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

[StarFoxisDown!]

I think a form of the BBB will still pass - the enhanced child tax credit expiring on Dec 31st is too big a grenade for even Manchin to have go off in his face (unless he really is contemplating a switch of allegiance to the GOP, which is indeed possible). Senate has until Jan 15th to get a bill to Bidens desk for the next child tax credit payment to be made.

However to get BBB passed, one thing that may indeed be the sacrificial lamb is a huge reduction or outright elimination in the EV credit component.

In the short term todays moves by Manchin may actually benefit Tesla Q4 numbers. In the long run no EV credit being available to Tesla will be a negative on margins, as ASP will skew lower, especially as Austin capacity ramps up.

Actually, the only way this would be negative on margins for Tesla in the future is if they were planning on raising prices even further once the EV credit passed.......which I do not think they were planning on doing. The 8k in price hikes throughout the year has been Tesla preparing for the EV credit.

BUT the macro environment has changed. The combination of inflation and supply shortages in the automotive sector has driven the ASP of all vehicles higher plus the cost of gas has skyrocketed. Legacy auto is going to ride the tight inventory and high ASP for as long as they can and likely they'll intentinoally limit production/inventory. You also have price gouging from dealership for any EV's from traditional auto. The combination of these dynamics means Tesla isn't going to feel any pressure to drop prices anytime soon, even with Austin coming online.

Tesla has yet to really recognize much of the price hikes throughout 2021 in their earnings thanks to the gap between when you order and the delivery date. Meanwhile they have been able to absorb the cost of goods rising due to inflation through efficiency. ASP was down in Q3 and yet gross margins were up. They have S/X still to be ramped back up to full production of 25k/quarter. By the time Tesla will need to drop the price of the 3/Y in the US in 2023, they'll have 4680 ramped and will be riding the cost curve down on battery costs.

If this were the beginning of 2021 after Q4 earnings where gross margins dropped (we knew the reason, GigaPress start and S/X refresh, but gross margins still dropped), I would have said if the new EV credit doesn't pass, Tesla could face some margin pressure. But given how they executed in 2021 combined with the macro environment for the auto industry and the excitement over the EV movement (just look at those wait times for a Y), I have zero concern about margin pressure for Tesla.

Literally nothing has changed in my view for margin expansion in 2022 because again, I don't think Tesla was planning on raising prices even further after the EV credit passed and I don't think they'll drop prices due to macro/inflation environment.

Now GM........they're royally screwed.

 

[ggies07]

Some of my posts were deleted...ok, fine. I am emotional about this. One dude is blocking ANY time of progress.

All the reasons you guys have stated why it should not be passed are NOT the reasons Joe gave. So he is not even on your train of thought.

Last admin nothing was done and now this one. SOMETHING has to happen.

Put the money towards companies building mines for battery materials or battery plants, but right now, again, it's business as usual.

 

[Artful Dodger]

Don't know if anybody else noticed this, but Elon is picking up about 100K twitter subscribers per day right now. Currently at 66.7M, Elon's Armee...

Cheers!

Elon added about 300K followers on Twitter in the past 3 days, now at 67M Followers.

Enormous Social Media presence, and a natural "influencer". I'd hate to be swimming against that tide.

Cheers!

 

[TheTalkingMule]

Did my part for Q4.


View attachment 746023

Do you really have a raised Churchill quote on the wall? To whom are you not surrendering?

 

[StarFoxisDown!]

Now that the BBB/EV credit is dead (and I definitely think dead for good), don't be surprised when you start seeing legacy auto announce delays to their EV lineups and/or production goals for 2022/2023.

Legacy auto needed this EV credit to not lose their shirt on every EV made at a price point that competes with Tesla, who has no EV credit.

 

[dl003]

Without the obvious UAW punt do we think Joe would have voted for it?

The EV credit is only a portion of the entire bill and what we have found in it screams nothing short of collusion and corruption. I don’t have much hope for the rest of the bill passing the smell test.

 

[MXWing]

Now that the BBB/EV credit is dead (and I definitely think dead for good), don't be surprised when you start seeing legacy auto announce delays to their EV lineups and/or production goals for 2022/2023.

Legacy auto needed this EV credit to not lose their shirt on every EV made at a price point that competes with Tesla, who has no EV credit.

All but GM and Tesla still has access to the original $7500 credit.

Correct me if I'm wrong, but the BBB version of the EV credit would have murdered Lucid. The plan as written by UAW was excluding EV Sedans at a ridiculously low price threshold.

Knocks out trims or entire lines of S3XY. Lucid Air is a bystander casualty.

 

[StarFoxisDown!]

All but GM still has access to the original credit.

Correct me if I'm wrong, but the BBB version of the EV credit would have murdered Lucid. The plan as written by UAW was excluding EV Sedans at a ridiculously low price threshold.

