Legacy OEM’s have struggled to mimic successfully anything Tesla has done.
Elon is just throwing them a bone with something they can easily ape.
Then up goes bitcoin. Genius. /s
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Elon is just throwing them a bone with something they can easily ape.
Then up goes bitcoin. Genius. /s
Krugerrand
Meow
I’ve ordered for the mountain.
starlink available in Bay Area, Ca.
Shipping in 2-4 weeks.
Down side is currently coverage is 50-150mbps latency 20-40 and states “potential for brief periods of no service”
Install kit was $597. Free delivery.
Monthly fee of $99
Anyone know if I can take it with me on RV trips? Or will it only work at my service address.
Tesla Summoned by Chinese Regulators on Quality Issues
SHANGHAI— Tesla Inc. TSLA 1.31% has been summoned by Chinese authorities citing consumer complaints about quality issues, a warning for the electric-vehicle maker in a country where it has enjoyed a welcome rarely seen for foreign companies.
The State Administration for Market Regulation, China’s top market regulator, said Monday that it and four other regulators had instructed Tesla to abide by Chinese laws and regulations and strengthen internal management to ensure the quality and safety of its products.
It was a rare rebuke for Tesla, the first foreign auto maker to operate a wholly-owned plant in China.
~~~Discussed hours and hours and hours ago. Moderators have multiple times alerted participants to DO YOUR RESEARCH (look back through at least the day's posts) before placing some news headline in the thread. Or do you really think that you're the first past the post?
By the way, did anyone notice Tesla has incorporated bitcoin into its Treasury holdings?~~~
SHANGHAI— Tesla Inc. TSLA 1.31% has been summoned by Chinese authorities citing consumer complaints about quality issues, a warning for the electric-vehicle maker in a country where it has enjoyed a welcome rarely seen for foreign companies.
The State Administration for Market Regulation, China’s top market regulator, said Monday that it and four other regulators had instructed Tesla to abide by Chinese laws and regulations and strengthen internal management to ensure the quality and safety of its products.
It was a rare rebuke for Tesla, the first foreign auto maker to operate a wholly-owned plant in China.
~~~Discussed hours and hours and hours ago. Moderators have multiple times alerted participants to DO YOUR RESEARCH (look back through at least the day's posts) before placing some news headline in the thread. Or do you really think that you're the first past the post?
By the way, did anyone notice Tesla has incorporated bitcoin into its Treasury holdings?~~~
Last edited by a moderator:
I think FSD is being held back because the software is still in a phase of transition from 2d to 4d per what Elon said.
LoL. It's not really a loss if you pocket some Tsla at 1300. Market can correct and you'll look like a genius since no one has a crystal ball.
Carl Raymond
Active Member
You are missing the ridiculously large carbon footprint of bitcoin...
Bitcoin Energy Consumption Index - Digiconomist
So far 18 million coins have been mined of a total capped at 21 million, but the system keeps halving the coins minted per block, so the pollution per coin keeps rising. A conspiracy theorist would say that bitcoin was invented by the energy industry to prop up demand.
davecolene0606
Member
Anybody remember the dude mining BTC out of the back of his MS using super chargers?
Um yeh I signed up for Starlink (long ago registered email) paid my $ today sez 2nd half to late 2021 for my area...
yesssss, now for the new movable island service...
Fire Away!
(It’s STILL the batteries, Stupid!)
Don't know how accurate this is, but I haven't dug in to whether US GAAP has published specific guidance on crypto-assets. I would have gone with any revaluations of BTC flowing through Other Comprehensive Income. No impact to Net Income, nor to EPS. Only an impact to Net Income or EPS if they actually sell any BTC.
I interrupt the current BTC programming to share my thoughts after reading through the 10-K. I think there are some very interesting comments laced through the disclosures, as well as some subtle tweaks to language from prior years.
