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

[FrankSG]

Apologies if I missed this being posted (I don’t recall seeing it today):

Troy posted the production figures for Tesla China in the month of July - 12,571 cars total.

View attachment 571882

I haven't seen this yet either. Somebody replied asking for a link. Hopefully he'll share it. It's on the low side for sure, considering the production rate in May was higher than this. If the number is accurate, I'd imagine that the production increase to 5k/week hurt volumes in the short term in the month of July.

 

[Buckminster]

Wouldn’t a cheaper, smaller car be an obvious way to “accelerate the mission” by simply allowing more people to buy a car? Musk himself repeatedly has said they simply need to make cars more affordable to enable more people to buy them. Making smaller models is an obvious way to lower entry prices while maintaining margins.

Absolutely. Everyone here may not believe the FSD timelines but Elon probably does. If Elon can make twice as many small robotaxis than larger robotaxis he will do it. A smaller, cheaper robotaxi will allow Tesla to directly own more of them within the network rather than selling them to consumers. There will be a new squeeze on consumer vehicles when the robotaxi comes in. You won't be able to buy them.

 

[RobStark]

Wouldn’t a cheaper, smaller car be an obvious way to “accelerate the mission” by simply allowing more people to buy a car? Musk himself repeatedly has said they simply need to make cars more affordable to enable more people to buy them. Making smaller models is an obvious way to lower entry prices while maintaining margins.

No, because Tesla doesn't have a demand problem but a production problem.

Smaller cars are not that much cheaper to make. Engineers are not cheaper. Factories are not cheaper. Blue collar workers don't accept less wages to make smaller cars.

The smaller bill for materials is insignificant versus what the customer is willing to pay.

Global demand for vehicles is about 100M per year including commercial.

Tesla could sell 20M vehicles per year with nothing cheaper than a $28k subcompact crossover and bigger/more expensive vehicles.

By the time Tesla is selling 20M electric vehicles per year well over half the micro car market will be BEV, the micro ICEv market will be crashing, and the Chinese/Indian automakers will be capable of making the micro car market 100% BEV. Taking market share from Chinese/Indian micro BEVs doesn't accelerate the mission.

 

[Sofie]

You misunderstand. My reply was intended for the original poster (only ... not an avg investor, which I don't even know what that would be).

My reply was based on what she has shared about herself on this thread as a TSLA investor. She is bull long-term with a minimum 10+ yr horizon, and has sufficient conviction to have already acquired 400+ shares with a $400k+ cost basis, and intends to accumulate more. She's early in her career with a stable job and sufficient disposable income. She also intends to dollar-cost average on a regular (wkly/biwkly?) basis, for possibly several more years. Granted, I don't know her TSLA investing temperament/tolerance, but I presume she aims to be steady and resolute.

Give me a different investor profile, I'll have a different response. I'll have a totally different take for someone doing onesies and twosies, like my cousin is.

Also, my response wasn't intended to suggest purchase price 'doesn't matter'. Of course it matters. It's math. However, as a shareholder since early-2013, I've been through the ups-and -downs and more ups-and-downs. Do I wish I had bought more shares at $35 vs $100, more at $100 vs $200, $200 vs $400, etc. ...? Of course. Do I fret about it 7 years later? Nope. Do I think of it those terms? No. I care about whether I think the SP will be X-times higher in 5 years, 10 yrs, etc. from the time I purchased it. Pick your "X" to match your profile/goals/expectations. Considering OP's scenario, and TSLA's expected performance over OP's long horizon, I'd argue 20% dif in SP now will be noise by then.

My other word for the OP is to consider a stash of cash for that possible 'bigger dip' associated w/ the macro 'event(s)' ... in addition to your DCA. Other than that, keep your eye on the end goal and continue spending time on TSLA research. I find it helps to strengthen my conviction (and reduces fretting).

Exactly! Thank you!

 

[junas]

No, because Tesla doesn't have a demand problem but a production problem.

Smaller cars are not that much cheaper to make. Engineers are not cheaper. Factories are not cheaper. Blue collar workers don't accept less wages to make smaller cars.

The smaller bill for materials is insignificant versus what the customer is willing to pay.

Global demand for vehicles is about 100M per year including commercial.

Tesla could sell 20M vehicles per year with nothing cheaper than a $28k subcompact crossover and bigger/more expensive vehicles.