Knocks out trims or entire lines of S3XY. Lucid Air is a bystander casualty.

Beneficial for the newcomers......bad for legacy auto

Newcomers have no baggage and can (hopefully) get to enough scale before the phase out to survive. Legacy auto has to deal with dropping ICE sales at the same time as trying to ramp to big volumes before the phase out period in order to survive. Very unlikely

 

[Artful Dodger]

Don't know if anybody else noticed this, but Elon is picking up about 100K twitter subscribers per day right now. Currently at 66.7M, Elon's Armee...

Cheers!

Elon added about 300K followers on Twitter in the past 3 days, now at 67M Followers.

Enormous Social Media presence, and a natural "influencer". I'd hate to be swimming against that tide.

Cheers!

This is exactly what I was talking about. As I said, I wrote software to search through many years worth of data looking at ~6000 other heavily traded symbols to find the longest consecutive period of zero FTDs for those other symbols. No other stock ever came close to 2.5 months of zero FTD.

Have you made some bar-graphs to show the magnitude of the difference in TSLA? This would be ideal subject matter for a pointed tweet at the right moment. Paging @DaveT

The only reasonable conclusion is that the data set is wrong, and that FTDs on TSLA (and TSLA only) were not being reported. That's why I wrote to the SEC, asking them to investigate and provide the missing data, but they just ignored me.

I suggest that you at least Cc: the DOJ on you request for an investigation on FTD reporting for TSLA. Clearly, the SEC is either tolerant or complicite in the problem. Investors have the right to know, especially with TSLA being poorly treated differentially compared to other Large Cap equities.

Thanks again for your work. This is important research that no short fund like Citron will ever do.

Cheers!

 

[StarFoxisDown!]

All but GM and Tesla still has access to the original $7500 credit.

Correct me if I'm wrong, but the BBB version of the EV credit would have murdered Lucid. The plan as written by UAW was excluding EV Sedans at a ridiculously low price threshold.

Knocks out trims or entire lines of S3XY. Lucid Air is a bystander casualty.

My comment is more forward thinking. Think not next year, but 2-3 years down the road.

If Ford ramps Mach-E like they state they want to going forward, they hit the phase out period in early 2023 and then have to compete with a Model Y fairly

So now, just like everyone else, they will face the dilemma of when to actually start selling their EV's in volume in the US. Either they purposely limit sales in the US of the Mach E for the 1-2 years in order to get ready for a larger ramp where they can still have more access to the current EV at larger production volume......or do they continue to ramp now in still relatively small volumes, hit the threshold late next year/early 2023 and then have to compete with Tesla on fair pricing right as they're able to actually crank out a lot of EV's.

It's not a great situation for legacy auto. They needed that credit for the next 10 years. Just getting a credit for the next 2-3 years doesn't help them because they won't have large production volumes for at least 3-4 years. Probably more like 4-5 years. To have to compete with Tesla on a fair pricing basis considering how Tesla continues to lower costs and at a time where 4680 production will be a freight train.......that will end them.

 

[Mengy]

This being an investment forum, what is the near term impact on TSLA of the failure of BBB to pass? Between that, EM selling, and shorts, will this create a triple threat buying opportunity for the first part of the upcoming week?

My gut feeling is the market will dive down further Monday morning on this news, taking TSLA down further with it.

Part of the BBB is both the child tax credit and student loan forgiveness. Both of these not passing will hurt a lot of American's budgets, thus less money to spend, tightening of belts, etc. I think the market will become more fearful on this news.

Tesla as a company will be fine without the EV credit of course, but the share price of TSLA will follow the macros, so if the market crashes further so will TSLA.

We'll see Monday morning.

 

[StateoftheArt]

Thank God for Elon Musk.

WE MUST PROTECT OUR GENIUSES.

 

[jerry33]

Thy could easily have put up barriers or opaque plastic sheeting to stop people looking in through the windows.

Seeing what tesla is doing is not any way helpful to emulating it.

Same thing with Spacex, we've been seeing rockets land for what 6 years now?

To emulate Tesla, a company will have to match Tesla's investment in technology, factories, and people. Legacy auto can't do this without bankruptcy. Some Chinese companies may be able to do this. Japanese companies also could, but there is no will in Japan to do so.

 

[Thekiwi]

Actually, the only way this would be negative on margins for Tesla in the future is if they were planning on raising prices even further once the EV credit passed.......which I do not think they were planning on doing. The 8k in price hikes throughout the year has been Tesla preparing for the EV credit.

BUT the macro environment has changed. The combination of inflation and supply shortages in the automotive sector has driven the ASP of all vehicles higher plus the cost of gas has skyrocketed. Legacy auto is going to ride the tight inventory and high ASP for as long as they can and likely they'll intentinoally limit production/inventory. You also have price gouging from dealership for any EV's from traditional auto. The combination of these dynamics means Tesla isn't going to feel any pressure to drop prices anytime soon, even with Austin coming online.

