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

[phantasms]

Not sure if this has been posted but in the new update you’re able to create a Tesla game profile. We all knew this kind of stuff would come eventually but it’s nice to see the first baby steps.

 

[bkp_duke]

If the format is 4680, then they are also adopting tabless jelly rolls.

That wasn't my point. 4680+tabless is not nearly as big a deal as DBE. DBE allows the footprint of your entire battery assembly line to decrease by 60+ %.

 

[Featsbeyond50]

I was advised to put this question here, as opposed to the Other Tech Stock thread where I initially asked the question:

Does anyone else feel like the current market smacks of the dot com bubble?

I saw a video a couple months ago where Cathie Wood addressed this. She said something to the effect of this time it's different because in the late nineties the technologies were a dream, now they are a reality. I believe that's true to an extent, for a few companies like Tesla. However, other companies like Quantumscape, are wildly over valued in my eyes. Which is more predominant, companies like Tesla that deserve their valuation or companies that have been carried by irrational exuberance? What's going to happen to the market as a whole, or to Tesla (the largest holding for all of us), when rationality returns?

 

[MC3OZ]

Over the years, I’d talk to dad about manufacturing costs and methods - he knows a lot as Financial Controller in a former life.

Something I learned:

Manufacturers do have their own R&D teams when they get rights to a certain new technology they are doing production for.

I've longed thought Tesla was going to do a "Batteries 4 Alllll" approach. Basically, outsourcing and/or licensing the new battery tech (or maybe giving it away for free) to the LG Chem and Panasonic of the world. From there, all the auto companies are going to get the new cheaper and better battery tech - hence why they are waiting until 2023-2024 for their EV rollouts...which is 2 years after Tesla's ramp up.

Personally, I think impossible for TSLA to own the entire world's auto market, but they can help transition the world to better transportation and sustainable infrastructure. Superchargers are already being used by some EV’s outside TSLA and I’m assuming the Boring Co loops will be doing the same in the future too...to eventually being used by every auto company. Thoughts?

Tesla is sharing any relevant IP on 4680 and Tabless.cells.
It is relatively easy for Panasonic and LG to covert existing factories to make these cells.
Perhaps slightly harder for CATL, who probably don't have factories making cylindrical cells.
All EVs will start to migrate towards 4680 and structural pack when they can do so.
4680 might more or less become the industry standard and start to obsolete prismatic packs.
So tabless 4680 is accelerating the mission across all EVs.

Likewise Tesla is probably sharing Silicon Anode tech with Panasonic and probably LG, again that is because Tesla wants them to make cells with that Anode and this probably extends to many of the other chemical properties of the cell.
How much of that can be used to help other EV companies isn't clear, a lot of the information can be got from teardowns, but Tesla owns the IP and can protect it to some extent.

Tesla may not sharing:-

• DBE
• Castings Alloy
• Factory machinery
• Cathode Process
• Formation Equipment
• Lithium extraction from clays

So they can share some information to accelerate the mission at all EV companies while retaining a competitive advantages through faster scaling and lower prices. If others held the competitive advantage they would not share.

At present LG and Panasonic might not be interested in everything on the list above, but may want to license / purchase some Tesla tech.

Formation Equipment is something Tesla might be happy to sell and battery makers might be keen to buy.

 

[goinfraftw]

Tesla is sharing any relevant IP on 4680 and Tabless.cells.
It is relatively easy for Panasonic and LG to covert existing factories to make these cells.
Perhaps slightly harder for CATL, who probably don't have factories making cylindrical cells.
All EVs will start to migrate towards 4680 and structural pack when they can do so.
4680 might more or less become the industry standard and start to obsolete prismatic packs.
So tabless 4680 is accelerating the mission across al EVs.

Likewise Tesla is probably sharing Silicon Anode tech with Panasonic and probably LG, again that is because Tesla wants them to make cells with that Anode and this probably extends to many of the other chemical properties of the cell.
How much of that can be used to help other EV companies isn't clear, a lot of the information can be got from teardowns, but Tesla owns the IP and can protect it to some extent.

Tesla may not sharing:-

• DBE
• Castings Alloy
• Factory machinery
• Cathode Process
• Formation Equipment
• Lithium extraction from clays

So they can share some information to accelerate the mission at all EV companies while retaining a competitive advantages through faster scaling and lower prices. If others held the competitive advantage they would not share.

At present LG and Panasonic might not be interested in everything on the list above, but may want to license / purchase some Tesla tech.

Formation Equipment is something Tesla might be happy to sell and battery makers might be keen to buy.

