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

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Wow. Haven't been paying much attention since Thursday and I poke my head in to find 87% growth. Lol!

For all those new to following TSLA on the daily:

1) Yes, this is earthshatteringly impressive.

2) The share price may very will just sit there for a few days or weeks.

Strong potential for bumping the leveraging thoughts in the "shares -> LEAPs" thread. The financial implications of these deliveries makes it all but impossible for the market to sit on their hands, but I'll be ready if they do.
If the price just sits there or sags a bit, back the Cybertruck up, and buy.
 
I sold all of our ARK at a loss and bought more TSLA! Held it for more than a year. Never cared to really understand why it when down. Looking forward to getting all of it back and more this year.
ARK, and especially ARKK. has become the poster child for "speculative growth", which became toxic in the past few months. It's become a target for shorts and others to use as a hedge (myself included, via a few puts).
 
I agree. I am beginning to think Elon is a better talent recruiter than engineer. The team he has assembled has managed a spectacular accomplishment.

Managing 87% growth in production during Covid, supply chain constraints, no rebate incentives (US), no advertising and while simultaneously building 2 new factories on different continents. Amazing!
You're on it.

I've said from early on that the majority of the investment thesis is betting on the things we don't know about Tesla, whether that was a product, a process, an idea or simply gumption. I've never felt more strongly that this still represents the thesis for the future - all the things we can't yet see. Hard to put a P/E to that, it takes recognizing that something extraordinary is unfolding, even if you yourself are not that, but you have this one ability to glimpse it in others. This forum helps us all gain a clearer perspective on that. Thanks everyone (in advance, and not trying to create any ill karma.)
 
Here's yearly deliveries since 2012. Logarithmic scale makes it look so predictable. This is Elon's "50% annual growth" he's been talking about since 2014. No reason to think it's slowing down any time soon.

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Here's an updated chart using the latest data. This trendline predicts 4M vehicles delivered in 2024 :oops:

Screen Shot 2022-01-02 at 9.26.42 PM.png

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I sold all of our ARK at a loss and bought more TSLA! Held it for more than a year. Never cared to really understand why it when down. Looking forward to getting all of it back and more this year.
Then, I guess you never really understood why Cathie repeatedly said that ARK, as a general matter, is at least a five-year investment.
 
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"energy will contribute 50% of earnings in the future" is the "competition is coming" of Tesla bulls. We've been saying that for a decade, but it's always apparently 2 years away.

Well, always 2 years away for a fusion energy source extraction by Tesla is much better indeed than always 30 years away for fusion energy by ITER....

 
P&L on the left compares Q4 2021 to Q4 2020
P&L on the right compares Q4 2021 to Q3 2021.

- Non-GAAP Earnings more than tripled vs last year ($3B in Q4 2021 vs $0.9B in Q4 2020)
- Tesla grew Non-GAAP Earnings by almost $1B in a mere 3 months from Q3 2021 ($2B) to Q4 2021 ($3B)
btw: I consider my estimates conservative as margins can come in higher than what I have.


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My full P&Ls and analysis starts here:

James Stephenson predicts Tesla will take $1.6B of tax-loss benefit in Q4, for total Non-GAAP Earnings of over $5B.

 
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Sooooo we (I for sure) completely missed the significance of that 12/9 video. For techs *AND* folks who understood the economic ramifications of a 3D plant vs a traditional 2D with forklifts, this was revelatory and the reason Giga Shanghai's production numbers are so earth shattering. From that banned to the hinterlands Numerology thread :
I haven't finished writing out analysis but I still think the video of Giga Shanghai had a lot more new info than was understood. Since my last post, I subsequently learned that some of what I had thought was new had already been shown in a couple recent interviews there. It's still not clear to me whether this was actually signaled intentionally with silly numbers and memes or not, but I think this was the biggest news since AI Day.

The highlights, in my opinion, were:
  • No inventory warehouse
    • This had already been discussed in an interview a year ago but the 12/9 video showed more, and this is the biggest deal of them all because of:
      • The build quality (i.e. manufacturing process reliability) and supply chain reliability that must have been achieved to get this to work in the first place
      • The implications on cost, flexibility/agility, and rate of innovation
    • New info: About 2,000 trucks per day across 97 bays = Avg of 1 container every 70 minutes at each bay.
      • About as perfect flow as could be achieved; next one arrives shortly after the previous one leaves

  • 2 months (merely!) from start of production with imported parts to localizing most of the supply chain
    • WTF?!

