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

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So, there is zero, repeat zero, chance the Tesla will have global dominance in BEV such as it nearly has today in many places. They may well be the best and or highest quality, but they will never have the kind of share that companies have when they invented the entire subject, such as Xerox, Polaroid, Kodak and Bayer once did.

I don't know how likely global dominance is for TSLA in the global automotive market but I'm not going to write it off as entirely impossible, zero chance, without a better reason than it's not common or I can't think of anyone else who has done a similar thing. :rolleyes:

First principles.
 
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I don't know how likely global dominance is for TSLA in the global automotive market but I'm not going to write it off as entirely impossible, zero chance, without a better reason than it's not common or I can't think of anyone else who has done a similar thing. :rolleyes:

First principles.
This is really a corporate culture question.

The assertion is that a Harvard MBA is the pinnacle of serving society well.
 
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Weekend gets even more amusing.

An ETF that mechanically takes bigger TSLA shorts for every purchases Cathie Wood owns and makes in TSLA? What could possibly go wrong here? 🤣

In other news, man discovers an ingenious way to avoid charges on the new Tuttle ETF, simply by flushing money down the lavatory
 
Does anyone follow twitter accounts that track Fremont production/activity?


I haven't bothered to track Fremont production/activity for years now since the Model 3 ramp (ah good old memories :) ) but given the uncertainty and expected FUD around chip supply for the next couple of quarters, I'm going to try and keep an eye out on it. We of course have our local Fremont flyover poster here, who we all appreciate doing the flyovers and would love weekly ones for Q3 ;) ;) ;)

As for Giga China, not worried about production over there. We have multiple data points showing production is expanding, possibly by quite a bit. There's the Wu Wan videos throughout July and then the ship tracking data. So far, 9 ships have left Giga China and 1 from Fremont........Q2 had 15 ships in total! And those tracking the ships state they assume there's at least 1-2 ships they're missing from Giga China.

Edit: Now actually up to 12 ships in total for Q3 already.

 
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What production rate for Models 3 and Y would satisfy consumer demand? i.e., how many more M3 & MY gigafactories could Tesla build before needing to add a new model to grow its sales?

Tesla will add new models before consumer demand for Models 3 and Y is satisfied. Because there is no one final answer for what consumer demand is, if Tesla ramps production of those models too quickly, they will hit a temporal demand limit. The ultimate demand, as people learn more about the products, is much higher. But it takes time for the demand limit to expand.

More time, higher demand. It's a moving target and we are a long way from the ultimate peak demand.
 
I don't know how likely global dominance is for TSLA in the global automotive market but I'm not going to write it off as entirely impossible, zero chance, without a better reason than it's not common or I can't think of anyone else who has done a similar thing. :rolleyes:

First principles.
Really it is simply considering the human attitudes and governmental attitudes towards monopolies and national champions.
The EU, most of the members, China, Japan, South Korea and the US will most certainly not allow their legacy automakers to disappear. In Japan and the US that has been proven when governments bail out failing large employers. Both have forced mergers and made major investments to preserve those entities. China absolutely will not allow it's market to be dominated by a single player. Examine world economic history and see if you can find a single monopoly in any business that was not created through direct government action. Then look to see what happened when some came close in the US, like Standard Oil Company, Bell Telephone, General Electric. Globally monopolies have existed but were nationalized once they became successful. Aramco and National Iranian Oil Company are examples.

To understand why global dominance of Tesla will not happen is simply to note all the national champions and major employers which will not be permitted to fail.

From a technical perspective such a thing could happen. Quite a number have come close through the industrial era.
Today SpaceX is perhaps the only proven example fo an entity that actually could become a monopoly. We all know that will not ahpemn because politicians can and do select obsolete and inferior technology to preserve political advantages. Were superiority relevant the SLS would have died at least five years ago. There is zero doubt that The EU will not let Arianespace die, nor will Russia or China cede to proven superiority.

This has nothing to do with "...it's not common or I can't think of anyone else who has done a similar thing."
It has everything to do with national pride and human behavior.