Thank you and sounds good - I don't know anything about battery tech. Though, if the Apple approach is taken, for smartphones, to compare with Tesla in creating the EV Market, would it make sense for the likes of LG Chem, CATL, and Panasonic to be the battery suppliers for EVs and robotics tech across the ecosystem of battery-powered cars...and "things"? (that might potentially include SpaceX and other Space technology companies with cheaper batteries and improved margins)

Meanwhile, the other auto manufacturers build out their design and manufacturing capabilities for their own form factors on top of and/or even the "skateboard"?

 

[MC3OZ]

I was advised to put this question here, as opposed to the Other Tech Stock thread where I initially asked the question:

Does anyone else feel like the current market smacks of the dot com bubble?

I saw a video a couple months ago where Cathie Wood addressed this. She said something to the effect of this time it's different because in the late nineties the technologies were a dream, now they are a reality. I believe that's true to an extent, for a few companies like Tesla. However, other companies like Quantumscape, are wildly over valued in my eyes. Which is more predominant, companies like Tesla that deserve their valuation or companies that have been carried by irrational exuberance? What's going to happen to the market as a whole, or to Tesla (the largest holding for all of us), when rationality returns?

The key difference between Tesla and Quantumscape is Tesla is a mature company earning good income with growing revenues and low risk. Quantumscape is a riskier bet, because significant income is a few years away.

Early stage risky bets are even riskier if the market corrects they need additional capital and they find it hard to raise.
A lot of these type of corrections involve some sort of credit squeeze with inflation and high interest rates, it seems very unlikely that is going to happen anytime soon.

The other attribute of the dot com bubble was a lot of the companies never made any money and never looked like making any money anytime soon. Some of the products were overhyped.

In the case of Quantumscape, we can judge their product and the prospects for future income, every company is different.
Quality usually survives and thrives, bad ideas, or poor execution typically fails..

 

[Pezpunk]

I was advised to put this question here, as opposed to the Other Tech Stock thread where I initially asked the question:

Does anyone else feel like the current market smacks of the dot com bubble?

I saw a video a couple months ago where Cathie Wood addressed this. She said something to the effect of this time it's different because in the late nineties the technologies were a dream, now they are a reality. I believe that's true to an extent, for a few companies like Tesla. However, other companies like Quantumscape, are wildly over valued in my eyes. Which is more predominant, companies like Tesla that deserve their valuation or companies that have been carried by irrational exuberance? What's going to happen to the market as a whole, or to Tesla (the largest holding for all of us), when rationality returns?

Tesla itself is not overvalued, but there are a dozen Tesla-adjacent stocks that are, because the market as a whole STILL doesn’t grasp that Tesla is a once-in-a-lifetime company and wholly unique. Right now, the market 1) Mistakenly sees Tesla’s valuation as irrational and 2) mistakenly thinks that justifies irrational valuations of various vaporware projects, outright grifts, or otherwise completely uncomparable companies.

I would advise staying out of that bubble, but when it pops I think it’s anyone’s guess whether it would hurt Tesla or just cause more money to flow into the most legitimate established player in this space.

 

[goinfraftw]

Tesla itself is not overvalued, but there are a dozen Tesla-adjacent stocks that are, because the market as a whole STILL doesn’t grasp that Tesla is a once-in-a-lifetime company and wholly unique. Right now, the market 1) Mistakenly sees Tesla’s valuation as irrational and 2) mistakenly thinks that justifies irrational valuations of various vaporware projects, outright grifts, or otherwise completely uncomparable companies.

I would advise staying out of that bubble, but when it pops I think it’s anyone’s guess whether it would hurt Tesla or just cause more money to flow into the most legitimate established player in this space.

Personally, I think it's more than just Tesla keeping the market afloat and there being a bubble. Some posters have mentioned here about places like Blackrock becoming more activitists in 2020 (due to what I assume is the global actions within the Paris Climate Accord):

https://www.blackrock.com/corporate/literature/publication/our-2021-stewardship-expectations.pdf

A lot of the US market's problems is a lack of awareness of what the people outside of the country are doing to make this transition towards sustainability possible from what I can tell. For example:

Readout of Transportation Secretary-designee Pete Buttigieg's Meeting with U.S. Mayors | President-Elect Joe Biden

"Mayors of small, mid-sized, and large cities agreed with and applauded Buttigieg’s priorities for the agency while sharing they’ve had four years of little to no engagement and a lack of investment and communication from the federal government on infrastructure and transportation issues. In addition, mayors shared with Buttigieg that they would like to ensure that the transportation and infrastructure of the United States is not only innovative and competitive, but the U.S. is a global leader in transportation. They stressed the need to ensure that local governments were able to use funds to hire and contract with local workers and small businesses to serve as an economic engine in their communities. In response to the pandemic and natural disasters, they discussed the need for resiliency plans that not only encouraged rebuilding, but building back better. The group also talked about the importance of Federal funding programs including Community Development Block Grants and Energy, Efficiency and Conservation Block Grants that are vital to their cities."