  • Multistory automated logistics taking full advantage of vertical dimension
    • Also had been discussed previously but much more shown on 12/9
    • Basically what was attempted--and failed--for original Model 3 ramp in Fremont
      • Designing factory more like a computer processor, as Elon has mentioned as goal many times
    • Improve volumetric efficiency
      • Key metric = Value added per cubic meter per day
    • Enables extensive system of feederlines that can easily be rearranged quickly
      • Helps with flexibility/agility in case a more optimal layout is invented or production steps are added or eliminated later on
    • Improves safety for people by eliminating most of the need for forklifts

  • Stamping, Welding, Painting and Final Assembly combined into one unified shop

  • Battery electrical connection to power bus majorly simplified
    • Apparently fully automated

  • Hairpin motor
    • Also apparently automated

They also showed several machines I've never seen before and don't understand what they do. These might be significant but I don't know what I'm looking at.


I also watched a video from Ford showcasing the Mach-E production line and it's a joke in comparison. Consider buying a Mach-E if you want a handcrafted artisan car with a charming touch of human-caused variation.


Edit: added link to YouTube video w/ English subtitles and transcript below - this screenshot is one of the key moments- also repeating the leitmotiv expression "law of cost control". Worth watching. Like Alex (@alex_voigt on Twitter) Brian volunteers a lot of his time helping with these, I've subscribed to support his work aka real PR for Tesla.

Bolded
parts my doing for easier reading

Tesla's "excellent" law of cost control
The law is essentially the underlying logic based on first principles
improve efficiency through innovation from the source of step
so as to achieve better cost control

Tesla's "excellent" law of cost control
When you walk into a factory covering 860,000 square meters
(9.2M square feet)

Tesla chooses to build a factory in Shanghai

numerous details show the Tesla difference

lean and high efficiency

First, abandon the complicated design of a factory

the four major vehicle processes of stamping, welding, coating, and assembly form a large, single workshop

This greatly shortens the logistics path between each process

This improves operating efficiency

Secondly, the plant's configuration allows full use of vertical space, benefiting from the multi-story design

to maximize space utilization

TSLA.YT.1209.jpg


The automated logistics system transports components by elevators and conveyor belts,

which reduces manual handling. The efficient travel path can be measured in cubic meters.

It can be said that the innovation of the factory itself provides rich soil for manufacturing innovation

Without this soil, cost control would have no roots and no source of water
(me: poetic if convoluted phrasing!)

Tesla's "excellent" law of cost control
Innovating

Tesla Shanghai's R&D Innovation center

is tesla's first overseas establishment

The R&D center is based on vehicle development

and achieves high levels of integration of R&D, manufacturing, and logistics

This ensures rapid integration of new product development


Start with first principles

Carry out original design and development, comprehensive test verification, and quality control

This forms a complete closed-loop product development process

R&D and innovation provide the source of power for the continuous evolution of Shanghai Giga Factory

Let cost control have a clear blueprint

Create lower cost solutions to increase the affordability of Tesla products

Tesla's "excellent" law of cost control
Product innovation

The first is the innovation in parts
improve the ability of independent parts development
To understand the innovative charm behind this part

Before, where the Model 3 was concerned

we probably needed more than 70 stamped and welded parts

our general OEMs are outsourced

we had to build a welding line ourselves

Actually the whole cycle is very long
Now that we do a single piece casting

we only need one supplier to supply us with aluminum ingots

Through our own manufacturing, we are smelting, die casting, post-processing, and finishing

in a very short time, the product is finished from this raw material
one-piece casting is done at Tesla

we are really promoting the development of the industry

our team feels really great about this accomplishment, especially being able to realize the dream of the engineers

Logistics innovation is also a highly of the production process

The logistics planning concept of Giga Shanghai
adhere to the surrounding layout

Thanks to the way of direct unloading at the side of the site

These are the loading docks
It can be seen in our Phase 1 final assembly workshop
There are currently 97 bays
They need to unload nearly 2,000 containers per day
It's a lot like the turnover at a restaurant
Every customer order involves the sorting of the necessary parts
Now the workshop has been in black, red, black and red
logistics will report to all sorting suppliers based on the configuration
So the parts are also arrange in red, black, red and black
so it's the shortest route from the supplier to the edge of the line
We don't even keep any inventory in the warehouse
So we're pursuing the ultimate in zero inventory


