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

[TheTalkingMule]

With Tesla's debt being low (and going lower?): will a rate increase affect Tesla that much?

Tesla is beginning to throw off cash at exactly the right time. Growth companies like Uber and the thousands of other zombies will die off in a higher rate environment. Tesla remains wildly profitable.

As we move heavily into renewables, you're not gonna be able to just tread water losing hundreds of millions of dollar every quarter. Inflation and deflation are gonna be all over the place as the entire world of fossil-based scarcity is disrupted.

 

[SmokyPeat]

I'm seeing green pre-market. Looks like the rally will resume today.

 

[IamJohnGalt]

With Tesla's debt being low (and going lower?): will a rate increase affect Tesla that much?

The rate used to discount future cash flows will be higher which could negatively effect TSLA -but not Tesla.

 

[TheTalkingMule]

Speaking of throwing off and/or needing cash......let's do another cash raise! Why not? Another small 1% offering would raise $12B+.

Just cause you don't need the money, doesn't mean you couldn't use more!

YES, I know Tesla currently "can't" deploy the $20B it already has. Things can change.

 

[Artful Dodger]

I'm seeing green pre-market. Looks like the rally will resume today.

Real-Time charting is live at NASDAQ.com beginning at 08:00 a.m. ET:

Cheers!

 

[Artful Dodger]

Another small 1% offering would raise $12B+.

Well, THAT would def lower Elon's tax bill...

 

[Webeevdrivers]

There are no new factories next year. Though there's 2 that ought begin production before end of this one.


At the annual shareholders meeting last month Elon told us they MIGHT start scouting for locations next year (2022) for new factories, and they will maybe make a decision sometime in 2023 for location.

Which puts 2024 as the earliest possible opening of entirely new sites.


Apart from constraints on supply (engineers, battery cells, chips, etc) there's the fact that they have 2 new factories they'll already be ramping in 2022... and then significant additions to all -4- factories in the 22-23 timeframe to expand production on existing sites.

GigaBerlin is obviously going to make 3s long term even if they start with Ys.

Austin is gonna make CTs (and far more eventually, it's a massive site)

China is the export hub now, and also expected to eventually produce the "cheap" car

Freemont is even looking to expand by 50% (somehow)


So plenty of room for growth without new sites any earlier than what Elon just told us.

Is there room on the property for a Fremont expansion?

 

[jbcarioca]

Regarding the Hertz hoopla, maybe someone has brought this up, but I had ten pages to get through and may have missed it.

Has anyone offered the possible conclusion that Hertz may have hired staff to go to the Tesla site and order all or most or many of the 100K cars the same way everyone else does? Sure, it would be time consuming, but, it would be one way to have done it.

Several have reported seeing Tesla cars in Hertz inventory already. I don't know, but this suggests to me that they may have been accumulating cars for a while already. Who knows, perhaps these orders are a big part of what has extended lead times?

Just a thought. Might be wrong, but it is not impossible, just highly improbable that they could have ordered some or all of their Tesla fleet this way.

Basically, er, essentially what I'm saying is that there may be no "deal" at all and all the fuss is a product of some of those reporting being unfamiliar with a no-dealership/no-bargaining type of car purchase.

FWIW, I rented a Model S85 from Hertz in 2012. They and several others have had some Teslae in some locations for about ten years. Now the difference is volume.
Of course then it was VERY expensive. Even in San Francisco it drew lots of attention. That experience changed my investment perspective permanently, so far anyway.

 

[jhm]

Speaking of throwing off and/or needing cash......let's do another cash raise! Why not? Another small 1% offering would raise $12B+.

Just cause you don't need the money, doesn't mean you couldn't use more!

YES, I know Tesla currently "can't" deploy the $20B it already has. Things can change.

Hmm, not so sure I follow. Why raise cash today when putting it off means accumulating more cash via Free Cash Flow? Basically, if FCF is strong enough, there is no real economic value to parking more cash. Suppose that extra $12B was not used while the stock doubles. So a future stock repurchase of $24B would be required to take those surplus shares out of circulation. So one might think of not doing a capital raise right now as avoiding stock buybacks in the future.

 

[mongo]

Is there room on the property for a Fremont expansion?

More like inspansion.
Gotta wonder what the bottleneck is though. Switching Y to front end castings would eliminate a lot of stamping and body line robots for space, but the rest of the line would beed to run faster or be duplicated.
Then, the paint shop still needs to keep up. Maybe general assembly is the only thing holding them back (assuming heathy supply chain)? They did make the outside sprung structure line(s?) permanent.

 

[Knightshade]

Is there room on the property for a Fremont expansion?

Not much.

Zach sounded significantly more reserved than Elon on how easily they can grow 50% there.... (which led to debates here about "50% above what # exactly"

I imagine there's some efficiencies that will be possible as they move to full front/rear castings eventually, and maybe the S/X refresh once in full swing will have saved some space over the previous gen stuff... but it's gonna be tight.