TL;DR:
Gross Margins (GM): Margin expansion was actually stronger than it appeared. 2019 had a downward revision ($451M) to Cost of Goods Sold (COGS) due to management having increased the likelihood of resale guarantee utilization (remember that program where Tesla guaranteed a certain percentage of resale values?). If estimates are that more people will exercise that option, then Tesla buys back the vehicle and gets to resell it (assumed at a gain, as they would tack on full FSD on re-sale). Management had increased their estimate utilization of that program, so they decreased the COGS related to vehicles subject to those options so as to account for the potential future gain on resale. This made 2019 GM higher (and likely was what they needed to keep margins above the 20% threshold).
Moreover, Tesla had $213M of idle capacity charges (i.e., you still incur costs relating to your factory even if its not producing anything - those costs get charged to COGS - essentially increasing the overall COGS per unit produced from that factory in the year), relating to factory shut downs due to pandemic. So, if you add $451M to 2019 COGS and remove $213M from 2020 COGS, you actually get to a 2019 GM of 19.1% (vs. 21.2%) and a 2020 GM of 26.4% (vs. 25.6%). That's impressive GM growth and shows the power of localized manufacturing (e.g., Shanghai) and equally highlights the benefits of Model Y cost structure being similar to Model 3, yet priced at a premium. I would not be shocked to see Tesla pushing 30-40% GM in the near future, especially if FSD take rates improve at all.
For transparency, estimates around the resale options as well as warranty reserves are two HIGHLY subjective areas and would be one area that management can pull a lot of accounting levers to achieve desired outcomes. In fact, this is fully disclosed in PwC's audit report as critical areas of the audit. This essentially is a cover-your-*** statement from PwC should the actual resales value program utilization or actual warranty expenses vary materially from current management estimates.
Deferred Tax Asset (DTA) and Valuation Allowance (VA): Tesla has been accumulating tax losses and tax credits for many years. Generally, when an entity accumulates these losses and credits, they effectively are building DTAs, assets that they will be able to apply against taxes payable in future years due to future profitability. From a financial reporting perspective, entities can only show this as an asset on their balance sheet if there is a "more likely than not" (generally >50%) probability that they will actually consume the assets in the foreseeable future. Tesla has yet to agree with their auditors as to the likelihood of utilization of some of these DTAs. As such, they have applied a VA against their DTA. Fancy way of saying they are valuing the DTA as $0 for reporting purposes.
If and when they release that VA, it will be a $3B+ boost to Net Income and a significant lift to Operating Margin %s. I would estimate we see all or part of that VA be released over the next 1-3 years. The reason for the range (rather than my taking the stance that 2021 WILL be the year of release of VA) would be that Tesla currently generates significant tax deductions due to their stock-based compensation (SBC) plan with Elon, and to a lesser extent, most of their employees. As those shares/options vest, Tesla gets significant tax write-offs relative to their Financial Statement Net Income. As long as those write-offs are sufficient to off-set immediate taxes payable, Tesla may not release the VA on their accumulated DTAs. Though at current market cap and operational milestone pace, it's likely that the CEO compensation package is fully taken in to account within the next 1-2 years which, compounded with continued growing profitability, would culminate in a release of the VA in that 1-3 year window.
R&D Expense: Increased $148M year over year, $62M related to materials testing (could be prototype equipment, could be testing different raw materials for battery chemistry or manufacturing processes, either way - its a lot of something), and $61M due to SBC on R&D staff.
SG&A: More than 100% of growth in SG&A expenses was from... you guessed it... SBC. SG&A would have otherwise decreased, which again confirms the theory that Tesla is now at the point in their growth journey of unlocking MASSIVE operating leverage. In other words, Tesla's rate of generating sales far outpaces its rate of incurring operating expenses, meaning incremental vehicle sales will continue to disproportionately increase Net Income, and thus Net Operating Margin %, and thus EPS. I would not be surprised to see double digit Net Operating Margin in the next 2-3 years (from the current 2.2%) especially when you consider the potential release of VA on DTAs. This is a significant potential unlock to valuation of Tesla as analysts get comfortable with that reality.