Tesla already has serious political impediments, there are legal prohibitions to direct sales, punitive duties and taxes, discouragement by imposing barriers to EVs.
There are non-tarriff barriers that, for example, prohibit foreign entities access to specific markets. There has been even a US prop[osal to provide Federal support only to unionized companies. In any given case these restrictions can be overturned. What cannot be disregarded is the willingness to penalize anybody 'who achieves too much power', whatever that means.

As we approach forecasts for Tesla we should all recognize that it is very easy for governments to invalidate patents or impose other discriminatory moves. Therefore I can be plausible for Tesla to gain a global market share more or less equivalent to that of Toyota today. The anti-competitive actions that can and will be taken makes it implausible to have much higher market share.

How to do that? Tesla will cooperate to make certain it does. Remember that the mission si to accelerate sustainable solutions, not gain overwhelming market share. Because Elon Musk believes so strongly in that objective he will help other manufacturers, as he already is right now with Supercharger access. We can forget about all the certain impediments to dominance that will be created. We only need to understand that doing so will defy the very mission of the company.

Nothing about that diminishes Tesla growth potential because the market itself will grow massively once the present state, with near-total opposition to EV's by Oil companies, petrol stations, auto dealers and even major auto companies from Toyota to BMW, with bizarre non-performance from even the ones which proclaim their Green goals. We may rest assured that global disaster must be obvious to them before they will change, but they will, and Tesla will help them.
 
The 10 year lifespan number is low to me, maybe in the US in the 90s. Today Toyotas and Hondas average over 250k. That's a 10-25 year lifespan. My wife's lexus will get replaced by a Y but for now it is a 16 year old car that can easily go a few more. My truck has over 300 and that's just getting broken in on the F150 segment- 13 years old.

Globally I'd assume the average vehicle is expected to be in service 20 years for 70 mln replacement- currently we are bringing on lots of new consumers in China and India and other developing countries so there is net growth that is not likely to continue as the market builds out. Furthermore as you start getting closer to 2030 you have to take into account the growing volume of EVs as part of the fleet. A million mile battery is a lifetime battery- as long as the car does not get in a wreck and the primary frame is sound you'll never need another car; car lifespan will go to over 50 years in theory. The only reason to change a car would be user fatigue. A 50 year lifespan will drive global fleet replacement to 30 million units or so. Anyone doubting this only has to look at Cuba and see the 60-70 year old ICE fleet.

In short EVs are going to contract the global auto business to something about 20-30% of what it is today. If tesla actually builds 20 mln cars they could have 2/3 of the global capacity in 2035. It will require extreme financial discipline and savvy to manage the build of factories to capture the initial explosion in sales of EVs but be prepared for the cliff as ICE replacement nears in 2040-50 and global sales crash. Throwing robotaxis into the mix means a further reduction in net sales. Moving the car to a platform for recurring software sales is going to be critical to long term profitability of the auto companies. Regardless of fleet size we could see Tesla capturing the vast majority of global profits.

Globally this will cause massive massive unemployment in Germany Japan Korea Mexico China and strand tens of billions in assets and that looks to be a cliff we're going to come to sooner rather than later. Talk about disruption.
20 year old robotaxi. Hmm. Would you get in this little beauty from 2001?
1627836085563.png

It will 1.5m miles on it by then (not 100k like this one).
 
It Tesla solves FSD first, they could build many factories, sell vehicles at or below cost. Under this scenario, global dominance could happen.
See the response to @StealthP3D just above, this one will simply not be permitted to happen. If Tesla does make that advance, the rest fo the world will quickly emulate it with even Tesla cooperation. Following this scenario would directly challenge numerous trade restrictions and global agreements prohibiting sale below cost. If necessary governments wll invent nw rules to stop an effective monopoly.
 
That's not how these transitions usually work.

As I mentioned- that's exactly how the horse to car transition worked.

It took decades, not a few years....despite that one NYC parade photo folks like to trot out (despite the fact horses remained in common use 10+ years after the "after" photo)

Large, expensive, durable, physical goods that last for 10-20 years don't transition at the same speed as cell phones, which are cheap, small, (relatively) inexpensive, (relatively) disposable goods.