Given the amount of land in Texas I'm not sure why they're wanting to grow Fremont that much more- but I suppose they must have reasons.

 

[TheTalkingMule]

I want this, or should I say a version with Tesla guts, A LOT more than I want a Cybertruck.

Ford F-100 Eluminator shows off Blue Oval's new electric crate motor

No engine here, just an Eluminator crate motor setup.

www.cnet.com

 

[jhm]

The rate used to discount future cash flows will be higher which could negatively effect TSLA -but not Tesla.

Michael Burry had the same idea, but thought that it would apply to Tesla.

 

[mongo]

I want this, or should I say a version with Tesla guts, A LOT more than I want a Cybertruck.

Ford F-100 Eluminator shows off Blue Oval's new electric crate motor

No engine here, just an Eluminator crate motor setup.

www.cnet.com

View attachment 728817


View attachment 728818

What do you do when there is a chip shortage? Sell motors without electronics :

 

[ggies07]

humanity is running out of time

There, fixed that for you.

 

[CHGolferJim]

Would it be illegal for Tesla to do a share buyback which Elon could participate in, then do a share offering?

 

[CLK350]

Hmm, not so sure I follow. Why raise cash today when putting it off means accumulating more cash via Free Cash Flow? Basically, if FCF is strong enough, there is no real economic value to parking more cash. Suppose that extra $12B was not used while the stock doubles. So a future stock repurchase of $24B would be required to take those surplus shares out of circulation. So one might think of not doing a capital raise right now as avoiding stock buybacks in the future.

Well .... why not use some of that extra cash to buy some land in sunny places close to where power lines are running. Or if not, where you can put the Boring machines to work whenever idle to run power lines underground to nearby cities ?

<anyone knows how to reach Tesla RE managers, ask them why not?>

 

[jbcarioca]

I agree also, whilst Tesla is a very unique company and all the cards are falling into place for it to become the dominant player in multiple markets, black swan events can come along which will temporarily (maybe lasting years) cause a setback.

I can think of the following:
1. Something happens (health wise) to Musk.
( In this scenario I would expect a big crash in the share price and then a recovery as I think Tesla is to far along now and some of the management are good enough to lead)
2. Natural disaster in California or Shanghai wrecking the factories.
3. China decides to invade Tawain. If the US intervenes I don’t expect it to go nuclear but no matter if the invasion succeeds or not, all western businesses in China will be in a very tricky situation and in the long run I would expect an economic decoupling.
4. Constitutional crisis in the US. If the republicans lose an election but if the republican states, delegates etc refuse to certify the election and the judiciary backs them we will have an unprecedented period where I have no idea how it will play out.

I would expect a recovery after all these events but if any of them happen when someone needs to sell for retirement or any other reason it will be bad luck with the timing.

I hope nothing like the above happens in the next 10-20 years but anyone who is a major investor has to keep in mind events can occur which are nothing to do with Tesla and which Tesla has no control over which will impact the share price for a certain amount of time.

The problem with your scenarios is that each one independently has material probability (how high perhaps nobody knows) and the impact on TSLA in each case is significant:

1. We know his lifestyle is not particularly healthy. We know he is exposes to ratter more accident risk than are most people his age.
2. Natural disasters are increasing in both Shanghai and Fremont. Major flooding is an increasing risk in Shanghai. Fremont has several risks but major earthquakes and/or fires can have major deleterious impact.
3. Political risks are rising in several major respects, not just the 'Taiwan question'. They are becoming significant even in the US.
4. Nearly all observers I trust suggest that the US is now in the midst of Constitutional risks as Haigh as any since the mid-19th century. That situation does present one of the most material risks.

Despite those four, and a few others not mentioned, the conclusion I have reached is that if any of those except the first happen, we will have more serious questions than TSLA share performance.

Given the present state of maturity of Tesla I think the risk #1 is by far the least serious. Why? The executive management team at Tesla is both deep and excellent. Elon Musk has been essential to establish Tesla as it is, not to mention all the other companies, but he has built such high quality staff that, after a hiccup or two TSLA will continue to thrive.

In sum, I try to do everything I can to control the risks I can control. I also simply accept the risks I cannot control. I can control my own investment decisions, thus TSLA has become my largest holding.

 

[jbcarioca]

Is there room on the property for a Fremont expansion?

There is room nearby, such as the Lathrop Megapack factory. There is also likely to be significant construction in Fremont, since much of the growth has simply had new willy-nilly add-ons. The ~40% growth planned certainly will be possible with substantial reorganization and update of the Fremont plant. Admittedly the analogy once made by E. Musk was 'rebuilding an airplane in flight'. That may not even be the most difficult thing they have done.

 

[Prunesquallor]

https://twitter.com/x/status/1455875868048478209