Didn't Trump campaign on Infrastructure in 2016? In a few weeks, I think the Biden administration is going to find out how little is known about the health of the US, but a requirement for innovation to plow through the problems and focus the nation towards resiliency and sustainability...with some help from very wealthy people, hopefully, that are keeping their money in banks right now to be deployed.

Deposits, All Commercial Banks

 

[MC3OZ]

Thank you and sounds good - I don't know anything about battery tech. Though, if the Apple approach is taken, for smartphones, to compare with Tesla in creating the EV Market, would it make sense for the likes of LG Chem, CATL, and Panasonic to be the battery suppliers for EVs and robotics tech across the ecosystem of battery-powered cars...and "things"? (that might potentially include SpaceX and other Space technology companies with cheaper batteries and improved margins)

Meanwhile, the other auto manufacturers build out their design and manufacturing capabilities for their own form factors on top of and/or even the "skateboard"?

Outside of Tesla, I'll be surprised if many car companies invest in battery R&D and battery manufacture, but they may increasingly invest in battery plants and possibly even in joint ventures with battery makers.

Tesla Battery Day is all about growing cell production rapidly so vehicle and energy storage are not cell constrained.
In turn that means Tesla vehicle and energy storage production can grow rapidly.

IMO it is a race for EV market share being first to the finish line is a big advantage, that provides the scale and revenue to further improve products and lower costs.

Once Tesla starts executing on Battery Day, other car makers are going ]to have to respond, demand for cells will be high and that will in turn drive investment in more cell capacity.

The timing of Battery Day and the rapid build of the Berlin and Austin factories will shake up the industry IMO, I can't see why it wouldn't.
In terms of an adequate response to that, it is a tough problem for other car makers to have, some will muddle through somehow, but some failures and further mergers are very likely.

 

[goinfraftw]

Outside of Tesla, I'll be surprised if many car companies invest in battery R&D and battery manufacture, but they may increasingly invest in battery plants and possibly even in joint ventures with battery makers.

Tesla Battery Day is all about growing cell production rapidly so vehicle and energy storage are not cell constrained.
In turn that means Tesla vehicle and energy storage production can grow rapidly.

IMO it is a race for EV market share being first to the finish line is a big advantage, that providers the scale and revenue to further improve products and lower costs.

Once Tesla starts executing on Battery Day, other car makers are going ]to have to respond, demand for cells will be high and that will in turn drive investment in more cell capacity.

The timing of Battery Day and the rapid build of the Berlin and Austin factories will shake up the industry IMO, I can't see why it wouldn't.
In terms of an adequate response to that, it is a tough problem for other car makers to have, some will muddle through somehow, but some failures and further mergers are very likely.

Sounds good, I agree as a layperson. I'd add that it's likely to create a great race in other areas of robotics and mechanical engineering with better batteries available to power more types of systems. Gonna be an interesting decade...

 

[EnzoXYZ]

I don't know how that reviewer can claim the Mach-e is impressive and "stands tall" against the Model Y in "most competitive measures".

The most glaring deficiency is really basic. To get comparable range and AWD in the Mach-e it's necessary to get the Premium Model with the extended range battery which costs $54,700 before delivery charge. That's $4,700 MORE than the Model Y Long Range which has significantly more range (326 miles of EPA certified range vs. 270 miles of EPA targeted range for Ford). That's a whopping difference of 56 miles less range for $4,700 more money.

Because the Tesla is considerably more aerodynamic the range deficiency will almost certainly be greater than this in the real world where it matters most - on the freeway going 70-75 mph. These vehicles are not even in the same ball-park. And that's before we talk about the huge disparity in safety and convenience features. The Ford doesn't come with the Tesla Autopilot and the safety features will not match Tesla's. The Ford doesn't have crash safety ratings yet but they can't beat Tesla's (and I'm confident they won't even match them).