FSD: This is the first time I've seen Tesla explicitly state that "We intend to establish in the future an autonomous Tesla ride-hailing network, which we expect would also allow us to access a new customer base even as modes of transportation evolve."; I checked their 2019 10-K and most recent 10-Q and there is no mention of that intention. This will add fuel to the revenue streams that analysts will be forced to consider in their own valuation models and again solidifying a significant portion of Tesla's valuation.
Engineering: Similar to FSD, Tesla has made a new statement in this 10-K "As we increase our capabilities, particularly in the areas of automation, die-making and line-building, we are also making strides in the simulations modeling these capabilities prior to construction." Making the machine that makes the machine. Tesla's product road map is as much factory design and building as it is the products those factories build. I would not be shocked to hear of several new factory announcements this year and equally not be shocked if we see the ramp in Berlin and Texas to be significantly faster than Shanghai.
---
Conclusion: Anyone selling off because of BTC is forgetting that this is still just the beginning for Tesla.
TL;DR:
- Market underappreciates the year over year Gross Margin improvement as well as how much operating leverage Tesla has achieved;
- Deferred Tax Asset Valuation Allowance saga continues, and will continue to snowball in size. Compounded with operating leverage, this is a significant future unlock of net operating margins;
- Stock based compensation is impacting multiple expenses categories (cost of goods sold, R&D, and general operating expenditures); this directly impacts a number of the standard ratios and metrics analysts use to value financial health and valuation of companies and makes Tesla very difficult to compare against "peers";
- Tesla intends to establish its own ride-hailing network - this is no longer just speculation or inference from a robo-taxi blue sky presentation from years ago - they explicitly state it for the first time in their 10-K;
- I am expecting announcements of at least two new factories in 2021;
Gross Margins (GM): Margin expansion was actually stronger than it appeared. 2019 had a downward revision ($451M) to Cost of Goods Sold (COGS) due to management having increased the likelihood of resale guarantee utilization (remember that program where Tesla guaranteed a certain percentage of resale values?). If estimates are that more people will exercise that option, then Tesla buys back the vehicle and gets to resell it (assumed at a gain, as they would tack on full FSD on re-sale). Management had increased their estimate utilization of that program, so they decreased the COGS related to vehicles subject to those options so as to account for the potential future gain on resale. This made 2019 GM higher (and likely was what they needed to keep margins above the 20% threshold).
Moreover, Tesla had $213M of idle capacity charges (i.e., you still incur costs relating to your factory even if its not producing anything - those costs get charged to COGS - essentially increasing the overall COGS per unit produced from that factory in the year), relating to factory shut downs due to pandemic. So, if you add $451M to 2019 COGS and remove $213M from 2020 COGS, you actually get to a 2019 GM of 19.1% (vs. 21.2%) and a 2020 GM of 26.4% (vs. 25.6%). That's impressive GM growth and shows the power of localized manufacturing (e.g., Shanghai) and equally highlights the benefits of Model Y cost structure being similar to Model 3, yet priced at a premium. I would not be shocked to see Tesla pushing 30-40% GM in the near future, especially if FSD take rates improve at all.
For transparency, estimates around the resale options as well as warranty reserves are two HIGHLY subjective areas and would be one area that management can pull a lot of accounting levers to achieve desired outcomes. In fact, this is fully disclosed in PwC's audit report as critical areas of the audit. This essentially is a cover-your-*** statement from PwC should the actual resales value program utilization or actual warranty expenses vary materially from current management estimates.
Deferred Tax Asset (DTA) and Valuation Allowance (VA): Tesla has been accumulating tax losses and tax credits for many years. Generally, when an entity accumulates these losses and credits, they effectively are building DTAs, assets that they will be able to apply against taxes payable in future years due to future profitability. From a financial reporting perspective, entities can only show this as an asset on their balance sheet if there is a "more likely than not" (generally >50%) probability that they will actually consume the assets in the foreseeable future. Tesla has yet to agree with their auditors as to the likelihood of utilization of some of these DTAs. As such, they have applied a VA against their DTA. Fancy way of saying they are valuing the DTA as $0 for reporting purposes.