By the time Tesla is selling 20M electric vehicles per year well over half the micro car market will be BEV, the micro ICEv market will be crashing, and the Chinese/Indian automakers will be capable of making the micro car market 100% BEV. Taking market share from Chinese/Indian micro BEVs doesn't accelerate the mission.

Smaller car doesn't necessarily mean weaker gross margins in software era.

Many customers want FSD feature regardless of their car size. They'll buy apps regardless of their car size (once third party apps become available). Software is where the margins are eventually. In case of a small hatchback 30-50% of selling price could be high-margin software making a huge effect on gross margins.

Remember that Europeans and Chinese drive small cars because of parking, narrow city streets, infrastructure, etc. Most could afford to buy a pickup truck or two, but it's purely a question of practicality. It's not about saving money or being poor in most cases.

Of course, you are right it makes more sense to sell 20M bigger vehicles than smaller vehicles. However, Tesla has been battery constrained and not general assembly constrained. Therefore, assuming batteries are not unlimited supply it makes way more sense to sell 30M smaller vehicles than 20M bigger vehicles. It's the software growth potential what justifies the current valuation, not the panel bending numbers.

 

[jerry33]

Question: which is the wise path when buying Tesla.
A) purchasing shares weekly on payday
B) waiting for a “pullback” to 1200$

A downside: missing out on lower cost shares and increasing cost basis significantly over time
B downside: it’ll never pull back to 1200$ and I’ll be timing the market for more shares forever

Time in the market is more important than timing the market. Ask yourself which strategy will give you more time in the market.

 

[UkNorthampton]

No, because Tesla doesn't have a demand problem but a production problem.

Smaller cars are not that much cheaper to make. Engineers are not cheaper. Factories are not cheaper. Blue collar workers don't accept less wages to make smaller cars.

The smaller bill for materials is insignificant versus what the customer is willing to pay.

Global demand for vehicles is about 100M per year including commercial.

Tesla could sell 20M vehicles per year with nothing cheaper than a $28k subcompact crossover and bigger/more expensive vehicles.

By the time Tesla is selling 20M electric vehicles per year well over half the micro car market will be BEV, the micro ICEv market will be crashing, and the Chinese/Indian automakers will be capable of making the micro car market 100% BEV. Taking market share from Chinese/Indian micro BEVs doesn't accelerate the mission.

Short answer: vans, anything diesel in urban use, Golf-sized cars, SUVs

Looooong answer...

Spoiler

I don't think people have been advocating microcars. It may be definitions. I'm not aware of a microcar class. From wikipedia:- Euro Car Segment - Wikipedia

North America has unusually large vehicles as cities are new. I don''t know USA, but please imagine the oldest and most crowded city streets in the USA (Boston, New York?) and many European cities will be far, far more congested. Try google earth / streetview on various towns and cities. It's not unusual for walking to be faster than driving at rush hour. Parking is often by permit only and larger cars cannot reliably park as no space is large enough.

• A: mini cars
• B: small cars
• C: medium cars
• D: large cars
• E: executive cars
• F: luxury cars
• J: sport utility cars (including off-road vehicles)
• M: Multi purpose cars (including pickup)
• S: Sports cars

2018's most popular cars in Europe by market segment | Autocar lists segments differently with best sellers in Europe in 2018. Here we can see typical cars in each segment, but it doesn't show the size of the segment.
Bolding those whose winner is over 150,000 cars (arbitrary choice).

Model Y - similar to BMW X5 or Merc GLC? Space in a Qashqai isn't that big as I remember. I don't know. Might also eat same segment as Model 3 / Passat. The smallest class is City Car.

The segments that have most vehicles might not be the same as the most polluting / miles driven. Attacking these markets is better for the mission and for profit / use of batteries. However, the sheer number of Golf size segment means that it should be tackled at some stage.

