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

[StarFoxisDown!]

So what you are saying is there's a collusion between Bosch and all these chip makers to say how they are in short supply on conference calls, but actually sell them all to ICE makers who horde them and not putting them into production cars, and continue to peddle the notion that they don't have any chips due to a lack of demand.

Because the shortage is real..Unless Elon is smoking again by literally calling out companies on twitter.

I've said this before, but I feel like people don't get the context with Elon. I personally think Elon is frustrated with the chip/parts supply issue because he wants to hit 1 million P/D for 2021. That context changes his words A LOT.

As for the overall chip supply shortage, I'm not saying there isn't a chip supply shortage. What I'm saying is that ICE auto makers are using the excuse to purposely limit production. They can state all they want that they can't get the chips they need......but we don't know how hard they're actually trying to obtain chip supply. Hell we don't know if they're even trying at all. I personally think they aren't.....and there's no way for someone to prove they aren't.

Bosch I'm sure is slammed with trying to produce as many chips as possible because there is a shortage. They have a ton of orders to fill across many different industrys. What I'm questioning is...does Ford even had orders in for chips to get their production back up to "normal" production levels? I personally think they along with GM and other's aren't placing the orders they need to and/or are not trying as hard as they should be to get priority.

 

[StealthP3D]

The only hope for ICE makers in the transition to EV's is to be able to sell ONLY their highest trim ICE vehicles with the best margin....which gives them the best hope of being able to survive the impending financial crunch they're about to experience (their odds still aren't good)

There's a huge incentive for them to keep inventory incredibly tight right now.

Yep. And the straits are so dire I wouldn't rule out illegal collusion.

It's illegal anti-competitive behavior to collude with other manufacturers to limit production to keep prices high but that's exactly what I think they are doing. In normal times they can't limit production because their competitors will steal market share from them but these are not normal times. They know anti-competitive collusion would not be prosecuted because they are fighting for their life, not trying to make obscene profits. And the chip shortage is good cover for this. Now they can say the chip shortage caused them to close plants and it's not worth it re-open them since we are going all electric soon anyway. It's no less illegal but somehow it's a whole lot less likely to be prosecuted. The form I think this would take is the suggestion amongst the CEO's of the automakers that total ICE sales not exceed a certain percentage of historical values, however that's defined. If a manufacturer is seen crossing the line in a certain segment then the agreement falls apart which would be bad for all of them. So they know not to cross that line. They all benefit, consumers lose.

Ironically, I fail to see how this is bad for the mission!

 

[StealthP3D]

So what you are saying is there's a collusion between Bosch and all these chip makers to say how they are in short supply on conference calls, but actually sell them all to ICE makers who horde them and not putting them into production cars, and continue to peddle the notion that they don't have any chips but the reality is there's no demand.

Because the shortage is real..Unless Elon is smoking again by literally calling out companies on twitter.

No, the world is not that "cookie cutter" simple. Nothing is as simple as it appears. The chip shortage is/was real. That doesn't mean automakers cannot use it as cover for anti-competitive behavior as they exaggerate it.

 

[Singuy]

I've said this before, but I feel like people don't get the context with Elon. I personally think Elon is frustrated with the chip/parts supply issue because he wants to hit 1 million P/D for 2021. That context changes his words A LOT.

As for the overall chip supply shortage, I'm not saying there isn't a chip supply shortage. What I'm saying is that ICE auto makers are using the excuse to purposely limit production. They can state all they want that they can't get the chips they need......but we don't know how hard they're actually trying to obtain chip supply. Hell we don't know if they're even trying at all. I personally think they aren't.....and there's no way for someone to prove they aren't.

Bosch I'm sure is slammed with trying to produce as many chips as possible because there is a shortage. They have a ton of orders to fill across many different industrys. What I'm questioning is...does Ford even had orders in for chips to get their production back up to "normal" production levels? I personally think they along with GM and other's aren't placing the orders they need to and/or are not trying as hard as they should be to get priority.

Didn't Elon say everyone is OVER ordering like people hording toilet paper by way worst?

 

[StarFoxisDown!]

Didn't Elon say everyone is OVER ordering like people hording toilet paper by way worst?

You'd have to link me to that comment because I don't particularly remember that.

But, you just have to remember that a lot these chips are essentially commodity chips used across many different industries. Definitely could be some hoarding going on with chip supply.....I just don't think it's ICE auto makers that are doing the hoarding and I think the opposite......that they're willingly not bidding for supplies of chips in order keep using the excuse so that they can limit inventory and keep their margins/profits at a higher level.