And take advantage of the EV's structure to carry out multi-component integrated production

It's another manifestation of cost control through production innovation

Tesla began Model 3 production in 2019
at that time most of the parts were still imported
our first task was to localize these imported parts as soon as possible
It took two months to source parts locally
to support the high-volume ramp

The dashboard assembly integrated hundreds of parts from different processes in the past

Now the components are fed directly to the line for assembly

Localization is not only to reduce costs

In the process, we were able to raise quality standards from our local suppliers

In the past, some import suppliers might make some parts like this

But we'd mention a grade instead of having the copy the part exactly

Tesla's "excellent" law of cost control

It's all about addition and subtraction based on "first principles"

PS.
Note how this could be interpreted by uninformed Chinese as proof of Chinese superiority .. while it is really proof of Elon's vision and willpower. Nicely detour worded with quotes from Elon at the beginning to smooth out misrepresentation. Sad that by remaining silent HERE IN THE FREAKING USA we (meaning the powers that be) are letting China having a free ride about it. Tribute to Elon, he's realistic, whatever advances the Mission. Amazing guy.
 
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James Stephenson predicts Tesla will take its $1.6B tax-loss benefit in Q4, for total Non-GAAP Earnings of over $5B.

I find this highly unlikely. Elon exercised and sold ~23 million shares at an average price of slightly above 1k. Given his cost basis was 6 dollars or so, Tesla has a tax loss of ~23 Billion dollars or ~$23 per share. Mind you, this is not loss as per GAAP accounting, but is a loss per Tax accounting. There is a description here.

Given that amount of tax losses, I find it inconceivable that the reserve is released anytime soon. I see this more as a 2022 YE or perhaps 2023 release.
 
Is it too early to celebrate with some Tesla Tequila 😂 Wow those are some amazing numbers!
Amazing numbers!

It’s a little early here to open up the Lightning decanter filled with Woodford Reserve, but, the afternoon is just around the corner here in Phuket, Thailand.😎
 

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Transportation is closer to 25%, and that’s with the horrendous inefficiency of small ICE. Road transport is about 2/3rds of that. Switching to EV would drop primary energy consumption of road transport by more than half if we used the same fuel ratio we use for power plants now. That would drop road transport from about 18% of primary energy now to about 10% after.

Grid will need less storage though maybe about a days’ worth, while a 350 mile range is roughly equal to a week or more of average driving, so you end up needing similar batteries for grid storage.

EDIT: here is an energy flow map. Look at how much energy goes right out the tailpipe or radiator of a small ICE. Most people have no idea how comically inefficient car engines are. Even you you just used oil-powered combined cycle power plants to charge the EVs you’d cut US oil consumption by about HALF!!!


Energy_US_2020.png

A significant portion of the Industrial energy consumption bucket is for heavy mobile machinery that I was including in a broader definition of transport, and that bumps it up from 24% to higher. I was including basically any self-powered motorized machine on wheels: Forklifts, dump trucks, backhoes, excavators, tractors, bulldozers, asphalt rollers, tree harvesters, pile drivers, rototillers, cherrypickers, etc.

Additionally I think increased efficiency and lower cost of ownership of EVs compared to ICEVs will result in greater quantity of transport miles demanded per capita. I think autonomous driving and Boring Co tunnel networks will multiply this increase even more. (This is for 2035 and beyond).

On the other hand, we will probably want more than 24 hours of storage for the grid.

In any case, energy consumption for all categories is likely to increase as the cost decreases. Supply and Demand 101.
 
James Stephenson predicts Tesla will take $1.6B of tax-loss benefit in Q4, for total Non-GAAP Earnings of over $5B.


He states that they could claim 80% in Q4 and then the remaining 20% in Q1, before having to pay massive taxes going forward. I think this lines up perfectly with Tesla moving their headquarters to Texas in Q4. It will both reduce the amount of tax they will have to pay as well stick it to the politician(s) in California who told him to F off.