If and when they release that VA, it will be a $3B+ boost to Net Income and a significant lift to Operating Margin %s. I would estimate we see all or part of that VA be released over the next 1-3 years. The reason for the range (rather than my taking the stance that 2021 WILL be the year of release of VA) would be that Tesla currently generates significant tax deductions due to their stock-based compensation (SBC) plan with Elon, and to a lesser extent, most of their employees. As those shares/options vest, Tesla gets significant tax write-offs relative to their Financial Statement Net Income. As long as those write-offs are sufficient to off-set immediate taxes payable, Tesla may not release the VA on their accumulated DTAs. Though at current market cap and operational milestone pace, it's likely that the CEO compensation package is fully taken in to account within the next 1-2 years which, compounded with continued growing profitability, would culminate in a release of the VA in that 1-3 year window.
R&D Expense: Increased $148M year over year, $62M related to materials testing (could be prototype equipment, could be testing different raw materials for battery chemistry or manufacturing processes, either way - its a lot of something), and $61M due to SBC on R&D staff.
SG&A: More than 100% of growth in SG&A expenses was from... you guessed it... SBC. SG&A would have otherwise decreased, which again confirms the theory that Tesla is now at the point in their growth journey of unlocking MASSIVE operating leverage. In other words, Tesla's rate of generating sales far outpaces its rate of incurring operating expenses, meaning incremental vehicle sales will continue to disproportionately increase Net Income, and thus Net Operating Margin %, and thus EPS. I would not be surprised to see double digit Net Operating Margin in the next 2-3 years (from the current 2.2%) especially when you consider the potential release of VA on DTAs. This is a significant potential unlock to valuation of Tesla as analysts get comfortable with that reality.
FSD: This is the first time I've seen Tesla explicitly state that "We intend to establish in the future an autonomous Tesla ride-hailing network, which we expect would also allow us to access a new customer base even as modes of transportation evolve."; I checked their 2019 10-K and most recent 10-Q and there is no mention of that intention. This will add fuel to the revenue streams that analysts will be forced to consider in their own valuation models and again solidifying a significant portion of Tesla's valuation.
Engineering: Similar to FSD, Tesla has made a new statement in this 10-K "As we increase our capabilities, particularly in the areas of automation, die-making and line-building, we are also making strides in the simulations modeling these capabilities prior to construction." Making the machine that makes the machine. Tesla's product road map is as much factory design and building as it is the products those factories build. I would not be shocked to hear of several new factory announcements this year and equally not be shocked if we see the ramp in Berlin and Texas to be significantly faster than Shanghai.
---
Conclusion: Anyone selling off because of BTC is forgetting that this is still just the beginning for Tesla.
Carl Raymond
Active Member
insaneoctane
Well-Known Member
Yep. I wanted to invest in the battery players of the future a few years ago knowing the EV play was going to create a serious demand problem. I decided Tesla was my smartest battery player at that time and just fortified. Tesla really is like a high tech growth ETF where each of the companies is run by the smartest, hardest working CEO ever!
Looks like Tesla’s BTC was purchased in the $33k range. Thanks Rob!
I have forborne earlier today from commenting on Tesla's Bitcoin move. I will be the first to admit that it is likely many participants are more knowledgeable of Bitcoin than I am and I've happily read some good, many interesting, some dodgy and a few off-the-wall comments today. Some small observations come to mind - the first...just a little off the wall.
1. So, speaking of the wall, I need to share what the listening bug I'd planted on the corporate boardroom wall relayed to me. Most succinctly, it went like this:
Anonymous Board Member: We still have too many shares tightly held by those from the Greatest and Silent Generations, and too few by the Gen Z up-and-comers.
Mr Musk: Time to release the 10-Kraken
2. Yes, there is and has been a Bitcoin sub-thread, but with today's report the relevance to TSLA/Tesla it is front and center, and discussion of it is the proper purpose of this thread.
3a. Regarding the mining of Bitcoins: Do I misunderstand, or - leaving aside the "joke" Dogecoin - are there not multiple cryptocurrencies competing with Bitcoin, for which each one has its own ultimate # to be discovered? Concurrently, is (is not) it the case that even though the ultimate amount of Bitcoins reasonably shortly will be reached, will not the mining grind of the other cryptos continue for much, much longer?
