

@ReflexFunds what's your take on Susquahanna, will they milk shorts for few more weeks,months or they are unwinding/unwinded during volatility in last weeks?

 

[ammulder]

A lot has changed perception and valuation wise in the past year, and Tesla has made continuous progress on production and most quarterly earnings line items, but really the bigger picture is unchanged from when I posted this last January and the future for Tesla looks just as positive as ever.

I'll update the sections of this prior post this week with a bit of extra detail, starting with the general EV transtion below:
Let me know if anything I missed here, I feel like there are several things I've forgotten.


Why BEVs will reach >90% of global new car sales much sooner than you expect

Cheaper Product

• Electricity cost are 70-75% cheaper per mile than petrol or diesel.
• EVs should be 70%+ cheaper to maintain (due to significantly fewer moving parts, no damaging combustion engine, regenerative breaking saving brake wear etc) once EV service networks reach economies of scale.
• EVs can be built to last 2-3x longer than an ICE car (0.5-1 million miles). Tesla’s powertrain is designed to last 1 million miles. Batteries currently last ~0.3 million miles (and can be easily replaced) but Tesla is likely close to releasing its million-mile battery.
• EV depreciation per year should be significantly less than ICE cars due to their far longer lifespans, cheaper cost of ownership and fears of ICE car bans (which will accelerate ICE depreciation rates).
• All of this leads to a total cost of ownership significantly lower than comparable ICE cars despite still significant EV upfront production cost handicap due to battery costs.
• Consumers are not stupid, and when they are made aware that EVs are already cheaper than ICEs on a total cost of ownership basis, most will buy them.
• But most EV components are following rapid technology cost experience curves (Wright’s Law) and EVs are rapidly approaching upfront cost parity too (Model 3 and Model Y are already at cost parity for comparable spec ICE cars despite being significantly higher margin). Upfront price parity will vary by market and segment, but most are likely to be reached in the next 5 years.
• EVs are significantly safer to drive due to front crumple zone (no engine in front of the driver), lower centre of gravity (limiting rollovers) and lower combustion risk (so far ~10x less per mile because EVs do not contain a huge tank of highly flammable fuel)..
• Over time, this should drive significantly cheaper insurance vs ICE cars.

Better Product

• EVs are faster to accelerate and brake, while the low centres of gravity and low polar moments of inertia give superior driving dynamics.
• EVs are much quieter which leads to both a more enjoyable drive and less noise pollution on city streets.
• Leaving a car to charge overnight at home or during the day at work is significantly more convenient than regular trips to the gas station. 99% of charging will take place at home and only rarely for long trips will you need to visit a supercharger. But a supercharge can already add 75 miles in 5 minutes or 180 miles in 15 minutes to a Model 3.
• Many different interests are aligned to roll out the necessary EV charging infrastructure: EV manufacturers, EV charger start-ups, Electricity utilities wanting to open up a new demand stream, governments working on advancing clean energy etc

Government and consumer support due to health, envirnmental and strategic benefits.

• Regulations are increasingly supportive of the EV transition, particularly in Europe and China, and as the EV transition gains momentum it becomes increasingly obvious we can transition the global economy to Clean Energy while delivering increased economic growth which makes it a much easier political decision to ban ICE cars.
• Current studies suggest ICE cars kill 1m+ people per year from air pollution and there is growing awareness of the issue. Both politicians and consumers are increasingly aware of the need to make a change.
• ICE car CO2 emissions are a key contributor to global warming which is likely to lead to huge economic damage and wealth destruction, 1 billion + people losing their homes and an unprecedented wave of climate refugees. Awareness of the urgency of addressing CO2 emissions to avoid the risk of the worst outcomes is increasing rapidly.
• EVs already emit significantly less CO2 than ICE cars even if they are powered by 100% coal power. However, coal is rapidly dying (it is not economic), and electricity grids are getting cleaner every year.
• The EV transition will massively accelerate the experience curve for batteries which will make building solar/wind + battery storage cheaper than continuing to operate existing fossil fuel power plants. Without this reduction in battery costs it is very difficult to get renewable energy >~30% of electricity due to issues with intermittency, but EV growth will make stationary storage cheap enough to solve intermittency and will rapidly transition global electricity to renewables and ensure cars are charged fully by clean sources.
  