Tesla has yet to really recognize much of the price hikes throughout 2021 in their earnings thanks to the gap between when you order and the delivery date. Meanwhile they have been able to absorb the cost of goods rising due to inflation through efficiency. ASP was down in Q3 and yet gross margins were up. They have S/X still to be ramped back up to full production of 25k/quarter. By the time Tesla will need to drop the price of the 3/Y in the US in 2023, they'll have 4680 ramped and will be riding the cost curve down on battery costs.

If this were the beginning of 2021 after Q4 earnings where gross margins dropped (we knew the reason, GigaPress start and S/X refresh, but gross margins still dropped), I would have said if the new EV credit doesn't pass, Tesla could face some margin pressure. But given how they executed in 2021 combined with the macro environment for the auto industry and the excitement over the EV movement (just look at those wait times for a Y), I have zero concern about margin pressure for Tesla.

Literally nothing has changed in my view for margin expansion in 2022 because again, I don't think Tesla was planning on raising prices even further after the EV credit passed and I don't think they'll drop prices due to macro/inflation environment.

Now GM........they're royally screwed.

My thoughts on margin compression is due simply to buyers having to pay an extra $8k than they would have if the EV credit was available, so US Tesla buyers averaged as a whole will choose lower priced options, and a small amount at the entry level wont buy a tesla at all.

 

[RobDickinson]

If Ford ramps Mach-E like they state they want to going forward, they hit the phase out period in early 2023 and then have to compete with a Model Y fairly

Ford are only tens of thousands off triggering the phase out. 123k as at June 2020.

Federal EV Tax Credit Phase Out Tracker By Automaker | EVAdoption

evadoption.com

Honestly not sure if I can carry on replying to this thread though, I'm having posts deleted and warnings but zero idea what for.

 

[StarFoxisDown!]

My thoughts on margin compression is due simply to buyers having to pay an extra $8k than they would have if the EV credit was available, so US buyers averaged as a whole will choose lower priced options.

You'll definitely see some opting now for lower trim options. I fully agree on that. But this is countered by the following :

- Price hikes from 2021 won't take full effects in earnings until mid 2022. The last price hikes of 2k in Q3 of this year won't even take effect until Q3 2022
- S/X full ramp
- Continued Shanghai production ramp
- Logistics savings due to Berlin/Austin
- Continued reduction of costs of good - mainly through riding battery costs down
- Better economies of scale due to larger parts orders - due to Berlin/Austin
- Higher adoption rate due to FSD progress and subscription.

So given all those elements, I don't really see ASP going down. ASP may be slightly down or stagnate in Q4 earnings even with more S/X ramp but that's just because you're getting a bunch of 3/Y deliveries that were orders from 6-8 months ago before the price hikes (People that were continually delaying deliveries for a year).

When ASP does start to drop materially, I think Tesla will have more than reduced costs by enough to continue to expand margins.

 

[StarFoxisDown!]

Ford are only tens of thousands off triggering the phase out. 123k as at June 2020.

Federal EV Tax Credit Phase Out Tracker By Automaker | EVAdoption

evadoption.com

Honestly not sure if I can carry on replying to this thread though, I'm having posts deleted and warnings but zero idea what for.

Thanks for that info.

So Ford, GM, Nissan, BWM, and Toyota are screwed. To be fair the last two apparently don't seem interested in trying in the US anyways

 

[Artful Dodger]

Now that the BBB/EV credit is dead (and I definitely think dead for good), don't be surprised when you start seeing legacy auto announce delays to their EV lineups and/or production goals for 2022/2023.

Legacy auto needed this EV credit to not lose their shirt on every EV made at a price point that competes with Tesla, who has no EV credit.

No wait, hold up! You mean that the Competition ISN'T coming?

Cheers!

 

[Ogre]

All but GM and Tesla still has access to the original $7500 credit.

Correct me if I'm wrong, but the BBB version of the EV credit would have murdered Lucid. The plan as written by UAW was excluding EV Sedans at a ridiculously low price threshold.

Knocks out trims or entire lines of S3XY. Lucid Air is a bystander casualty.

The Lucid is a $139k sedan, even the Pure is more expensive than the base Model S.

Lucid does not sell bars targeting super cost conscious buyers. The B B B is not going to murder them at all.

Rivian was likely more worried about it with their SUV and truck priced right at the margin of the incentive amount. I suspect Rivian’s margins are in 100% their options and the incentive makes Rivian’s expensive options potentially extremely expensive.

 

[22522]

Thanks for that info.

So Ford, GM, Nissan, BWM, and Toyota are screwed. To be fair the last two apparently don't seem interested in trying in the US anyways

FIFY