3b. Regarding the mining: Regardless of whether 3a is so or not so, it remains the case that of all the world's "hard" currencies/currency proxies like gold, cryptocurrencies are the one for which the SOLE input is energy. Gold...silver...diamonds already exist on the planet and elsewhere in the solar system, yet they take manual and mechanical labor to extract, and societal developments (towns, other ancillary services and so forth) to support such efforts, and ecological alterations (a very large number of which most certainly are considered deleterious to the environment, but so be it) occur as a result of these processes. Not so with Bitcoin, if one disregards the purchasing of processors.
Now, a good number of posters today have mentioned the environmental cost of Bitcoin mining, some with and some without supporting links that may or may not be responsibly researched. Regardless, given my observation that a Bitcoin so closely to purely represents "canned electricity", I am having significant puzzlement that the gentleman who so often espouses the philosophy of "Go Back to First Principles" can seem to disregard this fundamental feature of cryptocurrencies.
To me, the Big Picture is that electrons are, effectively, fungible and that means that irrespective of whether a miner uses "cheap" purportedly clean hydropower to derive the next bitcoin, not only has an irreversible quantum of entropy thereupon been effected, but another electric user MUST HAVE been shunted to a different - more expensive - dirtier - supplier. How how how does this ineluctable, axiomatic situation square with someone whose entire existence is to save mankind, and the earth, from mankind’s worst impulses?
I am not indicting Mr Musk for this. I am saying that I do not have the answers to resolve that above discrepancy.
4. Heretofore, I have given some thought as to how a currency ought to occur on a satellite so fundamentally separate from Earth as a Martian colony will be. My thoughts, and most certainly my solution or solutions remain inchoate, but they center on something quite analogous to the mining of bitcoins. What I perceive is that the ecological development of Mars - that is, the mutation of a very, very raw set of building blocks into a viable, self-sustaining biome - is of such unfathomable complexity that those who effect the multitudinous steps necessary for its success be considered "miners" of those steps. Grossly: What cocktail of microorganisms need be created such that a properly buffered aqueous solution (the neoMartian ocean) can continuously re-create itself (12-hr edit: i.e., maintain its chemical balance, replicating that singular and ultra-important feature the Earth’s ocean possesses)? What are the steps necessary such that said ocean is in balance with the neoMartian atmosphere? Ditto for inoculating the supra- and sub-crustal Martian surface?
Whoever solves these ghastly discoveries is worthy of receiving the currency - the "coins" - that are tied to them. So, so, so vastly distinct from the truly mindless running of a hot processor to churn out the next number sequence that plinks out the next bitcoin.
Lastly: can one square the inclusion of Bitcoin into Tesla's Treasury with #4, above? Despite my apprehension over same, I think the answer is yes, it is possible. If the justification is that Tesla/Musk is exploring the boundaries, the possibilities, the weaknesses of these first cryptocurrencies in order to provide insight into a future iteration of them, then I can see it as having the potential to be a valuable and worthy exercise indeed. *****BUT****(the end)
1. So, speaking of the wall, I need to share what the listening bug I'd planted on the corporate boardroom wall relayed to me. Most succinctly, it went like this:
Anonymous Board Member: We still have too many shares tightly held by those from the Greatest and Silent Generations, and too few by the Gen Z up-and-comers.
Mr Musk: Time to release the 10-Kraken
2. Yes, there is and has been a Bitcoin sub-thread, but with today's report the relevance to TSLA/Tesla it is front and center, and discussion of it is the proper purpose of this thread.
3a. Regarding the mining of Bitcoins: Do I misunderstand, or - leaving aside the "joke" Dogecoin - are there not multiple cryptocurrencies competing with Bitcoin, for which each one has its own ultimate # to be discovered? Concurrently, is (is not) it the case that even though the ultimate amount of Bitcoins reasonably shortly will be reached, will not the mining grind of the other cryptos continue for much, much longer?