My preference is to eliminate high-polluting urban vehicles and high mileage ones, replacing with electrics. My preference would be in order:-

1. Delivery vans eg Sprinter, Transit and smaller ones (Fiesta- smaller than Golf, Partner). Lots of stop start, high acceleration and braking. We don't have many pickups. Vans are used instead.
2. Taxis (diesels first, high mileages in urban environments). Often have engines running while in taxi queues which you have to walk past.
3. Police patrol - especially urban, high mileages.
4. Delivery lorries fixed and articulated (Semi in USA/NA English?)
5. Buses
6. Rubbish (trash) collection and council (municipality) vehicles
7. High mileage motorway eg sales, consultant, national/regional managers
8. Remaining Diesels (inc privately owned - tax and emission control them out of urban)
9. Petrols capable of high noise/emissions (lots of mid-life crisis boy racers on 30mph streets trying to sound loud)
10. Remaining fossils in urban areas except for highly controlled and taxed specials

According to Wiki... C-segment - Wikipedia "The C-segment is the third smallest of the European segments for passenger cars and is described as "medium cars".[1][2] It is equivalent to the Euro NCAP "small family car" size class,[3] and the compact car category in the United States.[4]

In 2011, the C-segment had a European market share of 23%"

City car: Fiat 500 - 167,708 sales
Supermini: Renault Clio - 284,241 sales
Family hatchback: Volkswagen Golf - 378,167 sales
Mid-size saloon/estate: Volkswagen Passat - 137,794 sales - Tesla Model 3 segment?
Executive: Mercedes-Benz E-Class - 101,334 sales
Luxury: Mercedes-Benz S-Class - 12,723 sales
Small SUV: Renault Captur - 186,220 sales
Mid-size SUV: Nissan Qashqai - 206,636 sales (USA/NA name is Rogue Sport)
Large SUV: Peugeot 5008 - 67,913 sales
Small premium SUV: BMW X1 - 93,164 sales
Mid-size premium SUV: Mercedes-Benz GLC - 108,323 sales
Large premium SUV: BMW X5 - 26,733 sales
Small MPV: Fiat 500L - 47,343 sales
Mid-size MPV: Renault Scenic - 82,702 sales
Large MPV: Mercedes-Benz V-Class - 24,432 sales
Small sports car: Mazda MX-5 - 12,590 sales
Mid-size sports car: Audi TT - 10,273 sales
Large sports car: Porsche 911 - 16,936 sales

 

[jerry33]

No, because Tesla doesn't have a demand problem but a production problem.

Smaller cars are not that much cheaper to make. Engineers are not cheaper. Factories are not cheaper. Blue collar workers don't accept less wages to make smaller cars.

The smaller bill for materials is insignificant versus what the customer is willing to pay.

Global demand for vehicles is about 100M per year including commercial.

Tesla could sell 20M vehicles per year with nothing cheaper than a $28k subcompact crossover and bigger/more expensive vehicles.

By the time Tesla is selling 20M electric vehicles per year well over half the micro car market will be BEV, the micro ICEv market will be crashing, and the Chinese/Indian automakers will be capable of making the micro car market 100% BEV. Taking market share from Chinese/Indian micro BEVs doesn't accelerate the mission.

Agreed. The advantage of micro cars is that they are easy to park. In some countries there is almost no space to park your car at home. If your home parking space only has room for a micro car, the cost of the car doesn't enter into it.

 

[ByeByeJohnny]

You misunderstand. My reply was intended for the original poster (only ... not an avg investor, which I don't even know what that would be).

My reply was based on what she has shared about herself on this thread as a TSLA investor. She is bull long-term with a minimum 10+ yr horizon, and has sufficient conviction to have already acquired 400+ shares with a $400k+ cost basis, and intends to accumulate more. She's early in her career with a stable job and sufficient disposable income. She also intends to dollar-cost average on a regular (wkly/biwkly?) basis, for possibly several more years. Granted, I don't know her TSLA investing temperament/tolerance, but I presume she aims to be steady and resolute.

Give me a different investor profile, I'll have a different response. I'll have a totally different take for someone doing onesies and twosies, like my cousin is.

Also, my response wasn't intended to suggest purchase price 'doesn't matter'. Of course it matters. It's math. However, as a shareholder since early-2013, I've been through the ups-and -downs and more ups-and-downs. Do I wish I had bought more shares at $35 vs $100, more at $100 vs $200, $200 vs $400, etc. ...? Of course. Do I fret about it 7 years later? Nope. Do I think of it those terms? No. I care about whether I think the SP will be X-times higher in 5 years, 10 yrs, etc. from the time I purchased it. Pick your "X" to match your profile/goals/expectations. Considering OP's scenario, and TSLA's expected performance over OP's long horizon, I'd argue 20% dif in SP now will be noise by then.

My other word for the OP is to consider a stash of cash for that possible 'bigger dip' associated w/ the macro 'event(s)' ... in addition to your DCA. Other than that, keep your eye on the end goal and continue spending time on TSLA research. I find it helps to strengthen my conviction (and reduces fretting).