The Model Y has 14% more cu. ft. of cargo capacity with the rear seats folded forward. The Model Y is 500 lbs. lighter so I'm betting it feels more nimble and drives better. 500 lbs. is a lot of extra weight, the equivalent of having two very large men in the car at all times (in addition to the driver and whatever else is in there). I could go on and on but it baffles me how any reviewer could say it compares favorably with the Model in "most competitive measures". These differences in range and weight derive directly from Tesla's superior EV technology. When you have to put in a considerably larger battery to get less range, all kinds of bad effects compound including driving dynamics. It's a BIG deal. This also means the Fords electric bill will be quite a bit higher over the life of the vehicle.

No one can compete with Tesla on price for what you get. And that is Tesla's real advantage and it's likely to grow, not shrink because Tesla is just starting to optimize production. The Ford will find some buyers because there are always people out there that don't understand how handicapped the Mach-e is vs. the Model Y or maybe they like the way the Mach-e looks. But that's not what it means to compare favorably in "most competitive measures". A porky lower range car for thousands more simply won't entice that many buyers.

My good friend does car reviews for living. It’s very typical of these large manufacturers to spend upwards of $10K per guest to lavish events. I was about to tag along to his all expense paid Geneva international auto show last March before COVID hit and canceled everything. Point is Ford likely targeted their best auto journalists to hype up the Mach E. I be very biased too if my content and access to new products are endangered.

 

[jerry33]

Once Tesla starts executing on Battery Day, other car makers are going ]to have to respond, demand for cells will be high and that will in turn drive investment in more cell capacity.

The issue is that batteries are only a small part of the problems that other vehicle manufacturers have. Most are thinking battery packs, which puts them at a great disadvantage compared to Tesla where the batteries will be structural elements. Then there's the casting and SpaceX metallurgy, and the custom made parts. OEMs rely on interchangeable parts to keep the costs down, but to compete with Tesla they will have to use all new parts that can't be shared with legacy vehicles. Outsourcing batteries, by definition, already means higher costs, so there is that wall to overcome as well.

 

[goinfraftw]

FYI - I paid upkeep in Q3, 2020.

 

[Nocturnal]

Not sure if this has been posted but in the new update you’re able to create a Tesla game profile. We all knew this kind of stuff would come eventually but it’s nice to see the first baby steps.


View attachment 621598

I can’t wait to pwn you noobs.

 

[Chunky Jr.]

Record Electric Vehicle Sales in China

Record Electric Vehicle Sales in China
https://cleantechnica.com/2020/12/27/record-electric-vehicle-sales-in-china/
While the overall Chinese auto market is slowly picking up (+12% year over year in November), plugin vehicles are already on the fast lane, growing by 138% year over year (YoY) to a record 198,000 units.

This time, plugin hybrids (PHEVs) grew faster than full electrics (BEVs) — +164% versus +134%. Despite this uptick from plugin hybrids, however, BEVs still own 80% of the plugin vehicle (PEV) market.

Model 3 is number 2 on the list.

 

[gabeincal]

Record Electric Vehicle Sales in China

Record Electric Vehicle Sales in China

Model 3 is number 2 on the list.

And the only model that beat Model 3 is this.

 

[kemallette]

I was advised to put this question here, as opposed to the Other Tech Stock thread where I initially asked the question:

Does anyone else feel like the current market smacks of the dot com bubble?

I saw a video a couple months ago where Cathie Wood addressed this. She said something to the effect of this time it's different because in the late nineties the technologies were a dream, now they are a reality. I believe that's true to an extent, for a few companies like Tesla. However, other companies like Quantumscape, are wildly over valued in my eyes. Which is more predominant, companies like Tesla that deserve their valuation or companies that have been carried by irrational exuberance? What's going to happen to the market as a whole, or to Tesla (the largest holding for all of us), when rationality returns?

Ask you and you shall receive! This post addresses dot-com bubble concerns in detail.

I get the sentiment. I even agree with it in regards to certain companies and perhaps the EV and related space. Seeing companies with no product in market and 0 to virtually 0 revenue (NKLA, QS) commanding multi-billion dollar valuations is astronomically absurd.

However, those are the exception rather than the rule. The numbers just don't point to another dot-com bust. Here's a nice thorough write-up penned in Sept on why. No, This Isn't a Repeat of the Dot-Com Bubble – Of Dollars And Data

Here are some key takeaways from the article:

Note: I've also adjusted some of the numbers to show where we are now vs when this was written in Sept as well as added a few tidbits not in the article

1. Nasdaq 5-year performance:

95 - 2000: +456%
2015-Current: +156%
​

2. Sampling of biggest individual performers:

95-2000 (avg 11x - 40x)
Intel: +998%
Cisco: +3,910%
Oracle: +1,220%
Microsoft: +1,600%

2015-2020 (avg 2.5x - 6x)
Apple: +401%
Amazon: +375%
Netflix: +361%
Facebook: +155%
Zoom: +559%
TSLA: +1,234% <---- Noteable exception I address at the end of the post​

3. P/E Ratios are still below the dot-com average: 44 vs 29-30ish

4. Yields (TINA - there is no other alternative)

Current average earnings yields (E/P) are:

Now: ~3-3.3% (1/29.5)
Dot-com: ~2.2% (1/44)​

Meaning, investors expect about a 3-3.5% return for every dollar they put in a stock now vs 2% during the dot-com bust.