• Fuel independence from Russia, Africa and the Middle East is a major advantage for national defence for countries such as China and much of Europe

Negative Feedback loops for ICE cars

• ICE production costs are increasing due to more strict emissions limits requiring more expensive tech.
• ICE OEMs are forced to start to sell EVs to avoid emissions fines, which means they will have to raise consumer awareness of the many advantages of EVs (and fight all the disinforamtion).
• ICE car sales will likely collapse faster than EV capacity can be built, accelerating the EV penetration in % terms. Few people will want to buy ICE in 5 years as it will be clear they will soon be obsolete and will face rapid depreciation (and even local or national bans).
• Falling ICE car sales reduces fixed cost leverage and increases production costs, putting them at a further disadvantage vs EVs.

Robotaxi wildcard

• All self-driving cars will be electric because after stripping out driver costs, an EV taxi service will make 3-4x more profit than an ICE taxi service due to lower fuel, maintenance & depreciation. Succedding with Robotaxis is a black swan (from the markets perspective that gives it ~0% probability) that will massively accelerate the EV transition (both in quantity of cars built and even further in terms of EV miles driven per year)

Great post, but I have two issues with it. First, I believe there's a huge number of car buyers who will feel they can't afford the additional upfront cost, never mind the lower TCO. Whether less cash on hand, poor credit, less willingness to absorb larger fixed monthly payments vs. maintenance that can often be delayed, etc. I don't think the entire market is going to turn on the basis of $40K cars with high resale value (meaning the used market doesn't help that much either). I think you have to make the assumption that -- in the China design center or elsewhere -- there will be a significantly lower up-front cost yet still high-range high-quality EV coming. It's a big ask, but we've got years, right?

And second, even if everyone starts to want EVs, what's the fastest that EV makers can scale up production by 100x? You're talking about 90% of an 80M/year global market.... I think Tesla would be doing well to hit 10x in 5 years (to 3.7M deliveries; would require more than GF Berlin & Shangai, I expect, or totally max them out at best)... for another 10x on top of that, there's a LOT of new factories, or else you have to believe all the OEMs are going to be way more successful transitioning to EVs than seems to be the common belief here.

Never mind batteries -- we're on the order of 100 GWh/yr for the EVs we're already getting, so if Battery Day/April Company Day reveals a plan to 1 TWh then that's only 10x, and we still need the plan to get to on the order of 10 TWh.

So when you say "much sooner than you expect", what are you expecting? Or what are you expecting we're expecting?

I have a hard time believing there will be 70M EVs sold per year any time in the next 10 years just because of the EV and battery production limitations. If demand for ICE really does collapse in the mean time, I think we're in for a very painful transition.

(Though I'd be happy to be wrong about the time frame. I know *I* won't be buying an ICE again.

 

[gerebgraus]

A lot has changed perception and valuation wise in the past year, and Tesla has made continuous progress on production and most quarterly earnings line items, but really the bigger picture is unchanged from when I posted this last January and the future for Tesla looks just as positive as ever.

I'll update the sections of this prior post this week with a bit of extra detail, starting with the general EV transtion below:
Let me know if anything I missed here, I feel like there are several things I've forgotten.


Why BEVs will reach >90% of global new car sales much sooner than you expect

Cheaper Product

• Electricity cost are 70-75% cheaper per mile than petrol or diesel.
• EVs should be 70%+ cheaper to maintain (due to significantly fewer moving parts, no damaging combustion engine, regenerative breaking saving brake wear etc) once EV service networks reach economies of scale.
• EVs can be built to last 2-3x longer than an ICE car (0.5-1 million miles). Tesla’s powertrain is designed to last 1 million miles. Batteries currently last ~0.3 million miles (and can be easily replaced) but Tesla is likely close to releasing its million-mile battery.
• EV depreciation per year should be significantly less than ICE cars due to their far longer lifespans, cheaper cost of ownership and fears of ICE car bans (which will accelerate ICE depreciation rates).
• All of this leads to a total cost of ownership significantly lower than comparable ICE cars despite still significant EV upfront production cost handicap due to battery costs.
• Consumers are not stupid, and when they are made aware that EVs are already cheaper than ICEs on a total cost of ownership basis, most will buy them.
• But most EV components are following rapid technology cost experience curves (Wright’s Law) and EVs are rapidly approaching upfront cost parity too (Model 3 and Model Y are already at cost parity for comparable spec ICE cars despite being significantly higher margin). Upfront price parity will vary by market and segment, but most are likely to be reached in the next 5 years.
• EVs are significantly safer to drive due to front crumple zone (no engine in front of the driver), lower centre of gravity (limiting rollovers) and lower combustion risk (so far ~10x less per mile because EVs do not contain a huge tank of highly flammable fuel)..
• Over time, this should drive significantly cheaper insurance vs ICE cars.