Fair enough, and I agree.

An investor shouldn't wait for a dip because it's more likley than not that you miss it. For a stock that goes up over a longer period it's over 50% that it will go up instead than down over any given shorter period. As for being smarter than the market just look at the last week since ER. Almost no one here saw this dip coming. There was a poll. Something like six people out of hundreds.

That said. The gist of what price you pay for your stocks doesn't matter is probably the most common advice given here. I've seen hundreds of posts in that vein. It's actually a bit insulting, because for most investors it does matter. It's a 'small' difference now but when the share price goes through the stratosphere so does the difference in what you have.

Again, you can't and in most cases shouldn't try to do something about finding a dip but in the end it does matter.

 

[Sunlight]

Agreed. The advantage of micro cars is that they are easy to park. In some countries there is almost no space to park your car at home. If your home parking space only has room for a micro car, the cost of the car doesn't enter into it.

In the past I've been frustrated by how crappy micro cars were and wondered why some better manufacturers didn't market really classy small cars for those who want a small foorprint but not a rubbish car.

Then along came Audi with the A2 and subsequent 'luxury' small cars - appealing for many. And good margins...Others have followed.

EVs lend themselves to smaller cars very well. They are inherently 'classy' with so much preformance and smoothness. The packaging is better so a small car can be bigger inside. The extra weight due to the batteries improves the ride and handling again mitigating against the disadvantages of many small cars. Ditto the improved EV safety. And so on.

I'd love to see Tesla produce a 'not cheap' small car (skip micro for now...) that was cutting edge, fast, smooth, stylish with all the Tesla attributes. Despite the extra cost, I believe they'd sell really well in the small car market and have good margins.

I agree that the really cheap basic 'scrape the barrel' micro EVs can be left to the Chinese, Indians and other companies - they would just drag down the Tesla image anyway!

 

[UCF3]

Okay so this is me. ~300 shares currently. But I need to make a fairly regular income out of this without trying to time the market as well. What’s the best way? Take out small amounts monthly? Take out larger amounts after jumps? I want to be very conservative with withdrawals as I’m jeopardizing a fortune in the future with them.

Rather than selling shares why don’t you sell covered calls and live off the premium?

 

[dww12]

Smaller car doesn't necessarily mean weaker gross margins in software era.

Many customers want FSD feature regardless of their car size. They'll buy apps regardless of their car size (once third party apps become available). Software is where the margins are eventually. In case of a small hatchback 30-50% of selling price could be high-margin software making a huge effect on gross margins.

Remember that Europeans and Chinese drive small cars because of parking, narrow city streets, infrastructure, etc. Most could afford to buy a pickup truck or two, but it's purely a question of practicality. It's not about saving money or being poor in most cases.

Of course, you are right it makes more sense to sell 20M bigger vehicles than smaller vehicles. However, Tesla has been battery constrained and not general assembly constrained. Therefore, assuming batteries are not unlimited supply it makes way more sense to sell 30M smaller vehicles than 20M bigger vehicles. It's the software growth potential what justifies the current valuation, not the panel bending numbers.

It’s a first principals thing. Say a pile of raw materials for a Model 3 cost $500 and a pile of raw materials for a small car cost $250. $250 is not a difference most people would need to save to get a larger car. The difference is only the factory speed and method of manufacture. This is the thing Elon has been talking about most lately. He has been pointing to Giga Belin. Stamp the body in one shot and eliminate needing finished rolled Al from another supplier and an hr of assembly and you just moved the bar down towards materials cost. Now do that with the batteries and get rid of the drying oven.

 

[FrankSG]

Rather than selling shares why don’t you sell covered calls and live off the premium?

Owning only 300 shares makes selling one or a few covered calls even more risky. Could've easily seen all those shares called away from late June to mid July as the SP ran up from $900 to $1,500+ in ~3 weeks.

I'd advice @gabeincal to do anything he can to live off of something else. Perhaps if your expenses are <$1,500 / month living off of shares won't hurt your portfolio that much, but If you think these shares will be something like $15,000 or more by 2030, every $1,500 you make through other means is then more like making $15,000.

 

[StarFoxisDown!]

I haven't seen this yet either. Somebody replied asking for a link. Hopefully he'll share it. It's on the low side for sure, considering the production rate in May was higher than this. If the number is accurate, I'd imagine that the production increase to 5k/week hurt volumes in the short term in the month of July.