But again, I very much believe Elon wanted to hit 1 million production(which is probably out of reach at this point). So when I hear him rant on and on about not being able to get the parts needed.....it makes sense. Trying to grow your production 100% and having the production capacity to do so with and not have the supply in parts, would frustrate the hell out of me.

 

[Artful Dodger]

are pix of graphs verboten if they are TA

Maybe just disguise your graph as a SERVICE discussion then I'm sure it'll be fine.

/s

 

[Artful Dodger]

you just have to remember that a lot these chips are essentially commodity chips used across many different industries. Definitely could be some hoarding going on with chip supply

Clearly, that's how Ford made its +$1B in "Other" profit in Q2. Well, that and bitcoin trading...

 

[Singuy]

You'd have to link me to that comment because I don't particularly remember that.

But, you just have to remember that a lot these chips are essentially commodity chips used across many different industries. Definitely could be some hoarding going on with chip supply.....I just don't think it's ICE auto makers that are doing the hoarding and I think the opposite......that they're willingly not bidding for supplies of chips in order keep using the excuse so that they can limit inventory and keep their margins/profits at a higher level.

But again, I very much believe Elon wanted to hit 1 million production(which is probably out of reach at this point). So when I hear him rant on and on about not being able to get the parts needed.....it makes sense. Trying to grow your production 100% and having the production capacity to do so with and not have the supply in parts, would frustrate the hell out of me.

https://twitter.com/x/status/1399999219218501633

 

[The Accountant]

So what you are saying is there's a collusion between Bosch and all these chip makers to say how they are in short supply on conference calls, but actually sell them all to ICE makers who horde them and not putting them into production cars, and continue to peddle the notion that they don't have any chips but the reality is there's no demand.

Because the shortage is real..Unless Elon is smoking again by literally calling out companies on twitter.

Serious question and I am copying @RobStark and @jbcarioca who have some knowledge of OEM operations:

If there is truly a chip shortage creating supply issues and no demand issue, why are there still incentives offered in Sept?

 

[Jack6591]

I had a front row seat to the transition from Mainframe computers to PCs and local area networks. In 1990, I dated a woman a woman with a cellphone; she used both hands to lift it to her ear. In both cases, I was astonished how quickly the disruption took place.

We are sitting in the front row seat, watching the demise of the internal combustion engine. It will happen fast — we are in the fits and throes of dying — most won’t see it coming.

 

[capster]

It's actually very plausible and logical that ICE is using the chip shortage as an excuse to limit production to keep inventory tight from stopping production in 2020 which led a incredibly tight inventory and thus, be able to sell nothing but the highest trims and keep their already low margins from collapsing.

Just remember, ICE auto makers are getting data from their dealerships about how many people come through the doors. They have an idea of organic demand. I personally believe and I think ICE auto makers are very aware....that organic demand is not good. Their smartest play is to continue to use the chip shortage as an excuse to limit production and keep prices high. Because the alternative is that they get production rates back up to normal and oversupply the lackluster demand and then are left in a situation loads of inventory of ICE vehicles on their lots as the US makes a huge shift to EV's.

If I were running a ICE auto maker.....this is exactly what I would be doing and they got a very good and plausible excuse in the chip shortage.

It’s possible that if there is less foot traffic through dealerships and that demand is soft, it is due in part to the pandemic. Many people haven’t needed to drive as much now they are working from home. Instead of buying cars, folks have been spending on sprucing up their homes and setting up home offices.

Cathie Wood may be calling the osbourning of ICE cars a little early, imo. Nevertheless, this soft demand may not recover much with a return to normalcy as people will soon start to delay for EV’s. This soft patch is bad news for the legacies, even with a PHEV bailout.

Also, the chip shortage seems mostly legit. If it weren’t, Tesla would be able to easily get the excess chips destined for the cars the legacies couldn’t sell. Yet unless I misunderstand the situation, Tesla is also having chip supply issues.

 

[StarFoxisDown!]

https://twitter.com/x/status/1399999219218501633

Thanks for the link!

Yeah I'd pretty much say what I said above. The particular chips that are in such short supply are more commodity chips that are used across many different products and industries. Lots of different companies that could be hoarding.