3b. Regarding the mining: Regardless of whether 3a is so or not so, it remains the case that of all the world's "hard" currencies/currency proxies like gold, cryptocurrencies are the one for which the SOLE input is energy. Gold...silver...diamonds already exist on the planet and elsewhere in the solar system, yet they take manual and mechanical labor to extract, and societal developments (towns, other ancillary services and so forth) to support such efforts, and ecological alterations (a very large number of which most certainly are considered deleterious to the environment, but so be it) occur as a result of these processes. Not so with Bitcoin, if one disregards the purchasing of processors.
Now, a good number of posters today have mentioned the environmental cost of Bitcoin mining, some with and some without supporting links that may or may not be responsibly researched. Regardless, given my observation that a Bitcoin so closely to purely represents "canned electricity", I am having significant puzzlement that the gentleman who so often espouses the philosophy of "Go Back to First Principles" can seem to disregard this fundamental feature of cryptocurrencies.
To me, the Big Picture is that electrons are, effectively, fungible and that means that irrespective of whether a miner uses "cheap" purportedly clean hydropower to derive the next bitcoin, not only has an irreversible quantum of entropy thereupon been effected, but another electric user MUST HAVE been shunted to a different - more expensive - dirtier - supplier. How how how does this ineluctable, axiomatic situation square with someone whose entire existence is to save mankind, and the earth, from mankind’s worst impulses?
I am not indicting Mr Musk for this. I am saying that I do not have the answers to resolve that above discrepancy.
4. Heretofore, I have given some thought as to how a currency ought to occur on a satellite so fundamentally separate from Earth as a Martian colony will be. My thoughts, and most certainly my solution or solutions remain inchoate, but they center on something quite analogous to the mining of bitcoins. What I perceive is that the ecological development of Mars - that is, the mutation of a very, very raw set of building blocks into a viable, self-sustaining biome - is of such unfathomable complexity that those who effect the multitudinous steps necessary for its success be considered "miners" of those steps. Grossly: What cocktail of microorganisms need be created such that a properly buffered aqueous solution (the neoMartian ocean) can continuously re-create itself (12-hr edit: i.e., maintain its chemical balance, replicating that singular and ultra-important feature the Earth’s ocean possesses)? What are the steps necessary such that said ocean is in balance with the neoMartian atmosphere? Ditto for inoculating the supra- and sub-crustal Martian surface?
Whoever solves these ghastly discoveries is worthy of receiving the currency - the "coins" - that are tied to them. So, so, so vastly distinct from the truly mindless running of a hot processor to churn out the next number sequence that plinks out the next bitcoin.
Lastly: can one square the inclusion of Bitcoin into Tesla's Treasury with #4, above? Despite my apprehension over same, I think the answer is yes, it is possible. If the justification is that Tesla/Musk is exploring the boundaries, the possibilities, the weaknesses of these first cryptocurrencies in order to provide insight into a future iteration of them, then I can see it as having the potential to be a valuable and worthy exercise indeed. *****BUT****(the end)
Knightshade
Well-Known Member
This was in the terms of purchase for FSD for years.
Specifically they said
Of course it's several years later and still no actual details since FSD still doesn't work, but they've been mentioning the FSD rideshare network operated by Tesla for a long long time right in plain sight.
It looks like they removed it from the current much-lower-end-list-of-features FSD sales description but it was there for at least 2 or 3 years back when they had the higher end description of FSD as part of the ordering process. See attached, near the bottom.
Naah--- they'd need to have more cash than debt to have a spare 1.5 billion to ape it- AFAIK Tesla was the only car maker that does.
insaneoctane
Well-Known Member
It’s not fair to judge BTC based only on the portions of the business model that have high energy usage when other portions use zero or near zero. Digital currency offers the possibility of a significant net energy reduction vs other traditional currency platforms (think buildings & paper statements alone). It’s like judging Tesla’s carbon footprint of their battery pack production vs the 12V battery in an ICE. You really need to judge BTC not just for mining costs, but for total energy used per transaction or per $100 transacted.
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