I have no clue where Troy got those numbers and I'm thinking it's his own estimate that he's passing off as data. Troy is not the usual source for the monthly China numbers and the usual sources that do have the monthly China numbers have not posted anything yet.

 

[Christine69420]

Okay so this is me. ~300 shares currently. But I need to make a fairly regular income out of this without trying to time the market as well. What’s the best way? Take out small amounts monthly? Take out larger amounts after jumps? I want to be very conservative with withdrawals as I’m jeopardizing a fortune in the future with them.

Rather than selling shares why don’t you sell covered calls and live off the premium?

Is there somewhere one can learn more about best practices when you start to use your investments?

A thread here or some other website?

I'm not there yet - but it would be interesting to learn more.

 

[Nocturnal]

Oh $1500. I’m sorry I talked bad about you, let’s never fight again. Btw, can I have your friend $1600’s number?

 

[replicant]

Ferrari market cap is $30+ billion. That's huge for a company selling few cars, at least compared to other ICE makers.

1. When do they plan to switch to BEV?
2. How fast and successful can they be in this transition? How much resources have they invested already?
   
3. Would Tesla be an option to customers cross-shopping Ferraris? If not, why and how deep is the moat?
   
4. What could distinguish Ferrari cars from Tesla, besides branding and exclusivity (e.g quality, features, range, customization...)?
5. [edit] Should Tesla consider launching sub-brands at some point, to better compete in the luxury space (vs robotaxis, trucks, family cars...)? If so, how can Ferrari keep up if their tech isn't as good as Tesla?

It seems that we expect Tesla to take market shares for all manufacturers and that the industry (and the stock market is finally realizing that, but so far, Ferrari seems unmoved, as if they weren't making ICE vehicles.

 

[elasalle]

No, because Tesla doesn't have a demand problem but a production problem.

Smaller cars are not that much cheaper to make. Engineers are not cheaper. Factories are not cheaper. Blue collar workers don't accept less wages to make smaller cars.

The smaller bill for materials is insignificant versus what the customer is willing to pay.

Global demand for vehicles is about 100M per year including commercial.

Tesla could sell 20M vehicles per year with nothing cheaper than a $28k subcompact crossover and bigger/more expensive vehicles.

By the time Tesla is selling 20M electric vehicles per year well over half the micro car market will be BEV, the micro ICEv market will be crashing, and the Chinese/Indian automakers will be capable of making the micro car market 100% BEV. Taking market share from Chinese/Indian micro BEVs doesn't accelerate the mission.

If Tesla's plan is to improve manufacturing by 1000+%, the costs incurred in current Production approaches should not be used as baseline.
Radical approach with Radical design and Micro cars with Software/Supercharger consumption, could still provide good margins, satisfy certain bracket of consumers and cut into competition gains. cheers!!

 

[elasalle]

For what it's worth, MAX-PAIN is @ 1490 for this Fri.

 

[Stretch2727]

Just now on Bloomberg (about 6:55 eastern time)

Mark Reuss GM president

EVGo charge network very important, 100% Reusable. Said Tesla made decide to do something different. EVGo plugs are SAE standard but Tesla went their own way. This was said in a very snide and dismissive tone.

Pain points on EV's are charging, range, cost and price. They will remove those pain points. EV's will be a large transformation for General Motors.

Smirk on his face when he said the are going to release their large suv's from Arlington Tx. facility a week ahead of their schedule.

GM will have the right price, chemistry, range etc... what the customers want. He said they are vertically integrated.

Bloomberg talking head said that Tesla's valuation is outrageous. Then he quickly adds "as many people think", It sounded like a quick addition to cover his bias. With this attitude Bloomberg should be ashamed of themselves, they have seem to show loose situational ethics.

At this point GM should stop being critical of Tesla and focus on the task at hand. In the past, Mary Barra made comments with the thoughts releasing the Bolt before the Model 3 and having "dealers" was a huge competitive advantage. Turned out to be completely wrong.

Their current focus for product is on the high end market (Cadillac and Hummer) is probably a good idea, but then why focus on charging for people in apartments and condos with EVGo. Not having seamless charging on road trips for someone buying a high end car is going to be a huge impediment to sales.

Honestly more confident than ever that this is going to be a huge train wreck for the OEM's in 3-4 years, especially in North America.