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

[Lessmog]

At heart, Elon is a startup guy not a corporate guy. Tesla has around 20k people in Silicon Valley, and it's just not a startup anymore. It's one of Silicon Valley's big 4 employers (along with Facebook, Google, and Apple). It seems Drew is pretty much running the ship here. Elon is out in Austin basically building out a startup company under the Tesla umbrella, and that's probably a better use of his talents than day-to-day management of a mature organization.

Arguably, perhaps two (or more?)

 

[lafrisbee]

So, how far does the stock price fall Monday?

 

[StealthP3D]

To add on to this as well.......Tesla is obviously pushing consumers to the higher trims through their expected delivery times. It's a incredibly strong position to be in and we saw this in action in European registrations. I noted a week or two back.....but the percentage of Model 3's being registered in Europe that are either LR or P trims was probably 75% of the mix this quarter. In prior quarters, LR and P trims were more like 15-20%. I suspect we're seeing the same thing in the US market as well.

So it sounds crazy, but 30% gross margin excluding credits in Q3 could be conservative.

I just thinking out loud here, I wonder if that would wake up the Wall Street types?


still thinking......



still thinking......




still thinking.......







Nope!

As for the TSLAQ types, I think they are hopeless. I'll predict their next line of FUD to explain excellent Tesla sales will be: The chip shortage is creating such a shortage of new cars it's forcing people to buy a Tesla, people who would otherwise never buy a Tesla.

 

[Prunesquallor]

At heart, Elon is a startup guy not a corporate guy. Tesla has around 20k people in Silicon Valley, and it's just not a startup anymore. It's one of Silicon Valley's big 4 employers (along with Facebook, Google, and Apple). It seems Drew is pretty much running the ship here. Elon is out in Austin basically building out a startup company under the Tesla umbrella, and that's probably a better use of his talents than day-to-day management of a mature organization.

Well, the Texas “startup” will exceed the “mature organization” in pretty much all aspects pretty soon. It will be interesting to see what Fremont’s future looks like.

 

[hobbes]

Factchecking as insightful as ever:

https://twitter.com/x/status/1444354063202766851

Hm, not following the math...

If, as he posted,

In Q2 Tesla produced 5,171 more cars than delivered,

but in Q3 Tesla delivered 3,477 more cars than produced.

that means inventory went up by 5171 in Q2 and decreased by 3477 in Q3, not that it decreased by the sum in Q3, right ?!

What he probably wanted to say is that in Q3 FCF would be (5171+3477=8648)*ASP higher than in Q2.

 

[Knightshade]

So it sounds crazy, but 30% gross margin excluding credits in Q3 could be conservative.

Apropos of nothing... but the last bonus tranche in Elons 2012 compensation plan-- the only one he has not actually earned of that plan-- requires 4 consecutive quarters of 30% gross margin.

Since this was awarded in August 2012, with a 10 year expiration, I believe Q3 2021 would be the last chance he'd have to start the 4Q run and not have this last tranche expire unattained. (though I'd appreciate a correction if that's not accurate).


That said- AFAIK it requires 30% gross margin for the whole company, not just vehicle margin.

 

[jhm]

So, how far does the stock price fall Monday?

How far does it have to fall to gaslight the P&D report?

 

[Singuy]

Hm, not following the math...

If, as he posted,



that means inventory went up by 5171 in Q2 and decreased by 3477 in Q3, not that it decreased by the sum in Q3, right ?!

What he probably wanted to say is that in Q3 FCF would be (5171+3477=8648)*ASP higher than in Q2.

Believe he is saying the FCF difference of +5171 worth of money not coming in but have spent the money producing them last Q to -3477 this Q in which not only there isn't a 5171 cars worth of headwind but an additional 3477 worth of money being collected in this Q's is an additional 8648 cars worth of money coming in. The additional 3477 cars were made last Q so on a FCF standpoint, they contributed to a negative number last Q while only contribute to a positive FCF number this Q.

 

[CorneliusXX]

Hm, not following the math...

If, as he posted,



that means inventory went up by 5171 in Q2 and decreased by 3477 in Q3, not that it decreased by the sum in Q3, right ?!

What he probably wanted to say is that in Q3 FCF would be (5171+3477=8648)*ASP higher than in Q2.

Agree. Also, I don't think we care so much about FCF anymore with $20b in the bank. It's still very nice, but not crucial to the mission. In years gone by Tesla needed FCF to ensure there was enough cash to expand at the speed they wanted and to avoid raising more capital. Now its a cherry on top.

 

[Mike Smith]

Volkswagen's desperation has reached new heights. Electrek just posted a review of the ID 4 which was sponsored by Volkswagen. 'Electrek's Take' at the end of the review is that it is the most intuitive car they've ever driven. I wonder how much they had to pay Electrek to say that..