Better Product

• EVs are faster to accelerate and brake, while the low centres of gravity and low polar moments of inertia give superior driving dynamics.
• EVs are much quieter which leads to both a more enjoyable drive and less noise pollution on city streets.
• Leaving a car to charge overnight at home or during the day at work is significantly more convenient than regular trips to the gas station. 99% of charging will take place at home and only rarely for long trips will you need to visit a supercharger. But a supercharge can already add 75 miles in 5 minutes or 180 miles in 15 minutes to a Model 3.
• Many different interests are aligned to roll out the necessary EV charging infrastructure: EV manufacturers, EV charger start-ups, Electricity utilities wanting to open up a new demand stream, governments working on advancing clean energy etc

Government and consumer support due to health, envirnmental and strategic benefits.

• Regulations are increasingly supportive of the EV transition, particularly in Europe and China, and as the EV transition gains momentum it becomes increasingly obvious we can transition the global economy to Clean Energy while delivering increased economic growth which makes it a much easier political decision to ban ICE cars.
• Current studies suggest ICE cars kill 1m+ people per year from air pollution and there is growing awareness of the issue. Both politicians and consumers are increasingly aware of the need to make a change.
• ICE car CO2 emissions are a key contributor to global warming which is likely to lead to huge economic damage and wealth destruction, 1 billion + people losing their homes and an unprecedented wave of climate refugees. Awareness of the urgency of addressing CO2 emissions to avoid the risk of the worst outcomes is increasing rapidly.
• EVs already emit significantly less CO2 than ICE cars even if they are powered by 100% coal power. However, coal is rapidly dying (it is not economic), and electricity grids are getting cleaner every year.
• The EV transition will massively accelerate the experience curve for batteries which will make building solar/wind + battery storage cheaper than continuing to operate existing fossil fuel power plants. Without this reduction in battery costs it is very difficult to get renewable energy >~30% of electricity due to issues with intermittency, but EV growth will make stationary storage cheap enough to solve intermittency and will rapidly transition global electricity to renewables and ensure cars are charged fully by clean sources.
  
• Fuel independence from Russia, Africa and the Middle East is a major advantage for national defence for countries such as China and much of Europe

Negative Feedback loops for ICE cars

• ICE production costs are increasing due to more strict emissions limits requiring more expensive tech.
• ICE OEMs are forced to start to sell EVs to avoid emissions fines, which means they will have to raise consumer awareness of the many advantages of EVs (and fight all the disinforamtion).
• ICE car sales will likely collapse faster than EV capacity can be built, accelerating the EV penetration in % terms. Few people will want to buy ICE in 5 years as it will be clear they will soon be obsolete and will face rapid depreciation (and even local or national bans).
• Falling ICE car sales reduces fixed cost leverage and increases production costs, putting them at a further disadvantage vs EVs.

Robotaxi wildcard

• All self-driving cars will be electric because after stripping out driver costs, an EV taxi service will make 3-4x more profit than an ICE taxi service due to lower fuel, maintenance & depreciation. Succedding with Robotaxis is a black swan (from the markets perspective that gives it ~0% probability) that will massively accelerate the EV transition (both in quantity of cars built and even further in terms of EV miles driven per year)

As usual great summary. Truly minor points:
Learning impacts not only price but also the quality of the product. Service costs include routine maintenance (You discussed) and fixing defects. Warranty repair cost I believe dropping in an exponential rate for Tesla. (I have not checked the data, TSLAQ regularly complains about the alleged accounting fraud of decreasing waranty reserves /car.)
2. I personally prefer applying Kurzweil's law of accelerating returns to Wright's law. Difference is minor though.

 

[Krugerrand]

How do people view and react to the ease with which big players move the SP up / down?

Middle finger.

I find that it really dampens my wish to increase my exposure to this rigged game. And yet many of us here are active with all sorts of financial products being traded, most of the time successfully because the price is up, but we pay so much attention to it, while in fact we are only at the mercy of bigger entities. How do you all remove yourselves from such filth? I'm only asking because I'm honestly struggling with the picture painted, even if my investment is up.

In case you are unaware, the world is replete with such slime and has been since the dawn of mankind. Welcome to our planet!

Here’s the positive. You get to choose what kind of human you will be and nobody else can do a thing about it. Choose wisely, it might matter later.

Knowledge is power. It has immeasurable value. Do something positive with the knowledge you possess. You’ll feel better regardless of what others do.