Especially when it'd be physically impossible to make enough EVs by 2030 to replace most, let alone all, ICE sales, and 20 years even if 100% of sales TODAY were EVs to replace all ICE on the road today.


Assuming continued great execution, Tesla will continue to grow massively for the rest of the decade and continue to sell as many EVs as they can make, faster than they can make em.... So will anybody else who actually manages to build a good EV.

But you'll still have no trouble finding a new ICE model for sale in 2025. Or 2030.

You might have a shot at that being hard to find by 2035 (which is the year many governments have discussed targeted sales of them- though they usually have a lot of escape-clause wording included in case battery output doesn't scale as fast as some hope)

And you'll still have no trouble still finding ICE vehicles on the road in 2040, even if they're mostly all several-years-old used ones by then.


There just ain't enough batteries coming in the next 5-9 years, or enough money for people who can't afford brand new cars, for that not to be true.
 
Has anyone experience with Volvo’s eXC40? Jenny has family who are debating between it and a Model Y…..I’d like to learn more about it before I start in on them about why they don’t want it……
Aaannd, a 24-hours update. I had to answer a LOT of questions from them; they are, by the way Denverites. Got this text one minute ago:

Audie, we drove a Model Y again yesterday (me for the first time) and really liked it this time. I’ve actually never been so excited about a car. Both Geoff and I realized the adaptation to the one pedal driving wouldn’t take long and that we’d probably end up loving it. It was a real joy to drive. Probably going to go in today to place an order. Just have to work out the details of the package we want. Going to keep our fingers crossed a new federal rebate comes through in time, but I think there’s not going back to the Volvo now…. Thanks for your advice and time yesterday. I can only imagine how busy you guys are there right now!
 
More: There had been some financial boosts that were assisting them in leaning toward the Volvo: the Federal rebate which, of course, Tesla long since has not had; and a $2000 discount that Costco was including, one that expired today. They also mentioned Colorado’s rebate; all I could say was that they should look into whether that was one that might also still include Tesla, as I’ve no idea.
 
Boeing is #2 in commercial aircraft, Airbus is #1.
Xerox disappeared when others became better, You might even have said Kodak. Neither were ever near monopoly worldwide.

As for the social media, those have high shares in some countries, not so much in others.

Your entire list points out that some companies dominate in some countries for some products, but nobody ever has done it broadly for a long time, much less had a monopoly.

The closest to a monopoly without a specific government mandate probably was Microsoft Office, and that is not any longer anywhere close to that status. Google for search is in that position in the US, but the largest user base by a long distance is Baidu.

All your cases tend to show that even when considering only US-centric, cherry-picked examples there are precisely zero cases of a new entrant in an established industry becoming anywhere near dominance.

In the auto industry there are several highly successful Chinese companies and one company that dominates it’s home market, is successful worldwide and began in the 1960’s, Hyundai. They are the only case of dominance, and that only in South Korea.

So, there is zero, repeat zero, chance the Tesla will have global dominance in BEV such as it nearly has today in many places. They may well be the best and or highest quality, but they will never have the kind of share that companies have when they invented the entire subject, such as Xerox, Polaroid, Kodak and Bayer once did.
I’ll see your zero chance and raise you a monopsony. As a reminder for all, Monopsony Happens When Large Buyers Control Portions of a Market

Tesla arguably acts as or approaches being one now wrt BEV battery buying. Rather than use its buying power to squeeze its suppliers, a monopsonist might give its suppliers long-term sweetheart deals that deny oxygen to gasping, would-be competitors.

Not saying that Tesla will necessarily dominate globally, just that there is a greater than zero chance of it happening.

Also and as a general rule, it’s not that compelling to ascribe certainty to a proposition arrived at by way of reasoning by analogy—there’ll usually be some wise guy out there who’ll be able to imagine some scenario that casts that certainty into doubt. ;)
 
For me that would be a reduction by 50% of my current (ha!) price. Man, you must be able save enough money with those prices to buy a boat load of TSLA.