I spent one week driving the VW ID.4 – here's how it went [sponsored]

Volkswagen partnered with Electrek to test the ID.4 electric crossover for a week. During the development, release, and launch, we’ve...

electrek.co

Here's Sandy Munro saying the complete opposite (the truth):

 

[InTheShadows]

Unless Fremont is expecting a step up in production and/or Texas starts production with a sprint, 300-310k for Q4 is the absolute maximum theoretical production I can see

160k out of China - Sept run rate of 50k/month for Oct, Nov, Dec with a 5-7% production increase
110 out of Fremont 3/Y
25k out of Fremont S/X
15k out of Texas

Equals 310k

But that's again, theoretical maximum, no factory downtimes (which we already know China will be down for holidays the first week of Oct), and Giga Texas hits the ground running. But even then, that would only take us to about 935-940k for the year. I really can't see 1 million for 2021 unless both Berlin and Texas have insane initial production rates.

You don’t think TX will ramp faster? The most difficult part to get right was the front and rea chassis. If they both are cast now, the Y line(s) should ramp pretty quickly. They already have the process nailed down from Shanghai. It’s just a matter of dialing in the remaining 1/3 robots.

 

[henchman24]

Agree. Also, I don't think we care so much about FCF anymore with $20b in the bank. It's still very nice, but not crucial to the mission. In years gone by Tesla needed FCF to ensure there was enough cash to expand at the speed they wanted and to avoid raising more capital. Now it's a cherry on top.

At this point, investors will start wanting to know with so much extra cash. Announcing expansions to existing factories and/or new favorites will be an expectation real soon. So with much fcf, that alone might not be enough. I expect some convertible bond payouts as the next step (effectively a type of buyback). After that… if they can’t spend it fast enough, a dividend might be in order. I’m probably ~2 years too early for the conversation, but cash is building at a very rapid rate.

 

[Prunesquallor]

Elon seems satisfied.

https://twitter.com/x/status/1444362460459323392

 

[CHGolferJim]

We have experience with tax incentives for plug-in hybrids in The Netherlands and that wasn't a good experience, that's for sure.
Because of these incentives in 2013 a lot of people bought the Mitsubishi Outlander PHEV here as a lease car.
The greatest part of that Mitsubishi production at the time went to The Netherlands.
Most owners appeared to drive them largely pure on gas, because they thought that was easier (and their employer paid for the gas anyway).
They only bought them for the tax incentive, not because they were in any way motivated to drive electrically.
Maybe now the circumstances differ a little, but still: no, incentives for plug-in hybrids are a very bad ide

If the driver owns the car and pays for the petrol/gas, like most people in the US, the behavior is different. Thanks for the explanation about how it works in Europe.

 

[StarFoxisDown!]

You don’t think TX will ramp faster? The most difficult part to get right was the front and rea chassis. If they both are cast now, the Y line(s) should ramp pretty quickly. They already have the process nailed down from Shanghai. It’s just a matter of dialing in the remaining 1/3 robots.

I think the question for Giga Texas for Q4 is battery supply. I think the lines could do higher than 15k, maybe much higher. But how much supply of 2170 cell's are they getting? There's just not enough insight there to really know what to expect.

I'll be quite interested to see what Tesla does with the MIC battery packs they've been importing. I would guess they want to free up as much 2170 supply as possible for Fremont and Texas Y production. For Berlin, I definitely think they've been stockpiling 4680 cell's and all Kato 4680 cell production will be going to Giga Berlin since Elon only mentioned Texas Model Y's using 2170 initially.

 

[nativewolf]

I think the question for Giga Texas for Q4 is battery supply. I think the lines could do higher than 15k, maybe much higher. But how much supply of 2170 cell's are they getting? There's just not enough insight there to really know what to expect.

I'll be quite interested to see what Tesla does with the MIC battery packs they've been importing. I would guess they want to free up as much 2170 supply as possible for Fremont and Texas Y production. For Berlin, I definitely think they've been stockpiling 4680 cell's and all Kato 4680 cell production will be going to Giga Berlin since Elon only mentioned Texas Model Y's using 2170 initially.

Battery supply is everything right now, it will be interesting, and critical, to see how fast they can grow the 4680 production. How long before Germany's 4680 plant is producing, etc.

 

[StarFoxisDown!]

Battery supply is everything right now, it will be interesting, and critical, to see how fast they can grow the 4680 production. How long before Germany's 4680 plant is producing, etc.

I actually think the timelines line up pretty well with Berlin/Texas ramp and 4680 ramp, based on the latest news we've heard about yields. Since Q4 and Q1 2022 will have relatively low production volume for Berlin/Texas, I think Kato can fulfill those needs and that gives both factories enough time to finish their battery facilities. Texas I'm particularly optimistic that they will be producing their own 4680 cells at some point in early or mid Q1. Berlin maybe late Q1 or early Q2.

 

[Paul_SF]

https://twitter.com/x/status/1444393403098275846

Did anyone said “moat”?

 

[Singuy]

https://twitter.com/x/status/1444393403098275846

Elon being Elon. He's probably sitting around brainstorming with his best to see if they can reduce the manufacturing of a Model 3 from 10hrs each down to 1hr each. Btw, if they managed to cut the time down by 90%, even robotaxi revenue becomes insignificant.

 

[Khamul]

I haven’t seen this linked:

Agile at Tesla, by Joe Justice

Joe is apparently a big name in agile, and in this video he details how Tesla does agile. I recommend watching it, there are a lot of details, including how Elon works at Tesla, plus some SpaceX stuff in the end (which is still relevant, as all Musk companies use these methods). The start is a bit slow, and there’s some humblebrag moments.