In a post I made I think last week or the week before, I said if Tesla does above 900k P/D for 2021, then I think ICE auto makers are purposely using the excuse to limit production and I still think that. If Tesla can obtain enough chips/parts for 900k or higher, 80% growth during a chip shortage.....well then I'm sure ICE makers are purposely not bidding on orders for chip supplies.

I mean the other alternative is that ICE makers are so incapable that they can't even manage to obtain supplies just to get production back up to normal levels while Tesla could get enough supply to grow production 80%.

 

[Crowded Mind]

It's actually very plausible and logical that ICE is using the chip shortage as an excuse to limit production to keep inventory tight from stopping production in 2020 which led a incredibly tight inventory and thus, be able to sell nothing but the highest trims and keep their already low margins from collapsing.

Just remember, ICE auto makers are getting data from their dealerships about how many people come through the doors. They have an idea of organic demand. I personally believe and I think ICE auto makers are very aware....that organic demand is not good. Their smartest play is to continue to use the chip shortage as an excuse to limit production and keep prices high. Because the alternative is that they get production rates back up to normal and oversupply the lackluster demand and then are left in a situation loads of inventory of ICE vehicles on their lots as the US makes a huge shift to EV's.

If I were running a ICE auto maker.....this is exactly what I would be doing and they got a very good and plausible excuse in the chip shortage.

Since when have legacy automakers done the smart thing? The actions we on this forum would take are drastically different than what we should expect from them. They, collectively, are highly incentivized to maximize sales in the short term. Purposely constraining inventory is detrimental to sales, there is almost no argument against this and it is supported by the fact that revenue is down despite ASP rising. Higher prices are not offsetting lower unit sales.

Cathie’s argument fails to address these things. No has argued that EVs are having no impact, the debate is to what degree. It seems clear to me that the chip shortage is a much, much more significant factor and it doesn’t rely on the assumption of excellent foresight industry wide (which is the exact opposite of precedent…).

 

[StarFoxisDown!]

Since when have legacy automakers done the smart thing? The actions we on this forum would take are drastically different than what we should expect from them. They, collectively, are highly incentivized to maximize sales in the short term. Purposely constraining inventory is detrimental to sales, there is almost no argument against this and it is supported by the fact that revenue is down despite ASP rising. Higher prices are not offsetting lower unit sales.

Cathie’s argument fails to address these things. No has argued that EVs are having no impact, the debate is to what degree. It seems clear to me that the chip shortage is a much, much more significant factor and it doesn’t rely on the assumption of excellent foresight industry wide (which is the exact opposite of precedent…).

Not sure how you can say almost no argument against maximizing sales when I laid out a very plausible one.....in fact I think a very logical one.

Either way, this thread doesn't need to be sidetracked on this discussion even more. We'll find out by the end of 1st half of 2022 if ICE makers are blowing smoke up everyone's butts about the chip shortage. Quite possibly it becomes clear by the end of 2021.

 

[henchman24]

Serious question and I am copying @RobStark and @jbcarioca who have some knowledge of OEM operations:

If there is truly a chip shortage creating supply issues and no demand issue, why are there still incentives offered in Sept?
View attachment 706293

To be fair, those incentives are rather low for legacy.

 

[Cherry Wine]

I really love Rob Maurer's common-sense ability to debunk so much of the idiotic Tesla hype that is being constantly created from thin air and speculation. However, on this point I think he is shockingly blind to what's going on. Maybe his constant stream of successes in de-bunking the typical Tesla hype has given him the over-confidence he feel he needs to poo-poo the theory that ICE makers are using the chip shortage to cover for the beginning of the collapse of ICE sales.

And looking at it from the ICE business perspective, it's critical for those companies totally dependent upon ICE revenues to delay the perception that it's all over for ICE for as long as physically possible. Because when this becomes a mass-realization is when their real pain begins. That's when the perceived value of their ICE products plummets. And everyone knows you can't make a profit when the value is below the cost to produce and that lower volumes increase the cost to produce. Logically, their only hope is to keep inventory limited and prices high as sales decline for as long as possible. And the best way to do that is to continue use the chip shortage to create the narrative that new cars are in short supply rather than letting the perception that ICE cars are "so yesterday" run rampant.

This is not an "either/or" situation, there are shades of grey. Cathie Wood never said the entire decline in sales was due solely to buyers not wanting to buy ICE, merely that the early signs are starting to show up. And Rob needs to backtrack on this before he blemishes his reputation as an excellent Tesla analyst any further.