On the plus side, the payback time of my 6 solar panels (that cover my entire annual electricity consumption) is shorter.
I got my new solar PV(15kW) + battery(30kWh) system connected and operational from July 1st on my new house. It is a net-metering grid connected setup, according to the monitoring system, in this first month I pushed about 1054kWh extra onto the grid, that is in addition to the usage of the house + some Tesla charging (2-3 days each week I am up there and charge my car). The payback time for the system cost is estimated 7-8 years assuming the price of electricity remains the same as today (probably not correct assumption).
note: we are not living in the house yet as there are still some internal construction work ongoing, but the construction workers also use electricity -- it is unclear whether that usage is more or less than what we will have when living in the house.
 
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If Q2 was a Billiards game, Tesla practically Ran-the-Table.
I compute my quarterly forecasts by using the prior quarter as a starting point. So in preparation for my Q3 forecast, I need to change my Q2 model inputs so that the outputs agree to the filed Q2 10Q. In doing so, it revealed just how impressive Q2 was.
20 of the 25 most important inputs were positive vs Q1.
See notes below the table for additional comments.

1627838731645.png


- ASP is Average Selling Price and excludes Leased Vehicles and Regulatory Credits
- Jump in Model S&X ASP is due to higher proportion of Plaid sales in Q2
- Jump in Model 3 ASP is due to higher % of cars sold outside of China (57% in Q1 and 72% in Q2) plus partial impact of higher US prices.
- High unit cost for Model S&X is due to underutilization of assets due to low production quantities (normally unit cost is about $71k)
- Supply Chain costs likely increased the average unit cost of Models 3&Y
- Debt paydown has a nice effect on interest expense reduction.
 
Somehow legal? 🤣

Look, I've only spent 5 minutes on this (and I haven't bothered to read the terms of the notes because I don't want any) but it's apparent to me that Tesla doesn't even have to offer early conversion if they don't want to.

You can't criticize Tesla for offering something that is optional on their part but has the potential to benefit both parties (depending upon the specific tax needs, etc. of the various holders of the debt). The debt has performed spectacularly, beyond any of the original holders wildest expectations and yet still people complain!

Sheesh! Enough of this trying to make it look like Tesla is doing something shady here!:rolleyes:

You know what they say about assume? :)

Tesla is required to offer early conversion when the SP exceeds a threshold, which was met last year. The bonds are converted at a well defined conversion rate. There are clauses to increase the conversion rate (receive more shares due to splits, dividends, etc), but none that would decrease the conversion rate for Tesla's circumstances.

For anyone that wants to check for themselves,

Conversion Rights (page S-28)
Adjustments to Conversion Rate (page S-36 to S-42)
Conversion upon Satisfaction of Trading Price Condition (page S-30)


Prospectus for 2024 Convertible Senior Notes

Why should a holder get the full value of holding to the maturity date when they aren't holding until the maturity date? (I see it as like options, there is some time value that you are forgoing by converting early.)

The Tesla convertible notes are very much like call options.

Exercising call options converts to the same number of shares whether exercised early or at expiration. The holder never receives *fewer* shares than the options they purchased. The time value is what other investors attribute to the value of each option, but does not affect the number of options than can be exercised.
 
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As we approach forecasts for Tesla we should all recognize that it is very easy for governments to invalidate patents or impose other discriminatory moves. Therefore I can be plausible for Tesla to gain a global market share more or less equivalent to that of Toyota today. The anti-competitive actions that can and will be taken makes it implausible to have much higher market share.
Toyota volumes have peaked at c.9m units per year historically (chart below). Many people here (including me) think Elon's goal of c.20m units per year by 2030 is achievable. Do you think 2x Toyota is out of the question?

I tend to think it is reasonable given cell production will be the limiting factor on EV growth and if Tesla is driving capacity increases in cell volume it can exceed current market share maximums (although I'd be surprised if it was allowed to keep more than 25% market share once the EV transition is nearing completion), with the alternative being more ICE sales. I'm keen to know if you think 20m/year in 2030 is unrealistic?

1627839179895.png
 
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