 

[ReflexFunds]

Great post, but I have two issues with it. First, I believe there's a huge number of car buyers who will feel they can't afford the additional upfront cost, never mind the lower TCO. Whether less cash on hand, poor credit, less willingness to absorb larger fixed monthly payments vs. maintenance that can often be delayed, etc. I don't think the entire market is going to turn on the basis of $40K cars with high resale value (meaning the used market doesn't help that much either). I think you have to make the assumption that -- in the China design center or elsewhere -- there will be a significantly lower up-front cost yet still high-range high-quality EV coming. It's a big ask, but we've got years, right?

And second, even if everyone starts to want EVs, what's the fastest that EV makers can scale up production by 100x? You're talking about 90% of an 80M/year global market.... I think Tesla would be doing well to hit 10x in 5 years (to 3.7M deliveries; would require more than GF Berlin & Shangai, I expect, or totally max them out at best)... for another 10x on top of that, there's a LOT of new factories, or else you have to believe all the OEMs are going to be way more successful transitioning to EVs than seems to be the common belief here.

Never mind batteries -- we're on the order of 100 GWh/yr for the EVs we're already getting, so if Battery Day/April Company Day reveals a plan to 1 TWh then that's only 10x, and we still need the plan to get to on the order of 10 TWh.

So when you say "much sooner than you expect", what are you expecting? Or what are you expecting we're expecting?

I have a hard time believing there will be 70M EVs sold per year any time in the next 10 years just because of the EV and battery production limitations.

(Though I'd be happy to be wrong. I know *I* won't be buying an ICE again.

2028 or 2029.

The Auto market likely will shrink to ~40 million cars as consumers await EV capacity. It will be higher if EV capacity is built sooner.

Tesla can self finance to 20 million EV capacity by 2028 if no one else is getting their act together with building EV capacity. This would leave only 16m capacity built by the rest of the Auto market. More likely Tesla only needs to get to 10m and other players together can get to 26m.

And yes, clearly if Tesla doesn't solve Robotaxis iminently, they will have to release signficantly lower priced models to get to this level of EV sales. But this upfront price parity for all car market segments within ~5 years is just a direct consequence of Wright's Law.

 

[shootformoon]

Isn't he the biggest bull? He used all his ammo and he's gonna HODL!

Well he's really sticking his neck out there...

View attachment 510141

 

[mrdoubleb]

OK, as long as we are in pre-market and talking EV share changes... I made an English version for you guys of two charts I did for one of my recent articles. The data is from 3 different sources, but it`s not easy to get official and consistent data on these things. Global Passenger vehicle sales is from Statista - 2019 is still an estimate of course. EV market share is based on ev-sales.blogspot.com for EU and Global numbers, while I use InsideEVs for US data for consistency.

 

[Chocochip]

More insights about the MY casting structure that is IMO a game changer for costs, production speed, reliability, safety and other.

We're fairly close to get the first Model Y deliveries and, therefore, the first teardowns (Sandy Munro and others), as well as the repair manuals similar to the Model 3 ones from which those schematics in the video were taken. I'm confident there's a higher number of cast parts in the frame of the Model Y compared to the 3, but I doubt it's to the extent described in the video. Some of the high-strength steel structural components in the frame cannot be easily (or cost-effectively) replaced with Al cast parts.

 

[Mader Levap]

Body frame, body panels, paint, glass, interior, wiring, suspension, tires & wheels, friction brakes, steering wheel, infotainment system, autonomy & safety systems all common to cars no matter the power plant.

False. Most of your examples will be changed in any decent EV. Good EV will have body frame redesigned from ground up to accomodate batteries, motor etc. Same with tires - EVs will still need solutions that minimize air/ground resistance for long time and type of tire are important part of that. And friction brakes? Even you mentioned regen braking.

So yes, claim of "20% common parts" seems to be accurate. Only way to have more common parts is to make crappy compliance EV. Those indeed will have same body frame etc as ICE, to their severe detriment.

You could as well insist you have high commoniality between cars and carriages since in principle you can make car that looks like horseless carriage. That it will be crap in comparison to something that is designed to be actual car without any horses is just unimportant detail, right?

 

[Chocochip]

Spotted on Twitter:

View attachment 510146

Could you post a link to the original tweet? Thanks.

 

[sundaymorning]

Bernstein worries that Tesla's Model Y may cannibalize some Model 3 sales

I don’t blame him for being worried about Tesla, his firm is clearly holding some puts on Tesla and got a massive beating this year.

 

[30seconds]

Cathie talks about whether Tesla can hold onto 17% market share. An alternative view is, can Tesla hold onto 90% of the US EV revenue? Given that eventually EVs will become the market.

well pretty soon Tesla is going to have 3 models with annual production capacity of >500,000 units each and I have yet to hear of a single major automaker announce a annual production capacity of >100,000 of any single model.