That doesn't seem like a big difference, but when compared against a MUCH safer investment, the 10 year treasury, there's a huge difference.

10-year US bonds:

Now: <1%
Dot-com: ~6%​

In the dot-com bust, you were taking a risk on companies barely earning anything for a meager 2.2% yield versus a 6% virtually guaranteed return in bonds! Now, you're lucky to get 1% on bonds versus 3% or better in stocks. Needless to say, it's not crazy to hear folks saying Amazon and Apple are better than bonds for storing your dollars.

To sum it up

Yes, TSLA is absolutely a performance outlier. However, unlike in the dot-com bust, investors are being forced to stick their dollars somewhere and mega-cap tech in the world's largest TAMs (total addressable market) is one of the best places to do that.

TSLA is:
- credibly competing in the two largest TAMs and arguably leading technology driven disruption in both
- TSLA's technology and business model has already proven economical -- an important distinction when comparing against dot-com businesses that were not economical
- led by a truly once in a generation level leader in his prime with decades of experience
- incredibly resilient having survived two MASSIVE economic disasters, one of which was the largest seen since the great depression and early in TSLA's existence

I don't have a crystal ball, but I can tell you that this valuation isn't irrationally exuberant by any means.

And to address this part of your question more directly:

What's going to happen to the market as a whole, or to Tesla (the largest holding for all of us), when rationality returns?

I would expect investment to consolidate around the winners as usual. The scale of consolidation is quite massive. If we are to assume electrified robo-taxi's is a winner take most market, for instance, you're looking at hundreds of billions in reallocation out of legacy auto, fossil fuel infrastructure, and speculative EV related plays into a handful of winners globally.

And unlike the dot-com bust, the companies that are destroying legacy auto, energy infrastructure, and so much more are doing so atop multiple innovation platforms each of which have ridden cost decline curves over many years making them truly competitive both on cost and capability. This is a key concept to grok in order to understand Cathie when she says:

She said something to the effect of this time it's different because in the late nineties the technologies were a dream, now they are a reality. I believe that's true to an extent, for a few companies like Tesla.

ARK provides a great overview of what those platforms are and the kind of opportunities they represent in their Big Ideas 2020 report here: Big Ideas 2020 - ARK Invest

Specific to mobility, electrification and energy generally, climate policy globally is picking up steam. The amount of backing and subsidy provided by governments the world over is incredible. The likes of which we've only seen in, well, fossil fuels and war.

Wait! But what about TINA (this is no alternative)! What happens if/when the fed decides it's time to end the party and raise rates?

Certainly, we should expect to see some amount of capital flow into fixed income again. However, the fed has been very clear that will not raise rates until it's clear that inflation is at or even above their ~2% target. And, despite the extraordinary measures we've already seen, it's not clear that inflation will come for quite some time for several reasons. One of which being that massive technology disruption tends to be deflationary. Cathie and ARK would argue that we haven't seen innovation on the scale and pace we are seeing today ever before. I would agree.

 

[DutchDriver]

Breaking: Trump has just signed the Spending bill / Corona relief bill. Should be at least some positive for markets?

 

[Unpilot]

Not sure if this has been posted but in the new update you’re able to create a Tesla game profile. We all knew this kind of stuff would come eventually but it’s nice to see the first baby steps.


View attachment 621598

I got the update...but no cool horn sounds...model S left out of that fun I guess.

 

[Mo City]

That wasn't my point. 4680+tabless is not nearly as big a deal as DBE. DBE allows the footprint of your entire battery assembly line to decrease by 60+ %.

This point should be stickied.

There was a video posted earlier today projecting 2021 deliveries (among other things) and the guy didn't even mention scaling DBE. Anything predicting 2021 and beyond that doesn't mention DBE should be disregarded.

True autonomy is the nuclear button for Tesla (and TSLA). Scaling DBE isn't far behind. When both happen, the number of announced retirements on TMC will increase so much mods will require a separate thread.