This is an interesting take, but my question is: if ICE OEMs are "fibbing" about the chip shortage, does that open them up to some legal liability? Secondly, I wonder if there is a way that this could be verified. If availability of other products relying on chip production improves and ICE vehicles remain limited, I suppose we'll have our answer.

 

[MartinAustin]

Just my $0.02 on the Giga Texas chip-making theory... when you are making nanometer-scale circuits on wafers, the last thing you need is V-I-B-R-A-T-I-O-N. No-one currently making semiconductor wafers play host to huge, heavy steel manufacturing presses just a couple of hundred feet away in the same building. I don't see why Tesla would 1) decide to branch out into a new area of manufacturing they haven't done before and 2) do it with new risks the existing manufacturers currently don't take.

I don't disagree they might build their own facility, but to do it right next to the stamping section of a car factory doesn't make sense... especially when they have 2,500 acres to build anything they want. They could easily do it in another area, in a special semi fab building.

OTOH the paint shop could do with the same HVAC as the semiconductor plant, so they would save on equipment there. So there's that

When TSLA hit $760 I was looking back to April 14th when it was $780... the highest level since the actual major surge to ~$900. Not a lot of resistance up there. I think the "FSD leak" stories are helping. Software doesn't "leak" if it's crap. It only leaks when it's desirable. So the clickbait headline writers are actually helping this time. It's also helping to reinforce the notion that all that is needed to make a Tesla self-driving is a software update. The hardware is already there. You couldn't leak the Waymo self-driving software because it's useless with a bunch of painstakingly hand-soldered cameras, lidar and other sensors.

 

[TheTalkingMule]

Thanks for the link!

Yeah I'd pretty much say what I said above. The particular chips that are in such short supply are more commodity chips that are used across many different products and industries. Lots of different companies that could be hoarding.

In a post I made I think last week or the week before, I said if Tesla does above 900k P/D for 2021, then I think ICE auto makers are purposely using the excuse to limit production and I still think that. If Tesla can obtain enough chips/parts for 900k or higher, 80% growth during a chip shortage.....well then I'm sure ICE makers are purposely not bidding on orders for chip supplies.

I mean the other alternative is that ICE makers are so incapable that they can't even manage to obtain supplies just to get production back up to normal levels while Tesla could get enough supply to grow production 80%.

That tweet reply was from June, things have certainly moderated by now. And hoarding doesn't speak to a shortage, just the potential for a shortage.

I think the fact these carmakers are actively pushing out the chip shortage to next year is proof enough. They're pinning a lack of desire to produce vehicles, for whatever reasons you like, on a chip shortage that couldn't possibly be this impactful for this long.

Global chip shortage will easily drag into 2022 -Stellantis CEO

The global semiconductor chip shortage that has hit automakers around the world and constrained vehicle production will easily drag into next year, the chief executive of the world's No. 4 automaker, Stellantis (STLA.MI), said on Wednesday.

www.reuters.com

Chip shortage will last 'well into 2022' and the impact will go beyond cars: Bain Partner

Bain & Company Partner and Head of America’s Technology Practice Anne Hoecker joins Yahoo Finance Live to discuss how the semiconductor shortage is impacting auto production.

news.yahoo.com

Why should the chipmakers push any other narrative. Imagine the pricing they're able to get right now. Here's a cute headline from back in May.

The global chip shortage could last until 2023

Glenn O'Donnell, a vice president research director at advisory firm Forrester, believes the shortage could last until 2023.

www.cnbc.com

Weren't triple lumber prices supposed to be the "new normal" for a while too? I find this all way too convenient.

 

[Crowded Mind]

Not sure how you can say almost no argument against maximizing sales when I laid out a very plausible one.....in fact I think a very logical one.

Either way, this thread doesn't need to be sidetracked on this discussion even more. We'll find out by the end of 1st half of 2022 if ICE makers are blowing smoke up everyone's butts about the chip shortage. Quite possibly it becomes clear by the end of 2021.

The argument you made is incorrect. Sales units in August were down 13% y/y and new vehicle prices were up 9%, so revenue would be down about 4%, not even factoring in that some of the higher sales price is likely retained by the dealer.

 

[StealthP3D]

Serious question and I am copying @RobStark and @jbcarioca who have some knowledge of OEM operations:

If there is truly a chip shortage creating supply issues and no demand issue, why are there still incentives offered in Sept?
View attachment 706293

They have to offer big incentives because five out of six of those are SUV's and everyone knows SUV's have low demand in the USA.

Errr...wait....